In the Name of Allah, Most Gracious, Most Merciful

Corporate Social Responsibility (CSR)

CSR is a concept which encourages organizations to consider
the interests of society by taking responsibility for the impact of the organization's activities
on customers, employees, shareholders, communities and the environment
in all aspects of its operations.

ARL promotes CSR as part of its core values to create the foundation for a
more equitable, just, productive, competitive and
knowledge-based environment.
 ANNUAL REPORT 2007 1

Contents
Honours & Achievements 02
Vision & Mission Statement 03
Board of Directors 04
Company Information 05
Company Profile 06
Management Committee 07
HSEQ Policy 08
Notice of Annual General Meeting 09
Chairman’s Review 12
Human Resource Policy 16
The Management 17
The Directors’ Report 18
Pattern of Shareholding 36
Financial Statistical Summary 38
Financial Highlights - ARL 40
Financial Highlights - AHL 42
Review Report to the Members 44
Statement of Compliance with the Code of Corporate Governance 45
Balance Sheet Composition 47
Contributions & Value Additions 48
Financial Statements of Attock Refinery Limited 49-82
Auditor’s Report to the Members 51
Balance Sheet 52
Profit and Loss Account 54
Cash Flow Statement 55
Statement of Changes in Equity 56
Notes to the Financial Statements 57
Consolidated Financial Statements 83-118
Auditor’s Report to the Members 85
Consolidated Balance Sheet 86
Consolidated Profit and Loss Account 88
Consolidated Cash Flow Statement 89
Consolidated Statement of Changes in Equity 90
Notes to the Consolidated Financial Statements 91
Preserving our environment - Ficus Religiosa planted Form of Proxy 119
on the commissioning of the Refinery in 1922.
2 AT TO C K R E F I N E RY L I M I T E D

Honours & Achievements

Awards include :
1 Corporate Social Responsibilty Award (Helpline Trust)

2 Annual Environment Excellence Award (NFEH)

3 Best Corporate Report Award (ICAP & ICMAP)

4 Special Merit Exporter Award (FPCCI)

Striving for excellence

 ANNUAL REPORT 2007 3

Vision & Mission

Vision 2020
To be a world class and leading organization
continuously providing high quality and
environment-friendly energy resources.

Mission 2010
To be a model diversified energy resources and
petrochemical organization exceeding expectations
of all stakeholders. We will achieve this by utilizing
best blend of state-of-the-art technologies, high
performing people, excellent business processes
and synergetic organizational culture.

Core Values Strategic Plan

Our success will not be a matter of chance, but of commitment
to the following enduring beliefs and values that are engrained
in the way we think and take actions to pursue a climate of
excellence:
Integrity & Ethics:
Integrity, honesty, high ethical, legal and safety standards are
cornerstones of our business practices.
Quality:
We pursue quality as a way of life. It is an attitude that affects
everything we do for relentless pursuit of excellence.
Social Responsibility:
We believe in respect for the community and preserving the
environment for our future generations and keeping National
interests paramount in all our actions.
Learning & Innovation: Company's strategic plans include enhancement of its refining
We embrace lifelong learning and innovation as an essential capacity and production of better, more environment-friendly
catalyst for our future success. We believe in continuous petroleum products to maintain and expand its market. The
improvement and to seize opportunities inherent in change to plans include installation of a Preflash Unit, an Isomerization
shape the future. Complex and a Diesel Hydrodesulfurization unit in first phase.
Further, the Company is actively engaged in diversification of
Team Work:
its operations within the energy sector which includes the white
We believe that competent and satisfied people are the company’s
oil pipeline project and a power project. Projects targeting
heart, muscle and soul. We savour flashes of genius in
environmental and social improvement for community
organization’s life by reinforcing attitude of teamwork and
development are also being planned.
knowledge sharing based on mutual respect, trust and openness.
Empowerment:
We flourish under an ecosystem of shared understanding
founded on the concept of empowerment, accountability and
open communication in all directions.
4 AT TO C K R E F I N E RY L I M I T E D

Board of Directors

01 02 03 04 05 06 07 08 09 10

01 Tariq Iqbal Khan

Chairman Board Committees
02 Dr. Ghaith R. Pharaon
03 Shuaib Anwar Malik
Deputy Chairman Audit Committee Audit Committee - TOR
(Alternate Director to Dr. Ghaith R. Pharaon) Abdus Sattar, Chairman The Audit Committee's primary role is to ensure compliance
04 Laith Ghaith Pharaon Babar Bashir Nawaz, Member with the best practices of Code of Corporate Governance,
05 Wael Ghaith Pharaon (Alternate Director) statutory laws, safeguard of Company's assets through
06 Bashir Ahmad Sajid Nawaz, Member monitoring of internal control system and fulfill other
Abdus Sattar (Alternate Director)
07 responsibilities under the Code.
08 Babar Bashir Nawaz
(Alternate Director to Laith Ghaith Pharaon) Technical & Finance Committee Technical & Finance Committee - TOR
09 Sajid Nawaz Abdus Sattar, Chairman To recommend annual capital and revenue budget and
(Alternate Director to Wael Ghaith Pharaon)
Sajid Nawaz, Member review any other key financial matters or technical aspect
10 M. Adil Khattak
Chief Executive Officer M. Adil Khattak, Member relating to refinery operations / upgradation etc.
 ANNUAL REPORT 2007 5

Company Information

Company Secretary
Khurram Shiraz
ACA

Auditors
A.F. Ferguson & Co.
Chartered Accountants

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

Registered Office
The Refinery
Morgah, Rawalpindi
Tel: (051) 5487041-5
Fax: (051) 5487254
E-mail: info@arl.com.pk
website: www.arl.com.pk

Group photograph at the 137th Board of Directors meeting held in Damascus, Syria on 10th September, 2007.
6 AT TO C K R E F I N E RY L I M I T E D

Company Profile

Attock Refinery Limited (ARL) was incorporated as a Private
Limited Company in November, 1978 to take over the business
of the Attock Oil Company Limited (AOC) relating to refining
of crude oil and supplying of refined petroleum products. It
was subsequently converted into a Public Limited Company
in June, 1979 and is listed on the three Stock Exchanges of
the country. The Company is also registered with Central
Depository Company of Pakistan Limited (CDC).
Original paid-up capital of the Company was Rs 80 million
which was subscribed by the holding company i.e. AOC,
Government of Pakistan, investment companies and general
public. The present paid-up capital of the Company is Rs
568.62 million.
ARL is the pioneer of crude oil refining in the country with its
operations dating back to 1922. Backed by a rich experience
of more than 85 years of successful operations, ARL’s plants
have been gradually upgraded/replaced with state-of-the-art
hardware to remain competitive and meet new challenges and
requirements.
There were subsequent discoveries of oil at Meyal and Toot
(1968). Reservoir studies during the period 1970-78 further
indicated high potential for crude oil production of around
20,000 bpd. In 1981, the capacity of Refinery was increased by
the addition of two distillation units of 20,000 and 5,000 bpd
capacity, respectively. Due to their vintage, the old units for
lube/wax production, as well as Edeleanu, were closed down
in 1986. In 1999, ARL commenced JP-1 pipeline despatches,
and in 2000, a Captive Power Plant with installed capacity of
7.5 Megawatt was commissioned. Another expansion and
upgradation project was completed in 1999 with the installation
of a Heavy Crude Unit of 10,000 bpd and a Catalytic Reformer
of 5,000 bpd. ARL’s current nameplate capacity stands at
40,000 bpd and it possesses the capability to process lightest
to heaviest (10-65 API) crudes.

It all began in February 1922, when two small stills of 2,500

barrel per day (bpd) came on stream at Morgah following the
first discovery of oil at Khaur where drilling started on January
22, 1915 and at very shallow depth of 223 feet 5,000 barrels
of oil flowed. After discovery of oil in Dhulian in 1937, the
Refinery was expanded in late thirties and early forties. A
5,500 bpd Lummus Two-Stage-Distillation Unit, a Dubbs
Thermal Cracker, Lubricating Oil Refinery and Wax Purification
facility and the Edeleanu Solvent Extraction unit for smoke-
point correction of Kerosene were added.
M. Adil Khattak Mansoor Shafique Khurram Jalil Iqbal Ahmad Adnan Hussain
Chief Executive Officer Assistant General Manager Manager (Maintenance) Manager (Operations) Senior Executive 7
(Operations) (Business Review & Assurance)
S. Ahmed Abid Khurram Shiraz Zia Uddin Kirmani
Deputy General Manager Ejaz H. Randhawa Manager (Finance & Accounts) / Manager (Health, Safety, Environment
(Finance & Corporate Affairs) Senior Manager (Technical Services) Company Secretary & Quality Control)
Dr. M. Ilyas Fazil Malik Masood Sadiq Asif Saeed Salman Tariq
Assistant General Manager Senior Manager Manager Deputy Manager (Engineering)
(Technical Services, Planning & Development) (Commercial & Materials Management) (Human Resources & Administration)

Management Committee

Series of Firsts ARL Products

• First refinery of the region (1922) • Premium Motor Gasoline (PMG) • Light Diesel Oil (LDO)
• First to start dispensing major products through pipeline using computerized metering system (1987) • High Speed Diesel (HSD) • Naphtha
• First to produce low sulfur furnace (less than 1%) (1998) • Kerosene Oil (KO) • Liquefied Petroleum Gas (LPG)
• First to produce low sulfur diesel (less than 0.5%) (1998) • Furnace Fuel Oil (FFO) • Jute Batching Oil (JBO)
• First to achieve ISO 9002 certification for quality control laboratory (1999) • Low Sulfur Furnace Fuel Oil (LSFO) • Solvent Oil (SO)
• First to produce low lead premium gasoline direct from refinery process (1999) • Jet Fuels (JP-1, JP- 4 & JP - 8) • Premium JBO
• First to produce polymer modified asphalt (2001) • Paving Asphalt (various grades)
• First refinery/first petro-chemical plant / first major industry to get ISO 9001:2000 certificate (2001) • Cut Back Asphalt (various grades)
• First refinery / first petrochemical plant/first major industry to get ISO 14001 certificate (2002). • Polymer Modified Bitumen (PMB)
• First major industry to get OHSAS 18001 certification (2006). • Mineral Turpentine (MTT)
8 AT TO C K R E F I N E RY L I M I T E D
Health, Safety, Environment and Quality Policy (HSEQ)
ARL is committed to provide the best quality products in
the market, endeavors to protect the environment and to
ensure health and safety of its employees, contractors, and
customers and work for continual improvements in Health,
Safety, Environment and Quality (HSEQ) systems.
ARL is committed to comply with all applicable Health,
Safety, Environment and Quality laws and regulations.
The Policy shall be used to demonstrate this commitment
through:
Health
ARL seeks to conduct its activities in such a way as to promote
the health of, and avoid harm to its employees, contractors,
visitors and the community.
Safety
ARL ensures that every employee or contractor works under
the safest possible conditions. It is our firm belief that every
effort must be made to avoid accidents, injury to people, damage
to property and the environment.
ARL believes that practically all accidents are preventable by
carrying out risk assessments, and reducing risks identified, by
appropriate controls.
Environment
ARL is committed to prevent pollution by the efficient use of
energy throughout its operations, recycle and reuse of the
effluent wherever possible, and use of cost-effective cleaner
production techniques that lead to preventive approach for
sustainable development.
Quality
ARL recognizes employees' input towards quality by emphasizing
skills development and professionalism.
ARL must be customer driven, cost effective and continuously
improving services, works and products to meet requirements
of the market.
ARL conducts periodic audits and risk assessment of its activities,
processes and products for setting and reviewing its objectives
and targets to provide assurance, to improve HSEQ standards
and loss control. ARL is committed to share all pertinent
information related to HSEQ with all concerned parties.

Notice of Annual General Meeting
Notice is hereby given that the 29th Annual
General Meeting of the Company will be held
at Pearl Continental Hotel, Rawalpindi on
Thursday, October 25, 2007 at 11:00 a.m. to
transact the following business:
Ordinary Business
1. To confirm the minutes of the Fifteenth (15th) Extra-Ordinary
General Meeting held on 11th January, 2007.
2. To receive, consider and approve the Audited Accounts of
the Company together with the Directors’ and Auditor’s
Reports for the year ended June 30, 2007.
3. To appoint auditors for the year ending June 30, 2008 and
fix their remuneration.
4. To consider and, if thought fit, declare a final cash dividend
as recommended by the Board of Directors for the year
ended June 30, 2007.
5. To transact such other business as may be placed before
the meeting with the permission of the Chairman.
Special Business
6. To consider and, if thought fit, to pass the following
Resolution as an ordinary resolution:
“Resolved:
a. that a sum of Rs 142,155,000 out of the profits of the
Company available for appropriation as at
June 30, 2007, be capitalized and applied for issue
of 14,215,500 ordinary shares of Rs 10 each allotted
ANNUAL REPORT 2007 9
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
October 17, 2007, 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 Secretary of the Company 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, including export of
bonus shares in respect of non-resident shareholders.”
By Order of the Board
The Refinery Khurram Shiraz
Morgah, Rawalpindi Company Secretary
October 04,2007 October 04, 2007
10 AT TO C K R E F I N E RY L I M I T E D
Notes:
i. Share Transfer Books of the Company will remain closed
and no transfer of shares will be accepted for registration
from October 18, 2007 to October 24, 2007 (both days
inclusive). Transfers received in order at the Shares
Department of M/s. Noble Computer Services (Pvt) Limited,
2nd Floor, Sohni Centre, BS 5&6, Main Karimabad,
Block-4, Federal B Area, Karachi-75950, Pakistan, by the
close of business on October 17, 2007 will be treated in
time for the entitlement to Bonus Shares, if declared.
ii. A member entitled to vote at this meeting may appoint Statement under Section 160 (1) (b)
another member as his/her proxy to attend and vote. of the Companies Ordinance, 1984
Proxies in order to be effective must be received by the
Issue of Bonus Shares:
Registered Office of the Company, duly stamped and
signed, not later than 48 hours before the time of the The Directors are of the view that with the existing profitability,
meeting. the Company’s financial position justifies capitalization of
Rs 142,155,000 out of profits available for appropriation as at
iii. CDC account holders shall follow the under mentioned
June 30, 2007, by issuing fully paid Bonus Shares in the
guidelines as laid down in Circular No.1 dated
proportion of one (1) Bonus Share for every four (4) ordinary
January 26, 2000 issued by the Securities & Exchange
shares held. The Directors of the Company, directly or indirectly,
Commission of Pakistan:
are not personally interested in this issue, except to the extent
a. In case of individuals, the account holder or sub- of their shareholding in the Company.
account holder and/or the person whose securities
are in group account and their registration detail is
uploaded as per the regulations, shall authenticate
identity by showing his/her original National Identity
Card (NIC), or original Passport at the time of attending
the meeting.
b. In case of corporate entity, the Board of Directors’
resolution/power of attorney with specimen signature
of the nominee shall be produced (unless provided
earlier) at the time of meeting.
iv. Members are requested to promptly notify the Company
of any change in their address.
v. Form of proxy is enclosed herewith.
vi. Statement of material facts, under Section 160 (1) (b) of
the Companies Ordinance, 1984, pertaining to the Special
Business referred above under Agenda item 6 is annexed
to this Notice of Meeting being sent to the members.
ANNUAL REPORT 2007 11
12 AT TO C K R E F I N E RY L I M I T E D
On behalf of the Board I am pleased to welcome our esteemed shareholders to the 29th Annual
General Meeting of the Company and to present annual review of the results of Company’s
Chairman's Review operations and audited financial statements for the financial year ended 30 June, 2007.
Business Review
The current financial year witnessed record high oil prices in
2006 before declining sharply towards the end of the year. In
an attempt to support prices at a level sought by its members,
OPEC was forced to cut its supply. However, the prices went
up again in 2007 and the refiners’ margin which had become
negative at the end of 2006, once again became favourable.
Oil prices remain uncertain for the foreseeable future as political
tensions and civil unrest refuse to ease in major oil producing
countries like Iraq and Nigeria. Global political uncertainties also
remain factors in the instability of price. An overall increase was
observed in the international prices for crude oil during the year
2006-07.
Like last year, the financial year 2006-07 was once again
punctuated with fluctuating refiners’ margins arising from price
movements in international markets. After ending up with
disappointing margins insufficient to cover the operating costs
in the first three quarters, the refiners’ margin showed significant
improvement in the 4th quarter and thus enabled your Company
to close the financial year on a positive note.
Profit from refinery operations increased to Rs 504.3 million
in the current year as against Rs 80.5 million in the year
2005-06. With dividend income of Rs 244.6 million from its
investments in associated undertakings, the total profit for the
year was Rs 748.9 million with an EPS of Rs 13.17. The detailed
financial results of the Company’s operations for the year ended
June 30, 2007 are given in the annexed Directors’ Report and
financial statements.
Business Risks, Challenges and
Future Outlook
As was reported last year, the public debate triggered by increase
in domestic petroleum products prices, following global increase
in these prices, continues to pose a serious challenge to the
existing pricing formula under which the Refinery is operating.
While the Company has a strong view point that the pricing
formula was agreed after full deliberations, implications and
incentives required for long-term sustainability of refinery
operations, political and public pressure has forced the
Government to review the pricing formula that has adversely
impacted the ex-refinery prices of certain products like kerosene
oil, light diesel oil and Jet fuel. Through adjustments in pricing
mechanism, the Government has also recently curtailed the
margin of oil marketing companies and dealers. While these
curtailing measures are being utilized apparently to settle the
huge price differential deficits of refineries and oil marketing
companies which had benefited the consumers at large, the
eventual burden is being taken-up by the oil industry with such
curtailments. The Company has emphasized upon the
Government that continued operations of the local refineries is
critical as it relates to strategic petroleum products supplies,
indigenous crude oil production as well as to safeguard the
investors interest in the oil refinery sector. It is expected that
Government shall consider these matters in the light of above
considerations and in the best long-term national interest.
With the new refineries being set-up in the country, continuing
challenges in the phased deregulation process and changes in
product specifications warranted by environment your Company
has undertaken the task of implementing certain projects that
shall cater to the market requirements of cleaner fuels, higher
RON motor gasoline as well as to maintain and enhance its oil
 ANNUAL REPORT 2007 13

Gross Refiner's Margin Simultaneously, your Production

US $ Per Barrel
Products and Crude Average Prices
US $ Per Barrel
refining facilities to meet any future growth in crude oil availability
in the northern region. The Company is working on its plan to
construct a Pre-Flash Unit that shall not only replace the aging
Lummus Unit but shall also enhance the overall refining capacity
to 48,400 barrels per day. Work to install an Isomerisation Unit
that shall upgrade its motor gasoline by raising its octane level
is also being actively pursued. These projects shall not only let
your company retain its market share in production and supply
of petroleum products but also provide operational flexibility in
its future operations.
Company continues to M. Tons in Thousands
emphasise upon the
Government that for
continued development
of environmental clean
products it is imperative
to provide sufficient
incentives to the refineries
for them to undertake
refinery upgradation
projects which require
intensive capital outlay.
Your Company is closely
watching the develop-
ments in international
and domestic market with its implications and is confident that Control Authority (PSQCA). This award is a mark of
the Government shall continue to support the oil refineries in a recognition of companies/corporations for their active
manner that it provides due incentives for fresh investment that participation in social causes of Pakistan.
can bring substantial economic benefits to the country and ii. NFEH Environmental Excellence Award 2007
provide protection from any possible disruption in global supplies
For the 2nd year in a row, your Company was awarded
strategically important for the country.
the Environmental Excellence Award of the National Forum
Your Company would continue to pursue new business for Environment and Health (NFEH). This award
opportunities, focus its operating strategies on reliability, efficiency demonstrates your Company’s commitment to establish,
and profitability to create shareholders value. implement and maintain a successful HSEQ Management
Corporate Awards and Recognitions system and its continued efforts to improve its effectiveness
in accordance with the requirements of ISO 14001 and
i. Corporate Social Responsibility (CSR) Award organized
OHSAS 18001 standards.
by Help Line Trust
Your Company was awarded Corporate Social
Responsibility Award (CSR) organized by the Help Line
Trust in collaboration with Pakistan Standards and Quality
14 AT TO C K R E F I N E RY L I M I T E D
Chairman's Review
iii. Exports Trophy 2006
Based on achieving highest exports in the region the
Company also won the Rawalpindi Chamber of Commerce
and Industry Export Trophy for the year 2006. Further, the
Company was also awarded Special Merit Exporter Award
for 2006 for its exports and foreign exchange earnings of
over Rs 7 billion by the Federation of Pakistan Chambers
of Commerce & Industry (FPCCI).
iv. Best Corporate Report Award
In addition, the Company ever since the inception of Best
Corporate Report Award in 2000 continues to receive
awards for Top positions in Fuel & Energy Sector for
presenting the best corporate annual reports. For the
Annual Report 2005, it has received Award for 2nd position
in the sector.
On behalf of the shareholders and the Board of Directors, I wish
to congratulate and compliment the Company’s management
and staff for bringing these laurels.
Employee Relations
A healthy and cordial relationship with its employees with
congenial atmosphere at work place remain to be the main
focus of the management in its employee relations functionalities.
Your Company’s management is actively engaged in employees
career development and progression. An environment exists
where employees understand the Company’s objectives, the
market conditions in which the Company operates and the risks
it must mitigate to ensure ideal working conditions for both,
labour and management. The labour – management relationship
continues to be cordial and is based on cooperation and trust
with positive and flexible attitude from both sides creating a Acknowledgement
good working environment with the common objective of serving On behalf of the Board, I would like to acknowledge the support
the Company’s interests and employee welfare. received from the Ministry of Petroleum & Natural Resources
and other Government organizations and express gratitude to
our valued customers, crude oil suppliers, banks, suppliers and
contractors for their continued cooperation.
Further, I would also like to thank my colleagues on the Board
and record my appreciation of the services and contributions of
the Directors who are representing the Audit, Technical and
Finance Committees of the Board.
Before concluding, I also wish to express my thanks for the
continued interest and support of our esteemed shareholders
and on behalf of the Board would like to extend our assurance
that the Board of Directors would continue to work in the best
I would like to appreciate the efforts and dedication of the officers,
interest of the Company and to create value addition for its
staff, workers of the Company and the CBA who enabled the
shareholders.
management to run the Company smoothly and efficiently during
the year for profitable operations.
Tariq Iqbal Khan
September 10, 2007 Chairman
ANNUAL REPORT 2007 15
16 AT TO C K R E F I N E RY L I M I T E D

Human Resource Policy

ARL Corporate policy on human resources is to attain the highest
standards of professionalism throughout the organization by
recognizing and revealing individual capabilities, productivity,
commitment and contribution.
ARL firmly believes that the continued progress and success of
the Company depends upon to a great extent on its personnel
- that only with a carefully selected, well trained, achievement
orientated and dedicated employee force, can the company
maintain its Leadership in the Refining industry.
And because the most valuable asset of the company is its
personnel, ARL has the following human resource policies :
4. Provide and maintain comfortable, peaceful and orderly
working conditions.
5. Promote from within whenever possible and provide
opportunities for growth and promotion to the employees.
6. Treat each employee with fairness and respect and in
return expect from him service marked by dedication,
devotion, commitment and loyalty.
7. Encourage each employee to improve and develop himself
and thereby prepare him for positions of higher responsibility.
8. Recognize and reward efficiency, team work, discipline
and dedication to duty and responsibility.
1. Employ the best-qualified persons available, recognizing 9. Exhaust all means to resolve Labor-Management
each person as an individual thus affording equal differences, if any, promptly and amicably.
opportunity.
10. Provide a wholesome and friendly atmosphere for
2. Pay just and responsible compensation in line with the harmonious Labor Management relations.
industry standards, job requirements and work force.
3. Help employees to attain their maximum efficiency and
effectiveness through a well-rounded training and
development program.
 ANNUAL REPORT 2007 17

Various Committees have been formulated to look after the operational

and financial matters of the Company. Brief description of the role of
The Management Committees involved in strategic matters is given below :

Management Committee Econo-Tech. Committee Central HSE Committee

This Committee which is constituted of all departmental heads
meet fortnightly under the chairmanship of CEO to coordinate
the activities and refinery operations and to discuss various
issues.
Value & Ethics Committee
The primary role of this committee is to investigate and advise
the Chief Executive Officer (CEO) appropriate action regarding
violation of ARL Core Values and related codes and policies.
Succession Planning and
Career Management Committee
This committee is responsible for initiating and taking all necessary
steps towards formulation and implementation of an appropriate
Succession Planning and Career Management System in the
Company.
This Committee reviews all new proposals relating to Refinery
operations and projects and formulates recommendations after
discussing/evaluating it from technical and economic aspects.
Budget Committee
This Committee reviews and recommends the annual budget
proposals for the approval of the Board of Directors. It also
monitors the approved budget utilisation.
Pricing Committee
Responsible for determining prices of deregulated products from
time to time.
The primary role of The 'Central HSE Committee' is to set
operating policy and procedures consistent with HSEQ Policy
and to monitor implementation of the policy. Furthermore, this
Committee provides a strategic direction, sets goals and
objectives, monitors performance and provides a mechanism
for dealing with safety behavior issues.
Information Technology Committee
Responsible for automation of processes and systems in line
with latest technology.
Risk Management & Strategic Plan Committee
This committee discusses and decides all matters related to
risk management and strategic plan of Attock Refinery Limited.
18 AT TO C K R E F I N E RY L I M I T E D

Directors' Report
On behalf of the Board of Directors, I am pleased
to present the Company’s 29th Annual Report which
includes the Audited Financial Statements of the
Company together with Auditors' Report thereon
for the year ended June 30, 2007.
1. Financial Results
The Company has earned net profit after tax of Rs 748.98
million during the year. Although the international prices
for both crude oil and products increased sharply during
the year 2006-07, the increase in products prices during
the 2nd half was higher than the crude prices due to
which the refiners’ margin increased during the year.
Changes in products mix also favourably contributed to
the margin with increase in sales of motor gasoline and
consequent decrease in the exports of naphtha at higher
prices.
The gross refiner’s margin (GRM) continued to decline
during the first two quarters and part of third quarter of
the year 2006-07 which resulted in a loss from refinery
operations of Rs 49.12 million. However, during the third
quarter the GRM started improving and during the
fourth quarter the overall annual average improved to
convert from negative margin to positive margin resulting
in profit from refinery operations of Rs 504.33 million.
This change in profitability was also contributed by
The financial results for the year ended June 30, 2007 are
summarized below:
Profit before tax from
refinery operations
Less: Provision for taxation
Profit after taxation from
refinery operations
Income from non-refinery
operations after tax
Net profit for the year after taxation
Unappropriated profit brought forward
Profit available for appropriation
Appropriations:
The Directors propose that this should be utilized in providing
for:
- Transfer to reserve for expansion/
modernization as per the stipulations
of the pricing formula
- Final cash dividend at the rate of 40%
(equivalent to Rs 4.00 per share of
Rs 10/- each) now proposed
2. Pricing Formula
It would be recalled that the refineries Import Parity
Pricing Formula was modified with effect from
Rs 000’s
July 1, 2002 whereby the minimum rate of return of 10%
on paid-up capital, was dispensed with and net profit
960,883 after tax from refinery operations (if any) above 50% of
456,550 the paid-up capital at that time is required to be diverted
to a special reserve to offset any future loss or make
investment for expansion / upgradation of the Refinery.
504,333
As the shareholders have continuously been advised in
244,652 the earlier reports, the Company has contested the
abolition of the minimum guaranteed rate of return as a
748,985
clause in the existing Agreement between the Company
267,428 and the Government of Pakistan to this effect cannot be
1,016,413 changed unilaterally by either party.
The Government has recently through the Federal Budget
2007-08 made certain modifications in the products pricing
mechanism, whereby 5% + 1% deemed duties on
Kerosene Oil and LDO and additional 1% surcharge
included in JP-8 pricing has been withdrawn. This has
resulted in reduced ex-refinery prices of these products
358,533
Sales Revenue Composition
(Rupees in Million)
227,448
20,000

increased demand for motor gasoline, with corresponding - Transfer to reserve for issue of bonus
15,000

reduction in naphtha exports, as a result of curbing of shares in the proportion of 1 share for
10,000
smuggling of this product due to domestic rationing of every 4 shares held i.e. 25% 142,155
5,000
this product in one of the neighbouring countries and 728,136
geo-political changes in the border areas. The industry - Leaving an un-appropriated profit to be 2002-03 2003-04 2004-05 2005-06 2006-07
0

had always been demanding that in order to promote the carried forward to next year 288,277 Motor gasoline Naphtha Diesel
sales of local refineries production, it was imperative to Kerosene/Jet Fuels FFO Asphalt Others

halt the smuggling menace.

ANNUAL REPORT 2007 19
20 AT TO C K R E F I N E RY L I M I T E D

Directors' Report

ceased effective September 2006 as a result of which Cash Dividend and Bonus Shares
the 3 years average cannot be determined, a revised
0 10% 20% 30% 40% 50%
formula was to be given for motor gasoline effective
July 2007. A dialogue and a process of exchange of
information was initiated during the year with several
options being considered as an alternate method for PMG
pricing. However, after several joint meetings, despite
assurances given by the Government that refineries shall
not be put into an adverse financial position, the
Government was inclined to opt for a PMG pricing formula
proposed by the World Bank and linked to 95 RON
Arab Gulf prices that would have effectively reduced the
Product's Prices
US $ Per Ton ex-refinery prices with a negative impact of over
800 Rs 700 million. This matter was again taken-up with the 3. Dividend
Ministry of Petroleum & Natural Resources at a joint The Directors are recommending a final dividend at the
600
meeting and after deliberations it was agreed to defer rate of 40% (Rs 4 per share of Rs 10 each) and issue of
400
the matter of revision in motor gasoline pricing and to bonus shares 25% i.e. one share for every four shares
review the position with a view to determine a viable held for the year ended June 30, 2007.
200 pricing formula that would effectively safeguard refineries’
4. Share Capital
revenues and protect their profitability and keep them
0
operational. The issued, subscribed and paid up capital of the Company
PMG KERO HSD F.F.O.
as at June 30, 2007 was Rs 568.62 million.
The Company alongwith other two refineries operating
on same pricing formula continues to strongly defend the
and shall have a corresponding impact on Company’s pricing formula on the contention that the pricing formula
profitability. The Company immediately responded to this and profitability has to be seen in a long term perspective
measure and requested the Government to compensate rather than a short term approach which position has
for this loss through adjustments in products pricing been vindicated by losses suffered during the prior periods
mechanism. while operating under the same pricing mechanism.

The prices of motor gasoline (PMG) were being calculated
by including an element of price differential based on
Caltex Bahrain Naphtha and 87 RON motor gasoline
price. However, since the publication of prices of Caltex
Bahrain 87 RON motor gasoline in Platts Oilgram has
Your Company expects that all concerned authorities
shall review the subject rationally without being influenced
by the high prices arising from international prices which
are beyond any one’s control.
 ANNUAL REPORT 2007 21

5. Refinery Management and Operations

The Refinery processed 14,074,644 barrels (2006:
14,567,216 barrels) of crude oil received from both
northern and southern oilfields. As reported in prior years,
the allocation of southern crude to the company is based
on the national freight economics and foreign exchange
savings as a result of processing this crude at the Refinery.
It has resulted in savings to the national exchequer of
Rs 58 million (2006: Rs 170 million) in freight and foreign
exchange savings of US $ 30 million (2006: US $ 52
million) during 2006-07 and accumulated freight savings
of over Rs 2.828 billion and foreign exchange savings of
US $ 210 million since commencement of these supplies
from November 1997. Further, the entire indigenous crude
production from the northern region including enhanced
production from certain fields continued to be processed
at the Refinery.
A total of 14.092 million barrels of crude oil (2006: 14.759
million barrels) was received from 84 different oilfields
which was successfully processed at various refining
units. Your refinery has the unique capability and distinction

Crude Oil Receipts & Composition

(Northern Vs Southern)
22 AT TO C K R E F I N E RY L I M I T E D
Directors' Report
6.
6.1
6.2
of processing varied quality of both heavy and light crude
oil produced from fields across the whole country.
All the crude processing units operated smoothly.
The Company supplied 1.77 million Tons (2006: 1.819
million Tons) of various petroleum products during the
year meeting the standard quality specifications. This
included the sale of 0.304 million Tons Premium Motor
Gasoline (PMG) (2006:0.275 million Tons). During the
year, the Company has successfully started supply of a
new product Premium JBO to meet the requirements of
customers.
Ongoing and Future Projects
White oil pipeline project
As reported in previous years, the Company is making
all efforts to implement the White Oil Pipeline Project
(WOPP), between Machhike (near Lahore) and Taru
Jabba (near Peshawar) in partnership with Pakistan State
Oil Company Limited (PSOCL) for transportation of
petroleum products. The Company has updated the
project feasibility after taking into account the revised
growth volumes and updating the project capital cost. On
the basis of the revised project feasibility an Action Plan
is being evolved to ensure an early implementation of
this project of national vital interest.
150 MW Furnace Fuel Fired Power Plant
As the shareholders have been apprised in the quarterly
reports, significant milestones were achieved in respect
of the Power Project including tariff determination by
NEPRA, award of Engineering Procurement and
Construction (EPC) contract to Wartsila and successful
negotiations on Power Purchase Agreement (PPA) and 6.3 Production of 90 RON Unleaded Gasoline
the Implementation Agreement (IA) with NTDC and PPIB (Isomerization Unit) and
respectively. The Company is pleased to inform that both HSD HydroDesulfurization Unit
PPA and IA which had earlier been initialled have now
In line with its policy to target better and more environment-
been formally signed. Attock Gen Limited has also
successfully arranged the debt financing of Rs 8.580 friendly petroleum products, ARL is planning to upgrade
billion and the sponsors including your Company have its PMG and High Speed Diesel (HSD) quality through
already subscribed to their respective equity contributions. a Light Straight Run Naphtha (LSRN) Isomerization
The Company’s equity subscription todate amounts to Complex to produce 90 RON with low benzene and
Rs 540 million. It is expected that the power plant will aromatics and a Diesel HydroDesulfurization Unit to target
start commercial operations in the second quarter of sulfur reduction to meet Euro Standards.
financial year 2008-09. The documents for debt financing The Front End Engineering Design (FEED) for both these
have been negotiated / finalized and relevant Agreements Units is expected in January 2008, through Engineering /
have been signed on 4th September, 2007. Licensing agreements with M/s UOP, the leading
ANNUAL REPORT 2007 23
24 AT TO C K R E F I N E RY L I M I T E D
Directors' Report
Licensor/Technology providers in the world. ARL will then
be in a position to move to the next phase, i.e. Engineering,
Procurement and Construction. The decision for the
implementation of the Diesel HydroDesulfurization Unit
Project would however be subject to certain incentives
6.5
required from the Government in the pricing of this product
to cover the intensive capital cost required for its
completion. Several joint meetings of the refineries with
the Government have already taken place on this subject.
6.4 Pre-flash Unit for capacity enhancement
The Company had originally planned to proceed with the
EPC contract for Pre-flash, Isomerization and Diesel
HydroDesulfurization units after the Front-End Engineering
Design (FEED) package for the Isomerization unit was
received from the Licensor M/s UOP of USA in
January 2008. However, the Lummus Distillation unit
6.6
which has been operating for over 65 years has outlived
its life and has now started showing signs of various
operational problems. Since, it may not be advisable to
continue operating with this plant for further extended
time, it has become essential to expedite the installation
of a Pre-flash unit, for which the feed package has already
been received, that shall enhance the overall refining
capacity to 48,400 bpd. Accordingly, the Company has
planned to proceed with the preparation of ITB documents
for both the Pre-flash and Isomerization units alongwith
feed package for offsite facilities as well as soliciting
interest of international engineering contractors. The
projects relating to Isomerization units and Pre-flash
are estimated to cost over US $ 85 million and are
economically feasible to prevent loss of production once
the Lummus unit is closed down on account of operational
safety. Further, with the recent growth in the demand for
PMG and future requirement to upgrade the product from
present 87 RON to 90 RON, the installation of
Isomerization unit has also become necessary and
economically justified.
Distributed control system (DCS)
for Howe-Baker (HB) Units I & II and
new Heater for HB-II Unit
Work on the DCS project at Heavy crude unit and Reformer
plant has been completed and is nearing completion
at HB Units at a total cost of over Rs 75 million. Further,
a new Heater for HB-II Unit is being procured and installed
at a total cost of Rs 76 million. This would not only prevent
unplanned shut downs but would also make the unit to
safely operate at a higher throughput of 6,000 bpd as
against the nameplate capacity of 5,000 bpd.
Storage capacity
The Company, as part of its on-going activity, and in order
to have more operational flexibility as well as to replace
old tanks had undertaken construction of crude oil and
products storage tanks of various capacities. While the
construction of a 100,000 barrels crude oil storage tank
is in progress with a total capital outlay of Rs 69 million,
two Jute Batching Oil (JBO), one tank for HSD and one
tank for asphalt storage were completed during the year
at a total cost of Rs 55 million. Additionally, as part of
reorganizing the storage tanks for various products
including naphtha and meeting the requirements for
supply of fuel oil to the Power Plant , one new furnace
fuel storage tank of 5,000 M. tons capacity and one
naphtha storage tank of 4,000 M. tons capacity are being
constructed to be completed in 2008-09 at an estimated
cost of Rs 88 million.
ANNUAL REPORT 2007 25
26 AT TO C K R E F I N E RY L I M I T E D
Directors' Report
7. Business Process Re-engineering,
Research & Development
In accordance with its vision and mission statement, all
efforts are made to improve the process and administrative
efficiency throughout the Company. During the year,
your Company continued with its practice of business
process re-engineering and review to further improve its
product quality and simultaneously boost production
efficiencies. Major efforts in this direction are outlined
below:
• Reformer and HCU DCS system was upgraded. New
system has increased operational reliability and the
upgraded software has the facility to store up to 5 years
historical data. Further, the DCS can be remotely accessed
via Local Area Network (LAN) and the Operator security
has also been enhanced.
• At Effluent Treatment Plant (ETP), the SRC and DAF
units’ controls have been switched from manual operation
to PLC system enabling simultaneous monitoring of all
units from single location, remote access to data and
storage/retrieval of historical data.
• Successful PIGG decoking was carried out at crude
charge heaters tubes at HBU-I, HBU-II and HCU. Besides
prolonging the life of heaters, it has helped to improve
heaters’ performance and enabled the plants to run at
higher heater transfer temperatures, consequently
obtaining increased middle distillates.
• A new cooling tower (CT-3) has been successfully
commissioned. Now all plants have more reliable, compact
and efficient cooling towers in place of old water showering
system. Addition of this cooling tower has given the
operational flexibility as it will also be used as standby
cooling tower for the other cooling tower.
• Enterprise Resource Planning (ERP) system, an IT based
solution, is an effective tool for optimizing working of
today’s modern and complex organisation. After
successfully implementing the ERP financials the
Company is now moving towards the implementation of
MAXIMO for its Procurement, Material management and
Plant Maintenance module. MAXIMO is capable of
effective material control and overall control over quality
of maintenance system.
8. Corporate Social Responsibility
Social responsibility is one of the Core Values of the
Company. Your Company has committed itself to conduct
the business in an honest, ethical, transparent and legal
manner. Your Company wants to be seen as a role model
in the Corporate World and Community by its conduct
and business practices.
Your Company continued to carry out its responsibility
with respect to protection and promotion of interest of its
customers, employees, shareholders, communities and
the environment in all aspects of its operations. Various
initiatives taken by the Company in this respect are given
below.
8.1 Social and Environmental Welfare Projects:
i. Attock Sahara Foundation (ASF) is a non-profit NGO
sponsored by the Company involved in the areas of
women development, vocational/technical training, poverty
alleviation and basic health. The Company promotes all
activities organized by ASF for the purpose of raising
funds by providing required administrative support.
Recently ASF has been awarded a project (the only NGO
 ANNUAL REPORT 2007 27

ASF Vocational & Technical Training Centre

28 AT TO C K R E F I N E RY L I M I T E D
Directors' Report
selected from Punjab) by PAIMAN/USAID for creating
awareness about the health and care of women and
children.
ii. Attock Hospital (Private) Limited, which is a wholly owned
subsidiary of the Company continued to provide basic
and advanced healthcare facilities to the employees and
local community. AHL provided free or discounted services
to the needy persons and conducted Health awareness
programs.
iii. National Cleaner Production Centre (NCPC) is another
organization co-sponsored by the Company that continued
to render valuable services for environment protection.
During the year NCPC has performed several
Environmental Impact Assessments (EIA) and other
analytical services in relation to waste water and flue
gases to various companies. It also provided its services
for incineration of wastes and bio-remediation of oil spills
due to accidents during crude oil transportation.
iv. Morgah Biodiversity Park is a project sponsored by the
Company in collaboration with UNESCAP on Public
Private Partnership basis, for conservation of biodiversity
of the Potohar region while providing opportunities to the
local community to earn their living. Simultaneously, it is
a source of entertainment and education for the visiting
community.
8.2 Human Resource and Organisation Development
The Company’s corporate policy on human resources is
to attain the highest standards of professionalism
throughout the organization by recognizing and revealing
individual capabilities, productivity, commitment and
contribution. Various steps taken by the Company for
development of its human resource capital included:
i. Training and Development: In line with the Company’s
Core values of learning & innovation, every effort is made
to develop and train the employees in a systematic way;
based upon employees’ training needs, succession
planning, and the organizational requirement. As part of
a continuous process various in-house training courses
as well as participation in external courses both within
and outside the country were arranged for the company
employees. Internships, apprenticeship, training programs
and study projects are also provided to students and
fresh graduates for their practical training. Further, merit
scholarships are also awarded to employees’ children
from primary up to post graduation level to assist them
in getting education from top rated institutions including
GIK & LUMS.
ii. Succession and Career Planning: There is a consistent
endeavor by the management in pursuing different
programmes to ensure meaningful development and
career progression for all staff members that would
contribute towards enhanced motivation level of our staff
and will ensure continuous supply of talent to fill future
management gaps in our organization. Succession
ANNUAL REPORT 2007 29
30 AT TO C K R E F I N E RY L I M I T E D
Directors' Report
i.
Planning and Career Management Project started during
the year is one of major initiatives in this direction. This
enormous work has been divided in two phases. During
the year, Phase-I has been completed under which
succession plan for sixteen critical positions has been
developed.
iii. Climate Survey: Human Resources Department carried
out an Organizational Climate Survey. The objective of
this survey was to examine employee opinions about the
quality of their organization's work climate. The feedback
obtained from employees is being used to identify
opportunities for improvements and make the Company
an employer of choice.
iv. Awards and Recognition: In order to recognize the valuable
services rendered by the employees, the Company
distributes various awards that include Long Service
ii.
Award, Man of the Quarter Award, Safety Award and
House Keeping Award.
8.3 Health, Safety and Environment (HSE)
The Company remains committed towards achieving the
highest standards of HSE. To realize this mission a
customized plan was drawn by adopting and implementing
world class sustainable HSE good management practices
for the overall benefit of all stakeholders including the
surrounding community.
All efforts are being made to make all processes
environment friendly, safe and efficient. Some of the
initiatives taken during the year in this respect are
summarized below:
Solar Water and Space Heating System: The Company
had taken initiative in the field of solar thermal energy.
The measures taken thus far include use of solar energy
for water heating within ARL’s estate, development of a
solar space heating system and solar distilled water still.
National Institute of Silicon Technology has provided the
technical support for this work.
Zero Effluent Discharge: The objective of Zero Effluent
is to recycle and minimize the water requirement for
refinery and to conserve the environment and save
energy. The Company has successfully completed the
recycling of cooling towers blow down, drinking water
treatment plant wastewater, car wash wastewater and
kitchen wastewater.
iii. Oily Sludge Bioremediation: The Company has started
disposing its oily sludge through bioremediation thus
contributing towards the sustainability of clean
environment.
iv. Drinking Water Treatment: The Company has its own
water treatment facility through which drinking water is
supplied not only to the employees but also to surrounding
areas. Continuous awareness is also being created for
use of solar disinfected water. Reverse Osmosis plant is
also in commissioning phase, which will provide further
purified water.
v. Solid Waste Composting: Your Company has started an
Integrated Solid Waste Management system to control
generation, storage, collection, transport, processing and
disposal of solid wastes. Composting of solid waste
consisting of biodegradable organic materials is carried
out in an environmental friendly way to produce fertilizer
that can be used to support plant growth and as a soil
amendment. The fertilizer produced through composting
is being used in household lawns and at vegetable gardens
that supply vegetable to employees and refinery canteen.
vi. Hazardous Waste Incineration: Hazardous waste poses
potential threat to public health and environment. Your
Company has taken the lead to manage hazardous waste
by installing three stage state of the art incinerator which
is incinerating not only the Refinery facilities’ hazardous
waste but also providing services to other interested
industries and hospitals.
 ANNUAL REPORT 2007 31

Solar Water Disinfection Unit

Hazardous Waste Incinerator

Solar Clock in Morgah Biodiversity Park

32 AT TO C K R E F I N E RY L I M I T E D
Directors' Report
8.4 Other CSR Activities
The Company continued to provide potable water to the
surrounding villages of Morgah, Nai Abadi, Kotha Kalan,
Jhamra and welfare organizations like SOS Village, Deaf
& Dumb School, other schools and mosques in the vicinity
thus providing lifeline to the surrounding population of
more than 50,000 people.
The company continued its quest for environment
endeavors using recycled water in ARL orchards through
drip irrigation system and growing vegetables through
organic farming. ARL has also stopped the use of
polythene bags and introduced paper bags at Fair Price
Shop at Morgah.
The Company firmly believes in the promotion of sports
for healthy development of community. In this connection
a number of sports events like Annual Swimming Gala
and Annual Sports Competition were organized throughout
the year in which Company’s employees, their children
and people of surrounding areas participated. Your
Company takes pride that the sports facilities and
conducive environment provided by it has contributed in
producing national heroes like Naseer Bunda and Shoaib
Akhtar.
9. Contribution to the National Economy
Attock Refinery is the only refinery located in the Northern
Region of Pakistan and thus holding a high strategic
position. It continues to make valuable contributions to
the National Economy some of which are enumerated
below:
• Providing an outlet to country’s indigenous production of
crude oil and more particularly from the Northern Region
• Meeting the petroleum products demand of both the civil
and defense market
• Foreign exchange savings by providing import substitution
of petroleum products
• Generation of Government duties and taxes in the form
of excise duty, petroleum development levy, sales tax
and customs duties on crude oil and sale of petroleum
products both local and exports
• Deployment of a large transportation fleet for crude oil
and products movement
• Employment and work opportunities
The Company’s contribution to the national exchequer in
the form of taxes and duties amounted to over
Rs 14,361 million. Further, foreign exchange savings of
 ANNUAL REPORT 2007 33

Potable Water Supply to Surrounding Villages

34 AT TO C K R E F I N E RY L I M I T E D
Directors' Report
US $ 52.44 million were achieved through import
substitution and exports.
10. Credit Rating
The Company successfully maintained its long-term and
the short-term ratings of ‘AA-’ (Double A Minus) and ‘A1+’
(A One Plus), respectively. The credit rating was conducted
by The Pakistan Credit Rating Agency (PACRA).
11. Corporate Governance
The Board of Directors and the Company remain
committed to the principles of good corporate management
practices with emphasis on transparency and disclosures.
The Board and management are cognizant of their
responsibilities and monitor the refinery operations and
p e r f o r m a n c e t o e n h a n c e t h e a c c u r a c y,
comprehensiveness and transparency of financial and
non-financial information.
The Company is fully compliant with the Code of Corporate
Governance and as per the requirements of the listing
regulations, following specific statements are being given
hereunder:
• Proper books of accounts of the Company have been
maintained.
• The financial statements prepared by the management
present fairly its state of affairs, the results of its operations,
cash flows and changes in equity.
• Appropriate accounting policies have been consistently
applied in preparation of financial statements which
conform to the International Accounting Standards as
applicable in Pakistan. The accounting estimates, wherever
required, are based on reasonable and prudent judgment.
• The system of internal controls are sound in design and
are effectively implemented by the management and
monitored by the internal and external auditors as well
as the Board of Directors and the Audit Committee. The
Board reviews the effectiveness of established internal
controls through the Audit Committee and suggests,
wherever required, further improvement in the internal
control systems.
• There are no significant doubts upon the Company’s
ability to continue as a going concern.
• There is no reported instance of any material departure
from the best practices of Corporate Governance.
• Significant deviations from last years operating results,
future plans and changes, if any, in pricing formula have
been separately disclosed, as appropriate, in the
Chairman’s Review and this Report of the Directors.
• Sales tax amounting to Rs 8.158 million for the month of
June 2007 was outstanding as at June 30, 2007 which
has been subsequently paid.
• The value of investment of employees provident and
pension funds, as at 31st December, 2006, based on
their latest audited accounts is given below:
Rs in million
Management Staff
- Pension Fund 150.207
- Provident Fund 143.137
Non-Management Staff
- Provident Fund 112.838
An unfunded gratuity provision of Rs 85.8 million also
exists in the accounts of the Company under deferred
liabilities
 ANNUAL REPORT 2007 35

• Key operating and financial data of last 6 years is annexed. Debt Equity Position in share capital on capitalisation of profits for issue of
(Rupees in Million)
bonus shares during the year.
A separate statement of compliance signed by the Chief
Executive Officer is separately included in this Annual 16. Holding Company
Report.
The Attock Oil Company Limited, incorporated in England,
12. Directors and Board Meetings held during is the Holding Company of Attock Refinery Limited.
the Year 17. Subsidiary
The three years term of office of seven (7) directors
The Company has a wholly owned subsidiary, Attock
shall expire on July 16, 2009. The three years term of
Hospital (Pvt) Limited (AHL).The accounts of AHL have
Chief Executive Officer, Mr. M. Adil Khattak expires on
been consolidated with the accounts of ARL and are
July 5, 2009.
annexed to these accounts.
Five meetings of Board of Directors were held between 13. Auditors
July 1, 2006 and June 30, 2007 and the attendance of
18. Investment in Associated Undertakings
The Auditors Messrs A.F. Ferguson & Co. Chartered
each director is given below: Accountants retire and offer themselves for reappointment. In addition to the investments made in prior years, the
The Audit Committee recommends the reappointment of Company enhanced its investment in Attock Petroleum
Total No. of
Messrs A.F. Ferguson & Co. Chartered Accountants as Limited from 20.91% as at June 30, 2006 to 21.70% as
Name of Directors meetings(*)
auditors for the financial year ending June 30, 2008. at June 30, 2007. Further, the Company acquired 30%
shares of Attock Gen Limited by making an investment
Mr. Tariq Iqbal Khan, Chairman 2* 14. Shareholding of Rs 540 million. The details of these investments are
Dr. Ghaith R. Pharaon *** 5 The total number of Company’s shareholders as at contained in Note 13 of the attached accounts for the
Mr. Shuaib Anwar Malik 5 June 30, 2007 was 4,098 as against 3,044 on year ended June 30, 2007.
June 30, 2006. The pattern of shareholding as at The results of these associated undertakings in so far as
Mr. Laith Ghaith Pharaon ** 4*
June 30, 2007 alongwith necessary disclosure as required they relate to the Company’s share in these entities have
Mr. Wael Ghaith Pharaon ** 5 under the Code of Corporate Governance is annexed. been incorporated in the enclosed Consolidated financial
Mr. Bashir Ahmad 4* No trading in the shares of the Company has been statements.
Mr. Abdus Sattar 5 reportedly carried out during the year by the Directors, On behalf of the Board
Chief Executive Officer, Chief Financial Officer, Company
Mr. M. Adil Khattak, CEO 5 Secretary and their spouses and minor children.
* Leave of absence was granted to the Chairman / Directors
15. Earning Per Share
who could not attend the meeting. Rawalpindi Tariq Iqbal Khan
Based on the net profit for the current year the earning September 10, 2007 Chairman
** Overseas directors attended the meetings either in person
per share was Rs 13.17 (2006 : Rs 5.34). The last year
or through alternate directors.
earning diluted from Rs 6.68 consequent to the increase
36 AT TO C K R E F I N E RY L I M I T E D

Pattern of Shareholding
as at June 30, 2007 Form 34 (Section 236)
No. of Shareholders Total
Shareholding
CDC Others Total Shares Held
659 100 759 From 1 to 100 38,850
1,103 68 1,171 From 101 to 500 386,191
721 149 870 From 501 to 1,000 717,489
911 25 936 From 1,001 to 5,000 2,215,697
146 4 150 From 5,001 to 10,000 1,143,326
63 Nil 63 From 10,001 to 15,000 793,016
25 1 26 From 15,001 to 20,000 479,249
18 Nil 18 From 20,001 to 25,000 429,318
10 Nil 10 From 25,001 to 30,000 288,948
18 Nil 18 From 30,001 to 35,000 583,115
7 Nil 7 From 35,001 to 40,000 267,400
8 Nil 8 From 40,001 to 45,000 346,510
11 Nil 11 From 45,001 to 50,000 533,437
3 Nil 3 From 50,001 to 55,000 160,500
4 Nil 4 From 55,001 to 60,000 233,700
2 Nil 2 From 60,001 to 65,000 123,750
3 Nil 3 From 65,001 to 70,000 202,325
2 Nil 2 From 70,001 to 75,000 145,750
1 Nil 1 From 75,001 to 80,000 75,032
1 Nil 1 From 80,001 to 85,000 81,250
1 Nil 1 From 85,001 to 90,000 85,200
2 Nil 2 From 95,001 to 100,000 200,000
2 Nil 2 From 105,001 to 110,000 220,000
2 Nil 2 From 110,001 to 115,000 223,525
1 Nil 1 From 115,001 to 120,000 119,000
2 Nil 2 From 125,001 to 130,000 256,650
2 Nil 2 From 140,001 to 145,000 287,600
1 Nil 1 From 145,001 to 150,000 149,175
1 Nil 1 From 165,001 to 170,000 170,000
1 Nil 1 From 175,001 to 180,000 180,000
1 Nil 1 From 180,001 to 185,000 184,700
1 Nil 1 From 185,001 to 190,000 188,020
1 Nil 1 From 200,001 to 205,000 203,210
1 Nil 1 From 215,001 to 220,000 216,037
1 Nil 1 From 220,001 to 225,000 220,100
 ANNUAL REPORT 2007 37

Form 34 (Section 236)

No. of Shareholders Total
Shareholding
CDC Others Total Shares Held
1 Nil 1 From 240,001 to 245,000 243,500
1 Nil 1 From 245,001 to 250,000 249,825
1 Nil 1 From 260,001 to 265,000 263,200
1 Nil 1 From 355,001 to 360,000 358,100
1 Nil 1 From 380,001 to 385,000 383,125
1 Nil 1 From 395,001 to 400,000 400,000
1 Nil 1 From 690,001 to 695,000 693,807
1 Nil 1 From 980,001 to 985,000 983,000
1 Nil 1 From 1,035,001 to 1,040,000 1,036,012
1 Nil 1 From 1,440,001 to 1,445,000 1,441,600
1 Nil 1 From 1,445,001 to 1,450,000 1,448,920
1 Nil 1 From 1,755,001 to 1,760,000 1,759,788
1 Nil 1 From 2,755,001 to 2,760,000 2,758,756
1 Nil 1 From 2,840,001 to 2,845,000 2,841,747
– 1 1 From 29,000,001 to 30,000,000 29,852,550
3,750 348 4,098 Total 56,862,000
Numbers Percentage
Categories of Shareholders
CDC Others Total Shares Held (%)
Joint Stock Companies:
The Attock Oil Company Limited (Holding Company) 1 1 2 31,274,150 55.00
Others 83 2 85 2,875,688 5.06
Financial Institutions:
National Investment Trust (NIT) 1 1 2 5,600,603 9.85
PICIC 1 – 1 1,036,012 1.82
Others 44 – 44 2,112,720 3.72
Insurance Companies 6 – 6 552,250 0.97
Investment Companies 9 – 9 541,174 0.95
Leasing Companies 2 – 2 82,250 0.14
Modarabas (including Management Companies) 6 – 6 35,937 0.06
Mutual Fund 9 – 9 787,630 1.39
Charitable Trusts 1 – 1 20,000 0.04
Individuals:
Dr. Ghaith R. Pharaon (Director) – 1 1 16 0.00
Mr. Shuaib Anwar Malik (Director) – 1 1 1 0.00
Others 3,587 342 3,929 11,943,569 21.00
Total 3,750 348 4,098 56,862,000 100.00
38 AT TO C K R E F I N E RY L I M I T E D

Financial Statistical Summary

June 30 (Rupees in Million)
2007 2006 2005 2004 2003 2002
Trading Results
Sales (Net of Govt. Levies) 59,108.53 55,828.14 41,606.17 25,412.73 23,381.00 20,684.60
Reimbursement from / (to) Government 355.39 234.24 133.46 – 8.90 –
Turnover 59,463.92 56,062.37 41,739.63 25,412.73 23,389.90 20,684.60
Cost of Sales 58,609.95 55,490.68 39,190.43 24,481.13 22,785.90 19,282.20
Gross profit 853.97 571.69 2,549.21 931.60 604.00 1,402.40
Administration and distribution cost 191.82 197.08 328.83 203.53 133.40 124.90
Other income 635.17 627.08 218.09 140.62 207.90 165.50
Non–Refinery income 244.65 223.19 73.50 8.47 10.80 14.10
Operating profit 1,541.96 1,224.89 2,511.96 877.16 689.30 1,457.10
Financial and other charges 336.43 566.34 248.92 93.04 133.40 330.30
Profit before tax 1,205.53 658.55 2,263.04 784.12 555.90 1,126.80
Taxation 456.55 354.84 1,040.44 392.17 276.20 385.70
Profit after tax 748.98 303.71 1,222.60 391.96 279.70 741.10
Dividend – – (116.64) (145.80) (145.80) (131.20)
Bonus shares (113.72) (104.98) (58.32) – – –
Transfer to reserves (358.53) – (1,003.30) (237.68) (123.20) (610.40)

Balance Sheet Summary

Paid–up capital 568.62 454.90 349.92 291.60 291.60 291.60
Reserves 2,828.89 2,392.36 2,376.05 1,190.33 952.70 829.50
Unappropriated Profit 381.15 182.42 138.08 21.44 12.90 2.20
Shareholder' funds 3,778.66 3,029.68 2,864.06 1,503.38 1,257.20 1,123.30
Financing facilities
(Long term including current portion) – 3,410.25 – 30.00 90.00 960.70
Property, plant & equipment
(less depreciation) 2,968.13 3,243.95 3,354.72 3,524.64 3,747.80 3,936.40
Net current assets (6,610.38) (2,440.47) (1,124.17) 89.18 (225.70) 100.00
 ANNUAL REPORT 2007 39

June 30 (Rupees in Million)

2007 2006 2005 2004 2003 2002
Key Financial Ratios
Gross profit / turnover ratio 1.4 1.0 6.1 3.7 2.6 6.8
Profit before tax / turnover ratio 2.0 1.2 5.4 3.1 2.4 5.4
Return on capital employed (%) 23.2 10.3 56.0 28.4 23.5 90.6
Interest coverage (times) 6 2 194 68 9 6
Inventory turnover (times) 20.90 22.61 20.42 16.73 20.65 18.13
Debtors turnover (times) 13.41 15.35 12.84 11.87 17.82 18.91
Fixed assets turnover (times) 43.43 38.24 25.85 14.29 11.88 9.18
Debt : Equity ratio 00:100 48:52 1:99 2:98 9:91 24:76
Liquidity ratios
Current 0.75 0.87 0.92 1.01 0.96 1.02
Quick asset 0.58 0.66 0.72 0.76 0.70 0.77

Shares and Earnings

Break–up value (Rs per share) without surplus
on revaluation of property, plant & equipment 66.45 66.60 81.85 51.56 43.11 38.52
Break–up value (Rs per share) with surplus
on revaluation of property, plant & equipment 100.28 108.88 136.81 117.51 109.07 104.48
Price earning ratio (times) * 12.31 16.48 4.84 6.81 9.97 2.33
Earning (Rs per share) 13.17 6.68 34.94 13.44 9.59 25.41
(on shares outstanding at 30 June)
Dividend 0% 0% 40% 50% 50% 45%
Bonus Shares Issue ** 30% 30% 20% – – –
Highest market value per share during the year 123.80 238.00 215.00 149.00 113.50 69.00
Lowest market value per share during the year 72.40 84.05 72.25 50.50 58.00 39.00
Market value per share 162.10 110.00 168.95 91.50 95.60 59.10
Cash dividend per share – – 3.33 5.00 5.00 4.50
Dividend yield ratio 4.01% 2.27% 2.96% 5.46% 5.23% 7.61%
Dividend payout ratio 15.18% 34.57% 14.31% 37.20% 52.13% 17.70%
* The price earning ratio is without the effect of Bonus issue.
** In addition the Board has proposed a cash dividend @ 40% and bonus issue @ 25% in their meeting held on September 10, 2007.
40 AT TO C K R E F I N E RY L I M I T E D

Financial Highlights - ARL

Profitability and Dividend Analysis Turnover Shareholders Funds

(Rupees in Million) (Rupees in Million) (Rupees in Million)
3,000

2,500

2,000

1,500

1,000

500

0
2000 2001 2002 2003 2004 2005 2006 2007
Gross profit Operating profit Profit after tax Dividend including bonus shares

Break-up of Refining Cost Break-up Value of Shares Fixed Assets

(US $ Per Barrel) (Rupees Per Share) (Rupees in Million)
ANNUAL REPORT 2007 41
42 AT TO C K R E F I N E RY L I M I T E D

Financial Highlights - AHL

Equities & Liabilities Fixed and Current Assets Total Revenue including other Income
(Rupees) (Rupees) (Rupees in Million)

Total Expenses including Taxation Composition of Revenue from Private Patients

(Rupees in Million) (Rupees)
ANNUAL REPORT 2007 43
44 AT TO C K R E F I N E RY L I M I T E D

Review Report to the Members

A member firm of
on Statement of Compliance
with Best Practices of Code of
Corporate Governance
We have reviewed the Statement of Compliance with the best Based on our review, nothing has come to our attention which
practices contained in the Code of Corporate Governance (the causes us to believe that the Statement of Compliance does
Code) as applicable to Attock Refinery Limited (the Company) not appropriately reflect the Company’s compliance, in all material
for the year ended June 30, 2007 prepared by the Board of respects, with the best practices contained in the Code of
Directors of Attock Refinery Limited, to comply with the Listing Corporate Governance as applicable to the Company for the
Regulations of the Karachi, Lahore and Islamabad Stock year ended June 30, 2007.
Exchanges where the Company is listed.
The responsibility for compliance with the Code of Corporate
Governance is that of the Board of Directors of the Company.
Our responsibility is to review, to the extent where such Chartered Accountants
Islamabad: September 10, 2007
compliance can be objectively verified, whether the Statement
of Compliance reflects the status of the Company’s compliance
with the provisions of the Code of Corporate Governance and
report if it does not. A review is limited primarily to inquiries of
the Company personnel and review of various documents
prepared by the Company to comply with the Code.
As part of our audit of 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 have not carried out any special review of
the internal control system to enable us to express an opinion
as to whether the Board’s statement on internal control covers
all controls and the effectiveness of such internal controls.

Statement of Compliance
with the Code of This statement is being presented to comply with the Code of
Corporate Governance Corporate Governance contained in listing regulations of Karachi,
Lahore and Islamabad Stock Exchanges for the purpose of
Name of Company – ATTOCK REFINERY LIMITED establishing a framework of good governance, whereby a listed
Year Ended – JUNE 30, 2007 company is managed in compliance with the best practices of
corporate governance.
The Company has applied the principles contained in the Code
in the following manner:
1. The Company encourages representation of independent
non-executive directors and directors representing minority
interests on its Board of Directors. At present the Board
comprises of seven non-executive directors of whom
three are independent directors including one director
representing institutional equity interest and minority
shareholders.
2. None of the directors is serving as a director in more than
ten listed companies, including this Company, unless
specifically exempt.
3. All the resident directors of the Company are registered
as taxpayers and none of them has defaulted in payment
of any loan to a banking company, a DFI or an NBFI or,
being a member of a stock exchange, has been declared
as a defaulter by that stock exchange.
4. No casual vacancy occured on the Board during the year.
5. The Company has prepared a ’Statement of Ethics and
Business Practices’, which has been signed by all the
directors and employees of the Company.
6. The Board has developed a vision/mission statement,
overall corporate strategy and significant policies of the
Company. A complete record of particulars of significant
ANNUAL REPORT 2007 45
policies along with the dates on which they were approved
or amended has been maintained.
7. All the powers of the Board have been duly exercised
and decisions on material transactions, including
appointment and determination of remuneration and terms
and conditions of employment of the CEO and other
executive directors are taken by the Board.
8. The meetings of the Board were presided over by the
Chairman and the Board met at least once in every
quarter. Written notices of the Board meetings, along with
agenda and working papers, were circulated at least
seven days before the meetings. The minutes of the
meetings were appropriately recorded and circulated.
9. The directors were apprised of their duties and
responsibilities through various in-house and external
orientation courses.
10. The directors’ report for this year has been prepared in
compliance with the requirements of the Code and fully
describes the salient matters required to be disclosed.
11. The financial statements of the Company were duly
endorsed by CEO and CFO before approval of the Board.
12. The directors, CEO and executives do not hold any
interest in the shares of the Company other than that
disclosed in the pattern of shareholding.
13. The Company has complied with all the corporate and
financial reporting requirements of the Code.
14. The Board has formed an audit committee. It comprises
3 members, all non-executive directors including the
Chairman of the committee who is an independent
non-executive director.
46 AT TO C K R E F I N E RY L I M I T E D

15. The meetings of the audit committee were held at least 18. The statutory auditors or the persons associated with
once every quarter prior to approval of interim and final them have not been appointed to provide other services
results of the Company and as required by the Code. except in accordance with the listing regulations and the
The terms of reference of the committee have been auditors have confirmed that they have observed IFAC
formed and advised to the committee for compliance. guidelines in this regard.
16. The Board has set-up an effective internal audit function 19. We confirm that all other material principles contained in
who are considered suitably qualified and experienced the Code have been duly complied with.
for the purpose and are conversant with the policies and
procedures of the Company and they are involved in the
internal audit function on a full time basis.
17. The statutory auditors of the Company have confirmed M. Adil Khattak
September 05, 2007 Chief Executive Officer
that they have been given a satisfactory rating under the
quality control review programme of the Institute of
Chartered Accountants of Pakistan, that they or any of
the partners of the firm, their spouses and minor children
do not hold shares of the Company and that the firm and
all its partners are in compliance with International
Federation of Accountants (IFAC) guidelines on code of
ethics as adopted by Institute of Chartered Accountants
of Pakistan.
 ANNUAL REPORT 2007 47

Balance Sheet Composition as at June 30, 2007

Equity and Liabilities Assets

3%
2%
16%

0%

79%

Issued, subscribed and paid-up capital Property, Plant & Equipment

Reserves and surplus (before dividend) Stores, spares and loose tools
Long term loans and Deferred Liabilities Stock-in-trade
Trade & other payables Trade debts
Provision for taxation Long Term Investments
Deferred taxation & other receivables
Cash and bank balances
48 AT TO C K R E F I N E RY L I M I T E D

Contributions & Value Additions

Contribution to National Exchequer Value additions during the year

Rs in million Rs in million

• Government levies on petroleum products 14,107 • Employees as remuneration 362

• Income tax paid 231 • Government as taxes 14,361
• Import / export duties 23 • Shareholders as dividend 114
Total 14,361 • Retained within the business 359

• Foreign exchange savings US$ 52.44 million

 ANNUAL REPORT 2007 49

ANNUAL AUDITED
FINANCIAL STATEMENTS 2007
ATTOCK REFINERY LIMITED
50 AT T O C K R E F I N E RY L I M I T E D

Auditors' Report to the Members
We have audited the annexed balance sheet of Attock
Refinery Limited as at June 30, 2007 and the related profit
and loss account, cash flow statement and statement of
changes in equity together with the notes forming part
thereof, for the year then ended and we state that we have
obtained all the information and explanations which, to
the best of our knowledge and belief, were necessary for
the purposes of our audit.
It is the responsibility of the Company's management to establish
and maintain a system of internal control, and prepare and
present the above said statements in conformity with the
approved accounting standards and the requirements of the
Companies Ordinance, 1984. Our responsibility is to express
an opinion on these statements based on our audit.
We conduct our audit in accordance with the auditing standards
as applicable in Pakistan. These standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the above said statements are free of any
material misstatement. An audit includes examining on a test
basis, evidence supporting the amounts and disclosures in the
above said statements. An audit also includes assessing the
accounting policies and significant estimates made by
management, as well as, evaluating the overall presentation
of the above said statements. We believe that our audit provides
a reasonable basis for our opinion and, after due verification,
we report that:
(a) in our opinion, proper books of account have been kept
by the Company as required by the Companies
Ordinance, 1984;
ANNUAL REPORT 2007 51
A member firm of
(b) in our opinion (d) in our opinion no Zakat was deductible at source
under the Zakat and Ushr Ordinance, 1980.
(i) the balance sheet and profit and loss account
together with the notes thereon have been
drawn up in conformity with the Companies
Ordinance, 1984, and are in agreement with
the books of account and are further in
accordance with accounting policies
Chartered Accountants
consistently applied;
Islamabad: September 10, 2007
(ii) the expenditure incurred during the year was
for the purpose of the Company's business;
and
(iii) the business conducted, investments made
and the expenditure incurred during the year
were in accordance with the objects of the
Company;
(c) in our opinion and to the best of our information and
according to the explanations given to us, the balance
sheet, profit and loss account, cash flow statement
and statement of changes in equity together with the
notes forming part thereof conform with approved
accounting standards as applicable in Pakistan, and,
give the information required by the Companies
Ordinance, 1984, in the manner so required and
respectively give a true and fair view of the state of
the Company's affairs as at June 30, 2007 and of the
profit, its cash flows and changes in equity for the
year then ended; and
52 AT T O C K R E F I N E RY L I M I T E D

Balance Sheet 2007 2006

as at June 30, 2007 Note Rupees Rupees

Share capital and reserves

Share capital
Authorised 4 1,000,000,000 1,000,000,000
Issued, subscribed and paid-up 4 568,620,000 454,896,000
Reserves and surplus 5 3,210,044,648 2,574,783,836
3,778,664,648 3,029,679,836

Surplus on revaluation of freehold land 6 1,923,338,591 1,923,338,591

5,702,003,239 4,953,018,427

Long term and deferred liabilities

Long term loans 7 – 3,410,250,000

Provision for staff gratuity 85,800,000 75,800,000
85,800,000 3,486,050,000

Current liabilities and provisions

Current maturity of long term loans 7 – 1,136,750,000

Short term finance 8 – –
Trade and other payables 9 25,393,520,229 18,772,869,711
Provision for taxation 1,006,629,216 747,596,998
26,400,149,445 20,657,216,709

Contingencies and commitments 10

32,187,952,684 29,096,285,136
 ANNUAL REPORT 2007 53

Balance Sheet 2007 2006

as at June 30, 2007 Note Rupees Rupees

Property, plant and equipment

Operating assets 11 2,730,262,269 2,945,709,003

Capital work-in-progress 12 217,682,385 220,546,344
Stores and spares held for capital expenditure 20,190,054 77,695,655
2,968,134,708 3,243,951,002

Long term investments 13 9,261,339,056 8,622,913,930

Long term loans and deposits 14 10,954,309 11,613,726

Deferred taxation 15 157,755,940 137,805,949

Current assets

Stores, spares and loose tools 16 630,835,993 585,992,163

Stock-in-trade 17 3,852,645,836 3,523,807,730
Trade debts 18 6,234,917,655 4,675,133,457
Loans, advances, deposits, prepayments and other receivables 19 191,255,471 263,473,099
Cash and bank balances 20 8,880,113,716 8,031,594,080
19,789,768,671 17,080,000,529

32,187,952,684 29,096,285,136

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

Chief Executive Director

54 AT T O C K R E F I N E RY L I M I T E D

Profit & Loss Account 2007 2006

for the year ended June 30, 2007 Note Rupees Rupees

Sales 21 59,154,779,218 55,936,831,735

Less: Discount 46,247,604 108,693,725
59,108,531,614 55,828,138,010

Reimbursement due from the Government

under import parity pricing formula 22 355,392,880 234,236,228
59,463,924,494 56,062,374,238
Less: Cost of sales 23 58,609,954,476 55,490,680,059
Gross profit 853,970,018 571,694,179

Less: Administration expenses 24 175,107,589 183,298,609

Distribution cost 25 16,716,333 13,779,850
Finance cost 26 234,277,979 498,424,775
Other charges 27 102,150,812 67,912,109
528,252,713 763,415,343
325,717,305 (191,721,164)
Other income 29 635,166,064 627,082,965
Profit before taxation from refinery operations 960,883,369 435,361,801
Provision for taxation 30 456,550,009 354,844,084
Profit after taxation from refinery operations 504,333,360 80,517,717
Income from non-refinery operations less applicable
charges and taxation 31 244,651,452 223,188,311
Profit for the year 748,984,812 303,706,028

Earnings per share 35.1 13.17 6.68

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

Chief Executive Director

 ANNUAL REPORT 2007 55

Cash Flow Statement 2007 2006

for the year ended June 30, 2007 Rupees Rupees

Cash flows from operating activities

Cash receipts from – customers 72,705,853,274 69,286,514,375
– others 98,995,648 131,684,336
72,804,848,922 69,418,198,711
Cash paid for operating costs (52,802,255,187) (52,412,273,161)
Cash paid to Government for duties, taxes and other levies (14,106,632,140) (12,089,104,107)
Income tax paid (231,352,655) (824,721,231)
Net cash flows from operating activities 5,664,608,940 4,092,100,212

Cash flows from investing activities

Additions to property, plant and equipment (81,160,249) (230,284,848)
Proceeds from sale of property, plant and equipment 954,362 2,309,505
Long term investments (638,425,126) (6,213,929,559)
Long term loans and deposits 659,417 426,715
Income on bank deposits received 529,356,513 501,987,969
Dividends received 277,697,450 253,335,200
Net cash flows from investing activities 89,082,367 (5,686,155,018)

Cash flows from financing activities

Long term loans (4,547,000,000) 4,547,000,000
Repayment of principal portion of finance lease – (30,000,000)
Financial charges paid (358,411,079) (374,917,154)
Dividends paid (30,173) (8,606)
Net cash flows from financing activities (4,905,441,252) 4,142,074,240

Effect of exchange rate changes 269,581 2,992,990

Increase in cash and cash equivalents 848,519,636 2,551,012,424
Cash and cash equivalents at the beginning of the year 8,031,594,080 5,480,581,656
Cash and cash equivalents at the end of the year 8,880,113,716 8,031,594,080
The annexed notes form an integral part of these financial statements.

Chief Executive Director

56 AT T O C K R E F I N E RY L I M I T E D

Special reserve for Surplus on

Statement of Changes in Equity Share
capital
Capital
reserve
expansion /
modernisation
General
reserve
Un-appropriated
Profit
revaluation of
freehold land Total
for the year ended June 30, 2007 Rupees Rupees Rupees Rupees Rupees Rupees Rupees

Balance at June 30, 2005 349,920,000 5,948,506 2,187,628,247 55,000 182,422,055 1,923,338,591 4,649,312,399

Bonus shares @ 30% related to

the year ended June 30, 2005 104,976,000 – – – (104,976,000) – –

Profit for the year – – – – 303,706,028 – 303,706,028

Transfer to reserve for

expansion / modernisation – – – – – – –

Balance at June 30, 2006 454,896,000 5,948,506 2,187,628,247 55,000 381,152,083 1,923,338,591 4,953,018,427

Bonus shares @ 25% related to

the year ended June 30, 2006 113,724,000 – – – (113,724,000) – –

Profit for the year – – – – 748,984,812 – 748,984,812

Transfer to reserve for

expansion / modernisation – – 358,533,360 – (358,533,360) – –

Balance at June 30, 2007 568,620,000 5,948,506 2,546,161,607 55,000 657,879,535 1,923,338,591 5,702,003,239

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

Chief Executive Director

 ANNUAL REPORT 2007 57

Notes to the Financial Statements

for the year ended June 30, 2007

1. Legal status and operations The Company was incorporated in Pakistan on November 8, 1978 as a private limited company and was converted into a public limited company on June
26, 1979. The registered office of the Company is situated at Morgah, Rawalpindi. Its shares are quoted on the Karachi, Lahore and Islamabad Stock
Exchanges in Pakistan. It is principally engaged in the refining of crude oil.

The Company is a subsidiary of The Attock Oil Company Limited, UK and its ultimate parent is Bay View International Group S.A.

2. Summary of significant accounting 2.1 Basis of presentation of financial statements

policies
These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements
of the Companies Ordinance, 1984 (the Ordinance). Approved accounting standards comprise of such International Accounting Standards as notified
under the provisions of the Ordinance. Wherever, the requirements of the Ordinance or directives issued by the Securities and Exchange Commission
of Pakistan differ with the requirements of these standards, the requirements of the Ordinance or the requirements of the said directives take
precedence.

Amendments to the published standards and new interpretations effective for accounting periods beginning on or after January 1, 2006:

IAS 19 (Amendment) – Employee Benefits is mandatory for the Company’s accounting periods beginning on or after January 1, 2006. This
amendment introduces the option of an alternate recognition approach for actuarial gains and losses and requires new disclosures. As the
Company does not intend to change its accounting policy adopted for the recognition of actuarial gains and losses, the adoption of this amendment
only impacts the format and extent of disclosures as given in note 28 to these financial statements.

Standards, amendments and interpretations effective for accounting periods beginning on or after January 1, 2006 but not relevant:

The other new standards, amendments and interpretations that are mandatory for accounting periods beginning on or after January 1, 2006
are not considered to be relevant or do not have any significant effect on the Company’s operations.

Standards or interpretations not yet effective but relevant:

The following new accounting standards and amendments to existing accounting standards have been published and are not effective for the
purpose of these financial statements.

i) IAS 1 Presentation of Financial Statements – Capital Disclosures

ii) IFRS 7 – Financial Instruments: Disclosures

iii) IAS 39 and IFRS 4 (Amendment), Financial Guarantee Contracts

Adoption of the above accounting standards is not considered to have any significant effect on the Company's financial statements.

2.2 Basis of measurement

These financial statements have been prepared under the historical cost convention modified by revaluation of free hold land referred to in note 2.5
and certain other modifications as required by International Accounting Standards referred to in the accounting policies given below.
58 AT T O C K R E F I N E RY L I M I T E D

Notes to the Financial Statements

for the year ended June 30, 2007

2.3 Dividend appropriation

Dividend is recognised as a liability in the financial statements in the period in which it is declared.

2.4 Taxation

Provision for current taxation is based on taxable income at the current rates of taxation or half percent of turnover, whichever is higher. Deferred
income tax is accounted for using the balance sheet liability method in respect of all temporary differences arising between the carrying amount of
assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities
are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that future taxable profits
will be available against which the deductible temporary differences can be utilised.

Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse based on the tax rates that have been
enacted. Deferred tax is charged or credited to income except in the case of items credited or charged to equity in which case it is included in equity.

2.5 Property, plant and equipment

a) Cost

Operating fixed assets except freehold land are stated at cost less accumulated depreciation. Freehold land is stated at revalued amount.
Capital work-in-progress and stores held for capital expenditure are stated at cost. Cost in relation to certain plant and machinery items includes
borrowing cost related to the financing of major projects during construction phase.

b) Depreciation

Depreciation is charged to income on straight line method to write off the cost of an asset over its estimated useful life at the rates specified in
note 11. The carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate that carrying
value may not be recoverable. If any such indication exists and where the carrying value exceeds the estimated recoverable amount, the assets
are written down to recoverable amount.

c) Repairs and maintenance

Maintenance and normal repairs, including minor alterations, are charged to income as and when incurred. Renewals and improvements are
capitalised and the assets so replaced, if any, are retired.

d) Gains and losses on deletion

Gains and losses on deletion of assets are included in income currently.

2.6 Investments

a) Investments in subsidiary and associated companies

These investments are initially valued at cost. At subsequent reporting dates, the Company reviews the carrying amount of the investment to
assess whether there is any indication that such investments have suffered an impairment loss. If any such indication exists, the recoverable
 ANNUAL REPORT 2007 59

Notes to the Financial Statements

for the year ended June 30, 2007

amount is estimated in order to determine the extent of the impairment loss, if any. Such impairment losses or reversal of impairment losses
are recognised in the profit and loss account. The profits and losses of subsidiary and associated companies are carried in the financial statements
of the subsidiary and associated company and are not dealt with for the purpose of the financial statements of the Company except to the extent
of dividend declared by the subsidiary and associated companies.

b) Available for sale investments

Investment securities held by the Company which may be sold in response to needs for liquidity or changes in interest rates, exchange rates
or equity prices are classified as available for sale. These investments are initially recognised at cost and subsequently re-measured at fair
value.

Unrealised gains and losses arising from changes in the fair value in respect of exchange differences of available for sale investments are
treated as referred to in note 2.9.

2.7 Stores, spares and loose tools

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

2.8 Stock-in-trade

Stock-in-trade is valued at the lower of cost and net realisable value. Crude oil in transit is valued at cost comprising invoice value. Cost in relation
to crude oil is determined on the basis of annual average cost of purchases during the year on the principles of import parity and in relation to
semi-finished and finished products it represents the cost of crude oil and refining charges consisting of direct expenses and appropriate production
overheads. Direct expenses are arrived at on the basis of average cost for the year per barrel of throughput. Production overheads, including
depreciation, are allocated to throughput proportionately on the basis of nameplate capacity.

Net realisable value in relation to finished product represents selling prices in the ordinary course of business less costs necessarily to be incurred
for its sale, as applicable, and in relation to crude oil represents replacement cost at the balance sheet date.

2.9 Foreign currency transactions

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 rate prevailing at the balance sheet date. Exchange differences
are dealt with through the profit and loss account.
60 AT T O C K R E F I N E RY L I M I T E D

Notes to the Financial Statements

for the year ended June 30, 2007

2.10 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.

ii) The Company is operating under the import parity pricing formula, as modified from time to time, whereby it is charged the cost of crude on
'import parity' basis and is allowed product prices equivalent to the 'import parity' price, calculated under agreed parameters. The Government
has, effective July 1, 2007 made certain modifications in the agreed parameters which has effectively reduced the ex-refinery price of Kerosene
oil, Light Diesel Oil (LDO) and JP-8 which will correspondingly reduce the sales revenue. The Government is also reviewing the pricing formula
for Motor Gasoline and it is expected that a pricing formula for this product would be finalised with mutual consultations ensuring that the
refineries do not suffer loss on account of these changes to remain commercially viable.

Under the pricing formula the Company was entitled to a net of tax return on its paid-up capital with a guaranteed minimum of 10% and allowable
maximum of 40% in respect of its refinery operations.

Effective July 1, 2002, the Government has further modified the pricing formula applicable to the Company. Under this modified formula the
Refinery shall not claim from the Government any shortfall in profitability and net profit after tax (if any) from refinery operations above 50% of
paid-up capital as at July 1, 2002 is required to be diverted to a special reserve to offset any future loss or make investment for expansion or
upgradation of Refinery. However, the Company has contested the abolition of minimum rate of return of 10% and represented to the Government
to modify the already existing agreement for guaranteed return with mutual consent of both the parties.

iii) Dividend income is recognised when the right to receive dividend is established.

iv) Other income is recognised on accrual basis.

2.11 Related party transactions

The transactions with related parties in respect of sale of petroleum products, the prices of which are regulated and notified by the Government, and
crude oil purchases, the prices of which are determined in accordance with the agreed pricing formula as approved by the Government, are recorded
at the prices so notified or determined.

In case of sale of deregulated petroleum products, the transactions are made at Company notified prices for all its customers. In certain cases,
reduced price is allowed on commercial considerations. All other transactions are carried out on commercially negotiated terms.

2.12 Borrowing cost

Borrowing cost related to the financing of major projects during construction phase is capitalised. All other borrowing costs are expensed as incurred.

2.13 Staff retirement benefits

The main features of the retirement benefit schemes operated by the Company for its employees are as follows:
 ANNUAL REPORT 2007 61

Notes to the Financial Statements

for the year ended June 30, 2007
(i) Defined benefit plans

A pension plan for its Management Staff and a gratuity plan for its Non-Management Staff. The pension plan is invested through an approved
trust fund while the gratuity plan is book reserve plan. Contributions are made in accordance with actuarial recommendation. Actuarial valuations
are conducted annually using projected unit credit method. The obligation is measured at the present value of the estimated future cash outflows.
Unrealised net gains and losses are amortised over the expected remaining service of current members.

(ii) Defined contribution plans

Approved contributory provident fund for all employees to which equal monthly contribution is made both by the Company and the employee
at the rate of 10% of basic salary.

2.14 Employees compensated absences

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

2.15 Financial instruments

Financial assets and financial 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 asset and in case of financial liability when the
obligation specified in the contract is discharged, cancelled or expired. The particular measurement methods adopted are disclosed in the individual
policy statements associated with each item as shown below:

a) 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.

b) Provisions

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

c) Trade and other receivables

Trade receivables and other receivables are recognised and carried at original invoice amount/cost less an allowance for any uncollectible
amounts.

d) Cash and cash equivalents

Cash in hand and at banks are carried at fair value. For the purpose of cash flow statement, cash and cash equivalents consist of cash in hand,
balances in banks and highly liquid short term investments.
62 AT T O C K R E F I N E RY L I M I T E D

Notes to the Financial Statements

for the year ended June 30, 2007

3. Critical accounting estimates and The preparation of financial statements in conformity with the approved accounting standards requires the use of certain critical accounting estimates. It also
judgments requires management to exercise its judgment in the process of applying the Company's accounting policies. Estimates and judgments are continually
evaluated and are based on historical experience, including expectation of future events that are believed to be reasonable under the circumstances. The
areas where various assumptions and estimates are significant to the Company's financial statements or where judgment was exercised in application of
accounting policies are as follows:

i) Revaluation surplus on freehold land - note 11.1

ii) Estimate of recoverable amount of investment in associated companies - note 13.1
iii) Price adjustment related to crude oil purchases - note 23.1
iv) Provision for retirement benefits - note 28
v) Provision for taxation - note 30

2007 2006
Rupees Rupees
4. Share capital Authorised
100,000,000 (2006: 100,000,000) ordinary shares of Rs 10 each 1,000,000,000 1,000,000,000

Issued, subscribed and paid up

Shares issued for cash

8,000,000 (2006: 8,000,000) ordinary shares of Rs 10 each 80,000,000 80,000,000

Shares issued as fully paid bonus shares

48,862,000 (2006: 37,489,600) ordinary shares of Rs 10 each 488,620,000 374,896,000

56,862,000 (2006: 45,489,600) ordinary shares of Rs 10 each 568,620,000 454,896,000

The Attock Oil Company Limited held 31,274,100 (2006: 23,882,040) ordinary shares at the year end.
 ANNUAL REPORT 2007 63

Notes to the Financial Statements

for the year ended June 30, 2007

2007 2006
Rupees Rupees
5. Reserves and surplus Capital reserve
Liabilities taken over from The Attock Oil
Company Limited no longer required 4,799,955 4,799,955
Capital gain on sale of building 653,906 653,906
Insurance and other claims realised relating to
pre-incorporation period 494,645 494,645
5,948,506 5,948,506

Revenue reserves
Special reserve for expansion/modernisation - note 5.1
Additional revenue under processing fee formula
related to 1990-91 and 1991-92 32,929,000 32,929,000
Surplus profits under the import parity pricing formula 2,513,232,607 2,154,699,247
2,546,161,607 2,187,628,247
General reserve 55,000 55,000
Surplus - unappropriated profit 657,879,535 381,152,083
3,204,096,142 2,568,835,330
3,210,044,648 2,574,783,836

5.1 Represents amounts retained as per stipulations of the Government under the pricing formula and is available only for offsetting any future loss or
making investment in expansion or upgradation of the refinery. Transfer to / from special reserve is recognised at each quarter end and is reviewed
for adjustment based on profit / loss on an annual basis.

6. Surplus on revaluation
of freehold land
7. Long term loans - secured
This represents surplus over book value resulting from revaluation of freehold land as referred to in note 11.1 and is not available for distribution to shareholders.
2007 2006
Rupees Rupees
Syndicate Financing Facility – 3,597,000,000
Morabaha Financing Facility – 950,000,000
– 4,547,000,000
Less:Current portion
Syndicate Financing Facility – 899,250,000
Morabaha Financing Facility – 237,500,000
– 1,136,750,000
– 3,410,250,000
64 AT T O C K R E F I N E RY L I M I T E D

Notes to the Financial Statements

for the year ended June 30, 2007

7.1 The Company obtained a long term syndicate financing facility of Rs 3,597 million from a consortium of banks under the lead of Faysal Bank Limited
and a separate Morabaha financing facility from Faysal Bank Limited of Rs 950 million. These facilities were repayable in eight half yearly equal
installments commencing July 2006 and carried profit at base rate (six month KIBOR) plus 2.05% per annum upto January 1, 2006 and thereafter
at base rate plus 1.90% per annum for the remaining period of facilities. These facilities were secured by first pari passu charge by way of hypothecation
over all present and future current and movable fixed assets of the Company and mortgage over immovable property.

During December 2006, the Company repaid the entire outstanding balance of these loans.

8. Short term finance The Company's short term finance facility under mark-up arrangements aggregating Rs 70 million (2006: Rs 70 million) available from MCB bank expired
during the year. The Company is in the process of arranging fresh running finance facilities from various commercial banks to the extent of Rs 3.5 billion at
varying mark-up rates linked to three months and one month KIBOR.

2007 2006
Rupees Rupees
9. Trade and other payables Creditors - note 9.1 18,020,915,256 11,481,267,334
Due to The Attock Oil Company Limited – Holding Company 275,108,397 432,891,332
Due to associated companies
Pakistan Oilfields Limited 1,384,104,431 1,471,797,733
Attock Petroleum Limited 1,430,155 21,113,426
Attock Information Technology Services (Private) Ltd. 5,542,677 –
Accrued liabilities and provisions - note 9.1 737,636,316 223,933,625
Due to the Government under pricing formula - note 9.2 4,707,073,386 4,689,396,074
Advance payments from customers - note 9.3 5,532,717 10,518,689
Sales tax payable 7,197,593 127,011,850
Accrued mark-up/interest on long term loans – 124,133,100
Workers' Welfare Fund 131,988,739 103,033,871
Workers' Profit Participation Fund - note 9.4 65,840,211 36,869,261
Staff Provident Fund – 54,127
Deposits from customers adjustable against freight
and Government levies payable on their behalf 1,270,705 1,018,470
Security deposits 48,940,150 48,861,150
Unclaimed dividends 939,496 969,669
25,393,520,229 18,772,869,711

9.1 Creditors include an amount of Rs 5,434.461 million (2006 : Rs 1,615.257 million) in respect of crude oil price in excess of US$ 50 per barrel withheld
by the Company, pending finalisation of discount thereon, from payments made to suppliers for purchase of local crude oil as per the directive of
Ministry of Petroleum & Natural Resources (the Ministry).
 ANNUAL REPORT 2007 65

Notes to the Financial Statements

for the year ended June 30, 2007
Further, as per directive of the Ministry dated May 31, 2006, the Company is required to make payments alongwith the mark-up generated after the
final discount rates in respect of crude oil price in excess of US$ 50 per barrel are decided between the parties and such withheld amounts are being
retained in a designated 90-day interest bearing account. Accumulated profits amounting to Rs 377.568 million (2006: Rs 32.000 million) earned
thereon are included in accrued liabilities and provisions.

9.2 The amount due to the Government under pricing formula is net of Rs 2,404 million (2006: Rs 1,570 million) price differential claim as referred to in
note 21.1 with a corresponding effect in creditors.

9.3 Advance payments from customers include Rs 2,855,486 (2006: nil) from Pakistan Oilfields Limited, an associated company, against sales of LPG.

2007 2006
Rupees Rupees
9.4 Workers' Profit Participation Fund
Balance at the beginning of the year 36,869,261 118,649,647
Add: Interest on funds utilised in the
Company's business - note 26 528,081 2,168,584
37,397,342 120,818,231
Less: Amount paid to the Fund 37,261,056 120,541,846
136,286 276,385
Add: Amount allocated for the year - notes 27 and 31 65,703,925 36,592,876
65,840,211 36,869,261

10. Contingencies and commitments Contingencies:

i) Performance and commitment guarantees arranged by the Company
on behalf of Attock Gen Limited (AGL), an associated company,
as main sponsors 214,255,000 –
ii) Guarantees issued by banks on behalf of the Company 300,000 250,000
iii) Claims for land compensation contested by the Company 1,300,000 1,300,000
iv) Price adjustment related to crude oil purchases as referred to in note 23.1,
the amount of which can not be presently quantified – –

Commitments outstanding:
i) Capital expenditure 55,423,626 41,868,873
ii) Letters of credit other than for capital expenditure 125,775,143 33,659,700
66 AT T O C K R E F I N E RY L I M I T E D

Notes to the Financial Statements

for the year ended June 30, 2007

Freehold Buildings on Plant & Computer Furniture, fixtures

land freehold land machinery equipment and equipment Vehicles Total
(note 11.1)
Rupees Rupees
11. Property, plant and equipment Cost

As at July 1, 2005 1,927,250,000 69,815,152 3,711,648,064 50,260,000 57,144,771 53,664,457 5,869,782,444

Additions during the year – 541,110 84,352,647 3,248,604 4,187,145 9,961,847 102,291,353
Disposals during the year – – (100,000) (1,631,619) (725,117) (991,610) (3,448,346)
As at June 30, 2006 1,927,250,000 70,356,262 3,795,900,711 51,876,985 60,606,799 62,634,694 5,968,625,451
Additions during the year – 14,374,730 113,947,125 3,687,304 1,545,900 7,974,750 141,529,809
Disposals during the year – – – – (187,993) (290,110) (478,103)
As at June 30, 2007 1,927,250,000 84,730,992 3,909,847,836 55,564,289 61,964,706 70,319,334 6,109,677,157

Depreciation

As at July 1, 2005 – 25,475,882 2,558,643,971 35,545,197 28,424,465 37,216,765 2,685,306,280

Charge for the year – 3,162,722 319,613,278 5,753,320 4,959,392 6,920,885 340,409,597
On disposals – – (100,000) (1,492,900) (266,881) (939,648) (2,799,429)
As at June 30, 2006 – 28,638,604 2,878,157,249 39,805,617 33,116,976 43,198,002 3,022,916,448
Charge for the year – 3,908,199 330,938,958 8,998,928 4,783,482 8,239,036 356,868,603
On disposals – – – – (80,056) (290,107) (370,163)
As at June 30, 2007 – 32,546,803 3,209,096,207 48,804,545 37,820,402 51,146,931 3,379,414,888

Written down value

As at June 30, 2006 1,927,250,000 41,717,658 917,743,462 12,071,368 27,489,823 19,436,692 2,945,709,003

As at June 30, 2007 1,927,250,000 52,184,189 700,751,629 6,759,744 24,144,304 19,172,403 2,730,262,269

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

 ANNUAL REPORT 2007 67

Notes to the Financial Statements

for the year ended June 30, 2007

11.1 Value of freehold land includes revaluation surplus of Rs 1,923.339 million arising from revaluation of freehold land in January 2001 carried out by
an independent value. Valuation was made on the basis of market value. The original cost of the land as at June 30, 2007 is Rs 3.911 million.

11.2 Effective from the current year, the Company has revised its estimate regarding useful life of computers. Accordingly, the annual depreciation rate
has been increased from 14.3% in previous years to 20% to reflect the pattern in which the assets' economic benefits will be consumed. Had the
change in accounting estimate not been made, the depreciation charge for the year would have been lower by Rs 4.470 million and the profit for
the year would have been higher to that extent. Correspondingly, the operating assets and equity as at June 30, 2007 would have been higher by
the same amount.

2007 2006
Rupees Rupees

11.3 The depreciation charge for the year has been allocated as follows:
Cost of sales 341,975,356 328,326,550
Administration expenses 13,360,853 10,875,215
Distribution cost 899,894 575,332
Desalter operating cost 632,500 632,500
356,868,603 340,409,597

12. Capital work-in-progress Civil works 2,486,951 11,725,973

Plant and machinery 186,976,759 161,182,102
Pipeline project 28,218,675 27,964,992
Power plant project - note 12.1 – 19,673,277
217,682,385 220,546,344

12.1 Cost incurred by the Company on the Power Plant Project has been fully recovered from Attock Gen Limited, an associated company, set up for
the purpose of independently operating the Power Plant.
68 AT T O C K R E F I N E RY L I M I T E D

Notes to the Financial Statements

for the year ended June 30, 2007

2007 2006
% age Rupees % age Rupees
Holdiing Holding
13. Long term investments Associated companies
Quoted
National Refinery Limited (NRL) - note 13.1 25 8,046,635,100 25 8,046,635,100
16,659,700 (2006: 16,659,700) fully paid
ordinary shares of Rs 10 each
Market value as at June 30, 2007: Rs 5,681 million
(2006: Rs 4,448 million)

Attock Petroleum Limited 21.70 668,203,956 20.91 569,778,830

8,681,400 (2006: 8,363,300) fully paid ordinary shares
including 3,500,000 (2006: 3,500,000) bonus shares
of Rs 10 each
Market value as at June 30, 2007: Rs 4,352 million
(June 30, 2006: Rs 2,701 million)

Unquoted
Attock Gen Limited 30 540,000,000 – –
5,400,000 fully paid ordinary shares of Rs 100 each
Value based on net assets as at June 30, 2007: Rs 542 million

Attock Information Technology Services (Private) Limited 10 4,500,000 10 4,500,000

450,000 (2006 : 450,000) fully paid ordinary shares of Rs 10 each
Value based on net assets as at June 30, 2007: Rs 4.92 million
(June 30, 2006: Rs 4.62 million)
9,259,339,056 8,620,913,930
Subsidiary company
Unquoted
Attock Hospital (Private) Limited 100 2,000,000 100 2,000,000
200,000 (2006: 200,000) fully paid ordinary shares of Rs 10 each
Value based on net assets as at June 30, 2007: Rs 6.761 million
(2006: Rs 7.261 million)
9,261,339,056 8,622,913,930
 ANNUAL REPORT 2007 69

Notes to the Financial Statements

for the year ended June 30, 2007

13.1 Based on a valuation analysis carried out by an external investment advisor engaged by the Company, the recoverable amount of investment in NRL
exceeds its carrying amount. The recoverable amount has been estimated based on a value in use calculation. These calculations have been made
on discounted cash flow based valuation methodology which assumes gross profit margin of 6.4% (2006: 6.30%), terminal growth rate of 5% (2006:
5%) and capital asset pricing model based discount rate of 14.30% (2006: 13.40%).

2007 2006
Rupees Rupees

14. Long term loans and deposits Loans to employees - considered good - note 14.1 21,079,761 20,748,226
Less: Amounts due within twelve months shown under current assets - note 19 10,990,473 9,999,521
10,089,288 10,748,705
Security deposits 865,021 865,021
10,954,309 11,613,726

14.1 Loans to employees are for purchase of car, refrigerator and for other purposes which are recoverable in 36, 24 and 60 equal monthly installments
respectively and are secured by a charge on the asset purchased and/or amount due to the employee against provident fund or a third party guarantee.
Loans to employees for refrigerator and other purposes are interest free while loans for purchase of car carry interest rates ranging from 3% to 15%
(2006: 3% to 15%) per annum. These do not include any amount outstanding for more than three years. These include an amount of Rs 3,551,595
(2006: Rs 2,232,870) receivable from executives of the Company and does not include any amount receivable from Directors or Chief Executive.
The maximum amount due from executives of the Company at the end of any month during the year was Rs 3,805,412 (2006: Rs 2,493,776).

2007 2006
Rupees Rupees
14.2 Reconciliation of carrying amount of loans to executives:

Opening balance as at July 1 2,232,870 283,000

Add: Disbursements during the year 3,922,053 3,044,644
6,154,923 3,327,644
Less: Repayments during the year 2,603,328 1,094,774
Closing balance as at June 30 3,551,595 2,232,870
70 AT T O C K R E F I N E RY L I M I T E D

Notes to the Financial Statements

for the year ended June 30, 2007

2007 2006
Rupees Rupees

15. Deferred Taxation Debit balances arising on

Provisions for obsolete stores, doubtful debts and gratuity 48,979,811 39,315,681
Accelerated depreciation allowances 124,673,071 130,284,153
Credit balance arising on finance lease arrangements (15,896,942) (31,793,885)
157,755,940 137,805,949

16. Stores, spares and loose tools Stores (including items in transit
Rs 119.67 million; 2006: Rs 82.54 million) 446,578,908 410,806,882
Spares 219,661,310 208,976,739
Loose tools 595,775 708,542
666,835,993 620,492,163
Less: Provision for slow moving items 36,000,000 34,500,000
630,835,993 585,992,163

17. Stock-in-trade Crude oil - in stock 1,488,647,552 1,310,846,837

- in transit 176,064,444 173,356,867
1,664,711,996 1,484,203,704
Semi-finished products 311,633,383 278,876,166
Finished products 1,876,300,457 1,760,727,860
3,852,645,836 3,523,807,730

Finished products include stocks carried at net realisable value of Rs 236 million (2006: Rs 334 million). Adjustments amounting to Rs 43.8 million
(2006: Rs 72.9 million) have been made to closing inventory to write down stocks of finished products to their net realizable value.

18. Trade debts All debtors are unsecured and considered good.

Aggregate amount receivable from an associated company as at June 30, 2007 was Rs 1,010,953,152 (2006: Rs 1,062,120,659).
 ANNUAL REPORT 2007 71

Notes to the Financial Statements

for the year ended June 30, 2007

2007 2006
Rupees Rupees
19. Loans, advances, deposits, Loans and advances - considered good
prepayments and other
receivables Current portion of long-term loans to employees - note 14 10,990,473 9,999,521
Advances to suppliers 19,301,031 32,552,811
Advances to employees 1,728,728 1,683,662
32,020,232 44,235,994

Deposits, prepayments and current account

balances with statutory authorities
Trade deposits 285,673 285,673
Short term prepayments 17,238,584 14,269,925
Current account balances with statutory authorities in respect
of petroleum development levy, excise duty and sales tax 287,247 23,725
17,811,504 14,579,323

Other receivables
Due from subsidiary company - Attock Hospital (Private) Limited 1,966,040 1,668,749
Due from associated companies
National Refinery Limited 4,677,170 2,363,777
Attock Gen Limited 2,415,270 –
Attock Information Technology Services (Private) Limited – 139,817
National Cleaner Production Centre Foundation 2,464,971 522,052
Attock Industrial Products Limited (net of provision of
Rs 3,015,145; 2006: Rs 3,015,145) – –
Attock Cement Pakistan Limited 155,340 –
Due from Staff Pension Fund 4,096,686 1,697,890
Income accrued on bank deposits 78,867,031 39,199,241
Crude oil freight recoverable through inland freight equalisation margin 39,220,600 150,716,052
Other receivables 7,560,627 8,350,204
141,423,735 204,657,782
191,255,471 263,473,099

Loans to employees include Rs 2,265,248 (2006: Rs 1,289,790) due from executives of the Company and does not include any amount receivable from
Directors or the Chief Executive.
72 AT T O C K R E F I N E RY L I M I T E D

Notes to the Financial Statements

for the year ended June 30, 2007

2007 2006
Rupees Rupees
20. Cash and bank balances Cash in hand 291,366 541,946
With banks:
On current accounts 2,790,058 4,654,915
On interest/ mark-up bearing savings accounts (including
US $ 379,624; 2006: US $ 643,379) 8,877,032,292 8,026,397,219
8,880,113,716 8,031,594,080

20.1 Balances with banks include Rs 5,381.864 million (2006: 1,000.136 million) in respect of deposits placed on 90-day interest-bearing account consequent
to a directive issued by the Ministry on account of amounts withheld as referred to in note 9.1 alongwith related interest earned thereon.
20.2 A lien on the Company's savings account has been marked by a bank to the extent of guarantees issued on behalf of the Company as referred to
in note 10 (i).
20.3 Balances with banks include Rs 48.940 million (2006: Rs 48.861 million) in respect of security deposits received.
20.4 The balances in savings accounts at the year end earn weighted average interest/ mark-up of 9.73% (2006: 8.93%) per annum.

2007 2006
Rupees Rupees
21. Sales Gross sales - note 21.1 66,083,778,877 61,362,743,941
Naphtha export sales 8,232,839,936 8,512,982,645
Less:Cost of Naphtha purchased from third parties and
related handling charges recovered 1,175,285,235 1,761,308,376
7,057,554,701 6,751,674,269
Less:Duties, taxes and levies - note 21.2 13,986,554,360 12,177,586,475
59,154,779,218 55,936,831,735
21.1 Under the products import parity pricing formula, effective July 1, 2000, the Government had imposed a cap on an element of pricing of Premium
Motor Gasoline (PMG) which has not been accepted by the Company. The Company has strongly urged the Government to remove this cap. The
sales revenue to the extent of related aggregate price differential claims of Rs. 2,404 million (including Rs. 1,570 million for prior years) is not being
reflected in sales till this matter is resolved. In this context, the tax authorities have raised demands for income tax against these price differential
claims which have been contested in appeals by the Company.
2007 2006
Rupees Rupees
21.2 Duties, taxes and levies
Development surcharge 5,356,523,313 3,858,634,023
Sales tax 8,166,096,090 7,810,481,336
Custom duties and other levies 463,934,957 508,471,116
13,986,554,360 12,177,586,475
 ANNUAL REPORT 2007 73

Notes to the Financial Statements

for the year ended June 30, 2007

22. Reimbursement due from the This represents amount due from the Government of Pakistan on account of shortfall in ex-refinery prices of certain petroleum products under the import
government under import parity parity pricing formula.
pricing formula 2007 2006
Rupees Rupees
23. Cost of sales Opening stock of semi-finished products 278,876,166 174,528,868
Crude oil consumed - note 23.1 56,326,788,162 53,529,997,346
Transportation and handling charges 1,016,614,947 1,042,847,253
Salaries, wages and other benefits - note 23.2 250,261,568 236,931,536
Printing and stationery 1,822,173 2,208,099
Chemicals consumed 347,235,336 368,336,337
Fuel and power 279,485,676 243,640,822
Rent, rates and taxes 6,524,583 5,644,009
Telephone and telex charges 1,602,062 2,309,376
Professional charges for technical services 2,455,174 2,849,672
Insurance 46,544,043 36,578,388
Repairs and maintenance (including stores and spares consumed Rs 65,330,509;
2006: Rs 79,543,503) 118,433,291 141,527,067
Staff transport and travelling - note 23.3 9,815,175 12,187,347
Cost of receptacles 8,618,744 24,775,920
Research and development 108,000 8,550,012
Depreciation - note 11.3 341,975,356 328,326,550
59,037,160,456 56,161,238,602
Closing stock of semi-finished products (311,633,383) (278,876,166)
58,725,527,073 55,882,362,436
Opening stock of finished products 1,760,727,860 1,369,045,483
Closing stock of finished products (1,876,300,457) (1,760,727,860)
(115,572,597) (391,682,377)
58,609,954,476 55,490,680,059

23.1 Crude oil consumed

Stock at the beginning of the year 1,484,203,704 557,049,967
Purchases 56,507,296,454 54,457,151,083
57,991,500,158 55,014,201,050
Stock at the end of the year (1,664,711,996) (1,484,203,704)
56,326,788,162 53,529,997,346
Certain crude purchases have been recorded based on provisional prices notified by the Government and may require subsequent adjustment.
74 AT T O C K R E F I N E RY L I M I T E D

Notes to the Financial Statements

for the year ended June 30, 2007

23.2 Salaries, wages and other benefits under cost of sales, administration expenses, distribution cost and income from crude desalter operations include
the Company's contribution to the Provident Fund amounting to Rs 11,552,458 (2006: Rs 10,682,306).

23.3 Staff transport and travelling

Staff transport and travelling under cost of sales, administration expenses and distribution cost include lease rentals amounting to Rs nil
(2006: Rs 764,819) related to nil (2006: 11) motor vehicles used during the year under terminable lease agreements.

2007 2006
Rupees Rupees

24. Administration expenses Salaries, wages and other benefits - note 23.2 97,666,151 90,619,295
Staff transport, travelling and entertainment - note 23.3 12,064,930 13,600,784
Telephone and telex charges 1,484,554 1,893,125
Electricity, gas and water 4,430,040 4,023,580
Printing and stationery 3,028,350 2,408,355
Auditors' remuneration and expenses:
Statutory audit 350,000 300,000
Special certifications, half yearly review, audit of consolidated accounts and staff funds 553,000 483,500
Out of pocket expenses 82,995 91,540
985,995 875,040
Legal and professional charges 5,874,513 7,951,800
Repairs and maintenance 21,490,375 24,795,439
Subscription 5,271,778 5,444,940
Publicity 4,043,563 4,029,913
Scholarship scheme 2,054,950 1,398,801
Rent, rates and taxes 1,273,568 1,677,635
Insurance 866,898 794,336
Donations* 414,619 10,275,147
Training expenses 744,814 2,389,783
Other expenses 51,638 245,421
Depreciation - note 11.3 13,360,853 10,875,215
175,107,589 183,298,609

* No director or his spouse had any interest in the donee institutions.

 ANNUAL REPORT 2007 75

Notes to the Financial Statements

for the year ended June 30, 2007

2007 2006
Rupees Rupees

25. Distribution cost Salaries, wages and other benefits - note 23.2 11,722,058 8,512,176
Staff transport, travelling and entertainment - note 23.3 568,338 661,935
Telephone and telex charges 209,812 174,908
Electricity, gas, fuel and water 1,476,680 1,341,193
Printing and stationery 81,097 70,976
Repairs and maintenance including packing and other stores consumed 1,295,190 1,911,219
Rent, rates and taxes 316,677 263,096
Legal and professional charges 144,000 216,285
Cost of samples 2,587 52,730
Depreciation - note 11.3 899,894 575,332
16,716,333 13,779,850

26. Finance cost Interest / mark-up on

Long term loans 233,361,071 493,541,346
Workers' Profit Participation Fund - note 9.4 528,081 2,168,584
Financial charges on liability against assets subject to finance lease – 346,028
Bank and other charges 388,827 2,368,817
234,277,979 498,424,775

27. Other charges Employees' retirement benefits

Staff gratuity benefits - note 28 15,320,547 15,378,909
Staff pension benefits - note 28 8,572,332 7,008,130
Less: Charged to subsidiary company (954,525) (852,696)
7,617,807 6,155,434
Contribution to employees old age benefits scheme 2,202,230 1,717,248
25,140,584 23,251,591
Provision for slow moving stores 1,500,000 1,500,000
Stores written off 12,560 –
Workers' Profit Participation Fund - note 9.4 51,819,052 23,926,116
Workers' Welfare Fund 23,678,616 19,234,402
102,150,812 67,912,109
76 AT T O C K R E F I N E RY L I M I T E D

Notes to the Financial Statements

for the year ended June 30, 2007

28. Employees' defined benefit plans The latest actuarial valuation of the employees' defined benefit plans was conducted at June 30, 2007 using the projected unit credit method. Details of the
defined benefit plans are:
Defined Benefit Pension Plan Defined Benefit Gratuity Plan
2007 2006 2007 2006
Rupees Rupees
a) The amounts recognised in the profit and loss account:
Current service cost 12,263,424 9,579,615 3,099,301 2,996,315
Interest on obligation 27,771,892 24,541,741 10,075,566 10,064,728
Expected return on plan assets (30,234,890) (26,233,559) – –
Contribution from an associated company (127,200) (160,898) – –
Net actuarial losses / (gains) recognised during the year (1,100,894) (718,769) 2,145,680 2,317,866
8,572,332 7,008,130 15,320,547 15,378,909
b) The amounts recognised in the balance sheet:
Fair value of plan assets 359,485,371 280,495,084 – –
Present value of defined benefit obligations (291,335,050) (263,054,407) (121,894,107) (96,057,559)
68,150,321 17,440,677 (121,894,107) (96,057,559)
Unrecognised actuarial gains / (losses) (64,053,635) (15,742,787) 36,094,107 20,257,559
Net liability 4,096,686 1,697,890 (85,800,000) (75,800,000)
c) Movement in the present value of defined benefit obligation:
Present value of defined benefit obligation as at July 1 263,054,407 215,382,051 96,057,559 88,577,526
Current service cost 12,263,424 9,579,615 3,099,301 2,996,315
Interest cost 27,771,892 24,541,741 10,075,566 10,064,728
Benefits paid (11,145,551) (9,714,214) (5,320,547) (4,493,785)
Actuarial (gains) / losses (609,122) 23,265,214 17,982,228 (1,087,225)
Present value of defined benefit obligation as at June 30 291,335,050 263,054,407 121,894,107 96,057,559
d) Changes in the fair value of plan assets:
Fair value of plan assets as at July 1 280,495,084 225,120,520 – –
Expected return 30,234,890 26,233,559 – –
Benefits paid (11,145,551) (9,714,214) – –
Contributions by employer 10,971,128 9,677,208 – –
Contributions by associated company 127,200 160,898 – –
Actuarial gains / (losses) 48,802,620 29,017,113 – –
Fair value of plan assets as at June 30 359,485,371 280,495,084 – –
Actual return on plan assets 79,037,510 55,250,672 – –

Expected contributions to the defined benefit pension plans for the year ending June 30, 2008 are Rs 12.6 million.
 ANNUAL REPORT 2007 77

Notes to the Financial Statements

for the year ended June 30, 2007

Defined Benefit Pension Plan Defined Benefit Gratuity Plan

2007 2006 2007 2006
Rupees Rupees
e) The major categories of plan assets:
Investment in equities 109,497,755 89,667,869 – –
Investment in mixed funds 136,836,898 54,852,274 – –
Cash 113,150,718 135,974,941 – –
359,485,371 280,495,084 – –

f) Significant actuarial assumptions at the balance sheet date:

Discount rate 11.00% 10.78% – –
Expected return on plan assets 11.00% 10.78% – –
Future salary increases 8.89% 8.66% – –
Future pension increases 5.71% 5.50% – –

2007 2006 2005 2004 2003

Rupees Rupees Rupees Rupees Rupees
g) Comparison for five years:

Defined Benefit Pension Plan

Present value of defined benefit obligation (291,335,050) (263,054,407) (215,382,051) (190,998,371) (176,177,000)
Fair value of plan assets 359,485,371 280,495,084 225,120,520 196,917,528 174,386,000
Surplus / (deficit) 68,150,321 17,440,677 9,738,469 5,919,157 (1,791,000)

Actuarial (gains) / losses on plan liabilities (609,122) 23,265,214 9,382,000 1,303,000 (11,671,000)
Actuarial (gains) / losses on plan assets (48,802,620) 29,017,113 13,388,000 9,384,000 10,642,000

Defined Benefit Gratuity Plan

Present value of defined benefit obligation (121,894,107) (96,057,559) (88,577,526) (80,831,692) (59,094,000)
Fair value of plan assets – – – – –
Deficit (121,894,107) (96,057,559) (88,577,526) (80,831,692) (59,094,000)
Actuarial (gains) / losses on plan liabilities 17,982,228 (1,087,225) 3,611,000 16,991,000 (1,085,000)
Actuarial (gains) / losses on plan assets – – – – –
78 AT T O C K R E F I N E RY L I M I T E D

Notes to the Financial Statements

for the year ended June 30, 2007

2007 2006
Rupees Rupees

29. Other income Income from financial assets

Income on bank deposits 569,024,303 527,198,018
Income on other balances – 2,029
Exchange gain 269,581 2,992,990
569,293,884 530,193,037

Income from non-financial assets

Income from crude decanting 11,205,337 8,835,527
Income from crude desalter operations - note 29.1 9,264,467 10,541,984
Insurance agency commission 4,719,025 2,206,024
Rental income 3,057,084 2,003,552
Sale of scrap 10,612,725 6,957,758
Profit on sale of fixed assets 846,422 1,660,588
Calibration charges 3,742,400 3,996,300
Handling and service charges 15,900,912 21,419,332
Registration charges from carriage contractors – 20,941,563
Penalties from carriage contractors 3,888,219 15,070,661
Old liabilities written back 693,597 2,603,288
Miscellaneous 1,941,992 653,351
65,872,180 96,889,928
635,166,064 627,082,965

29.1 Income from crude desalter operations

Income 43,927,953 49,598,239

Less:Operating costs
Salaries, wages and other benefits - note 23.2 1,882,227 2,287,290
Chemical consumed 7,058,352 8,577,336
Fuel and power 16,828,288 20,449,799
Repairs and maintenance 8,262,119 7,109,330
Depreciation - note 11.3 632,500 632,500
34,663,486 39,056,255
9,264,467 10,541,984
 ANNUAL REPORT 2007 79

Notes to the Financial Statements

for the year ended June 30, 2007

2007 2006
Rupees Rupees

30. Provision for taxation Current - for the year 476,500,000 400,000,000
Deferred - for the year (19,949,991) (45,155,916)
456,550,009 354,844,084

Numerical reconciliation between the average effective tax rate and the applicable tax rate
% %

Applicable tax rate 35.00 35.00

Tax effect of:
Income chargeable to tax at special rate and other differences 12.51 46.51
Average effective tax rate charged to profit and loss account 47.51 81.51

2007 2006
Rupees Rupees
31. Income from non-refinery Less applicable charges and taxation
operations Dividend income from associated companies
National Refinery Limited 208,246,250 183,256,700
Attock Petroleum Limited 69,451,200 70,078,500
277,697,450 253,335,200

Less:Related charges
Workers' Profit Participation Fund - note 9.4 13,884,873 12,666,760
Workers' Welfare Fund 5,276,252 4,813,369
Taxation 13,884,873 12,666,760
33,045,998 30,146,889
244,651,452 223,188,311

32. Related party transaction Attock Oil Company Limited holds 55% (2006: 52.50%) 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 influence 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 33 to the financial statements.
80 AT T O C K R E F I N E RY L I M I T E D

Notes to the Financial Statements

for the year ended June 30, 2007

2007 2006
Rupees Rupees
Associated companies
Sale of goods 12,941,980,204 15,315,597,351
Sale of services 76,773,297 46,784,718
13,018,753,501 15,362,382,069
Purchase of goods 7,591,741,626 9,016,821,119
Purchase of services 311,331,415 296,693,858
7,903,073,041 9,313,514,977
Holding company
Sale of services 284,675 –

Purchase of goods 1,298,842,610 1,997,891,103

Purchase of services 3,988,210 3,771,792
1,302,830,820 2,001,662,895
Subsidiary company
Sale of goods 614,043 541,408
Sale of services 18,834,184 16,601,311
19,448,227 17,142,719
Purchase of services 19,653,041 18,504,737
Employees' benefits funds
Payments made during the year 22,523,586 20,359,514
33. Remuneration of Chief Executive,
Directors and Executives The aggregate amounts charged in the financial statements for remuneration, including benefits and perquisites, were as follows:
Chief Executive Directors Executives
2007 2006 2007 2006 2007 2006
Rupees Rupees Rupees Rupees Rupees Rupees
Managerial remuneration / honorarium 3,909,722 2,482,256 1,219,140 1,215,792 22,187,830 18,528,616
Company's contribution to provident
and pension funds 789,421 574,200 – – 4,738,926 3,994,086
Housing and utilities 1,037,149 834,960 – – 11,261,606 8,768,688
Leave passage 330,000 298,356 – – 2,100,970 2,034,140
6,066,292 4,189,772 1,219,140 1,215,792 40,289,332 33,325,530
No of person(s) 1 1 3 3 20 18
33.1 In addition, the Chief Executive and 18 (2006: 17) executives were provided with limited use of the Company's cars. The Chief Executive and all
executives were provided with medical facilities and 7 (2006: 7) executives were provided with unfurnished accommodation in Company owned
bungalows. Limited residential telephone facility was also provided to the Chief Executive and 11 (2006: 7) executives. Payments to Chief Executive
include Rs 789,156 representing arrears of salary for the period February 2005 to June 2006.
Fee paid to directors during the year was Rs nil (2006: Rs nil).
 ANNUAL REPORT 2007 81

Notes to the Financial Statements

for the year ended June 30, 2007

34. Financial instruments 34.1 Financial assets and liabilities

2007 2006
Interest/markup Non-interest / Interest/markup Non-interest /
bearing markup bearing Total bearing markup bearing Total
Rupees Rupees Rupees Rupees Rupees Rupees
Financial assets:
Maturity upto one year
Trade debts – 6,234,917,655 6,234,917,655 – 4,675,133,457 4,675,133,457
Loans, advances, deposits and
other receivables – 154,428,609 154,428,609 – 214,262,861 214,262,861
Cash and bank balances
Foreign currency - US $ 22,815,414 201,063 23,016,477 38,667,078 201,063 38,868,141
Local currency 8,854,216,878 2,880,361 8,857,097,239 7,987,730,141 4,995,798 7,992,725,939
Maturity after one year
Long term investments – 9,261,339,056 9,261,339,056 – 8,622,913,930 8,622,913,930
Long term loans and deposits – 10,954,309 10,954,309 – 11,613,726 11,613,726
8,877,032,292 15,664,721,053 24,541,753,345 8,026,397,219 13,529,120,835 21,555,518,054
Financial liabilities:
Maturity upto one year
Long term loans and lease obligations
Local currency – – – 1,136,750,000 – 1,136,750,000
Short term finance – – – – – –
Trade and other payables 9,471,565,027 15,916,422,485 25,387,987,512 1,615,257,575 17,147,093,447 18,762,351,022
Maturity after one year
Long term loans and lease obligations
Local currency – – – 3,410,250,000 – 3,410,250,000
Staff gratuity – 85,800,000 85,800,000 – 75,800,000 75,800,000
9,471,565,027 16,002,222,485 25,473,787,512 6,162,257,575 17,222,893,447 23,385,151,022
Off balance sheet items
Commitments (other than letters of credit) – 55,423,626 55,423,626 – 41,868,873 41,868,873
Letters of credit – 125,775,143 125,775,143 – 33,659,700 33,659,700
Bank guarantees – 214,555,000 214,555,000 – 250,000 250,000
– 395,753,769 395,753,769 – 75,778,573 75,778,573
34.2 Concentration of credit risk
The Company's credit risk is primarily attributable to its trade debts and placements with banks. The sales are essentially to six oil marketing companies
and reputable foreign customers. The Company's placements are with reputable banks. Due to the high credit worthiness of corresponding parties
the credit risk is considered minimal.
34.3 Currency risk
Currency risk is the risk of loss through changes in foreign currency rates. The exchange risk against foreign currency liabilities has been hedged
by the Company through foreign currency deposits.
82 AT T O C K R E F I N E RY L I M I T E D

Notes to the Financial Statements

for the year ended June 30, 2007

34.4 Interest rate risk

The effective interest / mark up rates for the monetary financial assets and liabilities are mentioned in respective notes to the financial statements.
34.5 Liquidity risk
Liquidity risk reflects an enterprise's inability in raising funds to meet commitments. The Company follows an effective cash management and planning
policy to ensure availability of funds and to take appropriate measures for new requirements.
34.6 Fair value of financial assets and liabilities
The carrying value of financial assets and liabilities approximates their fair value except for long term investments, which are stated at cost.
2007 2006
35. General 35.1 Earnings per share
Profit for the year after taxation Rs. 748,984,812 Rs. 303,706,028
Number of ordinary shares outstanding during the year 56,862,000 56,862,000
Earnings per share Rs. 13.17 Rs. 5.34
Basic earnings per share for the year 2006 reported in the previous year was Rs 6.68. This has been restated on account of 11,372,400 bonus shares
issued without consideration during the year ended June 30, 2007.
There is no dilutive effect on the basic earnings per share of the Company for the year ended June 30, 2007.
35.2 Capacity and production
Against the designed annual refining capacity of 14,240,000 (2006: 14,280,000) US barrels the actual throughput during the year was 14,074,644
(2006: 14,567,216) US barrels. The actual throughput was lower than the annual refining capacity on account of the plant shut down for maintenance
and reductions in throughput to minimize losses during adverse periods of refining margins.
35.3 Number of employees
Total number of employees at the end of the year was 731 (2006: 684).
35.4 Corresponding figures
Sales for the corresponding year were net of discount of Rs. 108,693,725 which has now been disclosed separately in the profit & loss account.
35.5 Non adjusting events after the balance sheet date
The Board of Directors, in its meeting held on September 10, 2007, has proposed for the approval of members at the next Annual General Meeting
(i) a 40% cash diviend of Rs. 4 per share and (ii) an issue of bonus share in the proportion of one share for every four shares held i.e. 25% out of
unappropriated profits. These financial statements do not include the effect of these appropriations which will be accounted for in the financial
statements for the year ending June 30, 2008 as follows:
Transfer from unappropriated profit to: Rupees
Proposed dividend 227,448,000
Reserve for issue of bonus shares 142,155,000
35.6 Date of authorisation
These financial statements have been authorised for issue by the Board of Directors of the Company on September 10, 2007.

Chief Executive Director

 ANNUAL REPORT 2007 83

ANNUAL AUDITED
CONSOLIDATED FINANCIAL STATEMENTS 2007
ATTOCK REFINERY LIMITED
84 AT T O C K R E F I N E RY L I M I T E D
 ANNUAL REPORT 2007 85

Auditors' Report to the Members

A member firm of

We have audited the annexed consolidated financial In our opinion, the consolidated financial statements present
statements comprising consolidated balance sheet of fairly the financial position of ARL and its subsidiary company
Attock Refinery Limited (ARL) and its subsidiary company, as at June 30, 2007 and the results of their operations for
Attock Hospital (Private) Limited as at June 30, 2007 and the year then ended.
the related consolidated profit and loss account,
consolidated cash flow statement and consolidated
statement of changes in equity together with the notes
forming part thereof, for the year then ended. We have
also expressed seperate opinions on the financial
statements of ARL and its subsidiary company. These
financial statements are the responsibility of ARL's
management. Our responsibility is to express an opinion
on these financial statements based on our audit. Chartered Accountants
Islamabad: September 10, 2007

Our audit was conducted in accordance with the

International Standards on Auditing and accordingly included
such tests of accounting records and such other auditing
procedures as we considered necessary in the
circumstances.
86 AT T O C K R E F I N E RY L I M I T E D

Consolidated Balance Sheet 2007 2006

as at June 30, 2007 Note Rupees Rupees

Share capital and reserves

Share capital
Authorised 4 1,000,000,000 1,000,000,000
Issued, subscribed and paid-up 4 568,620,000 454,896,000
Reserves and surplus 5 5,371,775,791 3,596,538,319
5,940,395,791 4,051,434,319

Surplus on revaluation of freehold land 6 1,923,338,591 1,923,338,591

7,863,734,382 5,974,772,910

Long term and deferred liabilities

Long term loans 7 – 3,410,250,000

Provision for staff gratuity 85,800,000 75,800,000
85,800,000 3,486,050,000

Current liabilities and provisions

Current maturity of long term loans 7 – 1,136,750,000

Short term finance 8 – –
Trade and other payables 9 25,394,393,517 18,774,848,746
Provision for taxation 1,006,629,216 747,596,998
26,401,022,733 20,659,195,744

Contingencies and commitments 10

34,350,557,115 30,120,018,654
 ANNUAL REPORT 2007 87

Consolidated Balance Sheet 2007 2006

as at June 30, 2007 Note Rupees Rupees

Property, plant and equipment

Operating assets 11 2,734,127,289 2,950,640,961

Capital work-in-progress 12 217,682,385 220,546,344
Stores and spares held for capital expenditure 20,190,054 77,695,655
2,971,999,728 3,248,882,960

Long term investments 13 11,416,311,675 9,637,407,375

Long term loans and deposits 14 10,954,309 11,613,726

Deferred taxation 15 158,007,940 137,805,949

Current assets

Stores, spares and loose tools 16 630,835,993 585,992,163

Stock-in-trade 17 3,853,388,292 3,524,396,943
Trade debts 18 6,235,379,020 4,675,412,060
Loans, advances, deposits, prepayments and other receivables 19 192,627,061 264,779,937
Cash and bank balances 20 8,881,053,097 8,033,727,541
19,793,283,463 17,084,308,644

34,350,557,115 30,120,018,654

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

Chief Executive Director

88 AT T O C K R E F I N E RY L I M I T E D

Consolidated Profit & Loss Account 2007 2006

for the year ended June 30, 2007 Note Rupees Rupees

Sales 21 59,154,779,218 55,936,831,735

Less: Discount 46,247,604 108,693,725
59,108,531,614 55,828,138,010

Reimbursement due from the Government

under import parity pricing formula 22 355,392,880 234,236,228
59,463,924,494 56,062,374,238
Less: Cost of sales 23 58,609,954,476 55,490,680,059
Gross profit 853,970,018 571,694,179

Less:Administration expenses 24 175,107,589 183,298,609

Distribution cost 25 16,716,333 13,779,850
Finance cost 26 234,277,979 498,424,775
Other charges 27 102,150,812 67,912,109
528,252,713 763,415,343
325,717,305 (191,721,164)
Other income 29 635,166,064 627,082,965
Profit before taxation 960,883,369 435,361,801
Provision for taxation 30 456,550,009 354,844,084
Profit after taxation 504,333,360 80,517,717
Non-refinery income:
Share in profit of associated companies 31 1,384,628,112 1,112,353,142
Profit for the year 1,888,961,472 1,192,870,859

Earnings per share 35.1 33.22 20.98

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

Chief Executive Director

 ANNUAL REPORT 2007 89

Consolidated Cash Flow Statement 2007 2006

for the year ended June 30, 2007 Rupees Rupees

Cash flows from operating activities

Cash receipts from – customers 72,736,845,273 69,316,381,920
– others 98,995,648 131,684,336
72,835,840,921 69,448,066,256
Cash paid for operating costs (52,833,884,020) (52,442,238,773)
Cash paid to Government for duties, taxes and other levies (14,106,632,140) (12,089,104,107)
Income tax paid (231,932,305) (823,198,684)
Net cash flows from operating activities 5,663,392,456 4,093,524,692

Cash flows from investing activities

Additions to property, plant and equipment (81,167,010) (230,456,284)
Proceeds from sale of property, plant and equipment 954,362 2,309,505
Long term investments (638,425,126) (6,213,929,559)
Long term loans and deposits 659,417 426,715
Income on bank deposits received 529,385,678 502,002,429
Dividends received 277,697,450 253,335,200
Net cash flows from investing activities 89,104,771 (5,686,311,994)

Cash flows from financing activities

Long term loans (4,547,000,000) 4,547,000,000
Repayment of principal portion of finance lease – (30,000,000)
Financial charges paid (358,411,079) (374,917,154)
Dividends paid (30,173) (8,606)
Net cash flows from financing activities (4,905,441,252) 4,142,074,240

Effect of exchange rate changes 269,581 2,992,990

Increase in cash and cash equivalents 847,325,556 2,552,279,928
Cash and cash equivalents at the beginning of the year 8,033,727,541 5,481,447,613
Cash and cash equivalents at the end of the year 8,881,053,097 8,033,727,541

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

Chief Executive Director

90 AT T O C K R E F I N E RY L I M I T E D

Special reserve for Surplus on

Consolidated Statement of Changes in Equity Share
capital
Capital
reserve
expansion /
modernisation
General
reserve
Un-appropriated
Profit
revaluation of
freehold land Total
for the year ended June 30, 2007 Rupees Rupees Rupees Rupees Rupees Rupees Rupees

Balance at June 30, 2005 349,920,000 44,948,506 2,187,628,247 55,000 276,011,707 1,923,338,591 4,781,902,051

Bonus shares @ 30% related to

the year ended June 30, 2005 104,976,000 – – – (104,976,000) – –

Profit for the year – – – – 1,192,870,859 – 1,192,870,859

Transfer to reserve for

expansion / modernisation – – – – – – –

Transfer to special reserves by

an associated company – – 329,803,946 – (329,803,946) – –

Balance at June 30, 2006 454,896,000 44,948,506 2,517,432,193 55,000 1,034,102,620 1,923,338,591 5,974,772,910

Bonus shares @ 25% related to

the year ended June 30, 2006 113,724,000 – – – (113,724,000) – –

Profit for the year – – – – 1,888,961,472 – 1,888,961,472

Transfer to reserve for

expansion / modernisation – – 358,533,360 – (358,533,360) – –

Transfer to special reserves by

an associated company – – 124,108,492 – (124,108,492) – –

Balance at June 30, 2007 568,620,000 44,948,506 3,000,074,045 55,000 2,326,698,240 1,923,338,591 7,863,734,382

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

Chief Executive Director

 ANNUAL REPORT 2007 91

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

1. Legal status and operations Attock Refinery Limited (ARL) was incorporated in Pakistan on November 8, 1978 as a private limited company and was converted into a public limited
company on June 26, 1979. The registered office of the Company is situated at Morgah, Rawalpindi. Its shares are quoted on the Karachi, Lahore and
Islamabad Stock Exchanges in Pakistan. It is principally engaged in the refining of crude oil. ARL is a 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. The Company is a wholly owned subsidiary of Attock Refinery Limited.
For the purpose of these financial statements, ARL and its above referred wholly owned subsidiary AHL is referred to as the Company.

2. Summary of significant accounting 2.1 Basis of presentation of financial statements

policies These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements
of the Companies Ordinance, 1984 (the Ordinance). Approved accounting standards comprise of such International Accounting Standards as notified
under the provisions of the Ordinance. Wherever, the requirements of the Ordinance or directives issued by the Securities and Exchange Commission
of Pakistan differ with the requirements of these standards, the requirements of the Ordinance or the requirements of the said directives take
precedence.
Amendments to the published standards and new interpretations effective for accounting periods beginning on or after January 1, 2006:
IAS 19 (Amendment) – Employee Benefits is mandatory for the Company’s accounting periods beginning on or after January 1, 2006. This
amendment introduces the option of an alternate recognition approach for actuarial gains and losses and requires new disclosures. As the
Company does not intend to change its accounting policy adopted for the recognition of actuarial gains and losses, the adoption of this amendment
only impacts the format and extent of disclosures as given in note 28 to these financial statements.
Standards, amendments and interpretations effective for accounting periods beginning on or after January 1, 2006 but not relevant:
The other new standards, amendments and interpretations that are mandatory for accounting periods beginning on or after January 1, 2006
are not considered to be relevant or do not have any significant effect on the Company’s operations.
Standards or interpretations not yet effective but relevant:
The following new accounting standards and amendments to existing accounting standards have been published and are not effective for the
purpose of these financial statements.
i) IAS 1 Presentation of Financial Statements – Capital Disclosures
ii) IFRS 7 – Financial Instruments: Disclosures
iii) IAS 39 and IFRS 4 (Amendment), Financial Guarantee Contracts
Adoption of the above accounting standards is not considered to have any significant effect on the Company's financial statements.
92 AT T O C K R E F I N E RY L I M I T E D

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

2.2 Basis of measurement

These financial statements have been prepared under the historical cost convention modified by revaluation of free hold land referred to in note 2.6
and certain other modifications as required by International Accounting Standards referred to in the accounting policies given below.
2.3 Basis of Consolidation
The consolidated financial statements include the financial statements of Attock Refinery Limited and its wholly owned subsidiary, Attock Hospital
(Private) Limited.
Subsidiaries are all entities over which the Company has the power to govern the financial and operating policies generally accompanying a shareholding
of more than one half of the voting rights or otherwise has power to elect and appoint more than one half of its directors. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group and are de-consolidated 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 consolidation purposes.
2.4 Dividend appropriation
Dividend is recognised as a liability in the financial statements in the period in which it is declared.
2.5 Taxation
Provision for current taxation is based on taxable income at the current rates of taxation or half percent of turnover, whichever is higher.
Deferred income tax is accounted for using the balance sheet liability method in respect of all temporary differences arising between the carrying
amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax
liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that future taxable
profits will be available against which the deductible temporary differences can be utilised.
Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse based on the tax rates that have been
enacted. Deferred tax is charged or credited to income except in the case of items credited or charged to equity in which case it is included in equity.
2.6 Property, plant and equipment
a) Cost
Operating fixed assets except freehold land are stated at cost less accumulated depreciation. Freehold land is stated at revalued amount.
Capital work-in-progress and stores held for capital expenditure are stated at cost. Cost in relation to certain plant and machinery items includes
borrowing cost related to the financing of major projects during construction phase.
b) Depreciation
Depreciation is charged to income on straight line method to write off the cost of an asset over its estimated useful life at the rates specified in
note 11. The carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate that carrying
 ANNUAL REPORT 2007 93

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

value may not be recoverable. If any such indication exists and where the carrying value exceeds the estimated recoverable amount, the assets
are written down to recoverable amount.
c) Repairs and maintenance
Maintenance and normal repairs, including minor alterations, are charged to income as and when incurred. Renewals and improvements are
capitalised and the assets so replaced, if any, are retired.
d) Gains and losses on deletion
Gains and losses on deletion of assets are included in income currently.

2.7 Investments
a) Investments in associated companies
Investments in associated companies are accounted for using the equity method. Under this method investments are stated at cost plus the
Company's equity in undistributed earnings and losses after acquisition, less any impairment in the value of individual investments.
b) Available for sale investments
Investment securities held by the Company which may be sold in response to needs for liquidity or changes in interest rates, exchange rates
or equity prices are classified as available for sale. These investments are initially recognised at cost and subsequently re-measured at fair
value.
Unrealised gains and losses arising from changes in the fair value in respect of exchange differences of available for sale investments are
treated as referred to in note 2.10.

2.8 Stores, spares and loose tools

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

2.9 Stock-in-trade
Stock-in-trade is valued at the lower of cost and net realisable value. Crude oil in transit is valued at cost comprising invoice value. Cost in relation
to crude oil is determined on the basis of annual average cost of purchases during the year on the principles of import parity and in relation to
semi-finished and finished products it represents the cost of crude oil and refining charges consisting of direct expenses and appropriate production
overheads. Direct expenses are arrived at on the basis of average cost for the year per barrel of throughput. Production overheads, including
depreciation, are allocated to throughput proportionately on the basis of nameplate capacity.
Net realisable value in relation to finished product represents selling prices in the ordinary course of business less costs necessarily to be incurred
for its sale, as applicable, and in relation to crude oil represents replacement cost at the balance sheet date.
94 AT T O C K R E F I N E RY L I M I T E D

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

2.10 Foreign currency transactions

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 rate prevailing at the balance sheet date. Exchange differences
are dealt with through the profit and loss account.

2.11 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.
ii) The Company is operating under the import parity pricing formula, as modified from time to time, whereby it is charged the cost of crude on
'import parity' basis and is allowed product prices equivalent to the 'import parity' price, calculated under agreed parameters. The Government
has, effective July 1, 2007 made certain modifications in the agreed parameters which has effectively reduced the ex-refinery price of Kerosene
oil, Light Diesel Oil (LDO) and JP-8 which will correspondingly reduce the sales revenue. The Government is also reviewing the pricing formula
for Motor Gasoline and it is expected that a pricing formula for this product would be finalised with mutual consultations ensuring that the
refineries do not suffer loss on account of these changes to remain commercially viable.
Under the pricing formula the Company was entitled to a net of tax return on its paid-up capital with a guaranteed minimum of 10% and allowable
maximum of 40% in respect of its refinery operations.
Effective July 1, 2002, the Government has further modified the pricing formula applicable to the Company. Under this modified formula the
Refinery shall not claim from the Government any shortfall in profitability and net profit after tax (if any) from refinery operations above 50% of
paid-up capital as at July 1, 2002 is required to be diverted to a special reserve to offset any future loss or make investment for expansion or
upgradation of Refinery. However, the Company has contested the abolition of minimum rate of return of 10% and represented to the Government
to modify the already existing agreement for guaranteed return with mutual consent of both the parties.
iii) Income on investment in associated companies is recognised using the equity method. Under this method, the company's share of
post-acquisition profit or loss of the associated company is recognised in the profit and loss account, and its share of post-acquisition
movements in reserve is recognised in reserves. Dividend distribution by the associated companies is adjusted against the carrying
amount of the investment.
iv) Dividend income is recognised when the right to receive dividend is established.
v) Other income is recognised on accrual basis.

2.12 Related party transactions

Transactions with related parties in respect of sale of petroleum products, the prices of which are regulated and notified by the Government, and
crude oil purchases, the prices of which are determined in accordance with the agreed pricing formula as approved by the Government, are recorded
at the prices so notified or determined.
 ANNUAL REPORT 2007 95

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

In case of sale of deregulated petroleum products, the transactions are made at Company notified prices for all its customers. In certain cases,
reduced price is allowed on commercial considerations. All other transactions are carried out on commercially negotiated terms.

2.13 Borrowing cost

Borrowing cost related to the financing of major projects during construction phase is capitalised. All other borrowing costs are expensed as incurred.

2.14 Staff retirement benefits

The main features of the retirement benefit schemes operated by the Company for its employees are as follows:
(i) Defined benefit plans
A pension plan for its Management Staff and a gratuity plan for its Non-Management Staff. The pension plan is invested through an approved
trust fund while the gratuity plan is book reserve plan. Contributions are made in accordance with actuarial recommendation. Actuarial valuations
are conducted annually using projected unit credit method. The obligation is measured at the present value of the estimated future cash outflows.
Unrealised net gains and losses are amortised over the expected remaining service of current members.
(ii) Defined contribution plans
Approved contributory provident fund for all employees to which equal monthly contribution is made both by the Company and the employee
at the rate of 10% of basic salary.

2.15 Employees compensated absences

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

2.16 Financial instruments

Financial assets and financial 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 asset and in case of financial liability when the
obligation specified in the contract is discharged, cancelled or expired. The particular measurement methods adopted are disclosed in the individual
policy statements associated with each item as shown below:
a) 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.
b) Provisions
Provisions are recognised when a Company has a legal or constructive obligation as a result of past event if it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made.
96 AT T O C K R E F I N E RY L I M I T E D

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

c) Trade and other receivables

Trade receivables and other receivables are recognised and carried at original invoice amount/cost less an allowance for any uncollectible
amounts.
d) Cash and cash equivalents
Cash in hand and at banks are carried at fair value. For the purpose of cash flow statement, cash and cash equivalents consist of cash in hand,
balances in banks and highly liquid short term investments.

3. Critical accounting estimates and The preparation of financial statements in conformity with the approved accounting standards requires the use of certain critical accounting estimates. It also
judgments requires management to exercise its judgment in the process of applying the Company's accounting policies. Estimates and judgments are continually
evaluated and are based on historical experience, including expectation of future events that are believed to be reasonable under the circumstances. The
areas where various assumptions and estimates are significant to the Company's financial statements or where judgment was exercised in application of
accounting policies are as follows:

i) Revaluation surplus on freehold land - note 11.1

ii) Estimate of recoverable amount of investment in associated companies - note 13.1
iii) Price adjustment related to crude oil purchases - note 23.1
iv) Provision for retirement benefits - note 28
v) Provision for taxation - note 30

2007 2006
Rupees Rupees

4. Share capital Authorised

100,000,000 (2006: 100,000,000) ordinary shares of Rs 10 each 1,000,000,000 1,000,000,000

Issued, subscribed and paid up

Shares issued for cash

8,000,000 (2006: 8,000,000) ordinary shares of Rs 10 each 80,000,000 80,000,000

Shares issued as fully paid bonus shares

48,862,000 (2006: 37,489,600) ordinary shares of Rs 10 each 488,620,000 374,896,000

56,862,000 (2006: 45,489,600) ordinary shares of Rs 10 each 568,620,000 454,896,000

The Attock Oil Company Limited held 31,274,100 (2006: 23,882,040) ordinary shares at the year end.
 ANNUAL REPORT 2007 97

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

2007 2006
Rupees Rupees

5. Reserves and surplus Capital reserve

Liabilities taken over from The Attock Oil Company Limited no longer required 4,799,955 4,799,955
Capital gain on sale of building 653,906 653,906
Insurance and other claims realised relating to pre-incorporation period 494,645 494,645
Donations received for purchase of hospital equipment 4,000,000 4,000,000
Bonus shares issued by associated company 35,000,000 35,000,000
44,948,506 44,948,506
Revenue reserves
Special reserve for expansion/modernisation - note 5.1
Additional revenue under processing fee formula related to 1990-91 and 1991-92 32,929,000 32,929,000
Surplus profits under the import parity pricing formula 2,513,232,607 2,154,699,247
Surplus profits of associate under the import parity pricing formula 453,912,438 329,803,946
3,000,074,045 2,517,432,193
General reserve 55,000 55,000
Surplus - unappropriated profit 2,326,698,240 1,034,102,620
5,326,827,285 3,551,589,813
5,371,775,791 3,596,538,319

5.1 Represents amounts retained as per stipulations of the Government under the pricing formula and is available only for offsetting any future loss or
making investment in expansion or upgradation of the refinery. Transfer to / from special reserve is recognised at each quarter end and is reviewed
for adjustment based on profit / loss on an annual basis.

6. Surplus on revaluation
of freehold land
7. Long term loans - secured
This represents surplus over book value resulting from revaluation of freehold land as referred to in note 11.1 and is not available for distribution to shareholders.
2007 2006
Rupees Rupees
Syndicate Financing Facility – 3,597,000,000
Morabaha Financing Facility – 950,000,000
– 4,547,000,000
Less: Current portion
Syndicate Financing Facility – 899,250,000
Morabaha Financing Facility – 237,500,000
– 1,136,750,000
– 3,410,250,000
98 AT T O C K R E F I N E RY L I M I T E D

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

7.1 The Company obtained a long term syndicate financing facility of Rs 3,597 million from a consortium of banks under the lead of Faysal Bank Limited
and a separate Morabaha financing facility from Faysal Bank Limited of Rs 950 million. These facilities were repayable in eight half yearly equal
installments commencing July 2006 and carried profit at base rate (six month KIBOR) plus 2.05% per annum upto January 1, 2006 and thereafter
at base rate plus 1.90% per annum for the remaining period of facilities. These facilities were secured by first pari passu charge by way of hypothecation
over all present and future current and movable fixed assets of the Company and mortgage over immovable property.

During December 2006, the Company repaid the entire outstanding balance of these loans.

8. Short term finance The Company's short term finance facility under mark-up arrangements aggregating Rs 70 million (2006: Rs 70 million) available from MCB Bank Limited
expired during the year. The Company is in the process of arranging fresh running finance facilities from various commercial banks to the extent of Rs 3.5
billion at varying mark-up rates linked to three months and one month KIBOR.

2007 2006
Rupees Rupees
9. Trade and other payables Creditors - note 9.1 18,021,733,795 11,482,332,142
Due to The Attock Oil Company Limited - Holding Company 275,089,035 432,869,001
Due to associated companies
Pakistan Oilfields Limited 1,383,270,935 1,470,961,701
Attock Petroleum Limited 1,045,633 20,868,383
Attock Cement Pakistan Limited – 39,363
Attock Information Technology Services (Private) Limited 5,542,677 –
Accrued liabilities and provisions - note 9.1 738,703,445 225,681,895
Due to the Government under pricing formula - note 9.2 4,707,073,386 4,689,396,074
Advance payments from customers - note 9.3 5,532,717 10,518,689
Sales tax payable 7,197,593 127,011,850
Accrued mark-up / interest on long term loans – 124,133,100
Workers' Welfare Fund 131,988,739 103,033,871
Workers' Profit Participation Fund - note 9.4 65,840,211 36,869,261
Staff Provident Fund – 54,127
Deposits from customers adjustable against freight
and Government levies payable on their behalf 1,270,705 1,018,470
Security deposits 49,165,150 49,091,150
Unclaimed dividends 939,496 969,669
25,394,393,517 18,774,848,746
9.1 Creditors include an amount of Rs 5,434.461 million (2006 : Rs 1,615.257 million) in respect of crude oil price in excess of US$ 50 per barrel withheld
by the Company, pending finalisation of discount thereon, from payments made to suppliers for purchase of local crude oil as per the directive of
Ministry of Petroleum & Natural Resources (the Ministry).
 ANNUAL REPORT 2007 99

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

Further, as per directive of the Ministry dated May 31, 2006, the Company is required to make payments alongwith the mark-up generated after the
final discount rates in respect of crude oil price in excess of US$ 50 per barrel are decided between the parties and such withheld amounts are being
retained in a designated 90-day interest bearing account. Accumulated profits amounting to Rs 377.568 million (2006: Rs 32.000 million) earned
thereon are included in accrued liabilities and provisions.

9.2 The amount due to the Government under pricing formula is net of Rs 2,404 million (2006: Rs 1,570 million) price differential claim as referred to in
note 21.1 with a corresponding effect in creditors.

9.3 Advance payments from customers include Rs 2,855,486 (2006: nil) from Pakistan Oilfields Limited, an associated company, against sales of LPG.

2007 2006
Rupees Rupees

9.4 Workers' Profit Participation Fund

Balance at the beginning of the year 36,869,261 118,649,647
Add: Interest on funds utilised in the
Company's business - note 26 528,081 2,168,584
37,397,342 120,818,231
Less:Amount paid to the Fund 37,261,056 120,541,846
136,286 276,385
Add: Amount allocated for the year - notes 27 and 31 65,703,925 36,592,876
65,840,211 36,869,261

10. Contingencies and commitments Contingencies:

i) Performance and commitment guarantees arranged by the Company

on behalf of Attock Gen Limited (AGL), an associated company,
as main sponsors 214,255,000 –
ii) Guarantees issued by banks on behalf of the Company 300,000 250,000
iii) Claims for land compensation contested by the Company 1,300,000 1,300,000
iv) Price adjustment related to crude oil purchases as referred to in note 23.1,
the amount of which can not be presently quantified – –

Commitments outstanding:
i) Capital expenditure 55,423,626 41,868,873
ii) Letters of credit other than for capital expenditure 125,775,143 33,659,700
100 AT T O C K R E F I N E RY L I M I T E D

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

Freehold Buildings on Plant & Computer Furniture, fixtures

land freehold land machinery equipment and equipment Vehicles Total
(note 11.1)
Rupees Rupees
11. Property, plant and equipment Cost

As at July 1, 2005 1,927,250,000 69,815,152 3,720,312,389 50,842,064 58,561,368 53,664,457 5,880,445,430

Additions during the year – 541,110 84,506,557 3,253,776 4,199,500 9,961,847 102,462,790
Disposals during the year – – (100,000) (1,631,619) (725,117) (991,610) (3,448,346)
As at June 30, 2006 1,927,250,000 70,356,262 3,804,718,946 52,464,221 62,035,751 62,634,694 5,979,459,874
Additions during the year – 14,374,730 113,952,925 3,687,304 1,546,861 7,974,750 141,536,570
Disposals during the year – – – – (187,993) (290,110) (478,103)

As at June 30, 2007 1,927,250,000 84,730,992 3,918,671,871 56,151,525 63,394,619 70,319,334 6,120,518,341

Depreciation

As at July 1, 2005 – 25,475,882 2,562,496,765 35,979,188 28,931,719 37,216,765 2,690,100,319

Charge for the year – 3,162,722 320,495,102 5,837,027 5,102,287 6,920,885 341,518,023
On disposals – – (100,000) (1,492,900) (266,881) (939,648) (2,799,429)

As at June 30, 2006 – 28,638,604 2,882,891,867 40,323,315 33,767,125 43,198,002 3,028,818,913

Charge for the year – 3,908,199 331,821,362 9,047,232 4,926,473 8,239,036 357,942,302
On disposals – – – – (80,056) (290,107) (370,163)

As at June 30, 2007 – 32,546,803 3,214,713,229 49,370,547 38,613,542 51,146,931 3,386,391,052

Written down value

As at June 30, 2006 1,927,250,000 41,717,658 921,827,079 12,140,906 28,268,626 19,436,692 2,950,640,961

As at June 30, 2007 1,927,250,000 52,184,189 703,958,642 6,780,978 24,781,077 19,172,403 2,734,127,289

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

 ANNUAL REPORT 2007 101

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

11.1 Value of freehold land includes revaluation surplus of Rs 1,923.339 million arising from revaluation of freehold land in January 2001 carried out by
an independent valuer. Valuation was made on the basis of market value. The original cost of the land as at June 30, 2007 is Rs 3.911 million.

11.2 Effective from the current year, the Company has revised its estimate regarding useful life of computers. Accordingly, the annual depreciation rate
has been increased from 14.3% in previous years to 20% to reflect the pattern in which the assets' economic benefits will be consumed. Had the
change in accounting estimate not been made, the depreciation charge for the year would have been lower by Rs 4.470 million and the profit for
the year would have been higher to that extent. Correspondingly, the operating assets and equity as at June 30, 2007 would have been higher by
the same amount.

2007 2006
Rupees Rupees

11.3 The depreciation charge for the year has been allocated as follows:
Cost of sales 341,975,356 328,326,550
Administration expenses 13,360,853 10,875,215
Distribution cost 899,894 575,332
Desalter operating cost 632,500 632,500
Depreciation of subsidiary company 1,073,699 1,108,426
357,942,302 341,518,023

12. Capital work-in-progress Civil works 2,486,951 11,725,973

Plant and machinery 186,976,759 161,182,102
Pipeline project 28,218,675 27,964,992
Power plant project - note 12.1 – 19,673,277
217,682,385 220,546,344

12.1 Cost incurred by the Company on the Power Plant Project has been fully recovered from Attock Gen Limited, an associated company, set up for
the purpose of independently operating the Power Plant.

2007 2006
Rupees Rupees
13. Long term investments Investments in associated companies
Beginning of the year 9,637,407,375 2,534,407,873
Investment in associates during the year 638,425,126 6,213,929,559
Share of profit after tax of associated companies for the year 1,418,176,624 1,142,405,143
Less: Dividend from associated companies received during the year 277,697,450 253,335,200
11,416,311,675 9,637,407,375
102 AT T O C K R E F I N E RY L I M I T E D

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

2007 2006
% age Rupees % age Rupees
Holding Holding

13.1 The Company's interest in associates are as follows:

Quoted

National Refinery Limited (NRL) - note 13.2 25 9,558,250,900 25 8,715,833,650

16,659,700 (2006: 16,659,700) fully paid
ordinary shares of Rs 10 each
Market value as at June 30, 2007: Rs 5,681 million
(2006: Rs 4,448 million)

Attock Petroleum Limited 21.70 1,311,090,646 20.91 916,949,458

8,681,400 (2006: 8,363,300) fully paid
ordinary shares including 3,500,000
(2006: 3,500,000) bonus shares of Rs 10 each
Market value as at June 30, 2007: Rs 4,352 million
(June 30, 2006: Rs 2,701 million)

Unquoted

Attock Gen Limited 30 542,053,580 – –

5,400,000 fully paid ordinary shares of Rs 100 each
Value based on net assets as at June 30, 2007: Rs 542 million

Attock Information Technology Services (Private) Limited 10 4,916,549 10 4,624,267

450,000 (2006 : 450,000) fully paid
ordinary shares of Rs 10 each
Value based on net assets as at June 30, 2007: Rs 4.92 million
(June 30, 2006: Rs 4.62 million)
11,416,311,675 9,637,407,375
 ANNUAL REPORT 2007 103

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

13.2 Based on a valuation analysis carried out by an external investment advisor engaged by the Company, the recoverable amount of investment in NRL
exceeds its carrying amount. The recoverable amount has been estimated based on a value in use calculation. These calculations have been made
on discounted cash flow based valuation methodology which assumes gross profit margin of 6.4% (2006: 6.30%), terminal growth rate of 5% (2006:
5%) and capital asset pricing model based discount rate of 14.30% (2006: 13.40%).

2007 2006
Rupees Rupees

14. Long term loans and deposits Loans to employees - considered good - note 14.1 21,079,761 20,748,226
Less: Amounts due within twelve months shown under current assets - note 19 10,990,473 9,999,521
10,089,288 10,748,705
Security deposits 865,021 865,021
10,954,309 11,613,726

14.1 Loans to employees are for purchase of car, refrigerator and for other purposes which are recoverable in 36, 24 and 60 equal monthly installments
respectively and are secured by a charge on the asset purchased and/or amount due to the employee against provident fund or a third party guarantee.
Loans to employees for refrigerator and other purposes are interest free while loans for purchase of car carry interest rates ranging from 3% to 15%
(2006: 3% to 15%) per annum. These do not include any amount outstanding for more than three years. These include an amount of Rs 3,551,595
(2006: Rs 2,232,870) receivable from executives of the Company and does not include any amount receivable from Directors or Chief Executive.
The maximum amount due from executives of the Company at the end of any month during the year was Rs 3,805,412 (2006: Rs 2,493,776).

2007 2006
Rupees Rupees
14.2 Reconciliation of carrying amount of loans to executives:
Opening balance as at July 1 2,232,870 283,000
Add: Disbursements during the year 3,922,053 3,044,644
6,154,923 3,327,644
Less: Repayments during the year 2,603,328 1,094,774
Closing balance as at June 30 3,551,595 2,232,870
104 AT T O C K R E F I N E RY L I M I T E D

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

2007 2006
Rupees Rupees

15. Deferred Taxation Debit balances arising on

Provisions for obsolete stores, doubtful debts and gratuity 48,979,811 39,315,681
Accelerated depreciation allowances 124,925,071 130,284,153
Credit balance arising on finance lease arrangements (15,896,942) (31,793,885)
158,007,940 137,805,949

16. Stores, spares and loose tools Stores (including items in transit
Rs 119.67 million; 2006: Rs 82.54 million) 446,578,908 410,806,882
Spares 219,661,310 208,976,739
Loose tools 595,775 708,542
666,835,993 620,492,163
Less: Provision for slow moving items 36,000,000 34,500,000

630,835,993 585,992,163

17. Stock-in-trade Crude oil - in stock 1,488,647,552 1,310,846,837

- in transit 176,064,444 173,356,867
1,664,711,996 1,484,203,704
Semi-finished products 311,633,383 278,876,166
Finished products 1,876,300,457 1,760,727,860
Medical supplies 742,456 589,213
3,853,388,292 3,524,396,943

Finished products include stocks carried at net realisable value of Rs 236 million (2006: Rs 334 million). Adjustments amounting to Rs 43.8 million
(2006: Rs 72.9 million) have been made to closing inventory to write down stocks of finished products to their net realizable value.

18. Trade debts All debtors are unsecured and considered good.

Aggregate amount receivable from an associated company as at June 30, 2007 was Rs 1,010,953,152 (2006: Rs 1,062,120,659).
 ANNUAL REPORT 2007 105

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

2007 2006
Rupees Rupees

19. Loans, advances, deposits, Loans and advances - considered good

prepayments and other Current portion of long-term loans to employees - note 14 10,990,473 9,999,521
receivables Advances to suppliers 19,301,031 32,552,811
Advances to employees 1,728,728 1,683,662
32,020,232 44,235,994

Deposits, prepayments and current account

balances with statutory authorities
Trade deposits 285,673 285,673
Short term prepayments 17,266,084 14,297,425
Current account balances with statutory authorities in respect
of petroleum development levy, excise duty and sales tax 287,247 23,725
17,839,004 14,606,823
Other receivables
Due from associated companies
Attock Chemicals (Private) Limited – 268
National Refinery Limited 4,677,170 2,363,777
Attock Gen Limited 2,415,270 –
Attock Information Technology Services (Private) Limited – 139,817
National Cleaner Production Centre Foundation 2,464,971 522,052
Capgas (Private) Limited – 370
Attock Cement Pakistan Limited 103,492 –
Attock Industrial Products Limited (net of provision of Rs 3,015,145; 2006: Rs 3,015,145) – –
Due from Staff Pension Fund 4,096,686 1,697,890
Income accrued on bank deposits 78,867,031 39,207,362
Income Tax Refundable 3,361,978 2,939,328
Crude oil freight recoverable through inland freight equalisation margin 39,220,600 150,716,052
Other receivables 7,560,627 8,350,204
142,767,825 205,937,120
192,627,061 264,779,937

Loans to employees include Rs 2,265,248 (2006: Rs 1,289,790) due from executives of the Company and does not include any amount receivable from
Directors or the Chief Executive.
106 AT T O C K R E F I N E RY L I M I T E D

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

2007 2006
Rupees Rupees
20. Cash and bank balances Cash in hand 338,827 587,318
With banks:
On current accounts 2,804,509 4,659,995
On interest / mark-up bearing savings accounts (including
US $ 379,624; 2006: US $ 643,379) 8,877,909,761 8,028,480,228
8,881,053,097 8,033,727,541

20.1 Balances with banks include Rs 5,381.864 million (2006: 1,000.136 million) in respect of deposits placed on 90-day interest-bearing account consequent
to a directive issued by the Ministry on account of amounts withheld as referred to in note 9.1 alongwith related interest earned thereon.
20.2 A lien on the Company's savings account has been marked by a bank to the extent of guarantees issued on behalf of the Company as referred to
in note 10 (i).
20.3 Balances with banks include Rs 49.165 million (2006: Rs 49.091 million) in respect of security deposits received.
20.4 The balances in savings accounts at the year end earn weighted average interest/ mark-up of 9.73% (2006: 8.93%) per annum.

2007 2006
Rupees Rupees
21. Sales Gross sales - note 21.1 66,083,778,877 61,362,743,941
Naphtha export sales 8,232,839,936 8,512,982,645
Less:Cost of Naphtha purchased from third parties and
related handling charges recovered 1,175,285,235 1,761,308,376
7,057,554,701 6,751,674,269
Less:Duties, taxes and levies - note 21.2 13,986,554,360 12,177,586,475
59,154,779,218 55,936,831,735
21.1 Under the products import parity pricing formula, effective July 1, 2000, the Government had imposed a cap on an element of pricing of Premium
Motor Gasoline (PMG) which has not been accepted by the Company. The Company has strongly urged the Government to remove this cap. The
sales revenue to the extent of related aggregate price differential claims of Rs. 2,404 million (including Rs. 1,570 million for prior years) is not being
reflected in sales till this matter is resolved. In this context, the tax authorities have raised demands for income tax against these price differential
claims which have been contested in appeals by the Company.
2007 2006
Rupees Rupees
21.2 Duties, taxes and levies
Development surcharge 5,356,523,313 3,858,634,023
Sales tax 8,166,096,090 7,810,481,336
Custom duties and other levies 463,934,957 508,471,116
13,986,554,360 12,177,586,475
 ANNUAL REPORT 2007 107

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

22. Reimbursement due from the This represents amount due from the Government of Pakistan on account of shortfall in ex-refinery prices of certain petroleum products under the import
government under import parity parity pricing formula.
pricing formula 2007 2006
Rupees Rupees
23. Cost of sales Opening stock of semi-finished products 278,876,166 174,528,868
Crude oil consumed - note 23.1 56,326,788,162 53,529,997,346
Transportation and handling charges 1,016,614,947 1,042,847,253
Salaries, wages and other benefits - note 23.2 250,261,568 236,931,536
Printing and stationery 1,822,173 2,208,099
Chemicals consumed 347,235,336 368,336,337
Fuel and power 279,485,676 243,640,822
Rent, rates and taxes 6,524,583 5,644,009
Telephone and telex charges 1,602,062 2,309,376
Professional charges for technical services 2,455,174 2,849,672
Insurance 46,544,043 36,578,388
Repairs and maintenance (including stores and spares consumed Rs 65,330,509 ;
2006: Rs 79,543,503) 118,433,291 141,527,067
Staff transport and travelling - note 23.3 9,815,175 12,187,347
Cost of receptacles 8,618,744 24,775,920
Research and development 108,000 8,550,012
Depreciation - note 11.3 341,975,356 328,326,550
59,037,160,456 56,161,238,602
Closing stock of semi-finished products (311,633,383) (278,876,166)
58,725,527,073 55,882,362,436
Opening stock of finished products 1,760,727,860 1,369,045,483
Closing stock of finished products (1,876,300,457) (1,760,727,860)
(115,572,597) (391,682,377)
58,609,954,476 55,490,680,059

23.1 Crude oil consumed

Stock at the beginning of the year 1,484,203,704 557,049,967
Purchases 56,507,296,454 54,457,151,083
57,991,500,158 55,014,201,050
Stock at the end of the year (1,664,711,996) (1,484,203,704)
56,326,788,162 53,529,997,346
Certain crude purchases have been recorded based on provisional prices notified by the Government and may require subsequent adjustment.
108 AT T O C K R E F I N E RY L I M I T E D

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

23.2 Salaries, wages and other benefits under cost of sales, administration expenses, distribution cost and income from crude desalter operations include
the Company's contribution to the Provident Fund amounting to Rs 11,552,458 (2006: Rs 10,682,306).

23.3 Staff transport and travelling

Staff transport and travelling under cost of sales, administration expenses and distribution cost include lease rentals amounting to Rs nil
(2006: Rs 764,819) related to nil (2006: 11) motor vehicles used during the year under terminable lease agreements.

2007 2006
Rupees Rupees

24. Administration expenses Salaries, wages and other benefits - note 23.2 97,666,151 90,619,295
Staff transport, travelling and entertainment - note 23.3 12,064,930 13,600,784
Telephone and telex charges 1,484,554 1,893,125
Electricity, gas and water 4,430,040 4,023,580
Printing and stationery 3,028,350 2,408,355
Auditors' remuneration and expenses:
Statutory audit 350,000 300,000
Special certifications, half yearly review, audit of consolidated accounts and staff funds 553,000 483,500
Out of pocket expenses 82,995 91,540
985,995 875,040
Legal and professional charges 5,874,513 7,951,800
Repairs and maintenance 21,490,375 24,795,439
Subscription 5,271,778 5,444,940
Publicity 4,043,563 4,029,913
Scholarship scheme 2,054,950 1,398,801
Rent, rates and taxes 1,273,568 1,677,635
Insurance 866,898 794,336
Donations* 414,619 10,275,147
Training expenses 744,814 2,389,783
Other expenses 51,638 245,421
Depreciation - note 11.3 13,360,853 10,875,215
175,107,589 183,298,609

* No director or his spouse had any interest in the donee institutions.

 ANNUAL REPORT 2007 109

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

2007 2006
Rupees Rupees

25. Distribution cost Salaries, wages and other benefits - note 23.2 11,722,058 8,512,176
Staff transport, travelling and entertainment - note 23.3 568,338 661,935
Telephone and telex charges 209,812 174,908
Electricity, gas, fuel and water 1,476,680 1,341,193
Printing and stationery 81,097 70,976
Repairs and maintenance including packing and other stores consumed 1,295,190 1,911,219
Rent, rates and taxes 316,677 263,096
Legal and professional charges 144,000 216,285
Cost of samples 2,587 52,730
Depreciation - note 11.3 899,894 575,332
16,716,333 13,779,850

26. Finance cost Interest / mark-up on

Long term loans 233,361,071 493,541,346
Workers' Profit Participation Fund - note 9.4 528,081 2,168,584
Financial charges on liability against assets subject to finance lease – 346,028
Bank and other charges 388,827 2,368,817
234,277,979 498,424,775

27. Other charges Employees' retirement benefits

Staff gratuity benefits - note 28 15,320,547 15,378,909

Staff pension benefits - note 28 8,572,332 7,008,130

Less: Charged to subsidiary company (954,525) (852,696)
7,617,807 6,155,434
Contribution to employees old age benefits scheme 2,202,230 1,717,248
25,140,584 23,251,591
Provision for slow moving stores 1,500,000 1,500,000
Stores written off 12,560 –
Workers' Profit Participation Fund - note 9.4 51,819,052 23,926,116
Workers' Welfare Fund 23,678,616 19,234,402
102,150,812 67,912,109
110 AT T O C K R E F I N E RY L I M I T E D

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

28. Employees' defined benefit plans The latest actuarial valuation of the employees' defined benefit plans was conducted at June 30, 2007 using the projected unit credit method. Details of the
defined benefit plans are:
Defined benefit Defined benefit
Pension plan Gratuity plan
2007 2006 2007 2006
Rupees Rupees
a) The amounts recognised in the profit and loss account:
Current service cost 12,263,424 9,579,615 3,099,301 2,996,315
Interest on obligation 27,771,892 24,541,741 10,075,566 10,064,728
Expected return on plan assets (30,234,890) (26,233,559) – –
Contribution from an associated company (127,200) (160,898) – –
Net actuarial losses / (gains) recognised during the year (1,100,894) (718,769) 2,145,680 2,317,866
8,572,332 7,008,130 15,320,547 15,378,909
b) The amounts recognised in the balance sheet:
Fair value of plan assets 359,485,371 280,495,084 – –
Present value of defined benefit obligations (291,335,050) (263,054,407) (121,894,107) (96,057,559)
68,150,321 17,440,677 (121,894,107) (96,057,559)
Unrecognised actuarial gains / (losses) (64,053,635) (15,742,787) 36,094,107 20,257,559
Net liability 4,096,686 1,697,890 (85,800,000) (75,800,000)
c) Movement in the present value of defined benefit obligation:
Present value of defined benefit obligation as at July 1 263,054,407 215,382,051 96,057,559 88,577,526
Current service cost 12,263,424 9,579,615 3,099,301 2,996,315
Interest cost 27,771,892 24,541,741 10,075,566 10,064,728
Benefits paid (11,145,551) (9,714,214) (5,320,547) (4,493,785)
Actuarial (gains) / losses (609,122) 23,265,214 17,982,228 (1,087,225)
Present value of defined benefit obligation as at June 30 291,335,050 263,054,407 121,894,107 96,057,559
d) Changes in the fair value of plan assets:
Fair value of plan assets as at July 1 280,495,084 225,120,520 – –
Expected return 30,234,890 26,233,559 – –
Benefits paid (11,145,551) (9,714,214) – –
Contributions by employer 10,971,128 9,677,208 – –
Contributions by associated company 127,200 160,898 – –
Actuarial gains / (losses) 48,802,620 29,017,113 – –
Fair value of plan assets as at June 30 359,485,371 280,495,084 – –
Actual return on plan assets 79,037,510 55,250,672 – –
Expected contributions to the defined benefit pension plans for the year ending June 30, 2008 are Rs 12.6 million.
 ANNUAL REPORT 2007 111

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

Defined benefit Defined benefit

Pension plan Gratuity plan
2007 2006 2007 2006
Rupees Rupees
e) The major categories of plan assets:
Investment in equities 109,497,755 89,667,869 – –
Investment in mixed funds 136,836,898 54,852,274 – –
Cash 113,150,718 135,974,941 – –
359,485,371 280,495,084 – –

f) Significant actuarial assumptions at the balance sheet date:

Discount rate 11.00% 10.78% – –
Expected return on plan assets 11.00% 10.78% – –
Future salary increases 8.89% 8.66% – –
Future pension increases 5.71% 5.50% – –

2007 2006 2005 2004 2003

Rupees Rupees Rupees Rupees Rupees
g) Comparison for five years:

Defined Benefit Pension Plan

Present value of defined benefit obligation (291,335,050) (263,054,407) (215,382,051) (190,998,371) (176,177,000)
Fair value of plan assets 359,485,371 280,495,084 225,120,520 196,917,528 174,386,000
Surplus / (deficit) 68,150,321 17,440,677 9,738,469 5,919,157 (1,791,000)

Actuarial (gains) / losses on plan liabilities (609,122) 23,265,214 9,382,000 1,303,000 (11,671,000)
Actuarial (gains) / losses on plan assets (48,802,620) 29,017,113 13,388,000 9,384,000 10,642,000

Defined Benefit Gratuity Plan

Present value of defined benefit obligation (121,894,107) (96,057,559) (88,577,526) (80,831,692) (59,094,000)
Fair value of plan assets – – – – –
Deficit (121,894,107) (96,057,559) (88,577,526) (80,831,692) (59,094,000)
Actuarial (gains) / losses on plan liabilities 17,982,228 (1,087,225) 3,611,000 16,991,000 (1,085,000)
Actuarial (gains) / losses on plan assets – – – – –
112 AT T O C K R E F I N E RY L I M I T E D

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

2007 2006
Rupees Rupees

29. Other income Income from financial assets

Income on bank deposits 569,024,303 527,198,018
Income on other balances – 2,029
Exchange gain 269,581 2,992,990
569,293,884 530,193,037

Income from non-financial assets

Income from crude decanting 11,205,337 8,835,527
Income from crude desalter operations - note 29.1 9,264,467 10,541,984
Insurance agency commission 4,719,025 2,206,024
Rental income 3,057,084 2,003,552
Sale of scrap 10,612,725 6,957,758
Profit on sale of fixed assets 846,422 1,660,588
Calibration charges 3,742,400 3,996,300
Handling and service charges 15,900,912 21,419,332
Registration charges from carriage contractors – 20,941,563
Penalties from carriage contractors 3,888,219 15,070,661
Old liabilities written back 693,597 2,603,288
Miscellaneous 1,941,992 653,351
65,872,180 96,889,928
635,166,064 627,082,965

29.1 Income from crude desalter operations

Income 43,927,953 49,598,239

Less:Operating costs
Salaries, wages and other benefits - note 23.2 1,882,227 2,287,290
Chemical consumed 7,058,352 8,577,336
Fuel and power 16,828,288 20,449,799
Repairs and maintenance 8,262,119 7,109,330
Depreciation - note 11.3 632,500 632,500
34,663,486 39,056,255
9,264,467 10,541,984
 ANNUAL REPORT 2007 113

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

2007 2006
Rupees Rupees
30. Provision for taxation Current - for the year 476,500,000 400,000,000
Deferred - for the year (19,949,991) (45,155,916)
456,550,009 354,844,084

Numerical reconciliation between the average effective tax rate and the applicable tax rate
% %

Applicable tax rate 35.00 35.00

Tax effect of:
Income chargeable to tax at special rate and other differences 12.51 46.51
Average effective tax rate charged to profit and loss account 47.51 81.51

2007 2006
Rupees Rupees

31. Share of profit of associates Share in profit of associated companies is based on their audited financial statement
for the year ended June 30, 2007

National Refinery Limited 1,050,663,500 852,455,250

Attock Petroleum Limited 375,107,502 291,193,916
Attock Information Technology Services (Private) Limited 292,282 169,568
Attock Gen Limited 2,053,580 –
1,428,116,864 1,143,818,734
Less:Unrealised profit from intra-group transactions included in closing stocks 9,940,240 1,413,591
1,418,176,624 1,142,405,143
Less:Related charges
Workers' Profit Participation Fund - note 9.4 13,884,873 12,666,760
Workers' Welfare Fund 5,276,252 4,813,369
Taxation 13,884,873 12,666,760
33,045,998 30,146,889
1,385,130,626 1,112,258,254
(Loss) / profit of Attock Hospital (Private) Limited,
a wholly owned subsidiary - note 31.1 (502,514) 94,888
1,384,628,112 1,112,353,142
114 AT T O C K R E F I N E RY L I M I T E D

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

2007 2006
Rupees Rupees

31.1 (Loss) / Profit from Attock Hospital (Private) Limited

Revenue* 31,329,141 29,547,146
Less:Operating expenses
Salaries, wages and other benefits (including employees'
retirement benefits of Rs 1,063,935; 2006: Rs 923,156) 17,499,287 15,020,268
Medical supplies 2,953,382 2,945,262
Dietary cost 571,211 539,021
Sanitation and general services 3,433,072 3,733,226
Utilities and other office expenses 6,331,004 6,173,055
Audit fee 65,000 60,000
Depreciation 1,073,699 1,108,426
31,926,655 29,579,258

Loss before taxation (597,514) (32,112)

Provision for taxation - Current 157,000 168,000

- Deferred (252,000) (295,000)
(95,000) (127,000)

(Loss) / Profit after taxation (502,514) 94,888

* The revenue includes inter - company billings amounting to Rs 22,702,770 (2006 : Rs 21,328,674) which have not been eliminated from revenue
and costs. It is considered that this gives a fairer view of the operating results of the Group. The revenue also includes income on bank deposits
Rs 21,044 (2006: Rs 22,394).
 ANNUAL REPORT 2007 115

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

31.2 Summarised financial information of associated companies:

The assets, liabilities and equity of National Refinery Limited , Attock Petroleum Limited, Attock Information Technology Services (Private) Limited
and Attock Gen Limited as at June 30, 2007 based on their audited financial statements are as follows:
2007 2006
Rupees Rupees
Assets
National Refinery Limited 32,641,559,000 24,992,541,000
Attock Petroleum Limited 8,983,767,000 6,584,116,000
Attock Information Technology Services (Private) Limited 52,541,040 49,060,301
Attock Gen Limited 1,820,220,548 300,500
43,498,087,588 31,626,017,801
Liabilities
National Refinery Limited 19,895,170,000 15,545,821,000
Attock Petroleum Limited 5,529,470,000 4,538,425,000
Attock Information Technology Services (Private) Limited 3,378,234 2,820,320
Attock Gen Limited 13,375,281 500
25,441,393,515 20,087,066,820
Revenue
National Refinery Limited 91,326,538,000 80,894,039,000
Attock Petroleum Limited 44,130,536,000 40,839,299,000
Attock Information Technology Services (Private) Limited 13,641,500 10,366,500
Attock Gen Limited 10,531,179 –
135,481,246,679 121,743,704,500
Profit / (loss)
National Refinery Limited 4,202,654,000 3,409,821,000
Attock Petroleum Limited 1,728,606,000 1,392,606,000
Attock Information Technology Services (Private) Limited 2,922,825 1,695,684
Attock Gen Limited 6,845,267 –
5,941,028,092 4,804,122,684

The Company's share in shareholders' equity

National Refinery Limited 25.00% 25.00%
Attock Petroleum Limited 21.70% 20.91%
Attock Information Technology Services (Private) Limited 10.00% 10.00%
Attock Gen Limited 30.00% 0.00%
116 AT T O C K R E F I N E RY L I M I T E D

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

32. Related party transaction The Group is controlled by Attock Oil Company Limited which holds 55% (2006: 52.50%) of ARL's shares. 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 influence 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 33 to the consolidated financial statements.
2007 2006
Rupees Rupees
Associated companies
Sale of goods 12,941,980,204 15,315,597,351
Sale of services 76,773,297 46,784,718
13,018,753,501 15,362,382,069
Purchase of goods 7,591,741,626 9,016,821,119
Purchase of services 311,331,415 296,693,858
7,903,073,041 9,313,514,977
Holding company
Sale of services 284,675 –

Purchase of goods 1,298,842,610 1,997,891,103

Purchase of services 3,988,210 3,771,792
1,302,830,820 2,001,662,895
Employees' benefits funds
Payments made during the year 22,523,586 20,359,514

33. Remuneration of Chief Executive, The aggregate amounts charged in the financial statements for remuneration, including benefits and perquisites, were as follows:
Directors and Executives Chief Executive Directors Executives
2007 2006 2007 2006 2007 2006
Rupees Rupees Rupees Rupees Rupees Rupees
Managerial remuneration / honorarium 3,909,722 2,482,256 1,219,140 1,215,792 24,673,508 20,752,589
Company's contribution to provident
and pension funds 789,421 574,200 – – 5,209,292 4,422,443
Housing and utilities 1,037,149 834,960 – – 11,585,996 9,064,108
Leave passage 330,000 298,356 – – 2,323,690 2,256,860
6,066,292 4,189,772 1,219,140 1,215,792 43,792,486 36,496,000
No of person(s) 1 1 3 3 22 20
33.1 In addition, the Chief Executive and 19 (2006: 19) executives were provided with limited use of the Company's cars. The Chief Executive and all
executives were provided with medical facilities and 9 (2006: 9) executives were provided with unfurnished accommodation in Company owned
bungalows. Limited residential telephone facility was also provided to the Chief Executive and 13 (2006: 9) executives. Payments to Chief Executive
include Rs 789,156 representing arrears of salary for the period February 2005 to June 2006.
Fee paid to directors during the year was Rs nil (2006: Rs nil).
 ANNUAL REPORT 2007 117

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

34. Financial instruments 34.1 Financial assets and liabilities

2007 2006
Interest/markup Non-interest / Interest/markup Non-interest /
bearing markup bearing Total bearing markup bearing Total
Rupees Rupees Rupees Rupees Rupees Rupees
Financial assets:
Maturity upto one year
Trade debts – 6,235,379,020 6,235,379,020 – 4,675,412,060 4,675,412,060
Loans, advances, deposits and
other receivables – 155,772,699 155,772,699 – 215,542,199 215,542,199
Cash and bank balances
Foreign currency - US $ 22,815,414 201,063 23,016,477 38,667,078 201,063 38,868,141
Local currency 8,855,093,382 2,942,273 8,858,035,655 7,989,813,150 5,046,250 7,994,859,400
Maturity after one year
Long term investments – 11,416,311,675 11,416,311,675 – 9,637,407,375 9,637,407,375
Long term loans and deposits – 10,954,309 10,954,309 – 11,613,726 11,613,726
8,877,908,796 17,821,561,039 26,699,469,835 8,028,480,228 14,545,222,673 22,573,702,901
Financial liabilities:
Maturity upto one year
Long term loans and lease obligations
Local currency – – – 1,136,750,000 – 1,136,750,000
Short term finance – – – – – –
Trade and other payables 9,471,565,027 15,917,290,773 25,388,855,800 1,615,257,575 17,149,072,482 18,764,330,057
Maturity after one year
Long term loans and lease obligations
Local currency – – – 3,410,250,000 – 3,410,250,000
Staff gratuity – 85,800,000 85,800,000 – 75,800,000 75,800,000
9,471,565,027 16,003,090,773 25,474,655,800 6,162,257,575 17,224,872,482 23,387,130,057
Off balance sheet items
Commitments (other than letters of credit) – 55,423,626 55,423,626 – 41,868,873 41,868,873
Letters of credit – 125,775,143 125,775,143 – 33,659,700 33,659,700
Bank guarantees – 214,555,000 214,555,000 – 250,000 250,000
– 395,753,769 395,753,769 – 75,778,573 75,778,573
34.2 Concentration of credit risk
The Company's credit risk is primarily attributable to its trade debts and placements with banks. The sales are essentially to six oil marketing companies
and reputable foreign customers. The Company's placements are with reputable banks. Due to the high credit worthiness of corresponding parties
the credit risk is considered minimal.
34.3 Currency risk
Currency risk is the risk of loss through changes in foreign currency rates. The exchange risk against foreign currency liabilities has been hedged
by the Company through foreign currency deposits.
118 AT T O C K R E F I N E RY L I M I T E D

Notes to the Consolidated Financial Statements

for the year ended June 30, 2007

34.4 Interest rate risk

The effective interest / mark up rates for the monetary financial assets and liabilities are mentioned in respective notes to the financial statements.
34.5 Liquidity risk
Liquidity risk reflects an enterprise's inability in raising funds to meet commitments. The Company follows an effective cash management and planning
policy to ensure availability of funds and to take appropriate measures for new requirements.
34.6 Fair value of financial assets and liabilities
The carrying value of financial assets and liabilities approximates their fair value except for long term investments, which are stated at cost.

2007 2006
35. General 35.1 Earnings per share
Profit for the year after taxation Rs. 1,888,961,472 Rs. 1,192,870,859
Number of ordinary shares outstanding during the year 56,862,000 56,862,000
Earnings per share Rs. 33.22 Rs. 20.98
Basic earnings per share for the year 2006 reported in the previous year was Rs 26.22. This has been restated on account of 11,372,400 bonus
shares issued without consideration during the year ended June 30, 2007.
There is no dilutive effect on the basic earnings per share of the Company for the year ended June 30, 2007.
35.2 Capacity and production
Against the designed annual refining capacity of 14,240,000 (2006: 14,280,000) US barrels the actual throughput during the year was 14,074,644
(2006: 14,567,216) US barrels. The actual throughput was lower than the annual refining capacity on account of the plant shut down for maintenance
and reductions in throughput to minimize losses during adverse periods of refining margins.
35.3 Number of employees
Total number of employees at the end of the year was 763 (2006: 706).
35.4 Corresponding figures
Sales for the corresponding year were net of discount of Rs. 108,693,725 which has now been disclosed separately in the profit & loss account.
35.5 Non adjusting events after the balance sheet date
The Board of Directors, in its meeting held on September 10, 2007, has proposed for the approval of members at the next Annual General Meeting
(i) a 40% cash dividend of Rs. 4 per share and (ii) an issue of bonus share in the proportion of one share for every four shares held i.e. 25% out of
unappropriated profits. These financial statements do not include the effect of these appropriations which will be accounted for in the financial
statements for the year ending June 30, 2008 as follows:
Transfer from unappropriated profit to: Rupees
Proposed dividend 227,448,000
Reserve for issue of bonus shares 142,155,000
35.6 Date of authorisation
These financial statements have been authorised for issue by the Board of Directors of the Company on September 10, 2007.

Chief Executive Director

 ANNUAL REPORT 2007

Form of Proxy I / We

Attock Refinery Limited of

being member(s) of Attock Refinery Limited holding
ordinary shares hereby appoint Mr./ Mrs./ Miss
of another member of the Company or failing him / her
of
another member of the Company as my / our proxy in my / our absence to attend and vote for me / us and on my / our behalf at the Twenty
Nineth Annual General Meeting of the Company to be held on Thursday, 25th October, 2007 at 11:00 a.m. at Pearl Continental Hotel,

Rawalpindi and at any adjournment thereof.

As witness my / our hands seal this day of 2007.

Signed by
in the presence of

CDC Account No.

Folio No. Signature on
Participant I.D. Account No. Five Rupees
Revenue Stamp
.
The Signature should agree
with the specimen registered
with the Company
.

Important:
1. This Proxy Form, duly completed and signed, must be received at the Shares i. Attested copies of NIC or the passport of the beneficial owners and the proxy
Department of M/s. Noble Computer Services (Pvt) Limited, 2nd Floor, Sohni shall be provided with the proxy form.
Centre, BS 5&6, Main Karimabad, Block-4, Federal B Area, Karachi-75950,
ii. The proxy shall produce his original NIC or original passport at the time of
Pakistan, not less than 48 hours before the time of holding the meeting.
the meeting.
2. If a member appoints more than one proxy and more than one instruments of
iii. In case of a corporate entity, the Board of Directors resolution / power of
proxies are deposited by a member with the Company, all such instruments of
attorney with specimen signature shall be submitted (unless it has been
proxy shall be rendered invalid.
provided earlier) alongwith proxy form to the Company.
3. For CDC Account Holders / Corporate Entities

In addition to the above the following requirements have to be met.

 AFFIX
CORRECT
POSTAGE
The Company Secretary
ATTOCK REFINERY LIMITED
P.O. Refinery, Morgah,
Rawalpindi - 46600
ANNUAL REPORT 2007