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KARACHI PORT IMPROVEMENT PROJECT
(LN :7956-PAK)
FINANCIAL STATEMENTS AS AT JUNE 30,2016
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RIAZ AHMAD1 SAQ/81 GOHAR & CO. Chartered Accountants
INDEPENDENT AUDITORS' REPORT
Result Assured A member of
Services for Growth AGN International
5-Nasim C.H.S., Major Nazir Bhatti Road,
Off: Shaheed-e-Millat Road, Karachi.
Tel: (92-21) 34945427, 34931736
Fax: (92-21) 34932629
\'\fe have audited the accompanying financial statements o f Karachi Port Improvement Project (LN:7956-PAK), which comprises of the statement of assets and liabilities as at June 30, 2016, the statement of expenditure and sources and application o f fund statement for the year then ended, and a summary of significant accounting policies and o ther explanatory information. The financial statements have been prepared by management of Karachi Port Improvement Project based on Clause B of section II of the annexed schedule to the project agreement dated January 24, 2011 between Karachi Port Trust and International Bank for Reconstruction and D evelopment ("the Agreement").
Management's Responsibility for the Financial Statements
Management is responsible fo r the preparation o f these financial statements in accordance with the Clause B o f section II of the annexed schedule to the agreement, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibili ty is to express an opinion on these financial statements based on our audit. We conduct our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements arc free from material misstatement.
An Audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the finan cial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks o f material misstatement o f the financial statements, whether due to fraud o r error. In making those risk assessments, the audito r considers internal control relevant to the entity's preparation of 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 o f th e 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.
\'\fe believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. (t,.,,.
Website: www.rasgco.com Email : [email protected] Regional Offices at Lahore & Islamabad
Page 1 of2
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Result Assured A member of
Services for Growth AGN International
Opinion
In our opinion, the financial statements of Karachi Improvement Project (LN:7956-PAK) for the year ended June 30, 2016 arc prepared, in all material respects, in accordance with the Clause B of section II of the annexed schedule to the agreement.
Bas is of Accounting and Restriction on Distribution and Use
Without modifying our opinion, we draw attention to note 2.1 to the financial statements, which describes the basis of accounting. The fmancial statements are prepared to assist Karachi Port Trust to comply with the financial reporting provisions of the agreement referred to above. As a result, the financial statements may not be suitable for another purpose. Our report is intended solely for Karachi Port Trust and International Bank for Reconstruction and D evelopment and should no t be distributed to or used by parties o ther than Karachi Port Trust or International Bank for Reconstruction and Development.
Emph asis of Matter
Without qualifying our opinion, we draw attention to note 1.2 to the financial statements which sta tes that the management of the project has intention to transfer all assets and related liabilities to the KPT after completion of construction work.
2 1 JAN 2011 Karachi: ________ _
A t;,.
Cha rtered Accounta nts
E ngagement Partner: Shahid Kamran t-.
Page 2 of 2
KARACHI PORT IMPROVEMENT PROJECT (LN:7956-PAK) STATEMENT OF ASSETS AND LIABILITIE S AS AT JUNE 30, 2016
2016 2015 ----USD----
123,458,667 100,805,504
4,290,485 12,467,213
127,749,152 113,272,717
4,116,959 4,116,959
101,027,309 95,986,365 105,144,268 100,103,324
14,887,360 6,855,718
142,771 82,737
6,230,938 6,230,938
1,343,815 -
22,604,884 13,169,393
Note ASSETS
NON-CURRE NT ASSETS
Capital work in progress 4
CURRENT ASSETS
Receivable from State 5 Bank of Pakistan (SBP)
TOTAL ASSETS
Unrealized foreign exchange (loss) / gain - net
NON-CURRENT LIABILITIES
Retention money 6
Long term loans 7
CURRE NT LIABILITIES
Interest payable 8
Withholding tax payable 9
Payable to Karachi Port Trust (KPT)
Account payable
127,749,152 113,272,717 TOTAL LIABILITIES
2016 2015 ----PKR----
12,365,760,911 10,053,399,390
443,977,834 1 ,251 ,628, 482
12,809,738,745 11 ,305,027,872
(533,450,518) (262,796,372)
422,346,358 417,921 ,12-1-
10,577,559,235 9,807,845,487 10,999,905,593 10,225,766,611
1,558, 706,592 697,226,506
18,368,732 12,385,880
632,445,247 632,445,247
133,763,099 -
2,343,283,670 1,342,057,633
12,809,738,745 11,305,027,872
The annexed notes from to 10 form an in tegral part of these financial statements. (.,_
KARACHI PORT IMPROVEMENT PROJECT (LN:7956-PAK) SOURCES AND APPLICATION OF FUND STATEMENT FOR THE YEAR ENDED JUNE 30, 2016
2016 2015 ----USD----
12,467,213 12,467,213
5,040,944
17,508,157
13,217,672
13,217,672
4,290,485
4,290,485
SOURCES OF FUNDS
Opening cash ba lances
Counterpart funding
IBRD designated account 18,167,370 SBP account 18,167,370
9,890,912 6,230,938
Add: Cash receipts
Counterpart funding
Direct payment-IBRD
Direct payment - KPT Direct payment- counterpart
IBRD designated account 7,000,000 SBP account
Cash availa ble (opening 41,289,220 balance + receipts)
22,594,766 6,227,241
APPLICATION OF FUNDS
Civil works, goods, consultant se1vices and training
Interest paymem Expenditures funded by
counterpart funds
28,822,007 Cash used
Closing cash balance
Counterpan funding IBRD designated account
12,467,213 SBP account
T otal closing cash bala nce
2016 2015 ----PKR----
1,251,628,482 1,251,628,482
524,103,287
1,775,731,769
1,331, 753,935
1,331,753,935
443,977,834
443,977,834
1,794,931,341 1,794,931,341
998,958,204 632,445,24'"7
7 12,081,300
4,138,416,092
2,254,722,649 632,064,961
2,886,787,610
1,251,628,482
1 ,251 ,628, 482
GENE~NANCE I I I
KARACHI PORT IMPROVEMENT PROJECT (LN:7956-PAK) STATEMENT OF EXPENDITU RE FOR THE YEAR ENDED JUNE 30, 2016
UNREALIZED FOREIGN EXCHANGE
(LOSS) I GAIN
Unrealised foreign exchange Qoss) /gain- net
2016 2015
-----PFCI~-----
(270,654,146) (301,551,713)
Unrealised foreign exchange gain / Qoss) brought forward (262,796,372) 38,755,341
(533,450,518) (262,796,3 72)
The annexed notes from 1 to 10 form an integral par t of Lhese financial statements. 4-.
GENE~R FINANCE
KARACHI PORT IMPROVEMENT PROJECT (LN:7956-PAK) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER EXPLANATORY INFORMATION FOR THE YEAR ENDED J UNE 30,2016
1 STATUS AND NATURE OF BUSINESS
1.1 The Karachi Port Improvement Project (the project), is a \Vorld Bank approved project for financing a developmental project of Karachi Port Trust (KPT) (a statutory body established under the Karachi Po rt Trust Act. 1886). The project comprises of two main components; Component A is for financing the reconstruction of berths 15-171\ on East Wharf. \V'hereas, Component B addresses the areas of (i) preparation of business plan and strategic development plan (ii) Strcngthentng environmental management at port to eventually comply with ISO international standards (iii) Improving financial management and financial panning to meet IFRS.
1.2 The management of the project has intention to transfer all assets and related liabilities to the
KPT after completion of construction work.
2 BASIS OF PREPARATION
2.1 Statement of compliance
These financial s tatements have been prepared l1l accordance with the generally accepted
accounting principles.
2.2 Basis of measurement
These financial statements have been prepared on the basis of histOrical cost convention.
2.3 Functional and presentatio n currency
These financial statements arc presented in Pak Rupees, which is the functional and
presentation currency of the project and rounded off to the nearest rupee.
For the purpose of presentatjon and comparison amounts have also been presented in USD.
3 SIGNIFICANT ACCOUNTING POLICIES
3.1 Borrowing cos t
The borrowing costs are interest or other auxiliary cost incurred by the trust in connection with borrowing of funds and is treated as perioclic cost and charged to cxpencliture account. However, borrowing costs incurred on qualifying assets are capitalized as part of the cost ~
the asset.
2
3.2 Financial liabilities
All financial liabilities arc recognized at the time when the project becomes a party to the contractual provisions of the instrument. A financial liability is dcrccognized when the obligation under the liability is discharged or cancelled or expired. Financial liabilities include loan payable, accrued mark-up on loan and tax payable.
3.3 Fore ig n currency transactions
foreign currency transactions arc converted into rupees at the rates of exchange
approximating to those ruling at the date of transaction. Monetary assets and liabilities in foreign currencies have been Lranslatcd into rupees at the rates of exchange approximating those ru ling at the elate of statement of assets & liabilities. Exchange gains or losses are included in statement of expenditure currently.
3.4 Prov is ions
Provisions are recognized when the project has a present legal or constructiYc obligation as a result of past events and it i~ probable that an outOow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of amount of obligation
(~ can be made.
2
3.2 Financial liabilities
All financial liabilities arc recognized at the time when the project becomes a party to the contractual provisions of the instrument. A financial liability is dcrccognized when the obligation under the liability is discharged or cancelled or expired. Financial liabilities include loan payable, accrued mark-up on loan and tax payable.
3 .3 Fore ig n c urrency transac tio ns
f'orcign currency transactions are converted into rupees at the rates of exchange approximating to those ruling at the date of transaction. Monetary assets and liabilities in foreign currencies have been translated into rupees at the rates of exchange approximating those ruling at the date of statement of assets & liabilities. Exchange gains or losses are included in statement of expenditure currently.
3.4 Provisions
Provisions arc recognizccl when the project has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to scrtle the obligation and a reliable estimate of amount of obligation can be made. f,._
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2016 2015 2016 2015 ----USD---- Note ----PKR----
4 CAPITAL WORK IN PROGRESS
5
6
7
8
1,872,976 1,872,976 C.\P - billing 188,096,556 188,096,556 289,500 289,500 Front end fee 24,983,850 24,983,850
12,986,335 12,986,335 :\Lobtlization advance 1,224,611,391 1,224,611,391 4,116,959 4,116,959 Retention money 419,405,460 419,405,460
76,991,375 63,377,181 I ntenm payments 7,754,347,761 6,382,450,199 21,114,601 13,082,959 1 ntcrest 2,153,198,665 I ,312,285,748 6,086,921 5,079,594 \X'ith holding rax 601,117,228 501,566,186
123,458,667 100,805,504 12,365,760,911 10,053,399,390
RECEIVABLE FROM STATE BA K OF PAKISTAN
4,290,485 12,467,213 Recei,·able from SBP 443,977,834 1 ,25 L ,628,482
Th.is amount was received by the S13P from lntcrnar.ional Bank for Reconstruction and Dc,·clopment. The SBP translated the amount in Pak Rupees on the date of receipt of amow1t and has informeu the National Bank o f Pak.istan about availability of fw1d with intimation to management of KPT
RETENTION MONEY
4,116,959 -1,116,959 Retention money
LONG TERM LOANS
1,872,976 1,872,976 C:\1'- billing
289,500 289,500 Front end fcc 12,986,335 12,986,335 i\ fobilizatton advance
51,066,386 46,025,442 Interim paymenb
34,812,112 34,812,1 12 SBP Account 101,027,309 95,986,365
INTEREST PAYABLE
14,887,360 6,855,7 18 Tntcre~t payable
422,346,358
196,100,587
30,310,650
1,359,669,27 5
5,346,650,597 3,644,828,126
10,577,559,235
8.1 1,558,706,592 ==========
417,921,124
190,481,659
29,442,150
1,320,710,270
4,726,819,617 3,5 10,391,790 9,807,845,487
697,226,506
8.1 Interest is payable on the loan amount at rth' rate of 8.2 percent per annum.
9 WITH HOLDING TAX PAYABLE
142,771 82,737 \\'irh hold111g tax =======
9.1 18,368,732 12,38S,880
9.1 'TI1is represents amount of ta.'( deducted on parmcnts made to various contractors during the year, wh.ich is to be deposited in the Government treasury. (~
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10 GENERAL
arements h:1v,· l.ct.:n 1oundect off t0 the nearest rupee. (~
~ GENERAL MANAGER FINANCE
I • , '\
KARACHI PORT IMPROVEMENT PROJECT (LN:7956-PAK) MANAGEMENT REPRESENTATION FOR THE YEAR ENDED JUNE 30, 2016
This is to certify that the Project Furtds have been utili7.ccl for the intended purposes only. (._