pakgen power limited board of directors mr. ghazanfar hussain mirza chairman mr. aurangzeb firoz mr....

PAKGEN POWER LIMITED

PROTECTINGPOWERING TODAY

TOMORROW........!

HALF YEARLY REPORTFOR THE PERIOD ENDED

JUNE 30, 2019

Half Yearly ReportFor the period ended 30 June 2019

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02 CompanyProfile03 Directors’Report04 Directors’Report(Urdu)05 Auditors’ReporttotheMembersonReviewofCondensedInterim FinancialInformation06 CondensedInterimBalanceSheet08 CondensedInterimProfitandLossAccount andOtherComprehensiveIncome09 CondensedInterimCashFlowStatement10 CondensedInterimStatementofChangesinEquity11 SelectedNotestotheCondenseInterimFinancialInformation

CONTENTS


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COMPANY PROFILE

THE COMPANY PakgenPowerLimited(“theCompany”)wasincorporatedinPakistanon22June1995undertheCompaniesOrdinance,1984 (NowCompanied Act, 2017). The registered office issituated at 53-A, Lawrence Road, Lahore. The principalactivitiesoftheCompanyaretoown,operateandmaintainanoilfiredpowerstation(“theComplex”)havinggrosscapacityof365MWinMehmoodKot,Muzaffargarh,Punjab,Pakistan.

BOARD OF DIRECTORS Mr.GhazanfarHussainMirza Chairman Mr.AurangzebFiroz Mr.ShahidMalik Dr.ArifBashir Mr.FarrukhIfzal Mr.HassanNawazTarar Mr.BadarUlHassan

CHIEF EXECUTIVE OFFICER MianHassanMansha

AUDIT COMMITTEE Mr.FarrukhIfzal Chairman Mr.AurangzebFiroz Mr.ShahidMalik

HUMAN RESOURCE & Mr.FarrukhIfzalChairman REMUNERATION(HR &R) MianHassanMansha COMMITTEE Mr.GhazanfarHussainMirza

CHIEF FINANCIAL OFFICER Mr.TanvirKhalid

COMPANY SECRETARY Mr.KhalidMahmoodChohan

BANKERS OF THE HabibBankLimited COMPANY TheBankofPunjab SilkBankLimited UnitedBankLimited AlliedBankLimited NationalBankofPakistan BankAlfalahLimited FaysalBankLimited AskariBankLimited HabibMetropolitanBankLimited MCBBankLimited(FormerlyNIBBankLimited) BankIslamicPakistanLimited AlBarakaBank(Pakistan)Limited

AUDITOR OF THE RiazAhmad&Co. COMPANY CharteredAccountants

LEGAL ADVISOR OF Mr.M.AurangzebKhan THE COMPANY AdvocateHighCourt

REGISTERED OFFICE 53-A,LawrenceRoad, Lahore-Pakistan UAN:042-111-11-33-33

HEAD OFFICE 1-B,AzizAvenue,Gulberg-V, Lahore-Pakistan Tel:042-35717090-96 Fax:042-35717239

SHARE REGISTRAR CentralDepositoryCompanyofPakistanLimited CDCHouse,99-B,Block-B,S.M.C.H.S Shahra-e-Faisal,Karachi-74400 Tel:(92-21)111-111-500 Fax:(92-21)34326053

PLANT MehmoodKot,Muzaffargarh, Punjab-Pakistan.


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DIRECTORS’ REPORT

TheDirectorsofPakgen Power Limited “the Company”arepleased topresent their reporttogetherwithoperationalandfinancialresultsofyourCompanyfortheperiodended30June2019.

Wereportthatduringtheperiodunderreviewpowerplantbyachievingalltheoperatingstandardsdispatched234.259MWHofelectricityascomparedwith549.534MWHdispatchedduringthecorrespondingperiodofthepreviousfinancialyear.Resultantly,thecapacityfactorremainedat15.4%asagainst36.3%demonstratedinthecomparablesixmonthsofthepreviousfinancialyear.

Operation Financial Results:

ThefinancialresultsoftheCompanyforperiodended30June2019areasfollows:

PERIOD ENDED Financial Highlights 30 June 30June 2019 2018

Revenue(Rs‘000’) 6,734,197 9,191,417Grossprofit(Rs‘000’) 2,000,710 1,069,263Grossprofitratiotorevenue(%) 29.7 11.63Aftertaxprofit(Rs‘000’) 1,323,896 627,712Aftertaxprofitratiotorevenue(%) 19.66 6.82Earningspershare(Rs) 3.56 1.69

TheCompanyhaspostedaftertaxprofitofRupees1.323billionasagainstRs627.712millionprofitearnedinthecomparativeperiod.ThenetprofitsoftheCompanydemonstratedtheearningsperShareofRs.3.56asagainstRs.1.69pershareinthecorrespondingpreviousperiod.

OursolecustomerCPPA-GremainsunabletomeetitsobligationsinaccordancewiththePowerPurchaseAgreement (PPA)whicharesecuredunderasovereignguaranteeofGovernmentofPakistan.Ason30June2019,anamountofRupees18.610billionwasoutstandingagainstCPPA-Gof theseRupees1.041billionwasclassifiedoverdue. TheCompany ispursuingthematter, collectivelywithother IPPson IPPAC (IndependentPowerProducerAdvisoryCouncil)platform,withtherelevantauthoritiesandministries.

Duringtheperiod,JanuarytoJune2019,CompanyproducedandsoldelectricityforfivemonthsexceptforthemonthofMarch2019.TheplantwasonstandbymodeforthemonthofMarchduetolownationaldemand.ThiswasasperinstructionsofNationalPowerControlCenter(NPCC).

Corporate objectives:

Beingaresponsibleandreliableenergycompany,weaimtofacilitatethenationinreducingitscostofenergybymaintaininghighefficiencyandavailabilityofplant.

COMPOSITION OF BOARD:

Total number of Directors:(a) Male 7(b) Female 0Composition:(i) IndependentDirectors 1(ii) OtherNon-executiveDirectors 6(iii) ExecutiveDirectors 1


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COMMITTEES OF THE BOARD:

Audit Committee of the Board:

Sr. # Name of Member1 Mr.FarrukhAfzal (Member/Chairman)2 Mr.AurangzebFiroz (Member)3 Mr.ShahidMalik (Member)

Human Resource & Remuneration (HR&R) Committee:

Sr. # Name of Member1 Mr.FarrukhIfzal Member/Chairman2 MianHassanMansha Member3 Mr.GhazanfarHusseinMirza Member

DIRECTORS’ REMUNERATION:

Thecompanydoesnotpayremunerationto itsnon-executivedirectors including independentdirectorsexceptformeetingfee.Aggregateamountofremunerationpaidtoexecutiveandnon-executivedirectorshavebeendisclosedinnote9oftheannexedfinancialstatements.

Acknowledgement:

Theboardappreciatesthemanagementforestablishingamodernandmotivatingworkingclimateandpromotinghighlevelsofperformanceinallareasofthepowerplant.Wealsoappreciatetheeffortsofthecompany’sworkforcefordeliveringremarkableresultsandwewishfortheirlongliferelationshipwiththeCompany.

For and on behalf of the Board of Directors

Mian Hassan Mansha Mr. Arif BashirChiefExecutiveOfficerDirectorLahore:27thAugust2019


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Introduction

WehavereviewedtheaccompanyingcondensedinterimstatementoffinancialpositionofPAKGENPOWERLIMITEDas at 30 June2019and the related condensed interim statement of profitor lossandother comprehensive income,condensed interimstatementof changes in equity,andcondensed interimstatementofcashflows,andnotesto thecondensed interimfinancialstatementsforthehalfyearthenended(here-in-afterreferredtoasthe“condensedinterimfinancialstatements”).ManagementisresponsibleforthepreparationandpresentationofthesecondensedinterimfinancialstatementsinaccordancewithaccountingandreportingstandardsasapplicableinPakistanforinterimfinancialreporting.Ourresponsibilityistoexpressaconclusiononthesecondensedinterimfinancialstatementsbasedonourreview.Thefiguresofthecondensedinterimstatementofprofitorlossandothercomprehensiveincomeforthequartersended30June2019and30June2018havenotbeenreviewedandwedonotexpressaconclusiononthemaswearerequiredtoreviewonlythecumulativefiguresforthehalfyearended30June2019.

Scope of Review

Weconductedour review inaccordancewith InternationalStandardonReviewEngagements2410, “Reviewof Interim Financial InformationPerformedby the IndependentAuditor of theEntity”.Areviewofcondensedinterimfinancialstatementsconsistsofmakinginquiries,primarilyofpersonsresponsibleforfinancialandaccountingmatters,andapplyinganalyticalandotherreviewprocedures.AreviewissubstantiallylessinscopethananauditconductedinaccordancewithInternationalStandardsonAuditingandconsequentlydoesnotenableustoobtainassurancethatwewouldbecomeawareofallsignificantmattersthatmightbeidentifiedinanaudit.Accordingly,wedonotexpressanauditopinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that theaccompanyingcondensedinterimfinancialstatementsarenotprepared,inallmaterialrespects,inaccordancewiththeaccountingandreportingstandardsasapplicableinPakistanforinterimfinancialreporting.

Emphasis of matter

WedrawattentiontoNote5.1.1tothecondensedinterimfinancialstatementswhichdescribestheuncertaintyregardingoutcomeofclaimslodgedbyCentralPowerPurchasingAgency(Guarantee)Limited,whichhavebeendisputedbytheCompany.Ourconclusionisnotqualifiedinrespectofthismatter.

Theengagementpartneron the review resulting in this independentauditor’s review report isMubasharMehmood.

RIAZ AHMAD & COMPANYChartered Accountants

Lahore:27thAugust2019

INDEPENDENT AUDITORS’ REVIEW REPORT TO THE MEMBERS OF PAKGEN POWER LIMITED REPORT ON REVIEW OF CONDENSED INTERIM FINANCIAL STATEMENTS


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Un-audited Audited 30 June 31December Note 2019 2018 (Rupees in thousand)

EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Authorizedsharecapital 400,000,000(31December2018:400,000,000) ordinarysharesofRupees10each 4,000,000 4,000,000 Issued,subscribedandpaid-upsharecapital 372,081,591(31December2018:372,081,591) ordinarysharesofRupees10each 3,720,816 3,720,816Capitalreserve 116,959 116,959Revenuereserve-un-appropriatedprofit 13,621,691 12,855,905 Total equity 17,459,466 16,693,680 LIABILITIES NON-CURRENT LIABILITIES Longtermfinance-secured 4 - -Employeebenefit-gratuity 29,313 29,349

29,313 29,349CURRENT LIABILITIES Tradeandotherpayables 598,212 527,540Accruedmark-up/profit 217,362 126,510Shorttermborrowings 12,899,821 11,093,800Currentportionoflongtermfinance 4 111,456 334,369Unclaimeddividend 13,886 6,732

13,840,737 12,088,951

Total liabilities 13,870,050 12,118,300 CONTINGENCIES AND COMMITMENTS 5 TOTAL EQUITY AND LIABILITIES 31,329,516 28,811,980

Theannexednotesformanintegralpartofthesecondensedinterimfinancialstatements.

CONDENSED INTERIM STATEMENT OF FINANCIAL POSITIONAs at 30 June 2019

CHIEF EXECUTIVE DIRECTOR CHIEF FINANCIAL OFFICER


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Un-audited Audited 30 June 31December Note 2019 2018 (Rupees in thousand) ASSETS NON-CURRENT ASSETS FixedAssets 6 7,229,391 7,680,263Longterminvestment - -Longtermloanstoemployees 28,709 30,205Longtermsecuritydeposit 300 300

7,258,400 7,710,768 CURRENT ASSETS Stores,sparepartsandotherconsumables 879,166 832,661Fuelstock 630,916 516,398Tradedebts 18,610,462 16,939,272Loans,advancesandshorttermprepayments 394,930 378,385Loanstoassociatedcompany 1,833,481 1,000,000Otherreceivables 220,050 276,445AccruedInterest 17,200 9,258Salestaxrecoverable 1,184,646 1,145,615Cashandbankbalances 300,265 3,178

24,071,116 21,101,212 TOTAL ASSETS 31,329,516 28,811,980



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CONDENSED INTERIM STAEMENT OF PROFIT AND LOSS ACCOUNT AND OTHER COMPREHENSIVE INCOME (UN-AUDITED) FOR THE HALF YEAR ENDED 30 JUNE 2019

Half Year Ended Quarter Ended 30 June 30 June 30 June 30 June Note 2019 2018 2019 2018 (Rupees in thousand) (Rupees in thousand) SALES 6,734,197 9,191,417 3,172,476 5,079,953COSTOFSALES 7 (4,733,475) (8,122,154) (2,177,142) (4,575,723) GROSSPROFIT 2,000,722 1,069,263 995,334 504,230 ADMINISTRATIVEEXPENSES (94,907) (84,253) (27,148) (26,822)OTHEREXPENSES (1,388) (1,657) (906) (926)OTHERINCOME 77,439 18,663 47,959 15,599 PROFITFROMOPERATIONS 1,981,854 1,002,016 1,015,239 492,081 FINANCECOST (657,958) (374,304) (338,105) (199,598) PROFITBEFORETAXATION 1,323,908 627,712 677,134 292,483TAXATION - - - -

PROFITAFTERTAXATION 1,323,908 627,712 677,134 292,483 OTHERCOMPREHENSIVEINCOME: ITEMSTHATWILLNOTBERECLASSIFIEDTOPROFITORLOSS - - - - ITEMSTHATMAYBERECLASSIFIEDSUBSEQUENTLYTOPROFITORLOSS - - - - OTHERCOMPREHENSIVEINCOME - - - - TOTALCOMPREHENSIVEINCOMEFORTHEPERIOD 1,323,908 627,712 677,134 292,483 EARNINGSPERSHARE-BASICANDDILUTED(RUPEES) 3.56 1.69 1.82 0.79 Theannexednotesformanintegralpartofthesecondensedinterimfinancialstatements.



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CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITYFOR THE HALF YEAR ENDED 30 JUNE 2019

RESERVES SHARE Capital Revenue TOTAL CAPITAL Retained Un- EQUITY payments appropriated reserve profit ( - - - - - - - - - -- - -Rupees in thousand - - - - - - - -- - - ) Balance as at 31 December 2017 - audited 3,720,816 116,959 11,766,41515,604,190 Transactionwithowners-Finaldividendfortheyearended31December2017@Rupee1pershare - - (372,082) (372,082) Profitforthehalfyearended30June2018 - - 627,712 627,712Othercomprehensiveincomeforthehalfyearended30June2018 - - - -Totalcomprehensiveincomeforthehalfyearended30June2018 - - 627,712 627,712 Balance as at 30 June 2018 - un-audited 3,720,816 116,959 12,022,04515,859,820 Profitforthehalfyearended31December2018 - - 857,429 857,429Othercomprehensivelossforthehalfyearended31December2018 - - (23,569) (23,569)Totalcomprehensiveincomeforthehalfyearended31December2018 - - 833,860 833,860 Balance as at 31 December 2018 - audited 3,720,816 116,959 12,855,90516,693,680 Transactionwithowners-Finaldividendfortheyearended31December2018@Rupee1.5pershare - - (558,122) (558,122) Profitforthehalfyearended30June2019 - - 1,323,9081,323,908Othercomprehensiveincomeforthehalfyearended30June2019 - - - -

Totalcomprehensiveincomeforthehalfyearended30June2019 - - 1,323,9081,323,908 Balance as at 30 June 2019 - un-audited 3,720,816 116,959 13,621,69117,459,466 Theannexednotesformanintegralpartofthesecondensedinterimfinancialstatements.



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CONDENSED INTERIM STATEMENT OF CASH FLOWS (UN-AUDITED) FOR THE HALF YEAR ENDED 30 JUNE 2019 Half Year Ended 30 June 30June Note 2019 2018 (Rupees in thousand)CASH FLOWS FROM OPERATING ACTIVITIES Cash utilized in operations 8 (223,603) (1,189,187) Financecostpaid (566,802) (367,758)Interestincomereceived 68,728 17,824Netincreaseinlongtermloanstoemployees (126) (49,069)Incometaxpaid (2,739) (6,425)Gratuitypaid (7,704) (7,016)

Net cash used in operating activities (732,550) (1,601,631) CASH FLOWS FROM INVESTING ACTIVITIES Capitalexpenditureonfixedassets (2,504) (14,553) Net cash used in investing activities (2,504) (14,553) CASH FLOWS FROM FINANCING ACTIVITIES Repaymentoflongtermfinance (222,913) (222,913)Loanreceivedfromrelatedparty - 870,000Dividendpaid (550,967) (356,771) Netcashfrom/(usedin)financingactivities (773,880) 290,316 Net decrease in cash and cash equivalents (1,508,934) (1,325,868) Cash and cash equivalents at beginning of the period (11,090,622) (9,132,822) Cash and cash equivalents at end of the period (12,599,556) (10,458,690) CASH AND CASH EQUIVALENTS Cashinhand 214 230Cashatbanks 300,051 127,592Shorttermborrowings (12,899,821) (10,586,512)

(12,599,556) (10,458,690)

Theannexednotesformanintegralpartofthesecondensedinterimfinancialstatements.



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SELECTED NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UN-AUDITED)FOR THE HALF YEAR ENDED 30 JUNE 2019

1. THECOMPANYANDITSOPERATIONS PakgenPowerLimited(“theCompany”)wasincorporatedinPakistanon22June1995

undertherepealedCompaniesOrdinance,1984(NowCompaniesAct,2017).Theregisteredoffice of theCompany is situated at 53-A, LawrenceRoad, Lahore. TheCompany’sordinarysharesarelistedonPakistanStockExchangeLimited.TheprincipalactivitiesoftheCompanyaretoown,operateandmaintainanoilfiredpowerstation(“theComplex”)havinggrosscapacityof365MWinMehmoodKot,Muzaffargarh,Punjab,Pakistan.TheCompanyhasaPowerPurchaseAgreement(PPA)withitssolecustomer,CentralPowerPurchasingAgency(Guarantee)Limited(CPPA-G)for30yearswhichcommencedfrom01February1998.

2. BASISOFPREPARATION 2.1 Thesecondensedinterimfinancialstatementshavebeenpreparedinaccordancewiththe

accountingandreportingstandardsasapplicableinPakistanforinterimfinancialreporting.The accounting and reporting standards as applicable inPakistan for interim financialreportingcompriseof:

• InternationalAccountingStandard(IAS)34,InterimFinancialReporting,issuedbythe

InternationalAccountingStandardsBoard(IASB)asnotifiedundertheCompaniesAct,2017;and

• ProvisionsofanddirectivesissuedundertheCompaniesAct,2017. WheretheprovisionsofanddirectivesissuedundertheCompaniesAct,2017differwith

therequirementsofIAS34,theprovisionsofanddirectivesissuedundertheCompaniesAct,2017havebeenfollowed.

2.2 These condensed interim financial statements do not include all the information and

disclosures required in annual financial statements and shouldbe read in conjunctionwith the annual audited financial statements of theCompany for the year ended 31December2018.Thesecondensedinterimfinancialstatementsareun-audited,however,havebeensubjectedtolimitedscopereviewbytheauditorsandarebeingsubmittedtotheshareholdersasrequiredbytheListedCompanies(CodeofCorporateGovernance)Regulations,2017andSection237oftheCompaniesAct,2017.

3. ACCOUNTINGPOLICIES Theaccountingpolicies andmethodsof computationsadopted for thepreparationof

thesecondensedinterimfinancialstatementsaresameasappliedinthepreparationoftheprecedingauditedannualpublishedfinancialstatementsoftheCompanyfortheyearended31December2018exceptforthechangesinaccountingpoliciesasstatedinnote3.2totheseunconsolidatedinterimfinancialstatements.

3.1 Critical accounting estimates and judgments Thepreparationofthesecondensedinterimfinancialstatementsinconformitywithapproved

accounting standards requires the useof certain critical accounting estimates. It alsorequiresmanagementtoexerciseitsjudgmentintheprocessofapplyingtheCompany’saccountingpolicies.Estimatesandjudgmentsarecontinuallyevaluatedandarebasedonhistoricalexperienceandother factors, includingexpectationsof futureeventsthatarebelievedtobereasonableunderthecircumstances.


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Duringpreparationofthesecondensedinterimfinancialstatements,thesignificantjudgmentsmadebythemanagementinapplyingtheCompany’saccountingpoliciesandkeysourcesofestimationanduncertaintywerethesameasthosethatappliedintheprecedingauditedannualpublishedfinancialstatementsoftheCompanyfortheyearended31December2018.

3.2 Changes in accounting policies due to applicability of certain international Financial Reporting Standards (IFRS)

Thefollowingchangesinaccountingpolicieshavetakenplaceeffectivefrom01January

2019: 3.2.1 IFRS 9 “Financial Instruments” TheCompanyhasadoptedIFRS9“Financial Instruments”from01January2019.The

standardintroducednewclassificationandmeasurementmodelsforfinancialassets.Afinancialassetshallbemeasuredatamortisedcostifitisheldwithinabusinessmodelwhoseobjectiveistoholdassetsinordertocollectcontractualcashflowswhichariseonspecifieddatesandthataresolelyprincipalandinterest.Adebtinvestmentshallbemeasuredatfairvaluethroughothercomprehensiveincomeifitisheldwithinabusinessmodelwhoseobjectiveistobothholdassetsinordertocollectcontractualcashflowswhichariseonspecifieddatesthataresolelyprincipalandinterestaswellassellingtheassetonthebasisofitsfairvalue.AllotherfinancialassetsareclassifiedandmeasuredatfairvaluethroughprofitorlossunlesstheCompanymakesanirrevocableelectiononinitialrecognitiontopresentgainsand lossesonequity instruments inothercomprehensiveincome.Despite these requirements, a financial assetmaybe irrevocably designatedasmeasuredatfairvaluethroughprofitor losstoreducetheeffectof,oreliminate,anaccountingmismatch.Forfinancialliabilitiesdesignatedatfairvaluethroughprofitorloss,thestandardrequirestheportionofthechangeinfairvaluethatrelatestotheCompany’sowncreditrisktobepresentedinothercomprehensiveincome(unlessitwouldcreateanaccountingmismatch).NewsimplerhedgeaccountingrequirementsareintendedtomorecloselyaligntheaccountingtreatmentwiththeriskmanagementactivitiesoftheCompany.Newimpairmentrequirementsusean‘expectedcreditloss’(‘ECL’)modeltorecogniseanallowance.Impairmentismeasuredusinga12-monthECLmethodunlessthecreditriskonafinancialinstrumenthasincreasedsignificantlysinceinitialrecognitioninwhichcasethelifetimeECLmethodisadopted.Forreceivables,asimplifiedapproachtomeasuringexpectedcreditlossesusingalifetimeexpectedlossallowanceisavailable.

TheCompany has adopted IFRS9without restating the prior year results.However,

subsequenttothereportingperiod,theSecuritiesandExchangeCommisionofPakistan(SECP)videitscimmunicationhasexemptedtheapplicabilityofIFRS9inrespectofdebtsduefromGovernmentofPakistantopowersupplycompaniesforalimitedperiodofthreeyearsi.e.till30June2021.Hence,expectedcreditlossesinrespectoftradedebtsduefromCPPA-G,thesolecustomeroftheCompany,whicharebackedbysovereignguaranteeofGovernmentofPakistanhavenotbeenconsideredinthesecondensedinterimfinancialstatements.

Key changes in accounting policies resulting from application of IFRS 9 i) Classificationandmeasurementoffinancialinstruments IFRS9largelyretainstheexistingrequirementsinIAS39“FinancialInstruments:Recognition

andMeasurement”fortheclassificationandmeasurementoffinancialliabilities.However,itreplacesthepreviousIAS39categoriesforfinancialassetsi.e.loansandreceivables,fairvaluethroughprofitor loss(FVTPL),availableforsaleandheldtomaturitywiththecategoriessuchasamortisedcost,fairvaluethroughprofitorloss(FVTPL)andfairvaluethroughothercomprehensiveincome(FVTOCI).


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Investmentsandotherfinancialassets a)Classification From01January2019,theCompanyclassifiesitsfinancialassetsinthefollowing

measurementcategories: ·thosetobemeasuredsubsequentlyatfairvalue(eitherthroughothercomprehensive

income,orthroughprofitorloss),and ·thosetobemeasuredatamortisedcost TheclassificationdependsontheCompany’sbusinessmodel formanagingthe

financialassetsandthecontractualtermsofthecashflows. Forassetsmeasuredatfairvalue,gainsandlosseswilleitherberecordedinprofit

orlossorothercomprehensiveincome.Forinvestmentsindebtinstruments,thiswilldependonthebusinessmodelinwhichtheinvestmentisheld.Forinvestmentsin equity instruments, thiswill dependonwhether theCompany hasmade anirrevocable election at the time of initial recognition to account for the equityinvestment at fair value through other comprehensive income. TheCompanyreclassifiesdebtinvestmentswhenandonlywhenitsbusinessmodelformanagingthoseassetschanges.

b) Measurement Atinitialrecognition,theCompanymeasuresafinancialassetatitsfairvalueplus,

inthecaseofafinancialassetnotatfairvaluethroughprofitorloss,transactioncoststhataredirectlyattributabletotheacquisitionofthefinancialasset.Transactioncostsoffinancialassetscarriedatfairvaluethroughprofitorlossareexpensedinprofitorloss.

Financialassetswithembeddedderivativesareconsideredintheirentiretywhen

determiningwhethertheircashflowsaresolelypaymentofprincipalandinterest. Debt instruments SubsequentmeasurementofdebtinstrumentsdependsontheCompany’sbusiness

modelformanagingtheassetandthecashflowcharacteristicsoftheasset.Thereare threemeasurement categories intowhich theCompany classifies its debtinstruments:

Amortised cost Financialassetsthatareheldforcollectionofcontractualcashflowswherethosecash

flowsrepresentsolelypaymentsofprincipalandinterestaremeasuredatamortisedcost.Interestincomefromthesefinancialassetsisincludedinotherincomeusingthe effective interest ratemethod.Any gain or loss arising onderecognition isrecogniseddirectlyinprofitorlossandpresentedinotherincome/(otherexpenses)togetherwithforeignexchangegainsandlosses.Impairmentlossesarepresentedasseparatelineitemintheprofitorloss.

Fair value through other comprehensive income (FVTOCI) Financialassetsthatareheldforcollectionofcontractualcashflowsandforselling

thefinancialassets,where theassets’cashflows representsolelypaymentsofprincipalandinterest,aremeasuredatFVTOCI.Movementsinthecarryingamountare taken through other comprehensive income, except for the recognition ofimpairmentlosses(andreversalofimpaimentlosses),interestincomeandforeignexchangegainsandlosseswhicharerecognisedinprofitorloss.Whenthefinancialassetisderecognised,thecumulativegainorlosspreviouslyrecognisedinother


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comprehensiveincomeisreclassifiedfromequitytoprofitorlossandrecognisedinotherincome/(otherexpenses).Interestincomefromthesefinancialassetsisincludedinotherincomeusingtheeffectiveinterestratemethod.Foreignexchangegainsandlossesarepresentedinotherincome/(otherexpenses)andimpairmentlossesarepresentedasseparatelineitemintheprofitorloss.

Fairvaluethroughprofitorloss(FVTPL) AssetsthatdonotmeetthecriteriaforamortisedcostorFVTOCIaremeasured

atFVTPL.AgainorlossonadebtinstrumentthatissubsequentlymeasuredatFVTPLisrecognisedinprofitorlossandpresentednetwithinotherincome/(otherexpenses)intheperiodinwhichitarises.

Equity instruments TheCompanysubsequentlymeasuresallequityinvestmentsatfairvalueforfinancial

instrumentsquotedinanactivemarket,thefairvaluecorrespondstoamarketprice(level1).Forfinancialinstrumentsthatarenotquotedinanactivemarket,thefairvalueisdeterminedusingvaluation techniques includingreference to recentarm’s lengthmarkettransactionsortransactionsinvolvingfinancialinstrumentswhicharesubstantiallythesame(level2),ordiscountedcashflowanalysisincluding,tothegreatestpossibleextent,assumptionsconsistentwithobservablemarketdata(level3).

Fair value through other comprehensive income (FVTOCI) Where theCompany’smanagementhaselected topresent fairvaluegainsand

lossesonequityinvestmentsinothercomprehensiveincome,thereisnosubsequentreclassificationoffairvaluegainsandlossestostatementofprofitorloss.Impairmentlosses(andreversalofimpairmentlosses)onequityinvestmentsmeasuredatFVTOCIarenotreportedseparatelyfromotherchangesinfairvalue.

Fairvaluethroughprofitorloss(FVTPL) Changesinthefairvalueofequityinvestmentsatfairvaluethroughprofitorlossare

recognisedinotherincome/(otherexpenses)intheprofitorlossasapplicable. Dividendsfromsuchinvestmentscontinuetoberecognisedinprofitorlossasother

incomewhentheCompany’srighttoreceivepaymentsisestablished. ii) Impairment From01January2019,theCompanyassessesonaforwardlookingbasistheexpected

creditlossesassociatedwithitsdebtinstrumentscarriedatamortisedcostandFVTOCI.Theimpairmentmethodologyapplieddependsonwhethertherehasbeenasignificantincreaseincreditrisk.

Forotherreceivables, theCompanyappliesthesimplifiedapproachpermittedby IFRS

9,whichrequiresexpectedlifetimelossestoberecognisedfrominitialrecognitionofthereceivables.

iii) Hedge accounting IFRS9requiresthathedgeaccountingrelationshipsarealignedwithitsriskmanagement

objectivesandstrategyandtoapplyamorequalitativeandforward-lookingapproachtoassessinghedgeeffectiveness.

Thereisnoimpactofthesaidchangeonthesecondensedinterimfinancialstatements

asthereisnohedgeactivitycarriedonbytheCompanyduringtheperiodended30June2019.


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iv) ImpactsofadoptionofIFRS9onthesecondensedinterimfinancialstatementsas on 01 January 2019

On01January2019,theCompany’smanagementhasassessedwhichbusinessmodels

applytothefinancialassetsheldbytheCompanyatthedateofinitialapplicationofIFRS9(01January2019)andhasclassifieditsfinancial instrumentsintoappropriateIFRS9categories.

ReclassificationsoffinancialinstrumentsonadoptionofIFRS9 Ason01January2019,theclassificationandmeasurementoffinancialinstrumentsofthe

Companywereasfollows:

Measurement category Carrying amounts Original New Original New Difference (IAS 39) (IFRS 9) - - - - - - Rupees - - - - - -

Non-currentfinancialassets Longtermloanstoemployees Loansandreceivables Amortisedcost 30,205 30,205 - Longtermsecuritydeposits Loansandreceivables Amortisedcost 300 300 - Currentfinancialassets Tradedebts Loansandreceivables Amortisedcost 16,939,272 16,939,272 - Loantoassociatedcompany Loansandreceivables Amortisedcost 1,000,000 1,000,000 - Loanstoemployees Loansandreceivables Amortisedcost 15,520 15,520 - Otherreceivables Loansandreceivables Amortisedcost 153 153 - Accruedinterest Loansandreceivables Amortisedcost 9,258 9,258 - Cashandbankbalances Loansandreceivables Amortisedcost 3,178 3,178 - Non-currentfinancialliabilities Longtermfinance-secured Amortisedcost Amortisedcost - - - Currentfinancialliabilities Tradeandotherpayables Amortisedcost Amortisedcost 447,119 447,119 - Accruedmark-up/profit Amortisedcost Amortisedcost 126,510 126,510 - Shorttermborrowings Amortisedcost Amortisedcost 11,093,800 11,093,800 - Currentportionoflongtermfinance Amortisedcost Amortisedcost 334,369 334,369 - Unclaimeddividend Amortisedcost Amortisedcost 6,732 6,732 -

3.2.2 IFRS 15 ‘Revenue from Contracts with Customers’ TheCompanyhasadoptedIFRS15from01January2019.Thestandardprovidesasingle

comprehensivemodelforrevenuerecognition.Thecoreprincipleofthestandardisthatanentityshallrecogniserevenuetodepictthetransferofpromisedgoodsorservicestocustomersatanamountthatreflectstheconsiderationtowhichtheentityexpectstobeentitledinexchangeforthosegoodsorservices.Thestandardintroducedanewcontract-based revenue recognitionmodelwith ameasurement approach that is basedon anallocationofthetransactionprice.Thisisdescribedfurtherintheaccountingpoliciesbelow.Creditriskispresentedseparatelyasanexpenseratherthanadjustedagainstrevenue.ContractswithcustomersarepresentedinaCompany’sstatementoffinancialpositionasacontractliability,acontractasset,orareceivable,dependingontherelationshipbetweentheCompany’sperformanceand thecustomer’spayment.Customeracquisitioncostsandcoststofulfilacontractcan,subjecttocertaincriteria,becapitalisedasanassetandamortisedoverthecontractperiod.

TheCompany has adopted IFRS15by applying themodified retrospective approach

according towhich theCompany is not required to restate theprior year results. Theapplicationof IFRS15doesnothaveany impacton the revenue recognitionpolicyofthecompanyandtherefore,thecumulativeeffectofinitiallyapplyingthisstandardasanadjustmenttotheopeningbalanceofun-appropriatedprofitintheperiodofinitialapplicationisRupeesNil.

i) Key changes in accounting policies resulting from application of IFRS 15 TheCompanyrecognisesrevenueasfollows:


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a) Sale of electricity RevenuefromsaleofelectricitytotheCPPA-G,thesolecustomeroftheCompany,isrecorded

onthebasisofnetelectricaloutputdeliveredandcapacitymadeavailableatratesspecifiedunderthePowerPurchaseAgreement(PPA).PPAisacontractoveraperiodof30years.

b) Interest Interest income is accrued on a time proportion basis by reference to the principal

outstandingandtheapplicablerateofreturn. 3.3 Exemption from applicability of certain requirements of IFRS 16 Subsequent to the reporting period, SECP vide its communication has extended the

earlierexemptionfromtherequirementsofInternationalFinancialReportingInterpretationCommittee(IFRIC)4‘DeterminingWhetheranArrangementContainsaLease’,nowIFRS16‘Leases’toallcompanies,whichhaveenteredintopowerpurchaseagreementsbefore01January2019.Therefore,theCompanyisnotrequiredtoaccountfortheportionofitsPowerPurchaseAgreement(PPA)withCPPA-GasaleaseunderIFRS16‘Leases’.

Un-audited Audited 30 June 31December 2019 2018 (Rupees in thousand)4. LONG-TERMFINANCE-SECURED Openingbalance 334,369 780,194 Less:Repaidduringtheperiod/year 222,913 445,825

111,456 334,369 Less:Currentportionshownundercurrentliabilities 111,456 334,369

- -

5. CONTINGENCIESANDCOMMITMENTS 5.1 Contingencies Thereisnosignificantchangeinthestatusofcontingenciesasdisclosedinthepreceding

audited annual published financial statements of theCompany for the year ended31December2018exceptforthefollowing:

5.1.1CentralPowerPurchasingAgency(Guarantee)Limited(CPPA-G)hasraisedinvoicesfor

liquidateddamagestotheCompanyfrom11thto21st(uptoApril2019)agreementyear(aftertakingintoaccountforcedoutageallowancestipulatedunderthetermsofPowerPurchaseAgreement)onaccountofshortsupplyofelectricitybytheCompany,whichwasduetocashconstraintsoftheCompanyasaresultofdefaultbyCPPA-Ginmakingtimelypayments.LiquidateddamagesinvoicedtotheCompanyamountstoRupees6,266.08million (31December2018:Rupees6,266.06million).Outof these, theCompanyhasacceptedandpaidRupees4,006.41million(31December2018:Rupees4,006.39million).TheCompanydisputesandrejectsbalanceclaimsonaccountofliquidateddamagesthatareraisedbyCPPA-GonthepremisethatitsfailuretodispatchelectricitywasduetoCPPA-G’snon-paymentofduesontimelybasistotheCompanyandconsequentialinabilityoftheCompanytomaketimelypaymentstoitsfuelsupplierthatresultedininadequatelevelofelectricityproductionowingtoshortageoffuel.AgainstthesetheCompanyhasraisedinvoicedisputenoticestoCPPA-G.TheCompanyappointedmediationexpertunderthemechanismgiveninthePowerPurchaseAgreement(PPA).On22June2017,themediationexpertgavehisdecisioninfavouroftheCompany.However,thisdecisionisnotbindingoneitherparty.


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TheCompanyfiledcaseforarbitrationintheInternationalChamberofCommerce(ICC)toresolvethefollowingmatters,asperthemechanismallowedbyPPAforresolutionsofdisputes:

-Onvariousoccasions,CPPA-Ghassoughttosetoffamountsallegedlyowedtoitas

liquidateddamagesagainstamountsitmustpaytotheCompanyaspartofitsobligationstomakecapacitypayments.On8 January2018,CPPA-Gwrote to theCompany,threateningtosetoffatotalofRupees2.4billionwhichitconsidersasallegedlyduetoit,againstcapacitypaymentinvoicestobeissuedbytheCompany.Thefar-reachingimplicationsofCPPA-G’sthreattotakeunilateralactionlefttheCompanywithnooptionbuttoapproachthecourtsofPakistanforinterimrelief,untilthemattergetsresolvedfinallythrougharbitration,inaccordancewiththeprovisionsofthePPA.Initsordersdated16January2018,theLahoreHighCourtsuspendedthelegaleffectofCPPA-G’s8January2018letteronaninterimbasis.

-InSeptemberandNovember2015,CPPA-GsentanumberofletterstotheCompany,

purportingtodeductamountsfromtheenergypaymentsduetotheCompanyonthebasisthatithadprocuredfuelfromsuppliersotherthanthePakistanStateOilCompanyLimited(“PSO”).AmountswithheldonthisaccountfromtheinvoicesoftheCompanytotaledRupees4.9million.PPAdoesnotallowCPPA-GtodisputeinvoicesonthebasisthatfuelwasprocuredfromaproviderotherthanPSO.NeitherisCPPA-Gpermittedtoretroactivelydisputeinvoices,manymonthsoryearsaftertheyhavebecomedue.

-CPPA-GisrequiredtoprovideandrenewaLetterofCredit.LetterofCreditmustallow

access to “immediately available funds”,which “shall be in anamount equal to anaggregateoftwo(2)Monthsofcapacitypaymentsplusenergypayments”.CPPA-GhasfailedtorenewtheLettersofCredit,followingtheirexpiryon23December2010.

-Inadditiontoitspersistentfailuretomaketimelyenergyandcapacitypayments,CPPA-G

hasalsofailedtocomplywithitsobligationtopayinteresttotheCompany.PPAprovidesthat“Latepaymentsshallbearinterest”.Asaresult,atotalofRupees449.95millioninunpaidinterestisdueatthedateofthelatestinvoicesubmittedbytheCompany(tillthedateofrequestforarbitration).

-ForanumberofyearsCPPA-Ghasbeenissuingdespatchinstructionsrequestingthe

Companytorunthepowerplantcontinuouslyatalowminimumload,ortoperformsignificantrampingupordownatshortnotice.Thecontinuedoperationofthepowerplantsatlowloadaswellasrampingupordownatshortnoticegivesrisetoahostofoperatingproblems,includingerosionofthevalvesandhighboilervibrations,whichcausesthepowerplanttoshutdown.

Duringtheperiodended30June2019,anarbitratorhasbeenappointedwhowillframethe

caseandthecaseisstillpendingforhearing.Theultimateoutcomeofthemattercannotpresentlybedetermined,andconsequently,noprovisionforsuchliquidateddamageshasbeenmadeinthesecondensedinterimfinancialstatements.

Un-audited Audited 30 June 31December 2019 2018 (Rupees in thousand)5.2 Commitments

5.2.1Commitmentsinrespectoflettersofcreditfor capitalexpenditure - 4,992 5.2.2Commitmentsinrespectofotherthan capitalexpenditure 35,065 7,455


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Un-audited Audited 30 June 31December 2019 2018 (Rupees in thousand)6. FIXEDASSETS Operatingfixedassets(Note6.1) 7,186,776 7,634,699 Capitalwork-in-progress(Note6.2) 42,615 45,564

7,229,391 7,680,263 6.1 Operatingfixedassets Openingbookvalue 7,634,699 8,482,603 Add:Costofadditionsduringtheperiod/ year(Note6.1.1) 5,453 75,528 Less:Bookvalueofderecognitionsduringthe period/year(Note6.1.2) 58 1,915 Less:Depreciationchargedduringtheperiod/year 453,318 921,517

Closingbookvalue 7,186,776 7,634,699 6.1.1 Cost of additions Plantandmachinery 4,135 73,319 Officeequipment 13 572 Furnitureandfittings 461 557 Vehicles - 65 Electricequipmentandappliances 844 1,015 5,453 75,528 6.1.2 Book value of derecognitions Plantandmachinery -Cost 1,245 5,254 -Less:Accumulateddepreciation 1,187 3,339 58 1,9156.2 Capital work-in-progress Plantandmachinery 42,615 45,564


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Un-audited Un-audited Half Year Ended Quarter Ended 30 June 30 June 30 June 30 June 2019 2018 2019 2018 (Rupees in thousand) (Rupees in thousand) 7. COSTOFSALES

Fuelcost 3,745,153 7,199,905 1,624,858 4,086,787 Operationandmaintenancecosts 252,521 234,013 172,686 132,833 Insurance 284,086 229,074 142,043 114,537 Depreciation 451,696 459,111 238,940 242,838 LiquidateddamagestoCPPA-G 19 51 10 25 Others - - (1,395) (1,297)

4,733,475 8,122,154 2,177,142 4,575,723 Un-audited Half Year Ended 30 June 30June 2019 2018 (Rupees in thousand)

8. CASHUTILIZEDINOPERATIONS Profitbeforetaxation 1,323,908 627,712 Adjustments for non-cash charges and other items: Depreciation 453,318 461,030 Provisionforgratuity 7,668 7,016 Lossonderecognitionofoperatingfixedassets 58 388 Interestincome (76,670) (17,824) Financecost 657,958 374,304 Cashflowsfromoperatingactivitiesbefore workingcapitalchanges 2,366,240 1,452,626 Working capital changes (Increase)/decreaseincurrentassets: Stores,sparepartsandotherconsumables (46,505) (48,423) Fuelstock (114,518) (481,401) Tradedebts (1,671,190) (1,952,997) Loan,advancesandshort-termprepayments (12,185) (1,041,704) Loanstoassociatedcompany (833,481) - Otherreceivables 56,395 (31,206) Salestaxrecoverable (39,031) 1,096,361

(2,660,515) (2,459,370) Decreaseintradeandotherpayables 70,672 (182,443)

(223,603) (1,189,187)


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9. TRANSACTIONSWITHRELATEDPARTIES Relatedpartiesof theCompanycompriseofassociatedcompanies,keymanagement

personnelandstaffretirementbenefitplans.TheCompanyinthenormalcourseofbusinesscarriesouttransactionswiththeserelatedparties.Detailsoftransactionswithrelatedpartiesareasfollows:

(Un-audited) (Un-audited) Half Year Ended Quarter Ended 30 June 30June 30 June 30June 2019 2018 2019 2018 (Rupees in thousand) (Rupees in thousand) Relationship with Nature of the Company transaction Associated Insurancepremium 334,295 271,686 166,352 134,290 companies Insuranceclaims 525 364 144 364 Rentexpense 3,139 3,139 1,569 1,569 Flyingservices 36,830 29,463 18,722 10,063 Dividend 300,928 124,471 300,928 124,471 Boardinglodgingservices 33 17 33 - Purchaseofstores 145 180 145 180 Loanmade 3,044,962 1,000,000 2,312,100 1,000,000 Loanrecovered 2,211,481 - 1,499,481 - Interestcharged 74,013 14,713 45,242 14,713 Loanobtained 314,308 870,000 166,520 870,000 Loanrepaid 314,308 - 166,520 - Interestpaid 1,043 5,769 664 5,769 Keymanagement personnel Remuneration 15,870 16,064 4,842 5,041 Staffretirement Contributionto benefitsplans providentfund 8,499 8,583 4,056 4,272 Contributiontogratuityfund 7,668 7,016 3,834 3,508

Un-audited Audited 30 June 31December 2019 2018 (Rupees in thousand) Period end balances: Shorttermloanreceivablefromassociatedcompany 1,833,481 1,000,000 Accruedinterestonloantoassociatedcompanies 17,200 9,258 10. RECOGNIZEDFAIRVALUEMEASUREMENTS-FINANCIALINSTRUMENTS (i) Fair value hierarchy Certainfinancialassetsandfinancialliabilitiesarenotmeasuredatfairvalueifthecarrying

amountsareareasonableapproximationoffairvalue.Duetoshorttermnature,carryingamountsofcertainfinancialassetsandfinancialliabilitiesareconsideredtobethesameastheirfairvalue.Forthemajorityofthenon-currentreceivables,thefairvaluesarealsonotsignificantlydifferenttotheircarryingamounts.Judgementsandestimatesaremadeindeterminingthefairvaluesofthefinancialinstrumentsthatarerecognisedandmeasuredatfairvalueinthesecondensedinterimfinancialstatements.Toprovideanindicationaboutthereliabilityoftheinputsusedindeterminingfairvalue,theCompanyclassifyitsfinancialinstrumentsintothefollowingthreelevels.However,asatthereportingdate,theCompanyhasnosuchtypeoffinancialinstrumentswhicharerequiredtobegroupedintotheselevels.Theselevelsareexplainedasunder:


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Level 1:Thefairvalueoffinancialinstrumentstradedinactivemarkets(suchaspubliclytradedderivatives,andtradingandavailable-for-salesecurities)isbasedonquotedmarketpricesattheendofthereportingperiod.ThequotedmarketpriceusedforfinancialassetsheldbytheCompanyisthecurrentbidprice.Theseinstrumentsareincludedinlevel1.

Level 2:Thefairvalueoffinancialinstrumentsthatarenottradedinanactivemarket(for

example, over-the-counter derivatives) is determinedusing valuation techniqueswhichmaximisetheuseofobservablemarketdataandrelyaslittleaspossibleonentity-specificestimates.Ifallsignificantinputsrequiredtofairvalueaninstrumentareobservable,theinstrumentisincludedinlevel2.

Level 3: Ifoneormoreofthesignificantinputsisnotbasedonobservablemarketdata,

theinstrumentisincludedinlevel3.Thisisthecaseforunlistedequitysecurities. 11. EVENTSAFTERTHEREPORTINGPERIOD TheBoardofDirectorsof theCompanyat theirmeetingheldon27August2019has

proposedcashdividendofRupeesNilpershare.However,thiseventhasbeenconsideredasanon-adjustingeventunderInternationalAccountingStandard(IAS)10‘EventsaftertheReportingPeriod’andhasnotbeenrecognizedinthesecondensedinterimfinancialstatements.

12. FINANCIALRISKMANAGEMENT TheCompany’sfinancialriskmanagementobjectivesandpoliciesareconsistentwiththose

disclosedintheprecedingauditedannualpublishedfinancialstatementsoftheCompanyfortheyearended31December2018.

13. CORRESPONDINGFIGURES InordertocomplywiththerequirementsofInternationalAccountingStandard34“Interim

FinancialReporting”,thecondensedinterimstatementoffinancialpositionandcondensedinterimstatementofchangesinequityhavebeencomparedwithbalancesofauditedannualpublishedfinancialstatementsofprecedingfinancialyear,whereas,thecondensedinterimstatementofprofitorlossandothercomprehensiveincome,condensedinterimstatementofcashflowshavebeencomparedwiththeamountsofcomparableperiodofimmediatelyprecedingfinancialyear.

Correspondingfigureshavebeenre-arrangedandreclassified,wherevernecessaryforthe

purposeofcomparison,however,nosignificantre-arrangementsandreclassificationshavebeenmadeinthesecondensedinterimfinancialstatements.

14. DATEOFAUTHORISATIONFORISSUE Thesecondensedinterimfinancialstatementswereauthorizedforissueon27August2019

bytheBoardofDirectorsoftheCompany. 15. GENERAL FigureshavebeenroundedofftothenearestthousandRupees,unlessotherwisestated.



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53 - A, Lawrence Road, Lahore. Tel: 042 - 36367812 - 16

Fax: 042 - 36367414 I UAN: 042 - 111-11-33-33


pakgen power limited board of directors mr. ghazanfar hussain mirza chairman mr. aurangzeb firoz mr....

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