P. 1
anar2011

anar2011

|Views: 1|Likes:
Published by MSA-ACCA

More info:

Published by: MSA-ACCA on Feb 26, 2012
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

02/26/2012

pdf

text

original

CONTENTS

Corporate Profile Vision & Mission Statement Notice of Annual General Meeting Directors’ Report Pattern of Holding of the Shares Statement of Compliance with the Code of Corporate Governance Statement of Compliance with the Best Practices on Transfer Pricing for the Year Ended: June 30, 2011 Review Report to the Members on Statement of Compliance with Best Practices of Code of Corporate Governance Auditors’ Report To The Members Balance Sheet Profit and Loss Account Cash Flow Statement Statement of Comprehensive Income Statement of Changes in Equity Notes to and Forming Part of the Financial Statements Form of Proxy

2 3 4 5 9 13 15 16 17 18 20 21 22 23 24

Annual Report 2011

1

CORPORATE PROFILE

BOARD OF DIRECTORS

Mian Hassan Mansha Chairman /Chief Executive Mr. Khalid Qadeer Qureshi Mr. Shahid Zulfiqar Khan Mr. Mahmood Akhtar Mr. Shahzad Ahmad Malik Ms.. Nabiha Shahnawaz Cheema Mr. Badar-ul-Hassan Mr. Khalid Qadeer Qureshi Member / Chairman Mr. Shahzad Ahmad Malik Member Ms. Nabiha Shahnawaz Cheema Member Mr. Tanvir Khalid Mr. Khalid Mahmood Chohan Habib Bank Limited United Bank Limited Allied Bank Limited National Bank of Pakistan Bank Alfalah Limited Faysal Bank Limited Askari Bank Limited Habib Metropolitan Bank Limited Soneri Bank Limited Silk Bank Limited BankIslami Pakistan Limited Meezan Bank Limited HSBC Bank Middle East Limited A. F. Ferguson & Co. Chartered Accountants

AUDIT COMMITTEE

CHIEF FINANCIAL OFFICER COMPANY SECRETARY BANKERS OF THE COMPANY

AUDITORS OF THE COMPANY

LEGAL ADVISOR OF THE COMPANY Cornelius, Lane & Mufti Advocates & Solicitors REGISTERED OFFICE 53 - A, Lawrence Road, Lahore - Pakistan UAN: 042-111-11-33-33 1-B, Aziz Avenue, Canal Bank, Gulberg-V, Lahore - Pakistan Tel: +92-42-35717090-96, 35717159-63 Fax: +92-42-35717239 Website: www.nishatpower.com Hameed Majeed Associates (Pvt.) Ltd. Financial & Management Consultants H.M. House, 7-Bank Square, Lahore - Pakistan. Tel: 042-37235081-2 66-K.M, Multan Road, Jambar Kalan, Tehsil Pattoki, District Kasur.

HEAD OFFICE

SHARE REGISTRAR

PLANT

2

Nishat Power Limited

VISION STATEMENT ENLIGHTEN THE FUTURE THROUGH EXCELLENCE. COMMITMENT. INTEGRITY AND HONESTY MISSION STATEMENT TO BECOME LEADING POWER PRODUCER WITH SYNERGY OF CORPORATE CULTURE AND VALUES THAT RESPECT COMMUNITY AND ALL OTHER STAKEHOLDERS. Annual Report 2011 3 .

Account Number and Participant Account Number to produce at the time of attending the meeting. 7-Bank Square. received in order at Share Registrar. 2011 NOTES: 1. Proxies in order to be effective must reach the Company’s Registered Office not later than 48 hours before the time for holding the meeting. The Share Transfer Books of the Company will remain closed from 24-10-2011 to 31-102011 (both days inclusive).m. Lahore to transact the following business: 1. Lahore upto 1:00 p. 4 Nishat Power Limited . at registered office 53-A Lawrence Road. 2011 together with Directors’ and Auditors’ reports thereon. 3. Hameed Majeed Associates (Pvt) Ltd. To confirm minutes of the last Meeting. Proxies of the Members through CDS shall be accompanied with attested copies of their CNIC. on 22-10-2011 will be considered in time for attending of meeting. Any other matter with the permission of the chair BY ORDER OF THE BOARD LAHORE September 05. 2.NOTICE OF ANNUAL GENERAL MEETING NOTICE is hereby given that Annual General Meeting of the members of Nishat Power Limited (the Company) will be held on October 31.m. A member eligible to attend and vote at this meeting may appoint another member as his/ her proxy to attend and vote instead of him/her. 3. Shareholders are requested to immediately notify the change of address. KHALID MAHMOOD CHOHAN (Company Secretary) 2. To appoint External Auditors of the Company for the year 2011-12 and fix their remuneration. 2011 (Monday) at 2:30 p. if any. Physical transfers/CDS transactions/IDs. 4. The shareholders through CDC are requested to bring original CNIC. To receive and adopt the Audited Accounts of the Company for the year ended June 30. HM House.

50 million (2010: Rs 222. PRINCIPAL ACTIVITY: The principal activity of the Company is to build.52 million) resulting in a gross profit of Rs 4. sponsors.440. Tehsil Pattoki. The current year’s net profit after tax amounts to Rs 1.892.879. Annual Report 2011 5 . The Company had turnover of Rs 20.84 million). NTDCL. Pakistan. This was only possible due to the trust invested by our shareholders. Punjab. operate and maintain a fuel fired power plant based on Reciprocating Engine Technology having gross capacity of 200MW ISO in Jamber Kalan.89 million (2010: Rs 1.08 million resulting earnings per share of Rs 5.307 compared to previous year’s profit after tax of Rs 47. the company has successfully completed its first year of commercial operations after achieving COD on 9th June 2010.119. 2011 reduced to Rs.36 million) during the first complete year of operations against operating cost of Rs 16. as a result of which the total receivables from NTDCL on June 30. The Company took up the matter not only with NTDCL.473 GWh of electricity to its customer (NTDCL) during the year.21 million.20 million last year.18 million and earnings per share of Rs 0. 2011.82 million compared to Rs 72.39 million (2010: Rs 795.018.DIRECTORS’ REPORT The Board of Directors of Nishat Power Limited (The Company) is pleased to present Annual Report with the Audited Financial Statements of the Company together with Auditors’ Report thereon for the financial year ended June 30.01 million.867.135. but also with the concerned Ministries in the Government of Pakistan.31% average capacity factor and dispatched 1. own. lenders and other stakeholders. FINANCIAL RESULTS: By the grace of Almighty Allah. 6. out of which overdue receivables were Rs 4.986. The Company earned profit before tax of Rs 1. District Kasur.374. OPERATIONS AND SIGNIFICANT EVENTS: a) Operational results: The plant operated at an optimal efficiency with 86. the Company’s sole customer continues to default on its payment obligations.

937 0.53 342.31 3. KEY OPERATING AND FINANCIAL DATA: Fiscal year ending June 30. while maintaining short-term rating at “A1 +” (A one plus).667. 2011 2010 (Rupees in Millions) 20.018 5.89 14. These ratings denote a very low expectation of credit risk and minimization of operational risks.844.18 16. Procurement & Construction (EPC) contractor last year.54 2.36 47.879. 2011) c) Payment of Liquidated Damages During the year.540.307 15.135 9. subscribed and paid up capital Long term financing Short term financing Generation (MWH) Earnings per share-basic and diluted (Rs.018.222. CORPORATE SOCIAL RESPONSIBILITY: During the year the Company has made contribution in the Prime Minister Flood Relief Fund for the flood victims in August 2010.44 1.89 13.) Share prices (Market value rupees per share) INTERNAL AUDIT AND CONTROL: The Board has set up an independent audit function headed by a qualified person reporting to the Audit Committee.08 15.163.540. ENVIRONMENTAL PROTECTION MEASURES: Environmental monitoring for Emissions from Diesel Generators and testing of waste water is conducted on quarterly basis for compliance of National Environmental Quality Standards (NEQS). Company paid liquidated damages to NTDCL for delay in achieving Commercial Operations Date (COD).10 3.792.986. The scope of internal auditing within the Company is clearly defined which broadly involves review and evaluation of its’ internal control system.193.74 3.473.89 1.80 1.b) Upgraded Credit Rating: The Pakistan Credit Rating Agency (PACRA) has upgraded the long-term entity rating of the Company to “AA” (Double A) (Previous: AA-). (PACRA – Press Release April 14. Turnover Net profit Total non-current assets Issued. These liquidated damages have been paid from liquidated damages recovered from Engineering.94 6 Nishat Power Limited .

Nabiha Shahnawaz Cheema Syed Iqbal Ashraf appointed in place of Syed Hassan Irtiza Kazmi on October 27. International Financial Reporting Standards (IFRS). Shahzad Ahmad Malik Mr. 2010. Muhammad Shahzad Sadiq (ABL) Syed Hasan Irtiza Kazmi (NBP) Syed Iqbal Ashraf (NBP) Mr. The following comments are acknowledgement of Company’s commitment to high standards of Corporate Governance and continuous improvement. 5. cash flows and changes in equity.080 During the year under review. four meetings of the Board of Directors were held. Khalid Qadeer Qureshi Mr. Value of investments in respect of retirement benefits fund: Provident Fund: 30th June. 2011 is Rs. Proper books of account of the company have been maintained. The system of internal control. ! The financial statements. # 1 2 3 4 5 6 7 8 9 10 11 Mian Hassan Mansha (Chief Executive/Director) Mian Raza Mansha Mr. have been followed in preparation of financial statements and any departure there from has been adequately disclosed. attendance position was as under: Name of Directors No. Annual Report 2011 7 .CORPORATE AND FINANCIAL FRAMES WORK: The Company Management is fully cognizant of its responsibility as recognized by the formulated Companies Ordinance provisions and Code of Corporate Governance issued by the Securities and Exchange Commission of Pakistan (SECP). There are no doubts upon Company’s ability to continue as going concern. prepared by the management of the company present fairly its state of affairs. which is in place. is being continuously reviewed internally. Shahid Zulfiqar Khan Mr. of Meetings Attended 4 1 3 3 4 3 1 1 1 1 1 ! ! ! ! ! ! ! ! Sr. The process will continue and any weakness in controls will be removed. as applicable in Pakistan.713. Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment. Aftab Ahmad Khan Mr. the result of its operations. Mahmood Akhtar Ms. There has been no material departure from the best practices of corporate governance as detailed in the listing regulations.

NTDCL. 2011. Nabiha Shahnawaz Cheema appointed in place of Mr. 2011 is attached. CHIEF EXECUTIVE OFFICER Lahore: September 5th. The Board also recognized the contribution made by a very dedicated team of professionals and engineers who served the Company with full enthusiasm. Muhammad Shahzad Sadiq Nominee Allied Bank Limited on March 31. Wartsila and other business partners for their trust and continued support to the Company.Mr. RELATED PARTIES: The transactions between the related parties were carried out at arm’s length prices determined in accordance with the comparable uncontrolled prices method. Ferguson. ACKNOWLEDGEMENT: The Board of Directors appreciate the valued shareholders. AUDITORS: The present auditors M/s A. 2011. We appreciate all of our employees for demonstration of their commitment and responsibility to ensure and maintain safe and reliable operations of the power complex and we hope that the same spirit of devotion shall remain intact in the future ahead to the Company to achieve successful results for the Company and its shareholders. PATTERN OF SHAREHOLDING: The statement of pattern of shareholding as on June 30. DIVIDENDS: Due to cash flow constraints and increased receivables. the Board has decided not to declare any dividend for the year. Financial Institution. offer themselves for re-appointment for the year 2011-12. Ms. Mahmood Akhtar appointed in place of Mian Raza Mansha and Mr. 2011 8 Nishat Power Limited . The Company has fully complied with the best practices on transfer pricing as contained in the Listing Regulations of Stock Exchanges in Pakistan. CORPORATE GOVERNANCE: The Statement of Compliance with the best practices of Code of Corporate Governance is annexed. Chartered Accountants retire and being eligible. Aftab Ahmad Khan respectively on February 25. PPIB. Shahid Zulfiqar Khan and Mr. F. The Audit Committee of the Board has recommended the reappointment of the retiring auditors.

22 0.000 564.000 354.531 188.500 213.03 0.45 0.08 0.746 PERCENTAGE OF TOTAL CAPITAL 0.68 0.000 374.30 0.595 208.09 0.500.12 0.500 299.05 0.000.12 0.14 0.04 0.06 0.455 1.806 2.26 0.08 0.17 0.07 0.12 0.17 0.759 281.000 175.06 0.500 170.300 586.27 0.39 0.05 0.05 0.20 0.364 604.755 130.652 963.935 631.21 0.64 0.23 0.077 350.000 142.05 0.18 0.28 0.000 545.341 420.677 1.16 Annual Report 2011 9 .028.000 1.000 407.00 0.591.600.646 2.PATTERN OF SHAREHOLDINGS AS ON JUNE 30.000 1.197 232.29 0.000 176.066.586.012 781.000 295.06 0.633 2.000 275.442 582.619 500.388.08 0.000 621.08 0.18 0.866 752.15 0. 2011 NUMBER OF SHAREHOLDERS 169 1982 597 806 287 78 79 66 37 18 20 16 28 8 13 10 3 7 3 7 4 3 26 3 2 2 1 5 1 1 2 1 1 1 1 8 2 1 1 2 1 1 5 3 1 1 2 1 2 1 1 SHAREHOLDING FROM TO 1 101 501 1001 5001 10001 15001 20001 25001 30001 35001 40001 45001 50001 55001 60001 65001 70001 75001 80001 85001 90001 95001 100001 105001 110001 115001 120001 125001 140001 145001 165001 170001 175001 185001 195001 200001 210001 220001 245001 270001 290001 295001 300001 345001 370001 395001 415001 495001 540001 560001 100 500 1000 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 55000 60000 65000 70000 75000 80000 85000 90000 95000 100000 105000 110000 115000 120000 125000 130000 145000 150000 170000 175000 180000 190000 200000 205000 215000 225000 250000 275000 295000 300000 305000 350000 375000 400000 420000 500000 545000 565000 TOTAL NUMBER OF SHARES HELD 8.73 0.402.11 0.41 0.06 0.588 1.16 0.566 222.882 217.000 799.04 0.15 0.000 223.468.757 1.280.42 0.370 691.800 411.694 120.10 0.940 518.328 1.350 307.06 0.000 906.45 0.10 0.916 1.

000 3.000 4.56 0.000 1.100.34 0.85 8.000 5.000 3.000 844.951.19 0.000 180.000 4.671.21 0.20 0.116 30.382 619.24 0.47 0.30 0.18 0.07 1.627 2.53 1.000 1.245 4.47 51.30 1.100.28 0.200.69 2.689 1.168 2.62 0.59 0.23 0.708 1.316 723.350.000 1.807.000 900.999 7.000 4.000 2.137.000 1.51 0.500 PERCENTAGE OF TOTAL CAPITAL 0.645.004.500 850.155 354.800.58 0.869 1.31 0.158.24 0.615.002.645.500 676.000 672.000 763.000 3.500.946 751.NUMBER OF SHAREHOLDERS 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Total 4.488 4.744 599.00 10 Nishat Power Limited .85 0.560.000 800.000.46 0.17 0.088.29 1.522 1.000 3.599 775.793 651.000.000.40 1.22 0.08 1.00 100.500.220.90 1.16 0.049.850 5.408.19 0.27 1.149 13.645.200.007 2.145.18 0.25 0.32 0.149 3.22 0.877 2.499 628.66 0.064.000 1.42 0.34 0.200.999.17 0.000 2.16 3.504 1.57 0.17 1.369 SHAREHOLDING FROM TO 565001 595001 615001 625001 650001 670001 675001 720001 750001 760001 770001 795001 840001 845001 895001 995001 1000001 1045001 1095001 1135001 1195001 1215001 1495001 1645001 1670001 1805001 2000001 2060001 2095001 2200001 2345001 2995001 3145001 3195001 3795001 3825001 4155001 4495001 4555001 4610001 4950001 5405001 5995001 7645001 13645001 29995001 180585001 570000 600000 620000 630000 655000 675000 680000 725000 755000 765000 775000 800000 845000 850000 900000 1000000 1005000 1050000 1100000 1140000 1200000 1220000 1500000 1650000 1675000 1810000 2005000 2065000 2100000 2205000 2350000 3000000 3150000 3200000 3800000 3830000 4160000 4500000 4560000 4615000 4955000 5410000 6000000 7650000 13650000 30000000 180590000 TOTAL NUMBER OF SHARES HELD 569.826.585.89 0.

428. 5.Categories of Members 1. NON BANKING FINANCIAL INSTITUTIONS INSURANCE COMPANIES MODARABAS AND MUTUAL FUNDS SHAREHOLDERS HOLDING 10% OR MORE (Also included in Joint Stock Companies & Financial Institutions) GENERAL PUBLIC Local Foreign OTHERS Investment Companies Joint Stock Companies Pension Fund and Miscelaneous Shares Held 1.071 Nil 73.414 1.91 6.17 55. 7. 4.59 0.00 54. 51. 2.842.624 250. 8. THEIR SPOUSE AND MINOR CHILDREN ASSOCIATED COMPANIES.041.278.732 22. DEVELOPMENT FINANCIAL INSTIRUTIONS. DIRECTORS.53 9.835 14.01 3.976 216.80 1.33 61.499 196.07 0.000 619.805 Percentage 0.918 6.869.641.671.59 0. CEO.87 Nil 20. 6. Annual Report 2011 11 .502 194.762. UNDERTAKINGS AND RELATED PARTIES (Also included in Joint Stock Companies & Financial Institutions) NIT AND ICP BANKS.

) 10. Khalid Qadeer Qureshi 3. MODARABAS AND MUTUAL FUNDS 1.762.80 6. NATIONAL BANK OF PAKISTAN ( B ) NIT & ICP ( C ) DIRECTORS.24 12 Nishat Power Limited .428.00 17. UNDERTAKINGS AND RELATED PARTIES 1.000 DATE 02.000 500 NIL 180.59 0.02.976 196. 619. Mr.732 73. THEIR SPOUSE AND MINOR CHILDREN 1. DEVELOPMENT FINANCE INSTITUTIONS.641. Mr.01 3.645.405.01 10.116 NIL % 51.2011 RATE (RS. Mr.Shahzad Ahmad Malik ( D ) EXECUTIVES ( E ) PUBLIC SECTOR. INVESTMENT COMPANIES INSURANCE COMPANIES FINANCIAL INSTITUTIONS MODARABAS.. NON-BANKING FINANCE INSTITUTIONS.2011 03.955 35.955 13.842.632. Mian Hassan Mansha 2.632.17 1.00 INFORMATION UNDER CLAUSE XIX (j) OF THE CODE OF CORPORATE GOVERNANCE NAME OF CEO/DIRECTOR/CFO/COMPANY SECRETARY AND THEIR SPOUSE AND MINOR CHILDREN 1. Mahmood Akthar 4. Mr. COMPANIES AND CORPORATIONS JOINT STOCK COMPANIES ( F ) BANKS.850 51.499 6. ETC. 3. Mahmood Akthar DIRECTOR DIRECTOR NO. 2011 SHARES HELD ( A ) ASSOCIATED COMPANIES.00 0.918 22.0003 0.414 CHIEF EXECUTIVE / DIRECTOR DIRECTOR DIRECTOR DIRECTOR 1 1 1.0001 55. NISHAT MILLS LIMITED 2.06.86 0. INSURANCE COMPANIES.91 20. Mr.Shahzad Ahmad Malik 2. MUTUAL FUNDS & LEASING COMPANIES.33 ( G ) SHAREHOLDERS HOLDING TEN PERCENT OR MORE VOTING INTREST IN THE LISTED COMPANY 1.INFORMATION UNDER CLAUSE XIX (I) OF THE CODE OF CORPORATE GOVERNANCE AS ON JUNE 30. 4.00 0. CEO. ALLIED BANK LIMITED 180. 2. OF SHARES 500 1. NISHAT MILLS LIMITED 2.

The minutes of the meetings were appropriately recorded and circulated. which has been signed by all the directors and employees of the Company. The meetings of the Board were presided over by the Chairman and. Four casual vacancies occurred in the board and were filled up same day. in his absence.STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE FOR THE YEAR ENDED JUNE 30. 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. Annual Report 2011 13 . has been declared as a defaulter by that stock exchange. No orientation course has been arranged during the year. a DFI or an NBFI or. 6. 7. including their remuneration and terms and conditions of employment have been duly approved by the Board. 2011 This statement is being presented to comply with the Code of Corporate Governance contained in listing regulations of Karachi and Lahore Stock Exchanges respectively for the purpose of establishing a framework of good governance. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the Board. The Company encourages representation of independent non-executive directors and directors representing minority interests on its Board of Directors. by one of the directors present elected by the Board for this purpose and the Board met at least once in every quarter. The appointment of CFO. 4. 2. 12. including appointment and determination of remuneration and terms and conditions of employment of the CEO and other executive directors. The Board has developed a vision/mission statement. 3. 9. were circulated at least seven days before the meetings. have been taken by the Board. The Company has applied the principles contained in the Code in the following manner: 1. 8. overall corporate strategy and significant policies of the Company. Company Secretary and Head of Internal Audit. 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. 11. including this Company. along with agenda and working papers. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained. The Company has prepared a ‘Statement of Ethics and Business Practices’. At present the Board includes independent non-executive directors. 5. 10. The directors have confirmed that none of them is serving as a director in more than ten listed companies. being a member of a stock exchange. whereby a listed company is managed in compliance with the best practices of corporate governance. Written notices of the Board meetings. All the powers of the Board have been duly exercised and decisions on material transactions.

The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard. two are nonexecutive directors including the Chairman of the committee. The terms of reference of the committee have been formed and advised to the committee for compliance. of whom. We confirm that all other material principles contained in the Code have been substantially complied with. 14. 20. (MIAN HASSAN MANSHA) CHIEF EXECUTIVE NIC Number: 35202-1479111-5 14 Nishat Power Limited . The meetings of the audit committee were held at least once every quarter prior to approval of interim and final results of the Company and as required by the Code. 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. The audit committee is continued and it comprises 3 members. 15. The Company has complied with all the corporate and financial reporting requirements of the Code. 19. 17. The directors. that they or any of the partners of the firm. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under the Quality Control Review programme of the Institute of Chartered Accountants of Pakistan. The Board has set-up an effective internal audit function who is considered suitably qualified and experienced for the purpose and is conversant with the policies and procedures of the Company and it is involved in the internal audit function on a full time basis. CEO and executives do not hold any interest in the shares of the Company other than that disclosed in the pattern of shareholding. 18. 16.13.

2011 The Company has fully complied with the best practices on Transfer Pricing as contained in the related Listing Regulations of the Karachi and Lahore Stock Exchanges. (MIAN HASSAN MANSHA) CHIEF EXECUTIVE NIC Number: 35202-1479111-5 Annual Report 2011 15 .STATEMENT OF COMPLIANCE WITH THE BEST PRACTICES ON TRANSFER PRICING FOR THE YEAR ENDED: JUNE 30.

with the best practices contained in the Code of Corporate Governance as applicable to the company for the year ended June 30. Chartered Accountants Lahore: September 05. 35 of The Karachi Stock Exchange (Guarantee) Limited and The Lahore Stock Exchange (Guarantee) Limited. We are not required to consider whether the Board’s statement on internal control covers all risks and controls. 2011. 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. A. 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. to the extent where such compliance can be objectively verified. Based on our review. nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the company’s compliance. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm’s length price or not. 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. Further. all such transactions are also required to be separately placed before the audit committee.REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE WITH BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance prepared by the Board of Directors of Nishat Power Limited (‘the company’) to comply with the Listing Regulation No. The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the company. or to form an opinion on the effectiveness of such internal controls.F. Further. in all material respects. the company’s corporate governance procedures and risks. Ferguson & Co. 2011 Engagement Partner: Muhammad Masood 16 Nishat Power Limited . where the company is listed. 2009 requires the company to place before the Board of Directors for their consideration and approval related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm’s length transactions and transactions which are not executed at arm’s length price recording proper justification for using such alternate pricing mechanism. Sub-Regulation (xiii a) of Listing Regulation 35 notified by The Karachi Stock Exchange (Guarantee) Limited vide circular KSE/N-269 dated January 19. We are only required and have ensured compliance of requirement to the extent of approval of related party transactions by the Board of Directors and placement of such transactions before the audit committee. Our responsibility is to review.

no Zakat was deductible at source under the Zakat and Ushr Ordinance. statement of changes in equity and cash flow statement together with the notes forming part thereof. An audit also includes assessing the accounting policies and significant estimates made by management. after due verification. and. 2011 Engagement Partner: Muhammad Masood A. evidence supporting the amounts and disclosures in the above said statements. total comprehensive income. and are in agreement with the books of account and are further in accordance with accounting policies consistently applied. 1984. investments made and the expenditure incurred during the year were in accordance with the objects of the company. Our responsibility is to express an opinion on these statements based on our audit. 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. the expenditure incurred during the year was for the purpose of the company’s business. statement of comprehensive income. F. proper books of account have been kept by the company as required by the Companies Ordinance. to the best of our knowledge and belief. the balance sheet. 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. 1980 (XVIII of 1980). 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. and the business conducted. 1984. Chartered Accountants Annual Report 2011 17 . An audit includes examining. we report that: a) b) in our opinion. profit and loss account. changes in equity and its cash flows for the year then ended. give the information required by the Companies Ordinance. for the year then ended and we state that we have obtained all the information and explanations which. statement of comprehensive income. (ii) (iii) c) in our opinion and to the best of our information and according to the explanations given to us. and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance. 1984. in our opinion: i) the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with the Companies Ordinance. and in our opinion. as well as. 2011 and of the profit. We believe that our audit provides a reasonable basis for our opinion and. statement of changes in equity and cash flow statement together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan. Ferguson & Co. 2011 and the related profit and loss account. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. d) Lahore: September 05. on a test basis. 1984.AUDITORS’ REPORT TO THE MEMBERS We have audited the annexed balance sheet of Nishat Power Limited (‘the company’) as at June 30. evaluating the overall presentation of the above said statements.

146.095.261.665.262.494 5.000 5.000 1.000. subscribed and paid up share capital 354.924.984.798.494.852.193.237 771.010.880 739.814 CONTINGENCIES AND COMMITMENTS 12 23.279.161 19.494 3.000 3.540.605.secured Trade and other payables Accrued finance cost Provision for taxation 7 9 10 11 616.500) ordinary shares of Rs 10 each Un-appropriated profit 5 6 2011 Rupees 2010 Rupees 5.395 7 8 12.241 472.088.200 13. 2011 Note EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Authorised share capital 500.000 (2010: 500.685 27.885.000.988.unsecured CURRENT LIABILITIES Current portion of long term financing .115.000 74.885.770.189.345.953. 22.000) ordinary shares of Rs 10 each Issued.359 370.000.044 NON-CURRENT LIABILITIES Long term financing .460.121 13.137 644.533 4.377.540.597.500 (2010: 354.BALANCE SHEET AS AT JUNE 30.081 601.885.809.000 13.088.100 3.121 818.792.secured Short term borrowings .480.423.secured Subordinated loan .436.357 4.441 18 Nishat Power Limited .615.429 The annexed notes 1 to 34 form an integral part of these financial statements.525.424.000.568.000.619.044 3.220.000.335.897.559 2.

208.046 16. plant and equipment 13 2011 Rupees 2010 Rupees 15.882 6.597. deposits.012.316 1.769.058.478.346.383 215.028 CURRENT ASSETS Stores.770.112 11.674.653.665.374.844.458 7.774.429 22.903.064 5.921.305 756.483.099 104. spares and loose tools Inventories Trade debts Advances.667.068 2.436.099 354.598.291.744.306.668.852 23.Note ASSETS NON-CURRENT ASSETS Property. prepayments and other receivables Cash and bank balances 14 15 16 17 18 422.832 1.880 CHIEF EXECUTIVE DIRECTOR Annual Report 2011 19 .809.925.

867.304) 1.018.025 (25.822.364.739. CHIEF EXECUTIVE 20 Nishat Power Limited DIRECTOR .814) 37.203.135 The annexed notes 1 to 34 form an integral part of these financial statements.267 (180.893.394.434 4.320) 47.052.451. 2011 Note 2011 Rupees 2010 Rupees Sales Cost of sales Gross profit Administrative expenses Other operating expenses Other operating income Profit from operations Finance cost Profit before taxation Taxation Profit after taxation 19 20 20.499.023.986.520.276.466.307 0.577) 1.241.450 Earnings per share .PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30.647) (50.877) 222.887 (17.736 252.331 24 (2.523.358 1.083.375) 4.200.119.705 21 22 23 (47.041.590.754 25 (13.176.242) 72.547) (5.843.892.basic and diluted 26 5.807.879.099.914.764 (795.733 (16.809) 52.

176.450 1.083.450 47.STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED JUNE 30.879.879. 2011 2011 Rupees 2010 Rupees Profit after taxation Other comprehensive income Total comprehensive income for the year 1.705 47. CHIEF EXECUTIVE DIRECTOR Annual Report 2011 21 .083.705 The annexed notes 1 to 34 form an integral part of these financial statements.176.

2011 Balance as on June 30...STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30.....083.. CHIEF EXECUTIVE 22 Nishat Power Limited DIRECTOR .615..000 628.....494 The annexed notes 1 to 34 form an integral part of these financial statements..385...000 3.000 47....879.879..044 2..restated Receipt of share deposit money Issuance of ordinary shares against share deposit money Total comprehensive income for the year ended June 30....083..450 1..339 628.339 47..500.377... Rupees .....885...540.885.450 1....540....200.000) 27.. 2010 Balance as on June 30.385.. 2011 2.. 2009 ..494 5..705 74... Balance as on July 01.... 2011 Share capital Share deposit money Un-appropriated profit Total ..000 628.044 1. 2010 Total comprehensive income for the year ended June 30...939.700...345.176..385...953.000 3..494...000 (628.912...176.460.385.705 3.262..

489.832) 27 1.CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30.752.667) (7.128) (1.751 (2.833.532.053) (5.164.543.211.736 (1.554.851.546 472.017.568) 52.200 628.851.042.692) 797.751.885.988.038) (2.268.000 3.666. plant and equipment Proceeds from disposal of operating fixed assets Profit on bank deposits received Net cash outflow from investing activities Cash flows from financing activities Proceeds from long term financing Repayment of long term financing Proceeds from subordinated loans Proceeds from issuance of share capital Net cash (outflow)/inflow from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 28 (941.614.824.779) (2.901) 2.408.870.102.991.728) (1.635) (891.651.437.340) The annexed notes 1 to 34 form an integral part of these financial statements.501.978) (1.076.699.971) (2. CHIEF EXECUTIVE DIRECTOR Annual Report 2011 23 .800 (596.513.579) 345.052.598.746 (1.017.181.833 26.651.191.982.173) (383.538.253 (1.881 (356.789.385. 2011 Note 2011 Rupees 2010 Rupees Cash flows from operating activities Cash generated from / (used in) operations Finance cost paid Taxes paid Retirement benefits paid Net cash outflow from operating activities Cash flows from investing activities Purchase of property.426) 58.334.541) (1.173) (3.137.

1984 or the requirements of the said directives prevail. and interpretations mandatory for the first time for the financial year beginning July 01. 1984 or directives issued by Securities and Exchange Commission of Pakistan differ with the requirements of IFRS or IFAS. THE COMPANY AND ITS ACTIVITIES Nishat Power Limited (‘the company’) is a public limited company incorporated in Pakistan. Pakistan.1 Amendments to published standards effective in current year New and amended standards. The company is a subsidiary of Nishat Mills Limited. the requirements of the Companies Ordinance. own. ‘IFRS 2 – Group and treasury share transactions’. 24 Nishat Power Limited . 2011 1. amendments or an interpretation to existing standards The following amendments to existing standards have been published that are applicable to the company’s financial statements covering annual periods. and IFRIC 11. ‘Share-based payments – Group cash-settled payment transactions’. 1984.2. Tehsil Pattoki. defined terms and the main body of the standard. Initial application of standards. 2.NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30. These amendments provide a clear basis to determine the classification of share-based payment awards in consolidated and separate financial statements. The amended definitions remove inconsistencies between Appendix A. The original wording was inconsistent regarding the treatment of equity instruments of other entities in the group. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board and Islamic Financial Accounting Standards (IFAS) issued by Institute of Chartered Accountants of Pakistan as are notified under the Companies Ordinance. The principal activity of the company is to build. into the standard. beginning on or after the following dates: 2. The company’s ordinary shares are listed on the Karachi Stock Exchange (Guarantee) Limited and Lahore Stock Exchange (Guarantee) Limited. Amendment to IFRS 2. Lawrence Road.2 2. 2. 2010 but not currently relevant to the company (although they may affect the accounting for future transactions and events). The address of the registered office of the company is 53-A. 1984. Lahore. and clarifies the definitions section of IFRS 2. The amendment incorporates IFRIC 8. Punjab. provisions of and directives issued under the Companies Ordinance. District Kasur. Wherever the requirements of the Companies Ordinance.1 BASIS OF PREPARATION These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. expands on the guidance given in IFRIC 11 to address plans that were not considered in the interpretation. operate and maintain a fuel fired power station having gross capacity of 200 MW in Jamber Kalan. ‘Scope of IFRS 2’.

IFRIC 19.- IFRS 5 (Amendment). The amendment states that if such rights are issued pro rata to all the entity’s existing shareholders in the same class for a fixed amount of currency. ‘Presentation of Financial Statements’. amendments and interpretations to existing standards that are not yet effective The following amendments and interpretations to existing standards have been published and are mandatory for the company’s accounting periods beginning on or after their respective effective dates: Annual Report 2011 25 . IAS 36 (amendment). This clarifies the requirements of IFRSs when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept the entity’s shares or other equity instruments to settle the financial liability fully or partially. Classification of rights issues’ (Amendment to IAS 32). ‘Measurement of non-current assets (or disposal groups) classified as held-for-sale’. before the aggregation of segments with similar economic characteristics). The amendment clarifies that the largest cash-generating unit (or group of units) to which goodwill should be allocated for the purposes of impairment testing is an operating segment. as defined by paragraph 5 of IFRS 8. ‘Impairment of assets’. particularly paragraph 15 (to achieve a fair presentation) and paragraph 125 (sources of estimation uncertainty) of IAS 1.2. - - - - - 2. By amending the definition of current liability. The amendment provides clarification that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non-current. the amendment permits a liability to be classified as non-current (provided that the entity has an unconditional right to defer settlement by transfer of cash or other assets for at least 12 months after the accounting period) notwithstanding the fact that the entity could be required by the counterparty to settle in shares at any time. IAS 1 (Amendment). current practice appears to require such issues to be accounted for as derivative liabilities. For rights issues offered for a fixed amount of foreign currency. The amendment clarifies guidance in measuring the fair value of an intangible asset acquired in a business combination and it permits the grouping of intangible assets as a single asset if each asset has similar useful economic lives. IAS 38 (Amendment). ‘Extinguishing financial liabilities with equity instruments’. issued in October 2009. The amendment is part of the IASB’s annual improvements project published in April 2009. they should be classified as equity regardless of the currency in which the exercise price is denominated. The amendment provides clarification that IFRS 5 specifies the disclosures required in respect of non-current assets (or disposal groups) classified as held for sale or discontinued operations. The amendment is part of the IASB’s annual improvements project published in April 2009 and the company will apply IAS 38 (Amendment) from the date IFRS 3 (Revised) is adopted. The amendment is part of the International Accounting Standard Board’s (IASB) annual improvements project published in April 2009. It also clarifies that the general requirement of IAS 1 still apply.2 Standards. ‘Operating Segments’ (that is. ‘Intangible Assets’.

The amendments will promote transparency in the reporting of transfer transactions and improve users’ understanding of the risk exposures relating to transfers of financial assets and the effect of those risks on an entity’s financial position.2. have been exempted from its application by the Securities and Exchange Commission of Pakistan (SECP).- IFRIC 4.553 3.769. The company will apply these amendments for the financial reporting period commencing on July 1. 2011 or later periods. Consequently. These amendments are as part the IASBs comprehensive review of off balance sheet activities. The new disclosure requirements apply to transferred financial assets. nonetheless. If the company were to follow IFRIC .976 3. This interpretation provides guidance on determining whether arrangements that do not take the legal form of a lease should. however.250 3.931. the company is not required to account for a portion of its Power Purchase Agreement (PPA) with National Transmission and Despatch Company Limited (NTDCL) as a lease under IAS .250 223. particularly those involving securitization of financial asset. It is not expected to have any material impact on the company’s financial statements. ‘Leases’.056 227.787.199) (16.17.726) 16. ‘Determining Whether an Arrangement Contains a Lease’ is applicable for periods beginning on or after January 1. 2006.306 16. Independent Power Producers (IPPs). whose letter of intent has been be signed on or before June 30. issued on 8 October 2010.284.250 Standards.752.931.642. An entity transfers a financial asset when it transfers the contractual rights to receive cash flows of the asset to another party.931. ‘Disclosures on transfers of financial assets’ (Amendment).4 and IAS . amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the company The following amendments and interpretations to existing standards have been published and are mandatory for the company’s accounting periods beginning on or after January 1.573. 26 Nishat Power Limited . the effect on the financial statements would be as follows: 2011 Rupees De-recognition of property. be accounted for as a lease in accordance with International Accounting Standard (IAS) 17.659. 2011. but the company has not early adopted them: IFRS 7. 2010. plant and equipment Recognition of lease debtor Increase in un-appropriated profit at the beginning of the year Increase in profit for the year Increase in un-appropriated profit at the end of the year 2.089.17.663.821.3 2010 Rupees (15.

- IFRS 9. for example. 2013 but is available for early adoption. 2013. IFRS 9 only permits the recognition of fair value gains and losses in other comprehensive income if they relate to equity investments that are not held for trading.‘Fair value measurement’. The standard is not applicable until January 1. The main change resulting from these amendment is a requirement for entities to group items presented in Other comprehensive income (OCI) on the basis of whether they are potentially recycled to profit or loss (reclassification adjustments). The amendment does not address which items are presented in OCI. IAS 1 (amendments). clarifies that an entity will present an analysis of other comprehensive income for each component of equity. do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs or US GAAP. This standard includes the disclosure requirements for all forms of interests in other entities. It is not expected to have any material impact on the company’s financial statements. This standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The company will apply this standard from July 01. The requirements. Fair value gains and losses on available-for-sale debt investments. FRS 12 . special purpose vehicles and other off balance sheet vehicles. 2013. The amendment is effective for annual periods beginning on or after January 01. This addresses the classification and measurement of financial assets and is likely to affect the company’s accounting for its financial assets. issued in December 2009. IAS 12. associates. ‘Financial Instruments’. 2013. ‘Amendment to Deferred Taxation’. This amendment requires the entity holding investment properties measured at fair value in territories where there is no capital gains tax or where the capital gains rate is different from the income tax rate. which are largely aligned between IFRSs and US GAAP. 2012. This is applicable on accounting periods beginning on or after January 01. The amendments should be applied retrospectively to the earliest comparative period presented. 2011. This amendment is likely to reduce the deferred tax assets and liabilities recognised by the entity on such investments. The company has not yet decided when to adopt IFRS 9. It is not expected to have any material impact on the company’s financial statements. issued on 23 December 2010. 2013.‘Financial statement presentation’ (Amendment). This is applicable on accounting periods beginning on or after July 01. including joint arrangements. will therefore have to be recognised directly in profit or loss. Earlier adoption is permitted. This is applicable on accounting periods beginning on or after January 01. either in the statement of changes in equity or in the notes to the financial statements. The Company will apply this amendment from January 01. IFRS 13 . 2013 and does not expect to have a material impact on its financial statements. IAS 1 . - - - - - Annual Report 2011 27 . effective January 01.‘Disclosures of interests in other entities’. 2012. The company will apply this standard from July 01.

2 BASIS OF MEASUREMENT These financial statements have been prepared under the historical cost convention. 2011.- IAS 19 . subjective or complex judgments or estimates. - - 3. This is applicable on accounting periods beginning on or after January 01. ‘IAS 19 – The limit on a defined benefit asset. The amendments should be applied retrospectively to the earliest comparative period presented. It supersedes IAS 24.1 3. 3. These judgments involve assumptions or estimates in respect of future events and the actual results may differ from these estimates. The amendments correct an unintended consequence of IFRIC 14.‘Employee benefits’(Amendment). issued in November 2009. issued in November 2009. The amendment will eliminate the corridor approach and calculate finance costs on a net funding basis. entities are not permitted to recognise as an asset some voluntary prepayments for minimum funding contributions. The amendments are effective for annual periods beginning January 1. It is not expected to have any material impact on the company’s financial statements. 2011. issued in 2003. the amounts are shown as contingent liabilities. Earlier application is permitted. Without the amendments. It is not expected to have any material impact on the company’s financial statements. ‘Related party disclosures’. including expectations of future events that are believed to be reasonable under the circumstances. Instances where the company’s view differs from the view taken by the income tax department at the assessment stage and where the company considers that its views on items of material nature is in accordance with law. The company’s significant accounting policies are stated in note 4. ‘Related party disclosures’. ‘Prepayments of a minimum funding requirement’ (Amendments to IFRIC 14). IAS 24 (revised). Not all of these significant policies require the management to make difficult. minimum funding requirements and their interaction’. The revised standard clarifies and simplifies the definition of a related party and removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities. The following is intended to provide an understanding of the policies the management considers critical because of their complexity. 2013 and has yet to assess its full impact. 2013. 28 Nishat Power Limited . judgment and estimation involved in their application and their impact on these financial statements. This was not intended when IFRIC 14 was issued. The areas involving higher degree of judgments or complexity or areas where assumptions and estimates are significant to the financial statements are as follows: a) Provision for taxation The company takes into account the current income tax law and the decisions taken by appellate authorities. The revised IAS 24 is required to be applied from July 01. It is not expected to have any material impact on the company’s financial statements. The Company will apply this amendment from July 01. Estimates and judgments are continually evaluated and are based on historical experience. and the amendments correct the problem.

the company is also exempt from levy of minimum tax on ‘turnover’ under section 113 of the Income Tax Ordinance. 2001. However. plant and equipment on regular basis. 2001.b) Useful lives and residual values of property. Deferred tax has not been provided in these financial statements as the company’s management believes that the temporary differences will not reverse in the foreseeable future due to the fact that the profits and gains of the company derived from electric power generation are exempt from tax subject to the conditions and limitations provided for in terms of clause 132 of Part I of the Second Schedule to the Income Tax Ordinance. Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse based on tax rates that have been enacted or substantively enacted by the balance sheet date.1 Taxation Current The profits and gains of the company derived from electric power generation are exempt from tax in terms of Clause (132) of Part I of the Second Schedule to the Income Tax Ordinance. if any. SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies adopted in the preparation of these financial statements are set out below. except in the case of items credited or charged to equity in which case it is included in equity. 4. tax credits and rebates available. subject to the conditions and limitations provided therein. 2001. full provision is made in the profit and loss account on income from sources not covered under the above clauses at current rates of taxation after taking into account. Under clause 11(v) of Part IV of the Second Schedule to the Income Tax Ordinance. These policies have been consistently applied to all years presented. 2001. unused tax losses and tax credits can be utilised. Annual Report 2011 29 . plant and equipment with a corresponding effect on the depreciation charge and impairment. Deferred Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable profit. 4. plant and equipment The company reviews the useful lives of property. Any change in estimates in future years might affect the carrying amounts of the respective items of property. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences. unless otherwise stated. Deferred tax is charged or credited in the profit and loss account.

3 Impairment of non-financial assets Assets that have an indefinite useful life.2 Capital work-in-progress Capital work-in-progress is stated at cost less any identified impairment loss. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset. Depreciation on operating fixed assets is charged to profit and loss account. All other repair and maintenance costs are included in the profit and loss account during the period in which they are incurred.2. Freehold land is stated at cost less any identified impairment loss. 2011 has not required any adjustment as its impact is considered insignificant.1 after taking into account their residual values. 4. at each financial year end. The company’s estimate of the residual value of its operating fixed assets as at June 30. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in 30 Nishat Power Limited . as appropriate. and adjusted if impact on depreciation is significant.3). The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is recognized as an income or expense. plant and equipment Operating fixed assets Operating fixed assets except freehold land are stated at cost less accumulated depreciation and any identified impairment loss. All expenditure connected with specific assets incurred during installation and construction period are carried under capital work-in-progress. on the straight line method so as to write off the cost of an asset over its estimated useful life at the annual rates mentioned in note 13. only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably.1 Property.2 4. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 4. are not subject to depreciation/ amortization and are tested annually for impairment. while no depreciation is charged for the month in which the asset is disposed off. These are transferred to operating fixed assets as and when these are available for use. 4. Assets that are subject to depreciation/ amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The assets’ residual values and useful lives are reviewed. for example land. Depreciation on additions to operating fixed assets is charged from the month in which the asset is available for use. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.4.2.

while items considered obsolete are carried at nil value. The classification depends on the purpose for which the financial assets were acquired. available for sale and held to maturity.4. A financial asset is classified as held for trading if acquired principally for the purpose of selling in the short term.7 4.5 Stores. 4. Provision is made in the financial statements for obsolete and slow moving inventories based on management’s estimate. Net realizable value signifies the estimated selling price in the ordinary course of business less costs necessarily to be incurred in order to make a sale. 4. Materials in transit are stated at cost comprising invoice value plus other charges paid thereon. Items in transit are valued at cost comprising invoice value plus other charges paid thereon. a) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading and financial assets designated upon initial recognition as at fair value through profit or loss. Assets in this category are classified as current assets.6 Inventories Inventories except for those in transit are valued principally at lower of moving average cost and net realizable value. spares and loose tools Stores.7. 4. loans and receivables. assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).1 Operating leases Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.1 Financial instruments Financial assets The company classifies its financial assets in the following categories: at fair value through profit or loss.4 Leases The company is the lessee: 4. 4. Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit on a straight line basis over the lease term. spares and loose tools are valued principally at moving average cost. For the purposes of assessing impairment.use. Annual Report 2011 31 . Management determines the classification of its financial assets at the time of initial recognition.

Dividend income from financial assets at fair value through profit or loss is recognised in the profit and loss account as part of other income when the company’s right to receive payments is established. All financial assets are recognised at the time when the company becomes a party to the contractual provisions of the instrument. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest rate method.b) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. where management has the intention and ability to hold till maturity are classified as held to maturity and are stated at amortised cost. Financial assets are derecognised when the rights to receive cash flows from the assets have expired or have been transferred and the company has transferred substantially all the risks and rewards of ownership. They are included in current assets. d) Held to maturity Financial assets with fixed or determinable payments and fixed maturity. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the profit and loss account. except for maturities greater than twelve months after the balance sheet date. Dividends on available-for-sale equity instruments are recognised in the profit and loss account when the company’s right to receive payments is established. Changes in the fair value of securities classified as available-for-sale are recognised in equity. When securities classified as available-for-sale are sold or impaired. Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the profit and loss account in the period in which they arise. Interest on availablefor-sale securities calculated using the effective interest method is recognised in the profit and loss account. Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Loans and receivables comprise advances. deposits and other receivables and cash and cash equivalents in the balance sheet. 32 Nishat Power Limited . Regular purchases and sales of investments are recognised on trade-date – the date on which the company commits to purchase or sell the asset. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. the accumulated fair value adjustments recognised in equity are included in the profit and loss account as gains and losses from investment securities. which are classified as non-current assets. c) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investments within twelve months from the balance sheet date.

net of tax.The fair values of quoted investments are based on current prices. the cumulative loss is removed from equity and recognised in the profit and loss account. If the market for a financial asset is not active (and for unlisted securities). less provision for impairment. Impairment testing of trade debts and other receivables is described in note 4. 4. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. and default or delinquency in payments are considered indicators that the trade debt is impaired. if any. When a trade debt is uncollectible. If any such evidence exists for available-for-sale financial assets. the company measures the investments at cost less impairment in value. it is written off against the provision.3 Offsetting of financial assets and financial liabilities Financial assets and financial liabilities are offset and the net amount is reported in the financial statements only when there is a legally enforceable right to set off the recognized amount and the company intends either to settle on a net basis or to realize the assets and to settle the liabilities simultaneously. or the terms of an existing liability are substantially modified. and subsequently measured at amortised cost using the effective interest method. Impairment losses recognised in the profit and loss account on equity instruments are not reversed through the profit and loss account. such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability.7. The company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired.7.9 Share capital Ordinary shares are classified as equity and recognized at their face value. Significant financial difficulties of the debtor. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction. 4. probability that the debtor will enter bankruptcy or financial reorganisation. Annual Report 2011 33 .8.2 Financial liabilities All financial liabilities are recognised at the time when the company becomes a party to the contractual provisions of the instrument. A provision for impairment of trade debts and other receivables is established when there is objective evidence that the company will not be able to collect all the amount due according to the original terms of the receivable. if any. and the difference in respective carrying amounts is recognised in the profit and loss account.8 Trade debts and other receivables Trade debts and other receivables are recognised initially at invoice value. which approximates fair value. Where an existing financial liability is replaced by another from the same lender on substantially different terms. 4. Subsequent recoveries of amounts previously written off are credited to the profit and loss account. 4. The provision is recognised in the profit and loss account.

34 Nishat Power Limited . 4. construction or production of a qualifying asset in which case such costs are capitalised as part of the cost of the asset upto the date of commissioning of the related asset.10 Employees’ retirement benefits .13 Cash and cash equivalents Cash and cash equivalents includes cash in hand. net of transaction costs incurred. 4. Equal monthly contributions are made both by the company and employees to the fund at the rate of 9. and bank overdrafts. Retirement benefits are payable to staff on completion of prescribed qualifying period of service under the scheme. 4. 4.4.Defined contribution plan There is an approved defined contributory provident fund for all employees. other short-term highly liquid investments with original maturities of three months or less. deposits held at call with banks.5 percent of the basic salary. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.15 Borrowing costs Borrowing costs are recognised as an expense in the period in which they are incurred except where such costs are directly attributable to the acquisition. Borrowings are subsequently stated at amortized cost. 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.11 Trade and other payables Trade and other payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method. any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the profit and loss account over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.12 Provisions Provisions are recognized when the company has a present legal or constructive obligation as a result of past events. 4. Finance costs are accounted for on an accrual basis and are reported under accrued finance cost to the extent of the amount remaining unpaid. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet. Exchange gains and losses arising on translation in respect of liabilities in foreign currency are added to the carrying amount of the respective liabilities.14 Borrowings Borrowings are recognized initially at fair value.

whereas on account of capacity is recognised when due.18 Dividend Dividend distribution to the company’s members is recognised as a liability in the period in which the dividends are approved.645. 5. Ordinary shares of the company held by related parties as at year end are as follows: 2011 2010 (Number of shares) Nishat Mills Limited .holding company National Bank of Pakistan Allied Bank Limited 180.16 Revenue recognition Revenue is recognised when it is probable that the economic benefits will flow to the company and the revenue can be measured reliably.600 55. Annual Report 2011 35 .1 5.632.500 (2010: 354.278.246 . ISSUED.088.288.148 287. Revenue on account of energy is recognised on transmission of electricity to National Transmission and Despatch Company Limited (NTDCL). Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the profit and loss account. 4.17 Foreign currency transactions and translation a) Functional and presentation currency Items included in the financial statements of the company are measured using the currency of the primary economic environment in which the company operates (the functional currency). b) Transactions and balances Foreign currency transactions are translated into Pak Rupees using the exchange rates prevailing at the dates of the transactions. Income on bank deposits is accrued on a time proportion basis by reference to the principal outstanding and the applicable rate of return.1 Allied Bank Limited ceased to be a related party from March 31. SUBSCRIBED AND PAID UP CAPITAL This represents 354. 4.071 201.116 194.324.note 5. which is the company’s functional and presentation currency.166.4. 2011.498 30.553. The financial statements are presented in Pak Rupees.500) ordinary shares of Rs 10 each fully paid in cash.088.955 13.

424. These are unsecured and carry mark-up at the rate of three months KIBOR plus 2% per annum.781. Nishat Mills Limited.115.113. 2015 and July 29.22 million (2010: Rs 568. In accordance with the terms of agreement with the lenders of long term finances.1 This represents long term financing obtained from a consortium of banks led by Habib Bank Limited (Agent Bank).384.52% (2010:15. The overall financing is secured against registered first joint parri passu charge on immovable property.802.605.612 14. payable quarterly.103.241 7.52% (2010: 14.904.540.219.669 13. These represent two subordinated loans from the holding company.200 to cover the additional cost of the power project from the lenders of the original project finance facility on the same terms and conditions. subject to approval from the lenders of the long term financing facility in accordance with the Subordinated Loan Agreement.509.258 3.458.294.22 million and Rs 250 million are repayable on July 05.005.2 8.910.100 12. for Rs 568. The original project financing facility was Rs 12.279. there are certain restrictions on the distribution of dividends by the company.34% to 14.614 3. LONG TERM FINANCING . The portion of long term financing from Faysal Bank Limited is on murabaha basis. lien over project bank accounts and pledge of shares held by the holding company in Nishat Power Limited. 2020. The finance is repayable in thirty six quarterly instalments ending on July 01.800 739.259.834 3.600. It carries mark-up at the rate of three months Karachi Inter-Bank Offered Rate (KIBOR) plus three percent per annum.222.277.764 3.725. 7.172. mortgage of project receivables.764 3.29% to 16.SECURED Long term financing under mark-up arrangement obtained from following banks: Lender National Bank of Pakistan .490.34% to 15.related party Habib Bank Limited Allied Bank Limited United Bank Limited Faysal Bank Limited Less: Current portion shown under current liabilities 2.059.22 million) and Rs 250 million (2010: Nil) respectively.163.930. payable on quarterly basis. The effective mark-up rate charged during the year on the outstanding balance was 15.031.277. the company obtained a term finance facility of Rs 1. hypothecation of all present and future assets and all properties of the company (excluding the mortgaged immovable property).77%) per annum.29% to 15.221 616.6.826 1.059. During the previous year. 36 Nishat Power Limited .910.261.559 13.988.066 1. 2015 respectively. The loans of Rs 568.781.372.6%) per annum. 2011 Rupees 2010 Rupees 7.614 3. The effective mark-up rate charged on the outstanding balance during the year ranges from 14.121 2.

The effective mark-up rate charged during the year on the outstanding balance ranges from 14.29% to 15. 2011. to finance the procurement of multiple oils from the fuel suppliers.000 million) under mark-up arrangements from commercial banks at mark-up rates ranging from three to six months KIBOR plus 2% per annum. This represents murabaha and term finance facilities aggregating Rs 2.18% to 14. payable quarterly.193.100 million (2010: Rs 0.2 1.601.572.368.62% (2010: 14. The effective mark-up rate charged during the year on the outstanding balance ranges from 14.85%) per annum. Of the aggregate facilities of Rs 1.237 Short term running finance facilities available from various commercial banks under markup arrangements amount to Rs 4.525. the amount utilised at June 30.1 .1 9.33 million (2010: Rs 0.note 9.12% to 14. inventories and assignment of energy payment receivables from NTDCL. ranking charge over all present and future project assets (including moveable/immoveable assets) of the company.707 1.2 Allied Bank Limited ceased to be a related party from March 31.1 2010 Rupees 1.2011 Rupees 9.267. on the balance outstanding.88 million (2010: Rs 2.237 1.991.359.79 % (2010: 14. Mark-up is payable at the maturity of the respective murabaha transaction / term finance facility. The aggregate facilities for opening letters of credit and guarantees are secured by ranking charge on current assets comprising of fuel stocks and inventories of the company. Included in the above are running finances from the following related parties: 2011 2010 Rupees Rupees National Bank of Pakistan Allied Bank Limited .67 million) for opening letters of credit and guarantees.1.67 million).792. The aggregate facilities are secured against first pari passu charge on current assets comprising of fuel stocks.359 9.822.203 590. Annual Report 2011 37 .88 million) at mark-up rate of three months KIBOR plus 2% per annum.652 3.000. SHORT TERM BORROWINGS .75%) per annum.1 256.798.050 million (2010: Rs 1.note 9.000 333.24 % to 15.792.203 9. The aggregate running finances are secured against first parri passu assignment of the present or future energy payment price of the tariff.1.926.SECURED Short term borrowings under mark-up arrangements obtained as under: Short term running finances Short term finances .000.000 2.196.525. first parri passu hypothecation charge on the fuel stock and inventory. 2011 was Rs 84.note 9.

2011 Rupees 10. TRADE AND OTHER PAYABLES Creditors Payable to contractors Retention money Workers’ profit participation fund Workers’ welfare fund Withholding tax payable Sales tax payable Other accrued liabilities - note 10.1 - note 10.2 - note 10.2 153,474,704 47,740,879 204,683 94,668,941 813,927 67,217,225 5,889,778 370,010,137 10.1

2010 Rupees 33,427,926 725,065,446 2,240,895 3,610,001 1,444,001 694,057 5,326,755 771,809,081

Included is an amount of Rs 10,197,185 (2010: Rs 14,503,447) payable to Adamjee Insurance Company Limited, a related party. This relates to normal business of the company and is interest free. Workers’ Profit Participation Fund (WPPF) and Workers’ Welfare Fund (WWF)
2011 Rupees WPPF Opening balance Provision / (write back) for the year - note 17.1 Interest for the year - note 24 3,610,001 94,641,138 33,307 98,284,446 Less: Payments Closing balance 3,615,505 94,668,941 3,610,001 3,610,001 3,610,001 2010 2011 Rupees WWF 1,444,001 (1,444,001) 1,444,001 1,444,001 1,444,001 2010

10.2

The balance in respect of Workers’ Welfare Fund which had been provided for in the previous year, has now been written back based on the advice of the company’s consultant. 2011 Rupees 11. ACCRUED FINANCE COST Accrued mark-up / interest on: Long term financing - secured Subordinated loans - unsecured Short term borrowings - secured - note 11.1 - note 11.2 - note 11.3 478,980,157 31,659,959 133,979,569 644,619,685 38 Nishat Power Limited 541,683,647 16,906,488 42,505,026 601,095,161 2010 Rupees

2011 Rupees 11.1 Included are amounts of accrued mark-up of the following related parties: National Bank of Pakistan Allied Bank Limited - note 11.1.1 79,345,423 79,345,423 11.1.1 Allied Bank Limited ceased to be a related party from March 31, 2011. 11.2 11.3 This amount is payable to holding company, Nishat Mills Limited. Included are amounts of accrued mark-up of the following related parties: 2011 Rupees National Bank of Pakistan Allied Bank Limited - note 11.3.1 14,312,988 14,312,988 11.3.1 Allied Bank Limited ceased to be a related party from March 31, 2011. 12. 12.1 CONTINGENCIES AND COMMITMENTS Contingencies

2010 Rupees

94,010,395 125,358,539 219,368,934

2010 Rupees 6,728,819 6,656,183 13,385,002

Irrevocable standby letter of credit issued by bank on behalf of the company in favour of Wartsila Pakistan (Private) Limited for Rs 45,000,000 (2010: Rs 45,000,000) as required under the terms of the Operation and Maintenance Agreement.

Annual Report 2011

39

2011 Rupees 12.2 Commitments in respect of (i) (ii) iii) Letters of credit other than for capital expenditure Other contractors 39,327,984 2,670,000

2010 Rupees

672,219 1,331,303

The amount of future payments under operating lease and the period in which these payments will become due are as follows: Not later than one year 7,269,150 -

iv)

The company has entered into a contract for purchase of fuel oil from Shell Pakistan Limited (‘SPL’) for a period of ten years starting from the Commercial Operations Date of the power station i.e. June 09, 2010. Under the terms of the Fuel Supply Agreement, the company is not required to buy any minimum quantity of oil from SPL. The company has also entered into an agreement with Wartsila Pakistan (Private) Limited for the operations and maintenance (‘O&M’) of the power station for a five years period starting from the Commercial Operations Date of the power station i.e. June 09, 2010. Under the terms of the O&M agreement, the company is required to pay a monthly fixed O&M fee and a variable O&M fee depending on the net electrical output, both of which are adjustable according to the Wholesale Price Index. 2011 Rupees 2010 Rupees

(v)

13.

PROPERTY, PLANT AND EQUIPMENT Operating fixed assets - note 13.1 15,843,065,046 1,679,000 15,844,744,046 16,667,306,028 16,667,306,028

Capital work-in-progress - advance to supplier

40

Nishat Power Limited

979 141.850 430.511.328 6.709.278 2010 Rupees Annual Report 2011 41 .233.110 10 727.862.770.13.078 260.879 10 170.147 5.566.227.099 120.211 401.098.934.292 39.135 15.094. 2010 Book value as at June 30.791 35. 2011 DEPRECIATION Balance as at July 01.1 39.932 415.910 39.744.564.405.330 15.146.685.394.975 588.292 1.077.994 17.248.523 32.799.751 4 to 4.257 7.387 372.370 1.458 1.811 88.638.028 2.note 21 1.977 116.042 16.436.196 235.699) (840.948 574.126 177.042 155.440.436.566.395) 1.512 2.162.850 80.685.021.853 33. 2011 Annual depreciation rate % 80. 2009 Additions during the year Balance as at June 30.note 20 .439 33 20.168 6.484 571.620 787.028 9.342 1.001. 2009 Charge for the year Balance as at June 30.263 183. 2011 Book value as at June 30. a related party.790.146.749 35.209.1 Improvements on leasehold property represents costs of improvement incurred on property owned by Nishat Hotels and Properties Limited.621. 2011 Rupees 13.006.850 80.685.016 986.850 16.882 185.289 1.853 32.850 80.382 16.140 42.045.142.115 80.006.350 837.749 4 to 32 10 13.140 1.580.743 16.850 80.994 881.278 42.202 430.685.286 183.263 754.206.512.172 41.872.031.000 155.193 16.490.146 937.405.599 5.206.112.872.202 7.448 401.519 13.702 1.837 17.392.535.743 23.535 10 66.045.709.409 979.340.932 571.901 1.193 16.168 7.094.395) 3.458 22.370 (495. 2010 Balance as at July 01.400.065.577 (495. 2010 Charge for the year Disposal during the year Balance as at June 30.520 2.685.006.667.1. 2010 Additions during the year Disposal during the year Balance as at June 30.182 7.688 947.918.409.456.306.677 4.328 178.359.327 1.343 382.981.194.031.520 2.209.000 506.000 661.440.986 1.950.202 430.094.908.203.2 The depreciation charge for the year has been allocated as follows: Unallocated expenditure Cost of sales Administrative expenses .459 178.000 557.685.1 Operating fixed assets (Rupees) Freehold land Buildings and roads on freehold land 178.061 5.025.121 122.162.645 1.458 1.068.692 (840.292 39.042 304.000 195.112.824 967.008 1.440.1.161 4.767 1.460.677 1.268 66.147 594.673 16. 2010 Balance as at July 01.862 41.621.699) 16.299.045.793.750 881.523.000 155.210 Plant and machinery Improvements on leasehold land Electric Computer installa.078 141.637.436.195 22.193 16.620 1.110.091.328 178.843.385.564.584.598 34.046 20 15.748.141.equipment tions Furniture Office and equipment fixtures Vehicles Total COST Balance as at July 01.

850 417.806 12.000 Mode of disposal Bid Particulars Vehicles sold to: Outside party.012.252 6. The effective rate of delayed payment mark-up charged during the year on outstanding amounts ranges from 16.478. Nishat Power Limited 42 .603 345.3 Disposal of operating fixed assets Detail of operating fixed assets sold during the year is as follows: (Rupees) Accumulated depreciation 201. 345.064 354.692 8.030 422. SPARES AND LOOSE TOOLS Stores Spares [including in transit Rs 9.653.5% is charged in case the amounts are not paid within due dates.833 797.537 495.428.140 840.68% to 17.685 million)] Loose tools 2.952 2.75% to 18.898. 15.782 214.788.858 Book value 140.699 293.832 611.559 498.001.326.1.068 These represent trade receivables from NTDCL and are considered good.470. STORES. These are secured by a guarantee from the Government of Pakistan under the Implementation Agreement and are in the normal course of business and interest free.304 214.633 million (2010: Rs 3.32%) per annum.13.734. a delayed payment mark-up at the rate of three months KIBOR plus 4.874. however.511 215.701 Sale proceeds 583. Argosy Enterprises Holding company.955.346.752 1. Nishat Mills Limited Cost 342.825 16.858.099 2010 Rupees Stores and spares include items which may result in fixed capital expenditure but are not distinguishable.395 204. INVENTORIES Furnace oil Diesel Lubricating oil 987.833 Negotiation There were no disposals of operating fixed assets in the previous year.365 1.882 16. 2011 Rupees 14.22% (2010:16.483.

251. 17.001 3.margins. ADVANCES.058.101 3.001) 1.1 .139 105.Customs duty recoverable Claims recoverable from NTDCL for pass through items: .192.112 17.610.001 (1.610.To suppliers Balances with statutory authorities: .861. The balance in respect of Workers’ Welfare Fund which had been provided for in the previous year.903. deposits.001 3.001 1.001 2010 Rupees Under section 9.001 2011 Rupees WWF 1.316 Workers’ Profit Participation Fund (WPPF) and Workers’ Welfare Fund (WWF) 2011 2010 Rupees Rupees WPPF Opening balance Provision/(write back) for the year Closing balance 3.444.1 .Workers’ Welfare Fund Letters of credit .396.749 756. Annual Report 2011 43 .495 .444.505.Workers’ Profit Participation Fund .139 3. DEPOSITS.138 98.610.280 3.000 1.629.Sales tax recoverable .149 38.822 175.1 2010 Rupees 271.122 1.000 3.191 104.372.251.considered good: . payments to Workers’ Profit Participation Fund and Workers’ Welfare Fund are recoverable from NTDCL as a pass through item. opening charges etc Interest receivable Security deposits Prepayments Other receivables 64.444. PREPAYMENTS AND OTHER RECEIVABLES Advances .840 20.258 89.note 17.444.001 94.3(a) of the Power Purchase Agreement (PPA) with NTDCL.2 98.444. has now been written back based on the advice of the company’s consultant.627 85. MCB Bank Limited.note 17.To employees .448.658 277.2011 Rupees 17.641.610.001 1.109 50.note 17.080 640.2 This is receivable from a related party.Federal excise duty recoverable .806 175.

1 (2010: Euro 980.797 63.800 132.2 .00% per annum.284.On saving accounts .056.1 2010 Rupees 1.2 16.203 146.893.580.800 926.243 (2010: Rs 19.399 940.674.461 1.578) with MCB Bank Limited.764 19.805.1 & 19.note 18.950) 44 Nishat Power Limited .1)] . a related party.3 Includes accounts with the following related parties: MCB Bank Limited National Bank of Pakistan 13.066 1.On current accounts [including USD 2.000) & Euro 980.603 93. 2011 Rupees 2010 Rupees 13.2 18.774. Profit on balances in saving accounts ranges from 5% to 10% (2010: 5% to 10%) per annum.note 19.986.3 Cash in hand 10.003 18.661 11.088.note 19.note 18.000 (2010: USD 2.461.745.022 20.018.711 4.774.2 .689.774.916.025 1.2011 Rupees 18.733 849.560 (2010: Rs 135.809.731 11.739 168.302. CASH AND BANK BALANCES Cash at bank: .989 523.064 Cash with banks in saving accounts includes an amount of Rs 853.684.1 Energy purchase price is exclusive of sales tax amounting to Rs 2.364.1&18.458 18. which bears mark-up at the rate of 5.199 19. SALES Energy purchase price Capacity purchase price .614 1.916.374.448.

Under these circumstances.855 Salaries and other benefits .028 Fee and subscription 3.191 respectively which represent differential amounts of sales for the month of June 2010 due to change in tariff.802 Stores.1.915 Electricity consumed in-house 2.309 39.2 20.669 Printing and stationery 401.280 972.576 Operation and maintenance 271.969 Vehicle running expenses 1.332 144. Includes amounts charged by the following related parties for insurance of the company’s assets: 2011 2010 Rupees Rupees Adamjee Insurance Company Limited Security General Insurance Company Limited 144.398.945.220 (2010: Rs 42.581.000 23.455.599 and Rs 92.971 8.520.992.300.394.241.010.598 795.580.095 110. spares and loose tools consumed 66.196 677.971 Travelling and conveyance 2. Consequently.1 22.147 Rent.999.692 Insurance .945.336 1.901 Postage and telephone 308.401 Miscellaneous 2.058. 2010 and was subject to notification by the Federal Government as required by section 31(4) of the Regulation of Generation.877 20.789 16.119. due to change in tariff has been claimed and recognised in the current year.095 Annual Report 2011 45 .025. However. rates and taxes 46.313 40.19.222. during the current period.203.2 144.657 62. Transmission and Distribution of Electric Power Act.198 8. Included in energy purchase price and capacity purchase price are amounts of Rs 18. the differential amount of sales relating to the previous year.note 20.375 729.242 Entertainment 199. 2011 2010 Rupees Rupees COST OF SALES Raw materials consumed 14.346 9.152. it had not became part of the PPA signed between the company and NTDCL.769.1 20.754 384.679) in respect of provident fund contribution by the company.639 176.062. These were not recognised in the previous year as the revised tariff was provisionally approved by National Electric Power Regulator Authority (NEPRA) through its decision dated August 27.320.799.992.610.992.568 133.note 20.227 14. the revised tariff was notified by the Federal Government and became part of the PPA.2 1. 1997.021.2 Salaries and other benefits include Rs 1.note 13.984.095 8.418 Depreciation on operating fixed assets .

468 2.874) charged by a related party.271 235.814 5.259 (2010: Rs 19.2 21.468 22. rates and taxes .note 22.788 (2010: Rs 44.153.809 46 Nishat Power Limited .466.259 1.note 21. Includes rent expense of Rs 4.647 21.451.000 120.151 4.2 Travelling and conveyance Entertainment Rent.560 31.788 6. Includes amount of Rs 106.064 1.342 2.2 Miscellaneous 20.000.097 1.412 594. 2011 Rupees 2010 Rupees 21.1 & 21.800 (2010: Nil) charged by a related party.note 13. Security General Insurance Company Limited for insurance of company owned vehicles.547 Salaries and other benefits include Rs 517.000 100.203.272.809 5.267) charged by a related party.2 2.5 Advertisement Fee and subscription Depreciation on operating fixed assets .404 2. Adamjee Insurance Company Limited for group life and health insurance of employees.172 5.5 Legal and professional charges include the following in respect of auditors’ services for: Statutory audit Half yearly review Tax services Other assurance services Reimbursement of expenses 1.000 270.note 21.681.2011 Rupees 21. Nishat Hotels and Properties Limited for lease of property to the company.000 855.792) in respect of provident fund contribution by the company.037.232.000 117.196 6.785 345.1.3 21.737.451.321 (2010: Rs 87.627.492 57.4 2010 Rupees 3.note 22.4 Legal and professional charges .949 4.000.000 905.990.1 .792 100.000 300. Includes amount of Rs 338.373 523.000 16.254 50.023 208.981.000 250.026 47.note 21.555 413.114 388.000 500.346.272.193 861.note 21.097 700.034 17.3 Printing and stationery Postage and telephone Vehicle running expenses .399 531.373.459.667.400 117.799. ADMINISTRATIVE EXPENSES Salaries and other benefits .523.1 21. OTHER OPERATING EXPENSES Donation Interest on delayed payment Exchange loss .747.

Nishat Mills Limited.041.note 23. FINANCE COST Interest / mark-up on: .646.531 180.note 10.876 4.738.unsecured .1 26.1 .319 2.520 836.582 358.2 .3 This represents mark-up on subordinated loans from holding company. This represents interest on delayed payment charged by NTDCL as per terms of the PPA.2 None of the directors and their spouses had any interest in the donee. 2011 Rupees 2010 Rupees 23.163 3.579 33. Includes an amount of Rs 120.087.617.957 380.335.098.644.3 .964 26. a related party.590.198.100 586.242 24.832.307 4.024 37.625 762.223. OTHER OPERATING INCOME Income from financial assets: Profit on bank deposits .607 477.870.079 114.159.note 24.283 19.577 155.038.974.914.2 2.736 52.22.1 22.761.secured .109 120.088 56.434 52.127 24. Includes mark-up charged by the following related parties: National Bank of Pakistan Allied Bank Limited 57.999 Annual Report 2011 47 .note 24.527.765.Long term financing .Short term borrowings .1 Includes mark-up charged by the following related parties: National Bank of Pakistan Allied Bank Limited 381.881 452.552 570.907.052.276.810) from MCB Bank Limited.380 (2010: Rs 490.529 10.secured .167 15.035 11.823.note 24.648.052.Subordinated loans .489.736 Income from non-financial assets: Gain on disposal of operating fixed assets Scrap sales 23.1 24.Workers’ Profit Participation Fund Bank charges and commission Financing fee and charges .725.2 24.498.

307 2010 Rupees 72.331. 26.176.964 (649.652 13.450 354.500 5.1 EARNINGS PER SHARE Basic earnings per share Net profit for the year Weighted average number of ordinary shares Earnings per share 26.088. Relationship between tax expense and accounting profit Profit for the year before taxation Tax at the applicable rate of 35% (2010: 35%) Tax effect of exempt income as referred to in note 4.1 Tax effect of items taxable under the law Others 1.804.487.023. 2010 which would have any effect on the earnings per share if the option to convert is exercised.270.135 A diluted earnings per share has not been presented as the company does not have any convertible instruments in issue as at June 30.879. 2011 and June 30.083.312) 582.304 26.705 349.314.200.739.551) 6.025 25.822.862 25.009 (7. 25.892.320 47.168 0.754 662.1 This represents provision for current taxation for the year. 48 Nishat Power Limited .051.2011 Rupees 25.2 Diluted earnings per share Rupees Number Rupees 1.

038 246.368 (52.237) (1.705.733) (657.754 2010 Rupees 72.458 (3.276. prepayments and other receivables (Decrease)/increase in trade and other payables (207.815.901) 1.794) 651.792.814) (3.429) 756.secured 11.206.006.851.333) (2.674.180.982.193.472.798.229.753 (3.413) (2.988.204 (401.774.541 (452.305) (747.914.493.722.025 39.833.173) Annual Report 2011 49 .666.667) 1.944) (4.598.052.822.155.2011 Rupees 27.987.349.293.798.577 1.017.668.609.538.359) (3.064 (2.832 1.181.321.809. deposits.701.099) (354.746 (215. CASH AND CASH EQUIVALENTS Cash and bank balances Short term borrowings . spares and loose tools Increase in inventories Increase in trade debts Decrease/(increase) in advances.881) 2.892.483.751 28.200.408.525.736) 185.529) 5.346. CASH GENERATED FROM/(USED IN) OPERATIONS Profit before taxation Adjustment for non cash charges and other items: Depreciation on operating fixed assets Profit on bank deposits Finance cost Provision for employee retirement benefits Profit on disposal of operating fixed assets Profit before working capital changes Effect on cash flow due to working capital changes: Increase in stores.081) 1.051 891.170.868.489.370 (26.

660.800 6.800 6.600 174.048 987.1 REMUNERATION OF CHIEF EXECUTIVE.764 6.000 1.983 2.900 9.988. to the Chief Executive.387. including certain benefits.755 485. 50 Nishat Power Limited .700 513.074 - 18.743. 29.083 12.773 9 9 29.000 6.952.744.674 45.952.400 987.2 The director and certain executives are provided with company maintained vehicles.800 6.336 51.433 727.432 336.870.942.218.009 6. DIRECTORS AND EXECUTIVES The aggregate amount charged in the financial statements for the year for remuneration.360 32.900 1 967.650 11.988.988.403 7.223.074 766.660.972 3.042 766.660.29.162 29.048 2.480 2.000 Number of persons 1 1 19.491.432 174.711.284 5. full time working Directors and Executives of the company is as follows: Chief Executive 2011 2010 ( R u Director 2011 p 2010 e e Executives 2011 s 2010 ) Short term employee benefits Managerial remuneration Cost of living allowance Housing rent Conveyance Medical expenses Utilities Bonus Leave encashment Post employment benefits Contribution to provident fund 2.660.300 3.

782 282.245 7.740 891.538.017.200 76.500. Associated undertakings Purchases of goods and services Insurance claim received iii.038 ii.528 231.798 18.885.885.334.381 345.062. Other related parties Receipt of share deposit money Shares issued Disbursement of long term financing Long term financing repaid Short term borrowings acquired Short term borrowings repaid Bank charges and financing fee Bank guarantee commission Purchases of goods and services Contribution towards staff retirement benefits All transactions with related parties have been carried out on commercial terms and conditions.30.156. Annual Report 2011 51 . other related parties and key management personnel.324 334. Amounts due from and to related parties are shown under receivables and payables and remuneration of key management personnel is disclosed in note 29.824.541 510.402 2.173.929.022. TRANSACTIONS WITH RELATED PARTIES The related parties comprise the holding company.462.105 1.000 1.531 872.513.386.000 117.800 207. The company in the normal course of business carries out transactions with various related parties.000 35.308 472. associated undertakings.885.037 2. Holding company Nature of transactions Receipt of share deposit money Shares issued Purchases of operating fixed assets Subordinated loan proceeds 2. Other significant transactions with related parties are as follows: 2011 Rupees 2010 Rupees Relationship with the company i.579 22.352 117.000 510.023.977 2.532.920 300.500.027.539 410.

765. 52 Nishat Power Limited .760 hours (2010: 8. The company is exposed to currency risk arising from various currency exposures.106 (2010: Rs 30.1 FINANCIAL RISK MANAGEMENT Financial risk factors The company’s activities expose it to a variety of financial risks: market risk (including currency risk.815) lower/higher. other price risk and interest rate risk). All treasury related transactions are carried out within the parameters of these policies.872 1. Currency risk arises mainly from future commercial transactions or receivables and payables that exist due to transactions in foreign currencies. the impact on post tax profit for the year would have been Rs 6. credit risk and liquidity risk. the impact on post tax profit for the year would have been Rs 8. mainly as a result of exchange gains/losses on translation of EURO denominated financial instruments. interest rate risk. the sensitivity analysis is unrepresentative of inherent currency risk as the year end exposure does not reflect the exposure during the year. 32. At June 30. In management’s opinion.585 (2010: Rs 4. 2011 if the Rupee had weakened/strengthened by 5% against the USD with all other variables held constant. (a) Market risk (i) Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance.31.937 Under utilisation of available capacity is due to less demand by NTDCL. as well as policies covering specific areas such as foreign exchange risk. 32. credit risk and investment of excess liquidity. At June 30. 2011 if the Rupee had weakened/strengthened by 5% against the EURO with all other variables held constant. Currently.710. the company’s foreign exchange risk exposure is restricted to bank balances and the amounts receivable / payable from / to the foreign entities. Currency risk sensitivity to foreign exchange movements has been calculated on a symmetric basis. The Board provides principles for overall risk management.481) lower/higher. CAPACITY AND PRODUCTION Installed capacity [based on 8.233. Risk management is carried out by the Board of Directors (the Board). primarily with respect to the United States Dollar (USD) and EURO.018 1.760 hours)] Actual energy delivered 2011 MWH 2010 MWH 1.872 342. mainly as a result of exchange gains/losses on translation of USD denominated financial instruments.473.710.

580) (17. subordinated loans and short term borrowings. The company is also not exposed to commodity price risk since it does not hold any financial instrument based on commodity prices.839) Annual Report 2011 53 . The company’s interest rate risk arises from long term financing.339.overdue Financial liabilities Long term financing Subordinated loans Short term borrowings (13.018 68. The company is not exposed to equity price risk since there are no investments in equity instruments traded in the market at the reporting date.800) (472.193.000) (3. The company has no significant long-term interest-bearing assets. the interest rate profile of the company’s interest bearing financial instruments was: 2011 2010 Rupees Rupees Fixed rate instruments Financial assets Bank balances .163.066 1.774.234.221) (818.(ii) Other price risk Other price risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk). whether those changes are caused by factors specific to the individual financial instrument or its issuer.562) (17.360.461.237) Net exposure (12.989 1. or factors affecting all similar financial instruments traded in the market.428.398 10.222.006.220.savings accounts Financial liabilities Net exposure Floating rate instruments Financial assets Trade debts .200) (2.794.540.885.461.525.056.611.056.792.951.121.237) 4. At the balance sheet date.774. Borrowings obtained at variable rates expose the company to cash flow interest rate risk.103.798.989 (17.359) (14.440. (iii) Interest rate risk Interest rate risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.115.066 10.

653 1.374.305 2010 Rupees 2.745. (b) Credit risk Credit risk represents the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.099 100.163.440. Therefore.598.208.180 days 1.986.133 The age of trade receivables at balance sheet date is as follows: The age of trade debts .486. The maximum exposure to credit risk at the reporting date was as follows: 2011 Rupees Trade debts Advances.081 4.Past due 0 .934. 2011 (2010: Nil) The management estimates the recoverability of trade receivable on the basis of financial position and past history of its customer based on the objective evidence that it will not receive the amount due. Cash flow sensitivity analysis for variable rate instruments If interest rates on variable rate financial instruments.561 There is no impairment loss of trade receivables as at June 30.006.374.603 4. trade and other receivables.283. fluctuates by 1% higher / lower with all other variables held constant.907 68.237 11.668.598. post tax profit for the year would have been Rs 472.305 56.462.167 (2010: Rs 477.018 6.599.Fair value sensitivity analysis for fixed rate instruments The company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss.Not past due .580.209.774.797 6. A provision for doubtful debts is established when there is objective evidence that the company will not be able to collect all the amount due according to the 54 Nishat Power Limited .611. Credit risk arises from deposits with banks.202. deposits and other receivables Bank balances 6. (i) Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. a change in interest rate at the balance sheet date would not affect profit or loss of the company.208.499.505) lower / higher.099 2.668. at the year end date.398 2. mainly as a result of higher / lower interest expense on floating rate instruments.

the credit risk is minimal. The provision is recognised in the profit and loss account.408. monitoring balance sheet liquidity ratios against internal and external regulatory requirements.208.367 40. the Board maintains flexibility in funding by maintaining availability under committed credit lines.732 JCR-VIS PACRA PACRA PACRA JCR-VIS PACRA PACRA PACRA JCR-VIS JCR-VIS PACRA Due to the company’s long standing business relationships with these counterparties and after giving due consideration to their strong financial standing.305 133. (c) Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. Annual Report 2011 55 .000 1 323 33.824 2.099 926. and default or delinquency in payments are considered indicators that the trade debt is impaired.001. and maintaining debt financing plans.374. Significant financial difficulties of the debtor.782.548. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities.955 6.828.378 1.937 3. Accordingly.598.469 330. (ii) Credit quality of major financial assets The credit quality of major financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rate: Rating Short term Long term Shell Pakistan Limited NTDCL National Bank of Pakistan Habib Metropolitan Bank Limited Bank Alfalah Limited Faysal Bank Limited United Bank Limited Bank Islami Pakistan Limited MCB Bank Limited Askari Bank Limited Meezan Bank Limited Habib Bank Limited The Bank of Punjab Not Available Not Available A-1+ AAA A1+ A1+ A1+ A-1+ A1 A1+ A1+ A-1 A-1+ A1+ AA+ AA AA AA+ A AA+ AA AAAA+ AARating Agency 2011 Rupees 2.273 5. The provision is written off by the company when it expects that it cannot recover the balance due.815 3. are credited directly to income statement.851 2010 Rupees 557.388.403 99 5.871. This is generally carried out in accordance with practice and limits set by the company.668.628 5.391 6. Management monitors the forecasts of the company’s cash and cash equivalents (note 28) on the basis of expected cash flow. the availability of funding through an adequate amount of committed credit facilities. Any subsequent repayments in relation to amount written off.774.040.original terms of the receivable. The company’s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet its liabilities. probability that the debtor will enter bankruptcy or financial reorganisation.000 18.952 364 6.861. management does not expect non-performance by these counter parties on their obligations to the company. Due to the dynamic nature of the company’s businesses.

Carrying amount Less than one year One to five years More than five years (Rupees) Long term financing Subordinated loan Short term borrowings Trade and other payables Accrued finance cost 14.269 644. 2011.022 601.048 472.193 32.266.525.200 2. No quoted financial instrument is held by the company.193. Carrying amount Less than one year One to five years More than five years (Rupees) Long term financing Subordinated loans Short term borrowings Trade and other payables Accrued finance cost 13.095.995. The following are the contractual maturities of financial liabilities as at June 30.103.960.161 18.527.279.000 3.527.000 6.193.2 Fair value estimation The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date.161 4.248 10.163.100 3.102.857.The table below analyses the company’s financial liabilities and net-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date.619.221 818.107.269 644.729.061.559 2.619.061.575.642.413 5. The carrying amount less impairment provision of trade receivables and payables are assumed to approximate their fair values. 56 Nishat Power Limited .095.885.200 3.540.539 818.422. The amounts disclosed in the table are the contractual undiscounted cash flows as the impact of discounting is not significant.220.420 739.359 274. The financial instruments that are not traded in active market are carried at cost and are tested for impairment according to IAS 39 ‘Financial Instruments : Recognition and Measurement’.792.988.792.222.359 274.525.539 6.022 601.800 472.237 766.220. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the company for similar financial instruments.885.685 18.796.237 766.798.857.582 The following are the contractual maturities of financial liabilities as at June 30.268.747.321.153.692.898.880.266.979 3.798. 2010.582 6.565.193 10.685 4.933.321.534 616.692.

32.653 1.809. Consistent with others in the industry and the requirements of the lenders. less cash and cash equivalents as disclosed in note 28.226. as disclosed in note 7 & 8.099 100.540.064 4.4 Fair values of financial assets and liabilities The carrying values of all financial assets and liabilities reflected in the financial statements approximate their fair values.200 2. This ratio is calculated as net debt divided by total capital.798.619.305 56. Fair value is determined on the basis of objective evidence at each reporting date.022 2010 Rupees Financial liabilities at amortised cost 2011 Rupees Liabilities as per balance sheet Long term financing Subordinated loans Short term borrowings Trade and other payables Accrued finance cost 13.527.674.796.209.237 11. Net debt is calculated as total borrowings including current and non-current borrowings.499.420 2010 Rupees Annual Report 2011 57 . 14.359 274.193.668. In order to maintain or adjust the capital structure.794 2. deposits and other receivables Cash and bank balances 6. 32.022 601.269 644.107.222.000 3.208.800 472.220.534 32.268.486.458 6. return capital to shareholders through repurchase of shares.221 818.374.103. Total capital is calculated as ‘equity’ as shown in the balance sheet plus net debt.5 Capital risk management The company’s objectives when managing capital are to safeguard the company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.774.792.153. the company monitors the capital structure on the basis of gearing ratio.095. issue new shares or sell assets to reduce debt.3 Financial instruments by categories Loans and receivables 2011 Rupees Assets as per balance sheet Trade debts Advances.598.061.161 18.525.283.556.685 18.237 766.885.163. the company may adjust the amount of dividends paid to shareholders.

716. CHIEF EXECUTIVE DIRECTOR 58 Nishat Power Limited . The above figure has been re-arranged as the reclassification made is considered more appropriate for the purposes of presentation.426. 2011 and June 30.217 81.615.173) 15.222.494 22.539. The gearing ratio as at June 30. now reclassified in other operating expenses. Percentage 14.221 (3.636.note 7 & 8 Less: Cash and cash equivalents .122 5.809 previously classified in finance cost.851.616 75.277.312. CORRESPONDING FIGURES Corresponding figures have been re-arranged.269.note 28 Net debt Total equity Total capital Gearing ratio 33.181.345.451.040.017.000 (1. 34.24 DATE OF AUTHORISATION FOR ISSUE These financial statements were authorised for issue on September 05.494. which was unchanged from last year. 2010 is as follows: 2011 Rupees Borrowings . for the purposes of comparison. wherever necessary.323.The company’s strategy. was to maintain a gearing ratio of 80% debt and 20% equity.901) 17.654.81 2010 Rupees 14.262. Significant re-arrangement made is of exchange loss of Rs 5.044 19.173 3. 2011 by the Board of Directors of the company.657.988.

Attested copies of the CNIC or the passport of beneficial owners shall be furnished with the proxy form. For Appointing Proxies b. as my/our proxy in my/our absence and to vote for me/us at the Annual General Meeting of the Company to be held on 31 October 2011 (Monday) at 2:30 PM. In case of corporate entity. duly completed. As witness my/our hands in this day of________________2011. 5/- Signature _________________________________ Address __________________________________ _________________________________________ No. the Board’s resolution / power of attorney with specimen signature shall be furnished along with proxy form to the Company./Miss/Ms. 53-A. / FOLIO NO. d. / FOLIO NO. Lawrence Road. Lahore and at any adjournment thereof in the same manner as I/we myself/ourselves would vote if personally present at such meeting. The proxy shall produce his original CNIC or original passport at the time of the Meeting. 53-A.FORM OF PROXY I/We. Mr. . Revenue Stamp of Rs. c. _________________________________________________________________________ of _____________________________ CDC A/C NO. of shares held __________________________ Witness:Name ____________________________________ Address __________________________________ _________________________________________ IMPORTANT: a. must be received at the registered Office of the Company at Nishat House. ________________________ being a shareholder of the Nishat Power Limited (The Company) do hereby appoint. Lawrence Road. Lahore not later than 48 hours before the time of holding the Annual General Meeting. at Nishat House. ______________________ and or failing him/her _______________________________ of ______________________________ who is/are also a shareholder of the said Company. This instrument appointing a proxy. ___________________________________________________________________ of ___________________________ CDC A/C NO.

60 Nishat Power Limited .A. Lawrence Road. Lahore. 53 .AFFIX CORRECT POSTAGE The Company Secretary NISHAT POWER LIMITED Nishat House.

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->