g.p.o. box: 3423 bhandary 1,7/ji }osh/ · the ou~ine~~ of the company ha~ oeen f:;qm:h~r.trrl...
TRANSCRIPT
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1,7/JI }OSH/ & BHANDARY • Chartered Accountants • G.P.O. Box: 3423 Koshi Compound, Dillibazar Kathmandu, Nepal Tel : 977-1-4419364 Tel: 977-1-4423550 Fax: 977-1-4413038 Web: www.jb.com.np
INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF Nepal Hydro & Electric Ltd., Kathmandu
Fm thfl FY ?073 ~ 074 (2016 ~ :2017)
Report on the Financial Statements
We have audited the accompanying financial statements of Nepal Hydro & Electric Ltd which comprise the Statement of Financial Position as at July 15, 2017 (corresponding to Asad 31, 2074), and the Profit and Loss and Other Comprehensive Income Account, Statement of Changes in Equity and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Nepal Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Nepal Standards on Auditing. Those standards require that we comply with ethical requi rements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion
Report on Other Legal and Regulatory Requirements
As per Companies Act 2063, we report that, in our opinion:
1. We have obtained all the information and explanations, which, to the best of our knowledge and belief, were considered necessary for the purpose of our audit;
2. Proper books of accounts as required by law have been kept by the Company as far as appears from our examination of such books;
; "
",
3. The Balance Sheet, Income Statement and the Cash Flow Statement are prepared as per the provisions of the Company Act 2063 and the same are in agreement with the books of accounts maintained by the Company;
4. The ou~ine~~ of the Company ha~ oeen f:;Qm:h~r.tRrl RntiRfnr.tnrily; r~nrl
5. To the best of our knowledge and in accordance with explanations given to us and from our examination of the books of accounts of the Company, necessary for the purpose of our audit, we have not come across cases where the Board of Directors, representative or any employee of the Company has acted contrary to the provisions of law, or committed any misappropriation or caused loss or damage to the Company deliberately.
Opinion
In our opinion, the financial statements read together with the Significant Accounting Policies and Other Explanatory Notes give a true and fair view, in all material respects, of the financial position of Nepal Hydro & Electric Ltd as of July 15, 2017 (i.e Asad 31, 2074), and of its financial performance and its cash flows for the year then ended in accordance with Nepal Financial Reporting Standards.
Other Matters
These financial statements for the year ended 31 Ashadh, 2074 are the first the Company has prepared under Nepal Financial Reporting Standards (NFRS) as issued by the Institute of Chartered Accountants of Nepal (ICAN). For all periods upto and including the year ended 31 Ashadh, 2073, the Company prepared its financial statements in accordance with earlier issued Nepal Accounting Standards used for its statutory reporting requirement in Nepal immediately before adopting NFRS. The financial statements for the year ended 31 Ashadh, 2073 and the opening Balance Sheet as at 1 Shrawan, 2072 have been restated in accordance with NFRS for comparative information.
-~ Prabhu R Bhandary, F. Managing Partner
Dillil>azar, Kathmandu Date: January 08, 2018
Nepa l Hydro & Elect ric Li mi ted Statement of Financia l Position
.-\.sa t 3 1st Ashad 2074 (15 J uly 201 7)
ASSETS
Non-Current Assets Prope11y. pl ant and eq mpment
Capi tal work in progress Intangible assets Financial assets
Trade receivables
n llwr firmn{;iil l ""'" Defen·ed rax
Total Non-C urrent Assets
Current assets In ventori es Finnncial assets
Trade receivables Cash and cnsh equi valents Bank balance other than cash and cash equi vnlents Other financia l assets
Oth er cu1Tent assets (UITent tax (net)
To ta l current assets
Tota l assets
EQ UITY AND LI ABILITIES
Eq uity Equity share capital Other equity
Tota l Eq ui ty
Li abilit ies Non-Current Liabi li ties
Other financial liabili ties Provisions Defe1Ted tax
Total Non-Current Liabilities
Current Liabilities Financial liabi lities
Bonowi ngs Trade payablcs Other fi nancial li abiliti es
Provisions Other cun·ent li tlbiliti es Cu1Tent tax (net)
Totn l Current Liabil ities
Total Liabi lit ies
Total Equity and Lia bili ties
are an integral part of these fina ncia l statements.
/pi'~- ~ Utt~hresth n
Director
Di rector
_lL~~ P. L. Shrcs tha
Director
Note
6
y
/0
6 II / ]
8
9
13 u
15 16
19
'" /5 /6 17
.-\.s at 31st Ashad 207~
130.600.809
24,6 14.86 1 934.393
35. 129.9 15 1 ~7~~17
16.723.360
209.~82.855
84.846.069
296.548.4 7 1 2,921.508
19.860.000 2 16.503. 148
16.34 1.542 7. 744.475
64~.765.2 1 3
854.248.068
139.530.000 223.514 .365
363.044,365
939. 100.00 56.390.559
57,329.659
58.828.564 42.730.985 29.702.063
111.280 302.50 1. 153
~33 . 874.045
~91.203 . 704
854.248.068
Resta ted ' .-\s at 31st ..-\shad
2073
135.0 12.028
23.534,837 2.043.965
37.239.483 I ~~q 71R
12.1 16.744
211.946.795
92.284.565
306. 198.009 10.892,8 18 14.222.000
I 09.258.359 23.977.97 1 3.5 12.680
560.346,402
772.293. 197
139.530.000 137.875.2 10
277.405.210
939. 100.00 46,447.708
H ,386,808
114.772.733 44.378.478 2 1.1 71.748
263.770 266.914.450
4~7.50 1 . 1 79
494 887.987
772.29J . I97
Figures iu NPR
Restated '' .-\s at ls t Shrawan
2072
14 1.003 .090
23.534.837 3. 153.536
36.997.548 ?. rlq. r R•l
10.860.657
21 7,668,852
23.881.616
227.63 5,668 26.885.433 11.879.940 69.856.805 35.762.979
395,902,441
613.571.293
139,530.000 64. 935.074
204,465.07~
42.036,276
42.036,276
6 1.850.000 17. 199.720 75.856.259
32. 110 2 11. 792.063
339.79 1
367,069,943
~09. 1 06.219
613.571.293
Ocep:tk-Kum:l r Agrawa l Director
Finance ;v!anager
I
c
Nepa l Hyd ro & Electric Limited Statement of P rofit or Loss a nd Other Comr>rehensive Income
For the year ended 31st Ashad 2074 (15 July 2017)
Revenue Cost of Sales
Gross t>rofit Other income Profit TransfeiTed fonn JVs AUutilli.~ll u t1 VI.- uml utltL.J U IJL.I ul iil;<:. t.nliJt..u JV.J
Finance Income Finance Costs
Profit Befo re Tax
Income Tax Expense Cunent tax Deferred tax credit/charge
Profit from con tinu ing operations
Net Profit for the yea r
Other co m1u·ehcns ivc Income:
1Vote
20 21
21 23 ] /
25 20
9 9
Other com,Jrchcnsivc Income not to be reclass ified to profit or loss in subseq uent periods i. Re-measuremenl (losses) I gains on post employment defined benefit plans
ii. Income tax re l atin~t to items that wi ll not be reclassified to profit or loss
Other comt>rehensive gain/(loss) for the year, net of tax
Total C onl)lrehensive gain/(loss) fo r the year, net of tax
Eamings t>er equity share of Rs. 100 each Basic Eamings per share - Rs. Diluted Eamin.l!S per share - Rs.
/~ Bijay Bahadur Shrestha Chainnan
~ Suman Basnct
Director
Date:
Place: Butwal. Nepal
l.~b~ Director
27 27
Figures in NPR
2073-74 Restated* 2072-73
574,705 ,563 487,387.093 (50 1_840.380) (392.384.2 14)
72.865.1 83 95.002.879 8.225.492 30.808,862
89,775.000 I 9.000.000 (6 I ,6JJ,fl6 ·I) (6J .7> fl ,fl71)
2,859.749 2.199,07 1 (6. 18 1.405) (7.419.220)
1 05.92l.l55 75.832.721
( I 0,250, 706) (4. 177,354) 2.69 1.263 1.263.259
98,361 ,7 12 72,918,626
98.361.712 72.918.626
(7,66 1,410) 28,680 1.915.353 (7. 170)
(5. 746.057) 21,510
92.615.655 72 940.136
70.50 52.26 70 A)0 52.26
Deer)ak fumal· Agrawal D irector
A""'' ,,.J~~"·; Finance Manager
_J
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Nep:rl Hyllro & Electric Limitcll St;Hcment of CHsh Flows
For· th e year endell 31 st A shad 2074 (15 July 201 7)
CASH FLOWS FROM OPERATI NG ACTIVITIES Profit for the yenr Ad ju stments for·: Deprecmtion on property. plant and equipment Amortiza tion of Intangible Assets Prov1sion tOr employee benefits Provts•on tOr Bonus Finance mcome Fmance cost LVII r' (ynin) on on I? ? fOr,.., r nrt~· ~ plnnl rmrl rtrJ1n r mnnt Unrcalised fore ign exchange difference on cash and cash equr valents \Vorkin2 capit:r l adjust ments: Increase/ (dec rease) in Trade rccctvables Increase/ (decrease} in lnven tones Inc rease/ (decrease) in other fi nancial assets Increase/ (decrease) in other current assets (Increase_) I decrease in trade payables (Increase) I dec rease in financl<illlab ililles ( Increase) I dec rease m other current li abilit ies
Cnsh generated from operation s
Bonus paid Income Tax Paid
NET CAS H FLOWS FROM OPERATI NG ACTIVITIES
CAS H FLOWS FROM I (US ED IN) INVEST ING ACTIV ITIES
Proceeds from sale of Property. Plant and Equtpment Interest Recei ved Purchase of Property, plant and Equ1pment (including CW IP and Cap11al advances) Purchase of Intangib les
Bank balances other than cash & cash equiva lents
NET CASH FLOWS FROM INVESTING AC TIVITIES
C ASH FLOWS FROM FINANCING ACTIVITIES
Borrowing (repaid) I taken (net)
Ftnance cost Drv1dend paid
NET C AS H FLOWS FROM FINANCING ACT IVITI ES
INCREASE/(DECREASE) IN CASH AND C ASH EQUIVALENTS
Net fore ign exchange di fference on cash and cash eq Ui valents
CAS H AND C ASH EQ UlVALENTS. Beginning of Year
CAS II AND CASH EQ UIVALENTS. End or Pct·iod
The accompanying notes are an integn:t l pan of these linancial statements
Fi::ures in N PR
2073-74 Restated * 2072-73
105.92 1. 155 75.832.72'2
I 0. 750,4 74 11.363 ,678 1.109,572 1, 109.572 4,044,305 4,664,602
10, 11 3.067 7,092,758 (2.859.749) (2. 199,071) 6.000,632 7. 164.775
11 1n 533.654
14.117.257 (77.077,737) 7,438.496 (68,402,949)
( 106.724.568) (39.282. 108 ) 7.636,429 11.785,008
( 1.647.494) 27,178.758 8,530,3 15 (53. 745.4 12)
25.589.894 50.414.873
90,578.726 (44,100,532)
(7.092.758) (830.806) ( 16.397,854 ) (8.022.653)
67.088.11~ (52.953.991)
25.000 501.598 472.532
(7.469.566) (5.372,6 16)
(5 ,638.000) (2,342,060)
(12.580.968) t7.2n.I~4l
(58,250,000) 7,450.000 (6.000.632) (7.1 64.775)
( 1.554.438)
(6~.250.632) (1.269.213)
(9.743.487) (61.465.348)
(533.654)
(34.579.915) 26.885.433
(4~.857.056) (34.579,915)
• Cenai n amounts s hown here do no! correspond to the 207 1-72 fi nancia l statements and reflect adjustment This is the same statement of ti nancial pos ition referred to our repon of even date att ached
//~~ =-~--:-::c. --:- .. - / -Bii:1v Bah:Hiur !:iilrcs tha
Chmrman
~ j/~Jr, Sumnn Basnct -
Director
Date ,)O';£Lj I o91.2. 4 Place Butwa l. Nepal
Director
~ob: R:1icsh Agnrwal
CEO
unr A2rawa l Director
(
(
Particulars
Balance at I Shrawnn 2072
Profit for the year Other comprehensive mcome Total comprehensive income
Hous ing Fund rcsea·vc for the year
Dividends to shareholders
Balance at I Shrawan 2073
Profit for the year Other comprehensive income Total comp rehensive income
Housing Fund reserve for the year
Dividends to shareholders
Balance at 31st Ashad 2074
Nepa l Hydro & Electric Limited Statement of Changes in Equity
For the year ended 31st Ashad 2074 {15 July 2017)
Share Capita l Retained earnings and reserves
l-lousing fund Retai ned Ea rnings reserve
139.530.000 9.255.104 55.679.970
72.9 18.626 21.510
72.940.136
4. 106.333 { 4. 106.333)
139.530.000 13.361.437 124.513.773
98.361,712 (5.746.057) 92.615.655
4.790.404 (4.790.404)
(6.976.500)
139.530.000 18. 151.841 205.362.524
are an integral part of these financial statements.
Bijay Bahadur Shrestha Chainmm
Date .f2t;,":j-Lj [o9!:2.4 Place: Butwal. Nepal
Director
Director
Director ·Agrawa l
Director
~_() atesh Agrawa l ~ . 11ctn CEO An up Kunwar Cl I .
fmance Manager
Figures in NPR
Total
204.465.074
72,918,626 21.510
72,940,136
2 77.405.21 0
98,361,712 (5, 746,057) 92,6 15,655
(6,976,500)
363.044.365
(
r \I
Nepal Hydro & Electric Limited Notes to the financial statements for the year e nded 3 1st As h ad 207-t
Fi~ures in NPR
Note no: 3
FIRST TI ME ADOPTION OF NFRS
The financ1al statements have been prepared in accordance with applicable Nepal Financial Repo11ing Standards (NFRS) as 1ssued by the Institute of Chanered Accountants of Nepal (I CAN) with effect from I Shrawan. 2073. with a trans ition dntc of I Shrawan. 2072 . These financial statements
for the year ended 3 1 Ashadh. 2074 are the first the Company has prepared unde r NFRS. For nil periods up to and including the year ended 3 J
Ashadh. 2073 . the Company prepared its financial statements in accordance with earli er issued Nepal Accounting Standards (hcreinafler referred to as 'Previous GAA P').
The adoption of NFRS has been carried out in accordance with NfR S I. First-tune Adoption of NFRS. NFRS I requires that all NFRS and interpretations that are issued and effective for the first NfRS financial statements be applied retrospectively and consistently for all fina ncial years presented. Accordingly, the Company has prepared financia l statements which comply with Nf-'RS for year ended 3 1 f\s hadh. 2074. together with
ill~ cU III~H l a li Ve lil iUIIIIHiiUII H> HI !lll il lUI Ill~ y~lll ~ IIU ~U .l l M IIHUII. lUI> !IIIli IIte UjWtllrtg 1~ I' R~ l:l!ll~ll te ~1\W g ;\1 I ~lmlwan. lUll. lhe dale ol trans ition to NFRS. In preparing these NFRS financial statements. the Company has availed certa in exemptions and exceptions in accordance wi th NFRS I , as explained below. The resulting di ffere nce between the carrying values of the assets and liabil it ies in the fi nanc ia l statements as at the transition date under NFRS and Previous GAA P have been recognised directly in equity (retai ned camings or another approp1iate ca tegory of equity}. This note explains the adjustments made by the Company in restating its Previous GAA P financial statements. including the Statemem of Financ ial Posit ion as at I Shrawan. 2072 and the fi nancial statements as at and for the year ended 3 1 Ashadh. 2073 .
A. Exemptions fl-om retrospective application
NFRS I a llows first-time adopters certain exemptions from retTospective app lication of certain reC] uirements under NFRS. The Company has elected to apply the foll owing optional exemptions from retrospec tive applicntion :
a) Deemed cost for property, plant and eQuipment a nd intangible assets T he Company has elected to measure all irs property. plant and equipment and intangible asse ts at the Previous GAA P carrying amount as its
deemed cost on the dare of rransition to NFRS .
h) Past business combinations The Company has elected not to apply NFRS 3 Business Combinations retrospectively to past business combinat·ions that ocemTed before the
transition date of 1st Sharwan. 2072.
B. Exceptio ns to retrospective applica tion The Company has app lied the following exceptions to the retrospective application of NFRS as mandatori ly required under NFRS I:
a) Estima tes On assessment of the estimates made under the Previous GAAP financial statements, the Company has concluded that there is no necess ity to revise the estimates under NFRS, as there is no objec tive evidence that those es timates were in error. However. estimates that were required under NFRS but no t required under Previous GAA P are made by the Company for the relevant rcp01ting dates re necting. conditions existing as
at that date.
b) C lassification and measuremen t of finan cia l assets The classification of fin ancial assets to be measured at am011ised cos t or fa ir value through other comprehensive income is made on the basis of
the fa cts and circumstances that existed on the date of transition to NFRS.
c} De recognition of financial assets ami liabilities The Company has app lied the derecognit10n requirements of financial asse ts and financial liabilities.
C. Tra nsition to NFRS- Reconci liations The fo ll owing. reconciliations provide the explanations and quantification of the di ffe rences arising from the transition from Previous GAAP to
~FRS in accordance with NFRS I:
Reconci liation of Equity as at I Shrawan. 2072 . II. Reconci liation of Equ ity as at 3 1 Ashadh. 2073 . Ill Reconc iliation of Statement of Profit or Loss and other Comprehensive income for the year ended 31 Ashadh. 2073.
IV Adjustments to Statement of Cash Flows.
Previous GA.A P info nnation has been reclassi fi ed/regrou ped in accordance w ith NFRS. wherever necess<uy. based on the audited financial
statements of the Company for the year ended 3 1 /\shad, 2073 and 3 1 Ashadh. 2072.
(. Reconcili:ltion of Equity as nt J Shrawnn, 2072
ASSETS
:'I on-Cu rrent Assets Property. plant and equipment
Capital work in progress
lmangible assets
Financial assets
Trade receivables
Other financial assets
Defe1Ted tax
Current assets
lnvcnton es
Financial 11ssets
Trade receivables
Cash and cash equivalents
Bank balance other than cnsh and cash cqt~~ va l c n t s
Other finan ci<1l assets
Other c utTenr asse ts
)t
Notes Previously
dP
.-1
A
II
c /)
E
II
F c c
}!/
reported balance
144.156,626 23.534.837
I 0. 11 7.276
76.234 .502
270.330.867
26.885.433
82.806.069
634,065,609
p ~
Recon ciliation NFRS Balance
(3. 153.536) 141.003.090
23.534.837 3. 153.536 3.1 53.536
36.997.548 36.997.548 2.1 19. 184 2.119.184
7•13.38 1 10.860.65 7
(52.352.886) 23.88 1.6 16
(•12,695.199) 227.635.668
26,885.433 11 .879.940 11.879.940
( 12.9•19,264) 69.856.805
35.762.979 35.762.979
(20,·19·1,3 15) 6 1 3 ,57 1 ,2 9 ~
·Q ~
(
EQUITY AND LIABILITIES
Eq ui ty Equity share capital Retained eamings and reserves
Non-Current Liabi lit ies Provisions
Current Liabilities Financial !Jabi lit ies
Borrowings Trade payables Other financial liabi lities
Provisions Oth ar 1urn nt lin i.J iliti oo CmTent tax (net)
Tota l Equ ity and Liabil ities
II. Reconci liat ion of Equity ns at I S hrawan, 2073
ASSETS Non-Current Assets
Property. plant and equipment Capital work in progress Intangible asscrs Financial assets
Trade receivables Other finan cial assets
Deferred tax
Current ~1sscts
Inventories Financial assets
Trade receivables Cash and cash equi va lents Bank balance other than cash and cash equivalents Other financial assets
Other cunent assets Current tnx (net)
Totnl assets
EQU ITY AND LIABIL ITIES
Equ ity Equi ty share capim.l Retained camings and reserves
Liabili ties Non-Cu rrent Liabili ties
Financial liabilities Provisions
C urrent Liabi li ties
Fi nancial liabi lities Bo1Towings Trade payables Other financia l ltab iluies
Provisions Other cun·ent liabi lities
Tota l Equ ity nnd Liab ili ties
_.//fi--
·-~
)t
139.530,000
'- 79.20 1.094
.I
6 1.850.000 G 302.890.567 fl
.I 50.593.950
/i
634,065,612
Notes Previously
A
A
B
c D
E
B
F
c c f(
L
fl
.I
G H J
reoortcd balance
137.055.993 23.:534.837
10,796.492
188.072,436
262,795,920 I 0.892,818
154.265.500
787,413,996
139.530.000 150.736.866
114.772.733 324.972. 129
57.402.268
787,4 I3,997
~
~
139.530.000 ( 14.266.02 1) 64.935.074
42.036.276 42.036,276
61.850.000 (285,690.847) 17.199.720
75,856.259 75.856.259 (50.56 1 ,840) 32. 110 1 11.7Q? ,nA> 1 1 I , 7~1 j 011l
339.79 1 339.79 1
{20,494,319) 613,571 ,293
Reconci li ation NFRS Ba lan ce
(2.043.965) 135.012.028 23,534.837
2.043.965 2.043.965
37.239.483 37.239.483 1.999.738 1.999,738 1.320.252 I2, 11 6,744
(95 ,787.87 1) 92.284.565
43,402.089 306. 198.009 I 0.892.818
14 .222.000 14,222.000 (45,007. 14 I) 109.258.359 23 ,977.97 1 23.977.971
3,5 12.680 3.5 12.680
{ 15,120, 799) 772,293,197
139.530.000 ( 12.86 1.656) I37.875.2 1 0
939. 100 939, 100 46,447,708 46.447.708
114.772.733 (280.593.65 1) 44.378.478
2I , I71.748 21.171.748 (5 7, 138.498) 263.770 266,9 14.450 266,914.450
(15, I20,800) 772,293,197
Sf<
~
lL ~
(
Ill. Reco ncilia tion of Statement of Profit or Loss and other Comprehensive in come fo r the yea r ended 3 1 Ashad h, 2073
Notes Previously Reconci liation NFRS Ba lance reoorted balance
487.387.093 487,387.093 Revenue
Cost of Sales M (372.77 1.978) ( 19.6 12,236) (392,384,2 14)
Gross profit 114,615,115 (19,612,236) 95,002 ,879
Other income () 31.359.697 (550.835) 30.808.862 Profit T ransfen·ed from JVs 19.000.000 19.000.000 Admi nistTati ve and other operating expenses N (82.776. 124) 19.0 17.253 (63. 758,87 1)
2. 199.07 1 2, 199.071 Finance Income
Finance Costs
p
Q (7, 164.775) (254,445) (7_419,220)
Profit Before Tax 75,033,912 798,809 75,832,721
Income Ta x Expense C un·ent tax R
/)
(7.870.873 ) 3,693.5 19 (4, 177.354) De fen·cd tax credit/charge
Profit After Tax
Othc1· comprehensive Income: Othe1· comprehensive In come not to be reclassified to profit or· loss in subsequent periods
i. Re-measurement ( losses) I gains on post employment defined benefit plans
679,2 16
67.842.255
584,043 1.263.259
5,076,371 72,918,626
28.680 28.680
ii . Income tax re lating to items that wi ll not be reclassified to profit or
loss
(7. 170) (7. 170)
Other conwrehensivc gain/(loss) for the yea r, net of tax 21,510 21.510
Total Corn (>rehcnsive gai n/( loss) for the year, net of tnx 67,842 .255 5,097.88 1 72,940.136
Ill. Adjustments to Statement of Cash flows Bank overd raft (Cash Cred it ) has now been included in components of cash and cash equivalen t for presentation of Statement of Cash Flows. Opening cash and cash equivalent in previous reported GAAP has been restated by Rs. 45,472.733 (207 1-72: Rs. Nil ).
A P1·operty. plant and equ ipment Intangible asset (i.e. Computer Software) has been rec lass ified and reported separately in Statement of Financml Positi on
B Trade r eceivables Accoun t receivable which was classified as cmTelll asset entire ly has been bifurcated in to cutTcnt and non-CUITent. Non-cun·ent p01tion o f receivable has been measured at amortised cost.
C Other finnncial assets a. Advance to suppliers and Prepaid Expenses has been grouped under Other Current Asse ts. b. Advance Income Tax has been grouped under CuiTent tax asse ts/ liabilities (net) which is shown separately on the fnce ofSOFP.
c. O ther financ ial asse ts which were classifi ed as current asset enti rely has been bifurca ted into current and non-cmTent. Non-current portion
of such finan cial asset has been measured at amo11ised cost. d. C losing work in progress h<l s been reclassified under "Unbilled Revenue" under cuncnt fina ncia l asse ts. e. Margi n money depos its has been reclassi fi ed as other bank balances which were earlier c lass ilied under current fi nancia l asse ts.
0 Deferred Tax Deferred tax asset has increased as a result of increase in provision for gratuity and leave encnshmcnt as per actuarinl va luation. Ti ll last year. these were not measured as per actua rial va luation rcpon.
E Inventories Closing work in progress has been reclassified under "U nbill ed Revenue" under cutTCnt finan cial assets.
f Bank balance ot her than cash nnd cash eQuiva lents Margi n money depos its has been reclassified as other bank balances which were earlier class ified under CUITent financia l assets.
G T1·nde pnynble Trade payable is reclassified rrom current finnncial liabi lities and has been shown un der sep:.natc li ne on race of SOFP.
H Other fin ancia l liabilities a. Trade payable is reclassified from cun·ctlt finan cial liab ilities and has been shown under sepanue line on face of SOFP.
b. O ther provision has been reclnssified to other financia l liabilities which was earli er grouped under provision.
c Advance from customer. dividend payable. all s tatut01y dues and tTaining rund have been reclass ified to other liabil ities which were
earlier classi fied as fin ancial liabi lities. d. O ther finan cia l liabilities which were class ified as current liabi lines entirely has been birurca tcd into cun·citt and non-cun·ent. Non
CUITent portion or such fina ncial liabilllies has been measured at amon ised cos t.
O ther liabili ties a. Advance rrom cus tomer. dividend payable and all swtutory dues have been reclassifi ed to other liabilities which wt.:rc earlier classified as
fi nancinl lmbil it ics b. Bonus payable has been rcclassilic:d to other current linbi lttics which was earli er grouped under provisiOn
//~ ,. ,.- ....
tl-~ %
~ J;L \~
;
(
Provision a. Bonus payable has been reclass ified to other cun·ent liabilities which was earlier grouped under provision.
b. O ther provision has been rec lassifi ed to o ther financia l liabi lities which was earlier grouped under provision.
c. Provision for tax has been reclass ifi ed to cun·ent tax assets/liabili ties (net) which is shown separate ly on the face of SOFP
d. Provision for gratui ty and leave encashmeiH has been measured and class ified as cuncnt I non-cUITent as per the actuarial va luat ion report. Ti ll last year. these were not measured as per actuarial vnluation report.
K Current Tax (net) Provision for tax has been reclassified to cuJTent tax assets/liabilities (net) which is shown separately on the face ofSOFP
L Retained earni ngs a. Provis ion fo r gratui ty and leave encashmcm has been measured as per the actuarial va luation rep011. Till last year. these were not measured as per ac tuarial valuation report b. Effect of measuring the non-cunent financia l assets/habil uies on amortised cost which were measure at histoncal cost till previous year.
c. Training fund has now been rec lassified as other liabilities which was earlier classified as separa te fund under retained eaming.
M Cost of Sales a Gratuity expenses and leave encashment expenses were measured as per the actuarial va luation repon. T ill last year. these were not measured as per actuaria l valuation report .
b. Staff bonus. depreciation and employee benefit related expenses associated with cost of sales were charged to administrative and other operating expenses till last year. This has been now reclass ified under cost of sales to derive cun·ent gross profit
N Administrative and other operating expenses a. Gratuity expenses and leave encasluncnt expenses were measured as per the actuarial va luation rep011. Ti ll last year. these were not measured as per actuarial valuation report . b. Staff bonus. deprecia tion and employee benefit related expenses associated wi th cost of sales were charged to administrative and other
operating expenses ti ll last year. c. Bank charges initially recognized under Adminisrrarive and other operating cos t has been reclass ifi ed under fin ance cost.
0 Other Income Interest income initially recognized under this heading has been shown as a separate item in SOPL
P Finance Income a. Interest income initially recognized under this heading has been shown as a separate item in SO PL.
b. Interes t effec t of measuring the non-cmTent financia l assets/liabilities on amortised cost hns been class ified as other finance income/( cost).
0 Finance Cost Bank charges initially recognized under Administrati ve and other operating cost has been reclass ifi ed under finance cost.
R C urrent Tax Expense Adjustm ent of tax of prior years were adjusted against retained eam ing till last year cunent period but grouped under prio r yea r tax adjusnnenl.
T ins has been reclassified as income tax expenses of
~
c9:-
f <~"~ A }1- ~ ~' ~~
Note no: 4 Property, plant and l'(}u ipm ent:
Ot!emed cost as at I st Shrawan 2072
Additions Dtspos~Is
Balance at 31st Ashad 2073
Addit iOilS Dispos~ l s
13~lance at 3 1st A shad 207~
Accum ulat ed dcun·ciat ion B~lancc at I st Shrawan 2072
Charge tOr the year Disposals
Bal~ncc at 3 1st Ashad 2073
Charge for the vcar D1sposa ls
Balance at 3 1st /\shad 2074
:"'et bool.: value
At I st Shra" an 2072
At 31 st Ashad 2073
At 3 1st Ashad 2074
Freehold Land
50 479.555
50.479.555
50.479.555
50.479.555
50.479.555
50.479.555
_,---..,
Ne pal Hydro & Elec tric Limited No tes to the financi•tl sratcmen ts for· the ycn r ended 3 1st Aslwd 2074
Buildings
33 0?3_336
33.023.336
33.023.336
1,65 1, 167
1.65 1.1 67
I ,568,608
3.21 9.775
29.803. 560
Plant & Machinery
52.417.505
2,905.703
55.323.209
4,512,046
59.835.254
8, 102.032
Furniture & Fixture
590 50 I
3 12,328
902.829
16.407
9 19.236
224,584
Office Equi pmen t
1.758.632
1,212,726
2.971.358
907,306 (398,547)
3.480. 117
591,072
Computers
1.686.269
774,602
2.460.87 1
953,783
3.4 14.654
574,215
AutomoiJiles
1.0<17 .293
167,257
1.2 14.550
Capital work in progress
Figures in NPR
Total
13.534.837 164,537,927
5,372,6 16
23.534.837 169,910543
I ,080,024 7,469,566 (3 98,5~7 )
1.2 14.550 24.61 <1.861 176,98 1.562
220.609 11 ,363,678
8.102.032 224.584 591.072 574.2 15 220.609 II ,363,678
7,664,7 14 171 ,601 719,844 (348,259)
426,9 19 198,788 10,750,474 (348,259)
15.766.745 396. 184 962.656 1.00 1.1 33 4 19.397 21.765,892
44.068.509 523.05 1 2.5 17.46 1 2.4 13 .520 795. 153 24.614.86 1 155,215,670
a) The Company has availed the dt!emed cost e:\emption m relation to the properly, plant <1nd equipment on the date or transition and hence the net block cn rrying mnount has been considered as the gross block carrying a:11ount on thnt date. Refer table below lOr the gross block value and the accumulated dcprecmt ion on I st Shrawan, 2072 under the previous GA/\P·
Gross Block as m I st Shrawan 2072 Acc umulated Depreciation ns <H 1st Shrawan 2072
Freehold L:uul
50,479,555
Buildings
62 ,892,292 29,868,956
Plant& Furniture & Machinery Fixture
176,4 17,632 1,417,734 124 ,000, 127 827,233
Office Equip ment Co mputers Automobiles Capital work in Total progress
4,433 ,244 4,772,746 4,8 15,785 23,534.837 328,763,823 2,674,6 12 3,086 ,477 3.768 ,<19 1 164,225,896
Deemed cost ns at 1st Shrn wnn 2072 50.479 555 33 023 ,336 52AI7.505 590.501 1.758,632 1,686,269 1.047.293 23,534,837 164,537,927
b) Out or the machinery and eq uipment acqUired during f . Y. 2059/60 (2002/03) to establish fac ility for assentbling and refurbishing generators as part or the business expansion plan va lued at Rs. 36,99 1,312 87 , machi:-,c rics val ued at Rs 23 ,53LI.S37 me lying un inswllcd till date and same is shown under Capital work in progress .
c ) Refer Note no.
~~ L Lp
(
Nepal Hyd ro & Electric Li mited
Notes to the financial statements for the year ended 31st Ashad 2074
Note no : 5
Intangible assets:
Deemed cost as at I st Shrawan 2072
Additions - Extemall v acquired
blliattee at .l t ~~ 1-\~ llati 1u l .l
Additions - Extemall y acquired
Balance at 3 1st /\shad 2074
Amortisation
Balance at I st Shrawan 2072
Charge for the year
Balance at 3 I st A shad 207 3
Charge for the year
Balance at 31st Ashad 2074
Net book va lue
At I st Shrawan 2072
At 3 1st Ashad 2073
At 31st Ashad 2074
Computer Softwa re
3. 153.536
j , I )J,)J b
3.153.536
1. 109.572
1.109,571
1. 109,572
2,2 19,143
3, 153,536
2,043,965
934,393
Figures iu NPR
Total
3.153.536
J,J~J.~Jb
3.153.536
1,109,572
1,109,572
1, 109,572
2,219, !43
3,153,536
2,043,965
934,393
a) The Company has availed the deemed cost exempt ion 111 relation to the property. plant and equipment on the date of transition and hence
the net block canying amount has been considered as the gross block cany ing amount on that date. Refer table below for the gross block value and the accumulated depreciation on I st Shrawan. 2072 under the previous GAAP
Gross Block as at I st Shrawan 2072 Accumulated Depreciation as at I st Shrawan 2072
Deemed cost as at I st Shrawan 2072
Computer Softwa re
5,547,858 2.394.322
3. 153.536
Total
5,547,858 2,394,322
3.1 53.536
b) Rob Nm< I 9 loc "" d<1oi11 i" "'""' ol """'" ,ropM,, plm>i ""d ''"'"'""" h,_mhm•i<•"•"P""d " "~~•i•~ \It'/
}V
//-~ \_~
9
(
Nepal Hydro & Electric Limited Notes to the financial statements for the year ended 31 st Ashad 2074
Note no: 6 Trade receivables
Particulars
Unsecured, considered good Bills receivables fi·om JVs Other Bill s receivables Retention money held by Customers
Unsecured, considered doubtful Less: Allowances for doubtful receivables
Total
As at 31 s t As had 2074 C utTcnt Non-C urrent
88,904,595 194,62 1,103 16.928.222 35. 129.9 15
JOOA~l91ll .BJ ~~.m
(3,905,449)
(3.905,4491
296,548.471 35. 129.915
As at 3 1st Ashad 2073 C u rrcnt Non-C urrent
88.056,629 2 15.759,197
7.787.632 37.239.483
Jll.bUJA:,s JI.L.W-4~.1
(5,405,449)
{5.405,449)
306.198.009 37.239.483
Refer Note 19 for the details in respect of assets hypothecatecVm01tgaged as security for boiTowings.
Note no: 7 Other financial assets Particulars As at 31st Ashad 2074 As at 31 st Ashad 2073
Current Non-C urrent Current Non-Current
Loan and advances to Sto ff 7,041 ,027 450,687 3.942. 168 1.090,908 Trade and Security Deposit 184,662 I .028.830 169,280 908,830 Unbil1ed revenue 60,3 17, 165 95.787.87 1 Advance receivables fTom .I Vs 148.960.294 9.359.040
216.503. 148 1.479.51 7 109.258.359 1.999.738
Refer Note 19 fo r the detail s in respect of assets hypothecated/mortgaged as security for boiTowings.
Note no : 8 Other current and non-cu rrcnt assets Particulars
Advance to suppliers Prepayments
As at 31st Ashad 2074 Current
13. 183.466 3.158.076
16.341.542
Non-Current As at 31st Ashad 2073
Current
22,924,660 1.053.3 II
23,977.971
Non-Cu•Tcnt
Refer Note 19 for the de tn.ils in respect of assets hypothecated/mortgaged as security for botTowings.
' )t
Fir!llres in NPR
As at 1st Shrawan 2072 Current Non-C urrent
26,818,6 12 208 ,878,285
16.489. 189 36.997.548
L:IL.t AU.u&u JO.H7.J48
(24,550,41 8)
(24,550.418)
227.635,668 36.997.548
As at 1st Shrawan 2072 Cu1-rcnt Non-Current
4.454,91 5 1,379, 184 532.21 3 740.000
52,352.886 12.5 16.791
69.856.805 2.119.184
As at 1st Shrawan 2072 Current
34.464,464 1.298.515
35.762.979
Non-Current
~I
ty
~~
(
Nepa l Hydro & Electric Limited Notes to the financial statements for the year ended 3 1st Ashad 2074
Note no: 9 INCOME TAXES Tax expense recognised in the Stlltement of Profit and Loss
Current tax Cun·ent income tax char_ge Adjustment for under provision in prior periods Deferred tax credit/( charge) Origination and reversal of temporary differences Adjustments/( credits) related to previous years - (net)
Income tax expense re iJOrted in statement of Profit or Loss
Tax expense recognised in Other comprehensive income
Deferred tax Ad justments/( credits) related to previous years - (net)
Income tax charged to OCI
Current tax asset I (liab ili ty) -net:
Advance Income Tax Less: Income Tax Liabi lity
Total
Reconciliation of tax liabi lity on book profit vis-;i-vis actual tax liability Accounrinl! Profit/ (Loss) before income tax Enacted tax rate Computed tax expense Differences due to: Profit transferred fi·om JVs (Final withholding tax) Provision for doubtful debt written back Tax ell'ect due to non-deductible expenses Tax effect due to difference in depreciation rate Doubtful debt recovered Impact of NFRS Adjustments Ot her temporary differences
Year ended 31 Ashadh, 2074
15,705,744 (7.961.269)
7,744.475
Income tax expense charged to the sta tement of Profit or Loss and OCI
Yea r ended 31 Ashadh, 2074
7,268,806 2,981.900
(2,69 1.263)
7.559.444
Year ended 31 Ashadh, 207-l
1.915.353
1.915.353
Year ended 31 Ashadh, 2073
II ,383.553 (7 .870.873)
3.512.680
Year ended 31 Ashadh, 2074
I 05,92 1,155 25.00%
26.480,289
(22.443.750)
3.9 11 . 121 (303.853) (375.000)
7,268,807
The movement in deferred tax assets and liabilities during the yea r ended 3 1 Ashadh, 2073 a nd 31 Ashadh, 207-l:
Movement during the yea r ended 31 r\shadh, 2073
Deferred tax assets/(liabilities) Provision tOr leave encashment Prov1 sion for gratuity Depreciation
~lovcment during the year ended 31 Ashadh,2074
Deferred tax assets/( liab ilities) ProvisiOn for leave encashment Provision for gratuity Depreciation
As at I Shrawan, 2072
30 1.833 I 0.2 15.264
343.560
10.860.657
As at I Sh rawan, 2073
390.555 11 .287 .3 15
438.874
12.11 6.7-l-l
/~
C redit/( charge) in the Statement of Profit and Loss
88,723 1.079.221
95.314
1.263.257
Credit/( charge) in the Statement of Profit and Loss
22.390 509.848
2.159.026
2.691.263
f t
C redit/(charge) in Other
Comprehensive Income
(7.170)
{7.170)
C redit/(charge) in O th er
Comprehensive Income
1.915.353
Figures in NPR
Yea r ended 31 Ashadh, 2073
7.870.873 (3.693 ,5 19)
(679.2 16) (584.043)
2.91-1.095
Year ended 31 Ashadh, 2073
(7. 170)
{7.170)
Year ended 31 Ashadh, 2072
9.532.545 (9.872.336)
{339.791)
Year· ended 31 Ashadh, 2073
75 ,832.721 25.00%
18.958.180
(4.750,000) (6,137 .605)
( 199,702)
7,870,873
As at 31 Ashadh, 2073
390,555 11.287,3 15
438.874
12. 116.7-14
As at 31 Ashadh, 2074
412.945 13,712.515 2.597.900
16.723.360
~ ~ \__'t
( )
Nepal Hydro & Electric Limited Notes to the financial statements for the year ended 31st Ashad 2074
Note no: 10 Inventories Particulars
Steel and Electrodes Electrical Supplies Other items
As at 31st As had 2074 71 ,053,420
5,604,829 8.187.820
84,846,069
As at 31st Ashad 2073 74,096,487
7.421 ,038 10.767.040
92.284,565
R~ l e¥ l~di<! IY tot· Ute Uetltll s /ltt e> tJeet Ul' H»et> ltVWUtltee:tleLiitiiUII.UHgULI H> >eeutli y 1\Jt UUIIU\VIit.U>
Note no: II Cash and cash equivalents Particuhu4 s
Balance with Banks In cu1Tent account In convertible cun·enc1es account Cash on hand Cheques on hand
As at 31st Ashad 2074 --
2,580,751 305,760 34,997
-
2,921.508
f-or the purpose of the statement of cash flows. cash and cash equivalents comprise the followmg As at 31st Ashad
Cash at banks and on hand Overdraft
2074 2,921.508.00
( 47' 778.564.00)
As at 31st Ashad 2073
668,922 317,263
26.756 9.879.877
10,892,818
As at 31st Ashad 2073
I 0,892,818.00 (45,4 72. 733.00)
Figures in NPR
As at 1st Shrawan 2072 II ,836,082 3,527,502 8.518.032
23,881,616
As at 1st Shrawan 2072
16,363,542 300,647 42,175
I 0.179,069
26,885,433
As at lst Shrawan 2072
26,885,433.00
Cash and cash cquivnlcnt presented in cash flow statement {44,857,056.00) {34,579,915.00) 26,885.433.00
Note no: 12 Bank ba lance other than cash and cash couivalents Pa rticulars
Earmarked balance with Ban l\S Unpaid dividends Margin money accounts
As at 31st Ashad 2074
19.860.000
19,860,000
As at 31st Ashad 2073
14.222.000
1-1,222,000
/~~
As a t 1st Sh rawan 2072
11.879.940
I 1,879.940
~
' \__\
(
Note no: 13 Share Capital Particula rs
A. Equity Shares Author ised Equ ity Shares of Rs. I 00 each wi th vot ing rights
Issued Equity Shares of Rs. I 00 each with voting rights
l>uiH<'~I b~ti ntlU ~ lillY Pl\IU Equity Shares of Rs. I 00 each with voti ng rights
Nepal Hydro & Electric Limited Notes to the financia l statements for the yea r ended 31st Ashad 2074
As at 3 1st Ashad, 2074 As at 31st Ashad, 2073 No. of Shares Amount No. of Shares Amount
1,500,000 150,000,000 I ,500,000 150,000,000
1,450,000 145,000,000 I ,450,000 145,000,000
1,395,300 139,530,000 1,395,300 139,530,000
B. Reconciliation oft he number of slut res outstanding at the beginning and end of the yenr As at 31st As had, 2074 As at 31 st Ashad, 2073
Balance as at the beginning of the year Changes during the year
Ba lance as a t the end of the yea r
C. Detai ls of shareholding
No. of Shares
I ,395,3 00
1.395,300
Particulars As at 31st Ashad, 2074
Butwal Power Company IKN Industrial A.S Butwal Technical Institute Hi mal Hydro and General Construction Ltd.
Total
No. of Shares
715,800 654,500
15,000 10,000
1.395.300
D. Terms/rights att:tched to equity shares
Share%
51.30% 46.9 1%
1.08% 0.72%
100%
No. of Shares
I ,395,300
1.395.300
As at31st Ashad, 2073 No. of Shares Share %
715 ,800 51.30% 654,500 46.9 1%
15,000 1.08% 10,000 0.72%
1.395.300 100%
Figure!J' in NPR
As at 31st As had, 2072 No. of Shares Amount
1,500,000 150,000,000
1,450,000 145,000,000
1,395,300 139,530,000
As at 31st Ashnd, 2072 No. of Shares
I ,395,300
1.395,300
As at 31st Ashad, 2072 No. of Shares Share%
715,800 51.30% 654,500 46.9 1%
15,000 1.08% 10,000 0.72%
1.395.300 100%
The Company has only one class of equity shares having par value ofNPR 100 per share. Every member holding equity shares therein shall have voti ng rights in proportion to the member 's share of the paid up eq uity share capital. The Company declares and pays di vidend in Nepalese rupees. The di vidend proposed by the Board of Directors is subj ect to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares wi ll be entitled to receive remaining assets of the Company, afte r distribut ion of all preferen ti al amounts . The distr ibuti on will be in proportion to the number or equity shares held by the equity shareholders.
E. Dividend P:tid and Proposed:
Declared dividends and pr·oposcd dividends
Decla r ed and approved for during the yenr:
Di vidends on ordinary shares: Final di vidend for 2072-73 : NPR. 10 per share (5 Cash+ 5 Bonu s)
Proposed for approval at the annual gener:1lmeeting (not recognised as n liability as lll bllhtnce sheet d:tte):
Di vidends on ordinary shares:
Proposed dividend for 2073 -74 : NPR 10 (5 Cash+ 5 Bonus per share (2072-73 I 0 pershare )
Note no : 14 Other equity Particula rs
Balance at 1 Shnnv:m 2072
Profit for the year Other comprehensive income
Transfer to Employees ' llousing Reserve
Di vidends to shareholders
B:tlance a t I Shrawan 2073
Profit for the year Other comprehensive income Transfer to Employees' lluusiug Reserve
Dividends to shareholders
Bal:mce a t 31 st As had 207-1
Employees' l-lousing reserve
9,255, 104
4, I 06,333
13.36 1.437
4.790,404
18. 15 1.84 1
As Ht
31 st Ashad, 2074
6,976,500
6.976,500
Retained earnings
55,679,970
72.9 18,626 2 1,5 10
(4. 1 06,333)
124.5 13.773
98.36 1,712 (5.746.057) (4.790.404)
(6.976.500)
205.362.524
All other net ga ins and losses and transnct1 ons with owners (e.g. dividends) not recogni zed elsewhere.
As at 31st Ashnd, 2073
Tota l
6,9 76,500
64,935,074
72,918,626 21 ,510
137.875.210 98,361 ,712 (5,746,057)
(6,976,500)
~\
(
(
Nepal Hydro & Electric Limited Notes to the financial statements for the year ended 31st Ashad 2074
No te no: 15 Other financial liabilities
Particulars
Retention money Payable Refundable Deposits of Pm1ies Advance payable to JVs Employee related accural Defened contract revenue Other payables
Note no: 16 Provis ions
Pa rticula rs
Provision for Gratuity Provision for Leave Encashment
Note no: 17 Other current and non-cut-rent liabilities
Particulars
Advance from Customers Bonus Payable Dividend payable VAT Payable Statutory dues Training Fund
Note no: 18 Trade payables
Pa rticulars
Sundry cred itors
Note no : 19 Borrmvings
Particulars
Measured at amortised cost
Secured Borrowings from Banks Working Capital Loan Short Tenn loan Trust Receipt Loan Overdraft
As at 3 1st As had 2074 Current Non-Current 26,520.444
939.100 2,457,230
518.01 1
206.378
29,702,063 939,100
As at 31st Ashad 207~ Current No n-C urrent
35,840 54,8 14.2 19 75.440 1.576.340
I 11.280 56,390.559
As at 31st Ashad 2074 C urrent Non-C urrent
263.1 I 1,272 10, 11 3.067 6,976.500
20,003 ,906 2,296.408
302,501.153
As at 31st Ashad 2074 Current Non-Current
42.730.985
42.730,985
As at 31st Ashad 207~ Cu rrent
II ,050.000 47 .778.564
58.828.564
Non-Current
As at 3 1st As had 2073 Current Non-Current 12,349.5 17
939., I 00 7,583.444
230.6 19
1.008.168
21,1 71.748 939.100
As at 31st Ashad 2073 Current No n-Current
19 1.450 44.957,808 72.320 1.489.900
263,770 ~6.447, 708
As at 31st Ashad 2073 Current Non-Current
235,523,660 7,092.758
22.988 ,728 978,589 330.7 15
266,914.450
As at 31st Ashad 2073 Current Non-Current
44.3 78.4 78
44.378.478
As at 31st Ashad 2073 Cu rrent
25 ,000 ,000 44.300.000
45.472.733
114.772.733
Non-Current
Fiaures iu NPR
As at 1st Sh rawan 2072 Current Non-C urrent
2,553.424 12.712
72.252.720 241,458
795.945
75,856.259
As at 1st Shrawan 2072 Current :\'on-Current
40.86 1,056 3?.1 10 1.1 75.220
32,110 42,036.276
As at Is! Shrawan 2072 Current Non-Current 189,405,25 1
830,806 I ,554,438
18,792,629 878,224 330.7 15
21 1.792.063
As at 1st Shrawan 2072 Current Non-Current
17.199.720
17,199.720
As at 1st Shrawan 2072 Current Non-Curr·ent
40,000.000
21,850,000
61.850,000
a)Trust Recetpt Loan is obtained !Tom Nepal Investment Bank Ltd for payment of Letter of Credit faci li ty and repayable within 31st Januat}'
20 18.
b) Ovcrdrali Loan fac ili ty is obtamed from Nepal Investment Bank which is up to 31 Jan 2018. after completion such period the loan amount wi ll be repayable numediately upon demand by Bank.
c) Short tenn Lmm and working capital Loan is obtamed from Nepal Investmen t Bank tOr fultilling sho11tenn Capital requirement.
d) Above bOITowings are secured as charge by way of hypothecation on Freehold land sit uated at Machinenes. ln vcntones and Trade Receivables.
~
}/
Belbas. Rupandehi mcluding all Plant and
&~
~ ~~.
Nepal E-f ydro & Elect ri c Limited Notes to the fin ancia l statements fot· the yea r ended 31 s t As lw d 207-1
Note no: 20 Revenue Particulars Sales ivlechamcal DIVISIOn Sales Service Division Sales Elcctncal DivisiOn
Note no: 21 Cost of Sa les Hnt,tiouln"o Cost o f Consumed ivlatcnals. Supplies and Scrv1ccs Transponauon and S1te Installation Expenses Fuel and Power Charges Salaries and Wages Staff bonus Providcnl Fund Contribution Detined benefi t plan expenses Dcprecmtion and amortizatiOn S ub· contract Expenses
Note no: 22 Other income Parti cula rs Receipt from Insurance Clmm Income from Sales of scra p Foreign exchange Gam (loss) Provis1on for doubtful debt written back ~vli sce ll aneous Income Profit/( Loss) on Sale & Write Off Fi,ed Assets
Note no : 23 Profit Transferred form JVs Particulars CQNEC- NHE Consortium (KM ProJect) CW E · NH E Jo int venture CQNEC- NHE Consort ium (GSRP ProJect) CQNEC- NHE Consort1um (Chapali Project)
Note no: 2-1 Adm inistrative rlnd other onerating expenses Particulars Salari es and other employee cost Provident Fund Contribuuon Stalf Bonus Defi ned beneli t plan expenses StalfWelfare Advert isement and bus mess promotion AGM and Board E'penscs Audit Fee & Expenses Communicat ion Expenses Deprec1atton and amort1sntion Gift and Donat ton Hospi tality and Re freshment Insurance Legal and professiOnal Expenses Office nmning cost Prmung and StatlOneJ)' Rates and Taxes Rent Repa 1r and Mamtcnancc Training and Development Travellmg expenses Veh1cle runnmg cost Bad Debts PrOVISion ror Doubtful Dcbl s i'Vll scel\aneous Expenses
:-::.-::._ ... .. d I' ...
1fl
//~
fo ,- FY 2073-74
156.149.06~
52.024. 156 366.53~.345
57~.705.563
li'nr flY 10T),. 1rl
~08.952,267
<10.03 1.888 3,948,457
57.984 ,n9 6.573.494 1.7~9.61 1
3.077.638 I 1.400.497
168. 141.799
501 ,8~0380
For FY 2073-7~
718.409 1.900.931
4 18.362
5.2 13.077 (25.~87)
8.225.-192
For FY 2073-74
39.900.000
39.900,000 9,975.000
89.775.000
For FY 2073 -7~
29.3::!3,87i.J 85 1.348
3.539,573 1.461.75 1
:!5::!.057 1 .~37.:!35
1.0<15.738 295.731
1.:!22.4::!3 459.5 16
52,000 ::!, 1::!0.142 6~7.265
1.978.495 ::!.635.::!04 2. 187.4 17 45~.670
I .684.680 8~0.098
3.029. 7~ I 2.65~.007
541.532
3. 152.387
6 1 ,6 22.86~
~
Figures in NPR
For FY 2072-73 199,843.845 ~8-~28.109
::!59.3 15. 139
~87.387.093
fior li'Y ? 07?" Tl 154,451. 155 2~.467,885
5.835.540 66,83 1.959
4.613.566 1.~01.095
2.911.654 11.989,548
1 2~.081.812
392_384.21~
For FY 2072-73
195. 137 6<1 .380
1,580.361 24.550AI8 4.418.566
30-808.862
For FY 2072-73
9.500.000 9.500.000
19,000.000
For FY 2072-73
::!8.833,579
6 1 ~.367 ~.479. 1 92
1.405.225 284.667 564.375
1.5<19.805 231.883 941.237 483.70 1
92.500 1.202.975
717.832 ~.06 1.866
~.525.608
1.88 1,19 1 404.9~~
1.555.840 1.324.936 1 .5 ~6.028
3.986.031 421.767 280.591
5A05.449 2.985.304
J58-871
ar ~
l_\
Note no: 25 finance income Particulars
Interest income Other finance income
Note no: 26 Finance Cos ts Particul:lrs
Interest Expenses Other finance cost Bank Charges
Note no: 27 Earnings per sh.arc
Profit for the year
Particul:t1·s
Weighted average number of equity shares outstandmg Earni ngs Per Share (Rs.)- Basic (Face va lue or Rs. 100 per share)
Add: VVeighted average number of potential equitY shares
\:Veighted average number of Equ1ty shares (mcluding di lut1ve shares ) outstanding
E.arnings Per Share (Rs.)- Diluted (Face va lue or Rs. 100 per sha re)
~ ~
For FY 2073-7~
501.598 2.358. 151
2.859.7~9
Fo r FY 2073 -7~
6.000.632
ISO. 773
61_18 1.405
Fo r FY 2073-7~
98.36 1.71" 1.395.300
70.50
1.395.300
70.50
For FY 2072-73
472.532 1.726.539
2. 199,071
For FY 2072-73
7. 164.775
~54.445
7.419.220
For FY 2072-73
72.9 18.626 1.395.300
52.26
1.395.300
52.26
vy \_ ~
,..---,..
-Ne pal Hyd1·o & Electric Limited
:'\orcs to the financial statemen ts for the year ended 3 1st AshoHI 207-t
No te no: 28(a)
Post employment benefit plans The following tables sumn1arizes thl! components or net bene li t expense recognized in the statement of income and amounts recognized in the stcttement of tinancial position for the plan:
2073-7-t changes in tlu.• dl•lined benefit obligation and Fair va lu e of plan assets
G1alllity obligmion f"rw vnlul: of plcm assets
13a lancc at 1
Sharwan 2073
(46.304,380)
I , 155, 120
Benefit cost cha 1·gcd to inco me sta te men t
Se rvice cos t
(2,846.300)
Net Interest
(3,420,470)
1,727 ,380
Sub-tota l in cluded in
profit or loss
(6 ,266,770)
1,727,380
Benefi ts paid
2,324 ,160
(2 ,324, 160)
Rc- mcasu rcmcnt gain/(losscs) in other co mp rehensive income
Return on plan assets less interest
on plan assets
( I, 727 ,380)
Experience adjustments
(5,934,03 0)
Sub-tota l includ ed in
OCI
(5 ,934 ,030)
(1 ,727,380)
Contribution by em ploye r
2,500,000
Figures-:in NPR
Balance;Jt 3 1 As had : 074
(56, 81 ,020)
I ,;30,960
Benelit Liability (45. 149.260) (2.846.300) ( 1.693.090) (4.539,390) ( 1.727.380) (5.934.030) (7 .66 1.41 0) 2.500.000 (54 .350.060)
2072-73 changes in the defin ed benefit ob ligation a nd fair value of plan assets
Benefit cost charged to income statement
Grmuity obligation
Fmr value of plan assl.!ts
Benefit Liabili ty
J
Balance at I Sharwan 2072
(43 ,424.61 0)
2,563.550
140.86 1.060)
Service cos t
(2.784.590)
(2.784.590)
\~
Net Interes t
(3.202,920)
I ,670,630
( 1.532.290)
Sub-total included in
pro lit or loss
(5 ,987,5 1 0)
I ,670,630
14.3 16.880)
~
Benefits paid
I ,486. 730
( 1.486,730)
Re-measuremcnt gain/(losscs) in other com prehensive in co me
Return on plan assets less interest
un plan :1ssets
( 1.592,330)
Ex perience adjustments
1,62 1,0 10
"'"¥ :" ''"
Sub-total inchulcd in
OCI
1,62 1,0 10
( I ,592,330)
28.680
/
Contribution by employe r
Balanc~tt 3 1 Ashad :073
(46,'104.380)
1,] 55 , 120
(45J49.260)
..
~ ~
(
NeiJ:ll Hydro & Electric Limited Notes to the financial statements for the yen•· ended 31st Ashnd 2074
Note no: 28(b) Post em(J ioyment benefit l>lans (Continued ... ) The major categories of l>lan assets of the fai •· va lue of the total plan assets are, as fo llows:
Quoted Value Non-Quoted Value Others
Total
2073-74
1.330.960
1,330,960
Figures iu NPR
2072-73
1.1 55.120
1. 155,120
The principal assumptions used in detennining post-employment benefi t obl igat ions for the Company·s plans are shown below:
2073-74 2072-73
Discount rate 8.00% 7.50%
Salary escalation rate for Gratuity 6.50% 6.50%
Withdrawal rate 2.00% 2.00%
Mortali ty rate Nepal Assured Mortality Rate
The estimates of fi.tture salary increases, considered in actuarial valuation, take account of inflation. seniority. promotion and other relevant factors , such as supply and demand in the employment market.
A quantitative sensitivity analysis for significant assumption at the end of the reporting period is as shown below: Assumptions
Sensitivity Level Impact on Defined benefit obligation - Gratuity
Discount rate l.O~.
Increase (3.936.240)
l.O'X, Dec1·casc 4,448,640
Sahli)' esca lation rate I.O<Y., I.O'Y.,
Increase Decrease 4,472, 170 (4.024,8 10)
The sensiti vi ty analyses above have been detennined based on a method that extrapolates the impact on net defined benefit obligation as a result
The follow ing payments are expected contributions to the detined benelit plan in t[llure years :
Defined benefit obligation- Gratuity
Within the next 12 months (next annual reporting period)
Bet ween 2 and 5 years
Beyond 6 years
Weighted average duration of the above defined bene lit obligation
~ //
~
)v
2073-74
1.420,430
28,773.220
39,457.9 10
9 years
vy ~
2072-73
1,396,160
16,370.720
40,309,700
9 years
t__~
r
Nepal Hydro & Electric Limited Notes to the financial s tatements for the year ended 31st Ashad 2074
Fi{fures iu NPR
Note no: 29 Financial Instruments : Classifications and fair va lue measurements
Fair value of financial assets and financial liabilities that are not measured at fair value (but fa ir value disclosu•·cs arc •·cquircd) Except as detailed in the fo llowing table, the management consider that the cany ing amounts of financial assets and financial liabilities recognised in the financial statements approximate their fair values
As at 31st As had 207-1 Fina ncial Assets Financial assets carried at amortised cos t ·rt m.lL ll.L.Li HilJ) l.J
Cash and cash equi valents Bank balance orher than cash and cash equivalenrs
Other fi nancml assets
Total Financial Assets
Financial Liabilities Financial liabilities carried at amortised cos t: Bonowin.gs Trade payables Other financial liabilities
Tota l Financial Liabilities
----
As at 31st Ashad 2073 Fina ncial Assets Fina ncial assets c:uricd at amortised cos t Trade receivables Cash and cash equivalents Bank balance other than cash and cash equivalents
Other financial asse ts
Total Fina ncia l Assets
Financial Lial1i litics Financia l liabilities carried at amortised cost: Bon·owings Trade payables
Other tinancial liabili ties
Total Fi n:mcia l Liabi lities
As at 1st Shrawa n 2072 Financia l Assets Financia l assets carried at amortised cost Trade receivables Cash and cash equivalents Bank balance other than cash and cash equival ents
Other linancia l assets
Tota l f-inancia l Assets
Financia l Liabilities FinancialliaiJilitics carried at nmortiscd cost: Bo1Towings
Tracie payabks
Other lin ancial li abilit ies
Total financial Liabilities
f /
Can·ying value
11 L6?? 4JYn 2.92 1,508
19,860.000
2 17.982.665
572.-142.559
58,828,564 42.730,985 30_641.163
132.200.712
Carrying va lue
343,437,492 I 0,892,81 8 14,222 .000
111.258.097
479.810.407
114,772,733
44,378,478
22, 11 0,848
181.262.059
Carrying value
264,633,2 16 26,885,433 11 .879,940
71.975.989
375.374.578
6 1,850.000 17. 199.720
75.856.259
154.905,979
Level I Level 2 Level 3
" '' 1 n7~ -,~r, 2,92 1,508
19,860,000
2 17.982.665 !
572.442.5591
58,828.564 42,730,985 30.641 . 163
132.200.712
Level I Leve12 Lcvcl3
343,437,492 10,892.818 14,222,000
111.258.097
-179.810.407
11 4. 772 ,733
44 ,378.478
22, I I 0,848 i
181 ,262.0591
Levell Lcvel2 Levcl3
264.633.2 16 26.885.433 11 ,879,940
71_,275 .989
375.374.578
6 1,850,000 17. 199,720
75.856.259
15-1.905.979
~
Jv ~
Nepal Hydro & Electric Limited :'olotes to the financial statements for the year ended 31 Ashadh, 2074
Note no: 30 Related Party Disclosures
(a) Relationship The company is controlled by Butwal Power Company Limited which owns 5 1.30% of the company's shares.
Relationship Related Parties
Holdin_g Company Butwal Power Company Limited Group I Fellow Khudi Hydro & Electric Limited ~ltlwirli fl rif'l I RPI Sr.rtir.r, Lim ir~rl
Nvadi Hydropower Limited Hydro Consult Engineering Limited Kabeli Enen .. 'Y Limited
Joint Venture CWE-NHE Joint Venture CQNEC-NHE Consonium. Chapali CQNEC-NHE Consonium. KM CQNEC-NHE Consor1ium. GSRP CQNEC-NI-IE Consortium. Kulekhani I st
(b) T hose charged with governance Those charged wirh govemance of the NHEL mclude members of Board of directors namely: i) Bijay Bahadur Shrestha ii) Uttar Kumar Shrestha iii ) Ratna Sansar Shrestha iv) Suman Basnet v) P.L. Slu·estha vi) Deepak Kumar Agrawal
enses incwTed for those charged with govemance of NHE. Cun·cnt _vcar Previous year
21 3.000 357,000
(c) Transactions with key managcnu;nt personnel
i) Rajesh Agrawal, Chief executive officer
Current year Previous Ycou· 1.683.736
2.655.295
Fi!!ure.\· in NPR
Note· - The amounts disclosed in the table arc the amounts recognised as an expense during the reporting period related to key management personnel. Also, the liabilities lOr defined benefit plans (i.e. b'Tatuity obligations) and leave encashment are provided on an actuarial basis for the company as a whole, so the mnounts pe11aining ro the key management personnel are not included above.
\UJ '-" ~11'-'1 I '-'"~'-U 1111 If II <110 "' 11'-IIVII .I
Name of the related Nature of transnction Transaction Outstanding balance party Current Year Previous Yea r Current Year l>revious Year
Butwal Power Company Sales 19.037.295 21.848.073 I 0.070.768 18.623.763 Limited Payment of Rent and 150.871 229.268 (15.366) (34 ,6 10)
utilities Advance received (2 .624.036) (2.976. 703)
Khudi Hydro Power Snks 2.824 .708 480.697 2.948.397 890,532 Limited Payment or Rent and 256,478 337.693 ( 15.366)
uulities Advat1cc received - (508.948)
CWE-NHE Joint Venture Profit trnnsferred (2.349.69 1) (2.849.69 1) NHE- IPM Joint Venture Sub-cont ract 1.426.267 7.405.465 CQNEC-NHE Consortium. S ub~contract , Management 27,986.2 11 104. 100.000 80.787.334 30.442.168
support fcc and profit transtCrred
CQNEC-NHE Consor1ium, Sub-cotltract, iVIanagemcnt 159.0 I 1.551 176.4 17.08 1 40.70 1,439 57.6 14,46 1 support fcc and profit
CQNEC-NHE Consortium. Sub~co 1tt rnct and 90. 152.0 17 4.500.000 15.730,28 1 4.626.2 14 ~lana 'CIIlcnt su > )Qrt fee I
CQNEC-N HE Consortium. Mana~cnrcnt su ;mort fee 1.000.000 7.5 15.590 14,596!
Tenus and conditions of trnnsacli ons with related parties Outstanding balances at the yt:ar~t: nd nrc unsccurt.!d nnd intcrcsr f"i·ec nnd settl ement occurs 111 cnsh Thl.:rc lwvc bt.!en no guarantees prov1ded or received for any related party rccl!ivablcs or payHl>les For the year ended 15 July 20 17. the Compnny has not recorded any impninnent of receivables relating to nmou1li S owed by rdatcd parties. Th1s nsscssment is undertaken each linanc1al year through c:-.mnining the fi nancial pos1tion of the related party nnd th ...: market in which the rclatccl party operates
a) Bank Guarantees [ Bani\ Name I l'urposc
~ p
Currcncv Amou nt £xpirv Date
~
)1; ~ ~~ ...
(
Nepal Investment Bank Adv. Pmt. Guarantee NPR 224.073.679 V mi ous Dates US D 46.909
Nepal Investment Bank Bid Bond NPR 59.964.000 Various Dates Nepal Investment Bank Perfonnance Bond NPR 90.808 .788 Vmious Dates
b) Corporate G ua .-antees
Party Name Purpose C urrency Amoun t Ex piry Date in A.D.
CQNEC-N HE Chapali Advance Payment & NPR 20, 107.956 317120 17. Perfonmmce Bond 30!1 1/20 18
INR 6.50 I .000 30/1 1/2018 CHF 137.800 30/1 1/20 I 8 l.iS D 420.400 30/1 1/2018
CQNEC-NHE KM Advance Payment & NPR 43 ,995 ,969 3/212019 J'WillliHIIiC~ l:lbllti 8/.lJ/20 17
IN R I 6.626.359 3/2/20 I 9 8/3 1/20 I 7
USD 186.300 3/2/2019 CQNEC-NHE GSRP Advance Payment & NPR 75. I 60.64 I 7!1 012017
Perfonnance Bond 216120 I 8 JNR 22 .4 I 5.285 2/6/20 18 US D 32.458.9 14 7110/2017
216120 I 8 NHE-I PM JV Perfonnance Bond NPR 11,587,2 10 27/0 1/20 17 I
c) Inco me tax matters Large Tax Officer (L TO) has demanded additiona l capital gain tax of Rs. 7. I 28,885 on behalf of previous shareholder ALSTOM AS during the tax assessment of F/ Y 2069-70. The Company subsequently paid the said amount on 13 th Kanik. 2074 which shall be recovered fi·om ALSTOM AS. Norway. hence no provision for such tax has been made in the books.
Particulars As at 31st Ashad As a t 31 st Ashad As at 1st Shrawan 2074 2073 2072
Contract revenue recorrnised during the vear 574,705.563 487.387.093 3 79.700.4 18 Aggregate cost incurred and recognised profi ts (less recobo1ised losses) up to 864.699,738 6 I 1.908.887 368,472,003 the reponing date for contracts in progress
Amount of customer advances outstanding 263, I I I ,272 235.523 ,660 I 89,405,25 I
Retention money due from customers for contracts in progress 52,058. 137 45.027, 11 5 53.486.737
Gross amount due from customers for contracl works as an Clsset ( unbilled 60,3 17.165 95.787.87 I 52.352.886 ponion) (net of proviston fo r doubtful debt receivable)
Gross amount due to customers for contract works as a liabil ity I
~
/~
f ~ L<(
' \
Nepal Hydr·o and Electric Limited Notes to the financial statements for the year ended 31st Ashad 2074
Fi!!llre in NPR
Note L: Background
Nepal Hydro and Electric Limited (NHE) was established in 1985 AD (2042 BS) with its registered office in Butwal and main objective to manufacture, install, commission, refurbish and repair the items used in the power projects and to undertake contracts related to electrical works. In accordance with the provision of clause (b) of section 12 (I) of the Company Act 2053 , the company was converted from private limited to public limited during the year with effect !Tom 2061/10121 BS.
Thr. \.omnflnV iR intl<rnfttionftllv l<lirtifi~;\1 hv T\IY c .. rt 1:\0 900 I ;;4000 ~inc;:<: :400:4 A.D for 0\l!lli!Y Mf1nf1gemyn( Sv~t"m ,
The financial statements apply to the financial year ended 31.s' Ashadh 2074 ( IS'h July 20 17). In the Financial Statements, Nepal Hydro and Electric Limited has been referred as "NHE" or "Company" .
The accompanied financial statements have been approved by the Board of Directors of the NHE in its meeting held on 24/09/ 2074 (08/0 1120 17). The Board of Directors acknowledges the responsibility of preparation of financial statements.
Note 2: Significant accounting policies 2.1 Basis of Preparation and measurement
i. Statement of Compliance The financial statements have been prepared in accordance with applicable Nepal Financial Reporting Standards (NFRS) as issued by the Institute of Chartered Accountants of Nepal (!CAN). The Financial Statements have also been prepared in accordance with the relevant presentational requirements of the Company Act, 2063 of Nepa l. These financial statements for the year ended 31 Ashadh, 2074 are the first the Company has prepared under NFRS. For all periods up to and including the year ended 31 Ashadh, 2073, the Company prepared its financial statements in accordance with earlier issued Nepal Accounting Standards (hereinafter referred to as 'Previous GAAP') used for its statutory reporting requirement in Nepal immediately before adopting NFRS. The financial statements for the year ended 31 Ashadh, 2073 and the opening Balance Sheet as at I Shrawan, 2072 have been restated in accordance with NFRS for comparative information. Reconciliations and explanations of the effect of the transition from Previous GAAP to NFRS on the Company's statement of Financial Position, Statement of Profit or Loss and Statement of Cash Flows are provided in Note 3.
ii. Basis of pr·eparation The financial statements have been prepared on accrual and going concern basis. The accounting policies are applied consistently to all the periods presented in the financial statements, including the preparation of the opening NFRS Balance Sheet as at I Shrawan, 2072 being the 'Date of transition to NFRS'. All assets and liabilities have been classified as current or non-current as per the Company 's normal operating cycle. Based on the nature of products and the time between acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current or non-current class ification of assets and liabilities. The financial statements is presented in functional and presentation currency of the Company i.e. Nepalese Rupee ("NPR") which is the currency of the primary economic environment in which the Company operates.
iii. Basis of measurement These financial statements are prepared under historical cost convention except for certain material items that have been measured at fair value as required by the relevant NFRS and explained in the ensuing policies below.
2.2 Critical accounting estinwtes and judgements
The preparation of the financial statements in conformity with Nepal Financial Reporting Standards requires the use of certain critica l accounting estimates and judgments. It also requires management to exerc ise judgment in the process of applying the Company 's accounting policies. The Company makes certain estimates and assumptions regarding the future events. Estimates and judgments are continuously evaluated based on historical experience and other factors , including expectations of future events that are believed to be reasonable under the circumstances. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable . Future results could differ from these estimates. Any revis ion to accounting estimates is recognized prospectively in current and future periods. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next l'inancial year primarily includes:-
Useful life and residu:1l value of pr·operty, plant and equipment Management reviews the useful life and res idual values of property , plant and equipment at least once a year. Such life are dependent upon an assessment of both the technical life of the assets and also their likely economic life, based on various internal and external factors including relative effic iency and operating costs. Accordingly, depreciable lives are reviewed annually using the best information available to the Management.
Impairment of pr·operty plant and equipment At the end of each reporting period, the Company reviews the carrying amounts of its property, plant and equipment to determine whether there is any indicati on that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss ( if any). Recoverable amount is the higher of fair value less costs to se ll and value in use. Value in nse is usually dete rmined on the basis of discounted estimated future cash flows. This involves management estimates on anticipated commod ity prices, market demand and supply, .economic and regulatory environment, discount rates and otlwr factors. Any subsequent changes to cash llow due to changes in the above m llionecl factors could impact the carrying value of assets.
Page I o r 10
y -·- ff ~·,··
:'""1] . /~,
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(
Nepal Hydro and Elec tl"ic Limited Notes to the financial statements for· the yea r ended 31st As had 2074
Firmre in NPR
Co ntingencies In the normal course of business, contingent liabi li ties may arise from litigation and other claims against the Company. Potent ial liab ilities that are possib le but not probable of crysta llizing or are very difficult to quanti fy reliab ly are trea ted as contingent liabilities. Such liabilities are disclosed in the notes but are not recognised.
Defined benefit plans Thr rml nf rlr.fin r.rl hr.nr.fit nliln~ Ana otlwr PQ$t- employment benefits and the present va lue of such ob ligations are determined using actuari al valuations. An actuaria l valuation involves making various assumptions that may dlt't'er trom actual development in the l-ltture. These include the determination of the discount rate, fut ure salary esca lat ions and mortality rates etc. Due to the complex ities invo lved in the va luation and its long term nature, a defined benefit ob ligation is highly sens itive to changes in these assu mptions. All ass umptions are rev iewed at each reporting date.
Recogn ition of deferred tax assets S ignificant management judgment is required to determine the amount of deferred tax assets that can be recogn ised, based upon the likely timing and the leve l of future taxable profits together with future tax planning strategies. The Company based its assumptions and estimates on parameters avai lable when the financial statements were prepa red. Existing c ircumstances and assumptions about future developments, ho>vever, may change due to market changes or c ircumstances arising beyond the control of the Company.
2.3 Proputy, plant and equipment i. On trans ition to NFRS, the Company has elected to continue with the carrying value of all of its property, plan t and equipment
recognised as at As had 3 l , 2072 measured as per the previous GAAP and use that canying val ue as the deemed cost of the property, plant and equipment as on Shrawan l , 2072.
11 . Freehold land is carried at historical cost and is not deprec iated. All other items of property, plant and equipment are stated at hi storical cos t less accumulated depreciation and accumu lated impairment losses, if any. Historical cost inc ludes expenditure that is directly attributable to the acquisition of the items.
111. Subsequent costs are included in the asset's ca rrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be meas ured reliably. The canying amount of any component acco unted for as a separate assets are derecognised when replaced. All other repairs and maintenance are charged to profit and loss during the reporting period in which they are incurred.
iv. The Company identifies and determines cost of each component/ part of the asset separately, if the component/ part has a cost which is significant to the total cost of the asset having useful li fe that is materially different from that of the remaining asset. These components are deprecia ted over their useful lives: the rema ining asset is deprec iated over the life of the principal asset.
v. The res idual va lues, useful li ves and methods of deprec iation of property, plant and equipment are rev iewed at each financial year end and adjusted prospectively, if appropriate.
vi. An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposa l. Any ga in or loss aris ing on derecognition of the asset (calculated as the di fference between the net disposa l proceeds and the cany ing amount of the asset) is included in the statement of profit and loss when the asset is derecogn ised .
vii . Assets in the course of construction are capita lized in the assets under capita l work in progress account (CW!P). At the point when an asset is operating at management' s intended use, the cost of construc tion is transferred to the appropriate category of pro perty, plant and equipment and deprec iation commences. Where an obligation (legal or constructi ve) exists to dismantle or remove an asset or restore a s ite to its former condition at the end of its useful life, the present va lue of the estimate cost of dismantling, remov ing or restoring the site is capitalized along wi th the cost of acqui s ition or construction upon completion and a co rresponding liability is recognized. Revenue generated from producti on during the trial period is capitalized.
2.4 Other Intangible Assets i. Intang ible assets with finit e useful lives that are acquired separately are carri ed at cost less accumu lated amo tti sat ion and
accumu lated impairment losses. Intangi ble assets wi th indefinite useful lives are carried at cost less accumulated impairment losses. 11 . Ce rtai n computer software costs are capitalized and recognised as intangible assets based on materiality, accounting prudence and
s ignificant benefits expected to flow there t1·om lo r a period longer than one year. 111. Gains or losses aris ing from derecognition o f an intang ible asset are measured as the difference between the net di sposa l proceeds
and the carry ing amount of the asset and are recognised in the statement of pro fit and loss when the asset is derecognised.
2.5 De preciation a nd A mor·tization
Deprec iation is recognised so as to write off the cos t o f assets (o ther than freehold land and properties under construction) less th eir res idua l va lues over their usefu l lives.
ii . Amortiza tion is recognised on a straight lin ~ basis over their estimated useful li ves . The est imated use!itl li fe and amortisa tion method a re rev iewed at the end o f each reportin g period, wi th the effect of any changes in es timate being accounted for on a prospec ti ve bas is.
111. Ti ll previous financial yea r 2073 -74, depr~c i a t ion on the fixed assets including assets added during the year we re charged at the rates and method in accordance wi th the provis ions of Income Tax Act 2058. However from current yea r. depreciation is provided on the written down method based on the es timated useful li ves of the assets determined by the management. Depreciation on add itions to fixed assets is charged on pro-rata basis in the yea r of purchase. The useful li fe of rhc assets and the correspo nding
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Firmre i11 NPR
Category of asset Estimated useful li fe Depreciation Rate
Bui lding 58-59 years 5%
Plant and equ ipment 18- 19 years 15%
Office eq uipment 10-11 yea rs 25%
Furniture and fixtures 10-11 years 25%
Computers and accessories I 0- 11 years 25%
Ve hicles 13 - 14 years 20% - -------- --~-
Computer software is amorti sed over an estimated useful life of 5 years on stra ight line basis.
Useful life is either the period of time whic h the asset is expected to be used or the number of production or s imilar tmits expected to be obtained from the use of asset.
The estimated useful li fe , residual val ues and depreciation method are reviewed at the end of each reporting period , w ith the effect of any changes in estimate acco unted for on a prospective basis.
iv. Leaseho ld improvements are depreciated over the period of lease or estimated useful li fe, wh ichever is lower, on straight line bas is. v~ Deprec iation on assets under construction does not commence until they are complete and ava ilable for use.
2.6 Impairment of tangible and intangible assets I. At the end of each report ing period, the Company reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any ind ication that those assets have suffered an impainnent loss. If any such indication exists , the recovera ble amount of the asset is estimated in order to determine the extent of the impairment loss ( if any). When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverab le amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent bas is of allocation can be identified , corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest Company of cash-generating units fo r which a reasonable and consistent allocation basis can be identified.
11. Intang ible assets with indefinite useful li ves and intang ible assets not yet avai lab le for use are tested for impa irment at least annually, and whenever there is an indication that the asset may be impaired .
111. Recoverable amount is the higher of fair value less costs o f disposa l and val ue in use. In assess ing value in use, the es timated future cash flo ws are discounted to their presen t va lue us ing a pre-tax discount rate that re fl ects current market assessments of the time value o f money and the risks spec ific to the asset for which the estimates of future cash flows have not been adj usted.
IV . If the recovera ble amo unt of an asset (or cash-gene rating unit) is esti mated to be less than its carryi ng amount, the carrying amo unt of the asset (or cash-generating uni t) is reduced to its recoverable amount. An impai rment loss is recognised immediately in Statement of Profit and Loss.
v. When an impairment loss subsequently reverses , the canying amou nt of the asse t (o r a cash-generating unit) is increased to the rev ised estimate of its recoverab le amount, but so that the increased carrying amount does not exceed the carry ing amount that wo uld have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in pr ior yea rs. A reversal of an impa irment loss is recognised immediate ly in Statement of Pro tit and Loss.
2.7 Bon·owing cost
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Borrowing costs consist of in terest and other costs that an entity incurs in connection with the borro wing of funds. Borrowing cos t also includes exchange differences to the ex tent regarded as an adjustment to the borrowing costs. Borrowing costs directly allributable to the acquis ition , construct ion or production of an asset that necessarily takes a substantia l period of ti me to get ready for it s intended use or sa le are cap ita lized as part of the cost of the asset until s uch time as the assets are substantiall y ready lo r the intended usc or sale. All other borrowing costs are expensed in th e period in which they occur.
C ash and cash equiva lents Cash and cash equi va lent s in the ba lance sheet compri se cash at banks and on hand and demand depos its with an origina l maturi ty o f three months or less and highl y liquid in vestments that are readil y convertible into known amounts of cash and which are subj ec t to an ins igniti cant risk of cha nges in va lue net of outstanding bank overdralis as they are considered an integra l part of the Company's cash management.
l nven tories Cost of inventories inc ludes cos t of purchase, costs of convers ion and other cos ts incurred in bring ing the inventories to their present location and conditi on. Inventories of stores. spare parts and loose too ls are s lated at the lower of we ighted average cost and net realizable va lue. Ne t rea lizab le va lue represents the es timated selling price for in ventories in the ordinary course of business less a ll estimated cos ts o r compl ct ion and es timated cos ts necessa ry to make the sale. Records o r ln v@ lOIY ow r1 cd by thud pa1ty (customers) a1e rec01ded separate ly and a1c n GGU!J.!.Hed lo r as part ol' mventory for til e compan y ( 1\1. Elecr,.;"-
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Nepal Hydro and Electric Limited Notes to the financial statements for the year ended 31st As had 2074
Fhmre in NPR
i) Revenue from construction contracts including consultancy contracts Construction and consultancy contract revenue and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date, as measured by the propo11ion that contract costs incurred for work perfo rmed to date bear to the estimated tota l contract costs . Where the outcome of the contrac t cannot be estimated reliably, revemte is recognised to the extent of the contract costs incurred if it is probable that they will be recoverable. When the outcome of the contract is asce rtained reliably, contract revenue is recognised at cost of work performed on the contract plus propot1ionate margin , using the percentage of completion method. Percentage of completion is the proportion of cost of work performed to-date, to the tota l est imated contract costs. The estimated outcome of a contract is considered reliab le when all the following conditions are satisfied:
i. Tho umount of ro•i onuo oon bo mooourod rolinbly, ii . It is probable that the economic benefits associated with the contract will flow to the Group, iii. The stage of completion of the contract at the end of the reporting period can be measured reliably, iv. The costs incurred or to be incurred in respect of the contract can be measured reliably.
Provision is made for a ll losses incurred to the balance sheet date. Variations in contract work , claims and incentive payments are recogn ised to the extent that it is probable that they will result in revenue and they are capable of being reliably measured. Expected loss. if any, on a contract is recognised as expense in the period in which ir is foreseen, irrespective of the stage of completion of the contract. for contracts where progress billing exceeds the aggregate of contract costs incurred to-date and recognised profits (or recognised losses , as the case may be), the surplus is shown as the amount due to customers.
ii) Dividend and intet·est income Dividend income (net of withholding taxes) fro m investments is recognised when the shareholder's right to receive payment has been established (prov ided that it is probable that the economic benefits will tlow to the Company and the amount of income can be measured re liab ly). In case of stock dividend only the number of shares is increased.
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amoun t of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective in terest rate app licable, which is the rate that exactly discounts es timated future cash receipts through the expected life of the financial asset to that asset ' s net carrying amOL(nt on initia l recognition.
2.1 I Foreign curTency transactions i. The functional currency of the Company and its subsidiaries is determined on the basis of the primary economic environment in which it
operates. The functional currency of the Company is Nepa lese Rupee (NPR). 11. In preparing the financial statements the Company, transactions in currencies other than the enti ty's functional currency (fore ign
currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. iii. At the end of each reporting period, monetary items denominated in fore ign currencies are retranslated at the rates prevailing at that date.
Non-monetary items carried at fa ir va lue that arc denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair va lue was determined.
iv. Non-monetary items that are measured in terms of histori ca l cost in a fore ign currency are not retranslated. v. Exchange di fferences on monetary items are recognised in Statement of Profit and Loss in the period in which they arise.
2. I 2 Employment Benefits The Company has schemes of employment benel"its namely provident fund , employee gratuity, other retirement benefit and accumu late leave paya ble as per employee serv ice manual.
Defined co ntribution plan - Pr·ovident Fund Under defined contribution plans, provident fund. the Company pays pre-defined amounts to separate funds and does not have any lega l or constructive ob ligation to pay additional sums. Contributions to defined contribution schemes (Provident fund ) are charged to the profit or loss statement in the year to which they relate as the company has no further defined obl igations beyond monthly contributions. Contributions to de ll ned contribution schemes are deposited with Employees Provident Fund (Kannachari Sanehaya Kosh).
Defined benefit plan - Gra tuity r. The Company provides for defined benefits in the fo rm of gratuity. The liability or asset recognised in the ba lance sheet in respec t o r
defined benefit gratuity plan is the present value of defined benefit ob ligat ions at the end of the reporting period less fair va lue of p lan assets. The defined benetit obligation is ca lcu lated ann ually by actuaries through ac tuarial va luat ion using the projected unit cred it meth od.
ii . The Company recognizes the fo llowing changes in the defi ned benefit obligation to the profit or loss statement: • Service costs comprisin g current serv ice costs and past-service costs • In terest expenses The net interest cost is calculated by applying the discount rate to the net balance of the defin ed benefit ob liga tion and fa ir va lue of plan
assets. This cost is inc luded in employee benefit expenses in the statement of the profit & loss. iii . Any changes in the liabilities over the year due to changes in assumptions or experience within the scheme.
comprehensive income in the period in which they arise. are recognized in other
iv. NAS 19 requires the exerc ise of judgment in relation to various assumptions including li1ture pay rises, inllation and discount rates and emp loyee and pensioner demographics. The Company determ ines the assumptions in conj unction with its actuaries, and be lieves th ese assumptions to be in line with best practice. but the app lica tion of different assumptions could have a signi fica nt effect on the amount rencc ted in the income statement. other comprehensive in come and balance sheet . There may be also interdependency between some of" the assum ptions.
v . The class ilica tion o l' the Co mpany's net ob ligation into current and non- current is as per the actuaria l va luation report. Vl . Gratuity is li lllded and de pos ited to a separate entity (C iti zen In ves tment Trusr , towa rds mee tin g the gratuity ob ligation
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Firmre in NPR
Short tct·m and lo ng-tct·m employmen t benefits i. A li ability is recognised for benefits accruing to employees in respect of wages and sa laries, annual leave and s ick leave in the period the
re lated service is rendered at the undiscounted amount of the benefits expected to be paid in exchange for that serv ice. ii. Liabilities recognised in respect of short- tem1 employee benefits are measured at the uncliscoun tecl amount of the benefits expected to be
paid in exchange for the related serv ice. iii . Compensated absences which are not expected to occur with in twelve months after the end of the period in wh ich the employee renders
the related services are recogn ised as a li abil ity at the present val ue of the ob ligation as at the Balance sheet date determined based on an notunt•inl vn lunticm.
2.13 Taxation Income Tax Income tax on the profit or loss for the year comprises current taxes and deferred taxes. Income tax is recognized in the profit or loss statement except to the extent tha t it relates to items recognized d irectly to equity .
CutTent tax C urrent tax is the expected tax payable on the taxable income for the year using tax rates at the ba lance sheet elate and any adjustment to tax payable in respect of prev ious years. Income tax rates app licable to company is 25%, during the fiscal year end the company has booked current tax as Rs.IO, 250,706.
DefetTed tax 1. Deferred tax is provided us ing the balance sheet liab il ity method, providing for temporary differences between the carry ing amo un ts of
assets and liabilities for fi nancia l reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected rea li zation or settlement of the carry ing amount of assets and liabilit ies using tax rates at the balance sheet date.
ii . A deferred tax asset is recognized onl y to the extent that it is probable that future taxab le profits wi ll be ava ilable aga inst which the asset can be utilized. The ca rry ing a moun t of deferred tax assets is rev iewed at the end of each reporting period and reclucecl to the extent that it is no longer probable that suffici ent taxable profits wi ll be ava il able to allow all or part of the asset to be recovered.
iii. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset rea lized, based on tax rates (and tax laws) that have been enacted or substantive ly enacted by the end of the reporting period.
IV. At the end of Ashaclh 3 1, 2074, the company's deferred tax asset is Rs . 16,723,360.
2.l4 Ea ntings per share Basic earnings per share is computed by dividing the profit/ (loss) for the year by the weighted average number of equ ity shares outstanding during the year. The weighted average number of eq uity shares outstanding during the year is adjusted for treasury shares. bonus issue, bonus element in a rights issue to ex isting shareholders, share sp li t and reverse share spli t (conso lidation of shares). Diluted earn ings per share is computed by d ivid ing the profit/ (loss) for the year as adj usted for dividend , interest and other charges to expense or income (net of any attributab le taxes) relating to the clilutive potentia l equ ity shares. by the weighted average number of eq uity shares considered fo r deri ving basic earnings per share and the we ighted average number of eq ui ty shares which cou ld have been issued on the convers ion of a ll dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their convers ion to eq ui ty shares would decrease the net profit per share from continuing ordinary operat ions. Potentia l cli lutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date.
2.1 S Provisions, contingencies and commitments i. Provisions are recogni sed when the Company has a present ob li gation ( lega l or constructive) as a result of a past event, it is probable that
an outflow of resources embodying economic benefits wi ll be required to settle the ob ligat ion and a reli ab le estimate can be made of the amount of the obligation .
ii . When the Company expec ts some or al l of a provision to be reimbursed, fo r example, under an insurance con tract, the reimbursement is recogn ised as a separate asset. but only when the reim bursement is virtually certain .
111. T he expense re lati ng to a provis ion is presented in the statement of profit and loss net of any reimbursement. iv. If the effect of the time va lue of money is material , prov is ions are disco un ted us ing a c urrent pre-tax rate that reflects, when approp ri ate,
the risks specific to the liabi li ty. When discounting is used, the increase in the provis ion due to the passage of time is recognised as a finance cos t.
-v. A provision fo r onerous cont rac ts is recogni sed when the expected benefit s to be derived by the Company fro m a contract are lower than the unavoidable cos t o r meeting its ob ligations under the contract. The prov ision is meas ured at the present va lue of the lower of the expected cost of terminating th e contrac t and the expected net cost of continuing with the contract. Before a provision is estab lished, the Company recognises any impairment loss on the assets assoc iated with that cont ract.
' ' 1. A contingent li abil ity is a possib le ob ligat ion that arises from past events whose existence will be confirmed by the occurrence or nonoccurrence of one or more uncerta in future events beyond the control of the Company or a present ob ligation that is not recog ni zed because it is not probab le th at an outflow of resources wi ll be req uired to se ttl e the ob ligation. A contingent liabi li ty also arises in extremely rare cases where there is a liabi lity that cann ot be recognized because it cannot be measured reliably. The Company does not recognize a cont ingent liabi lit y but d isc loses its exis tence in the standa lone linancia l statemen ts.
" ii . A cont ingen t asset is a poss ib le asset that arises Ji·om past events and whose ex istence will be confirmed only by the occurrence or nonoccurrence or one or mor~ uuc~rt a in fulllre events not who lly wit hin the control oft h ~ entity.
vi ii. Commitme nt s include th e aJ110U IIt o f purc hase order (net of adva nces) issued to pan ics lor complet ion o f assets. i: .x. Provisions , cont ingen t liabi l iti ~s , contingent assets and commitments arc rev iewed at(ptch reporting peri od.
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Fifmre in NPR
2.16 Financiallnstruments i. Financial inst1·nments Financial assets and financial liabi lities are recognised when the Company becomes a party to the contract embodying the related financia l instruments. All financial assets , tinancial liabilities and financial guarantee contracts are initially measured at transaction cost and where such values are different from the fair value, at fair value . Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than tinancial assets and financial liabilities at fair va lue through profit and loss) are added to or deducted from the fa ir va lue measured on in iti al recognition of financial asset or financial liability. Transaction costs directly attributable to the acquisition of financia l assets and financia l liabi liti es at fair va lue through profit and loss are immed iately recognised in the statement of profit and loss. In case ot 1nterest tree or concessiOn loans/debentureslpre lerence shares g1ven to subs1dmnes, assocmtes and JOint ventures , the excess of the actual amount of the loan over initial measure at fair value is acco unted as an equity in ves tment. In vestment in equity instruments issued by subs idiaries, associates and joint ventures are measured at cost less impairment. Investment in preference shares/debentures of the subsidiaries are treated as equi ty instruments if the same are convertible into eq uity shares or are redeemable out of the proceeds of equity instruments issued for the purpose of redemption of such in vestments. In vestment in preference shares/debentures not meet ing the aforesaid conditions are c lass ified as debt instruments at amortised cost.
ii. Effective interest method The effective interest method is a method of calculating the amo11ised cost of a financial instrument and of allocating interes t income or expense over the relevant period . The effective interest rate is the rate that exactly discounts future cash receipts or payments throug h the expected life of the financial instrument, or where appropriate, a shorter period. Income/ expense ari sing on financial instruments after applying an effective interest rate is recognised in Statement of Profit and Loss and is included in the "Other finance income" or "Other fin ance cosr · line item. For calculating EIR, risk free interest rate of 8% p.a. has been cons idered.
iii. Financial assets F inancial assets at amortised cost Financ ial assets a re subsequently measured at amortised cost if these tinancial assets are held wi thin a business model whose objective is to hold these assets in order to co llect contractual cash tlows and the contractual terms of the financia l asset give ri se on specified dates to cash flows that are solely pay ments of principal and interest on the principal amount outstanding.
F inancial assets measu1·ed at fair value F inancial assets are measured at fair va lue through other comprehens ive income if these financ ial assets are held within a business mode l whose objective is to hold these assets in order to co llect contractual cash tlows or to sell these financia l assets and the contractual terms of the financia l asset give ri se on specified dates to cash tlows that are so lely payments of principal and interest on the princ ipal amount outstanding. The Company in respect of equity investments (other than in subsidiaries, assoc iates and joint ventures) which are not held for trading has made an irrevocable election to present in other comprehens ive income subsequent changes in the fair va lue of such equity instruments . Such a n election is made by the Company on an instrument by instrument basis at the time of initial recognition of such equity in vestments. Financial asset not measured at amortised cost or at fa ir va lue through other comprehensive income is carried at fair va lue through the s tatement of profit and loss . For financial assets maturing with in one year !"rom the balance sheet date, the carrying amounts approx imate fair va lue due to the shorter maturity of these ins truments.
Impairment of linancial assets Loss allowance for expected cred it losses is recognised for tinancial assets measured at amortised cost and fair va lue through the statement of pro fit and loss . T he company recognises impairment loss on trade rece ivab les us ing expec ted cred it loss model. Fo r financ ial assets whose credit risk has not" s ignificantl y increased s ince ini tial recognition , loss a ll owance equal to twelve months expected credit losses is recognised. Loss allowance e qua l to the li fet ime expected c redit losses is recognised if the cred it risk on the financia l instruments has significantly increased s ince initial recognition.
Oc-1·ecognition of financial assets T he Compan y de-recognises a financial asset only when the cont ractual rights to the cash tlows from the financ ial asset expire, or it tra nsfers the financ ia l asset and the transfer qualifies for de-recognition under NFRS 9. If the Company neither transfers nor retains substantiall y all the ri sks and rewards of ownership and contin ues to control the transferred asset , the Company recognises its reta ined interest in the asse ts and an associated liabili ty for amo unts it may have to pay. If the Company retains substantia lly all the risks and rewards of ownership of a trans ferred financial asset, the Company continues to recognise the financial asset and also recognises a co ll ateralised borrowing for the proceeds received . O n de-recognition of a fin anc ial asset in its entirety, the difference between the carrying amounts measured at the date of de-recognition and tile cons ideration received is recognised in statement of profit or loss.
iv. Financial liabilities and equity instnnnents
Ia ssitication as debt or eq uity Fi nanc ia l li ab il ities and eq uity instruments issued by the Company are class ified according to the substance of the contractual arrangements ~1 1t cred into and the del"initions of a finan cial liab ility and an equity instrument.
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'le pal Hydro and Electric Limited Notes to t he financial statements for the ycm· ended 31st Asha d 2074
Fi!mre in NPR
F inancia l liabilities are initially measured at fair va lue, net of transaction costs, and are subseq uently measured at amortised cost, using the effective interest rate method where the time value of money is s ignificant. Interest bearin g bank loans, overdrafts and issued de bt are initially m easured at fair value and are subsequentl y measured at amort ised cost us ing the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the sett lement or redemption of borrowings is recognised over the term of the borrowings in the s tatement of profit and loss. For trade and other payables maturing wi thin one year from the balance sheet date, the carryi ng a mounts approximate fair val ue due to the s hort maturi ty of these instruments.
!Financia l guar·antce contracts F inancial guarantee con tracts issued by the Company are those contracts that req uire a payment to be made to reimburse the holder for a loss it incurs because the spec ified debtor fai ls to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised ini tially as a li ab ili ty at· fair va lue, adj usted for transaction costs that are directly attributable to the issuance of the g uarantee.
D e-recognition of financial liability A financial liability is derecognised when the obligation under the li ability is discharged or cancelled or expires. When an existing financial I iability is replaced by another from the same lender on substanti ally different terms, or the terms of an existing liabili ty are substantia lly rnoditled , suc h an exchange or modification is treated as the de-recognition of the original liabili ty and the recognition of a new liability. The d iffe rence in the respect ive carry ing amo unts is recognised in the statement of profit and loss.
v. Off-setting of financial instr·umcnts F inanc ial assets and financia l liabilities are offset and the net amount is reported in the standalone ba lance sheet if there is a currently e nforceable legal ri ght to offset the recognised amounts and there is an intention to settle on a net bas is, to realize the assets and settle the I iabilities simultaneously.
2. 17 Leases T he determination of whether an arrangement is (or contains) a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, o r contains, a lease if fulfilment of the arrangement is dependent on the use of a specitlc asset or assets and the a rrangement conveys a ri ght to use the asset or assets, even if that right is not explicitly spec ified in an arrangement. A lease is classified at the inception date as a financ e lease or an operat ing lease. For arrangements entered into prior to Shrawan I , 2072, the C ompany has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition .
C ompany as a lessee A lease that trans fers substantiall y a ll the ri sks and rewards inc identa l to ownersh ip to the Company is c lass ified as a finance lease. A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certa in ty that the Company will o btain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term. F inance leases are capita li zed at the commencement of the lease at the incept ion date fair value of the leased asset or, at the present va lue of tl1e minimum lease payments at the inception of the lease, whic hever is lower. Lease payments are apportioned between tlnance charges and reduction of the lease liabi lity so as to achieve a constant rate of interest on the remaining balance of the li abili ty. Finance charges are recognised in finance costs in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case th ey are c apitalized in accordance with the Company's general policy on the borrowing costs. O perating lease payments are recognised as an expense in the statement of profit and loss on a straight-line bas is over the lease term unless c ither: a . another systemat ic basis is more representative of the time pattern of the user' s bene tit even if the payments to the lessors are not on that l> as is; or I>. the payments to th e lessor are structured to increase in line with expected general inflation to compensate for the lessor's expected inflationary cost increases. If payments to the lessor vary because of factors other than genera l inflation , then this condition is not met.
2.1 8 Financialr·isk management objectives and policies The Compa ny ' s business ac ti vities expose it to a variety of financia l risks, namely primaril y to fluctuations in foreign currency exchange rates, interes t rates, eq ui ty prices, liquidity and cred it risk, which may adversely impact the fa ir va lue of its financial instruments . The Compan y's Board and senior management has overa ll respons ibility for the es tabli shment and overs ight of the Company's ri sk management. The Compan y's ri sk management poli cies a re established to identi fy and analyse the ri sks faced by the Company, to se t appropriate ri sk limits and controls and to monitor risks and ad herence to limits. Risk management policies and systems are reviewed regul arl y to re fl ect changes in market conditions and the Compan y's act iviti es. The Ri sk Management is done by the Compa ny's management that provides assurance that the Company's financia l risk acti vities arc govern ed by approp ri ate policies and procedures and that l'i nanc ia l risks are identified , measured and managed in accordance with the Company's po lic ies and risk objectives. The Board of Directo rs rev iews and agrees po lic ies for manag ing each of these risks which are summarized below:-
a. C urTc ncy risk The Company is subjec t to the risk that changes in fo re ign currency va lues impact the Company's imports of in ventories and property. plant and eq uipment. As at 3 1st Ash ad. 2074, there is no unhedged exposure to the Company on holding fi nancia l assets (Bank bala nces and Trade rece iva bles) and liabilities (trade paya blcs) other than in their functional currency. T he Company is exposed to foreign exchange ri sk ari sing from various c urrency exposures. pri mari ly with res pect to US Doll ar. The ai m of the Group ·s approacl1 to manage ment of currency risk is to leave the Cor).Wfny wit h no materi al res idual riskiThis ai m has been achieved in a ll years presented. Since, there is not s ignificant ri sk managemeny{lasfnot ent ered into any forward contrpct. ~
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Ne pal Hydr·o and Electric Limited No tes to the financial statements for the year ended 31st As had 2074
Fi!mre in NPR
The fo llowing table demonstrate the unhedged exposure in USD exchange rate as at Ashad 31 , 2074, Ashad 3 1, 2073 and Sharwan I, 2072 Particulars C urTency Ashad 31, 2074 As had 31, 2073 S hanva n I, 2072
Cash and bank balance NPR 305,760 317,263 300,647
USD 2,973 2,973 2,973
NPR 16,8 16,644 29,606,447 1) ,084,743 T rade Rece ivables USD 11 8, 11 7 233 ,249 105,357
EURO ]1),7!10 J9,7l!O ]1) ,720
Trade Payables NPR 1,276,904 I ,255,552 1,255,552
USD 12,414 12,414 12,414
b. Credit ri sk C red it risk refers to the risk that a counterparty including its subsid iaries and assoc iates will default on its contractual obl igations resul ting in financial Joss to the Compan y. The Company has adopted a policy of only dea ling with creditworthy counterparties and obtaining suffic ient collateral , where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company's exposure a nd th e credit ratings of its counterparties are continuous ly monitored. In add ition, the Company is exposed to credit risk in re lation to financial guarantees given to banks provided by the Company. T he Company ' s maximum exposure in this respect is the maximum amount the Company could have to pay if the guarantee is ca lled on. No amount has been recogni sed in the financial position as financial liab ilities.
c. Interest rate risk Interest rate ri sk is the risk that th e fair va lue or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company ' s exposu re to the risk of changes in market interest rates relates primarily to the Company 's long-term and short-term debt obligations. S ince, the interest rate risk is infl uenced by market forces, NHE has little ro le to play fo r minimizing this risk. Further, the Company manages its interest rate risk by having a ba lanced portfolio of fixed and variab le rate loans and borrowings by negotiat ing with hi gh ly reputed commerc ia l banks.
d. Liquidity r·isk Liquidi ty ri sk is the risk that the Company will face in m eeting its obl igati ons associated with its financial liabi lities. The Company's approach to managing liquidity is to ensure that it w ill have suffic ient funds to meet its liabilities when due without incurring unacceptable losses. In doing this, management cons iders both normal and stressed cond itions. A materia l and sustained shortfall in our cash flow could create potential bus iness continuity risk. In order to contro l liquidity risk and fo r better work ing cap ita l management, NHE has made arrangement adequate level of OD fac ility for short term financing. The Company's Finance department regularly monitors the cash position to ensure it has suffic ient cash ongoing basis to meet operational needs. Any short term surplus cash generated by the operating enti t ies, over and above the mno unt required for work ing cap ital management and o ther operational req uirements, are retained as cash and cash eq ui va lents (to the extent required) and any excess is in vested in interest bearing term depos its to optimize its cash returns on in vestments. The said investments are made in instruments with appropriate maturities or suffic ient liquidity to prov ide suffic ient head-room as determi ned by the abovementioned forecasts.
C apital M anagement For th e purpose of the Company 's cap ital management, cap ital includes issued cap ital and a ll other eq uity reserves a ttributab le to the eq uity holders of the company. The Company manages its capital so as to safeguard its ab ili ty to continue as a go ing concern and to optimize returns to the shareholders . The cap ital structure of the Company is based on management 's judgement of the appropriate balance of key e lements in order to meet its s trateg ic and day-to-day needs. Company consider the amount of cap ita l in proportion to risk and manage the capital s tructure in li ght of changes in economic conditions and the risk characteri stics of the underlying assets. The Company's a im to trans late profi tabl e growth to s uperior cash generation through effic ient cap ita l management. The Company's policy is to mai ntai n a stabl e and strong cap ital structure w ith a focus on tota l eq uity so as to maintain investor, creditor, and market confide nce and to sustain future development and growth of its business. The Company's foc us is on keeping strong total equi ty base to ensure independence, security , as we ll as a hi gh financial fle xibility for potentia l future borrowings, if required, witho ut impacting the risk profi le of th e Company. The Company will take appropriate steps in order to mainta in , or if necessary adjust, its capita l structure. The management monitors the re turn on capital as well as the leve l of d ividends to shareholders. No changes were made in th e objectives, policies o r processes fo r manag ing capita l during the years ended 3 1st Ashad 2074, 2073 and 2072.
Segmen t r epor·ting The C hief Execut ive Officer and fu nctional managers of the Company has been ide ntil~ed as the Chief Operating Decision Maker (CODJ\!1) as defined by NFRS 8, O perating Segments . The CODM eva luates the Company's performance and a llocates resources based on an analysis of va ri ous perfo rm ance indicators , however the Company is primarily engaged in only one segment v iz. , ' ·manufact ure, i11s ta ll . commission, refurbish and repair sal es of hydro mechanical and elec tromechanica l eq ui pment of hydro project and sub-station and that most of th e operations ar c in Nepa l Hence th e Com pany does not have any repo rtab le ;:rnents as per NFRS 8 "Operatmg Segments"
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Nepal Hydro and Electr·ic Limited Notes to the financial statements for· the yea r· ended 31st Ashad 2074
Fi!mre in NPR
Staff Bonus and Housing are acco unted for in accordance with the provisions of Bonus Act 2030 and Labor Act 2048 respectivel y. T he Company has not invested the provisions made for staff quarters in separate fund in accordance with section 41 (2) of Labor Act 2048. Company has practice of lending housing loan to employee at subsidies interest rate from its housing fi.md.
2.22 Jo in t Venture
Following Joint Ventures of Nepa l Hydro & Electric Ltd are operational joint ventures, therefo re, onl y protlt I (loss) of the same have been transferred.
a. NHE-IPM J oint Ve nture
Nepa l Hydro & Electric Limited have entered into a joint venture agreement with Industria l Processors & Meta llizers (P) Ltd ( !PM) [named 'N HE-IPM Joint Ven ture '] for carrying out the work of ' Suppl y and Delivery of Turbine Spare Parts and Repair of Turbine of Ka li Gandak i ·A· Hydro Power Plant Rehabilitation Project' contract ID No. KGAHPPRP/G/ICB-3. The Joint Venture entered into an agreement with Nepa l Electricitv Authority for the sa id project on August 8, 20 I 4. The va lue of the contract was Rs. I 15,872, 100. Based on which the Joint Venture has awarded the work of'repair of turbine' to Nepa l Hydro & Electric Limited for a contract value of Rs. 37,356 , 100 on august, 2014. Up to last fiscal year NHE raised invoice of Rs. 33 ,3 54,300. During the year, the NHE has not raised any invo ices. At the balance sheet date NHE shows recei vab le ofRs. 1,426,267
b. CQNEC-NHE Co nsortium, C hapali The company has entered into a Consorti um agreement with Chongqing New Century Elec trica l Company Limited, China (CQNEC) [named ·CQNEC-NHE consortium ' ] for carrying out the work of Supply, Construction & Installation of 132/66 kV Chapali Substations and Associated Works under 'Chapali Augmentation (Chapa li 132 kV Substation expansion) Project ' . The Consortium entered into an agreement with Nepa l Electrici.!:y Authori ty for the sa id project on June 06, 20 14. The va lue of the contract was US$ 4,203 ,781.15 plus CHF 1,377,567.59 plus IRs 65,005,374.30 plus NRs 153 ,609,740.49. Based on which, the Consortium has awarded the work of ·Supply and Delivery of Locally Manu factured Plant and Equipmen t and Construction and Install ation works to Nepa l Hydro & Electric Limited for a contract va lue of RS 120,000,000 on 07th September 20 14. In addition the company has raised invoice at agreed serv ice cost as and when required. The company has also g iven guarantee to the banker for loan limit of Rs 8.829 million to CQNEC-Nl-IE Conso1tium. i. Up to the end of As hadh 31st 2074, the company has raised invoice to CQNEC-NHE Consortium of Rs 122,2 I3 ,411 , during
the yea r the company raised in voice to CQNEC-Nl-IE consortium of Rs. 27,986,211: (Pre VAT). ii. At the end of year NHE received distributed profit of Rs. 9,975 ,000 & shows receivable of
Rs. 90,762,334.00
c. CQNEC-NHE Consortium, Kohalpur· Mahendranagar
Tl1e company has entered into a Consortium agreement with Chongqing New Centu1y Electrical Company Limited, China (CQN EC) [named ' CQNEC-NHE consortium ' ] for carrying ou t the work of Design, Supply, & Construction of 132kV Substations. The Consortium entered into an agreement with Nepal Electrici.!:y Authority for the sa id project on February 06, 2015. The va lue of the contract was US$ 1,862,528.09 plus IRs 166,098,628.99 plus NRs 329,9 15,964.42. Based on which , the Consortium has awarded the work of ·Supply and Delivery of Locally Manufactured Plant and Equipment and Construction and Installation works to Nepa l Hydro & Electric Limited for a contract va lue of RS 324,967,224.95 on 07th April 2015. In addition the company has raised invoice at agreed serv ice cost as and when required. The company has al so given guarantee to the banker for loan limit of Rs 8.775 million to CQNECNI-IE Consortium.
I , Up to the end of Ashadh 31st 2074, i. e. current year the company has raised in vo ice to CQNEC-NI-IE Consortium of Rs 159,01 1,55 1.22 (Pre VAT).
II. At the end of year NHE received di stributed profit ofRs. 39,900,000 & shows rece ivable of Rs. 80.60 I ,438.88
d. CQNEC-NHE Consortium, GSRP
The company has entered into a Consortium agreement with Chongqing New Century Elec trical Company Limited, China (CQNEC) [named ·CQNEC-NHE consort ium ' ] for carry ing out the work of Procurement of Plant for Grid Substation Re inforcement Project (Des ign. Suppl y and Install )" contract ID No. PMD/GS RP-071 /072-0 I. The Consortium entered into an agreement with Nepa l Electric Authority for the sa id projec t on .July 05, 20 15. The va lue of the contract was US$ 3,687. 101.76 plus IRs 79,733 ,9 18 .74 plus NRs I 34,643 ,028.14 . Based o n which, the Consortium has awarded the work or ·s uppl y and Deli ve1y o f Locally Manufactured Plant and Equipment and Construction and Installation works to Nepal Hydro & Electric Limited for a contract va lue of RS 130,603,737.32 on 20th July 2015. In add ition the company has raised in vo ice at agreed serv ice cos t as and l·vhen required . The company has a lso given guarantee to the banker for loan limit oi'Rs 75.6 18 mi llion to CQNEC-NHE Consortiu m.
i. Up to the end o f As hadh 3 1st 2074, i.e. current yea r the company has raised in vo ice to CQNEC-NHE Consortium ofRs 90, 152,017.00 (Pre VAT ).
ii . At the end o f year N HE rece ived distributed profit of Rs. 39 .900.000 & shows rece iva ble of Rs 55,630.28 1.07
c. CQNEC-:'IH E Conso1·tium, Kulekhani 1st·
The compan y has entered into a Consorti um agreem~nt with Chongqing New Centu ry Elec trical Company Limited, China (CQNEC) [n amed ·' ' QN CC-NHE consortium ' ] lor carry ing out th e wo rk )11; Suppl y, De li ve ry. Lay ing,j Installation. Testing & Commissioning of 66kV.
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Nepal Hydro and Electric Limited Notes to the financial statements for the year ended 31st Ash ad 2074
Fi.~ure iu NPR
XLPE,240 Sq . mm, Single Core, Copper Conductor, Aluminum Armored Power Cab le With Termination Kits' . The Consortium entered into an agreement with Nepal Electric Authority for the said project on March 20, 20 16. The value of the contract was NRs 31,178,906.94. Based on which, the Consort ium will be awarded the work of ·supply and Deli very of Loca ll y Manufactured Plant and Equipment and Construction and Install ation works to Nepal Hydro & Electric Limited, but at the end of Ashadh 2073 , the contract has not made. The company has also g iven guarantee to the banker for loan limit ofRs 8 million to CQNEC-NHE Consortium
During the year, the NHE has raised invoice to CQNEC-NHE Consortium of Rs 2,000,000.00 (Pre VAT). At the balance sheet date NHE s hows receivable ofRs.7, 515 ,590.
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