cover-back · annual report 2016 page 06 bankers allied bank limited al baraka bank (pakistan)...

03 Vision 04 Mission05 Corporate Information07 Zero Harm Charter09 Corporate Objectives & Business Strategy15 Chairman’s Review17 Directors’ Report21 Pattern of Shareholding23 Financial Achievements at a glance24 Key Operational & Financial Data25 Notice of Annual General Meeting33 Statement of Compliance with the Code of Corporate Governance35 Review Report to the Members on Statement of Compliance with the Code of Corporate Governance37 Statement of Compliance with the Issue of Sukuk Regulations, 201538 Independent Reasonable Assurance Report to the Board of Directors on the Statement of Compliance with the Issue of Sukuk Regulations, 201543 Auditors’ Report to the Members on Unconsolidated Financial Statements45 Unconsolidated Financial Statements50 Notes to the Unconsolidated Financial Statements86 Auditors’ Report to the Members on Consolidated Financial Statements87 Consolidated Financial Statements92 Notes to the Consolidated Financial Statements124 Form of Proxy125 Form of Proxy in Urdu language130 Directors’ Report in Urdu language132 Chairman’s Review in Urdu language

Contents

In 2005, Hascol Petroleum Limited was granted the Oil Marketing License by the Government of Pakistan and ever since, the company has aggressively invested in establishing a countrywide network of over 400 retail fuel stations in four provinces of Pakistan and Azad Jammu and Kashmir under the Hascol brand with further sites planned during the coming year.

The company is all set to jump up a number on the competitive ladder, strategizing its position ahead in terms of market share. The acquisition of 10 retail outlets on the Lahore-Islamabad Motorway has strengthened the company’s backbone to broaden its network and has given the Hascol brand a remarkable boost in Central Punjab and has encouraged the company’s sales volume and profitability.

Over the years, Hascol has constructed storage facilities at Keamari, Daulatpur, Shikarpur, MehmoodKot, Machike and Amangarh with further storages planned at Sahiwal, Kotlajam and Thalian.

Hascol obtained listing on the Pakistan Stock Exchange in August 2014 and its share price has appreciated significantly

since getting listed in line with company’s growth having received a credit rating of ‘A+/A-1’ (Single A Plus /A-One) from JCR-VIS Credit Company Limited.

Hascol has a strategic License agreement with FUCHS Middle East (FOMEL), an associate of FUCHS Petrolub based in Germany, to represent the brand in Pakistan. The German brand has emerged as a tough competitor in the oil lubricants sector depicting doubling sales volumes year after year. With an estimated cost of USD 20 Million, the company owned Lube Oil Blending Plant is expected to start operations by December 2017. Hascol has emerged as a strong competitor for its counterparts in the industry and continues to strengthen its footprints.

Hascol Petroleum Limited is the first OMC to market LPG through its Retail Network for the automotive sector. The company has plans to market LPG for domestic consumers and to develop several Auto gas LPG stations across the country in the coming year to accommodate the ever growing demand for energy.

Annual Report 2016 Page 03QUALITY PERSONIFIED

VisionTo become the leading energy marketing company in Pakistan through operational exellence, talent management, business diversification and substainable expansion.

Annual Report 2016 Page 04

MissionTo gain recognition and leadership in the hydrocarbon and energy sectors, by maximizing customer satisfaction and shareholder value through continuous improvement, high quality human capital, appropriate technology, and by adhering to the Company’s Core Values.


Chairman & C.E.OMr. Mumtaz Hasan Khan

DirectorsMr. Abdul Aziz Khalid (Nominee of Vitol Dubai Limited)Mr. Farooq Rahmatullah Khan Mr. Liaquat AliMr. Najmus Saquib HameedMr. Saleem ButtMr. Sohail Hasan

Company Secretary Mr. Zeeshan Ul Haq

Audit CommitteeMr. Sohail Hasan (Chairman)Mr. Liaquat Ali (Member)Mr. Najmus Saquib Hameed (Member)

Strategy CommitteeMr. Farooq Rahmatullah Khan (Chairman)Mr. Mumtaz Hasan Khan (Member)Mr. Liaquat Ali (Member)Mr. Saleem Butt (Member)

Human Resource CommitteeMr. Najmus Saquib Hameed (Chairman)Mr. Mumtaz Hasan Khan (Member)Mr. Liaquat Ali (Member)

AuditorsGrant Thornton Anjum Rahman Chartered Accountants


BankersAllied Bank LimitedAl Baraka Bank (Pakistan) LimitedAskari Bank LimitedBank Al Falah Limited Bank Al Habib LimitedBank Islami Pakistan LimitedFaysal Bank LimitedFirst Women Bank LimitedHabib Metropolitan Bank LimitedHabib Bank LimitedIndustrial and Commercial Bank of China Limited MCB Bank LimitedNational Bank of Pakistan Samba Bank LimitedSindh Bank LimitedSoneri Bank LimitedSummit Bank LimitedUnited Bank Limited

Share RegistrarCentral Depository Company of Pakistan Limited

Legal AdvisorMohsin Tayebaly & Co.Corporate Legal Consultants - Barristers & Advocates

Registered OfficeThe Forum, Suite No. 105-106 First Floor, Khayaban-e-Jami Clifton, Block - 9, Karachi Pakistan Phone: +92-21-35301343-50Fax: +92-21-35301351UAN: 111-757-757E-mail: [email protected]: www.hascol.com


Hascol Petroleum Limited has initiated a Zero Harm approach in compliance with its health, safety, environmental sustainability commitments within the scope of our legal and regulatory obligations. The spirit of our initiative is to ensure that employees, contractors, and other stakeholders share a common attitude and emphasis towards health and safety — whether at work and even home.

To achieve our commitment Hascol Petroleum Limited has set up the following guiding principles throughout the business to demonstrate our Zero Harm charter.

01Hascol supports health and safety by proactively communicating with its people and implement programs that addresses specific hazards faced in our industry.

02Ongoing risk assessment of our operations where management actively seeks feedback from employees as our operational growth occurs.

03Benchmark our HSEQpolicy with our strategic partners and competitors to add value in our standards and continually review them to achieve or even exceed industry standards.

04Our actions havea direct consequentialaffect to the environment; so we aim to monitor our carbonfoot-print and other contaminations/pollutant that occurs in the span of our operations and mitigate them.

05Our initiative has obliged us to prepare contingency plans to counter any adverse event/threat that can potentially disrupt our operations.

06A progressive attitude which acknowledges that all workplace injuries or disease are preventable; employees are encouraged to report an incident and any near misses; where a near miss is defined as a situation which could have adverse consequences if circumstances prevailed.


07Respect local and international law so that we set a prime example in the industry; and formulate our operation in order to avoid any potential breaches; thus setting an image of a responsible organization.

08Employees have aresponsibility toidentify and isolate anyhazards during tasks,be it in the office or out in operations; and our on the job continuous training program are pivotal for achieving this mission.

09In conclusion, our belief is based on a moral obligation that any contribution we make today sets the tone for our future; so we strive to be accountable for achieving the best.


Corporate Objectives and Business StrategyAt HASCOL, our focus on sustainability

healthy ethics plan is driven by our

long-standing commitment to doing

what is right.


The objective of Hascol Petroleum Limited is to create a retail network catering the fuel needs of its customer base throughout the country; reaching remote areas for domestic consumption and to cater the energy needs of all the industrial clients in an e�cient and pro�table manner.

Hascol Petroleum Limited recognizes oil and gas as an energy resource integral to future needs for economic development in this era of world globalization.

Our business strategy is devised in a manner that ensures fulfilling energy needs in an environmentally viable and socially responsible conduct. At Hascol Petroleum Limited, our aspiration is to attain a high standard of performance with robust profitability as well as strengthening market position in the competitive environment. We closely liaise with our customers, partners and policy-makers to fulfill everyone's needs.

A reputation is not built overnight. But when core values are in place, customers give it recognition for international standards, good governance and fair play.


Hascol Petroleum Limited transacts its business based on the following Business Principles; for which the objectives are stated below:

Hascol ValuesHascol Petroleum Limited’s employees share a set of beliefs as prescribed by our founding father - Unity, Faith and Discipline. We strongly value the importance of trust, openness, teamwork and professionalism, and take great pride in how we do business. HPL also places constant emphasis on employees to demonstrate a high level of discipline in their role and establish a culture of ingenuity; where people are welcome to provide feedback/suggestion to the Management and Human Resource.

Competitive EnvironmentHascol Petroleum Limited supports the practical implementation of free and fair competition amongst the industry members. We seek to compete ethically abiding by the local and international legislation and within the framework of applicable competition laws in the relevant jurisdiction. Our motto is that honest business practice reaps rewards in the long run for business sustainability.

Integrity and HonestyHascol Petroleum Limited undertakes its operations based on honesty, integrity and fairness in all aspects of the business, be its customers, suppliers, contractors and external partnerships, and expects the same in our interactions. The direct or indirect offer, facilitation payments, soliciting or acceptance of bribes in any form is unacceptable. Employees are expected to avoid conflicts of interest between their private activities and their part in the conduct of company business. Insider trading and passing on sensitive company information is strictly forbidden. All business transactions on behalf of Hascol Petroleum Limited must be reflected accurately and fairly in the financial statements of the company in accordance with established procedures and are subject to audit by the external statutory auditors.

Safeguarding the Human CapitalHascol Petroleum Limited has a positive approach to health, safety, security and environmental management in order to achieve continuous performance improvement. Our “Zero Harm Charter” revolves around the contribution and importance our workforce provides in our growth. Employees are encouraged to address any personal concerns to the Human Resource on a confidential basis for any issues

they are facing that is affecting their performance. If any counseling is required, the general management is duly notified. Hascol Petroleum Limited prioritises these matters as critical business activities, sets standards and targets for improvement, and measures, appraises and reports performance externally.

EconomicsIt is universally recognized that profitability is essential for achieving business goals, prosperity and sustainability for future growth. It is a measure, both in terms of effciency and brand value that customers will eventually place on Hascol Petroleum Limited; showing confidence in our products and services. The business foot-print is conducted in an economical manner; whereby developing the necessary corporate resources for recouping our investment and guaranteeing profits to develop and produce future energy supplies for our customer base. We invest and reallocate our resources keeping in view all the relevant factors ranging from economic, social and environmental on a micro and macro level; so as to justify our decisions making process and their outcome.

Meetings and EngagementsHascol Petroleum Limited recognizes that regular dialogue and engagement with our stakeholders is essential. We are committed to reporting our performance by providing relevant and reliable information to legitimately interested parties; subject to any overriding considerations of business confidentiality in our interactions with employees, business partners and local communities. We endeavour to listen and respond to their concerns and provide feedback honestly and responsibly. Our employees also follow a stringent rule of having formal work relations and not to compromise on principles.

ComplianceWe comply with all applicable laws and regulations of the Islamic Republic of Pakistan where we operate. Any breach is a matter of prompt scrutiny and immediate action against the perpetrators. Within our organization, we have also internal procedures which are just as important for our daily tasks. General Management ensures that employees adhere to our code of conduct and work procedures and no short-cuts are taken. Our retail sites ensure the safe disposal of hazardous material and other elements that cause environmental pollution.


Business based on our PrinciplesHascol's core values of unity, faith and discipline coupled with honesty, integrity and respect for people are the basis for all the work we do and are the foundation of our Business Principles. These rules apply to all transactions, and are the basis of the behavior expected of every employee in Hascol Petroleum Limited at all times. Our reputation is based on our actions and it will be upheld if we act in accordance with the law and the Business Principles. We encourage our business partners to follow these principles. We persuade our employees to demonstrate leadership, accountability and teamwork, and through these behaviors, to contribute to the overall success of Hascol Petroleum Limited. It is the responsibility of the management to lead by example, to ensure that all employees are aware of these principles, and behave in accordance with the spirit of this statement. The application of these principles is underpinned by a comprehensive set of assurance procedures which are designed to make sure that our employees understand the principles and confirm that they act in accordance with them.

As part of the assurance system, it is also the responsibility of management to provide employees with safe and confidential channels to raise concerns and report instances of non-compliance. In return, it is the responsibility of the employees to report suspected breaches of the Business Principles to the management. The Business Principles have been fundamental to how we conduct our business and living by them is crucial to our continued success.

COUNTRY POLITICS

a. Of CompaniesHascol Petroleum Limited pursues its activities within the laws and statutes of the Islamic Republic of Pakistan whereby our aim is to legitimately accomplish our commercial objectives. The initiatives of Triple Bottom Reporting are gradually evolving among the corporate circles of Pakistan, where the pillars of focus are People, Profit and Planet and Corporate Social Responsibility. Throughout our general principle statement, there will be extracts of practical implementation of the TBR charter. Hascol Petroleum Limited

as a rule of thumb does not make payments to political parties or organization, or to their affliates /representatives whatsoever. The Company does not take part in any external/internal affairs with regulatory bodies unless compliance issue arises or authorized instruction permits us to do so. However, with such dealings, Hascol Petroleum Limited has the right to make our position known on any matters which affect us, our employees, our customers, our shareholders or the local communities in which we operate, in a manner which is in accordance with our ethical values and the best practices of our company.

b. Of EmployeesHascol Petroleum Limited has encouraged the need of a friendly work environment and identified the deal conduct for a decent workplace culture and interaction with all stakeholders. Harassment has been explicitly stated and what is unacceptable includes: jokes, insults, threats, and other unwelcome actions about a person’s race, gender, age, religion, ancestry, social or economic status or educational background is strictly forbidden. Nor is any employee eligible to verbally or physically conduct himself/herself that upsets another’s work performance creating a fearful or hostile work environment. Hascol Petroleum Limited has ensured to provide safe working environment based on our statements in the “Zero Harm Charter”. Also, we discourage intoxication or use of illegal substance at work premises and employees violating shall be subjected to disciplinary action. Where individuals wish to engage in political activities in the community, including standing for election to public office, they will be given the opportunity to do so where this is appropriate keeping in view the specific circumstances of that particular scenario.


We have a Business Ethics Charter by the name of BUSINESS, COMPLIANCE & ETHICS GUIDELINE that dictates our commitment to fair dealing and highlighting ourselves as a professional entity in the oil marketing sector. Our initiative is to avoid any consequential events due to non-conformance of local and foreign legislation and be subjected to penal scrutiny. Apart from General Business Principles; Hascol Petroleum Limited has placed this additional guideline for its operational engagement with the relevant stakeholders.

Business Compliance, &Ethics Guideline

Customer RelationHascol Petroleum Limited will compete for business aggressively and honestly in the competitive oil marketing industry, and shall constrict itself in the following ways: • Will not misrepresent any products, services and prices.• Will not make false claims about our competitors.• Product alteration / blending or change in specifications is

only allowed if requested by the customer, or permitted by regulation or commercial practice.

• Only supply safe products and services that meet all applicable government standards and regulations.

Supplier RelationHascol Petroleum Limited shall ensure all procurement decisions are based on best value received by us and a supplier analysis needs to be conducted. Base the purchase of goods and services only on the merits of price, quality, performance and suitability.• Avoid reciprocal agreements or exchange of favors.• The fee or price paid for goods and services by Hascol

Petroleum Limited shall represent the value of the goods or services provided. Hascol Petroleum Limited shall ensure its maximum ability to refrain from using suppliers who participate in the following activities:

• Supply unsafe products or services.• Break laws or regulations.• Hidden deals and unscrupulous commitments.

Entertainment & GiftsGifts, favor or entertainment should not be accepted orprovided if it will obligate or appear to obligate theperson who receives it. Employees may accept or givegifts, favors and entertainment subject to the followingcriteria:• Not against the laws and policies of other parties’

company.• Not intended to serve as a bribe, payoff or to get

improper influence.• Should not have been requested or asked to be provided.• Should not affect business relationship in any negative

manner.

Information SharingUnless sharing information with external suppliers and customers is against the law or our standard business practise, Hascol Petroleum Limited shall encourage sharing information when it may improve the quality or use of our products. Passing on internal memos and confidential documentation / paperwork is strictly forbidden; if Hascol proprietary information is given outside the company, it has to be ensured that a written confidentiality and non-disclosure agreement is prepared, and that proper controls are established to manage the flow of information. Otherwise, the concerned employee is in serious breach of the business ethics and subject to prosecution.

General Public RelationHascol Petroleum Limited considers the general public as its brand ambassador; our brilliance in products and services must outshine that of competitors; thus allow for our market share to rise at our desired optimal level. Dispelling rumors and misinforming about competitors products and services to the public is highly prohibited and any competitor that indulges in such activities must be dealt with the guidelines prescribed by OGRA and other regulations and legislation. Our business ethics guide us to avoid unnecessary comparisons and benchmarking of retrospective performance of competitors.

Society and Local CommunitiesHascol Petroleum Limited aims to be society’s best friend and foster healthy relationships within our communities. Our aim is to monitor possible impacts of the actions we pursue and ensure that we create recreational facilities adjacent to our retail outlets with provision of fast food franchise chains. This was an idea provisioned by our marketing team to provide a means of light entertainment to the local residents. In


addition, Hascol Petroleum Limited takes a constructive interest in societal matters directly or indirectly related to our business and donation payments for social causes are made on a regular basis. Two well-renowned charities are regular recipients of our donations. Employees can in some instances given time of for appropriate volunteer work and can also refer to legitimate registered.

ResponsibilitiesHascol Petroleum Limited recognizes its responsibilities towards all the stakeholders. The management is responsible to continuously assess these priorities and discharge them on the basis of its assessment. These responsibilities pertain to:• Protect shareholders' investment, and provide competitive

long-term return; benchmarking other leading companies in the oil marketing industry as well as to create a brand name; and supplement growth of its affliate brand FUCHS.

• Developing and maintaining a staunch customer base by providing products and services which offer value in terms of price, quality, safety and positive environmental and commercial expertise thereby create a brand loyalty of Hascol in customers by offering the best possible products and services.

• Employees are our most important assets and they receive utmost respect, rights, good and safe working conditions and to commensurate them with competitive terms and conditions of employment. We appreciate innovation and hard work and regular appraisals based on performance are some of the few means which we use to promote the development and best use of the talents of our employees. We recognize that commercial success depends on the full commitment of all employees.

• The external stakeholders are the contractors, dealers and suppliers with whom we seek to transact business which is mutually beneficial. The ability to promote these principles effectively will be an important factor in the decision to enter into or remain in such relationship.

• Overall, Hascol Petroleum Limited believes in conducting our business as responsible corporate members of the society, to comply with applicable laws and regulations, to support fundamental human rights in line with the legitimate role of business, and to give proper regard to health, safety, security and the environment.

General Principles, Business, Compliance and Ethics and Zero Harm Charter is subject to constant review and updated as per our business requirements. We seek continuous feedback from a variety of stakeholders and vested interest group as the dynamic and unpredictable nature of the oil marketing business demands us to be proactive.

I welcome the sincere initiatives of any respective reader of our General Principles and overall this report to present Hascol Petroleum Limited with any clarification and constructive feedback they deem has to be brought to our attention.

Mumtaz Hasan KhanChairman & Chief Executive


Chairman’sReview

The credit for this outstanding performance goes to senior management and all the employees who have executed the Business Plan in a diligent and efficient manner.

As a result of our performance the share price of the company has been steadily increasing and continues to reflect the superb performance of the company. In 2016, we commissioned ZY terminal at Keamari, which has enabled us to import larger volumes of Motor Gasoline and this has resulted a huge growth in our Motor Gasoline sales.

Additionally, we completed storage facility at Mehmood Kot and recently the pipeline has also been connected with the Papco Pipeline. We are now in a position to receive diesel directly via pipeline from Karachi. This will boost our sales in Southern Punjab.

I am happy to report that 2016 has been another tremendous year for the company. Our sales volumes increased

by almost 46% and our profit before tax was in excess of rupees 2 billion.

As such, we have exceeded the challenging targets, which the Board

had set for the management. We ended the year, as the third largest Oil Marketing Company in the country in

terms of volumes.


As I mentioned in my nine months report, the company has set up a new joint venture company with Vitol in the name of Hascol Terminals Limited, which will build 200,000 Tons storage facility at Port Qasim. Construction

work is proceeding at a fast pace and we hope to commission a major part of the facility by the end of 2017.

Hascol has also acquired a land for Lube Oil Blending and Grease Plant at Port Qasim. The design work has been completed and recently the

Ground Breaking Ceremony was held to formally inaugurate the construction phase of the project. We hope to have the plant fully

operational in 2018.

Your company is also entering the LPG business and has applied to OGRA for LPG Marketing License. We will be setting up a storage facility

at Port Qasim to import LPG and sell bulk LPG to third parties and through cylinders.

Hascol/Vitol have also started joint venture company for marketing of LNG in Pakistan. In the joint venture company Vitol will be a 70%

shareholder and Hascol will be a 30% shareholder. Vitol is in the process of acquiring an equity stake in one of the LNG terminals being set up.

The company will continue with its aggressive plan to develop the Retail Outlets and new depots to open new sales envelop. By the end of 2017,

our retail network will cross 500 Retails Outlets and two new storage facilities at Sahiwal and Amangarh will be operational. Necessary land has also been acquired at Kotla Jam to develop a storage facility to meet the

growing demand, resulting from CPEC.

I would also like to inform the shareholders, that Vitol has exercised the option to take 10% more equity in the company. Once, all the formalities will be completed, Vitol will be largest shareholder with 25% equity. Vitol

decision to increase its equity reflects their confidence in the management of the company and its future prospects.

Moreover, with Vitol as our shareholder, our imports of petroleum products to meet our growing requirements have been streamlined and

we are able to maintain sufficient stocks at all times due to swift execution of our import needs by Vitol at competitive prices.

Finally, I would like to thank the Board for their guidance in pursuing an aggressive business strategy and in making recommendations in our

corporate governance. I would also like to place on record the efforts of the management team and all employees for efficiently executing the

Business Plan of the company and exceeding the ambitious targets.

I am confident that the future of the company is now assured and the Board and Senior Management

will continue to reward the shareholders with attractive dividends.



The Directors of your Company are pleased to present the Annual Report of the Company along with audited standalone and consolidated financial statements and auditors’ report thereon for the year ended 31st December 2016.

1. FINANCIAL RESULTS

The profit for the year ended 31st December 2016 after providing for administrative, marketing and distribution expenses, financial and other charges amounts to:

Appropriations and movement in reserves have been disclosed in the Statement of Changes in Equity on page no. 48 of the Annual Report.

(Rupees in ‘000)

Profit before taxation 2,153,975Taxation (938,349)Profit for the year 1,215,626 (Rupees)Earnings per share 10.07


During the year the Company has achieved a growth of 46% as compared to last year, with sales volume at 1,862,649 MT. The Gross Profits have also improved by 65.83%, thereby generating a Profit after Tax of Rs. 1.215 billion in comparison to Rs. 1.133 billion of previous year, showing an increase of 7.27%.

The standalone EPS for the year is Rs. 10.07 which is 7.24% higher than the last year EPS of Rs. 9.39.

2. DIVIDENDS

The Board is pleased to recommend a final cash dividend of Rs. 3.50 per share i.e. 35% for the year ended 31st December 2016, in addition to the earlier interim cash dividend of Rs. 3.50 per share i.e. 35%. The total dividends for the year stood at Rs. 7.00 per share i.e. 70%. The approval of the members for the dividend will be obtained at the Annual General Meeting of the Company to be held on 28th April 2017. This approach remains in line with our commitment to provide consistent returns to our shareholders.

3. COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE

The management of Hascol Petroleum Limited is committed to good corporate governance and complying with the best practices. As required under the Code of Corporate Governance, the directors are pleased to state as follows:

(a) The financial statements prepared by the Management of the Company present its state of affairs fairly, the result of its operations, cash flows and changes in equity.

(b) Proper books of account of the Company have been maintained.(c) Appropriate accounting policies have been consistently applied in preparation of financial statements and any changes in

accounting policies have been disclosed in the financial statements. The accounting estimates are based on reasonable and prudent judgment.

(d) International Financial Reporting Standards as applicable in Pakistan have been followed in the preparation of financial statements and any departure therefrom has been adequately disclosed and explained.

(e) The Company maintains a sound system of internal control which has been effectively implemented and regularly reviewed and monitored.

(f) There are no significant doubts upon the Company’s ability to continue as a going concern.(g) There has been no material departure from the best practices of Code of Corporate Governance, as detailed in the listing

regulations.(h) The key operating and financial data of last six years has been given on page no. 24 of the Annual Report. The significant

deviations in operating results of the Company from last year have been discussed in the Chairman’s Review on page no. 15.

4. BOARD OF DIRECTORS AND MEETINGS OF THE BOARD HELD DURING THE YEAR 2016

During the year, six (6) meetings of the Board of Directors were held and the attendance of each Director is given below:

S. No.

1234567

Director’s Name

Mr. Mumtaz Hasan Khan (Chairman)Mr. Abdul Aziz KhalidMr. Farooq Rahmatullah KhanMr. Najmus Saquib HameedMr. Sohail HasanMr. Liaquat AliMr. Saleem Butt

Meetings Attended

5465655


5. BOARD COMMITTEE MEETINGS HELD DURING THE YEAR

During the year, the Audit Committee held four (4) meetings. The attendance record of the Directors is as follows:

During the year, the Strategy Committee held one (1) meeting. The attendance record of the Directors is as follows:

During the year, the Human Resources Committee held two (2) meetings. The attendance record of the Directors is as follows:

6. CREDIT RATINGS

JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the entity ratings of Hascol Petroleum Limited (HPL) at ‘A+/A-1’ (Single A Plus/A-One). Rating of HPL’s secured Sukuk issue of Rs. 2 billion has also been reaffirmed at AA- (Double A Minus). Outlook on the assigned ratings is ‘Stable’.

7. PERFORMANCE EVALUATION OF THE BOARD

The performance of the Board of your Company was evaluated during the year. The Board members effectively bring diversity to the Board and constitute a mix of independent and non-executive directors. The overall performance of the Board is good and the board members are aligned with the results of the evaluation.

8. DIRECTORS TRAINING PROGRAMME

Details have been provided in the Statement of Compliance with the Code.

S. No.

123

Director’s Name

Mr. Sohail Hasan (Chairman)Mr. Najmus Saquib HameedMr. Liaquat Ali

Meetings Attended

443

S. No.

123

Director’s Name

Mr. Najmus Saquib Hameed (Chairman)Mr. Mumtaz Hasan KhanMr. Liaquat Ali

Meetings Attended

222

S. No.

1234

Director’s Name

Mr. Farooq Rahmatullah Khan (Chairman)Mr. Mumtaz Hasan KhanMr. Liaquat AliMr. Saleem Butt

Meetings Attended

1111


9. VALUE OF INVESTMENT OF PROVIDENT AND GRATUITY FUNDS

The Company maintains retirement benefit plans for its employees. Contribution to provident and gratuity funds on the basis of audited financial statements as at 31st December 2016 are as follows:

10. CORPORATE SOCIAL RESPONSIBILITY

Your Company has a roadmap with respect to Corporate Social Responsibility to support in the areas of education, health and environment through various philanthropic efforts. During the current year the Company paid donations amounting to Rs. 17.52 million to various educational institutions, hospitals and charitable organizations.

11. CONTRIBUTION TO THE NATIONAL EXCHEQUER AND ECONOMY

During the year your Company has made a total contribution of Rs. 47.78 billion to the national exchequer on account of import duties, general sales tax, income tax and other government levies.

12. EXTERNAL AUDITORS

The auditors Messrs Grant Thornton Anjum Rahman, Chartered Accountants will retire at the conclusion of the forthcoming annual general meeting and being eligible offered themselves for the re-appointment.

The Board has recommended the appointment of Messrs Grant Thornton Anjum Rahman as Auditors of the Company for the year 2017, subject to Shareholders’ approval at the next AGM to be held on 28th April 2017.

13. PATTERN OF SHAREHOLDING

The statement of Pattern of Shareholding as at 31st December 2016 is given on page no. 21 of the Annual Report.

14. ACKNOWLEDGEMENT

Our people are the key drivers behind the sustained growth of the Company. The directors acknowledge the contribution of each and every employee of the Company. We would also like to express our thanks to our customers for the trust shown in our products. We are also grateful to our shareholders for their support and confidence in our management.

15. FUTURE OUTLOOK A reasonable indication of future prospects is discussed in the Chairman’s Review on page no. 15.

Provident Fund Gratuity

Rs. (000)

15,49227,508

Thanking you all.On behalf of the Board

Mumtaz Hasan KhanChairman


Pattern of ShareholdingAs of December 31, 2016

No. of Shareholder Shareholdings' Slab Total Shares Held 1616 1 to 100 67,658 1329 101 to 500 404,712 2636 501 to 1000 1,833,900 1272 1001 to 5000 2,653,257 167 5001 to 10000 1,210,570 78 10001 to 15000 976,633 40 15001 to 20000 725,712 27 20001 to 25000 615,073 19 25001 to 30000 526,298 7 30001 to 35000 221,004 12 35001 to 40000 447,655 7 40001 to 45000 302,986 6 45001 to 50000 287,546 7 50001 to 55000 368,777 5 55001 to 60000 294,030 4 60001 to 65000 251,015 6 65001 to 70000 400,514 5 70001 to 75000 365,030 2 75001 to 80000 156,578 3 80001 to 85000 248,759 1 85001 to 90000 90,000 1 90001 to 95000 93,816 5 95001 to 100000 500,000 4 100001 to 105000 405,179 1 105001 to 110000 110,000 2 110001 to 115000 220,563 1 115001 to 120000 120,000 2 120001 to 125000 246,000 1 125001 to 130000 127,878 3 130001 to 135000 396,635 2 145001 to 150000 300,000 2 160001 to 165000 321,872 1 165001 to 170000 167,166 1 185001 to 190000 189,156 1 225001 to 230000 226,452 3 235001 to 240000 714,700 1 245001 to 250000 250,000 2 250001 to 255000 504,997 3 265001 to 270000 799,206 1 270001 to 275000 274,426 1 275001 to 280000 279,680 1 295001 to 300000 300,000 3 305001 to 310000 927,100 1 385001 to 390000 390,000 1 455001 to 460000 458,001 1 605001 to 610000 609,146 1 885001 to 890000 886,945 1 1025001 to 1030000 1,026,458 1 1060001 to 1065000 1,064,422 1 1115001 to 1120000 1,116,874 1 1570001 to 1575000 1,572,800 1 1625001 to 1630000 1,625,199 1 1755001 to 1760000 1,759,800 1 2645001 to 2650000 2,649,424 1 2740001 to 2745000 2,740,640 1 3090001 to 3095000 3,091,984 1 3695001 to 3700000 3,700,000 1 4415001 to 4420000 4,415,845 1 8820001 to 8825000 8,822,526 1 11995001 to 12000000 12,000,000 1 18100001 to 18105000 18,101,880 1 34720001 to 34725000 34,724,723

7310 120,679,200


Pattern of ShareholdingAs of December 31, 2016

Categories of Shareholders Shareholders Shares Held Percentage

Directors and their spouse(s) and minor children NAJMUS SAQIB HAMEED 1 5 0.00 SOHAIL HASAN 1 5 0.00 LIAQUAT ALI 1 2,649,424 2.20 SALEEM BUTT 1 266,406 0.22 FAROOQ RAHMATULLAH KHAN 1 274,426 0.23 NAZIA MALIK 1 1,116,874 0.93 MUMTAZ HASAN KHAN 1 34,724,723 28.77 NAJMUS SAQUIB HAMEED 1 53,280 0.04

Associated Companies, undertakings and related parties MARSHAL GAS (PVT) LIMITED 1 8,822,526 7.31 FOSSIL ENERGY (PRIVATE) LIMITED 2 12,609,146 10.45 Executives 4 76,908 0.06 Public Sector Companies and Corporations 3 352,200 0.29 Banks, development finance institutions, non-banking finance companies, insurance companies, takaful, modarabas and pension funds 15 6,248,838 5.18 Mutual Funds CDC - TRUSTEE MCB PAKISTAN STOCK MARKET FUND 1 310,000 0.26 CDC - TRUSTEE PAKISTAN CAPITAL MARKET FUND 1 20,000 0.02 CDC - TRUSTEE JS LARGE CAP. FUND 1 95 0.00 CDC - TRUSTEE MCB PAKISTAN ISLAMIC STOCK FUND 1 85,000 0.07 CDC - TRUSTEE MEEZAN BALANCED FUND 1 90 0.00 CDC - TRUSTEE FAYSAL BALANCED GROWTH FUND 1 30,000 0.02 CDC - TRUSTEE ALFALAH GHP VALUE FUND 1 2,042 0.00 CDC - TRUSTEE AKD INDEX TRACKER FUND 1 13,100 0.01 CDC-TRUSTEE PAK. INT. ELEMENT ISLAMIC ASSET ALLOCATION FUND 1 65,000 0.05 CDC - TRUSTEE AL MEEZAN MUTUAL FUND 1 3,682 0.00 CDC - TRUSTEE MEEZAN ISLAMIC FUND 1 7,545 0.01 CDC - TRUSTEE FAYSAL ASSET ALLOCATION FUND 1 25,000 0.02 CDC - TRUSTEE NAFA STOCK FUND 1 80 0.00 CDC - TRUSTEE MCB DCF INCOME FUND 1 43,500 0.04 TRUSTEE-BMA CHUNDRIGAR ROAD SAVINGS FUND 1 1,500 0.00 CDC - TRUSTEE ALFALAH GHP ISLAMIC STOCK FUND 1 4,337 0.00 CDC - TRUSTEE NAFA ISLAMIC ASSET ALLOCATION FUND 1 114 0.00 CDC - TRUSTEE ALFALAH GHP STOCK FUND 1 3 0.00 CDC - TRUSTEE ALFALAH GHP ALPHA FUND 1 70 0.00 CDC - TRUSTEE ABL INCOME FUND 1 236,500 0.20 CDC - TRUSTEE ABL STOCK FUND 1 3,444 0.00 CDC - TRUSTEE MCB DYNAMIC CASH FUND - MT 1 8,100 0.01 CDC-TRUSTEE HBL ISLAMIC STOCK FUND 1 26,700 0.02 CDC - TRUSTEE ASKARI EQUITY FUND 1 285 0.00 CDC - TRUSTEE KSE MEEZAN INDEX FUND 1 46,998 0.04 MCBFSL - TRUSTEE PAK OMAN ADVANTAGE ASSET ALLOCATION FUND 1 26,500 0.02 MCBFSL - TRUSTEE PAK OMAN ISLAMIC ASSET ALLOCATION FUND 1 36,500 0.03 CDC-TRUSTEE FIRST HABIB ISLAMIC BALANCED FUND 1 1,500 0.00 MCBFSL - TRUSTEE ABL ISLAMIC STOCK FUND 1 995 0.00 CDC - TRUSTEE FIRST CAPITAL MUTUAL FUND 1 93 0.00 CDC - TRUSTEE NIT INCOME FUND - MT 1 48,300 0.04 CDC - TRUSTEE FAYSAL SAVINGS GROWTH FUND - MT 1 3,100 0.00 CDC - TRUSTEE NAFA ISLAMIC PRINCIPAL PROTECTED FUND - II 1 63 0.00 CDC - TRUSTEE NAFA ISLAMIC STOCK FUND 1 36,498 0.03 CDC - TRUSTEE FAYSAL ISLAMIC ASSET ALLOCATION FUND 1 10,000 0.01 ABA ALI HABIB SECURITIES (PVT) LIMITED - MF 1 200 0.00 CDC - TRUSTEE HBL ISLAMIC ASSET ALLOCATION FUND 1 8,400 0.01 CDC - TRUSTEE FAYSAL MTS FUND - MT 1 29,100 0.02

General Public a. Local 7152 17,514,905 14.51 b. Foreign 3 927,708 0.77 Foreign Companies 18 32,173,498 26.66 OTHERS 66 1,733,894 1.44

Totals 7310 120,679,200 100.00

Share holders holding 5% or more Shares Held Percentage

MUMTAZ HASAN KHAN 34,724,723 28.77 VITOL DUBAI LIMITED 18,101,880 15.00 FOSSIL ENERGY (PRIVATE) LIMITED 12,609,146 10.45 MARSHAL GAS (PVT) LIMITED 8,822,526 7.31

2016 2015 2014 2013 2012 2011 Profit and Loss Account Rs/mn Revenue (Gross) 128,759 94,065 99,061 57,469 29,775 19,584 Revenue (net) 99,508 76,774 84,856 49,820 25,992 17,094 Cost of good sold 95,000 74,018 82,877 48,506 24,996 16,394 Gross profit 4,708 2,839 2,037 1,360 996 699 Operating profit 2,627 1,630 1,237 579 393 257 Profit before tax 2,154 1,197 865 425 292 43 Profit after tax 1,216 1,133 640 392 218 82 Earnings before interest, taxes, depreciation and amortisation 2,987 1,788 1,264 633 464 300 Balance Sheet

Share Capital 1,207 1,207 906 656 656 656 Property, plant and equipment 8,689 6,278 3,291 2,436 1,724 877 Inventory 16,478 8,470 3,474 3,154 617 311 Current assets 33,710 17,916 10,975 6,557 2,595 1,136 Current liabilities 35,035 20,171 12,059 7,630 3,067 1,686 Non current assets 10,940 8,703 4,642 2,798 1,913 1,214 Non current liabilities 3,510 662 459 281 376 205 Surplus on revaluation of fixed assets 1,143 1,257 321 358 396 19 Summary of cash flow statements

Cash flows from operating activities 2,421 4,364 722 948 307 253 Cash flows from investing activities (2,933) (2,290) (1,793) (642) (322) (117)Cash flows from financing activities 1,785 104 1,367 (214) 311 145 Net cash flows during the year 1,273 2,178 296 93 296 281 Investor Information % Profitability Ratios Gross profit ratio 4.73 3.70 2.40 2.73 3.83 4.09 Net profit ratio 1.22 1.48 0.75 0.79 0.84 0.48 EBITDA margin 3.00 1.90 1.28 1.10 1.56 1.53 Cost / Income ratio 0.79 0.74 0.65 1.35 1.53 1.72 Return on equity 0.24 0.25 0.23 0.36 0.33 0.19

Liquidity Ratios Ratio Current ratio 0.96:1 0.88:1 0.91:1 0.88:1 0.85:1 0.67:1 Quick ratio 0.49:1 0.47:1 0.62:1 0.47:1 0.65:1 0.49:1 %

Cash flows from operations to sales 2.43 5.68 0.85 1.90 1.18 1.48 Cash to current liabilities 0.22 0.20 0.15 0.11 0.15 0.06

Investment / Market Ratios Rs Earning / (loss) per share 10.07 9.39 5.89 5.97 3.33 1.94 Breakup value per share without surplus on revaluation of fixed assets 41.12 37.53 30.67 16.54 10.07 6.71 Breakup value per share with surplus on revaluation of fixed assets 50.59 47.94 34.21 22.01 16.11 7.01


Six Years Summary

Key Operational and Financial Data


Notice of Fifteenth (15th) Annual General MeetingNotice is hereby given that the Fifteenth (15th) Annual General Meeting of Hascol Petroleum Limited will be held on Friday, 28th April 2017 at 9:00 a.m. at the ICAP Auditorium, Chartered Accountants Avenue, Clifton Karachi, to transact the following business:

Ordinary Business

1. To confirm the minutes of the Extraordinary General Meeting of the Company held on 29th June 2016.

2. To receive, consider and adopt the audited accounts of the Company for the year ended 31st December 2016, together with the Directors’ and Auditors’ reports thereon.

3. To consider and approve payment of final cash dividend of Rs.3.50 per share i.e. 35%, as recommended by the Board of Directors. This is in addition to the interim dividend already paid at Rs.3.50 per share i.e. 35%.

4. To appoint auditors and to fix their remuneration for the financial year 2017.

5. To transact any other ordinary business with the permission of the Chair.

Special Business

6. To consider and, if deemed appropriate, pass with or without modification, the following resolutions as Special Resolution for amending the Articles of Association of the Company for the purpose of: (i) compliance with the requirements prescribed in the Companies (E-Voting) Regulations, 2016 as allowed by Securites and Exchange Commission of Pakistan (“SECP”) vide SRO 43(1)/2016 dated 22nd January 2016; (ii) transmission of annual financial statements, auditors' report and directors' report etc. ("Annual Audited Accounts") through CD/DVD/USB instead of transmitting the accounts in hard copies, pursuant to SRO 470(1)/2016 dated 31st May 2016:

RESOLVED THAT, the Articles of Association of the Company be and hereby are amended as follows:

After Article 42 the following new Articles 42-A and 42-B be inserted:

(i) “(42-A) A member may opt for E-voting in a general meeting of the Company under the provisions of the Companies (E-Voting) Regulations, 2016, as amended or re-enacted from time to time. In the case of E-voting, both members and non-members can be appointed as proxy. The instruction to appoint execution officer and option to e-vote through intermediary shall be required to be deposited with the Company, at least ten (10) days before holding of the general meeting, at the Company’s registered office address or through email. The Company will arrange E-voting if the Company receives demand for poll from at least five (5) members or by any member or members having not less than one tenth (1/10) of the voting power”.

(42-B) An instrument of proxy in relation to E-voting shall be in the following form:

I/We, ______________ of ______________ being a member of Hascol Petroleum Limited, holder of ____________ share(s) as per registered Folio No. / CDC Account No._____________ hereby opt for E-voting through Intermediary and hereby consent to the appointment of Execution Officer ________________ as proxy and will exercise E-voting as per The Companies (E-voting) Regulations, 2016 and hereby demand for poll for resolutions.

E-voting


My secured email address is ________________, please send login details, password and electronic signature through email.

_______________________Signature of Member

CNIC No._______________

Signed in the presence of:

______________________ _____________________Signature of Witness Signature of Witness

(ii) Article 103 shall be amended to read as under:

A copy of the Balance Sheet and Profit and Loss Account together with a copy of the Auditors’ report and Directors’ report shall be sent to all members in the manner hereinafter provided in Article 103A hereof, along with the notice convening the General Meeting before which the same are required to be laid at least twenty-one days preceding the Meeting.

The Annual Balance Sheet and profit and loss accounts, auditors’ report and directors’ report etc. ("Annual Audited Accounts") shall be circulated to the members electronically in the following manner:

(i) pursuant to the consent accorded by the members of the Company in General Meeting held on 28th April 2017, henceforth the Annual Audited Accounts shall be transmitted to the members through CD / DVD / USB instead of transmitting the said Accounts in hard copies;

Provided that the requirement of filing the prescribed number of hard copies of Annual Audited Accounts with the Commission and Stock Exchange by post shall be fulfilled;

Provided further that the hard copies of the Annual Audited Accounts shall be supplied to the shareholders on demand, at their registered address, free of cost, within one (1) week of such demand. For convenience of the members the Standard Request Form to communicate their need of hard copies of Annual Audited Accounts instead of sending the same through CD/DVD/USB along with postal and email address of Company Secretary / Share Registrar to whom such requests shall be sent, is given on Company's website www.hascol.com.

(ii) If a member prefers to receive hard copies for all the future Annual Audited Accounts, then such preference of the member shall be given to the Company in writing and the Company provide hard copies of all the future Annual Audited Accounts to such member.

Copies of Balance Sheet and Auditors’ Report to be sent to members

Copies of Annual Audited Accounts to be electronically sent to the members instead of hard copies

After Article 103, as amended above, the following new Article 103-A shall be inserted:


7. To consider and, if deemed appropriate, pass, with or without modification, the following resolutions, under Section 208 of the Companies Ordinance, 1984, as a Special Resolution for the purpose of approving investment by the Company in its associated company, VAS LNG (Private) Limited:

RESOLVED THAT the Company be and is hereby authorized to make an equity investment up to an amount of PKR 300,000,000 (Pak Rupees Three Hundred Million) by way of subscription of 30,000,000 (Thirty Million) new ordinary shares of the face value of Rs.10 each representing 30% of the total proposed share capital of the VAS LNG (Private) Limited, a newly incorporated associated company.

8. To consider and, if deemed appropriate, pass, with or without modification, the following resolutions, under Section 208 of the Companies Ordinance, 1984, as a Special Resolution for the purpose of approving additional equity investment by the Company in its associated company, Hascol Terminals Limited:

RESOLVED THAT the Company be and is hereby authorized to make additional equity investment up to an amount of PKR 125,000,000 (Pak Rupees One Hundred and Twenty Five Million only) by way of subscription of 12,500,000 (Twelve Million Five Hundred Thousand only) new ordinary shares of the face value of Rs.10 each representing 15% of the total proposed increase in share capital of Hascol Terminals Limited, an associated company.

By Order of the Board

7th April 2017 Zeeshan Ul HaqKarachi Company Secretary

NOTES:

Closure of Share Transfer Books

The Share Transfer Books of the Company shall remain closed from 22nd April 2017 to 28th April 2017 (both days inclusive). Transfers in the form of physical transfers / CDS Transaction IDs received in order at the Company’s Share Registrar, Messrs Central Depository Company of Pakistan Limited, CDC House, 99-B, Block-B, S.M.C.H.S., Shahra-e-Faisal, Karachi, by close of business on 21st April 2017 will be treated in time to attend and vote at the meeting and for the purpose of the above entitlement to the transferees.

Participation in the Meeting

Only those persons, whose names appear in the register of members of the Company as on 21st April 2017, are entitled to attend, participate in, and vote at the Annual General Meeting.

A member of the Company entitled to attend and vote at the Annual General Meeting may appoint another person as his / her proxy to attend and vote instead of him / her. Proxies in order to be effective must be received at the registered office of the Company not less than 48 hours before the time of the Meeting and must be duly stamped, signed and witnessed. A form of proxy is attached herewith in the Annual Report.

Transmission of Annual Financial Statements through Email:

The Securities and Exchange Commission of Pakistan (SECP) through its Notification S.R.O. 787(1)/2014 dated 8th September 2014 has permitted companies to circulate Audited Financial Statements along with Notice of Annual General Meeting to its members through e-mail. Accordingly, members are hereby requested to convey their consent and e-mail address for receiving Audited Financial Statements and Notice through e-mail. In order to avail this facility a Standard Request Form is available at the Company’s website www.hascol.com, to be sent along with copy of his / her / its CNIC / Passport to the Company’s Share Registrar.


Please note that giving email address for receiving of Annual Financial Statements instead of receiving the same by post is optional, in case you do not wish to avail this facility please ignore this notice. Annual Financial Statements will be sent at your registered address, as per normal practice.

Notice to Members Who Have Not Provided CNIC

SECP vide Notification S.R.O. 19(1)/2014 dated 10th January 2014 read with Notification S.R.O 831(1)/2012 dated 5th July 2012 require that the dividend warrant(s) should bear CNIC number of the registered member or the authorized person, except in case of minor(s) and corporate members. Accordingly, Members who have not yet submitted copy of their valid CNIC or NTN in case of corporate entities are requested to submit the same to the Company’s Share Registrar. In case of non-compliance, the Company may withhold dispatch of dividend warrants under intimation to regulator till such time they provide the valid copy of their CNIC as per law.

Change of Address

Members are requested to immediately notify the Company’s Share Registrar, Messrs Central Depository Company of Pakistan Limited of any change in their registered address.

Guidelines for CDC Account Holders

CDC account holders are required to comply with the following guidelines as laid down in Circular No.1 of 2000 dated 26th January 2000 issued by SECP:

A. For Attending the Meeting

(i) In case of individuals, the account holder or sub-account holder and/or the person whose securities are in group account and their registration details are uploaded as per CDC regulations, shall authenticate his / her identity by showing his / her original Computerized National Identity Card (CNIC) or original passport at the time of attending the meeting; and

(ii) In case of corporate entities, the Board Of Directors’ resolution / power of attorney with specimen signature of the nominee shall be produced (unless it has been provided earlier) at the time of the meeting.

B. For Appointing Proxies

(i) In case of individuals, the account holder or sub-account holder and/or the person whose securities are in group account their registration details are uploaded as per the CDC regulations, shall submit the proxy form as per the above requirement;

(ii) The proxy form shall be witnessed by two (2) persons whose names, addresses, and CNIC numbers shall be mentioned on the form;

(iii) Attested copies of CNIC or the passport of beneficial owners and the proxy shall be furnished with the proxy form;

(iv) The proxy shall produce his / her original CNIC or original passport at the time of the meeting; and

(v) In case of corporate entities, the board of directors’ resolution / power of attorney with specimen signature of the person nominated to represent and vote on behalf of the corporate entity shall be submitted (unless it has been provided earlier) along with the proxy form to the Company.


Revision of Withholding Tax on Dividend Income under Section 150 of Income Tax Ordinance, 2001:

Pursuant to Section 150 of the Income Tax Ordinance, 2001 and the provisions of the Finance Act 2016 effective 1st July 2016, withholding tax on dividend income will be deducted for ‘Filer’ and ‘Non-Filer’ shareholders @ 12.5% and 20% respectively. According to clarification received from Federal Board of Revenue (FBR) withholding tax will be determined separately on ‘Filer / Non-Filer’ status of principal shareholder as well as joint holder(s) based on their shareholding proportions, in case of joint accounts.

In this regard, all shareholders who hold shares with joint shareholders, are requested to provide shareholding proportions of principal shareholder and joint holder(s) in respect of shares held by them to our Share Registrar, in writing. In case the required information is not provided to our Share Registrar it will be assumed that the shares are held in equal proportion by the principal shareholder and joint holder(s).

Dividend Mandate

Pursuant to SECP Circular No. 18 of 2012, a shareholder may, if so desire, direct the Company to pay dividend through his/her/its bank account. In this regard, shareholders are advised to submit application to the Company’s Share Registrar giving particulars relating to their name, folio number, title of account, bank account number, the bank’s name and complete mailing address of the bank. Please note that this dividend mandate is optional and not compulsory.

STATEMENT UNDER SECTION 160 (1) (b) OF THE COMPANIES ORDINANCE, 1984

This statement sets out the material facts concerning the Special Business listed at Agenda item nos.6, 7 and 8 to be transacted at the Annual General Meeting to be held on 28th April 2017.

Agenda Item No.6

Amendments in the Articles of Association

(i) Compliance with the requirements prescribed in the Companies (E-Voting) Regulations, 2016

The amendments in the Articles of Association of the Company are being carried out in order to give effect to the requirements of Companies (E-Voting) Regulations, 2016 (the “Regulations”) issued by the Securities and Exchange Commission of Pakistan. The Regulations enable the members of listed companies to exercise their voting rights through electronic means (E-Voting) managed by authorized intermediaries, subject to terms and conditions mentioned in the Regulations.

(ii) Circulations of Annual Reports through CD/DVD/USB Securities and Exchange Commission of Pakistan vide S.R.O 470(I)/2016 dated 31st May 2016 has allowed the companies

to circulate annual balance sheet and profit and loss account, auditors’ report and directors’ report (annual audited accounts), notices of annual general meetings and other information contained therein to its members through CD/DVD/USB subject to consent of the shareholders in the general meeting. This will save time and expenses incurred on printing of the annual report.

The Company shall supply the hard copies of the annual audited accounts to the shareholders on demand, free of cost,

within one week of such demand. After approval of the shareholders, the Company will place a Standard Request Form on its website to communicate their need of hard copies of the annual audited accounts instead of sending the same through CD/DVD/USB along with postal and email address of the Company Secretary/Share Registrar to whom such requests shall be made.

The directors, sponsors, majority shareholders of the Company and their relatives have no vested interest, directly or

indirectly in the above business except to the extent of their/spouses’ shareholdings and directorship in the Company.


Agenda Item No.7

Details required under Clause 3(1)(a) of the Companies (Investment in Associated Companies or Associated Undertakings) Regulations, 2012 are given below:

Name of the associated company or associatedundertaking along with criteria based on whichthe associated relationship is established:

Purpose, benefits and period of investment:

Maximum amount of investment:

Maximum price at which securities will be acquired:

Maximum number of securities to be acquired:

Number of securities and percentage thereof held before and after the proposed investment:

Average market price of the shares intended to be purchased during preceding twelve weeks in case of listed companies

In case of investment in unlisted securities, fair market value of such securities determined in terms of regulation 6(1):

Breakup value of shares intended to be purchased on the basis of last published financial statements

Earning per share of the associated company or associated undertaking for the last three years:

For the year 2016:For the year 2015:For the year 2014:

Sources of funds from which securities will be acquired:

VAS LNG (Private) Limited (“VLPL”) an associated company of Hascol Petroleum Limited (the “Company”). VLPL has been set up initially as a subsidiary of the Company to eventually operate as a joint venture company.

Purpose: To undertake the business of marketing Liquefied Natural Gas (LNG).

Period of Investment: Investment will be made from time to time in a period of 2 years.

Benefit: To increase revenue and in turn shareholder’s value.

Up to PKR 300,000,000

Rs.10/- per share (par value).

30,000,000 shares.

Nil (except undertaking to subscribe 97 shares out of total 100 shares as per the Memorandum and Articles of Association of VLPL). The total securities that will be held after the proposed investment will be a maximum total of 30,000,000.

Not applicable (newly established company)

Newly Incorporated (fresh equity at face value)

Not Applicable (newly incorporated)


Self generated funds.

Where the securities are intended to be acquired using borrowed funds:(a) Justification for investment through borrowings:(b) Detail of guarantees and assets pledged for

obtaining such funds:

Salient features of the agreement(s), if any, entered into with its associated company or associated undertaking with regards to the proposed investment:

Direct or indirect interest of directors, sponsors, majority shareholders and their relatives, if any, in the associated company or associated undertaking or the transaction under consideration:

Not applicable.

Not applicable.

No agreement existing at present. The Company proposes to enter into a Joint Venture Agreement to jointly own and operate the Company in the following proportion i.e. (a) Vitol Dubai Limited / or its affiliate 70% and (b) Hascol Petroleum Limited 30%.

The Directors / sponsors / majority shareholders of the Company have no interest directly or indirectly in the investment in VLPL, except that Mr. Mumtaz Hasan Khan is also a director in the Company as well.

Name of the associated company or associated undertaking along with criteria based on which the associated relationship is established:

Purpose, benefits and period of investment:

Maximum amount of investment:

Maximum price at which securities will be acquired:

Maximum number of securities to be acquired:

Hascol Terminals Limited (“HTL”) an associated company of Hascol Petroleum Limited (“Company”). HTL was initially set up as a subsidiary of the Company to eventually operate as a joint venture company along with co-sponsors / investors listed below. The Company will own 15% of the issued shares of HTL. The Company currently has approval of an equity investment of PKR 375 million after seeking shareholders approval under a special resolution for complying with Section 208 of the Companies Ordinance 1984 in an EOGM held on 29th June 2016 (“First Special Resolution Notice”).

Purpose: Due to increase in steel prices the project cost of HTL has over run and additional cost has to be incurred for the construction of tanks and piping. The shareholders of HTL have agreed to fund the additional costs in proportion to their respective shareholding. Approval is being sought from the shareholders for the Company to make pro-rata equity investment to meet such cost over-runs up to a maximum of PKR 125,000,000 (Pak Rupees One Hundred and Twenty Five Million only).

Benefit: The benefits of the project have already been disclosed to the shareholders in the First Special Resolution Notice.

Up to PKR125,000,000

Rs.10/- per share (par value).

12,500,000 shares


Agenda Item No.8 Details required under Clause 3(1)(a) of the Companies (Investment in Associated Companies or Associated

Undertakings) Regulations, 2012 are given below:

Number of securities and percentage thereof held before and after the proposed investment:

Average market price of the shares intended to be purchased during preceding twelve weeks in case of listed companies

In case of investment in unlisted securities, fair market value of such securities determined in terms of regulation 6(1):

Breakup value of shares intended to be purchased on the basis of last published financial statements

Earning per share of the associated company or associated undertaking for the last three years:

For the year 2016:For the year 2015:For the year 2014:

Sources of funds from which securities will be acquired:

Where the securities are intended to be acquired using borrowed funds:(a) Justification for investment through

borrowings:(b) Detail of guarantees and assets pledged for

obtaining such funds:

Salient features of the agreement(s), if any, entered into with its associated company or associated undertaking with regards to the proposed investment:

Direct or indirect interest of directors, sponsors, majority shareholders and their relatives, if any, in the associated company or associated undertaking or the transaction under consideration:

Presently 7,500,000 shares (62.50%) are held and the balance amount invested is advance against equity. Upon full subscription, the shares will be issued to the amount of investment made. After the proposed investment the holding will increase up to 50,000,000 shares (15%).

Not Applicable (newly established company)

Newly Incorporated (fresh equity at face value)



Self generated funds

Not applicable

Not applicable

The Company has entered into a joint venture / shareholders’ agreement dated 3rd January 2017 to jointly own and operate the Company in the following proportion i.e. (a) VTTI 51% (b) Hascol Petroleum Limited 15% (c) Fossil Energy (Private) Limited 24%, and (d) ST Logistics (Private) Limited 10%, with proportionate representation of the Board of Directors and expected standard rights of first refusal and tag along rights usual for such type of joint venture companies.

The Directors / sponsors / majority shareholders of the Company have no interest directly or indirectly in the investment in HTL, except that they are shareholders/directors in HTL. Mr. Saleem Butt is interested as a majority shareholder in Fossil Energy (Private) Limited a co-sponsor of HTL.



Statements of Compliance with the Code ofCorporate GovernanceThis statement is being presented to comply with the Code of Corporate Governance (the “CCG”) contained in Regulation No. 5.19 of listing regulations of the Pakistan Stock Exchange Limited for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance.

The Company has applied the principles contained in the CCG in the following manner:

1. The Company encourages representation of independent non-executive directors and directors representing minority interests on its Board of Directors. At present the Board includes:

Category Names

Independent Director Mr. Sohail Hasan Executive Directors Mr. Mumtaz Hasan Khan Mr. Saleem Butt Non-Executive Directors Mr. Farooq Rahmatullah Khan Mr. Najmus Saquib Hameed Mr. Liaquat Ali Mr. Abdul Aziz Khalid

The independent director meets the criteria of independence under clause 5.19.1(b) of the CCG.

2. The directors have confirmed that none of them is serving as a director on more than seven listed companies, including this Company.

3. All the resident directors of the Company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company, a Development Financial Institution or a Non-Banking Financial Institution, or, being a member of a stock exchange, has been declared as a defaulter by that stock exchange.

4. A casual vacancy occurring on the board on 30th March 2016 was filled up by the directors on the same day.

5. The Company has prepared a “Code of Conduct” and has ensured that appropriate steps have been taken to disseminate it throughout the Company along with supporting policies and procedures.

6. The Board has developed a Vision / Mission statement, overall corporate strategy and significant policies of the Company.

A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained.

7. All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the Chief Executive Officer, other executive and non-executive directors, have been taken by the Board / shareholders.

8. The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the Board for this purpose and the Board met at least once in every quarter. Written notices of the Board meetings, along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated.

Agenda Item No.8 Details required under Clause 3(1)(a) of the Companies (Investment in Associated Companies or Associated

Undertakings) Regulations, 2012 are given below:


9. In accordance with the criteria specified on clause 5.19.7 of PSX Rules, majority of Directors of the Company have completed the Directors’ training program.

10. There has been no new appointment for the positions of CFO, Company Secretary or Head of Internal Audit during the year.

11. The Directors’ Report has been prepared in compliance with the requirements of CCG and fully describes the salient matters required to be disclosed.

12. The financial statements of the Company were duly endorsed by Chief Executive Officer and Chief Financial Officer before approval of the Board.

13. The Directors, Chief Executive Officer and executives do not hold any interest in the shares of the Company other than that disclosed in the pattern of shareholding.

14. The Company has complied with all the corporate and financial reporting requirements of the CCG.

15. The Board has formed an Audit Committee. It comprises of three members, of whom two are non-executive directors and one is an independent director. The chairman of the audit committee is an independent director.

16. 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 CCG. The terms of reference of the committee have been formed and advised to the committee for compliance.

17. The Board has formed a Human Resource Committee. It comprises of three members, of whom two are non-executive directors and one is an executive director. The chairman of the committee is a non-executive director.

18. The Board has set up an effective internal audit function for the Company which was fully operational during the year.

19. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under the quality control review program of the Institute of Chartered Accountants of Pakistan (ICAP), that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the ICAP.

20. 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.

21. The ‘closed period’, prior to the announcement of interim / final results, and business decisions, which may materially affect the market price of company’s securities, was determined and intimated to directors, employees and stock exchange.

22. Material / price sensitive information has been disseminated among all market participants at once through the stock exchange.

23. The Company has complied with the requirements relating to maintenance of register of persons having access to inside information by designated senior management officer in a timely manner and maintained proper record including basis for inclusion or exclusion of names of persons from the said list.

24. As stated above, we confirm that all other material principles enshrined in the CCG have been complied with.

Karachi: 31st March 2017 Mumtaz Hasan Khan

Chairman & Chief Executive


Statement of Compliance with the Issue of Sukuk Regulations, 2015This statement is being presented to comply with the requirements under “Issue of Sukuk Regulations, 2015” issued by the Securities and Exchange Commission of Pakistan. This Statement of Compliance is for the year ended December 31, 2016.

Hascol Petroleum Limited (the Company) entered into an arrangement for issue of Sukuk amounting to Rs. 2,000 Million inclusive of Green Shoe Option of Rs. 500 Million, on December 31st, 2015 for a period of 6 years including a grace period of 1 year. We state that the Company is in compliance with the Sukuk features and Shari’ah requirements in accordance with the Issue of Sukuk Regulations, 2015.

We specifically confirm that:- The Company has established policies and procedures for all Sukuk related transactions to comply with Sukuk features and

Shari’ah requirements.- The Company has implemented and maintained such internal control and risk management systems that are necessary to

mitigate the risk of non-compliances of the Sukuk features and Shari’ah requirements, whether due to fraud or error;- The Company has a process to ensure that the management and where appropriate those charged with governance, and

personnel responsible to ensure the Company’s compliance with the Sukuk related features and Shari’ah requirements are properly trained and systems are properly updated.

The Sukuk features and Shari’ah requirements in accordance with Issue of Sukuk Regulations, 2015 comprises of the following:

a. Requirements of Shariah Structure and Transaction Documents as stated in the Information Memorandum, with respect to issuance of Sukuk:

i. Trust Deedii. Musharka Agreementsiii. Payment Agreementsiv. Purchase Undertakingv. Asset Purchase Agreementvi. Investment Agency Agreementvii. Security Documentsb. Guidelines of the relevant Shariah Standards, issued by the Accounting and Auditing Organization of the Islamic Financial

Institutions (AAOIFI), as notified by the Securities and Exchange Commission of Pakistan (the SECP);c. Requirements of the relevant Islamic Financial Accounting Standard as notified by the SECP; andd. Other compliances specified in the issue of Sukuk Regulations 2015 issued by the Securities and Exchange Commission of

Pakistan.

The above Statement has been duly endorsed by the Board of Directors of the Company.


Najmus Saquib HameedDirector

for the year ended December 31, 2016


Annual Report 2016 QUALITY PERSONIFIED Page 45

UNCONSOLIDATED BALANCE SHEET AS AT DECEMBER 31, 2016 (Rupees in thousand)

Note 2016 2015ASSETS Non-current assets Property, plant and equipment 5 8,688,947 6,277,928 Intangible asset 6 - 1,522 Long-term investments 7 1,961,977 1,955,310 Long-term deposits 8 288,882 228,631 Deferred taxation 9 - 240,096 Total non-current assets 10,939,806 8,703,487

Current assets Stock-in-trade 10 16,477,668 8,470,018 Trade debts 11 7,871,281 4,263,595 Advances 12 253,413 150,606 Deposits, prepayments and other receivables 13 1,286,748 959,829 Cash and bank balances 14 7,821,070 4,071,547 Total current assets 33,710,180 17,915,595 TOTAL ASSETS 44,649,986 26,619,082

EQUITY AND LIABILITIES Share capital and reserves Share capital 15 1,206,792 1,206,792 Reserves 16 3,755,346 3,322,311 Total shareholders’ equity 4,962,138 4,529,103

Surplus on revaluation of fixed assets - net of tax 17 1,142,880 1,256,529

LIABILITIES Non-current liabilities Long-term finances 18 2,307,749 176,151 Liabilities against assets subject to finance lease 19 471,731 322,930 Deferred taxation - net 9 594,790 - Deferred liability - gratuity 20 135,791 99,090 Total non-current liabilities 3,510,061 598,171

Current liabilities Trade and other payables 21 29,822,758 17,419,728 Mark-up accrued 22 91,185 54,311 Short-term borrowings 23 3,889,629 1,413,055 Current portion of long term finances 18 599,079 285,636 Current maturity of liabilities against assets subject to finance lease 19 148,387 102,597 Taxation 24 483,869 959,952 Total current liabilities 35,034,907 20,235,279 TOTAL LIABILITIES 38,544,968 20,833,450 TOTAL EQUITY AND LIABILITIES 44,649,986 26,619,082

CONTINGENCIES AND COMMITMENTS 25

The annexed notes 1 to 48 form an integral part of these unconsolidated financial statements.

Chairman & Chief Executive DirectorMumtaz Hasan Khan Najmus Saquib Hameed


UNCONSOLIDATED PROFIT AND LOSS ACCOUNT (Rupees in thousand)FOR THE YEAR ENDED DECEMBER 31, 2016

Note 2016 2015

Sales - net 26 128,759,275 94,065,297 Less: sales tax (29,251,081) (17,291,360)Net sales 99,508,194 76,773,937

Other revenue 27 199,280 82,831 Net revenue 99,707,474 76,856,768

Cost of products sold 28 (94,999,669) (74,017,815)Gross profit 4,707,805 2,838,953

Operating expenses Distribution and marketing 29 (1,763,478) (1,053,474)Administrative 30 (528,636) (366,238) (2,292,114) (1,419,712)Other income 31 211,496 210,541 Operating profit 2,627,187 1,629,782

Finance cost 32 (432,618) (349,652)Other charges 33 (40,594) (83,409) (473,212) (433,061)Profit before taxation 2,153,975 1,196,721

Taxation 34 (938,349) (63,484)Profit for the year 1,215,626 1,133,237

Earnings per share - basic and diluted (Rupees) 35 10.07 9.39




UNCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED DECEMBER 31, 2016

Note 2016 2015

Profit for the year 1,215,626 1,133,237

Other comprehensive income Items that will not be reclassified to profit and loss account Remeasurement of net defined benefit liability - net of deferred tax 20.3 (9,795) (7,464)

Items that may be reclassified subsequently to profit and loss account Unrealized (loss)/gain due to change in fair value of long-term investment classified as ‘available-for-sale’ - net of deferred tax (59,791) 690,662 (69,586) 683,198 Total comprehensive income 1,146,040 1,816,435


(Rupees in thousand)



UNCONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED DECEMBER 31, 2016

Capital Revenue reserves reserve Total Share Share Fair Unappropri shareholders’ Capital premium value -ated profit equity reserve Balance as at January 01, 2015 906,000 1,070,828 (5,941) 807,926 2,778,813

Total comprehensive income for the year Profit for the year - - - 1,133,237 1,133,237

Other comprehensive income Remeasurement of net defined benefit liability - net of tax - - - (7,464) (7,464)Unrealized loss due to change in fair value of long-term investment classified as ‘available-for-sale’ - net of tax - - 690,662 - 690,662 Total comprehensive income - - 690,662 1,125,773 1,816,435

Transferred from surplus on revaluation of fixed assets on account of incremental depreciation - net of tax - - - 84,704 84,704 - - 690,662 1,210,477 1,901,139 Transaction with owners Annual bonus @ 11% - December 2014 99,660 - - (99,660) - Interim bonus @ 20% - June 2015 201,132 - - (201,132) - First interim dividend at Rs. 1.5 per share - - - (150,849) (150,849)Total transaction with owners 300,792 - - (451,641) (150,849)Balance as at December 31, 2015 1,206,792 1,070,828 684,721 1,566,762 4,529,103

Balance as at January 01, 2016 1,206,792 1,070,828 684,721 1,566,762 4,529,103

Total comprehensive income for the year Profit for the year - - - 1,215,626 1,215,626

Other comprehensive income Remeasurement of net defined benefit liability - net of tax - - - (9,795) (9,795)Unrealized gain due to change in fair value of long-term investment classified as ‘available-for-sale’ - net of tax - - (59,791) - (59,791)Total comprehensive income - - (59,791) 1,205,831 1,146,040

Transferred from surplus on revaluation of fixed assets on account of incremental depreciation - net of tax - - - 131,749 131,749 - - (59,791) 1,337,580 1,277,789 Transaction with owners Final dividend at Rs. 3.50 per share - December 2015 - - - (422,377) (422,377)Interim dividend at Rs. 3.50 per share - June 2016 - - - (422,377) (422,377)Total transaction with owners - - - (844,754) (844,754)Balance as at December 31, 2016 1,206,792 1,070,828 624,930 2,059,588 4,962,138





UNCONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED DECEMBER 31, 2016

Note 2016 2015

CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations 38 3,256,191 4,792,265 Finance cost paid (395,744) (355,218)Profit on bank deposits 165,033 139,662 Taxes paid (599,442) (197,891)Gratuity paid (5,003) (3,359)Net cash generated from operating activities 2,421,035 4,375,459

CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure incurred (2,863,872) (1,735,953)Proceeds from disposal of property, plant and equipment 65,711 2,272 Long-term investment made during the year (75,000) (384,440)Long-term deposits (60,251) (172,142)Net cash used in investing activities (2,933,412) (2,290,263)

CASH FLOWS FROM FINANCING ACTIVITIES Lease liability obtained - net 194,591 349,288 Dividend paid (844,754) (150,849)Long-term finance obtained/(repaid) - net 2,435,489 (106,093)Net cash generated from financing activities 1,785,326 92,346

Net increase in cash and cash equivalents 1,272,949 2,177,542

Cash and cash equivalents at beginning of the year 2,658,492 480,950

Cash and cash equivalents at end of the year 39 3,931,441 2,658,492





NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED DECEMBER 31, 2016

1 STATUS AND NATURE OF BUSINESS Hascol Petroleum Limited (the Company) was incorporated in Pakistan as a private limited company on March 28, 2001. On

September 12, 2007 the Company was converted into a public unlisted company and on May 12, 2014 the Company was listed on the Pakistan Stock Exchange. The registered office of the Company is situated at Suite No. 105-106, The Forum, Khayaban-e-Jami, Clifton, Karachi.

The Company is engaged in the business of procurement, storage and marketing of petroleum and related products, for which the Company obtained oil marketing license from Ministry of Petroleum and Natural Resources in the year 2005.

1.1 These financial statements are separate financial statements of the Company in which investments in subsidiaries are accounted for on the basis of direct interest rather than on the basis of reported results. Consolidated financial statements are prepared separately.

Subsidiaries Hascombe Lubricants (Private) Limited

Hascombe Lubricants (Private) Limited is a wholly owned subsidiary of the Company which is incorporated in Pakistan.

Hascol Terminals Limited

Hascol Terminals Limited is a subsidiary of the Company which is incorporated in Pakistan. The subsidary provides storage facilities for imported and locally produced petroleum and related products.

2 BASIS OF PREPARATION 2.1 Statement of compliance These unconsolidated financial statements have been prepared in accordance with the Approved Accounting Standards as applicable

in Pakistan. Approved Accounting Standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan (ICAP) as are notified under the provisions of the Companies Ordinance, 1984, the requirements of the Companies Ordinance, 1984 and the directives issued by the Securities and Exchange Commission of Pakistan (SECP). Where the requirements of the Companies Ordinance, 1984 or directives issued by the SECP differ with the requirements of IFRS, the requirements of and directives issued under the Companies Ordinance, 1984 shall prevail.

2.2 Basis of measurement These unconsolidated financial statements have been prepared under the historical cost convention, except for certain assets and

liabilities which are stated at revalued amount.

In these unconsolidated financial statements, except for the unconsolidated statement of cash flows, all the transactions have been accounted for on an accrual basis.

2.3 Functional and presentation currency

These unconsolidated financial statements are presented in Pakistani Rupees which is also the Company’s functional currency.

2.4 Standards, Amendments and Interpretations to Approved Accounting Standards

2.4.1 Standards, amendments and interpretations to the published standards that are relevant to the company and adopted in the current year

The Company has adopted the following new standards, amendments to published standards and interpretations of IFRSs which became effective during the current year.



Amendments Effective Date IAS 1 - Disclosure Initiative (Amendments to IAS 1 Presentation of Financial Statements) January 1, 2016 IFRS 10, IFRS 12 and IAS 28 - Investment Entities : Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28) January 1, 2016 Annual Improvements to IFRSs 2012 - 2014 Cycle January 1, 2016 (i) IFRS 5 — Adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to held for

distribution or vice versa and cases in which held-for-distribution accounting is discontinued. (ii) IFRS 7 — Additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset, and

clarification on offsetting disclosures in condensed interim financial statements. (iii) IAS 19 — Clarify that the high quality corporate bonds used in estimating the discount rate for post-employment benefits

should be denominated in the same currency as the benefits to be paid. (iv) IAS 34 — Clarify the meaning of ‘elsewhere in the interim report’ and require a cross-reference.

IAS 27 - Equity method in Separate Financial Statatements (Amendments to IAS 27) January 1, 2016 IAS 16 and IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38) January 1, 2016 Adoption of the above revisions, amendments and interpretations of the standards have no significant effect on the amounts for the

year ended December 31, 2015 and 2016.

2.4.2 Standards, amendments to published standards and interpretations that are effective but not relevant

The other new standards, amendments to published standards and interpretations that are mandatory for the financial year beginning on January 01, 2016 are considered not to be relevant or to have any significant effect on the Company’s financial reporting and operations and are therefore not presented here.

2.4.3 Standards, amendments and interpretations to the published standards that are relevant but not yet effective and not early adopted by the Company

There are number of other standards, amendments and interpretations to the published standards that are relevant to the Company and not yet effective and therefore, have not been presented here.

2.4.4 Standards, amendments and interpretations to the published standards that are not yet notified by the Securities and Exchange Commission of Pakistan (SECP)

Following new standards have been issued by the International Accounting Standards Board (IASB) which are yet to be notified by the SECP for the purpose of applicability in Pakistan.

Standard IASB effective date (Annual periods beginning on or after)

IFRS 9 - Financial Instruments January 1, 2018

IFRS 14 - Regulatory Deferral Accounts January 1, 2016 IFRS 15 - Revenue from Contracts with Customers January 1, 2018 IFRS 16 - Leases January 1, 2019 3 CRITICAL ASSUMPTIONS, ESTIMATES AND MEASUREMENT UNCERTAINITY

The preparation of unconsolidated financial statements in conformity with approved accounting standards, as applicable in Pakistan, requires management to make estimates, assumptions and use judgment that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses.

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.



The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Accounting policies in respect of judgments made by management in the application of approved accounting standards, as applicable in Pakistan, that have significant effect on the Company’s financial statements and estimates and assumptions with significant risk of material adjustment in the future period are included in the following notes:

Note a) Useful life of depreciable and amortisable assets 4.1 & 4.2 b) Net realizable value of stock-in-trade 4.8 c) Provisions and contingent liabilities 4.11 d) Taxation 4.14 e) Retirement and other service benefits 4.16 Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectation of

future events that are believed to be reasonable under the circumstances.

4 SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied in the preparation of these unconsolidated financial statements are set out below. These

policies have been consistently applied to all the years presented, unless otherwise stated.

4.1 Property, plant and equipment Initial recognition (a) Operating fixed assets An item of property, plant and equipment is initially recognized at cost.

Cost includes expenditure that is directly attributable to the acquisition of the asset. Property, plant and equipment under construction are disclosed as capital work-in-progress. The cost of self constructed assets includes the cost of materials and fixed labour, any other cost directly attributable to bringing the asset into service for its intended use including, where applicable, the cost of dismantling and removing the items and restoring the site on which they are located, and borrowing costs on qualifying assets.

The assets which are available for intended use are capitalized as operating fixed assets. While assets under construction are capitalized to capital work in progress.

The Company accounts for property, plant and equipment acquired under finance leases by recording the assets and the related liability. These amounts are determined at the inception of lease, on the basis of the lower of the fair value of the leased properties and the present value of minimum lease payments. Financial charges are allocated to the accounting period in a manner so as to provide a constant rate of charge on the outstanding liability.

(b) Capital work-in-progress (CWIP) CWIP is stated at cost less accumulated impairment losses, if any. All expenditure in connection with specific assets incurred during

construction / installation period are carried to CWIP. These expenditures are transferred to operating fixed assets as and when these are available for intended use.

Measurement subsequent to initial recognition (a) Carried using revaluation model Following operating assets both owned and leased are subsequently measured under revaluation model (i.e. fair value at the date of

revaluation less any subsequent accumulated depreciation and any subsequent accumulated impairment losses).

- Building on lease hold land - Tanks and pipelines - Dispensing pumps - Plant and machinery - Electrical, mechanical and fire fighting equipment.



Fair value is determined by external professional valuers with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair value at the balance sheet date.

(b) Carried using cost model Fixed assets other than those mentioned above are stated at cost less accumulated depreciation and accumulated impairment

losses. Depreciation Depreciation on operating fixed assets is charged to profit and loss account applying the straight-line method whereby the cost/

revalued amount of operating fixed assets is written off over its remaining useful life. Same basis and estimates for depreciation are applied to owned assets and assets acquired under finance lease.

Depreciation is charged on straight line method from the month in which an asset is available for intended use, while no depreciation is charged from the month in which the asset is disposed off. Depreciation is provided at the rates as disclosed in note 5.1.

Depreciation method, useful lives, and residual values are reviewed at each reporting period and adjusted, if applicable. Capital work-in-progress is not depreciated.

Maintenance and normal repairs are charged to the unconsolidated profit and loss account as and when incurred. Major renewals and improvements are capitalized and the assets so replaced, if any, are retired.

Gain and loss on disposal of property, plant and equipment is included in the unconsolidated profit and loss account in the period of disposal.

Surplus on revaluation of fixed assets The surplus arising on revaluation of fixed assets is credited to the “Surplus on revaluation of fixed assets” shown below equity in the

unconsolidated balance sheet. Accordingly the Company has adopted the following accounting treatment of depreciation on revalued assets, keeping in view the requirement of Securities and Exchange Commission of Pakistan’s (SECP) SRO 45(1)/2003 dated January 13, 2003:

- depreciation on assets which are revalued is determined with reference to the value assigned to such assets on revaluation and depreciation charge for the period is taken to the unconsolidated profit and loss account; and

- an amount equal to incremental depreciation for the period net of deferred taxation is transferred from “Surplus on revaluation of fixed assets account” to unappropriated profits through unconsolidated statement of changes in equity to record realization of surplus to the extent of the incremental depreciation charge for the period.

4.2 Intangible assets These are recorded initially at cost and subsequently carried at cost less accumulated amortization and accumulated impairment

losses, if any.

Intangible assets having finite useful lives are stated at cost less accumulated amortization and accumulated impairment losses, if any. Such intangibles are amortized over their estimated useful lives using the straight line method.

Amortization on addition and deletion of intangible assets during the year is charged in proportion to the period of use. The useful life and amortization method are reviewed and adjusted, if appropriate, at the balance sheet date.

Intangible assets having indefinite useful life are not amortized and stated at cost less impairment losses, if any.

4.3 Financial instruments Recognition, initial measurement and derecognition Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the

financial instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities is described below.



Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Regular purchases and sales of financial assets are recognised on the trade date - the date on which the Company commits to purchase or sell the asset.

Classification and subsequent measurement of financial assets For the purpose of subsequent measurement financial assets, other than those designated and effective as hedging instruments, are

classified into the following categories upon initial recognition: • loans and receivables; • at fair value through profit or loss - held for trading; • held to maturity; and • available for sale. All financial assets except for those at fair value through profit and loss are reviewed for impairment at least at each reporting date

to identify whether there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described below. All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Company`s cash and bank balances fall into this category of financial instruments.

Receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default.

At fair value through profit or loss - held for trading Financial assets at ‘fair value through profit or loss’ - held for trading include financial assets that are either classified as held-for-trading

or that meet certain conditions and are designated at fair value through profit or loss - held for trading upon initial recognition.

Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists. The Company does not currently have any asset in this category.

Held to maturity Held to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed

maturity other than loans and receivables. Investments are classified as ‘held to maturity’ if the Company has the intention and ability to hold them until maturity. The Company does not currently have any asset in this category. Held to maturity investments are measured subsequently at amortised cost using the effective interest method. If there is objective evidence that the investment is impaired, determined by reference to external credit ratings, the financial asset is measured at the present value of estimated future cash flows. Any changes in the carrying amount of the investment, including impairment losses, are recognised in profit or loss.

Available for sale Available for sale (AFS) are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in

any of the other categories of financial assets. These are primarily investments that are intended to be held for an undefined period of time or may be sold in response to the need for liquidity.



The equity investment is measured at cost less any impairment charges, as its fair value cannot currently be estimated reliably. Impairment charges are recognised in profit or loss. All other AFS financial assets are measured at fair value. Gains and losses are recognized in other comprehensive income and reported within the Available for sale reserve within equity, except for interest and dividend income, impairment losses and foreign exchange differences on monetary assets, which are recognised in the unconsolidated profit and loss account. When the asset is disposed off or is determined to be impaired, the cumulative gain or loss recognised in other comprehensive income is reclassified from the equity reserve to profit or loss. Interest calculated using the effective interest method and dividends are recognised in profit or loss within finance income.

Reversals of impairment losses for Available for sale equity investments are not recognised in profit or loss and any subsequent increase in fair value is recognised in other comprehensive income. The Company does not currently have any other asset other than as provided in this category.

Classification and subsequent measurement of financial liabilities Financial liabilities that are measured subsequently at amortised cost using the effective interest method. All interest-related charges,

if applicable, changes in an instrument’s fair value that are reported in profit or loss account are included within finance costs or finance income.

4.4 Off setting Financial assets and liabilities are off set and the net amount is reported in the unconsolidated balance sheet if the Company has a

legally enforceable right to off-set the transactions and also intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

4.5 Investments (a) Investment in subsidiary Subsidiaries are entities in which the parent company has control and / or ownership of more than half or fifty percent, of the voting

power. Control exists when the Parent Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable are taken into account.

Investment in subsidiary company is stated at cost and the carrying amount is adjusted for impairment, if any, to the recoverable amounts of such investments.

(b) Other investments The Company classifies its investment as ‘available-for-sale’, that do not fall under the held-for-trading or held-to-maturity. Unrealized

surplus/deficit arising on revaluation of investment classified as ‘available-for-sale’ is disclosed in the unconsolidated statement of other comprehensive income.

In case of impairment of available-for-sale securities, the cumulative loss that has been recognised directly in fair value reserve on the unconsolidated balance sheet below equity is removed there from and recognized in profit and loss.

4.6 Trade and other payables Trade and other payables are recognised initially at fair value and subsequently measured at amortized cost, using the effective

interest method. Exchange gains and losses arising on translation in respect of liabilities in foreign currency are added to the carrying amount of the respective liabilities.

4.7 Trade debts and other receivables Trade debts and other receivables are recognised initially at invoice value, which approximates fair value, and subsequently measured

at amortised cost using the effective interest method, less provision for impairment. 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 amounts due according to the original terms of the receivable. Significant financial difficulties of the debtors, probability that the debtor will enter bankruptcy and default or delinquency in payments are considered indicators that the trade debt is impaired. The amount of provision is charged to profit or loss. Trade debts and other receivables considered irrecoverable are written-off.

Exchange gains and losses arising on translation in respect of trade debts and other receivables in foreign currency are added to the carrying amount of the respective receivables.



4.8 Stock-in-trade Stock-in-trade is valued at the lower of cost and net realizable value. Stock-in-transit is valued at cost comprising invoice value plus other charges incurred thereon. Provision is made for obsolete and

slow moving stock-in-trade based on management’s best estimate and is recognized in the unconsolidated profit and loss account.

The cost of stock-in-trade is determined on moving weighted average basis.

Provision is made for obsolete/slow moving stocks where necessary and recognized in the unconsolidated profit and loss account. Net realizable value is the estimated selling value price in the ordinary course of business less estimated costs necessary to be incurred in order to make a sale.

4.9 Impairment of non financial assets The carrying amounts of non financial assets, other than deferred tax assets, are assessed at each reporting date to ascertain whether

there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. An impairment loss is recognized, as an expense in the unconsolidated profit and loss account, for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost to sell and value in use.

Value in use is ascertained through discounting of the estimated future cash flows using a discount rate that reflects current market assessments of the time value of money and the risk specific to the assets. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognized.

4.10 Cash and cash equivalents Cash and cash equivalents are carried in the unconsolidated balance sheet at cost. For the purposes of the unconsolidated statement

of cash flows, cash and cash equivalents include cash and bank balances and other items of current assets and current liabilities which qualify as cash equivalent.

4.11 Provisions and contingent liabilities Provisions are recognized when the Company has a present, legal or constructive obligation as a result of past events, it is probable

that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurence or non-occurence of one or more uncertain future events not wholly within the control of the Company, or a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities are only disclosed and not recognized as liability in the unconsolidated balance sheet.

4.12 Leases . Finance leases Leases in terms of which the Company has substantially all the risks and rewards of ownership are classified as

finance leases. Assets obtained under finance lease are accounted for in accordance with policy stated in note 4.1.

The related rental obligations, net of finance costs are classified as current and long term depending upon the timing of the payment.

Each lease payment is allocated between the liability and finance cost so as to achieve a constant rate on the balance outstanding. The interest element of the rental is charged to income over the lease term.



Operating leases Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.

Payments made under operating leases (net of any incentives received from the lessor) are charged to the unconsolidated profit and loss account on a straight-line basis over the period of lease.

Ijarah Leased assets which are obtained under Ijarah agreement are not recognised in the Company’s unconsolidated balance sheet and are

treated as operating lease based on Islamic Financial Accounting Standard (IFAS) 2 issued by the Institute of Chartered Accountants of Pakistan and notified by Securities and Exchange Commission of Pakistan vide S.R.O. 43(1) / 2007 dated 22 May 2007. Payments made under operating lease are charged to the unconsolidated profit and loss account on a straight line basis over the lease term.

4.13 Foreign currency translations Monetary assets and liabilities in foreign currencies are translated into Pakistani Rupees at the rates of exchange prevailing at the

balance sheet date. Transactions denominated in foreign currencies are converted into Pakistani Rupees at the rates of exchange prevailing at the transaction date. Exchange gains or losses are taken to the unconsolidated profit and loss account.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

4.14 Taxation Taxation for the year comprises current and deferred tax. Taxation is recognized in the unconsolidated profit and loss account

except to the extent that it relates to items recognized outside profit and loss account (whether in other comprehensive income or directly in equity), if any, in which case the tax amounts are recognized outside profit or loss.

Current

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustments to tax payable in respect of prior years.

Deferred Deferred tax is provided for using the balance sheet method providing the temporary differences between the carrying amount of

assets and liabilities for financial reporting purposes and the amount used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted at the balance sheet date. Deferred tax asset is recognized only to the extent that it is probable that the future taxable profits will be available and credits can be utilized.

Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse, based on the tax rates that have been enacted. The Company takes into account the current income tax laws and decisions taken by the taxation authorities.

Deferred tax is charged or credited in the unconsolidated profit and loss account, except in the case of items credited or charged to equity or unconsolidated statement of other comprehensive income, in which case it is included in equity or unconsolidated statement of other comprehensive income as the case may be.

4.15 Revenue recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be

measured reliably. Revenue is measured at the fair value of consideration received or receivable on the following basis:



Operating revenue - Sales are recorded when significant risks and rewards of ownership of the goods have passed to the customers which

coincides with dispatch of goods to customers. - Non-fuel retail income and other revenue (including license fee) is recognized on an accrual basis.

Other income

- Dividend income is recognized when the Company’s right to receive the dividend is established. - Return on deposits and other services income is recognized on accrual basis.

4.16 Retirement and other service benefits Unfunded gratuity scheme Actuarial gains and losses are recognized in the unconsolidated statement of other comprehensive income in the periods in which

they occur. Amounts recorded in the unconsolidated profit and loss account are limited to current service and past service costs, gains or losses on settlements, and net interest income (expense). All other changes in the net defined benefit obligation are recognized directly in other comprehensive income with no subsequent recycling through the unconsolidated profit and loss account.

Contributory provident fund The Company operates an approved contributory provident fund for all its permanent employees. The contribution to the fund is

made by the Company as well as the employee at the rate of 5.72% percent of the basic salary.

4.17 Borrowings and borrowing cost Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized

cost, any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the unconsolidated 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.

Borrowing costs are capitalized up to the point in time when substantially all the activities necessary to prepare the qualifying assets for its intended use or sale are complete. All other borrowing costs are charged to the unconsolidated profit and loss account as and when incurred.

4.18 Dividend distribution Final dividend distribution to the Company’s shareholders is recognised as a liability in the unconsolidated balance sheet in the period

in which the dividend is approved by the Company’s shareholders at the Annual General Meeting, while interim dividend distributions are recognised in the period in which the dividends are declared by the Board of Directors.

4.19 Operating segments Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.

The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as management that makes strategic decisions. The management has determined that the Company has a single reportable segment as the Board of Directors view the Company’s operations as one reportable segment.

4.20 Earning per share The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the

profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.


NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED DECEMBER 31, 2016 (Rupees in thousand)

N

ote

20

16

2015

5 P

RO

PE

RT

Y, P

LA

NT

AN

D E

QU

IPM

EN

T

O

pera

ting

fixed

ass

ets

5.1

5,21

4,53

6

4,2

20,5

84

C

apita

l wor

k-in

-pro

gres

s 5.

5 3

,474

,411

2

,057

,344

8,6

88,9

47

6,27

7,92

8 5.

1 O

pera

ting

fixe

d as

sets

O

wne

d as

sets

Le

ased

ass

ets

Build

ing

on

Elec

tric

al,

Furn

iture

,

El

ectr

ical

,

le

ase

hold

land

mec

hani

cal

offic

e

m

echa

nica

l

Tot

al

*Offi

ce

Pum

p T

anks

and

D

ispe

nsin

g Pl

ant

and

and

fire

equi

pmen

t V

ehic

les

Com

pute

r Bu

ildin

g on

T

anks

and

D

ispe

nsin

g Pl

ant

and

and

fire

Veh

icle

s op

erat

ing

Lan

d

build

ing

build

ing

pipe

lines

pu

mps

m

achi

nery

fig

htin

g an

d ot

her

au

xilia

ries

le

aseh

old

pipe

lines

pu

mps

m

achi

nery

fig

htin

g

fixed

equi

pmen

t as

sets

la

nd

eq

uipm

ent

as

sets

At

Janu

ary

1, 2

016

Cos

t / r

eval

ued

amou

nt

-

9

69,9

29

1,02

0,61

7

579

,307

3

03,7

71

52,

311

4

26,1

35

73,

320

1

0,44

8

34,4

63

277

,873

20

8,59

6

600,

076

16

8,00

2

39,

592

2

3,96

9

4,7

88,4

09

Acc

umul

ated

dep

reci

atio

n -

(70,

312)

(

76,1

43)

(30

,113

)

(27

,125

) (

3,44

4)

(37

,316

)

(50

,884

) (

6,77

8)

(24

,360

) (

55,0

40)

(33

,766

) (

100,

748)

(

24,3

18)

(

6,46

4)

(21

,014

) (

567,

825)

Net

bo

ok

valu

e -

899

,617

9

44,4

74

549,

194

27

6,64

6

48,

867

38

8,81

9

22,

436

3

,670

10

,103

22

2,83

3

174

,830

4

99,3

28

143

,684

3

3,12

8

2,9

55

4,2

20,5

84

Yea

r en

ded

D

ecem

ber

31, 2

016

Ope

ning

net

boo

k va

lue

-

8

99,6

17

944

,474

54

9,19

4

276

,646

4

8,86

7

388

,819

2

2,43

6

3,6

70

10,

103

2

22,8

33

174

,830

4

99,3

28

143

,684

3

3,12

8

2,9

55

4,2

20,5

84

Add

ition

/ tra

nsfe

r fr

om C

WIP

3

1,55

7

80,

341

3

40,3

35

185

,597

2

2,11

7

28,

920

1

67,8

66

69,

623

6

6,87

7

18,

408

7

,526

-

35,

040

3

7,32

0

5,1

85

350

,032

1

,446

,744

R

eval

uatio

n

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

D

ispo

sals

Cos

t

-

-

-

-

-

-

-

-

(3,

207)

(

60)

-

-

-

-

-

(5

6,92

9)

(60

,196

)A

ccum

ulat

ed d

epre

ciat

ion

-

-

-

-

-

-

-

-

2,5

33

50

-

-

-

-

-

3,9

63

6,5

46

-

-

-

-

-

-

-

-

(67

4)

(10

) -

-

-

-

-

(52,

966)

(

53,6

50)

Dep

reci

atio

n ch

arge

-

(59

,569

) (

68,4

14)

(30

,349

) (

23,1

03)

(5,

032)

(

58,1

41)

(11

,274

) (

7,63

9)

(9,

425)

(

19,5

87)

(13

,779

) (

64,4

09)

(11

,008

) (

1,30

3)

(16

,110

) (

399,

142)

Clo

sing

net

bo

ok

valu

e 3

1,55

7

920

,389

1

,216

,395

7

04,4

42

275

,660

7

2,75

5

498

,544

8

0,78

5

62,

234

1

9,07

6

210

,772

1

61,0

51

469

,959

1

69,9

96

37,

010

2

83,9

11

5,2

14,5

36

At

Dec

embe

r 31

, 201

6C

ost

/ rev

alue

d am

ount

3

1,55

7

1,0

50,2

70

1,3

60,9

52

764

,904

3

25,8

88

81,

231

5

94,0

01

142

,943

7

4,11

8

52,

811

2

85,3

99

208

,596

6

35,1

16

205

,322

4

4,77

7

317

,072

6

,174

,957

A

ccum

ulat

ed d

epre

ciat

ion

-

(12

9,88

1)

(14

4,55

7)

(60

,462

) (

50,2

28)

(8,

476)

(

95,4

57)

(62

,158

) (

11,8

84)

(33

,735

) (

74,6

27)

(47

,545

) (

165,

157)

(

35,3

26)

(7,

767)

(

33,1

61)

(96

0,42

1)N

et b

oo

k va

lue

31,

557

9

20,3

89

1,21

6,39

5

704

,442

2

75,6

60

72,

755

4

98,5

44

80,

785

6

2,23

4

19,

076

2

10,7

72

161

,051

4

69,9

59

169

,996

3

7,01

0

283

,911

5

,214

,536

Dep

reci

atio

n ra

te -

%

-

5

5

5

6

.67

5

1

0

20

2

0

33.

33

5

5

6.6

7

5

10

2

0

At

Janu

ary

1, 2

015

Cos

t / r

eval

ued

amou

nt

-

338

,643

3

58,5

58

193

,621

9

8,48

1

25,

095

1

05,2

98

65,

997

14

,474

2

8,90

8

209

,477

1

54,2

81

311

,550

1

15,3

79

2

2,06

5

23,

969

2

,065

,796

A

ccum

ulat

ed d

epre

ciat

ion

-

(

35,4

81)

(38

,044

) (

9,98

4)

(15

,059

) (

1,56

9)

(8,

977)

(

42,7

89)

(9,

685)

(

16,0

74)

(40,

247)

(

22,0

64)

(55

,451

)

(15

,512

)

(2,

998)

(

19,2

20)

(33

3,15

4)N

et b

oo

k va

lue

-

3

03,1

62

320

,514

1

83,6

37

83,

422

2

3,52

6

96,

321

2

3,20

8

4,7

89

12,

834

1

69,2

30

132,

217

2

56,0

99

99,

867

1

9,06

7

4,7

49

1,7

32,6

42

Yea

r en

ded

D

ecem

ber

31, 2

015

Ope

ning

net

boo

k va

lue

-

3

03,1

62

320

,514

1

83,6

37

83,

422

2

3,52

6

96,

321

2

3,20

8

4,7

89

12,

834

1

69,2

30

132

,217

2

56,0

99

99,

867

1

9,06

7

4,7

49

1,7

32,6

42

Add

ition

/ tra

nsfe

r fr

om C

WIP

-

491

,890

1

42,8

53

299

,643

5

1,11

9

15,

436

2

22,9

32

7,3

23

-

5

,555

-

-

-

-

1

0,24

7

-

1,2

46,9

98

Rev

alua

tion

-

139

,396

5

19,2

06

86,

043

1

54,1

71

11,

780

9

7,90

5

-

-

-

6

8,39

6

54,

315

2

88,5

26

52,

623

7

,280

-

1

,479

,641

D

ispo

sals

/ tra

nsfe

rs

Cos

t

-

-

-

-

-

-

-

-

(4,

026)

-

-

-

-

-

-

-

(4,

026)

Acc

umul

ated

dep

reci

atio

n -

-

-

-

-

-

-

-

4

,026

-

-

-

-

-

-

-

4,0

26

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

D

epre

ciat

ion

char

ge fo

r th

e ye

ar

-

(

34,8

31)

(38

,099

) (

20,1

29)

(12

,066

) (

1,87

5)

(28

,339

) (

8,09

5)

(1,

119)

(

8,28

6)

(14

,793

) (

11,7

02)

(45

,297

) (

8,80

6)

(3,

466)

(

1,79

4)

(23

8,69

7)C

losi

ng n

et b

oo

k va

lue

-

8

99,6

17

944

,474

5

49,1

94

276

,646

4

8,86

7

388

,819

2

2,43

6

3,6

70

10,

103

2

22,8

33

174

,830

4

99,3

28

143

,684

3

3,12

8

2,9

55

4,2

20,5

84

At

Dec

embe

r 31

, 201

5

C

ost

-

969

,929

1

,020

,617

5

79,3

07

303

,771

5

2,31

1

426

,135

7

3,32

0

10,

448

3

4,46

3

277

,873

2

08,5

96

600

,076

1

68,0

02

39,

592

2

3,96

9

4,7

88,4

09

Acc

umul

ated

dep

reci

atio

n -

(70

,312

) (

76,1

43)

(

30,1

13)

(27

,125

) (

3,44

4)

(37

,316

) (

50,8

84)

(6,

778)

(

24,3

60)

(55

,040

) (

33,7

66)

(10

0,74

8)

(24

,318

) (

6,46

4)

(21

,014

) (

567,

825)

Net

bo

ok

valu

e -

899

,617

9

44,4

74

549

,194

2

76,6

46

48,

867

3

88,8

19

22,

436

3

,670

1

0,10

3

222

,833

1

74,8

30

499

,328

1

43,6

84

33,

128

2

,955

4

,220

,584

Dep

reci

atio

n ra

te -

%

-

5

5

5

6.6

7

5

10

2

0

20

3

3.33

5

5

6

.67

5

1

0

20

*Run

ning

fina

nce

faci

lity

from

Sum

mit

Bank

Lim

ited

is s

ecur

ed o

n of

fice

build

ing

for

the

valu

e of

Rs.

500

mill

ion

(201

5: R

s. 5

00 m

illio

n).



5.2 Had there been no revaluation, the written down value of the following assets in the unconsolidated balance sheet would have been as follows:

Cost Accumulated Written down value depreciation 2016 2015 Owned Assets

Building on lease hold land 880,921 153,631 727,290 771,336 Pump building

Dispensing units 61,613 11,165 50,448 54,558 Plant and machinery 19,767 4,357 15,410 16,398 Tanks and pipelines 312,423 34,398 278,025 293,646 Electrical, mechanical and

fire fighting equipment 224,202 45,279 178,923 201,343 Leased Assets Building on lease hold land 166,399 75,011 91,388 99,708 Dispensing units 137,419 78,234 59,185 68,351 Plant and machinery 66,850 29,294 37,556 40,899 Tanks and pipelines 90,260 43,498 46,762 51,275 Electrical, mechanical and fire fighting equipment 14,351 5,199 9,152 10,587 1,974,205 480,066 1,494,139 1,608,101 Note 2016 20155.3 The depreciation charged for the year has been allocated as follows: Distribution and marketing expenses 29 373,786 226,599 Administrative expenses 30 25,356 12,098 399,142 238,697 5.4 During the year written down value of property, plant and equipment that have been disposed-off amount to Rs. 53.65 million (2015:

Rs. Nil). Details of assets disposed off with WDV above Rs. 50,000 is given below:

Accumulated Net book Sale Particulars of Mode of Type Cost depreciation value proceeds Gain buyers disposal

Vehicle - 622 498 124 253 129 Awais Shaikh As per company policy owned 982 752 230 508 278 Khurram Shehzad As per company policy 982 785 197 508 311 Asif Raza As per company policy 622 498 124 253 129 Moosa Rind As per company policy 10,773 180 10,593 12,568 1,975 Meezan Bank Sale and operating leaseback 10,773 180 10,593 12,568 1,975 Meezan Bank Sale and operating leaseback 10,773 180 10,593 12,568 1,975 Meezan Bank Sale and operating leaseback 10,773 180 10,593 12,568 1,975 Meezan Bank Sale and operating leaseback 10,773 180 10,593 12,568 1,975 Meezan Bank Sale and operating leaseback 57,073 3,433 53,640 64,362 10,722




2016 20155.5 Capital work in progress Office building 1,601,993 815,572 Pump building 250,137 348,220 Plant and machinery 22,319 40,561 Tanks and pipe lines 649,540 261,069 Dispensing pumps 96,357 143,903 Computer auxiliaries 7,045 7,740 Electrical, mechanical and fire fighting equipment 475,424 117,658 Furniture, office equipment and other assets 107,768 187,141 Borrowing cost capitalized 123,214 34,000 Advances to contractors 140,614 101,480 3,474,411 2,057,344 5.5.1 During the year additions amounting to Rs. 2,875.10 million (2015: 1,746.68 million) have been made in capital work-in-progress. This

also includes borrowing cost capitalized during the year at rates ranging from 7.36% - 9.59% (2015: 9.58% - 13.18%).

Note 2016 20156 INTANGIBLE ASSET Net book value at beginning of the year 1,522 4,288 Amortization charge for the year 30 (1,522) (2,766) Net book value at the end of the year 6.1 - 1,522

6.1 Net book value Cost 8,299 8,299

Accumulated amortization (8,299) (6,777) Net book value - 1,522 Rate of amortization - % 33.33 33.33

7 LONG-TERM INVESTMENTS - Subsidiary - at cost 7.1 75,000 -

- Pakistan Refinery Limited - available-for-sale 7.2 & 7.3 1,886,977 1,955,310 1,961,977 1,955,310 Note Cost Provision for Carrying value impairment 2016 2015 7.1 Subsidiary - at cost

Hascombe Lubricants (Private) Limited 7.1.1 & 7.1.2 30,604 (30,604) - -

Hascol Terminals Limited 7.1.3 75,000 - 75,000 - 105,604 (30,604) 75,000 -

7.1.1 Hascombe Lubricants (Private) Limited is wholly owned subsidiary of the Company, incorporated in Pakistan under the Companies Ordinance, 1984. Its shares are not quoted in an active market. The Company holds 9.78 million ordinary shares (2015: 9.78 million) of Rs. 10 per share.

2016 20157.1.2 Movement in provision for impairment

Opening balance 30,604 30,604

Provision made during the year - - Closing balance 30,604 30,604




7.1.3 During the year the Company subscribed 7.5 million shares of Hascol Terminals Limited (HTL) at a subscription price of Rs. 10 each, which represent 62.5% of the share capital of HTL. These shares are not quoted on an active market and have been carried at cost.

7.2 Investment in Pakistan Refinery Limited Cost Unrealised gain Carrying value

December 31, 2016 1,172,772 714,205 1,886,977 December 31, 2015 1,172,772 782,538 1,955,310

7.3 Investment in Pakistan Refinery Limited (quoted) amounts to Rs. 1,172.77 million (2015: Rs. 1,172.77 million) representing 13.72% (2015: 13.72%) shares in PRL as at December 31, 2016. The Company has 43.24 million shares (2015: 43.24 million shares) as at December 31, 2016.

Note 2016 20158 LONG-TERM DEPOSITS

Lease deposits 133,462 52,819 Less: current portion of lease deposits 13 (5,740) - 127,722 52,819 Other deposits 8.1 161,160 175,812 288,882 228,631 8.1 Other deposits include amount of Rs. 39.72 million (2015: Rs. 39.72 million) with Motorway Operations & Rehabilitation Engineering

(Private) Limited (MORE) for 10 petrol stations on M-2 Motorway and Rs. 8.28 million (2015: Rs. 8.28 million) with PAF Base Faisal for 1 petrol station on Shara-e-Faisal, Karachi.

2016 20159 DEFERRED TAXATION - NET This comprises the following:

Taxable temporary difference arising in respect of:

Accelerated depreciation (354,233) (286,347) Assets under finance lease (129,683) (55,612) Revaluation of fixed assets (513,467) (590,758) Exchange gain (1,797) (3,379) Surplus on remeasurement on investment (89,276) (97,817) Deductible temporary difference arising in respect of:

Liabilities against assets subject to finance lease 182,677 132,751 Provision for:

- retirement benefit 40,718 31,001 - doubtful debts 2,358 2,463 - franchise income 8,168 - Investments in subsidiary 9,140 9,547 Turnover tax 250,605 1,098,247 (594,790) 240,096 9.1 Movement in deferred tax

Opening deferred tax 240,096 509,075 Deferred tax income/(expense)

- through profit and loss (208,870) 287,302 - through other comprehensive income 9,805 (94,305) Adjusted against tax liability (635,821) (461,976) Closing deferred tax (594,790) 240,096




Note 2016 201510 STOCK-IN-TRADE Raw and packing materials 79,694 63,757 Finished goods

- fuels 10.1 14,972,545 5,836,553 - lubricants 315,292 240,713 15,287,837 6,077,266 Stock of fuel in transit 1,110,137 2,328,995 16,477,668 8,470,018 10.1 Fuels include Rs. 4,799.01 million (2015: 239.88 million) of High Speed Diesel which has been maintained as line fill necessary for the

pipeline to operate.

Note 2016 201511 TRADE DEBTS - UNSECURED Due from related party

- Considered doubtful 11.1 & 11.2 7,124 7,124 Due from others

- Considered good 7,871,281 4,263,595 - Considered doubtful 849 849 7,872,130 4,264,444 7,879,254 4,271,568 Less: Provision for impairment 11.3 (7,973) (7,973) 7,871,281 4,263,595 11.1 The aging of related party balances at the balance sheet date is as follows:

Past due 1-30 days - - More than 365 days 7,124 7,124

11.2 This represents receivable from Hascombe Lubricants (Private) Limited (subsidiary company) amounting to Rs. 7.12 million (2015: Rs. 7.12 million).

Note 2016 201511.3 Movement of provision for impairment Opening balance 7,973 7,973

Provision made during the year - - Closing balance 7,973 7,973

12 ADVANCES - CONSIDERED GOOD

To employees - against expenses 1,716 70,138

- against salary 13,348 15,006 Leasing companies 2,203 2,606 Advance against purchase of shares 12.1 208,808 - Suppliers 27,338 62,856 253,413 150,606

12.1 This represents amount paid to Hascol Terminals Limited (HTL) for further issue of shares.




Note 2016 201513 DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES Current portion of lease deposits 8 5,740 - Prepaid rent 66,616 45,779 Prepaid insurance and others 14,001 36,147 Receivable from oil marketing companies 13.1 11,328 38,470 Receivable against regulatory duty 25,533 25,533 Inland freight equalization margin receivable 1,024,234 667,776 Franchise income receivable 13.2 73,304 81,946 Price differential claims 13.3 5,083 5,083 Others 13.4 60,909 59,095 1,286,748 959,829

13.1 This represents amount receivable from various oil marketing companies on account of share of motor gasoline imported on their behalf.

2016 2015 13.2 Franchise income receivable 100,653 81,946 Movement of provision

Opening balance - - Charge during the year (27,349) - (27,349) - Closing balance 73,304 81,946 13.3 This represents amount receivable from the Government of Pakistan (GoP) net of recovery as per fortnightly rates declared by

the Ministry of Petroleum and Natural Resources (MPNR). The Company together with other oil marketing companies is actively pursuing the matter with the concerned authorities for the early settlement of above claim. The Company considers that the balance amount will be reimbursed by GoP in due course of time.

13.4 This includes Rs. 4.45 million (2015: Rs. 24.64 million) receivable from Sigma Motors (Private) Limited, an associated company.

Note 2016 201514 CASH AND BANK BALANCES Balances with banks:

- in current accounts 1,410,192 382,458 - in deposit accounts 14.1 6,409,149 3,684,616 7,819,341 4,067,074 Cash in hand 1,729 4,473 7,821,070 4,071,547

14.1 These carry mark-up ranging from 3.75% to 6% per annum (2015: 5.50% to 6.50% per annum).




15 SHARE CAPITAL Authorized share capital 2016 2015 2016 2015 Number of shares Rupees in ‘000

150,000,000 150,000,000 Ordinary shares of Rs. 10 each 1,500,000 1,500,000 Issued, subscribed and paid-up share capital 2016 2015 Note 2016 2015 Number of shares Rupees in ‘000

89,540,000 89,540,000 Ordinary shares of Rs. 10 each fully paid in cash 895,400 895,400

1,060,000 1,060,000 Ordinary shares of Rs. 10 each for consideration other than cash 15.1 10,600 10,600 9,966,000 9,966,000 Annual bonus @ 11% - December 2014 99,660 99,660 20,113,200 20,113,200 Interim bonus @ 20% - June 2015 201,132 201,132 120,679,200 120,679,200 1,206,792 1,206,792 15.1 These were issued on December 8, 2004 for consultancy, feasibility study, travel and other expenses.

16 RESERVES 2016 2015 Capital reserves

Share premium reserve 1,070,828 1,070,828 Fair value reserve 624,930 684,721 1,695,758 1,755,549 Revenue reserve

Unappropriated profit 2,059,588 1,566,762 3,755,346 3,322,311 17 SURPLUS ON REVALUATION OF

FIXED ASSETS - NET OF TAX

Opening balance 1,847,286 492,209 Gain on revaluation - 1,479,641 Transfer in respect of incremental depreciation

charged during the year (190,939) (124,564) 1,656,347 1,847,286 Related deferred tax

Opening balance 590,758 171,659 Related deferred tax of gain on revaluation - 473,112 Effective rate adjustment (18,101) (14,153) Reversal of deferred tax liability on account of incremental depreciation charged during the year (59,190) (39,860) (513,467) (590,758) 1,142,880 1,256,529 17.1 In 2012, the Company carried out revaluation of petrol pumps through an independent valuer. Revalued amount of assets was Rs.

1,172 million, resulting in surplus (net of deferred tax) amount to Rs. 387 million. Further, during 2015 the Company carried out revaluation of depots and petrol pumps through an independent valuer. Revalued amount of assets was Rs. 4,154 million, resulting in surplus (net of deferred tax) amounting to Rs. 1,006 million.




Note 2016 2015 18 LONG TERM FINANCES - SECURED

PAIR Investment Company Limited 18.1 - 96,429 First Women Bank Limited 18.2 225,000 - Burj Bank Limited 18.3 - 187,922 Pak Oman Investment Company Limited 18.4 220,007 177,436 Sukuk certificates 18.5 1,961,821 - National Bank of Pakistan 18.6 500,000 - 2,906,828 461,787 Current portion of long term finances

PAIR Investment Company Limited - 42,857 First Women Bank Limited 100,000 - Burj Bank Limited - 187,922 Pak Oman Investment Company Limited 136,579 54,857 Sukuk certificates 300,000 - National Bank of Pakistan 62,500 - (599,079) (285,636) 2,307,749 176,151 18.1 This represents term finance facility from PAIR Investment Company Limited to finance the development of Machike storage facility.

The sanctioned limit is Rs. 150 million and is secured against first pari passu charge on all present and future current and fixed assets of the Company with 25% margin, personal guarantee of Mr. Mumtaz Hasan Khan (CEO) as sponsor and post dated cheque covering the purchase price of facility. Mark-up rate is 3 months KIBOR plus a spread of 3%. The loan has been repaid during the current year.

18.2 This represents term finance facility from First Women Bank Limited for construction of retail outlets. The sanctioned limit was Rs. 300 million and was secured against pledge of TDR of Rs. 60 million, pledge of PRL shares at 40% margin and personal guarantee of Mr. Mumtaz Hasan Khan (CEO) as sponsor. Mark-up rate is 6 months KIBOR plus a spread of 1.3%. The loan is repayable in 36 equal monthly instalments in arrears, from first draw down with last repayment due in March 07, 2019.

18.3 This represents working facility of Diminishing Musharika arrangement from Burj Bank Limited to refinance capital expenditure incurred by the Company. The sanction limit is 300 million and is secured against movable fixed assets of the Company with 25% margin and pledge of shares of Pakistan Refinery Limited (PRL) with 40% margin to be maintained at all times. The loan has been repaid during the current year.

18.4 This represents term finance facility from Pak Oman Investment Company Limited to refinance the new storage facility at Daulatpur. The sanction limit is Rs. 300 million and is secured against first pari passu charge on Company’s land, building and machinery located at Daulatpur along with 25% margin and personal guarantee of Mr. Mumtaz Hasan Khan (CEO) as sponsor. It carries mark-up rate of 6 months KIBOR plus a spread rate from 2.5% to 3%. The loan is repayable in 42 equal monthly instalments in arrears, from first draw down with last repayment due in July 19, 2020.

Note 2016 2015 18.5 Sukuk certificates 18.5.1 2,000,000 - Issuance cost Opening - - Addition (47,731) - Charged to profit and loss 9,552 - (38,179) - 1,961,821 - 18.5.1 This represent privately placed long term islamic certificate (Sukuk) amounting to Rs. 2,000 million, issued by the Company during

the year to meet the working capital requirement and expansion plans of the Company. Summit Bank Limited is the trustee while Meezan Bank Limited is acting as shariah structuring advisor for this Sukuk. The Company is in the process of listing of Sukuk over the counter (OTC) on Pakistan Stock Exchange. This facility carries profit at 3 month KIBOR plus 1.5% per annum, payable quarterly. This arrangement is secured against first pari-passu charge over specific depots and retail outlets of the Company inclusive of a 25% margin. The certificates will be redeemed in 20 equal quarterly installments, in arrears, starting from April 2017.




18.6 This represents term loan facility obtained from National Bank of Pakistan to finance capital expenditure for construction of a storage facility at Mehmood Kot. The sanction limit is Rs. 500 million and is secured against exclusive charge of Rs. 666.67 million over the entire land and building, installation and machinery of the facility and personal guarantee of Mr. Mumtaz Hasan Khan (CEO) as sponsor and post dated cheque covering facaility amount and corporate guarantee of Fossil Energy (Private) Limited and Marshall Gas (Private) Limited. It carries mark-up rate of 3 months KIBOR plus a spread rate of 2.5%. The loan is repayable in 16 equal quarterly instalments in arrears, with grace period of 12 months, from first draw down with last repayment due in Feburary 24, 2021.

19 LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE

The Company has entered into lease agreements with various leasing companies for lease of items of plant and machinery and other assets. Minimum lease payments, which are payable by the year 2020, have been discounted by using financing rates ranging from 7.90% to 9.85% (2015 : 8.43% to 14.03% per annum). Title to the assets acquired under the leasing arrangements are transferable to the Company upon payment of entire lease obligations.

The minimum lease payments for which the Company has committed to pay in future under the lease agreements are as follows:

2016 2015 Minimum Financial Present Minimum Financial Present lease charges value of lease charges value of payments allocated minimum payments allocated to minimum to future lease future lease periods payments periods payments

Not later than one year 185,485 37,098 148,387 137,086 34,489 102,597 Later than one year but not later than five years 524,896 53,165 471,731 365,040 42,110 322,930 710,381 90,263 620,118 502,126 76,599 425,527 20 DEFERRED LIABILITY - GRATUITY

The Company operates an unfunded gratuity scheme for employees who have completed the employment period of 5 years. Provision is created for the benefit of the scheme on the basis of actuarial valuations. The actuarial valuations are carried out by an independent valuer using the projected unit credit method.

Note 2016 2015 Deferred liability - gratuity 20.1 & 20.2 135,791 99,090 The information provided in notes 20.1 to 20.5 has been obtained from the actuarial valuations.

20.1 Movement in liability recognized in balance sheet Note 2016 2015 Present value of defined benefit obligation as at the end of the year 20.3 135,791 99,090 Fair value of plan assets - - Balance sheet liability 135,791 99,090

20.2 Movement in liability recognized in balance sheet Balance at the beginning of the year 99,090 71,057 Add: charge for the year 20.4 27,508 20,416 Less: payments to outgoing employees (5,003) (3,359) Remeasurements charged to other comprehensive income 14,196 10,976 Balance at the end of the year 135,791 99,090




2016 201520.3 Movement in present value of the defined benefit obligation

Opening balance 99,090 71,057 Current service cost 17,963 12,454 Interest cost 9,545 7,962 Benefits paid during the year (5,003) (3,359) 121,595 88,114 Remeasurement: actuarial losses - net of tax 9,795 7,464 Impact of deferred tax 4,401 3,512 14,196 10,976 Present value of defined benefit obligation at the end of the year 135,791 99,090 20.4 Amounts recognized in the profit or loss

Current service cost 17,963 12,454 Net interest cost 9,545 7,962 Expense for the year 27,508 20,416

20.5 Actuarial assumptions

The following significant assumptions were used in the valuation carried out at the balance sheet date using the projected unit credit method:

Note 2016 2015 % per annum

- Expected long-term rate of increase in salary level 7.50% 9.00% - Discount rate 7.50% 9.00% 21 TRADE AND OTHER PAYABLES Trade creditors 22,258,817 12,069,319 Payable to cartage contractors 2,445,673 1,938,342 Advance from customers 4,253,932 2,553,327 Dealers’ and customers’ security deposits 21.1 170,000 64,132 Accrued liabilities 6,153 46,018 Other liabilities 688,183 748,590 29,822,758 17,419,728 21.1 The security deposits are non-interest bearing and are refundable on termination of contracts.

22 MARK-UP ACCRUED Note 2016 2015 Mark-up accrued 91,185 54,311 23 SHORT-TERM BORROWINGS - SECURED

Running finances utilised against mark-up arrangements 23.1 1,329,629 538,055

Loans 23.2 2,560,000 875,000 3,889,629 1,413,055 23.1 The facilities for short term running finances are available from various commercial banks aggregating to Rs. 1,600 million (2015: Rs. 900 million). The rates of mark-up ranges from 3 month KIBOR plus 1.5% to 3 month KIBOR plus 3% (2015: 3 month KIBOR plus

2.5% to 3 month KIBOR plus 3%). These arrangements are secured against hypothecation charge over the Company’s present and future current assets with minimum 25% margin, pledge of PRL shares, with minimum 40% margin, personal guarantee of Mr. Mumtaz Hasan Khan (CEO) as sponsor, along with equitable registered mortgage charge over the property situated at The Forum, Suite No. 105-106, 1st Floor, Khayaban-e-Jami, Clifton, Karachi.




23.2 The loans have been obtained from various financial institutions aggregating to Rs. 2,600 million (2015: Rs. 875 million). The rates of mark-up ranges from 6 month KIBOR plus 2.25% to 6 month KIBOR plus 2.5% (2015: 1 year KIBOR plus 2.25% to 1 year KIBOR plus 2.5%). These are secured against hypothecation charge over the Company’s present and future current assets.

2016 201524 TAXATION Sales tax payable 169,112 92,988 Income tax payable 314,757 866,964 483,869 959,952 25 CONTINGENCIES AND COMMITMENTS Contingencies As per the deliberations of the main committee of the Oil Companies Advisory Committee (OCAC) held in their meeting number

MCM-168 dated September 20, 2007, the financial costs on outstanding Price Differential Claims (PDCs) should be worked and billed to the Government of Pakistan (GoP) through OCAC by the Oil Marketing Companies (OMCs) on a regular basis. Although the Company had billed Rs. 65.97 million to the GOP/ OCAC, the management had not accounted for its impact in these unconsolidated financial statements as the inflow of economic benefits, though probable, is not virtually certain.

Commitments The facility for opening letters of credit (LCs) acceptances as at December 31, 2016 amounted to Rs. 30,550 million (2015: Rs. 17,100

million) of which the amount remaining unutilized as at that date was Rs. 3,631 million (2015: Rs. 1,797 million).

Commitments in respect of capital expenditure contracted for but not yet incurred are as follows: 2016 2015 Property, plant and equipment 758,237 427,701 Commitments for rental under operating lease agreements / ijarah contracts as at December 31, 2016 amounted to Rs. 1,984 million

(2015: Rs.1,944 million) as follows: 2016 2015 Not later than one year 173,461 136,245 Later than one year but not later than five years 642,427 538,869 Later than five years 1,167,834 1,269,461 1,983,722 1,944,575 26 SALES - NET Gross sales, inclusive of sales tax 129,296,958 94,274,786 Less: sales discount (537,683) (209,489) 128,759,275 94,065,297




Note 2016 201527 OTHER REVENUE Joining fee for petrol pump operators 55,349 9,600 Franchise fee 96,971 73,231 Owned tank lorries 46,960 - 199,280 82,831 28 COST OF PRODUCTS SOLD Opening stock of lubricants, raw and packing materials 304,470 256,461 Raw and packing materials purchased 780,242 784,019 Less: closing stock of lubricants, raw and packing materials 10 (394,986) (304,470) Lubricants, raw and packing materials consumed 689,726 736,010 Opening stock - fuel 8,165,548 3,217,243 Fuel purchased 81,431,713 63,370,263 Storage and handling charges 538,393 328,558 Duties and levies 28.1 20,256,971 14,403,074 Less: closing stock - fuel 10 (16,082,682) (8,165,548) Net realisable value - adjustment - 128,215 94,309,943 73,281,805 94,999,669 74,017,815 28.1 Duties and levies Inland freight equalization margin 3,624,258 2,399,895 Petroleum development levy 14,566,162 9,185,877 Freight 2,066,551 2,817,302 20,256,971 14,403,074 29 DISTRIBUTION AND MARKETING EXPENSES

Salaries, wages and other benefits 30.1 443,932 258,579 Traveling and conveyance 169,832 58,398 Rent, rates and taxes 201,788 174,723 Insurance 113,947 75,026 Depreciation 5.3 373,786 226,599 Printing, communication and stationery 9,374 17,232 Repairs and maintenance 54,658 22,405 Utilities 66,305 27,718 Fees and subscription 11,072 4,847 Legal and professional charges 3,236 1,111 Commission 194,043 111,767 Royalty 17,653 43,603 Advertising and publicity 75,237 30,756 Provision against franchise income 27,349 - Miscellaneous 1,266 710 1,763,478 1,053,474




Note 2016 201530 ADMINISTRATIVE EXPENSES

Salaries, allowances and other benefits 30.1 229,341 149,545 Traveling and conveyance 34,717 38,932 Rent, rates and taxes 8,306 7,467 Insurance 21,711 20,093 Depreciation 5.3 25,356 12,098 Amortization 6 1,522 2,766 Printing, communication and stationery 27,012 11,488 Repairs and maintenance 28,979 11,176 Utilities 10,353 8,335 Fee and subscription 22,932 21,020 Advertising and publicity 19,850 18,582 Auditors’ remuneration 30.2 2,746 2,545 Donation 30.3 17,520 6,345 Legal and professional charges 68,183 49,204 Ujrah payments 10,108 6,642 528,636 366,238

30.1 Salaries and other benefits relating to distribution and administrative expense include:

- Gratuity 20.4 27,508 20,416 - Contribution to provident fund 15,492 10,713

30.2 Auditors’ remuneration Statutory audit 1,265 1,100 Half yearly review 420 366 Certifications 500 673 Consolidation 230 200 Out of pocket expenses 331 206 2,746 2,545 30.3 Donation includes an amount of Rs. 0.5 million (2015: Rs. 0.2 million) paid to Layton Rahmatulla Benevolent Trust (LRBT), Mr.

Najmus Saquib Hameed, a director of the Company, is also Chairman of LRBT.

2016 201531 OTHER INCOME Income from financial assets

Profit on bank deposits 165,033 139,662 Dividend income 13,407 - 178,440 139,662 Income from non-financial assets Promotional marketing fee 2,641 1,006 Scrap sales 1,055 569 Gain on disposal of operating fixed assets 12,061 2,272 Rent income 6,764 6,431 Sundries 10,535 9,799 Storage and handling income - 50,802 33,056 70,879 211,496 210,541




2016 201532 FINANCE COST

Mark-up on borrowings 220,712 166,041 Letter of credit charges 163,812 148,243 Lease finance charges 35,193 23,720 Bank charges 12,901 11,648 432,618 349,652 33 OTHER CHARGES Workers’ welfare fund 46,423 24,420 Exchange (gain) / loss - net (5,829) 58,989 40,594 83,409 34 TAXATION

Current 700,869 330,862 Prior 28,610 19,924 Deferred 208,870 (287,302) 938,349 63,484 34.1 Relationship between tax expense and accounting profit Accounting profit before taxation 2,153,975 1,196,721 Tax at the applicable tax rate of 31% (2015: 32%) 667,732 382,951 Tax effect on income under final tax regime (3,297) 12,317 Reversal of deferred tax asset - net 208,870 (287,302) Prior year tax 28,610 19,924 Other adjustments 36,434 (64,406) Tax expense for the year 938,349 63,484 35 EARNINGS PER SHARE - BASIC AND DILLUTED

Profit for the year 1,215,626 1,133,237 Weighted average number of ordinary shares in thousand 120,679 120,679 Basic earning per share - Rupees 10.07 9.39 There is no dilutive effect on basic earning per share as the Company has no potential ordinary shares outstanding at year end.

36 REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

2016 2015 Chief Directors Executives Chief Directors Executives

Executive Executive

Director’s fee - 6,775 - - 2,975 - Managerial remuneration 21,844 36,450 328,761 19,080 30,751 151,722 Cost of living allowance 4,241 4,050 56,555 3,603 3,913 33,950 Reimbursement of medical expenses 3,737 1,100 17,365 2,322 778 12,450 Bonus 6,521 13,500 25,449 3,780 8,100 16,544 Retirement benefits 1,249 2,085 12,158 1,087 1,616 8,010 37,592 63,960 440,288 29,872 48,133 222,676 Number of persons 1 6 202 1 6 126




36.1 The Chief Executive Officer and certain executives are also provided with free use of Company maintained cars and cellular connections. In addition, the Chief Executive Officer and a director are provided with free security services in accordance with the terms of employment.

37 RELATED PARTY TRANSACTIONS AND BALANCES

Amount due to/ from and other significant transactions with related parties, other than those disclosed elsewhere in these financial statements, are as follows:

Nature of relationship Nature of transaction 2016 2015 Associated companies

Sigma Motors (Private) Limited Sale of fuels - 1,693 Office rent 6,764 6,432 Staff retirement benefits/ contribution funds

Provident fund Contribution 15,492 10,713 Gratuity scheme Expense charged 27,508 20,416 Key management personnel Salaries and benefits 69,920 63,150 Director Fee Fee for attending meetings 6,775 2,975 Other related parties Consultancy services 18,550 10,180 Balances

Associated companies

Sigma Motors (Private) Limited Other receivable 4,458 24,643 Expenses recovered from/ charged by related parties are based on actual expense.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities

of the Company directly or indirectly. The Company considers its Chief Executive and Executive Director to be key management personnel.

Note 2016 201538 CASH GENERATED FROM OPERATIONS

Profit before taxation 2,153,975 1,196,721 Adjustment for:

Depreciation and amortization 29 & 30 400,664 241,463 Provision for gratuity 20.4 27,508 20,416 Profit on bank deposits 31 (165,033) (139,662) Exchange gain (15,572) - Gain on disposal of operating fixed assets 31 (12,061) (2,272) Finance cost 32 432,618 349,652 Changes in working capital 38.1 434,092 3,125,947 3,256,191 4,792,265




Note 2016 201538.1 Changes in working capital (Increase) / decrease in current assets

Stock-in-trade (8,007,650) (4,996,314) Trade debts (3,607,686) 285,228 Advances (102,807) 15,960 Deposits, prepayments and other receivables (326,919) 65,125 (12,045,062) (4,630,001) Increase in current liabilities Trade and other payables 12,479,154 7,755,948 Changes in working capital 434,092 3,125,947 39 CASH AND CASH EQUIVALENTS

Cash and bank balances 14 7,821,070 4,071,547 Short-term borrowings 23 (3,889,629) (1,413,055) 3,931,441 2,658,492 40 OPERATING SEGMENTS

- These financial statements have been prepared on the basis of a single reportable segment. - Sales from petroleum products represents 99.7 % (2015: 99.7%) of total revenues of the Company.

- Out of total sales of the Company, 100 % (2015: 100 %) related to customers in Pakistan. - All non-current assets of the Company as at December 31, 2016 are located in Pakistan.

- The Company sells its product to dealers, governments agencies and autonomous bodies, independent power project and other corporate customers. However, none of the customers exceeds 10% threshold.

Note 2016 201541 FINANCIAL INSTRUMENTS BY CATEGORY Financial assets

Available for sale

Long-term investments 7 1,961,977 1,955,310 At amortised cost

Long-term deposits 8 288,882 228,631 Trade debts 11 7,871,281 4,263,595 Advances 12 222,156 15,006 Other receivables 13 1,200,391 877,903 Cash and bank balance 14 7,821,070 4,071,547 17,403,780 9,456,682 19,365,757 11,411,992 Financial liabilities

At amortised cost

Long-term finances 18 2,906,828 461,787 Liabilities against assets subject to finance lease 19 620,118 425,527 Trade and other payables 21 25,568,826 14,866,401 Mark-up accrued 22 91,185 54,311 Short-term borrowings 23 3,889,629 1,413,055 33,076,586 17,221,081 41.1 Fair values of financial instruments

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s length transaction. The fair value of financial instruments approximates their carrying value.




a) Fair values versus carrying amounts

The fair values of financial assets and liabilities, together with the carrying amounts shown in the unconsolidated balance sheet, are as follows:

2016 2015 Carrying Fair Carrying Fair

amount Value amount Value Financial Assets

Long term investments 1,961,977 1,961,977 1,955,310 1,955,310 Long term deposits 288,882 288,882 228,631 228,631 Trade debts 7,871,281 7,871,281 4,263,595 4,263,595 Advances 222,156 222,156 15,006 15,006 Other receivables 1,200,391 1,200,391 877,903 877,903 Cash and bank balances 7,821,070 7,821,070 4,071,547 4,071,547 19,365,757 19,365,757 11,411,992 11,411,992

2016 2015 Carrying Fair Carrying Fair amount Value amount Value Financial Liability

Long-term finances - secured 2,906,828 2,906,828 461,787 461,787 Liabilities against assets subject to

finance lease 620,118 620,118 425,527 425,527 Mark-up accrued 91,185 91,185 54,311 54,311 Trade and other payables 25,568,826 25,568,826 14,866,401 14,866,401 Short-term running finances - secured 3,889,629 3,889,629 1,413,055 1,413,055 33,076,586 33,076,586 17,221,081 17,221,081 b) Valuation of financial instruments

The Company measures fair value using the following fair value hierarchy that reflects the significance of the inputs used in making

the measurements:

Level 1: Quoted market price (unadjusted) in an active market. Level 2: Valuation techniques based on observable inputs. Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data.

Fair values of financial assets that are traded in active markets are based on quoted market prices. For all other financial instruments the Company determines fair values using valuation techniques unless the instruments do not have a market/ quoted price in an active market and whose fair value cannot be reliably measured.

Valuation techniques used by the Company include discounted cash flow model. Assumptions and inputs used in valuation techniques includes risk-free rates, bond and equity prices, foreign currency exchange rates, equity and equity index prices. The objective of valuation techniques is to arrive at a fair value determination that reflects the price of the financial instrument at the balance sheet date that would have been determined by market participants acting at arm’s length.

Valuation models for valuing securities for which there is no active market requires significant unobservable inputs and a higher degree of management judgement and estimation in the determination of fair value. Management judgement and estimation are usually required for selection of the appropriate valuation model to be used, determination of expected future cash flows on the financial instrument being valued and selection of appropriate discount rates, etc.




The table below analyses equity instruments measured at fair value at the end of the reporting period by the level in the fair value hierarchy into which the fair value measurement is categorised:

2016 Level 1 Level 2 Level 3 Total Available-for-sale financial assets

- Equity securities 1,886,977 75,000 - 1,961,977 2015 Level 1 Level 2 Level 3 Total Available-for-sale financial assets - Equity securities 1,955,310 - - 1,955,310 42 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

The Company is exposed to the following risks from its use of financial instruments:

- Market risk (42.1.1) - Credit risk and concentration of credit risk (42.1.2) - Liquidity risk (42.1.3)

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring any increase in risk, and the Company’s management of capital.

42.1 Financial risk management

The Board of Directors (the Board) has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board is responsible for developing and monitoring the Company’s risk management policies.

The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risk and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in the market conditions and the Company’s activities. The Company through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Board oversee how management monitors compliance with the Company’s risk management policies and procedures, and review the adequacy of risk management framework in relation to the risks faced by the Company.

42.1.1 Market risk The Company is exposed to market risk through its use of financial instruments and specifically to currency risk, interest rate risk

and certain other price risks, which result from both its operating and investing activities. The objective of market risk management is to manage and control market risk exposures within an acceptable range. The market risk includes:

(a) Currency risk Currency risk is the risk that the value of financial asset or a liability will fluctuate due to a change in foreign exchange rates. It arises

mainly where receivables and payables exist due to transactions entered into foreign currencies. The Company imports petroleum product and is thus exposed to currency risk in respect to foreign creditors, which at the year end amount to USD 94.62 million (2015: USD 50.38 million) having PKR equivalent amount of Rs. 9,916.65 million (2015: Rs. 5,287.17 million). The average rates applied during the year is Rs. 104.92 per USD (2015: Rs. 102.69 per USD) and the spot rate as at December 31, 2016 is Rs. 104.80 per USD (2015: Rs. 104.95 per USD).

The Company manages its currency risk by close monitoring of currency markets. Under regulatory requirements, the Company cannot hedge its currency risk exposure. Consequently, the Company recorded exchange gain amounting to Rs. 5.83 million (2015: exchange loss amounting to Rs. 58.9 million) during the year.




Sensitivity analysis As at December 31, 2016, if the Pakistani Rupee had weakened/ strengthened by 10% against USD with all other variables held

constant, profit for the year would have been lower/ higher by Rs. 992.01 million (2015: Rs. 529.8 million).

(b) Interest rate risk Interest rate risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes

in market interest rates. Interest rate exposure arises due to long-term finances, liabilities against assets subject to finance lease and short term running finances. At the balance sheet date the interest rate profile of the Company’s mark-up bearing financial instruments is summarized as follows:

Cash flow sensitivity for variable rate instruments

A change of 100 basis points (bps) in interest rates at the reporting date would have increased/ (decreased) profit or loss before tax as shown below. This analysis assumes that all other variables, in particular foreign currency rates remain constant.

Profit and loss Equity Cash flow sensitivity of 100 bps 100 bps 100 bps 100 bps

variable rate instruments increase decrease increase decrease (Expense) / income

As at December 31, 2016 (37,912) 37,912 (26,159) 26,159 As at December 31, 2015 (22,376) 22,376 (15,216) 15,216 Effective Exposed to yield/interest risk Non-interest bearing yield/ interest Maturity Maturity Sub- Maturity Maturity Sub-

rate % up to one after one Total up to one after one Total 2016 year year year year Total

Financial assets Long-term investments - - - - 1,961,977 1,961,977 1,961,977

Long-term deposits - - - - 288,882 288,882 288,882 Trade debts - - - 7,871,281 - 7,871,281 7,871,281 Advances - - - 222,156 - 222,156 222,156 Other receivables - - - 1,200,391 - 1,200,391 1,200,391 Cash and bank balances 3.75-6.0 p.a. 6,409,149 - 6,409,149 1,411,921 - 1,411,921 7,821,070 (a) 6,409,149 - 6,409,149 10,705,749 2,250,859 12,956,608 19,365,757 Financial liabilities

Liabilities against assets subject to finance lease 8.55-10.4p.a. 148,387 471,731 620,118 - - - 620,118 Long term finances - secured 7.95-10.15 p.a. 599,079 2,307,749 2,906,828 - - - 2,906,828 Trade and other payables - - - 25,568,826 - 25,568,826 25,568,826 Mark-up accrued - - - 91,185 - 91,185 91,185 Short-term borrowings 8.15-9.65 p.a. 3,889,629 - 3,889,629 - - - 3,889,629 (b) 4,637,095 2,779,480 7,416,575 25,660,011 - 25,660,011 33,076,586 On balance sheet gap (a)-(b) 1,772,054 (2,779,480) (1,007,426) (14,954,262) 2,250,859 (12,703,403) (13,710,829)




Effective Exposed to yield/interest risk Non-interest bearing yield/ interest Maturity Maturity Sub- Maturity Maturity Sub-


Financial assets Long-term investments - - - - 1,955,310 1,955,310 1,955,310 Long-term deposits - - - - 228,631 228,631 228,631 Trade debts - - - 4,263,595 - 4,263,595 4,263,595 Advances - - - 15,006 - 15,006 15,006 Other receivables - - - 852,370 - 852,370 852,370 Cash and bank balances 5.5-6.5 p.a. 3,684,616 - 3,684,616 386,931 - 386,931 4,071,547 (a) 3,684,616 - 3,684,616 5,517,902 2,183,941 7,701,843 11,386,459 Financial liabilities Liabilities against assets subject to finance lease (gross) 8.43-13.26 p.a. 102,597 322,930 425,527 - - - 425,527 Long term finances - secured 9.41-13.19 p.a. 285,636 176,151 461,787 - - - 461,787 Trade and other payables - - - 14,866,401 - 14,866,401 14,866,401 Mark-up accrued - - - 54,311 - 54,311 54,311 Short-term borrowings 9.51-11.02 p.a. 1,413,055 - 1,413,055 - - - 1,413,055 (b) 1,801,288 499,081 2,300,369 14,920,712 - 14,920,712 17,221,081

On balance sheet gap (a)-(b) 1,883,328 (499,081) 1,384,247 (9,402,810) 2,183,941 (7,218,869) (5,834,622)

(c) Price Risk Price risk represents the risk that the fair value of a financial instrument will fluctuate because of changes in the market prices

(other than those arising from interest/mark-up rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instruments or its issuers, or factors affecting all or similar financial instruments traded in the market. The Company is exposed to equity price risk since it has investments in quoted equity securities amounting to Rs. 1,887 million (2015: Rs. 1,955 million) at the balance sheet date.

The Company manages price risk by monitoring exposure in quoted equity securities and implementing strict discipline in internal risk management and investment policies.

The value of investment subject to equity price risk are, in almost all instance, based on quoted market price as of the reporting date except for unquoted investments which are carried at cost. Market prices are subject to fluctuation and consequently the amount realized as a result of subsequent sale of an investment may differ from the reported market value. Fluctuation in the market price of a security may result from perceived changes in the underlying economic characteristics of the investee, the relative price of alternative investment and general market condition. Furthermore, the amount realized in the sale of a particular security may be affected by the relative quantity of the security being sold.

Sensitivity analysis The table below summarizes the Company’s equity price risk as of December 31, 2016 and 2015 and shows the effects of a

hypothetical 30% increase and a 30% decrease in market prices as at the year end. The selected hypothetical change does not reflect what could be considered to be the best or worst case scenarios. Accordingly, the sensitivity analysis prepared is not necessarily indication of the effect on Company’s net assets of future movement in the level of PSX 100 index.

Hypothetical Estimated fair Hypothetical Hypothetical Fair price change value increase / increase /

value at 30% hypothetical (decrease) in (decrease) in after change shareholders profit / (loss) in price equity

December 31, 2016 1,886,977 Increase 2,453,070 566,093 -

Decrease (2,453,070) (566,093) -

December 31, 2015 1,955,310 Increase 2,541,903 586,593 -

Decrease (2,541,903) (586,593) -




(d) Other price risk Other price risk is the risk that the fair value of future cash flows of the financial instruments 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. The Company is not exposed to such price risk as there is no such type of financial instruments available to the Company.

42.1.2 Credit risk and concentration of credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. Out of the total financial assets of Rs. 17,404 million (2015: Rs. 9,457 million), the financial assets which are subject to credit risk amounting to Rs. 9,583 million (2015: Rs. 5,385 million).

The credit quality of receivables can be assessed with reference to the historical performance with no or some defaults in recent history. The Company manages credit risk of receivables through the monitoring of credit exposures, limiting transactions with specific customers and continuous assessment of credit worthiness of its customers.

The carrying values of financial assets which are neither past due nor impaired are as under:

2016 2015 Long-term deposits 288,882 228,631 Trade debts 7,871,281 4,263,595 Advances 222,156 15,006 Other receivables 1,200,391 877,903 Cash and bank balance 7,821,070 4,071,547 17,403,780 9,456,682 The credit risk for cash and cash equivalents is considered to be negligible, since the counterparties are reputable banks and institutes

with high quality external credit ratings. The credit quality of bank balances that are neither past due nor impaired can be assessed with reference to external credit ratings as follows:

Banks Rating Short Long Banks Rating Short Long Agency term term Agency term term

Allied Bank Limited PACRA A1+ AA+ Samba Bank Limited JCR- VIS A1 AA

Askari Bank Limited PACRA A1+ AA+ Silkbank Limited JCR- VIS A-2 A-

Bank Al Falah Limited PACRA A1+ AA Sindh Bank Limited JCR- VIS A1+ AA

Bank Al Habib Limited PACRA A1+ AA+ Soneri Bank Limited PACRA A1+ AA-

Bank Islami Pakistan Limited PACRA A1 A+ Summit Bank Limited JCR- VIS A1 A-

Habib Metropolitan Bank Limited PACRA A1+ AA+ United Bank Limited JCR- VIS A1+ AAA

Habib Bank Limited JCR- VIS A1+ AAA First Women Bank Limited PACRA A2 A-

MCB Bank Limited PACRA A1+ AAA Burj Bank Limited PACRA A1 A

Meezan Bank Limited JCR- VIS A1+ AA Industrial and Commercial

National Bank of Pakistan PACRA A1+ AAA Bank of China Limited S&P - A

NIB Bank Limited PACRA A1+ AA- PAIR Investments Limited PACRA A1+ AA

42.1.3 Liquidity risk Liquidity risk reflects the Company’s inability of raising funds to meet commitments. Management closely monitors the Company’s

liquidity and cash flow position. This includes maintenance of balance sheet liquidity ratios, debtors and creditors concentration both in terms of overall funding mix and avoidance of undue reliance on large individual customers.




As at December 31, 2016 the Company’s financial liabilities have contractual maturities as summarised below:

Within one Over one year year Total Long-term finances - secured 599,079 2,307,749 2,906,828 Liabilities against assets subject to finance lease 148,387 471,731 620,118 Trade and other payable 25,568,826 - 25,568,826 Mark-up accrued 91,185 - 91,185 Short-term running finances - secured 3,889,629 - 3,889,629 30,297,106 2,779,480 33,076,586 As at December 31, 2015 the Company’s liabilities had contractual maturities as summarised below:

Within one Over year one year Total Long-term finances - secured 285,636 176,151 461,787 Liabilities against assets subject to finance lease 102,597 322,930 425,527 Trade and other payable 14,866,401 - 14,866,401 Mark-up accrued 54,311 - 54,311 Short-term running finances - secured 1,413,055 - 1,413,055 16,722,000 499,081 17,221,081 43 CAPITAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Board’s policy is to maintain a strong capital base so as to maintain investors’, creditors’ and market’s confidence and to sustain future development of the business, safeguard the Company’s ability to continue as going concern in order to provide returns for shareholders and benefit for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Board monitor the return on capital, which the Company defines as net profit/ (loss) after tax divided by total shareholders’ equity. The Board also monitor the level of dividend to ordinary shareholders subject to the availability of funds.

The Company finances its operations through equity, borrowings and management of working capital with a view to maintain an appropriate mix between various sources of finance to minimize risk.

2016 2015 Total borrowings 7,416,575 2,300,369 Cash and bank balance (7,821,070) (4,071,547) Excess of net cash over debt/ net debt (404,495) (1,771,178) Total Equity 4,962,138 4,529,103 Total Capital 4,557,643 2,757,925 Gearing ratio 0.00% 0.00%

44 EMPLOYEES PROVIDENT FUND The Company operates approved provident fund for its employees. Details of assets and investments of the fund is as follows:

Note 2016 2015 Size of fund - total assets 72,797 54,856 Cost of investments made 69,931 52,662 Percentage of investments made 100% 100% Fair value of investments 44.1 72,797 54,856




44.1 The break-up of fair value of investments is as follows:

2016 2015 Investments Percentage of Investments Percentage of

investment investment % % Regular income certificates 15,675 21.53 16,219 29.57 Saving bank accounts 57,122 78.47 38,637 70.43 72,797 54,856 The management, based on the un-audited financial statements of the fund, is of the view that the investments out of the provident

fund have been made in accordance with the provision of section 227 of the Companies Ordinance, 1984 and the rules formulated for the purpose.

45 NUMBER OF EMPLOYEES Total number of employees at year-end 519 394 Average number of employees during the year 457 359 46 EVENTS AFTER THE BALANCE SHEET DATE

The Board of Directors in its meeting held on March 31, 2017 has proposed a cash dividend of Rs. 3.50 per share for the

year ended December 31, 2016 for approval of the members at the Annual General Meeting to be held on April 28, 2017.

These unconsolidated financial statements do not include the effect of the proposed cash dividend which will be accounted for in the unconsolidated financial statements for the year ending December 31, 2017.

47 GENERAL All amounts have been rounded to the nearest thousand.

The corresponding figures have been reclassified/re-arranged where considered necessary for the purpose of better presentation.

However, no material reclassification/re-arrangement have been made in these unconsolidated financial statements.

48 DATE OF AUTHORISATION FOR ISSUE These unconsolidated financial statements have been authorized for issue on March 31, 2017 by the Board of Directors of the

Company.



for the year ended December 31, 2016


Annual Report 2016 QUALITY PERSONIFIED page 87

CONSOLIDATED BALANCE SHEET AS AT DECEMBER 31, 2016

Note 2016 2015ASSETS

Non-current assets Property, plant and equipment 5 9,424,264 6,277,928 Intangible asset 6 - 1,522 Long-term investments 7 1,886,977 1,955,310 Long-term deposits 8 290,362 228,631 Deferred taxation 9 - 240,096 Total non-current assets 11,601,603 8,703,487

Current assets Stock-in-trade 10 16,477,668 8,470,018 Trade debts 11 7,871,281 4,263,595 Advances 12 44,605 150,606 Deposits, prepayments and other receivables 13 1,297,628 959,829 Cash and bank balances 14 7,832,284 4,072,003 Total current assets 33,523,466 17,916,051 TOTAL ASSETS 45,125,069 26,619,538

EQUITY AND LIABILITIES Share capital and reserves Share capital 15 1,206,792 1,206,792 Reserves 16 3,746,665 3,321,405 Equity attributable to owners of the holding company 4,953,457 4,528,197 Non-controlling interest 17 469,714 - 5,423,171 4,528,197

Surplus on revaluation of fixed assets - net of tax 18 1,142,880 1,256,529

LIABILITIES Non-current liabilities Long-term finances 19 2,307,749 176,151 Liabilities against assets subject to finance lease 20 471,731 322,930 Deferred taxation - net 9 594,790 - Deferred liability - gratuity 21 135,791 99,090 Total non-current liabilities 3,510,061 598,171

Current liabilities Trade and other payables 22 29,836,808 17,421,090 Mark-up accrued 23 91,185 54,311 Short-term borrowings 24 3,889,629 1,413,055 Current portion of long term finances 19 599,079 285,636 Current maturity of liabilities against assets subject to finance lease 20 148,387 102,597 Taxation 25 483,869 959,952 Total current liabilities 35,048,957 20,236,641 TOTAL LIABILITIES 38,559,018 20,834,812 TOTAL EQUITY AND LIABILITIES 45,125,069 26,619,538

CONTINGENCIES AND COMMITMENTS 26

The annexed notes 1 to 49 form an integral part of these consolidated financial statements.



Annual Report 2016 page 88

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED DECEMBER 31, 2016

Note 2016 2015

Sales - net 27 128,759,275 94,065,297 Less: sales tax (29,251,081) (17,291,360)Net sales 99,508,194 76,773,937

Other revenue 28 199,280 82,831 Net revenue 99,707,474 76,856,768

Cost of products sold 29 (94,999,669) (74,017,815)Gross profit 4,707,805 2,838,953

Operating expenses Distribution and marketing 30 (1,763,478) (1,053,474)Administrative 31 (540,986) (366,388) (2,304,464) (1,419,862)Other income 32 211,496 210,541 Operating profit 2,614,837 1,629,632

Finance cost 33 (432,618) (349,652)Other charges 34 (40,594) (83,409) (473,212) (433,061)Profit before taxation 2,141,625 1,196,571

Taxation 35 (938,349) (63,484)Profit for the year 1,203,276 1,133,087

Profit / (loss) attributable to: Equity holders of the holding company 1,207,851 1,133,087 Non-controlling interests 17 (4,575) - 1,203,276 1,133,087

Earnings per share - basic and diluted (Rupees) 36 10.01 9.39





CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED DECEMBER 31, 2016

Note 2016 2015

Profit for the year 1,203,276 1,133,087

Other comprehensive income Items that will not be reclassified to profit and loss account Remeasurement of net defined benefit liability - net of deferred tax 21.3 (9,795) (7,464)

Items that may be reclassified subsequently to profit and loss account Unrealized (loss)/gain due to change in fair value of long-term investment classified as ‘available-for-sale’ - net of deferred tax (59,791) 690,662 (69,586) 683,198 Total comprehensive income 1,133,690 1,816,285

Total comprehensive income / (loss) attributable to: Equity holders of the holding company 1,138,265 1,816,285 Non-controlling interests 17 (4,575) - 1,133,690 1,816,285





CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED DECEMBER 31, 2016

Capital Revenue reserves reserve Non - Total Share Share Fair Unappropri Total controlling shareholers’ Capital premium value -ated profit intrest equity reserve Balance as at January 01, 2015 906,000 1,070,828 (5,941) 807,170 2,778,057 - 2,778,057

Total comprehensive income for the year Profit for the year - - - 1,133,087 1,133,087 - 1,133,087

Other comprehensive income Remeasurement of net defined benefit liability - net of tax - - - (7,464) (7,464) - (7,464)Unrealized loss due to change in fair value of long-term investment classified as ‘available-for-sale’ - net of tax - - 690,662 - 690,662 - 690,662 Total comprehensive income - - 690,662 1,125,623 1,816,285 - 1,816,285

Transferred from surplus on revaluation of fixed assets on account of incremental depreciation - net of tax - - - 84,704 84,704 - 84,704 - - 690,662 1,210,327 1,900,989 - 1,900,989 Transaction with owners Annual bonus @ 11% - December 2014 99,660 - - (99,660) - - - Interim bonus @ 20% - June 2015 201,132 - - (201,132) - - - First interim dividend at Rs. 1.5 per share - - - (150,849) (150,849) - (150,849)Total transaction with owners 300,792 - - (451,641) (150,849) - (150,849)Balance as at December 31, 2015 1,206,792 1,070,828 684,721 1,565,856 4,528,197 - 4,528,197

Balance as at January 01, 2016 1,206,792 1,070,828 684,721 1,565,856 4,528,197 - 4,528,197

Total comprehensive income for the year Profit for the year - - - 1,207,851 1,207,851 (4,575) 1,203,276

Other comprehensive income Remeasurement of net defined benefit liability - net of tax - - - (9,795) (9,795) - (9,795)Unrealized gain due to change in fair value of long-term investment classified as ‘available-for-sale’ - net of tax - - (59,791) - (59,791) - (59,791)Total comprehensive income - - (59,791) 1,198,056 1,138,265 (4,575) 1,133,690

Transferred from surplus on revaluation of fixed assets on account of incremental depreciation - net of tax - - - 131,749 131,749 - 131,749 - - (59,791) 1,329,805 1,270,014 (4,575) 1,265,439 Transaction with owners Final dividend at Rs. 3.50 per share - December 2015 - - - (422,377) (422,377) - (422,377)Interim dividend at Rs. 3.50 per share - June 2016 - - - (422,377) (422,377) - (422,377)Consideration for acquisition of subsidary - - - - - 474,289 474,289 Total transaction with owners - - - (844,754) (844,754) 474,289 (370,465)Balance as at December 31, 2016 1,206,792 1,070,828 624,930 2,050,907 4,953,457 469,714 5,423,171





CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED DECEMBER 31, 2016

Note 2016 2015 CASH FLOWS FROM OPERATING ACTIVITIES Cash generated from operations 39 3,454,457 4,792,265 Finance cost paid (395,744) (355,218)Profit on bank deposits 165,033 139,662 Taxes paid (599,442) (197,891)Gratuity paid (5,003) (3,359)Net cash generated from operating activities 2,619,301 4,375,459

CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure incurred (3,599,189) (1,735,953)Proceeds from disposal of property, plant and equipment 65,711 2,272 Long-term investment made during the year - (384,440)Long-term deposits (61,731) (172,142)Net cash used in investing activities (3,595,209) (2,290,263)

CASH FLOWS FROM FINANCING ACTIVITIES Lease liability obtained - net 194,591 349,288 Contribution of NCI in subsidary company 474,289 - Dividend paid (844,754) (150,849)Long-term finance obtained/(repaid) - net 2,435,489 (106,093)Net cash generated from financing activities 2,259,615 92,346

Net increase in cash and cash equivalents 1,283,707 2,177,542

Cash and cash equivalents at beginning of the year 2,658,948 481,406

Cash and cash equivalents at end of the year 40 3,942,655 2,658,948





NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED DECEMBER 31, 2016

1 STATUS AND NATURE OF BUSINESS The Group consists of: Status in the Percentage of Name of company Group holding

Hascol Petroleum Limited Holding company - Hascombe Lubricants (Private) Limited Subsidiary company 100% Hascol Terminals Limited Subsidiary company 62.50%

Hascol Petroleum Limited (the Holding Company) was incorporated in Pakistan as a private limited company on March 28, 2001. On September 12, 2007 the Holding Company was converted into a public unlisted company and on May 12, 2014 the Holding Company was listed on the Pakistan Stock Exchange. The registered office of the Holding Company is situated at Suite No. 105-106, The Forum, Khayaban-e-Jami, Clifton, Karachi.

The Holding Company is engaged in the business of procurement, storage and marketing of petroleum and related products, for which the Holding Company obtained oil marketing license from Ministry of Petroleum and Natural Resources in the year 2005.

Subsidiaries

Hascombe Lubricants (Private) Limited

Hascombe Lubricants (Private) Limited is a wholly owned subsidiary of the Holding Company which is incorporated in Pakistan. The subsidiary company has ceased to be a going concern. The financial statements of the subsidiary company have not been prepared on a going concern assumption.

Hascol Terminals Limited Hascol Terminals Limited is a subsidiary of the Holding Company which is incorporated in Pakistan. The subsidary provides storage

facilities for imported and locally produced petroleum and related products.

2 BASIS OF PREPARATION 2.1 Statement of compliance These consolidated financial statements have been prepared in accordance with the Approved Accounting Standards as applicable

in Pakistan. Approved Accounting Standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan (ICAP) as are notified under the provisions of the Companies Ordinance, 1984, the requirements of the Companies Ordinance, 1984 and the directives issued by the Securities and Exchange Commission of Pakistan (SECP). Where the requirements of the Companies Ordinance, 1984 or directives issued by the SECP differ with the requirements of IFRS, the requirements of and directives issued under the Companies Ordinance, 1984 shall prevail.

2.2 Basis of consolidation The consolidated financial statements includes the financial statement of Holding Company and its subsidiaries comprising together

‘the Group’.

Subsidiary company The Holding Company can directly exercise control over subsidiaries as they are owned more than 50% by the Holding

Company.

The assets and liabilities of subsidiaries have been consolidated on a line by line basis and the carrying value of investments held by the Holding Company is eliminated against the subsidiaries’ shareholders’ equity in these consolidated financial statements.

Inter-company transactions, balances and unrealised gains on transactions between the group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred.

The financial statements of the subsidiaries are prepared for the same reporting year as the Holding Company, using consistent accounting policies.



2.3 Basis of measurement These consolidated financial statements have been prepared under the historical cost convention, except for certain assets and

liabilities which are stated at revalued amount.

In these consolidated financial statements, except for the consolidated statement of cash flows, all the transactions have been accounted for on an accrual basis.

2.4 Functional and presentation currency These consolidated financial statements are presented in Pakistani Rupees which is also the Group functional currency.

2.5 Standards, Amendments and Interpretations to Approved Accounting Standards

2.5.1 Standards, amendments and interpretations to the published standards that are relevant to the group and adopted in the current year

The Group has adopted the following new standards, amendments to published standards and interpretations of IFRSs which became effective during the current year.

Amendments Effective Date IAS 1 - Disclosure Initiative (Amendments to IAS 1 Presentation of Financial Statements) January 1, 2016 IFRS 10, IFRS 12 and IAS 28 - Investment Entities : Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28) January 1, 2016 Annual Improvements to IFRSs 2012 - 2014 Cycle January 1, 2016 (i) IFRS 5 — Adds specific guidance in IFRS 5 for cases in which an entity reclassifies an asset from held for sale to held for

distribution or vice versa and cases in which held-for-distribution accounting is discontinued. (ii) IFRS 7 — Additional guidance to clarify whether a servicing contract is continuing involvement in a transferred asset, and

clarification on offsetting disclosures in condensed interim financial statements. (iii) IAS 19 — Clarify that the high quality corporate bonds used in estimating the discount rate for post-employment benefits

should be denominated in the same currency as the benefits to be paid. (iv) IAS 34 — Clarify the meaning of ‘elsewhere in the interim report’ and require a cross-reference.

IAS 27 - Equity method in Separate Financial Statatements (Amendments to IAS 27) January 1, 2016 IAS 16 and IAS 38 - Clarification of Acceptable Methods of Depreciation and Amortisation (Amendments to IAS 16 and IAS 38) January 1, 2016 Adoption of the above revisions, amendments and interpretations of the standards have no significant effect on the amounts for the

year ended December 31, 2015 and 2016.

2.5.2 Standards, amendments to published standards and interpretations that are effective but not relevant

The other new standards, amendments to published standards and interpretations that are mandatory for the financial year beginning on January 01, 2016 are considered not to be relevant or to have any significant effect on the Group’s financial reporting and operations and are therefore not presented here.

2.5.3 Standards, amendments and interpretations to the published standards that are relevant but not yet effective and not early adopted by the Group

There are number of other standards, amendments and interpretations to the published standards that are relevant to the Group and not yet effective and therefore, have not been presented here.



2.5.4 Standards, amendments and interpretations to the published standards that are not yet notified by the Securities and Exchange Commission of Pakistan (SECP)

Following new standards have been issued by the International Accounting Standards Board (IASB) which are yet to be notified by

the SECP for the purpose of applicability in Pakistan. Standard IASB effective date (Annual periods beginning on or after)”

IFRS 9 - Financial Instruments January 1, 2018 IFRS 14 - Regulatory Deferral Accounts January 1, 2016 IFRS 15 - Revenue from Contracts with Customers January 1, 2018 IFRS 16 - Leases January 1, 2019 3 CRITICAL ASSUMPTIONS, ESTIMATES AND MEASUREMENT UNCERTAINITY

The preparation of consolidated financial statements in conformity with approved accounting standards, as applicable in Pakistan, requires management to make estimates, assumptions and use judgment that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses.

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised, if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Accounting policies in respect of judgments made by management in the application of approved accounting standards, as applicable in Pakistan, that have significant effect on the Group financial statements and estimates and assumptions with significant risk of material adjustment in the future period are included in the following notes:

Note a) Useful life of depreciable and amortisable assets 4.1 & 4.2 b) Net realizable value of stock-in-trade 4.8 c) Provisions and contingent liabilities 4.11 d) Taxation 4.14 e) Retirement and other service benefits 4.16 Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectation of

future events that are believed to be reasonable under the circumstances.

4 SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies applied in the preparation of these consolidated financial statements are set out below. These

policies have been consistently applied to all the years presented, unless otherwise stated. 4.1 Property, plant and equipment Initial recognition (a) Operating fixed assets An item of property, plant and equipment is initially recognized at cost.

Cost includes expenditure that is directly attributable to the acquisition of the asset. Property, plant and equipment under construction are disclosed as capital work-in-progress. The cost of self constructed assets includes the cost of materials and fixed labour, any other cost directly attributable to bringing the asset into service for its intended use including, where applicable, the cost of dismantling and removing the items and restoring the site on which they are located, and borrowing costs on qualifying assets.

The assets which are available for intended use are capitalized as operating fixed assets. While assets under construction are capitalized to capital work in progress.



The Group accounts for property, plant and equipment acquired under finance leases by recording the assets and the related liability. These amounts are determined at the inception of lease, on the basis of the lower of the fair value of the leased properties and the present value of minimum lease payments. Financial charges are allocated to the accounting period in a manner so as to provide a constant rate of charge on the outstanding liability.

(b) Capital work-in-progress (CWIP) CWIP is stated at cost less accumulated impairment losses, if any. All expenditure in connection with specific assets incurred during

construction / installation period are carried to CWIP. These expenditures are transferred to operating fixed assets as and when these are available for intended use.

Measurement subsequent to initial recognition (a) Carried using revaluation model Following operating assets both owned and leased are subsequently measured under revaluation model (i.e. fair value at the date of

revaluation less any subsequent accumulated depreciation and any subsequent accumulated impairment losses).

- Building on lease hold land - Tanks and pipelines - Dispensing pumps - Plant and machinery - Electrical, mechanical and fire fighting equipment. Fair value is determined by external professional valuers with sufficient regularity such that the carrying amount does not differ

materially from that which would be determined using fair value at the balance sheet date.

(b) Carried using cost model Fixed assets other than those mentioned above are stated at cost less accumulated depreciation and accumulated impairment

losses. Depreciation Depreciation on operating fixed assets is charged to profit and loss account applying the straight-line method whereby the cost/

revalued amount of operating fixed assets is written off over its remaining useful life. Same basis and estimates for depreciation are applied to owned assets and assets acquired under finance lease.

Depreciation is charged on straight line method from the month in which an asset is available for intended use, while no depreciation

is charged from the month in which the asset is disposed off. Depreciation is provided at the rates as disclosed in note 5.1.

Depreciation method, useful lives, and residual values are reviewed at each reporting period and adjusted, if applicable. Capital work-in-progress is not depreciated.

Maintenance and normal repairs are charged to the consolidated profit and loss account as and when incurred. Major renewals and

improvements are capitalized and the assets so replaced, if any, are retired.

Gain and loss on disposal of property, plant and equipment is included in the consolidated profit and loss account in the period of disposal.

Surplus on revaluation of fixed assets The surplus arising on revaluation of fixed assets is credited to the “Surplus on revaluation of fixed assets” shown below equity in

the consolidated balance sheet. Accordingly the Group has adopted the following accounting treatment of depreciation on revalued assets, keeping in view the requirement of Securities and Exchange Commission of Pakistan’s (SECP) SRO 45(1)/2003 dated January 13, 2003:

- depreciation on assets which are revalued is determined with reference to the value assigned to such assets on revaluation

and depreciation charge for the period is taken to the consolidated profit and loss account; and - an amount equal to incremental depreciation for the period net of deferred taxation is transferred from “Surplus on

revaluation of fixed assets account” to unappropriated profits through consolidated statement of changes in equity to record realization of surplus to the extent of the incremental depreciation charge for the period.



4.2 Intangible assets These are recorded initially at cost and subsequently carried at cost less accumulated amortization and accumulated impairment

losses, if any. Intangible assets having finite useful lives are stated at cost less accumulated amortization and accumulated impairment losses, if any.

Such intangibles are amortized over their estimated useful lives using the straight line method.

Amortization on addition and deletion of intangible assets during the year is charged in proportion to the period of use. The useful life and amortization method are reviewed and adjusted, if appropriate, at the balance sheet date.

Intangible assets having indefinite useful life are not amortized and stated at cost less impairment losses, if any.

4.3 Financial instruments Recognition, initial measurement and derecognition Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial

instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through profit or loss which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities is described below.

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial

asset and substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

Regular purchases and sales of financial assets are recognised on the trade date - the date on which the Group commits to purchase

or sell the asset. Classification and subsequent measurement of financial assets For the purpose of subsequent measurement financial assets, other than those designated and effective as hedging instruments, are

classified into the following categories upon initial recognition: • loans and receivables; • at fair value through profit or loss - held for trading; • held to maturity; and • available for sale. All financial assets except for those at fair value through profit and loss are reviewed for impairment at least at each reporting date

to identify whether there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described below. All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Group`s cash and bank balances fall into this category of financial instruments.

Receivables are considered for impairment when they are past due or when other objective evidence is received that a specific

counterparty will default. At fair value through profit or loss - held for trading Financial assets at ‘fair value through profit or loss’ - held for trading include financial assets that are either classified as held-for-trading

or that meet certain conditions and are designated at fair value through profit or loss - held for trading upon initial recognition.



Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists. The Group does not currently have any asset in this category.

Held to maturity Held to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity other than

loans and receivables. Investments are classified as ‘held to maturity’ if the Group has the intention and ability to hold them until maturity. The Group does not currently have any asset in this category.

Held to maturity investments are measured subsequently at amortised cost using the effective interest method. If there is objective evidence that the investment is impaired, determined by reference to external credit ratings, the financial asset is measured at the present value of estimated future cash flows. Any changes in the carrying amount of the investment, including impairment losses, are recognised in profit or loss.

Available for sale Available for sale (AFS) are non-derivative financial assets that are either designated to this category or do not qualify for inclusion in

any of the other categories of financial assets. These are primarily investments that are intended to be held for an undefined period of time or may be sold in response to the need for liquidity.

The equity investment is measured at cost less any impairment charges, as its fair value cannot currently be estimated reliably.

Impairment charges are recognised in profit or loss. All other AFS financial assets are measured at fair value. Gains and losses are recognized in other comprehensive income and reported within the Available for sale reserve within equity, except for interest and dividend income, impairment losses and foreign exchange differences on monetary assets, which are recognised in the consolidated profit and loss account. When the asset is disposed off or is determined to be impaired, the cumulative gain or loss recognised in consolidated statement of other comprehensive income is reclassified from the equity reserve to profit or loss. Interest calculated using the effective interest method and dividends are recognised in profit or loss within finance income.

Reversals of impairment losses for Available for sale equity investments are not recognised in profit loss and any subsequent increase in fair value is recognised in other comprehensive income. The Group does not currently have any other asset other than as provided in this category.

Classification and subsequent measurement of financial liabilities Financial liabilities that are measured subsequently at amortised cost using the effective interest method. All interest-related charges,

if applicable, changes in an instrument’s fair value that are reported in profit or loss account are included within finance costs or finance income.

4.4 Off setting Financial assets and liabilities are off set and the net amount is reported in the consolidated balance sheet if the Group has a legally

enforceable right to off-set the transactions and also intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

4.5 Investments The Group classifies its investment as ‘available-for-sale’, that do not fall under the held-for-trading or held-to-maturity. Unrealized

surplus/deficit arising on revaluation of investment classified as ‘available-for-sale’ is disclosed in the consolidated statement of other comprehensive income.

In case of impairment of available-for-sale securities, the cumulative loss that has been recognised directly in fair value reserve on the

consolidated balance sheet below equity is removed there from and recognized in profit and loss.

4.6 Trade and other payables Trade and other payables are recognised initially at fair value and subsequently measured at amortized cost, using the effective

interest method. Exchange gains and losses arising on translation in respect of liabilities in foreign currency are added to the carrying amount of the respective liabilities.



4.7 Trade debts and other receivables Trade debts and other receivables are recognised initially at invoice value, which approximates fair value, and subsequently measured

at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade debts and other receivables is established when there is objective evidence that the Group will not be able to collect all the amounts due according to the original terms of the receivable. Significant financial difficulties of the debtors, probability that the debtor will enter bankruptcy and default or delinquency in payments are considered indicators that the trade debt is impaired. The amount of provision is charged to profit or loss. Trade debts and other receivables considered irrecoverable are written-off.

Exchange gains and losses arising on translation in respect of trade debts and other receivables in foreign currency are added to the carrying amount of the respective receivables.

4.8 Stock-in-trade Stock-in-trade is valued at the lower of cost and net realizable value. Stock-in-transit is valued at cost comprising invoice value plus other charges incurred thereon. Provision is made for obsolete and

slow moving stock-in-trade based on management’s best estimate and is recognized in the consolidated profit and loss account.

The cost of stock in trade is determined on moving weighted average basis.

Provision is made for obsolete/slow moving stocks where necessary and recognized in the consolidated profit and loss account. Net realizable value is the estimated selling value price in the ordinary course of business less estimated costs necessary to be incurred in order to make a sale.

4.9 Impairment of non financial assets The carrying amounts of non financial assets, other than deferred tax assets, are assessed at each reporting date to ascertain whether

there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. An impairment loss is recognized, as an expense in the consolidated profit and loss account, for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost to sell and value in use.

Value in use is ascertained through discounting of the estimated future cash flows using a discount rate that reflects current market assessments of the time value of money and the risk specific to the assets. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined if no impairment loss had been recognized.

4.10 Cash and cash equivalents Cash and cash equivalents are carried in the consolidated balance sheet at cost. For the purposes of the consolidated statement of

cash flows, cash and cash equivalents include cash and bank balances and other items of current assets and current liabilities which qualify as cash equivalent.

4.11 Provisions and contingent liabilities Provisions are recognized when the Group has a present, legal or constructive obligation as a result of past events, it is probable that

an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurence or non-occurence of one or more uncertain future events not wholly within the control of the Group, or a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities are only disclosed and not recognized as liability in the consolidated balance sheet.



4.12 Leases . Finance leases Leases in terms of which the Group has substantially all the risks and rewards of ownership are classified as

finance leases. Assets obtained under finance lease are accounted for in accordance with policy stated in note 4.1.

The related rental obligations, net of finance costs are classified as current and long term depending upon the timing of the payment.

Each lease payment is allocated between the liability and finance cost so as to achieve a constant rate on the balance outstanding. The

interest element of the rental is charged to income over the lease term.

Operating leases Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.

Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated profit and loss account on a straight-line basis over the period of lease.

Ijarah Leased assets which are obtained under Ijarah agreement are not recognised in the Group’s consolidated balance sheet and are

treated as operating lease based on Islamic Financial Accounting Standard (IFAS) 2 issued by the Institute of Chartered Accountants of Pakistan and notified by Securities and Exchange Commission of Pakistan vide S.R.O. 43(1) / 2007 dated 22 May 2007. Payments made under operating lease are charged to the consolidated profit and loss account on a straight line basis over the lease term.

4.13 Foreign currency translations Monetary assets and liabilities in foreign currencies are translated into Pakistani Rupees at the rates of exchange prevailing at the

balance sheet date. Transactions denominated in foreign currencies are converted into Pakistani Rupees at the rates of exchange prevailing at the transaction date. Exchange gains or losses are taken to the consolidated profit and loss account.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

4.14 Taxation Taxation for the year comprises current and deferred tax. Taxation is recognized in the consolidated profit and loss account except

to the extent that it relates to items recognized outside profit and loss account (whether in other comprehensive income or directly in equity), if any, in which case the tax amounts are recognized outside profit or loss.

Current Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the

balance sheet date, and any adjustments to tax payable in respect of prior years.

Deferred Deferred tax is provided for using the balance sheet method providing the temporary differences between the carrying amount of

assets and liabilities for financial reporting purposes and the amount used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted at the balance sheet date. Deferred tax asset is recognized only to the extent that it is probable that the future taxable profits will be available and credits can be utilized.

Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse, based on the tax rates

that have been enacted. The Group takes into account the current income tax laws and decisions taken by the taxation authorities.

Deferred tax is charged or credited in the consolidated profit and loss account, except in the case of items credited or charged to equity or consolidated statement of other comprehensive income, in which case it is included in equity or consolidated statement of other comprehensive income as the case may be.



4.15 Revenue recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be

measured reliably. Revenue is measured at the fair value of consideration received or receivable on the following basis:

Operating revenue - Sales are recorded when significant risks and rewards of ownership of the goods have passed to the customers which

coincides with dispatch of goods to customers. - Non-fuel retail income and other revenue (including license fee) is recognized on an accrual basis.

Other income - Dividend income is recognized when the Group’s right to receive the dividend is established. - Return on deposits and other services income is recognized on accrual basis.

4.16 Retirement and other service benefits Unfunded gratuity scheme Actuarial gains and losses are recognized in the consolidated statement of other comprehensive income in the periods in which they

occur. Amounts recorded in the consolidated profit and loss account are limited to current service and past service costs, gains or losses on settlements, and net interest income (expense). All other changes in the net defined benefit obligation are recognized directly in other comprehensive income with no subsequent recycling through the consolidated profit and loss account.

Contributory provident fund The Holding Company operates an approved contributory provident fund for all its permanent employees. The contribution to the

fund is made by the Holding Company as well as the employee at the rate of 5.72% percent of the basic salary.

4.17 Borrowings and borrowing cost Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized

cost, any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated profit and loss account over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.

Borrowing costs are capitalized up to the point in time when substantially all the activities necessary to prepare the qualifying assets

for its intended use or sale are complete. All other borrowing costs are charged to the consolidated profit and loss account as and when incurred.

4.18 Dividend distribution Final dividend distribution to the Group’s shareholders is recognised as a liability in the consolidated balance sheet in the period in

which the dividend is approved by the Group’s shareholders at the Annual General Meeting, while interim dividend distributions are recognised in the period in which the dividends are declared by the Board of Directors.

4.19 Operating segments Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.

The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as management that makes strategic decisions. The management has determined that the Group has a single reportable segment as the Board of Directors view the Group’s operations as one reportable segment.

4.20 Earning per share The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the

profit or loss attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares.



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5.2 Had there been no revaluation, the written down value of the following assets in the consolidated balance sheet would have been as follows:

Cost Accumulated Written down value

depreciation 2016 2015 Owned Assets

Building on lease hold land 880,921 153,631 727,290 771,336 Dispensing units 61,613 11,165 50,448 54,558 Plant and machinery 19,767 4,357 15,410 16,398 Tanks and pipelines 312,423 34,398 278,025 293,646 Electrical mechanical and

fire fighting equipment 224,202 45,279 178,923 201,343 Leased Assets

Building on lease hold land 166,399 75,011 91,388 99,708 Dispensing units 137,419 78,234 59,185 68,351 Plant and machinery 66,850 29,294 37,556 40,899 Tanks and pipelines 90,260 43,498 46,762 51,275 Electrical, mechanical and fire fighting equipment 14,351 5,199 9,152 10,587 1,974,205 480,066 1,494,139 1,608,101

Note 2016 20155.3 The depreciation charged for the year has been allocated as follows:

Distribution and marketing expenses 30 373,786 226,599 Administrative expenses 31 25,356 12,098 399,142 238,697 5.4 During the year written down value of property, plant and equipment that have been disposed-off amount to Rs. 53.65 million (2015:

Rs. Nil). Details of assets disposed off with WDV above Rs. 50,000 is given below:

Accumulated Net book Sale Particulars of Mode of Type Cost depreciation value proceeds Gain buyers disposal

Vehicle - 622 498 124 253 129 Awais Shaikh As per company policy owned 982 752 230 508 278 Khurram Shehzad As per company policy 982 785 197 508 311 Asif Raza As per company policy 622 498 124 253 129 Moosa Rind As per company policy 10,773 180 10,593 12,568 1,975 Meezan Bank Sale and operating leaseback 10,773 180 10,593 12,568 1,975 Meezan Bank Sale and operating leaseback 10,773 180 10,593 12,568 1,975 Meezan Bank Sale and operating leaseback 10,773 180 10,593 12,568 1,975 Meezan Bank Sale and operating leaseback 10,773 180 10,593 12,568 1,975 Meezan Bank Sale and operating leaseback 57,073 3,433 53,640 64,362 10,722




2016 20155.5 Capital work in progress Office building 1,608,287 815,572 Petrol Pump building 250,137 348,220 Plant and machinery 22,319 40,561 Tanks and pipe lines 649,540 261,069 Dispensing pumps 96,357 143,903 Computer auxiliaries 7,045 7,740 Electrical, mechanical and fire fighting equipment 475,424 117,658 Furniture, office equipment and other assets 110,014 187,141 Borrowing cost capitalized 123,214 34,000 Advances to contractors 203,263 101,480 3,545,600 2,057,344 5.5.1 During the year additions amounting to Rs. 2,946.29 million (2015: 1,746.68 million) have been made in capital work-in-progress. This

also includes borrowing cost capitalized during the year at rates ranging from 7.36% - 9.59% (2015: 9.58% - 13.18%).

6 INTANGIBLE ASSET Note 2016 2015 Net book value at beginning of the year 1,522 4,288 Amortization charge for the year 31 (1,522) (2,766) Net book value at the end of the year 6.1 - 1,522

6.1 Net book value

Cost 8,299 8,299 Accumulated amortization (8,299) (6,777) Net book value - 1,522 Rate of amortization - % 33.33 33.33

7 LONG-TERM INVESTMENTS

- Pakistan Refinery Limited - available-for-sale 7.1 & 7.2 1,886,977 1,955,310

7.1 Investment in Pakistan Refinery Limited Cost Unrealised Carrying

gain value

December 31, 2016 1,172,772 714,205 1,886,977 December 31, 2015 1,172,772 782,538 1,955,310 7.2 Investment in Pakistan Refinery Limited (quoted) amounts to Rs. 1,172.77 million (2015: Rs. 1,172.77 million) representing 13.72%

(2015: 13.72%) shares in PRL as at December 31, 2016. The Group has 43.24 million shares (2015: 43.24 million shares) as at December 31, 2016.

Note 2016 20158 LONG-TERM DEPOSITS Lease deposits 133,462 52,819 Less: current portion of lease deposits 13 (5,740) - 127,722 52,819 Other deposits 8.1 162,640 175,812 290,362 228,631




8.1 Other deposits include amount of Rs. 39.72 million (2015: Rs. 39.72 million) with Motorway Operations & Rehabilitation Engineering (Private) Limited (MORE) for 10 petrol stations on M-2 Motorway and Rs. 8.28 million (2015: Rs. 8.28 million) with PAF Base Faisal for 1 petrol station on Shara-e-Faisal, Karachi.

Note 2016 20159 DEFERRED TAXATION - NET This comprises the following:

Taxable temporary difference arising in respect of : Accelerated depreciation (354,233) (286,347)

Assets under finance lease (129,683) (55,612) Revaluation of fixed assets (513,467) (590,758) Exchange gain (1,797) (3,379) Surplus on remeasurement on investment (89,276) (97,817) Deductible temporary difference arising in respect of :

Liabilities against assets subject to finance lease 182,677 132,751 Provision for:

- retirement benefit 40,718 31,001 - doubtful debts 2,358 2,463 - franchise income 8,168 - Turnover tax 259,745 1,107,794 (594,790) 240,096 9.1 Movement in deferred tax Opening deferred tax 240,096 509,075 Deferred tax income/(expense)

- through profit and loss (208,870) 287,302 - through other comprehensive income 9,805 (94,305) Adjusted against tax liability (635,821) (461,976) Closing deferred tax (594,790) 240,096 10 STOCK-IN-TRADE Raw and packing materials 79,694 63,757 Finished goods

- fuels 10.1 14,972,545 5,836,553 - lubricants 315,292 240,713 15,287,837 6,077,266 Stock of fuel in transit 1,110,137 2,328,995 16,477,668 8,470,018 10.1 Fuels include Rs. 4,799.01 million (2015: 239.88 million) of High Speed Diesel which has been maintained as line fill necessary for the

pipeline to operate. Note 2016 201511 TRADE DEBTS - UNSECURED Due from related party

- Considered doubtful 11.1 & 11.2 - - Due from others

- Considered good 7,871,281 4,263,595 - Considered doubtful 849 849 7,872,130 4,264,444 7,872,130 4,264,444 Less: Provision for impairment 11.2 (849) (849) 7,871,281 4,263,595




Note 2016 2015 11.1 The aging of related party balances at the balance sheet date is as follows:

Past due 1-30 days - - More than 365 days - -

11.2 Movement of provision for impairment Opening balance (849) (849) Provision made during the year - - Closing balance (849) (849) 12 ADVANCES - CONSIDERED GOOD

To employees - against expenses 1,716 70,138 - against salary 13,348 15,006 Leasing companies 2,203 2,606 Suppliers 27,338 62,856 44,605 150,606

13 DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES Current portion of lease deposits 8 5,740 - Prepaid rent 69,462 45,779 Prepaid insurance and others 14,001 36,147 Receivable from oil marketing companies 13.1 11,328 38,470 Receivable against regulatory duty 25,533 25,533 Inland freight equalization margin receivable 1,024,234 667,776 Franchise income receivable 13.2 73,304 81,946 Price differential claims 13.3 5,083 5,083 Others 13.4 68,943 59,095 1,297,628 959,829 13.1 This represents amount receivable from various oil marketing companies on account of share of motor gasoline imported on their

behalf. 2016 2015

13.2 Franchise income receivable 100,653 81,946 Movement of provision

Opening balance - - Charge during the year (27,349) - (27,349) - Closing balance 73,304 81,946 13.3 This represents amount receivable from the Government of Pakistan (GoP) net of recovery as per fortnightly rates declared by

the Ministry of Petroleum and Natural Resources (MPNR). The Holding Company, together with other oil marketing companies is actively pursuing the matter with the concerned authorities for the early settlement of above claim. The Group considers that the balance amount will be reimbursed by GoP in due course of time.




13.4 This includes Rs. 4.45 million (2015: Rs. 24.64 million) receivable from Sigma Motors (Private) Limited, an associated company.

Note 2016 2015 14 CASH AND BANK BALANCES

Balances with banks:

- in current accounts 1,415,269 382,914 - in deposit accounts 14.1 6,415,286 3,684,616 7,830,555 4,067,530 Cash in hand 1,729 4,473 7,832,284 4,072,003

14.1 These carry mark-up ranging from 3.75% to 6% per annum (2015: 5.50% to 6.50% per annum).

15 SHARE CAPITAL

Authorized share capital

2016 2015 2016 2015 Number of shares 150,000,000 150,000,000 Ordinary shares of Rs. 10 each 1,500,000 1,500,000 Issued, subscribed and paid-up share capital

2016 2015 Note 2016 2015 Number of shares

89,540,000 89,540,000 Ordinary shares of Rs. 10 each fully paid in cash 895,400 895,400 1,060,000 1,060,000 Ordinary shares of Rs. 10 each for consideration other than cash 15.1 10,600 10,600 9,966,000 9,966,000 Annual bonus @ 11% - December 2014 99,660 99,660 20,113,200 20,113,200 Interim bonus @ 20% - June 2015 201,132 201,132 120,679,200 120,679,200 1,206,792 1,206,792

15.1 These were issued on December 8, 2004 for consultancy, feasibility study, travel and other expenses.

16 RESERVES Note 2016 2015 Capital reserves

Share premium reserve 1,070,828 1,070,828 Fair value reserve 624,930 684,721 1,695,758 1,755,549 Revenue reserve

Unappropriated profit 2,050,907 1,565,856 3,746,665 3,321,405 17 NON-CONTROLLING INTEREST (NCI)

NCI contribution in share capital of subsidary company 45,000 - (Loss) allocated to NCI 17.2 (4,575) - Net assets attributable to NCI 17.1 40,425 - NCI contribution in advance against equity of subsidary company 429,289 - Non-controlling interest 469,714 - NCI Percentage 37.50% 0.00%




Note 2016 201517.1 Net assets attributable to NCI

Non-current assets 736,797 -

Current assets 21,594 - Advance against equity (638,054) - Current liabilities (12,536) - Net assets 107,801 - Net assets attributable to (NCI) 40,425 -

17.2 Total comprehensive loss of subsidiary company (12,199) - Total comprehensive loss allocated to NCI (4,575) - Cash (used in) / generated from - operating activities (10,499) - - investing activities (736,797) - - financing activities 758,054 -

18 SURPLUS ON REVALUATION OF FIXED ASSETS - NET OF TAX Opening balance 1,847,286 492,209

Gain on revaluation - 1,479,641 Transfer in respect of incremental depreciation

charged during the year (190,939) (124,564) 1,656,347 1,847,286 Related deferred tax

Opening balance 590,758 171,659 Related deferred tax of gain on revaluation - 473,112 Effective rate adjustment (18,101) (14,153) Reversal of deferred tax liability on account of incremental

depreciation charged during the year (59,190) (39,860) (513,467) (590,758) 1,142,880 1,256,529 18.1 In 2012, the Holding Company carried out revaluation of petrol pumps through an independent valuer. Revalued amount of assets

was Rs. 1,172 million, resulting in surplus (net of deferred tax) amount to Rs. 387 million. Further, during 2015 the Holding Company carried out revaluation of depots and petrol pumps through an independent valuer. Revalued amount of assets was Rs. 4,154 million, resulting in surplus (net of deferred tax) amounting to Rs. 1,006 million.

Note 2016 2015 19 LONG TERM FINANCES - SECURED

PAIR Investment Company Limited 19.1 - 96,429 First Women Bank Limited 19.2 225,000 - Burj Bank Limited 19.3 - 187,922 Pak Oman Investment Company Limited 19.4 220,007 177,436 Sukuk certificates 19.5 1,961,821 - National Bank of Pakistan 19.6 500,000 - 2,906,828 461,787 Current portion of long term finances

PAIR Investment Company Limited - 42,857 First Women Bank Limited 100,000 - Burj Bank Limited - 187,922 Pak Oman Investment Company Limited 136,579 54,857 Sukuk certificates 300,000 - National Bank of Pakistan 62,500 - (599,079) (285,636)

2,307,749 176,151




19.1 This represents term finance facility from PAIR Investment Company Limited to finance the development of Machike storage facility. The sanctioned limit is Rs. 150 million and is secured against first pari passu charge on all present and future current and fixed assets of the Holding Company with 25% margin, personal guarantee of Mr. Mumtaz Hasan Khan (CEO) as sponsor and post dated cheque covering the purchase price of facility. Mark-up rate is 3 months KIBOR plus a spread of 3%. The loan has been repaid during the current year.

19.2 This represents term finance facility from First Women Bank Limited for construction of retail outlets. The sanctioned limit was Rs. 300 million and was secured against pledge of TDR of Rs. 60 million, Pledge of PRL shares at 40% margin and personal guarantee of Mr. Mumtaz Hasan Khan (CEO) as sponsor. Mark-up rate is 6 months KIBOR plus a spread of 1.3%. The loan is repayable in 36 equal monthly instalments in arrears, from first draw down with last repayment due in March 07, 2019.

19.3 This represents working facility of Diminishing Musharika arrangement from Burj Bank Limited to refinance capital expenditure incurred by the Holding Company. The sanction limit is 300 million and is secured against movable fixed assets of the Holding Company with 25% margin and pledge of shares of Pakistan Refinery Limited (PRL) with 40% margin to be maintained at all times. The loan has been repaid during the current year.

19.4 This represents term finance facility from Pak Oman Investment Company Limited to refinance the new storage facility at Daulatpur. The sanction limit is Rs. 300 million and is secured against first pari passu charge on Company’s land, building and machinery located at Daulatpur along with 25% margin and personal guarantee of Mr. Mumtaz Hasan Khan (CEO) as sponsor. It carries mark-up rate of 6 months KIBOR plus a spread rate from 2.5% to 3%. The loan is repayable in 42 equal monthly instalments in arrears, from first draw down with last repayment due in July 19, 2020.

Note 2016 2015 19.5 Sukuk certificates 19.5.1 2,000,000 - Issuance cost

Opening - - Addition (47,731) - Charged to profit and loss 9,552 - (38,179) - 1,961,821 - 19.5.1 This represent privately placed long term islamic certificate (Sukuk) amounting to Rs. 2,000 million, issued by the Holding Company

during the year to meet the working capital requirement and expansion plans of the Holding Company. Summit Bank Limited is the trustee while Meezan Bank Limited is acting as shariah structuring advisor for this Sukuk. The Holding Company is in the process of listing of Sukuk over the counter (OTC) on Pakistan Stock Exchange. This facility carries profit at 3 month KIBOR plus 1.5% per annum, payable quarterly. This arrangement is secured against first pari-passu charge over specific depots and retail outlets of the Holding Company inclusive of a 25% margin. The certificates will be redeemed in 20 equal quarterly installments, in arrears, starting from April 2017.

19.6 This represents term loan facility obtained from National Bank of Pakistan to finance capital expenditure for construction of a storage facility at Mehmood Kot. The sanction limit is Rs. 500 million and is secured against exclusive charge of Rs. 666.67 million over the entire land and building, installation and machinery of the facility and personal guarantee of Mr. Mumtaz Hasan Khan (CEO) as sponsor and post dated cheque covering facaility amount and corporate guarantee of Fossil Energy (Private) Limited and Marshall Gas (Private) Limited. It carries mark-up rate of 3 months KIBOR plus a spread rate of 2.5%. The loan is repayable in 16 equal quarterly instalments in arrears, with grace period of 12 months, from first draw down with last repayment due in Feburary 24, 2021.

20 LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE

The Group has entered into lease agreements with various leasing companies for lease of items of plant and machinery and other assets. Minimum lease payments, which are payable by the year 2020, have been discounted by using financing rates ranging from 7.90% to 9.85% (2015 : 8.43% to 14.03% per annum). Title to the assets acquired under the leasing arrangements are transferable to the Group upon payment of entire lease obligations.




The minimum lease payments for which the Group has committed to pay in future under the lease agreements are as follows:

2016 2015 Minimum Financial Present Minimum Financial Present lease charges value of lease charges value of payments allocated minimum payments allocated to minimum to future lease future lease periods payments periods payments

Not later than one year 185,485 37,098 148,387 137,086 34,489 102,597 Later than one year but not later than five years 524,896 53,165 471,731 365,040 42,110 322,930 710,381 90,263 620,118 502,126 76,599 425,527 21 DEFERRED LIABILITY - GRATUITY

The Holding Company operates an unfunded gratuity scheme for employees who have completed the employment period of 5 years. Provision is created for the benefit of the scheme on the basis of actuarial valuations. The actuarial valuations are carried out by an independent valuer using the projected unit credit method.

Note 2016 2015 Deferred liability - gratuity 21.1 & 21.2 135,791 99,090 The information provided in notes 21.1 to 21.5 has been obtained from the actuarial valuations.

Note 2016 201521.1 Movement in liability recognized in balance sheet Present value of defined benefit obligation as

at the end of the year 21.3 135,791 99,090 Fair value of plan assets - - Balance sheet liability 135,791 99,090 21.2 Movement in liability recognized in balance sheet

Balance at the beginning of the year 99,090 71,057

Add: charge for the year 21.4 27,508 20,416 Less: payments to outgoing employees (5,003) (3,359) Remeasurements charged to other comprehensive income 14,196 10,976 Balance at the end of the year 135,791 99,090 21.3 Movement in present value of the defined benefit obligation

Opening balance 99,090 71,057 Current service cost 17,963 12,454 Interest cost 9,545 7,962 Benefits paid during the year (5,003) (3,359) 121,595 88,114 Remeasurement: actuarial losses - net of tax 9,795 7,464 Impact of deferred tax 4,401 3,512 14,196 10,976 Present value of defined benefit obligation at the end of the year 135,791 99,090



NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED DECEMBER 31, 2016 (Rupees in thousand)

2016 2015 21.4 Amounts recognized in the profit or loss Current service cost 17,963 12,454 Net interest cost 9,545 7,962 Expense for the year 27,508 20,416 21.5 Actuarial assumptions

The following significant assumptions were used in the valuation carried out at the balance sheet date using the projected unit credit method:

2016 2015 % per annum

- Expected long-term rate of increase in salary level 7.50% 9.00% - Discount rate 7.50% 9.00% Note 2016 201522 TRADE AND OTHER PAYABLES

Trade creditors 22,260,329 12,070,681 Payable to cartage contractors 2,445,673 1,938,342 Advance from customers 4,253,932 2,553,327 Dealers’ and customers’ security deposits 22.1 170,000 64,132 Accrued liabilities 16,144 46,018 Other liabilities 690,730 748,590 29,836,808 17,421,090

22.1 The security deposits are non-interest bearing and are refundable on termination of contracts.

Note 2016 2015 23 MARK-UP ACCRUED Mark-up accrued 91,185 54,311 24 SHORT-TERM BORROWINGS - SECURED

Running finances utilised against mark-up arrangements 24.1 1,329,629 538,055 Loans 24.2 2,560,000 875,000 3,889,629 1,413,055 24.1 The facilities for short term running finances are available from various commercial banks aggregating to Rs. 1,600 million (2015:

Rs. 900 million). The rates of mark-up ranges from 3 month KIBOR plus 1.5% to 3 month KIBOR plus 3% (2015: 3 month KIBOR plus 2.5% to 3 month KIBOR plus 3%). These arrangements are secured against hypothecation charge over the Group’s present and future current assets with minimum 25% margin, pledge of PRL shares, with minimum 40% margin, personal guarantee of Mr. Mumtaz Hasan Khan (CEO) as sponsor, along with equitable registered mortgage charge over the property situated at The Forum, Suite No. 105-106, 1st Floor, Khayaban-e-Jami, Clifton, Karachi.

24.2 The loans have been obtained from various financial institutions aggregating to Rs. 2,600 million (2015: Rs. 875 million). The rates of

mark-up ranges from 6 month KIBOR plus 2.25% to 6 month KIBOR plus 2.5% (2015: 1 year KIBOR plus 2.25% to 1 year KIBOR plus 2.5%). These are secured against hypothecation charge over the Group’s present and future current assets.



2016 2015 25 TAXATION

Sales tax payable 169,112 92,988 Income tax payable 314,757 866,964 483,869 959,952

26 CONTINGENCIES AND COMMITMENTS Contingencies

As per the deliberations of the main committee of the Oil Companies Advisory Committee (OCAC) held in their meeting number MCM-168 dated September 20, 2007, the financial costs on outstanding Price Differential Claims (PDCs) should be worked and billed to the Government of Pakistan (GoP) through OCAC by the Oil Marketing Companies (OMCs) on a regular basis. Although the Holding Company had billed Rs. 65.97 million to the GOP/ OCAC, the management had not accounted for its impact in these financial statements as the inflow of economic benefits, though probable, is not virtually certain.

Commitments

The facility for opening letters of credit (LCs) acceptances as at December 31, 2016 amounted to Rs. 30,550 million (2015: Rs. 17,100 million) of which the amount remaining unutilized as at that date was Rs. 3,631 million (2015: Rs. 1,797 million).

Commitments in respect of capital expenditure contracted for but not yet incurred are as follows:

2016 2015 Property, plant and equipment 758,237 427,701 Commitments for rental under operating lease agreements/ijarah contracts as at December 31, 2016 amounted to Rs. 1,984 million

(2015: Rs.1,945 million) as follows:

2016 2015 Not later than one year 173,461 136,245 Later than one year but not later than five years 642,427 538,869 Later than five years 1,167,834 1,269,461 1,983,722 1,944,575

27 SALES - NET

Gross sales, inclusive of sales tax 129,296,958 94,274,786 Less: sales discount (537,683) (209,489) 128,759,275 94,065,297 28 OTHER REVENUE

Joining fee for petrol pump operators 55,349 9,600 Franchise fee 96,971 73,231 Owned tank lorries 46,960 - 199,280 82,831




Note 2016 2015 29 COST OF PRODUCTS SOLD

Opening stock of lubricants, raw and packing materials 304,470 256,461 Raw and packing materials purchased 780,242 784,019 Less: closing stock of lubricants, raw and packing materials 10 (394,986) (304,470) Lubricants, raw and packing materials consumed 689,726 736,010 Opening stock - fuel 8,165,548 3,217,243 Fuel purchased 81,431,713 63,370,263 Storage and handling charges 538,393 328,558 Duties and levies 29.1 20,256,971 14,403,074 Less: closing stock - fuel 10 (16,082,682) (8,165,548) Net realisable value - adjustment - 128,215 94,309,943 73,281,805 94,999,669 74,017,815 29.1 Duties and levies

Inland freight equalization margin 3,624,258 2,399,895 Petroleum development levy 14,566,162 9,185,877 Freight 2,066,551 2,817,302 20,256,971 14,403,074 30 DISTRIBUTION AND MARKETING EXPENSES

Salaries, wages and other benefits 31.1 443,932 258,579 Traveling and conveyance 169,832 58,398 Rent, rates and taxes 201,788 174,723 Insurance 113,947 75,026 Depreciation 5.3 373,786 226,599 Printing, communication and stationery 9,374 17,232 Repairs and maintenance 54,658 22,405 Utilities 66,305 27,718 Fees and subscription 11,072 4,847 Legal and professional charges 3,236 1,111 Commission 194,043 111,767 Royalty 17,653 43,603 Advertising and publicity 75,237 30,756 Provision against franchise income 27,349 - Miscellaneous 1,266 710 1,763,478 1,053,474 31 ADMINISTRATIVE EXPENSES

Salaries, allowances and other benefits 31.1 230,484 149,545 Traveling and conveyance 35,336 38,932 Preliminary expenditure 7,579 - Rent, rates and taxes 10,677 7,467 Insurance 21,711 20,093 Depreciation 5.3 25,356 12,098 Amortization 6 1,522 2,766 Printing, communication and stationery 27,043 11,488 Repairs and maintenance 28,979 11,176 Utilities 10,368 8,335 Fee and subscription 23,044 21,020 Advertising and publicity 19,850 18,582 Auditors’ remuneration 31.2 3,226 2,695 Donation 31.3 17,520 6,345 Legal and professional charges 68,183 49,204 Ujrah payments 10,108 6,642

540,986 366,388




Note 2016 2015 31.1 Salaries and other benefits relating to distribution and administrative expense include:

- Gratuity 21.4 27,508 20,416

- Contribution to provident fund 15,492 10,713 31.2 Auditors’ remuneration

Remuneration to the auditors of the Holding Company

Statutory audit 1,265 1,100 Half yearly review 420 366 Certifications 500 673 Consolidation 230 200 Out of pocket expenses 331 206 2,746 2,545 Remuneration to the auditors of the Subsidaries Company

Statutory audit 425 125 Certifications - - Out of pocket expenses 55 25 480 150 3,226 2,695 31.3 Donation includes an amount of Rs. 0.5 million (2015: Rs. 0.2 million) paid to Layton Rahmatulla Benevolent Trust (LRBT), Mr.

Najmus Saquib Hameed, a director of the Holding Company, is also Chairman of LRBT. 2016 2015

32 OTHER INCOME

Income from financial assets Profit on bank deposits 165,033 139,662

Dividend income 13,407 - 178,440 139,662 Income from non-financial assets

Promotional marketing fee 2,641 1,006 Scrap sales 1,055 569 Gain on disposal of operating fixed assets 12,061 2,272 Rent income 6,764 6,431 Sundries 10,535 9,799 Storage and handling income - 50,802 33,056 70,879 211,496 210,541 33 FINANCE COST

Mark-up on borrowings 220,712 166,041 Letter of credit charges 163,812 148,243 Lease finance charges 35,193 23,720 Bank charges 12,901 11,648 432,618 349,652




2016 2015 34 OTHER CHARGES

Workers’ welfare fund 46,423 24,420 Exchange (gain)/loss - net (5,829) 58,989 40,594 83,409 35 TAXATION

Current 700,869 330,862 Prior 28,610 19,924 Deferred 208,870 (287,302) 938,349 63,484

35.1 Relationship between tax expense and accounting profit

Accounting profit before taxation 2,141,625 1,196,721 Tax at the applicable tax rate of 31% (2015: 32%) 663,904 382,951 Tax effect on income under final tax regime (3,297) 12,317 Reversal of deferred tax asset - net 208,870 (287,302) Prior year tax 28,610 19,924 Other adjustments 40,262 (64,406) Tax expense for the year 938,349 63,484

36 EARNINGS PER SHARE - BASIC AND DILLUTED

Profit for the year 1,207,851 1,133,087 Weighted average number of ordinary shares in thousand 120,679 120,679 Basic earning per share - Rupees 10.01 9.39

There is no dilutive effect on basic earning per share as the Group has no potential ordinary shares outstanding at year end.

37 REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES

2016 2015 Chief Directors Executives Chief Directors Executives

Executive Executive

Director’s fee - 6,775 - - 2,975 - Managerial remuneration 21,844 36,450 328,761 19,080 30,751 151,722 Cost of living allowance 4,241 4,050 56,555 3,603 3,913 33,950 Reimbursement of medical expenses 3,737 1,100 17,365 2,322 778 12,450 Bonus 6,521 13,500 25,449 3,780 8,100 16,544 Retirement benefits 1,249 2,085 12,158 1,087 1,616 8,010 37,592 63,960 440,288 29,872 48,133 222,676 Number of persons 1 6 202 1 6 126




37.1 The Chief Executive Officer and certain executives are also provided with free use of Group maintained cars and cellular connections. In addition, the Chief Executive Officer and a director are provided with free security services in accordance with the terms of employment.

38 RELATED PARTY TRANSACTIONS AND BALANCES

Amount due to/ from and other significant transactions with related parties, other than those disclosed elsewhere in these financial statements, are as follows:

Nature of relationship Nature of transaction 2016 2015 Associated companies

Sigma Motors (Private) Limited Sale of fuels - 1,693 Office rent 6,764 6,432 Staff retirement benefits/ contribution funds

Provident fund Contribution 15,492 10,713 Gratuity scheme Expense charged 27,508 20,416 Key management personnel Salaries and benefits 69,920 63,150 Director Fee Fee for attending meetings 6,775 2,975 Other related parties Consultancy services 18,550 10,180 Balances

Associated companies

Sigma Motors (Private) Limited Other receivable 4,458 24,643 Expenses recovered from/ charged by related parties are based on actual expense.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities

of the Group directly or indirectly. The Group considers its Chief Executive and Executive Director to be key management personnel.

Note 2016 2015 39 CASH GENERATED FROM OPERATIONS

Profit before taxation 2,141,625 1,196,571

Adjustment for:

Depreciation and amortization 30 & 31 400,664 241,463 Provision for gratuity 21.4 27,508 20,416 Profit on bank deposits 32 (165,033) (139,662) Exchange gain (15,572) - Gain on disposal of operating fixed assets 32 (12,061) (2,272) Finance cost 33 432,618 349,652 Changes in working capital 39.1 644,708 3,126,097 3,454,457 4,792,265 39.1 Changes in working capital

(Increase) / decrease in current assets Stock-in-trade (8,007,650) (4,996,314)

Trade debts (3,607,686) 285,228 Advances 106,001 15,960 Deposits, prepayments and other receivables (337,799) 65,125 (11,847,134) (4,630,001) Increase in current liabilities

Trade and other payables 12,491,842 7,756,098 Changes in working capital 644,708 3,126,097




Note 2016 2015 40 CASH AND CASH EQUIVALENTS

Cash and bank balances 14 7,832,284 4,072,003

Short-term borrowings 24 (3,889,629) (1,413,055) 3,942,655 2,658,948 41 OPERATING SEGMENTS - These financial statements have been prepared on the basis of a single reportable segment. - Sales from petroleum products represents 99.7 % (2015: 99.7%) of total revenues of the Group. - Out of total sales of the Group, 100 % (2015: 100 %) related to customers in Pakistan. - All non-current assets of the Group as at December 31, 2016 are located in Pakistan. - The Group sells its product to dealers, governments agencies and autonomous bodies, independent power project and other corporate customers. However, none of the customers exceeds 10% threshold.

Note 2016 2015 42 FINANCIAL INSTRUMENTS BY CATEGORY

Financial assets Available for sale

Long-term investments 7 1,886,977 1,955,310 At amortised cost

Long-term deposits 8 290,362 228,631 Trade debts 11 7,871,281 4,263,595 Advances 12 15,551 17,612

Other receivables 13 1,208,425 877,903 Cash and bank balance 14 7,832,284 4,072,003 17,217,903 9,459,744 19,104,880 11,415,054 Financial liabilities

At amortised cost

Long-term finances 19 2,906,828 461,787 Liabilities against assets subject to finance lease 20 620,118 425,527 Trade and other payables 22 25,582,876 14,867,763 Mark-up accrued 23 91,185 54,311 Short-term borrowings 24 3,889,629 1,413,055 33,090,636 17,222,443 42.1 Fair values of financial instruments

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s

length transaction. The fair value of financial instruments approximates their carrying value.

a) Fair values versus carrying amounts

The fair values of financial assets and liabilities, together with the carrying amounts shown in the consolidated balance sheet, are as follows:




2016 2015 Carrying Fair Carrying Fair amount Value amount Value

Financial Asset Long term investments 1,886,977 1,886,977 1,955,310 1,955,310 Long term deposits 290,362 290,362 228,631 228,631 Trade debts 7,871,281 7,871,281 4,263,595 4,263,595 Advances 15,551 15,551 17,612 17,612 Other receivables 1,208,425 1,208,425 877,903 877,903 Cash and bank balances 7,832,284 7,832,284 4,072,003 4,072,003 19,104,880 19,104,880 11,415,054 11,415,054

2016 2015 Carrying Fair Carrying Fair amount Value amount Value Finacial Liability Long-term finances - secured 2,906,828 2,906,828 461,787 461,787 Liabilities against assets subject to

finance lease 620,118 620,118 425,527 425,527 Mark-up accrued 91,185 91,185 54,311 54,311 Trade and other payables 25,582,876 25,582,876 14,867,763 14,867,763 Short-term running finances - secured 3,889,629 3,889,629 1,413,055 1,413,055 33,090,636 33,090,636 17,222,443 17,222,443 b) Valuation of financial instruments

The Group measures fair value using the following fair value hierarchy that reflects the significance of the inputs used in making the

measurements: Level 1: Quoted market price (unadjusted) in an active market. Level 2: Valuation techniques based on observable inputs.

Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data. Fair values of financial assets that are traded in active markets are based on quoted market prices. For all other financial instruments the Group determines fair values using valuation techniques unless the instruments do not have a market/ quoted price in an active market and whose fair value cannot be reliably measured. Valuation techniques used by the Group include discounted cash flow model. Assumptions and inputs used in valuation techniques includes risk-free rates, bond and equity prices, foreign currency exchange rates, equity and equity index prices. The objective of valuation techniques is to arrive at a fair value determination that reflects the price of the financial instrument at the balance sheet date that would have been determined by market participants acting at arm’s length. Valuation models for valuing securities for which there is no active market requires significant unobservable inputs and a higher degree of management judgement and estimation in the determination of fair value. Management judgement and estimation are usually required for selection of the appropriate valuation model to be used, determination of expected future cash flows on the financial instrument being valued and selection of appropriate discount rates, etc.

The table below analyses equity instruments measured at fair value at the end of the reporting period by the level in the fair value

hierarchy into which the fair value measurement is categorised:

2016 Level 1 Level 2 Level 3 Total Available-for-sale financial assets

- Equity securities 1,886,977 - - 1,886,977 2015 Level 1 Level 2 Level 3 Total Available-for-sale financial assets - Equity securities 1,955,310 - - 1,955,310




43 FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

The Group is exposed to the following risks from its use of financial instruments: - Market risk (43.1.1) - Credit risk and concentration of credit risk (43.1.2) - Liquidity risk (43.1.3)

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring any increase in risk, and the Group’s management of capital.

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring any increase in risk, and the Group’s management of capital.

43.1 Financial risk management The Board of Directors (the Board) has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board is responsible for developing and monitoring the Group’s risk management policies. The Group’s risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risk and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in the market conditions and the Group’s activities. The Group through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Board oversee how management monitors compliance with the Group’s risk management policies and procedures, and review the adequacy of risk management framework in relation to the risks faced by the Group.

43.1.1 Market risk The Group is exposed to market risk through its use of financial instruments and specifically to currency risk, interest rate risk and certain other price risks, which result from both its operating and investing activities. The objective of market risk management is to manage and control market risk exposures within an acceptable range. The market risk includes:

(a) Currency risk

Currency risk is the risk that the value of financial asset or a liability will fluctuate due to a change in foreign exchange rates. It arises mainly where receivables and payables exist due to transactions entered into foreign currencies. The Group imports petroleum product and is thus exposed to currency risk in respect to foreign creditors, which at the year end amount to USD 94.62 million (2015: USD 50.38 million) having PKR equivalent amount of Rs. 9,916.65 million (2015: Rs. 5,287.17 million). The average rates applied during the year is Rs. 104.92 per USD (2015: Rs. 102.69 per USD) and the spot rate as at December 31, 2016 is Rs. 104.80 per USD (2015: Rs. 104.95 per USD). The Group manages its currency risk by close monitoring of currency markets. Under regulatory requirements, the Group cannot hedge its currency risk exposure. Consequently, the Group recorded exchange gain amounting to Rs. 5.83 million (2015: exchange loss amounting to Rs. 58.9 million) during the year. Sensitivity analysis

As at December 31, 2016, if the Pakistani Rupee had weakened/strengthened by 10% against USD with all other variables held constant, profit for the year would have been lower/higher by Rs. 992.01 million (2015: Rs. 529.8 million).

(b) Interest rate risk

Interest rate risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Interest rate exposure arises due to long-term finances, liabilities against assets subject to finance lease and short term running finances. At the balance sheet date the interest rate profile of the Group’s mark-up bearing financial instruments is summarized as follows:



Cash flow sensitivity for variable rate instruments

A change of 100 basis points (bps) in interest rates at the reporting date would have increased/ (decreased) profit or loss before tax as shown below. This analysis assumes that all other variables, in particular foreign currency rates remain constant.

Profit and loss Equity Cash flow sensitivity of 100 bps 100 bps 100 bps 100 bps

variable rate instruments increase decrease increase decrease

Expense) / income

As at December 31, 2016 (37,912) 37,912 (26,159) 26,159 As at December 31, 2015 (22,376) 22,376 (15,216) 15,216 Effective Exposed to yield/interest risk Non-interest bearing yield/ interest Maturity Maturity Sub- Maturity Maturity Sub-


Financial assets

Long-term investments - - - - 1,886,977 1,886,977 1,886,977 Long-term deposits - - - - 290,362 290,362 290,362 Trade debts - - - 7,871,281 - 7,871,281 7,871,281 Advances - - - 15,551 - 15,551 15,551 Other receivables - - - 1,208,425 - 1,208,425 1,208,425 Cash and bank balances 3.75-6.0 p.a. 6,415,286 - 6,415,286 1,416,998 - 1,416,998 7,832,284 (a) 6,415,286 - 6,415,286 10,512,255 2,177,339 12,689,594 19,104,880 Financial liabilities Liabilities against assets subject to finance lease 8.55-10.4p.a. 148,387 471,731 620,118 - - - 620,118 Long term finances - secured 7.95-10.15 p.a. 599,079 2,307,749 2,906,828 - - - 2,906,828 Trade and other payables - - - 25,582,876 - 25,582,876 25,582,876 Mark-up accrued - - - 91,185 - 91,185 91,185 Short-term borrowings 8.15-9.65 p.a. 3,889,629 - 3,889,629 - - - 3,889,629

(b) 4,637,095 2,779,480 7,416,575 25,674,061 - 25,674,061 33,090,636 On balance sheet gap (a)-(b) 1,778,191 (2,779,480) (1,001,289) (15,161,806) 2,177,339 (12,984,467) (13,985,756)

Effective Exposed to yield/interest risk Non-interest bearing yield/ interest Maturity Maturity Sub- Maturity Maturity Sub-


Financial assets Long-term investments - - - - 1,955,310 1,955,310 1,955,310

Long-term deposits - - - - 228,631 228,631 228,631 Trade debts - - - 4,263,595 - 4,263,595 4,263,595 Advances - - - 15,006 - 15,006 15,006 Other receivables - - - 852,370 - 852,370 852,370 Cash and bank balances 5.5-6.5 p.a. 3,684,616 - 3,684,616 386,931 - 386,931 4,071,547 (a) 3,684,616 - 3,684,616 5,517,902 2,183,941 7,701,843 11,386,459

Financial liabilities Liabilities against assets subject

to finance lease (gross) 8.43-13.26 p.a. 102,597 322,930 425,527 - - - 425,527 Long term finances - secured 9.41-13.19 p.a. 285,636 176,151 461,787 - - - 461,787 Trade and other payables - - - 14,867,763 - 14,867,763 14,867,763 Mark-up accrued - - - 54,311 - 54,311 54,311 Short-term borrowings 9.51-11.02 p.a. 1,413,055 - 1,413,055 - - - 1,413,055 (b) 1,801,288 499,081 2,300,369 14,922,074 - 14,922,074 17,222,443 On balance sheet gap (a)-(b) 1,883,328 (499,081) 1,384,247 (9,404,172) 2,183,941 (7,220,231) (5,835,984)




(c) Price Risk

Price risk represents the risk that the fair value of a financial instrument will fluctuate because of changes in the market prices (other than those arising from interest/mark-up rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instruments or its issuers, or factors affecting all or similar financial instruments traded in the market. The Group is exposed to equity price risk since it has investments in quoted equity securities amounting to Rs. 1,887 million (2015: Rs. 1,955 million) at the balance sheet date.

The Group manages price risk by monitoring exposure in quoted equity securities and implementing strict discipline in internal risk

management and investment policies. The value of investment subject to equity price risk are, in almost all instance, based on quoted market price as of the reporting date except for unquoted investments which are carried at cost. Market prices are subject to fluctuation and consequently the amount realized as a result of subsequent sale of an investment may differ from the reported market value. Fluctuation in the market price of a security may result from perceived changes in the underlying economic characteristics of the investee, the relative price of alternative investment and general market condition. Furthermore, the amount realized in the sale of a particular security may be affected by the relative quantity of the security being sold.

Sensitivity analysis

The table below summarizes the Group’s equity price risk as of December 31, 2016 and 2015 and shows the effects of a hypothetical 30% increase and a 30% decrease in market prices as at the year end. The selected hypothetical change does not reflect what could be considered to be the best or worst case scenarios. Accordingly, the sensitivity analysis prepared is not necessarily indication of the effect on Group’s net assets of future movement in the level of PSX 100 index.

Hypothetical Estimated fair Hypothetical Hypothetical

Fair price change value increase / increase /

value at 30% hypothetical (decrease) in (decrease) in

after change shareholders profit / (loss)

in price equity

December 31, 2016 1,886,977 Increase 2,453,070 566,093 - Decrease (2,453,070) (566,093) -

December 31, 2015 1,955,310 Increase 2,541,903 586,593 - Decrease (2,541,903) (586,593) - (d) Other price risk

Other price risk is the risk that the fair value of future cash flows of the financial instruments 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. The Group is not exposed to such price risk as there is no such type of financial instruments available to the Group.

43.1.2 Credit risk and concentration of credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. Out of the total financial assets of Rs. 17,217 million (2015: Rs. 9,459 million), the financial assets which are subject to credit risk amounting to Rs. 9,385 million (2015: Rs. 5,387 million). The credit quality of receivables can be assessed with reference to the historical performance with no or some defaults in recent history. The Group manages credit risk of receivables through the monitoring of credit exposures, limiting transactions with specific customers and continuous assessment of credit worthiness of its customers.

The carrying values of financial assets which are neither past due nor impaired are as under:

2016 2015 Long-term deposits 290,362 228,631 Trade debts 7,871,281 4,263,595 Advances 15,551 17,612 Other receivables 1,208,425 877,903 Cash and bank balance 7,832,284 4,072,003

17,217,903 9,459,744




The credit risk for cash and cash equivalents is considered to be negligible, since the counterparties are reputable banks and institutes with high quality external credit ratings. The credit quality of bank balances that are neither past due nor impaired can be assessed with reference to external credit ratings as follows:

Banks Rating Short Long Banks Rating Short Long Agency term term Agency term term

Allied Bank Limited PACRA A1+ AA+ Samba Bank Limited JCR- VIS A1 AA

Askari Bank Limited PACRA A1+ AA+ Silkbank Limited. JCR- VIS A-2 A-

Bank Al Falah Limited PACRA A1+ AA Sindh Bank Limited JCR- VIS A1+ AA

Bank Al Habib Limited PACRA A1+ AA+ Soneri Bank Limited PACRA A1+ AA-

Bank Islami Pakistan Limited PACRA A1 A+ Summit Bank Limited JCR- VIS A1 A-

Habib Metropolitan Bank Limited PACRA A1+ AA+ United Bank Limited JCR- VIS A1+ AAA

Habib Bank Limited JCR- VIS A1+ AAA First Women Bank Limited PACRA A2 A-

MCB Bank Limited PACRA A1+ AAA Burj Bank Limited PACRA A1 A

Meezan Bank Limited JCR- VIS A1+ AA Industrial and Commercial

National Bank of Pakistan PACRA A1+ AAA Bank of China Limited S&P - A

NIB Bank Limited PACRA A1+ AA- PAIR Investments Limited PACRA A1+ AA

43.1.3 Liquidity risk

Liquidity risk reflects the Group’s inability of raising funds to meet commitments. Management closely monitors the Group’s liquidity

and cash flow position. This includes maintenance of balance sheet liquidity ratios, debtors and creditors concentration both in terms of overall funding mix and avoidance of undue reliance on large individual customers.

As at December 31, 2016 the Group’s financial liabilities have contractual maturities as summarised below: Within one Over one

year year Total Long-term finances - secured 599,079 2,307,749 2,906,828 Liabilities against assets subject to finance lease 148,387 471,731 620,118 Trade and other payable 25,582,876 - 25,582,876 Mark-up accrued 91,185 - 91,185 Short-term running finances - secured 3,889,629 - 3,889,629 30,311,156 2,779,480 33,090,636 As at December 31, 2015 the Group’s liabilities had contractual maturities as summarised below:

Within one Over one year year Total

Long-term finances - secured 285,636 176,151 461,787 Liabilities against assets subject to finance lease 102,597 322,930 425,527 Trade and other payable 14,867,763 - 14,867,763 Mark-up accrued 54,311 - 54,311 Short-term running finances - secured 1,413,055 - 1,413,055 16,723,362 499,081 17,222,443

44 CAPITAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Board’s policy is to maintain a strong capital base so as to maintain investors’, creditors’ and market’s confidence and to sustain future development of the business, safeguard the Group’s ability to continue as going concern in order to provide returns for shareholders and benefit for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Board monitor the return on capital, which the Group defines as net profit/(loss) after tax divided by total shareholders’ equity. The Board also monitor the level of dividend to ordinary shareholders subject to the availability of funds.




The Group finances its operations through equity, borrowings and management of working capital with a view to maintain an appropriate mix between various sources of finance to minimize risk.

2016 2015 Total borrowings 7,416,575 2,300,369 Cash and bank balance (7,832,284) (4,072,003) Net funds (415,709) (1,771,634) Total Equity 4,953,457 4,528,197 Total Capital 4,537,748 2,756,563 Gearing ratio 0.00% 0.00%

45 EMPLOYEES PROVIDENT FUND

The Group operates approved provident fund for its employees. Details of assets and investments of the fund is as follows: Note 2016 2015

Size of fund - total assets 72,797 54,856 Cost of investments made 69,931 52,662 Percentage of investments made 100% 100% Fair value of investments 44.1 72,797 54,856

45.1 The break-up of fair value of investments is as follows:

2016 2015 Investments Percentage of Investments Percentage of

investment investment % %

Regular income certificates 15,675 21.53 16,219 29.57 Saving bank accounts 57,122 78.47 38,637 70.43 72,797 54,856

The management, based on the un-audited financial statements of the fund, is of the view that the investments out of the provident fund have been made in accordance with the provision of section 227 of the Companies Ordinance, 1984 and the rules formulated for the purpose.

46 NUMBER OF EMPLOYEES

Total number of employees at year-end 519 394 Average number of employees during the year 457 359

47 EVENTS AFTER THE BALANCE SHEET DATE

The Board of Directors in its meeting held on March 31, 2017 has proposed a cash dividend of Rs. 3.50 per share for the year ended December 31, 2016 for approval of the members at the Annual General Meeting to be held on April 28, 2017. These consolidated financial statements do not include the effect of the proposed cash dividend which will be accounted for in the consolidated financial statements for the year ending December 31, 2017.




48 GENERAL

All amounts have been rounded to the nearest thousand.

The corresponding figures have been reclassified/re-arranged where considered necessary for the purpose of better presentation. However, no material reclassification/re-arrangement have been made in these consolidated financial statements.

49 DATE OF AUTHORISATION FOR ISSUE

These consolidated financial statements have been authorized for issue on March 31, 2017 by the Board of Directors of the Group.


Form of Proxy15thAnnual General Meeting

The Company Secretary Hascol Petroleum Limited The Forum, Suite No. 105-106, 1st Floor Khayaban-e-Jami, Clifton Karachi

I / We ______________________________________________________________________________ of

__________________________________________________________________________________ being

member(s) of Hascol Petroleum Limited and holder of ______________________________ ordinary shares as per

Share Register Folio No. __________________ and/or CDC Participant I.D. No. and Sub Account

No._____________________________________________, hereby appoint

_____________________________________________________________________________________ of

________________________________ or failing him / her __________________________________ of

______________________________ as my / our proxy in my / our absence to attend and vote for me / us and on my

/ our behalf at the 15th Annual General Meeting of the Company to be held on Friday, 28th April 2017, and at any

adjournment thereof.

As witness my / our hands / seal this ____________________ day of April 2017.

Witness No.1

Name ________________________ Address ________________________ ________________________ CNIC ________________________ __________________________ Signature

(Signature should agree with the specimen signature required with the Company)

Witness No.2 Name ________________________ Address ________________________ ________________________ CNIC ________________________

Important

Rs. 5/- RevenueStamp

1. This proxy form, duly completed and signed, must be received at the registered office of the Company at The Forum, Suite No. 105-106, 1st

Floor Khayaban-e-Jami, Clifton, Karachi, not less than 48 hours before the time of holding the Meeting.

2. Members are requested:

(a) To affix Revenue Stamp of Rs. 5/- at the place indicated above; and (b) To sign across the Revenue Stamp in the same style of signature as is registered with the Company.

For CDC account holder(s) / corporate entitiesIn addition to the above the following requirements have to be met:

i) the proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers shall be stated on the form;

ii) attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with the proxy form;

iii) the proxy shall produce his / her original CNIC or original passport at the time of the meeting; and

iv) corporate entities should produce a certified copy of the resolution pertinent of its board of directors’ meeting or a power of attorney bearing signature of the nominee at the time of the Meeting, unless it has been provided earlier.

Hascol Petroleum LimitedThe Forum, Suite No. 105-106, 1st Floor,Khayaban-e-Jami, Clifton, Block-9 KarachiPhone: +92-21-35301343-50 Fax: +92-21-35301351UAN: 111-757-757 Email: [email protected]

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