Pakistan Refinery Limited’s financial results for the year ended June 30, 2011

Karachi: We have to inform you that the Board of Directors of PRL in their meeting held on September 16, 2011 at 9:00 am at PSO House, Karachi has recommended a final cash dividend of Rs 1.5 per share he. 15%.

The profit and loss account of the Company for the year ended June 30, 2011 is given as follows:

 

2011

2010

(Rupees in thousand)

Sales96,450,54576,658,272
Cost of sales (94,032,891)(77,289,144)
———-———-
Gross profit / (loss) 2,417,654(630,872)
Distribution cost (164,585)(126,394)
Administrative expenses(177,153)(162,373)
Other operating expenses (See annexed mote) (1,448,262)(420)
other income309,890125,303
 ———-———-
Operating profit / (loss)937,544 (794,756)
Finance cost (212,009) (1,134,272)
Share of income of associate 8,58714,595
———-———-
Profit / (Loss) before taxation734,122 (1,914,433)
Taxation (510,166) (1,060,782)
———-———-
Profit / (Loss) after taxation223,956(2,975,215)
———-———-
Earnings/ (Loss) per shareRs 5.4 (Rs 85.01)

 

 

A. Extracts from the Notes to the Financial Statements for the Year Ended June 30, 2011:

Note 2.1 Basis of Preparation

As at June 30, 2011 the company has accumulated losses of Rs. 917.14 million (2010: Rs.1.14 billion) and its current liabilities exceed its current assets by Rs. 1.85 billion (2010: Rs. 3.35 billion). These conditions indicate the existence of material uncertainty that may cast doubt on the company’s ability to continue as a going concern and realize its assets and discharge its liabilities is the normal course of business. During the year ended June 30, 2011 the company has earned profit after taxation of Rs. 223.96 million. Further, during the year the pricing mechanism of certain products, effective from June 1, 2011, has been revised by the Government of Pakistan (GoP) which is expected to have a favorable impact on the company’s profitability and liquidity. Therefore, the company expects to be able to realize its assets and discharge its liabilities in the normal course of business. Accordingly, these financial statements are prepared on a going concern basis,

Note 28.1 – Other Operating Expenses

The company has been pursuing refinery up gradation project and was carrying Rs.1.39 billion, as capital work-in-progress as at June 30, 2010. As there is no material progress on the financing arrangements and considering other options available for completion of the up gradation project, this cost has been written off.

B. Refinery Up Gradation

The company is committed to upgrade its product lines of High Speed Diesel (HSD) and Motor Spirit (Petrol) in compliance with the directives of the Ministry of Petroleum and Natural Resources dated May 31, 2011. To achieve this objective during the current year, refinery upgrade project strategy was revisited to take advantage of global recessionary environment by exploring other cost effective options including purchasing and installing pre-owned units for compliance with GOP directive, to produce Euro 2 specs HSD and to improve profitability.

Recently the Company has engaged global engineering contractor to perform due diligence for an Isomerization Unit to improve the quality / production of Motor Spirit (Petrol). Based on the findings and recommendations, the Company may choose to initiate commercial negotiations for procurement of such units.

C. Extracts from the Audit Report of External Auditors of the Company on the Financial Statements for the Year Ended June 30, 2011:

Without qualifying their opinion the external auditors have given following paragraphs of emphasis in their audit report by drawing attention to:

i. note 28.1 to the financial statements. As explained in the note, the company has written off a sum of Rs 1.39 billion relating to refinery up gradation project which was included in capital work-in progress as at June 30, 2010. We had expressed a qualified opinion on the company’s financial statements for the year ended June 30, 2010 in respect of this matter.

ii. note 2.1 to the financial statements. As stated in the note, as at June 30, 2011 the company has accumulated loss of Rs 917.14 million resulting in net negative equity of Rs 567.01 million. Further, current liabilities of the Company exceed its current assets by Rs 1.85 billion. These conditions, indicate the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as going concern.

D. Annual General Meeting and Book Closure

The Annual General Meeting of the Company will be held on Monday October 24, 2011 at 8:30 am at Marriott Hotel Karachi, The Share Transfer Books of the Company will remain close from Tuesday October 18, 2011 to Monday October 24, 2011 (both days . inclusive) when no applications for transfer of shares will be accepted.

 

For more information, contact:
Imran Ahmed Mirza
Chief Financial Officer
Pakistan Refinery Limited
Korangi Creek Rd,
P.O. Box 4612 Karachi-75190
Phone: 35122131-9
Fax: 92-21-35060145
Website: www.prl.com