Attock Refinery Limited (Annual Report 2007)

Corporate Social Responsibility (CSR)

CSR is a concept which encourages organizations to considerthe interests of society by taking responsibility for the impact of the organization's activities

on customers, employees, shareholders, communities and the environmentin all aspects of its operations.

ARL promotes CSR as part of its core values to create the foundation for amore equitable, just, productive, competitive and

knowledge-based environment.

In the Name of Al lah, Most Gracious, Most Merc i fu l

1A N N U A L R E P O R T 2 0 0 7

Honours & Achievements 02

Vision & Mission Statement 03

Board of Directors 04

Company Information 05

Company Profile 06

Management Committee 07

HSEQ Policy 08

Notice of Annual General Meeting 09

Chairman’s Review 12

Human Resource Policy 16

The Management 17

The Directors’ Report 18

Pattern of Shareholding 36

Financial Statistical Summary 38

Financial Highlights - ARL 40

Financial Highlights - AHL 42

Review Report to the Members 44

Statement of Compliance with the Code of Corporate Governance 45

Balance Sheet Composition 47

Contributions & Value Additions 48

Financial Statements of Attock Refinery Limited 49-82

Auditor’s Report to the Members 51

Balance Sheet 52

Profit and Loss Account 54

Cash Flow Statement 55

Statement of Changes in Equity 56

Notes to the Financial Statements 57

Consolidated Financial Statements 83-118

Auditor’s Report to the Members 85

Consolidated Balance Sheet 86

Consolidated Profit and Loss Account 88

Consolidated Cash Flow Statement 89

Consolidated Statement of Changes in Equity 90

Notes to the Consolidated Financial Statements 91

Form of Proxy 119

Contents

Preserving our environment - Ficus Religiosa plantedon the commissioning of the Refinery in 1922.

2 A T T O C K R E F I N E R Y L I M I T E D

Honours & Achievements

Awards include :

Corporate Social Responsibilty Award (Helpline Trust)

Annual Environment Excellence Award (NFEH)

Best Corporate Report Award (ICAP & ICMAP)

Special Merit Exporter Award (FPCCI)

1

2

3

4

Striving for excellence

3A N N U A L R E P O R T 2 0 0 7

Vision & Mission

Vision 2020

To be a world class and leading organization

continuously providing high quality and

environment-friendly energy resources.

Mission 2010

To be a model diversified energy resources and

petrochemical organization exceeding expectations

of all stakeholders. We will achieve this by utilizing

best blend of state-of-the-art technologies, high

performing people, excellent business processes

and synergetic organizational culture.

Core Values

Our success will not be a matter of chance, but of commitment

to the following enduring beliefs and values that are engrained

in the way we think and take actions to pursue a climate of

excellence :

Integrity & Ethics:

Integrity, honesty, high ethical, legal and safety standards are

cornerstones of our business practices.

Quality :

We pursue quality as a way of life. It is an attitude that affects

everything we do for relentless pursuit of excellence.

Social Responsibility :

We believe in respect for the community and preserving the

environment for our future generations and keeping National

interests paramount in all our actions.

Learning & Innovation:

We embrace lifelong learning and innovation as an essential

catalyst for our future success. We believe in continuous

improvement and to seize opportunities inherent in change to

shape the future.

Team Work:

We believe that competent and satisfied people are the company’s

heart, muscle and soul. We savour flashes of genius in

organization’s life by reinforcing attitude of teamwork and

knowledge sharing based on mutual respect, trust and openness.

Empowerment :

We flourish under an ecosystem of shared understanding

founded on the concept of empowerment, accountability and

open communication in all directions.

Strategic Plan

Company's strategic plans include enhancement of its refining

capacity and production of better, more environment-friendly

petroleum products to maintain and expand its market. The

plans include installation of a Preflash Unit, an Isomerization

Complex and a Diesel Hydrodesulfurization unit in first phase.

Further, the Company is actively engaged in diversification of

its operations within the energy sector which includes the white

oil pipeline project and a power project. Projects targeting

environmental and social improvement for community

development are also being planned.


01 Tariq Iqbal KhanChairman

02 Dr. Ghaith R. Pharaon

03 Shuaib Anwar MalikDeputy Chairman(Alternate Director to Dr. Ghaith R. Pharaon)

04 Laith Ghaith Pharaon

05 Wael Ghaith Pharaon

06 Bashir Ahmad

07 Abdus Sattar

08 Babar Bashir Nawaz(Alternate Director to Laith Ghaith Pharaon)

09 Sajid Nawaz(Alternate Director to Wael Ghaith Pharaon)

10 M. Adil KhattakChief Executive Officer

01 02 03 04 05 06 07 08 09 10

Board Committees

Audit Committee

Abdus Sattar, Chairman

Babar Bashir Nawaz, Member(Alternate Director)

Sajid Nawaz, Member(Alternate Director)

Technical & Finance Committee

Abdus Sattar, Chairman

Sajid Nawaz, Member

M. Adil Khattak, Member

Audit Committee - TOR

The Audit Committee's primary role is to ensure compliance

with the best practices of Code of Corporate Governance,

statutory laws, safeguard of Company's assets through

monitor ing of internal control system and ful f i l l other

responsibilities under the Code.

Technical & Finance Committee - TOR

To recommend annual capital and revenue budget and

review any other key financial matters or technical aspect

relating to refinery operations / upgradation etc.

Board of Directors

5A N N U A L R E P O R T 2 0 0 7

Company SecretaryKhurram ShirazACA

AuditorsA.F. Ferguson & Co.Chartered Accountants

Legal Advisor

Zafar Law AssociatesAdvocates & Solicitors

Ali Sibtain Fazli & AssociatesLegal Advisors, Advocates & Solicitors

Registered Office

The Refinery

Morgah, Rawalpindi

Tel: (051) 5487041-5

Fax: (051) 5487254

E-mail : [email protected]

website : www.arl.com.pk

Company Information

Group photograph at the 137th Board of Directors meeting held in Damascus, Syria on 10th September, 2007.


Company Profile

Attock Refinery Limited (ARL) was incorporated as a Private

Limited Company in November, 1978 to take over the business

of the Attock Oil Company Limited (AOC) relating to refining

of crude oil and supplying of refined petroleum products. It

was subsequently converted into a Public Limited Company

in June, 1979 and is listed on the three Stock Exchanges of

the country. The Company is also registered with Central

Depository Company of Pakistan Limited (CDC).

Original paid-up capital of the Company was Rs 80 million

which was subscribed by the holding company i.e. AOC,

Government of Pakistan, investment companies and general

public. The present paid-up capital of the Company is Rs

568.62 million.

ARL is the pioneer of crude oil refining in the country with its

operations dating back to 1922. Backed by a rich experience

of more than 85 years of successful operations, ARL’s plants

have been gradually upgraded/replaced with state-of-the-art

hardware to remain competitive and meet new challenges and

requirements.

It all began in February 1922, when two small stills of 2,500

barrel per day (bpd) came on stream at Morgah following the

first discovery of oil at Khaur where drilling started on January

22, 1915 and at very shallow depth of 223 feet 5,000 barrels

of oil flowed. After discovery of oil in Dhulian in 1937, the

Refinery was expanded in late thirties and early forties. A

5,500 bpd Lummus Two-Stage-Distillation Unit, a Dubbs

Thermal Cracker, Lubricating Oil Refinery and Wax Purification

facility and the Edeleanu Solvent Extraction unit for smoke-

point correction of Kerosene were added.

There were subsequent discoveries of oil at Meyal and Toot

(1968). Reservoir studies during the period 1970-78 further

indicated high potential for crude oil production of around

20,000 bpd. In 1981, the capacity of Refinery was increased by

the addition of two distillation units of 20,000 and 5,000 bpd

capacity, respectively. Due to their vintage, the old units for

lube/wax production, as well as Edeleanu, were closed down

in 1986. In 1999, ARL commenced JP-1 pipeline despatches,

and in 2000, a Captive Power Plant with installed capacity of

7.5 Megawatt was commissioned. Another expansion and

upgradation project was completed in 1999 with the installation

of a Heavy Crude Unit of 10,000 bpd and a Catalytic Reformer

of 5,000 bpd. ARL’s current nameplate capacity stands at

40,000 bpd and it possesses the capability to process lightest

to heaviest (10-65 API) crudes.

7

Series of Firsts

• First refinery of the region (1922)

• First to start dispensing major products through pipeline using computerized metering system (1987)

• First to produce low sulfur furnace (less than 1%) (1998)

• First to produce low sulfur diesel (less than 0.5%) (1998)

• First to achieve ISO 9002 certification for quality control laboratory (1999)

• First to produce low lead premium gasoline direct from refinery process (1999)

• First to produce polymer modified asphalt (2001)

• First refinery / first petro-chemical plant / first major industry to get ISO 9001:2000 certificate (2001)

• First refinery / first petrochemical plant/first major industry to get ISO 14001 certificate (2002).

• First major industry to get OHSAS 18001 certification (2006).

ARL Products

• Premium Motor Gasoline (PMG)

• High Speed Diesel (HSD)

• Kerosene Oil (KO)

• Furnace Fuel Oil (FFO)

• Low Sulfur Furnace Fuel Oil (LSFO)

• Jet Fuels (JP-1, JP- 4 & JP - 8)

• Paving Asphalt (various grades)

• Cut Back Asphalt (various grades)

• Polymer Modified Bitumen (PMB)

• Mineral Turpentine (MTT)

M. Adil KhattakChief Executive Officer

S. Ahmed AbidDeputy General Manager(Finance & Corporate Affairs)

Dr. M. Ilyas FazilAssistant General Manager(Technical Services, Planning & Development)

Mansoor ShafiqueAssistant General Manager(Operations)

Ejaz H. RandhawaSenior Manager (Technical Services)

Malik Masood SadiqSenior Manager(Commercial & Materials Management)

Khurram JalilManager (Maintenance)

Khurram ShirazManager (Finance & Accounts) /Company Secretary

Asif SaeedManager(Human Resources & Administration)

Iqbal AhmadManager (Operations)

Zia Uddin KirmaniManager (Health, Safety, Environment& Quality Control)

Salman TariqDeputy Manager (Engineering)

Management Committee

Adnan HussainSenior Executive(Business Review & Assurance)

• Light Diesel Oil (LDO)

• Naphtha

• Liquefied Petroleum Gas (LPG)

• Jute Batching Oil (JBO)

• Solvent Oil (SO)

• Premium JBO


Health, Safety, Environment and Quality Policy (HSEQ)

ARL is committed to provide the best quality products in

the market, endeavors to protect the environment and to

ensure health and safety of its employees, contractors, and

customers and work for continual improvements in Health,

Safety, Environment and Quality (HSEQ) systems.

ARL is committed to comply with all applicable Health,

Safety, Environment and Quality laws and regulations.

The Policy shall be used to demonstrate this commitment

through:

Health

ARL seeks to conduct its activities in such a way as to promote

the health of, and avoid harm to its employees, contractors,

visitors and the community.

Safety

ARL ensures that every employee or contractor works under

the safest possible conditions. It is our firm belief that every

effort must be made to avoid accidents, injury to people, damage

to property and the environment.

ARL believes that practically all accidents are preventable by

carrying out risk assessments, and reducing risks identified, by

appropriate controls.

Environment

ARL is committed to prevent pollution by the efficient use of

energy throughout its operations, recycle and reuse of the

effluent wherever possible, and use of cost-effective cleaner

production techniques that lead to preventive approach for

sustainable development.

Quality

ARL recognizes employees' input towards quality by emphasizing

skills development and professionalism.

ARL must be customer driven, cost effective and continuously

improving services, works and products to meet requirements

of the market.

ARL conducts periodic audits and risk assessment of its activities,

processes and products for setting and reviewing its objectives

and targets to provide assurance, to improve HSEQ standards

and loss control. ARL is committed to share all pertinent

information related to HSEQ with all concerned parties.

9A N N U A L R E P O R T 2 0 0 7

Notice of Annual General Meeting

Ordinary Business

1. To confirm the minutes of the Fifteenth (15th) Extra-Ordinary

General Meeting held on 11th January, 2007.

2. To receive, consider and approve the Audited Accounts of

the Company together with the Directors’ and Auditor’s

Reports for the year ended June 30, 2007.

3. To appoint auditors for the year ending June 30, 2008 and

fix their remuneration.

4. To consider and, if thought fit, declare a final cash dividend

as recommended by the Board of Directors for the year

ended June 30, 2007.

5. To transact such other business as may be placed before

the meeting with the permission of the Chairman.

Special Business

6. To consider and, if thought fit, to pass the following

Resolution as an ordinary resolution:

“Resolved:

a. that a sum of Rs 142,155,000 out of the profits of the

Company available for appropriation as at

June 30, 2007, be capitalized and applied for issue

of 14,215,500 ordinary shares of Rs 10 each allotted

as fully paid bonus shares to the members of the

Company, whose names appear on the register of

members as a t c lose o f bus iness on

October 17, 2007, in the proportion of one (1) new

share for every four (4) shares held;

b. that the Bonus Shares so allotted shall rank pari

passu in every respect with the existing shares;

c. that the members entitled to fractions of a share shall

be given sale proceeds of their fractional entitlement

for which purpose the fractions shall be consolidated

into whole shares and sold in the stock market; and

d. that the Secretary of the Company be authorised and

empowered to give effect to this resolution and to do

or cause to do all acts, deeds and things that may

be necessary or required for issue, allotment and

distribution of Bonus Shares, including export of

bonus shares in respect of non-resident shareholders.”

By Order of the Board

The Refinery Khurram ShirazMorgah, Rawalpindi Company Secretary

October 04, 2007

Notice is hereby given that the 29th Annual

General Meeting of the Company will be held

at Pearl Continental Hotel, Rawalpindi on

Thursday, October 25, 2007 at 11:00 a.m. to

transact the following business:

Administrator

Sd

ahassan

Text Box

October 04,2007


ii. A member entitled to vote at this meeting may appoint

another member as his/her proxy to attend and vote.

Proxies in order to be effective must be received by the

Registered Office of the Company, duly stamped and

signed, not later than 48 hours before the time of the

meeting.

iii. CDC account holders shall follow the under mentioned

guidelines as laid down in Circular No.1 dated

January 26, 2000 issued by the Securities & Exchange

Commission of Pakistan:

a. In case of individuals, the account holder or sub-

account holder and/or the person whose securities

are in group account and their registration detail is

uploaded as per the regulations, shall authenticate

identity by showing his/her original National Identity

Card (NIC), or original Passport at the time of attending

the meeting.

b. In case of corporate entity, the Board of Directors’

resolution/power of attorney with specimen signature

of the nominee shall be produced (unless provided

earlier) at the time of meeting.

iv. Members are requested to promptly notify the Company

of any change in their address.

v. Form of proxy is enclosed herewith.

vi. Statement of material facts, under Section 160 (1) (b) of

the Companies Ordinance, 1984, pertaining to the Special

Business referred above under Agenda item 6 is annexed

to this Notice of Meeting being sent to the members.

Statement under Section 160 (1) (b)

of the Companies Ordinance, 1984

Issue of Bonus Shares:

The Directors are of the view that with the existing profitability,

the Company’s financial position justifies capitalization of

Rs 142,155,000 out of profits available for appropriation as at

June 30, 2007, by issuing fully paid Bonus Shares in the

proportion of one (1) Bonus Share for every four (4) ordinary

shares held. The Directors of the Company, directly or indirectly,

are not personally interested in this issue, except to the extent

of their shareholding in the Company.

Notes:

i. Share Transfer Books of the Company will remain closed

and no transfer of shares will be accepted for registration

from October 18, 2007 to October 24, 2007 (both days

inclusive). Transfers received in order at the Shares

Department of M/s. Noble Computer Services (Pvt) Limited,

2nd Floor, Sohni Centre, BS 5&6, Main Karimabad,

Block-4, Federal B Area, Karachi-75950, Pakistan, by the

close of business on October 17, 2007 will be treated in

time for the entitlement to Bonus Shares, if declared.

11A N N U A L R E P O R T 2 0 0 7


Chairman's Review

Business Review

The current financial year witnessed record high oil prices in

2006 before declining sharply towards the end of the year. In

an attempt to support prices at a level sought by its members,

OPEC was forced to cut its supply. However, the prices went

up again in 2007 and the refiners’ margin which had become

negative at the end of 2006, once again became favourable.

Oil prices remain uncertain for the foreseeable future as political

tensions and civil unrest refuse to ease in major oil producing

countries like Iraq and Nigeria. Global political uncertainties also

remain factors in the instability of price. An overall increase was

observed in the international prices for crude oil during the year

2006-07.

Like last year, the financial year 2006-07 was once again

punctuated with fluctuating refiners’ margins arising from price

movements in international markets. After ending up with

disappointing margins insufficient to cover the operating costs

in the first three quarters, the refiners’ margin showed significant

improvement in the 4th quarter and thus enabled your Company

to close the financial year on a positive note.

Profit from refinery operations increased to Rs 504.3 million

in the current year as against Rs 80.5 million in the year

2005-06. With dividend income of Rs 244.6 million from its

investments in associated undertakings, the total profit for the

year was Rs 748.9 million with an EPS of Rs 13.17. The detailed

financial results of the Company’s operations for the year ended

June 30, 2007 are given in the annexed Directors’ Report and

financial statements.

Business Risks, Challenges and

Future Outlook

As was reported last year, the public debate triggered by increase

in domestic petroleum products prices, following global increase

in these prices, continues to pose a serious challenge to the

existing pricing formula under which the Refinery is operating.

While the Company has a strong view point that the pricing

formula was agreed after full deliberations, implications and

incentives required for long-term sustainability of refinery

operations, political and public pressure has forced the

Government to review the pricing formula that has adversely

impacted the ex-refinery prices of certain products like kerosene

oil, light diesel oil and Jet fuel. Through adjustments in pricing

mechanism, the Government has also recently curtailed the

margin of oil marketing companies and dealers. While these

curtailing measures are being utilized apparently to settle the

huge price differential deficits of refineries and oil marketing

companies which had benefited the consumers at large, the

eventual burden is being taken-up by the oil industry with such

curtailments. The Company has emphasized upon the

Government that continued operations of the local refineries is

critical as it relates to strategic petroleum products supplies,

indigenous crude oil production as well as to safeguard the

investors interest in the oil refinery sector. It is expected that

Government shall consider these matters in the light of above

considerations and in the best long-term national interest.

With the new refineries being set-up in the country, continuing

challenges in the phased deregulation process and changes in

product specifications warranted by environment your Company

has undertaken the task of implementing certain projects that

shall cater to the market requirements of cleaner fuels, higher

RON motor gasoline as well as to maintain and enhance its oil

On behalf of the Board I am pleased to welcome our esteemed shareholders to the 29th Annual

General Meeting of the Company and to present annual review of the results of Company’s

operations and audited financial statements for the financial year ended 30 June, 2007.

13A N N U A L R E P O R T 2 0 0 7

refining facilities to meet any future growth in crude oil availability

in the northern region. The Company is working on its plan to

construct a Pre-Flash Unit that shall not only replace the aging

Lummus Unit but shall also enhance the overall refining capacity

to 48,400 barrels per day. Work to install an Isomerisation Unit

that shall upgrade its motor gasoline by raising its octane level

is also being actively pursued. These projects shall not only let

your company retain its market share in production and supply

of petroleum products but also provide operational flexibility in

its future operations.

Simultaneously, your

Company continues to

emphasise upon the

Government that for

continued development

of environmental clean

products it is imperative

to provide sufficient

incentives to the refineries

for them to undertake

refinery upgradation

projects which require

intensive capital outlay.

Your Company is closely

watching the develop-

ments in international

and domestic market with its implications and is confident that

the Government shall continue to support the oil refineries in a

manner that it provides due incentives for fresh investment that

can bring substantial economic benefits to the country and

provide protection from any possible disruption in global supplies

strategically important for the country.

Your Company would continue to pursue new business

opportunities, focus its operating strategies on reliability, efficiency

and profitability to create shareholders value.

Corporate Awards and Recognitions

i. Corporate Social Responsibility (CSR) Award organized

by Help Line Trust

Your Company was awarded Corporate Social

Responsibility Award (CSR) organized by the Help Line

Trust in collaboration with Pakistan Standards and Quality

Gross Refiner's MarginUS $ Per Barrel

Products and Crude Average PricesUS $ Per Barrel

Control Authority (PSQCA). This award is a mark of

recognition of companies/corporations for their active

participation in social causes of Pakistan.

ii. NFEH Environmental Excellence Award 2007

For the 2nd year in a row, your Company was awarded

the Environmental Excellence Award of the National Forum

for Environment and Health (NFEH). This award

demonstrates your Company’s commitment to establish,

implement and maintain a successful HSEQ Management

system and its continued efforts to improve its effectiveness

in accordance with the requirements of ISO 14001 and

OHSAS 18001 standards.

ProductionM. Tons in Thousands


Employee Relations

A healthy and cordial relationship with its employees with

congenial atmosphere at work place remain to be the main

focus of the management in its employee relations functionalities.

Your Company’s management is actively engaged in employees

career development and progression. An environment exists

where employees understand the Company’s objectives, the

market conditions in which the Company operates and the risks

it must mitigate to ensure ideal working conditions for both,

labour and management. The labour – management relationship

continues to be cordial and is based on cooperation and trust

with positive and flexible attitude from both sides creating a

good working environment with the common objective of serving

the Company’s interests and employee welfare.

I would like to appreciate the efforts and dedication of the officers,

staff, workers of the Company and the CBA who enabled the

management to run the Company smoothly and efficiently during

the year for profitable operations.

iii. Exports Trophy 2006

Based on achieving highest exports in the region the

Company also won the Rawalpindi Chamber of Commerce

and Industry Export Trophy for the year 2006. Further, the

Company was also awarded Special Merit Exporter Award

for 2006 for its exports and foreign exchange earnings of

over Rs 7 billion by the Federation of Pakistan Chambers

of Commerce & Industry (FPCCI).

iv. Best Corporate Report Award

In addition, the Company ever since the inception of Best

Corporate Report Award in 2000 continues to receive

awards for Top positions in Fuel & Energy Sector for

presenting the best corporate annual reports. For the

Annual Report 2005, it has received Award for 2nd position

in the sector.

On behalf of the shareholders and the Board of Directors, I wish

to congratulate and compliment the Company’s management

and staff for bringing these laurels.

Acknowledgement

On behalf of the Board, I would like to acknowledge the support

received from the Ministry of Petroleum & Natural Resources

and other Government organizations and express gratitude to

our valued customers, crude oil suppliers, banks, suppliers and

contractors for their continued cooperation.

Further, I would also like to thank my colleagues on the Board

and record my appreciation of the services and contributions of

the Directors who are representing the Audit, Technical and

Finance Committees of the Board.

Before concluding, I also wish to express my thanks for the

continued interest and support of our esteemed shareholders

and on behalf of the Board would like to extend our assurance

that the Board of Directors would continue to work in the best

interest of the Company and to create value addition for its

shareholders.

Tariq Iqbal KhanSeptember 10, 2007 Chairman

Chairman's Review

Administrator

Sd

15A N N U A L R E P O R T 2 0 0 7

ARL Corporate policy on human resources is to attain the highest

standards of professionalism throughout the organization by

recognizing and revealing individual capabilities, productivity,

commitment and contribution.

ARL firmly believes that the continued progress and success of

the Company depends upon to a great extent on its personnel

- that only with a carefully selected, well trained, achievement

orientated and dedicated employee force, can the company

maintain its Leadership in the Refining industry.

And because the most valuable asset of the company is its

personnel, ARL has the following human resource policies :

1. Employ the best-qualified persons available, recognizing

each person as an individual thus affording equal

opportunity.

2. Pay just and responsible compensation in line with the

industry standards, job requirements and work force.

3. Help employees to attain their maximum efficiency and

effectiveness through a well-rounded training and

development program.


Human Resource Policy

4. Provide and maintain comfortable, peaceful and orderly

working conditions.

5. Promote from within whenever possible and provide

opportunities for growth and promotion to the employees.

6. Treat each employee with fairness and respect and in

return expect from him service marked by dedication,

devotion, commitment and loyalty.

7. Encourage each employee to improve and develop himself

and thereby prepare him for positions of higher responsibility.

8. Recognize and reward efficiency, team work, discipline

and dedication to duty and responsibility.

9. Exhaust all means to resolve Labor-Management

differences, if any, promptly and amicably.

10. Provide a wholesome and friendly atmosphere for

harmonious Labor Management relations.

17A N N U A L R E P O R T 2 0 0 7

The Management

Management Committee

This Committee which is constituted of all departmental heads

meet fortnightly under the chairmanship of CEO to coordinate

the activities and refinery operations and to discuss various

issues.

Value & Ethics Committee

The primary role of this committee is to investigate and advise

the Chief Executive Officer (CEO) appropriate action regarding

violation of ARL Core Values and related codes and policies.

Succession Planning and

Career Management Committee

This committee is responsible for initiating and taking all necessary

steps towards formulation and implementation of an appropriate

Succession Planning and Career Management System in the

Company.

Econo-Tech. Committee

This Committee reviews all new proposals relating to Refinery

operations and projects and formulates recommendations after

discussing/evaluating it from technical and economic aspects.

Budget Committee

This Committee reviews and recommends the annual budget

proposals for the approval of the Board of Directors. It also

monitors the approved budget utilisation.

Pricing Committee

Responsible for determining prices of deregulated products from

time to time.

Central HSE Committee

The primary role of The 'Central HSE Committee' is to set

operating policy and procedures consistent with HSEQ Policy

and to monitor implementation of the policy. Furthermore, this

Committee provides a strategic direction, sets goals and

objectives, monitors performance and provides a mechanism

for dealing with safety behavior issues.

Information Technology Committee

Responsible for automation of processes and systems in line

with latest technology.

Risk Management & Strategic Plan Committee

This committee discusses and decides all matters related to

risk management and strategic plan of Attock Refinery Limited.

Various Committees have been formulated to look after the operational

and financial matters of the Company. Brief description of the role of

Committees involved in strategic matters is given below :

0

5,000

10,000

15,000

20,000

2002-03 2003-04 2004-05 2005-06 2006-07

Sales Revenue Composition(Rupees in Million)

Motor gasoline Naphtha Diesel

Kerosene/Jet Fuels FFO Asphalt Others

On behalf of the Board of Directors, I am pleased

to present the Company’s 29th Annual Report which

includes the Audited Financial Statements of the

Company together with Auditors' Report thereon

for the year ended June 30, 2007.

1. Financial Results

The Company has earned net profit after tax of Rs 748.98

million during the year. Although the international prices

for both crude oil and products increased sharply during

the year 2006-07, the increase in products prices during

the 2nd half was higher than the crude prices due to

which the refiners’ margin increased during the year.

Changes in products mix also favourably contributed to

the margin with increase in sales of motor gasoline and

consequent decrease in the exports of naphtha at higher

prices.

The gross refiner’s margin (GRM) continued to decline

during the first two quarters and part of third quarter of

the year 2006-07 which resulted in a loss from refinery

operations of Rs 49.12 million. However, during the third

quarter the GRM started improving and during the

fourth quarter the overall annual average improved to

convert from negative margin to positive margin resulting

in profit from refinery operations of Rs 504.33 million.

This change in profitability was also contributed by

increased demand for motor gasoline, with corresponding

reduction in naphtha exports, as a result of curbing of

smuggling of this product due to domestic rationing of

this product in one of the neighbouring countries and

geo-political changes in the border areas. The industry

had always been demanding that in order to promote the

sales of local refineries production, it was imperative to

halt the smuggling menace.


Directors' Report2. Pricing Formula

It would be recalled that the refineries Import Parity

Pricing Formula was modified with effect from

July 1, 2002 whereby the minimum rate of return of 10%

on paid-up capital, was dispensed with and net profit

after tax from refinery operations (if any) above 50% of

the paid-up capital at that time is required to be diverted

to a special reserve to offset any future loss or make

investment for expansion / upgradation of the Refinery.

As the shareholders have continuously been advised in

the earlier reports, the Company has contested the

abolition of the minimum guaranteed rate of return as a

clause in the existing Agreement between the Company

and the Government of Pakistan to this effect cannot be

changed unilaterally by either party.

The Government has recently through the Federal Budget

2007-08 made certain modifications in the products pricing

mechanism, whereby 5% + 1% deemed duties on

Kerosene Oil and LDO and additional 1% surcharge

included in JP-8 pricing has been withdrawn. This has

resulted in reduced ex-refinery prices of these products

The financial results for the year ended June 30, 2007 are

summarized below:

Rs 000’s

Profit before tax from

refinery operations 960,883

Less: Provision for taxation 456,550

Profit after taxation from

refinery operations 504,333

Income from non-refinery

operations after tax 244,652

Net profit for the year after taxation 748,985

Unappropriated profit brought forward 267,428

Profit available for appropriation 1,016,413

Appropriations:

The Directors propose that this should be utilized in providing

for:

- Transfer to reserve for expansion/

modernization as per the stipulations

of the pricing formula 358,533

- Final cash dividend at the rate of 40%

(equivalent to Rs 4.00 per share of

Rs 10/- each) now proposed 227,448

- Transfer to reserve for issue of bonus

shares in the proportion of 1 share for

every 4 shares held i.e. 25% 142,155

728,136

- Leaving an un-appropriated profit to be

carried forward to next year 288,277

19A N N U A L R E P O R T 2 0 0 7


and shall have a corresponding impact on Company’s

profitability. The Company immediately responded to this

measure and requested the Government to compensate

for this loss through adjustments in products pricing

mechanism.

The prices of motor gasoline (PMG) were being calculated

by including an element of price differential based on

Caltex Bahrain Naphtha and 87 RON motor gasoline

price. However, since the publication of prices of Caltex

Bahrain 87 RON motor gasoline in Platts Oilgram has

ceased effective September 2006 as a result of which

the 3 years average cannot be determined, a revised

formula was to be given for motor gasoline effective

July 2007. A dialogue and a process of exchange of

information was initiated during the year with several

options being considered as an alternate method for PMG

pricing. However, after several joint meetings, despite

assurances given by the Government that refineries shall

not be put into an adverse financial position, the

Government was inclined to opt for a PMG pricing formula

proposed by the World Bank and linked to 95 RON

Arab Gulf prices that would have effectively reduced the

ex-refinery prices with a negative impact of over

Rs 700 million. This matter was again taken-up with the

Ministry of Petroleum & Natural Resources at a joint

meeting and after deliberations it was agreed to defer

the matter of revision in motor gasoline pricing and to

review the position with a view to determine a viable

pricing formula that would effectively safeguard refineries’

revenues and protect their profitability and keep them

operational.

The Company alongwith other two refineries operating

on same pricing formula continues to strongly defend the

pricing formula on the contention that the pricing formula

and profitability has to be seen in a long term perspective

rather than a short term approach which position has

been vindicated by losses suffered during the prior periods

while operating under the same pricing mechanism.

Your Company expects that all concerned authorities

shall review the subject rationally without being influenced

by the high prices arising from international prices which

are beyond any one’s control.

3. Dividend

The Directors are recommending a final dividend at the

rate of 40% (Rs 4 per share of Rs 10 each) and issue of

bonus shares 25% i.e. one share for every four shares

held for the year ended June 30, 2007.

4. Share Capital

The issued, subscribed and paid up capital of the Company

as at June 30, 2007 was Rs 568.62 million.

0

200

400

600

800

PMG KERO HSD F.F.O.

Product's PricesUS $ Per Ton

Directors' Report

Cash Dividend and Bonus Shares

0 10% 20% 30% 40% 50%

21A N N U A L R E P O R T 2 0 0 7

5. Refinery Management and Operations

The Refinery processed 14,074,644 barrels (2006:

14,567,216 barrels) of crude oil received from both

northern and southern oilfields. As reported in prior years,

the allocation of southern crude to the company is based

on the national freight economics and foreign exchange

savings as a result of processing this crude at the Refinery.

It has resulted in savings to the national exchequer of

Rs 58 million (2006: Rs 170 million) in freight and foreign

exchange savings of US $ 30 million (2006: US $ 52

million) during 2006-07 and accumulated freight savings

of over Rs 2.828 billion and foreign exchange savings of

US $ 210 million since commencement of these supplies

from November 1997. Further, the entire indigenous crude

production from the northern region including enhanced

production from certain fields continued to be processed

at the Refinery.

A total of 14.092 million barrels of crude oil (2006: 14.759

million barrels) was received from 84 different oilfields

which was successfully processed at various refining

units. Your refinery has the unique capability and distinction

Crude Oil Receipts & Composition(Northern Vs Southern)


of processing varied quality of both heavy and light crude

oil produced from fields across the whole country.

All the crude processing units operated smoothly.

The Company supplied 1.77 million Tons (2006: 1.819

million Tons) of various petroleum products during the

year meeting the standard quality specifications. This

included the sale of 0.304 million Tons Premium Motor

Gasoline (PMG) (2006:0.275 million Tons). During the

year, the Company has successfully started supply of a

new product Premium JBO to meet the requirements of

customers.

6. Ongoing and Future Projects

6.1 White oil pipeline project

As reported in previous years, the Company is making

all efforts to implement the White Oil Pipeline Project

(WOPP), between Machhike (near Lahore) and Taru

Jabba (near Peshawar) in partnership with Pakistan State

Oil Company Limited (PSOCL) for transportation of

petroleum products. The Company has updated the

project feasibility after taking into account the revised

growth volumes and updating the project capital cost. On

the basis of the revised project feasibility an Action Plan

is being evolved to ensure an early implementation of

this project of national vital interest.

6.2 150 MW Furnace Fuel Fired Power Plant

As the shareholders have been apprised in the quarterly

reports, significant milestones were achieved in respect

of the Power Project including tariff determination by

NEPRA, award of Engineering Procurement and

Construction (EPC) contract to Wartsila and successful

negotiations on Power Purchase Agreement (PPA) and

the Implementation Agreement (IA) with NTDC and PPIB

respectively. The Company is pleased to inform that both

PPA and IA which had earlier been initialled have now

been formally signed. Attock Gen Limited has also

successfully arranged the debt financing of Rs 8.580

billion and the sponsors including your Company have

already subscribed to their respective equity contributions.

The Company’s equity subscription todate amounts to

Rs 540 million. It is expected that the power plant will

start commercial operations in the second quarter of

financial year 2008-09. The documents for debt financing

have been negotiated / finalized and relevant Agreements

have been signed on 4th September, 2007.

6.3 Production of 90 RON Unleaded Gasoline

(Isomerization Unit) and

HSD HydroDesulfurization Unit

In line with its policy to target better and more environment-

friendly petroleum products, ARL is planning to upgrade

its PMG and High Speed Diesel (HSD) quality through

a Light Straight Run Naphtha (LSRN) Isomerization

Complex to produce 90 RON with low benzene and

aromatics and a Diesel HydroDesulfurization Unit to target

sulfur reduction to meet Euro Standards.

The Front End Engineering Design (FEED) for both these

Units is expected in January 2008, through Engineering /

Licensing agreements with M/s UOP, the leading

Directors' Report

23A N N U A L R E P O R T 2 0 0 7


Licensor/Technology providers in the world. ARL will then

be in a position to move to the next phase, i.e. Engineering,

Procurement and Construction. The decision for the

implementation of the Diesel HydroDesulfurization Unit

Project would however be subject to certain incentives

required from the Government in the pricing of this product

to cover the intensive capital cost required for its

completion. Several joint meetings of the refineries with

the Government have already taken place on this subject.

6.4 Pre-flash Unit for capacity enhancement

The Company had originally planned to proceed with the

EPC contract for Pre-flash, Isomerization and Diesel

HydroDesulfurization units after the Front-End Engineering

Design (FEED) package for the Isomerization unit was

received from the Licensor M/s UOP of USA in

January 2008. However, the Lummus Distillation unit

which has been operating for over 65 years has outlived

its life and has now started showing signs of various

operational problems. Since, it may not be advisable to

continue operating with this plant for further extended

time, it has become essential to expedite the installation

of a Pre-flash unit, for which the feed package has already

been received, that shall enhance the overall refining

capacity to 48,400 bpd. Accordingly, the Company has

planned to proceed with the preparation of ITB documents

for both the Pre-flash and Isomerization units alongwith

feed package for offsite facilities as well as soliciting

interest of international engineering contractors. The

projects relating to Isomerization units and Pre-flash

are estimated to cost over US $ 85 million and are

economically feasible to prevent loss of production once

the Lummus unit is closed down on account of operational

safety. Further, with the recent growth in the demand for

PMG and future requirement to upgrade the product from

present 87 RON to 90 RON, the installation of

Isomerization unit has also become necessary and

economically justified.

6.5 Distributed control system (DCS)

for Howe-Baker (HB) Units I & II and

new Heater for HB-II Unit

Work on the DCS project at Heavy crude unit and Reformer

plant has been completed and is nearing completion

at HB Units at a total cost of over Rs 75 million. Further,

a new Heater for HB-II Unit is being procured and installed

at a total cost of Rs 76 million. This would not only prevent

unplanned shut downs but would also make the unit to

safely operate at a higher throughput of 6,000 bpd as

against the nameplate capacity of 5,000 bpd.

6.6 Storage capacity

The Company, as part of its on-going activity, and in order

to have more operational flexibility as well as to replace

old tanks had undertaken construction of crude oil and

products storage tanks of various capacities. While the

construction of a 100,000 barrels crude oil storage tank

is in progress with a total capital outlay of Rs 69 million,

two Jute Batching Oil (JBO), one tank for HSD and one

tank for asphalt storage were completed during the year

at a total cost of Rs 55 million. Additionally, as part of

reorganizing the storage tanks for various products

including naphtha and meeting the requirements for

supply of fuel oil to the Power Plant , one new furnace

fuel storage tank of 5,000 M. tons capacity and one

naphtha storage tank of 4,000 M. tons capacity are being

constructed to be completed in 2008-09 at an estimated

cost of Rs 88 million.

Directors' Report

25A N N U A L R E P O R T 2 0 0 7


7. Business Process Re-engineering,

Research & Development

In accordance with its vision and mission statement, all

efforts are made to improve the process and administrative

efficiency throughout the Company. During the year,

your Company continued with its practice of business

process re-engineering and review to further improve its

product quality and simultaneously boost production

efficiencies. Major efforts in this direction are outlined

below:

• Reformer and HCU DCS system was upgraded. New

system has increased operational reliability and the

upgraded software has the facility to store up to 5 years

historical data. Further, the DCS can be remotely accessed

via Local Area Network (LAN) and the Operator security

has also been enhanced.

• At Effluent Treatment Plant (ETP), the SRC and DAF

units’ controls have been switched from manual operation

to PLC system enabling simultaneous monitoring of all

units from single location, remote access to data and

storage/retrieval of historical data.

• Successful PIGG decoking was carried out at crude

charge heaters tubes at HBU-I, HBU-II and HCU. Besides

prolonging the life of heaters, it has helped to improve

heaters’ performance and enabled the plants to run at

higher heater transfer temperatures, consequently

obtaining increased middle distillates.

• A new cooling tower (CT-3) has been successfully

commissioned. Now all plants have more reliable, compact

and efficient cooling towers in place of old water showering

system. Addition of this cooling tower has given the

operational flexibility as it will also be used as standby

cooling tower for the other cooling tower.

• Enterprise Resource Planning (ERP) system, an IT based

solution, is an effective tool for optimizing working of

today’s modern and complex organisation. After

successfully implementing the ERP financials the

Company is now moving towards the implementation of

MAXIMO for its Procurement, Material management and

Plant Maintenance module. MAXIMO is capable of

effective material control and overall control over quality

of maintenance system.

8. Corporate Social Responsibility

Social responsibility is one of the Core Values of the

Company. Your Company has committed itself to conduct

the business in an honest, ethical, transparent and legal

manner. Your Company wants to be seen as a role model

in the Corporate World and Community by its conduct

and business practices.

Your Company continued to carry out its responsibility

with respect to protection and promotion of interest of its

customers, employees, shareholders, communities and

the environment in all aspects of its operations. Various

initiatives taken by the Company in this respect are given

below.

8.1 Social and Environmental Welfare Projects:

i. Attock Sahara Foundation (ASF) is a non-profit NGO

sponsored by the Company involved in the areas of

women development, vocational/ technical training, poverty

alleviation and basic health. The Company promotes all

activities organized by ASF for the purpose of raising

funds by providing required administrative support.

Recently ASF has been awarded a project (the only NGO

Directors' Report

27A N N U A L R E P O R T 2 0 0 7

ASF Vocational & Technical Training Centre

selected from Punjab) by PAIMAN/USAID for creating

awareness about the health and care of women and

children.

ii. Attock Hospital (Private) Limited, which is a wholly owned

subsidiary of the Company continued to provide basic

and advanced healthcare facilities to the employees and

local community. AHL provided free or discounted services

to the needy persons and conducted Health awareness

programs.

iii. National Cleaner Production Centre (NCPC) is another

organization co-sponsored by the Company that continued

to render valuable services for environment protection.

During the year NCPC has performed several

Environmental Impact Assessments (EIA) and other

analytical services in relation to waste water and flue

gases to various companies. It also provided its services

for incineration of wastes and bio-remediation of oil spills

due to accidents during crude oil transportation.

iv. Morgah Biodiversity Park is a project sponsored by the

Company in collaboration with UNESCAP on Public

Private Partnership basis, for conservation of biodiversity

of the Potohar region while providing opportunities to the

local community to earn their living. Simultaneously, it is

a source of entertainment and education for the visiting

community.

8.2 Human Resource and Organisation Development

The Company’s corporate policy on human resources is

to attain the highest standards of professionalism

throughout the organization by recognizing and revealing

individual capabilities, productivity, commitment and

contribution. Various steps taken by the Company for

development of its human resource capital included:

i. Training and Development: In line with the Company’s

Core values of learning & innovation, every effort is made

to develop and train the employees in a systematic way;

based upon employees’ training needs, succession

planning, and the organizational requirement. As part of

a continuous process various in-house training courses

as well as participation in external courses both within

and outside the country were arranged for the company

employees. Internships, apprenticeship, training programs

and study projects are also provided to students and

fresh graduates for their practical training. Further, merit

scholarships are also awarded to employees’ children

from primary up to post graduation level to assist them

in getting education from top rated institutions including

GIK & LUMS.

ii. Succession and Career Planning: There is a consistent

endeavor by the management in pursuing different

programmes to ensure meaningful development and

career progression for all staff members that would

contribute towards enhanced motivation level of our staff

and will ensure continuous supply of talent to fill future

management gaps in our organization. Succession


Directors' Report

29A N N U A L R E P O R T 2 0 0 7


Planning and Career Management Project started during

the year is one of major initiatives in this direction. This

enormous work has been divided in two phases. During

the year, Phase-I has been completed under which

succession plan for sixteen critical positions has been

developed.

iii. Climate Survey: Human Resources Department carried

out an Organizational Climate Survey. The objective of

this survey was to examine employee opinions about the

quality of their organization's work climate. The feedback

obtained from employees is being used to identify

opportunities for improvements and make the Company

an employer of choice.

iv. Awards and Recognition: In order to recognize the valuable

services rendered by the employees, the Company

distributes various awards that include Long Service

Award, Man of the Quarter Award, Safety Award and

House Keeping Award.

8.3 Health, Safety and Environment (HSE)

The Company remains committed towards achieving the

highest standards of HSE. To realize this mission a

customized plan was drawn by adopting and implementing

world class sustainable HSE good management practices

for the overall benefit of all stakeholders including the

surrounding community.

All efforts are being made to make all processes

environment friendly, safe and efficient. Some of the

initiatives taken during the year in this respect are

summarized below:

i. Solar Water and Space Heating System: The Company

had taken initiative in the field of solar thermal energy.

The measures taken thus far include use of solar energy

for water heating within ARL’s estate, development of a

solar space heating system and solar distilled water still.

National Institute of Silicon Technology has provided the

technical support for this work.

ii. Zero Effluent Discharge: The objective of Zero Effluent

is to recycle and minimize the water requirement for

refinery and to conserve the environment and save

energy. The Company has successfully completed the

recycling of cooling towers blow down, drinking water

treatment plant wastewater, car wash wastewater and

kitchen wastewater.

iii. Oily Sludge Bioremediation: The Company has started

disposing its oily sludge through bioremediation thus

contributing towards the sustainability of clean

environment.

iv. Drinking Water Treatment: The Company has its own

water treatment facility through which drinking water is

supplied not only to the employees but also to surrounding

areas. Continuous awareness is also being created for

use of solar disinfected water. Reverse Osmosis plant is

also in commissioning phase, which will provide further

purified water.

v. Solid Waste Composting: Your Company has started an

Integrated Solid Waste Management system to control

generation, storage, collection, transport, processing and

disposal of solid wastes. Composting of solid waste

consisting of biodegradable organic materials is carried

out in an environmental friendly way to produce fertilizer

that can be used to support plant growth and as a soil

amendment. The fertilizer produced through composting

is being used in household lawns and at vegetable gardens

that supply vegetable to employees and refinery canteen.

vi. Hazardous Waste Incineration: Hazardous waste poses

potential threat to public health and environment. Your

Company has taken the lead to manage hazardous waste

by installing three stage state of the art incinerator which

is incinerating not only the Refinery facilities’ hazardous

waste but also providing services to other interested

industries and hospitals.

Directors' Report

Hazardous Waste Incinerator

31A N N U A L R E P O R T 2 0 0 7

Solar Water Disinfection Unit

Solar Clock in Morgah Biodiversity Park


8.4 Other CSR Activities

The Company continued to provide potable water to the

surrounding villages of Morgah, Nai Abadi, Kotha Kalan,

Jhamra and welfare organizations like SOS Village, Deaf

& Dumb School, other schools and mosques in the vicinity

thus providing lifeline to the surrounding population of

more than 50,000 people.

The company continued its quest for environment

endeavors using recycled water in ARL orchards through

drip irrigation system and growing vegetables through

organic farming. ARL has also stopped the use of

polythene bags and introduced paper bags at Fair Price

Shop at Morgah.

The Company firmly believes in the promotion of sports

for healthy development of community. In this connection

a number of sports events like Annual Swimming Gala

and Annual Sports Competition were organized throughout

the year in which Company’s employees, their children

and people of surrounding areas participated. Your

Company takes pride that the sports facilities and

conducive environment provided by it has contributed in

producing national heroes like Naseer Bunda and Shoaib

Akhtar.

9. Contribution to the National Economy

Attock Refinery is the only refinery located in the Northern

Region of Pakistan and thus holding a high strategic

position. It continues to make valuable contributions to

the National Economy some of which are enumerated

below:

• Providing an outlet to country’s indigenous production of

crude oil and more particularly from the Northern Region

• Meeting the petroleum products demand of both the civil

and defense market

• Foreign exchange savings by providing import substitution

of petroleum products

• Generation of Government duties and taxes in the form

of excise duty, petroleum development levy, sales tax

and customs duties on crude oil and sale of petroleum

products both local and exports

• Deployment of a large transportation fleet for crude oil

and products movement

• Employment and work opportunities

The Company’s contribution to the national exchequer in

the form of taxes and duties amounted to over

Rs 14,361 million. Further, foreign exchange savings of

Directors' Report

33A N N U A L R E P O R T 2 0 0 7

Potable Water Supply to Surrounding Villages


US $ 52.44 million were achieved through import

substitution and exports.

10. Credit Rating

The Company successfully maintained its long-term and

the short-term ratings of ‘AA-’ (Double A Minus) and ‘A1+’

(A One Plus), respectively. The credit rating was conducted

by The Pakistan Credit Rating Agency (PACRA).

11. Corporate Governance

The Board of Directors and the Company remain

committed to the principles of good corporate management

practices with emphasis on transparency and disclosures.

The Board and management are cognizant of their

responsibilities and monitor the refinery operations and

p e r f o r m a n c e t o e n h a n c e t h e a c c u r a c y,

comprehensiveness and transparency of financial and

non-financial information.

The Company is fully compliant with the Code of Corporate

Governance and as per the requirements of the listing

regulations, following specific statements are being given

hereunder:

• Proper books of accounts of the Company have been

maintained.

• The financial statements prepared by the management

present fairly its state of affairs, the results of its operations,

cash flows and changes in equity.

• Appropriate accounting policies have been consistently

applied in preparation of financial statements which

conform to the International Accounting Standards as

applicable in Pakistan. The accounting estimates, wherever

required, are based on reasonable and prudent judgment.

• The system of internal controls are sound in design and

are effectively implemented by the management and

monitored by the internal and external auditors as well

as the Board of Directors and the Audit Committee. The

Board reviews the effectiveness of established internal

controls through the Audit Committee and suggests,

wherever required, further improvement in the internal

control systems.

• There are no significant doubts upon the Company’s

ability to continue as a going concern.

• There is no reported instance of any material departure

from the best practices of Corporate Governance.

• Significant deviations from last years operating results,

future plans and changes, if any, in pricing formula have

been separately disclosed, as appropriate, in the

Chairman’s Review and this Report of the Directors.

• Sales tax amounting to Rs 8.158 million for the month of

June 2007 was outstanding as at June 30, 2007 which

has been subsequently paid.

• The value of investment of employees provident and

pension funds, as at 31st December, 2006, based on

their latest audited accounts is given below:

Rs in million

Management Staff

- Pension Fund 150.207

- Provident Fund 143.137

Non-Management Staff

- Provident Fund 112.838

An unfunded gratuity provision of Rs 85.8 million also

exists in the accounts of the Company under deferred

liabilities

Directors' Report

35A N N U A L R E P O R T 2 0 0 7

• Key operating and financial data of last 6 years is annexed.

A separate statement of compliance signed by the Chief

Executive Officer is separately included in this Annual

Report.

12. Directors and Board Meetings held during

the Year

The three years term of office of seven (7) directors

shall expire on July 16, 2009. The three years term of

Chief Executive Officer, Mr. M. Adil Khattak expires on

July 5, 2009.

Five meetings of Board of Directors were held between

July 1, 2006 and June 30, 2007 and the attendance of

each director is given below:

Total No. ofName of Directors meetings(*)

Mr. Tariq Iqbal Khan, Chairman 2 *

Dr. Ghaith R. Pharaon *** 5

Mr. Shuaib Anwar Malik 5

Mr. Laith Ghaith Pharaon ** 4 *

Mr. Wael Ghaith Pharaon ** 5

Mr. Bashir Ahmad 4 *

Mr. Abdus Sattar 5

Mr. M. Adil Khattak, CEO 5

* Leave of absence was granted to the Chairman / Directors

who could not attend the meeting.

** Overseas directors attended the meetings either in person

or through alternate directors.

13. Auditors

The Auditors Messrs A.F. Ferguson & Co. Chartered

Accountants retire and offer themselves for reappointment.

The Audit Committee recommends the reappointment of

Messrs A.F. Ferguson & Co. Chartered Accountants as

auditors for the financial year ending June 30, 2008.

14. Shareholding

The total number of Company’s shareholders as at

June 30, 2007 was 4,098 as against 3,044 on

June 30, 2006. The pattern of shareholding as at

June 30, 2007 alongwith necessary disclosure as required

under the Code of Corporate Governance is annexed.

No trading in the shares of the Company has been

reportedly carried out during the year by the Directors,

Chief Executive Officer, Chief Financial Officer, Company

Secretary and their spouses and minor children.

15. Earning Per Share

Based on the net profit for the current year the earning

per share was Rs 13.17 (2006 : Rs 5.34). The last year

earning diluted from Rs 6.68 consequent to the increase

in share capital on capitalisation of profits for issue of

bonus shares during the year.

16. Holding Company

The Attock Oil Company Limited, incorporated in England,

is the Holding Company of Attock Refinery Limited.

17. Subsidiary

The Company has a wholly owned subsidiary, Attock

Hospital (Pvt) Limited (AHL).The accounts of AHL have

been consolidated with the accounts of ARL and are

annexed to these accounts.

18. Investment in Associated Undertakings

In addition to the investments made in prior years, the

Company enhanced its investment in Attock Petroleum

Limited from 20.91% as at June 30, 2006 to 21.70% as

at June 30, 2007. Further, the Company acquired 30%

shares of Attock Gen Limited by making an investment

of Rs 540 million. The details of these investments are

contained in Note 13 of the attached accounts for the

year ended June 30, 2007.

The results of these associated undertakings in so far as

they relate to the Company’s share in these entities have

been incorporated in the enclosed Consolidated financial

statements.

On behalf of the Board

Rawalpindi Tariq Iqbal KhanSeptember 10, 2007 Chairman

Debt Equity Position(Rupees in Million)

Administrator

Sd


Pattern of Shareholding

as at June 30, 2007 Form 34 (Section 236)No. of Shareholders Total

CDC Others TotalShareholding

Shares Held

659 100 759 From 1 to 100 38,850

1,103 68 1,171 From 101 to 500 386,191

721 149 870 From 501 to 1,000 717,489

911 25 936 From 1,001 to 5,000 2,215,697

146 4 150 From 5,001 to 10,000 1,143,326

63 Nil 63 From 10,001 to 15,000 793,016

25 1 26 From 15,001 to 20,000 479,249

18 Nil 18 From 20,001 to 25,000 429,318

10 Nil 10 From 25,001 to 30,000 288,948

18 Nil 18 From 30,001 to 35,000 583,115

7 Nil 7 From 35,001 to 40,000 267,400

8 Nil 8 From 40,001 to 45,000 346,510

11 Nil 11 From 45,001 to 50,000 533,437

3 Nil 3 From 50,001 to 55,000 160,500

4 Nil 4 From 55,001 to 60,000 233,700

2 Nil 2 From 60,001 to 65,000 123,750

3 Nil 3 From 65,001 to 70,000 202,325

2 Nil 2 From 70,001 to 75,000 145,750

1 Nil 1 From 75,001 to 80,000 75,032

1 Nil 1 From 80,001 to 85,000 81,250

1 Nil 1 From 85,001 to 90,000 85,200

2 Nil 2 From 95,001 to 100,000 200,000

2 Nil 2 From 105,001 to 110,000 220,000

2 Nil 2 From 110,001 to 115,000 223,525

1 Nil 1 From 115,001 to 120,000 119,000

2 Nil 2 From 125,001 to 130,000 256,650

2 Nil 2 From 140,001 to 145,000 287,600

1 Nil 1 From 145,001 to 150,000 149,175

1 Nil 1 From 165,001 to 170,000 170,000

1 Nil 1 From 175,001 to 180,000 180,000

1 Nil 1 From 180,001 to 185,000 184,700

1 Nil 1 From 185,001 to 190,000 188,020

1 Nil 1 From 200,001 to 205,000 203,210

1 Nil 1 From 215,001 to 220,000 216,037

1 Nil 1 From 220,001 to 225,000 220,100

37A N N U A L R E P O R T 2 0 0 7

Form 34 (Section 236)No. of Shareholders Total

CDC Others TotalShareholding

Shares Held

1 Nil 1 From 240,001 to 245,000 243,500

1 Nil 1 From 245,001 to 250,000 249,825

1 Nil 1 From 260,001 to 265,000 263,200

1 Nil 1 From 355,001 to 360,000 358,100

1 Nil 1 From 380,001 to 385,000 383,125

1 Nil 1 From 395,001 to 400,000 400,000

1 Nil 1 From 690,001 to 695,000 693,807

1 Nil 1 From 980,001 to 985,000 983,000

1 Nil 1 From 1,035,001 to 1,040,000 1,036,012

1 Nil 1 From 1,440,001 to 1,445,000 1,441,600

1 Nil 1 From 1,445,001 to 1,450,000 1,448,920

1 Nil 1 From 1,755,001 to 1,760,000 1,759,788

1 Nil 1 From 2,755,001 to 2,760,000 2,758,756

1 Nil 1 From 2,840,001 to 2,845,000 2,841,747

– 1 1 From 29,000,001 to 30,000,000 29,852,550

3,750 348 4,098 Total 56,862,000

Categories of ShareholdersNumbers Percentage

CDC Others Total Shares Held (%)

Joint Stock Companies:

The Attock Oil Company Limited (Holding Company) 1 1 2 31,274,150 55.00

Others 83 2 85 2,875,688 5.06

Financial Institutions:

National Investment Trust (NIT) 1 1 2 5,600,603 9.85

PICIC 1 – 1 1,036,012 1.82

Others 44 – 44 2,112,720 3.72

Insurance Companies 6 – 6 552,250 0.97

Investment Companies 9 – 9 541,174 0.95

Leasing Companies 2 – 2 82,250 0.14

Modarabas (including Management Companies) 6 – 6 35,937 0.06

Mutual Fund 9 – 9 787,630 1.39

Charitable Trusts 1 – 1 20,000 0.04

Individuals:

Dr. Ghaith R. Pharaon (Director) – 1 1 16 0.00

Mr. Shuaib Anwar Malik (Director) – 1 1 1 0.00

Others 3,587 342 3,929 11,943,569 21.00

Total 3,750 348 4,098 56,862,000 100.00


Financial Statistical Summary

June 30 (Rupees in Million)2007 2006 2005 2004 2003 2002

Trading Results

Sales (Net of Govt. Levies) 59,108.53 55,828.14 41,606.17 25,412.73 23,381.00 20,684.60

Reimbursement from / (to) Government 355.39 234.24 133.46 – 8.90 –

Turnover 59,463.92 56,062.37 41,739.63 25,412.73 23,389.90 20,684.60

Cost of Sales 58,609.95 55,490.68 39,190.43 24,481.13 22,785.90 19,282.20

Gross profit 853.97 571.69 2,549.21 931.60 604.00 1,402.40

Administration and distribution cost 191.82 197.08 328.83 203.53 133.40 124.90

Other income 635.17 627.08 218.09 140.62 207.90 165.50

Non–Refinery income 244.65 223.19 73.50 8.47 10.80 14.10

Operating profit 1,541.96 1,224.89 2,511.96 877.16 689.30 1,457.10

Financial and other charges 336.43 566.34 248.92 93.04 133.40 330.30

Profit before tax 1,205.53 658.55 2,263.04 784.12 555.90 1,126.80

Taxation 456.55 354.84 1,040.44 392.17 276.20 385.70

Profit after tax 748.98 303.71 1,222.60 391.96 279.70 741.10

Dividend – – (116.64) (145.80) (145.80) (131.20)

Bonus shares (113.72) (104.98) (58.32) – – –

Transfer to reserves (358.53) – (1,003.30) (237.68) (123.20) (610.40)

Balance Sheet Summary

Paid–up capital 568.62 454.90 349.92 291.60 291.60 291.60

Reserves 2,828.89 2,392.36 2,376.05 1,190.33 952.70 829.50

Unappropriated Profit 381.15 182.42 138.08 21.44 12.90 2.20

Shareholder' funds 3,778.66 3,029.68 2,864.06 1,503.38 1,257.20 1,123.30

Financing facilities

(Long term including current portion) – 3,410.25 – 30.00 90.00 960.70

Property, plant & equipment

(less depreciation) 2,968.13 3,243.95 3,354.72 3,524.64 3,747.80 3,936.40

Net current assets (6,610.38) (2,440.47) (1,124.17) 89.18 (225.70) 100.00

39A N N U A L R E P O R T 2 0 0 7

June 30 (Rupees in Million)2007 2006 2005 2004 2003 2002

Key Financial Ratios

Gross profit / turnover ratio 1.4 1.0 6.1 3.7 2.6 6.8

Profit before tax / turnover ratio 2.0 1.2 5.4 3.1 2.4 5.4

Return on capital employed (%) 23.2 10.3 56.0 28.4 23.5 90.6

Interest coverage (times) 6 2 194 68 9 6

Inventory turnover (times) 20.90 22.61 20.42 16.73 20.65 18.13

Debtors turnover (times) 13.41 15.35 12.84 11.87 17.82 18.91

Fixed assets turnover (times) 43.43 38.24 25.85 14.29 11.88 9.18

Debt : Equity ratio 00:100 48:52 1:99 2:98 9:91 24:76

Liquidity ratios

Current 0.75 0.87 0.92 1.01 0.96 1.02

Quick asset 0.58 0.66 0.72 0.76 0.70 0.77

Shares and Earnings

Break–up value (Rs per share) without surplus

on revaluation of property, plant & equipment 66.45 66.60 81.85 51.56 43.11 38.52

Break–up value (Rs per share) with surplus

on revaluation of property, plant & equipment 100.28 108.88 136.81 117.51 109.07 104.48

Price earning ratio (times) * 12.31 16.48 4.84 6.81 9.97 2.33

Earning (Rs per share) 13.17 6.68 34.94 13.44 9.59 25.41

(on shares outstanding at 30 June)

Dividend 0% 0% 40% 50% 50% 45%

Bonus Shares Issue ** 30% 30% 20% – – –

Highest market value per share during the year 123.80 238.00 215.00 149.00 113.50 69.00

Lowest market value per share during the year 72.40 84.05 72.25 50.50 58.00 39.00

Market value per share 162.10 110.00 168.95 91.50 95.60 59.10

Cash dividend per share – – 3.33 5.00 5.00 4.50

Dividend yield ratio 4.01% 2.27% 2.96% 5.46% 5.23% 7.61%

Dividend payout ratio 15.18% 34.57% 14.31% 37.20% 52.13% 17.70%

* The price earning ratio is without the effect of Bonus issue.

** In addition the Board has proposed a cash dividend @ 40% and bonus issue @ 25% in their meeting held on September 10, 2007.


Financial Highlights - ARL

Shareholders Funds(Rupees in Million)

Break-up of Refining Cost(US $ Per Barrel)

Break-up Value of Shares(Rupees Per Share)

Fixed Assets(Rupees in Million)

2001 2002 2003 2004 2005 2006 2007

0

500

2000

1,000

1,500

2,000

2,500

3,000

Profitability and Dividend Analysis(Rupees in Million)

Gross profit Operating profit Profit after tax Dividend including bonus shares

Turnover(Rupees in Million)

41A N N U A L R E P O R T 2 0 0 7


Financial Highlights - AHL

Composition of Revenue from Private Patients(Rupees)

Total Expenses including Taxation(Rupees in Million)

Equities & Liabilities(Rupees)

Fixed and Current Assets(Rupees)

Total Revenue including other Income(Rupees in Million)

43A N N U A L R E P O R T 2 0 0 7


We have reviewed the Statement of Compliance with the best

practices contained in the Code of Corporate Governance (the

Code) as applicable to Attock Refinery Limited (the Company)

for the year ended June 30, 2007 prepared by the Board of

Directors of Attock Refinery Limited, to comply with the Listing

Regulations of the Karachi, Lahore and Islamabad Stock

Exchanges where the Company is listed.

The responsibility for compliance with the Code of Corporate

Governance is that of the Board of Directors of the Company.

Our responsibility is to review, to the extent where such

compliance can be objectively verified, whether the Statement

of Compliance reflects the status of the Company’s compliance

with the provisions of the Code of Corporate Governance and

report if it does not. A review is limited primarily to inquiries of

the Company personnel and review of various documents

prepared by the Company to comply with the Code.

As part of our audit of financial statements we are required to

obtain an understanding of the accounting and internal control

systems sufficient to plan the audit and develop an effective

audit approach. We have not carried out any special review of

the internal control system to enable us to express an opinion

as to whether the Board’s statement on internal control covers

all controls and the effectiveness of such internal controls.

Based on our review, nothing has come to our attention which

causes us to believe that the Statement of Compliance does

not appropriately reflect the Company’s compliance, in all material

respects, with the best practices contained in the Code of

Corporate Governance as applicable to the Company for the

year ended June 30, 2007.

Chartered AccountantsIslamabad: September 10, 2007

Review Report to the Members

on Statement of Compliance

with Best Practices of Code of

Corporate Governance

A member firm of

Administrator

Sd

45A N N U A L R E P O R T 2 0 0 7

This statement is being presented to comply with the Code of

Corporate Governance contained in listing regulations of Karachi,

Lahore and Islamabad Stock Exchanges for the purpose of

establishing a framework of good governance, whereby a listed

company is managed in compliance with the best practices of

corporate governance.

The Company has applied the principles contained in the Code

in the following manner:

1. The Company encourages representation of independent

non-executive directors and directors representing minority

interests on its Board of Directors. At present the Board

comprises of seven non-executive directors of whom

three are independent directors including one director

representing institutional equity interest and minority

shareholders.

2. None of the directors is serving as a director in more than

ten listed companies, including this Company, unless

specifically exempt.

3. All the resident directors of the Company are registered

as taxpayers and none of them has defaulted in payment

of any loan to a banking company, a DFI or an NBFI or,

being a member of a stock exchange, has been declared

as a defaulter by that stock exchange.

4. No casual vacancy occured on the Board during the year.

5. The Company has prepared a ’Statement of Ethics and

Business Practices’, which has been signed by all the

directors and employees of the Company.

6. The Board has developed a vision/mission statement,

overall corporate strategy and significant policies of the

Company. A complete record of particulars of significant

Name of Company – ATTOCK REFINERY LIMITED

Year Ended – JUNE 30, 2007

Statement of Compliance

with the Code of

Corporate Governance

policies along with the dates on which they were approved

or amended has been maintained.

7. All the powers of the Board have been duly exercised

and decisions on material transactions, including

appointment and determination of remuneration and terms

and conditions of employment of the CEO and other

executive directors are taken by the Board.

8. The meetings of the Board were presided over by the

Chairman and the Board met at least once in every

quarter. Written notices of the Board meetings, along with

agenda and working papers, were circulated at least

seven days before the meetings. The minutes of the

meetings were appropriately recorded and circulated.

9. The directors were apprised of their duties and

responsibilities through various in-house and external

orientation courses.

10. The directors’ report for this year has been prepared in

compliance with the requirements of the Code and fully

describes the salient matters required to be disclosed.

11. The financial statements of the Company were duly

endorsed by CEO and CFO before approval of the Board.

12. The directors, CEO and executives do not hold any

interest in the shares of the Company other than that

disclosed in the pattern of shareholding.

13. The Company has complied with all the corporate and

financial reporting requirements of the Code.

14. The Board has formed an audit committee. It comprises

3 members, all non-executive directors including the

Chairman of the committee who is an independent

non-executive director.


15. The meetings of the audit committee were held at least

once every quarter prior to approval of interim and final

results of the Company and as required by the Code.

The terms of reference of the committee have been

formed and advised to the committee for compliance.

16. The Board has set-up an effective internal audit function

who are considered suitably qualified and experienced

for the purpose and are conversant with the policies and

procedures of the Company and they are involved in the

internal audit function on a full time basis.

17. The statutory auditors of the Company have confirmed

that they have been given a satisfactory rating under the

quality control review programme of the Institute of

Chartered Accountants of Pakistan, that they or any of

the partners of the firm, their spouses and minor children

do not hold shares of the Company and that the firm and

all its partners are in compliance with International

Federation of Accountants (IFAC) guidelines on code of

ethics as adopted by Institute of Chartered Accountants

of Pakistan.

18. The statutory auditors or the persons associated with

them have not been appointed to provide other services

except in accordance with the listing regulations and the

auditors have confirmed that they have observed IFAC

guidelines in this regard.

19. We confirm that all other material principles contained in

the Code have been duly complied with.

M. Adil KhattakSeptember 05, 2007 Chief Executive Officer

Administrator

Sd

Property, Plant & EquipmentStores, spares and loose toolsStock-in-tradeTrade debtsLong Term InvestmentsDeferred taxation & other receivablesCash and bank balances

2%16%

0%

79%

3%

Issued, subscribed and paid-up capitalReserves and surplus (before dividend)Long term loans and Deferred LiabilitiesTrade & other payablesProvision for taxation

47A N N U A L R E P O R T 2 0 0 7

Equity and Liabilities Assets

Balance Sheet Composition as at June 30, 2007


Contributions & Value Additions

Contribution to National Exchequer

Rs in million

• Government levies on petroleum products 14,107

• Income tax paid 231

• Import / export duties 23

Total 14,361

• Foreign exchange savings US$ 52.44 million

Value additions during the year

Rs in million

• Employees as remuneration 362

• Government as taxes 14,361

• Shareholders as dividend 114

• Retained within the business 359

49A N N U A L R E P O R T 2 0 0 7

ANNUAL AUDITEDFINANCIAL STATEMENTS 2007

ATTOCK REFINERY LIMITED


Auditors' Report to the Members

51A N N U A L R E P O R T 2 0 0 7

We have audited the annexed balance sheet of Attock

Refinery Limited as at June 30, 2007 and the related profit

and loss account, cash flow statement and statement of

changes in equity together with the notes forming part

thereof, for the year then ended and we state that we have

obtained all the information and explanations which, to

the best of our knowledge and belief, were necessary for

the purposes of our audit.

It is the responsibility of the Company's management to establish

and maintain a system of internal control, and prepare and

present the above said statements in conformity with the

approved accounting standards and the requirements of the

Companies Ordinance, 1984. Our responsibility is to express

an opinion on these statements based on our audit.

We conduct our audit in accordance with the auditing standards

as applicable in Pakistan. These standards require that we

plan and perform the audit to obtain reasonable assurance

about whether the above said statements are free of any

material misstatement. An audit includes examining on a test

basis, evidence supporting the amounts and disclosures in the

above said statements. An audit also includes assessing the

accounting policies and significant estimates made by

management, as well as, evaluating the overall presentation

of the above said statements. We believe that our audit provides

a reasonable basis for our opinion and, after due verification,

we report that:

(a) in our opinion, proper books of account have been kept

by the Company as required by the Companies

Ordinance, 1984;

(b) in our opinion

(i) the balance sheet and profit and loss account

together with the notes thereon have been

drawn up in conformity with the Companies

Ordinance, 1984, and are in agreement with

the books of account and are further in

accordance wi th account ing po l ic ies

consistently applied;

(ii) the expenditure incurred during the year was

for the purpose of the Company's business;

and

(iii) the business conducted, investments made

and the expenditure incurred during the year

were in accordance with the objects of the

Company;

(c) in our opinion and to the best of our information and

according to the explanations given to us, the balance

sheet, profit and loss account, cash flow statement

and statement of changes in equity together with the

notes forming part thereof conform with approved

accounting standards as applicable in Pakistan, and,

give the information required by the Companies

Ordinance, 1984, in the manner so required and

respectively give a true and fair view of the state of

the Company's affairs as at June 30, 2007 and of the

profit, its cash flows and changes in equity for the

year then ended; and

(d) in our opinion no Zakat was deductible at source

under the Zakat and Ushr Ordinance, 1980.

Chartered Accountants

Islamabad: September 10, 2007

A member firm of

Administrator

Sd

Balance Sheetas at June 30, 2007


2007 2006 Note Rupees Rupees

Share capital and reserves

Share capital

Authorised 4 1,000,000,000 1,000,000,000

Issued, subscribed and paid-up 4 568,620,000 454,896,000

Reserves and surplus 5 3,210,044,648 2,574,783,836

3,778,664,648 3,029,679,836

Surplus on revaluation of freehold land 6 1,923,338,591 1,923,338,591

5,702,003,239 4,953,018,427

Long term and deferred liabilities

Long term loans 7 – 3,410,250,000

Provision for staff gratuity 85,800,000 75,800,000

85,800,000 3,486,050,000

Current liabilities and provisions

Current maturity of long term loans 7 – 1,136,750,000

Short term finance 8 – –

Trade and other payables 9 25,393,520,229 18,772,869,711

Provision for taxation 1,006,629,216 747,596,998

26,400,149,445 20,657,216,709

Contingencies and commitments 10

32,187,952,684 29,096,285,136

Balance Sheetas at June 30, 2007

53A N N U A L R E P O R T 2 0 0 7


Property, plant and equipment

Operating assets 11 2,730,262,269 2,945,709,003

Capital work-in-progress 12 217,682,385 220,546,344

Stores and spares held for capital expenditure 20,190,054 77,695,655

2,968,134,708 3,243,951,002

Long term investments 13 9,261,339,056 8,622,913,930

Long term loans and deposits 14 10,954,309 11,613,726

Deferred taxation 15 157,755,940 137,805,949

Current assets

Stores, spares and loose tools 16 630,835,993 585,992,163

Stock-in-trade 17 3,852,645,836 3,523,807,730

Trade debts 18 6,234,917,655 4,675,133,457

Loans, advances, deposits, prepayments and other receivables 19 191,255,471 263,473,099

Cash and bank balances 20 8,880,113,716 8,031,594,080

19,789,768,671 17,080,000,529

32,187,952,684 29,096,285,136

The annexed notes form an integral part of these financial statements.

Chief Executive Director

Administrator

Sd

Administrator

Sd

Profit & Loss Accountfor the year ended June 30, 2007



Sales 21 59,154,779,218 55,936,831,735

Less: Discount 46,247,604 108,693,725

59,108,531,614 55,828,138,010

Reimbursement due from the Government

under import parity pricing formula 22 355,392,880 234,236,228

59,463,924,494 56,062,374,238

Less: Cost of sales 23 58,609,954,476 55,490,680,059

Gross profit 853,970,018 571,694,179

Less: Administration expenses 24 175,107,589 183,298,609

Distribution cost 25 16,716,333 13,779,850

Finance cost 26 234,277,979 498,424,775

Other charges 27 102,150,812 67,912,109

528,252,713 763,415,343

325,717,305 (191,721,164)

Other income 29 635,166,064 627,082,965

Profit before taxation from refinery operations 960,883,369 435,361,801

Provision for taxation 30 456,550,009 354,844,084

Profit after taxation from refinery operations 504,333,360 80,517,717

Income from non-refinery operations less applicable

charges and taxation 31 244,651,452 223,188,311

Profit for the year 748,984,812 303,706,028

Earnings per share 35.1 13.17 6.68



Administrator

Sd

Administrator

Sd

Cash Flow Statementfor the year ended June 30, 2007

55A N N U A L R E P O R T 2 0 0 7

2007 2006 Rupees Rupees

Cash flows from operating activities

Cash receipts from – customers 72,705,853,274 69,286,514,375

– others 98,995,648 131,684,336

72,804,848,922 69,418,198,711

Cash paid for operating costs (52,802,255,187) (52,412,273,161)

Cash paid to Government for duties, taxes and other levies (14,106,632,140) (12,089,104,107)

Income tax paid (231,352,655) (824,721,231)

Net cash flows from operating activities 5,664,608,940 4,092,100,212

Cash flows from investing activities

Additions to property, plant and equipment (81,160,249) (230,284,848)

Proceeds from sale of property, plant and equipment 954,362 2,309,505

Long term investments (638,425,126) (6,213,929,559)

Long term loans and deposits 659,417 426,715

Income on bank deposits received 529,356,513 501,987,969

Dividends received 277,697,450 253,335,200

Net cash flows from investing activities 89,082,367 (5,686,155,018)

Cash flows from financing activities

Long term loans (4,547,000,000) 4,547,000,000

Repayment of principal portion of finance lease – (30,000,000)

Financial charges paid (358,411,079) (374,917,154)

Dividends paid (30,173) (8,606)

Net cash flows from financing activities (4,905,441,252) 4,142,074,240

Effect of exchange rate changes 269,581 2,992,990

Increase in cash and cash equivalents 848,519,636 2,551,012,424

Cash and cash equivalents at the beginning of the year 8,031,594,080 5,480,581,656

Cash and cash equivalents at the end of the year 8,880,113,716 8,031,594,080



Administrator

Sd

Administrator

Sd

Statement of Changes in Equityfor the year ended June 30, 2007


Special reserve for Surplus onShare Capital expansion / General Un-appropriated revaluation ofcapital reserve modernisation reserve Profit freehold land TotalRupees Rupees Rupees Rupees Rupees Rupees Rupees

Balance at June 30, 2005 349,920,000 5,948,506 2,187,628,247 55,000 182,422,055 1,923,338,591 4,649,312,399

Bonus shares @ 30% related to

the year ended June 30, 2005 104,976,000 – – – (104,976,000) – –

Profit for the year – – – – 303,706,028 – 303,706,028

Transfer to reserve for

expansion / modernisation – – – – – – –

Balance at June 30, 2006 454,896,000 5,948,506 2,187,628,247 55,000 381,152,083 1,923,338,591 4,953,018,427



Profit for the year – – – – 748,984,812 – 748,984,812


expansion / modernisation – – 358,533,360 – (358,533,360) – –

Balance at June 30, 2007 568,620,000 5,948,506 2,546,161,607 55,000 657,879,535 1,923,338,591 5,702,003,239



Administrator

Sd

Administrator

Sd

Notes to the Financial Statementsfor the year ended June 30, 2007

57A N N U A L R E P O R T 2 0 0 7

The Company was incorporated in Pakistan on November 8, 1978 as a private limited company and was converted into a public limited company on June

26, 1979. The registered office of the Company is situated at Morgah, Rawalpindi. Its shares are quoted on the Karachi, Lahore and Islamabad Stock

Exchanges in Pakistan. It is principally engaged in the refining of crude oil.

The Company is a subsidiary of The Attock Oil Company Limited, UK and its ultimate parent is Bay View International Group S.A.

2.1 Basis of presentation of financial statements

These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements

of the Companies Ordinance, 1984 (the Ordinance). Approved accounting standards comprise of such International Accounting Standards as notified

under the provisions of the Ordinance. Wherever, the requirements of the Ordinance or directives issued by the Securities and Exchange Commission

of Pakistan differ with the requirements of these standards, the requirements of the Ordinance or the requirements of the said directives take

precedence.

Amendments to the published standards and new interpretations effective for accounting periods beginning on or after January 1, 2006:

IAS 19 (Amendment) – Employee Benefits is mandatory for the Company’s accounting periods beginning on or after January 1, 2006. This

amendment introduces the option of an alternate recognition approach for actuarial gains and losses and requires new disclosures. As the

Company does not intend to change its accounting policy adopted for the recognition of actuarial gains and losses, the adoption of this amendment

only impacts the format and extent of disclosures as given in note 28 to these financial statements.

Standards, amendments and interpretations effective for accounting periods beginning on or after January 1, 2006 but not relevant:

The other new standards, amendments and interpretations that are mandatory for accounting periods beginning on or after January 1, 2006

are not considered to be relevant or do not have any significant effect on the Company’s operations.

Standards or interpretations not yet effective but relevant:

The following new accounting standards and amendments to existing accounting standards have been published and are not effective for the

purpose of these financial statements.

i) IAS 1 Presentation of Financial Statements – Capital Disclosures

ii) IFRS 7 – Financial Instruments: Disclosures

iii) IAS 39 and IFRS 4 (Amendment), Financial Guarantee Contracts

Adoption of the above accounting standards is not considered to have any significant effect on the Company's financial statements.

2.2 Basis of measurement

These financial statements have been prepared under the historical cost convention modified by revaluation of free hold land referred to in note 2.5

and certain other modifications as required by International Accounting Standards referred to in the accounting policies given below.

1. Legal status and operations

2. Summary of significant accounting

policies



2.3 Dividend appropriation

Dividend is recognised as a liability in the financial statements in the period in which it is declared.

2.4 Taxation

Provision for current taxation is based on taxable income at the current rates of taxation or half percent of turnover, whichever is higher. Deferred

income tax is accounted for using the balance sheet liability method in respect of all temporary differences arising between the carrying amount of

assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities

are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that future taxable profits

will be available against which the deductible temporary differences can be utilised.

Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse based on the tax rates that have been

enacted. Deferred tax is charged or credited to income except in the case of items credited or charged to equity in which case it is included in equity.

2.5 Property, plant and equipment

a) Cost

Operating fixed assets except freehold land are stated at cost less accumulated depreciation. Freehold land is stated at revalued amount.

Capital work-in-progress and stores held for capital expenditure are stated at cost. Cost in relation to certain plant and machinery items includes

borrowing cost related to the financing of major projects during construction phase.

b) Depreciation

Depreciation is charged to income on straight line method to write off the cost of an asset over its estimated useful life at the rates specified in

note 11. The carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate that carrying

value may not be recoverable. If any such indication exists and where the carrying value exceeds the estimated recoverable amount, the assets

are written down to recoverable amount.

c) Repairs and maintenance

Maintenance and normal repairs, including minor alterations, are charged to income as and when incurred. Renewals and improvements are

capitalised and the assets so replaced, if any, are retired.

d) Gains and losses on deletion

Gains and losses on deletion of assets are included in income currently.

2.6 Investments

a) Investments in subsidiary and associated companies

These investments are initially valued at cost. At subsequent reporting dates, the Company reviews the carrying amount of the investment to

assess whether there is any indication that such investments have suffered an impairment loss. If any such indication exists, the recoverable


59A N N U A L R E P O R T 2 0 0 7

amount is estimated in order to determine the extent of the impairment loss, if any. Such impairment losses or reversal of impairment losses

are recognised in the profit and loss account. The profits and losses of subsidiary and associated companies are carried in the financial statements

of the subsidiary and associated company and are not dealt with for the purpose of the financial statements of the Company except to the extent

of dividend declared by the subsidiary and associated companies.

b) Available for sale investments

Investment securities held by the Company which may be sold in response to needs for liquidity or changes in interest rates, exchange rates

or equity prices are classified as available for sale. These investments are initially recognised at cost and subsequently re-measured at fair

value.

Unrealised gains and losses arising from changes in the fair value in respect of exchange differences of available for sale investments are

treated as referred to in note 2.9.

2.7 Stores, spares and loose tools

These are valued at moving average cost less allowance for obsolete items. Items in transit are stated at invoice value plus other charges paid

thereon.

2.8 Stock-in-trade

Stock-in-trade is valued at the lower of cost and net realisable value. Crude oil in transit is valued at cost comprising invoice value. Cost in relation

to crude oil is determined on the basis of annual average cost of purchases during the year on the principles of import parity and in relation to

semi-finished and finished products it represents the cost of crude oil and refining charges consisting of direct expenses and appropriate production

overheads. Direct expenses are arrived at on the basis of average cost for the year per barrel of throughput. Production overheads, including

depreciation, are allocated to throughput proportionately on the basis of nameplate capacity.

Net realisable value in relation to finished product represents selling prices in the ordinary course of business less costs necessarily to be incurred

for its sale, as applicable, and in relation to crude oil represents replacement cost at the balance sheet date.

2.9 Foreign currency transactions

Transactions in foreign currencies are converted into rupees at the rates of exchange ruling on the date of the transaction. All monetary assets and

liabilities denominated in foreign currencies at the year end are translated at exchange rate prevailing at the balance sheet date. Exchange differences

are dealt with through the profit and loss account.



2.10 Revenue recognition

Revenue is recognised to the extent that it is probable that economic benefits will flow to the Company and the revenue can be reliably measured.

Revenue is recognised as follows:

i) Revenue from sales is recognised on delivery of products ex-refinery to the customers with the exception that Naphtha export sales are

recognised on the basis of products shipped to customers.

ii) The Company is operating under the import parity pricing formula, as modified from time to time, whereby it is charged the cost of crude on

'import parity' basis and is allowed product prices equivalent to the 'import parity' price, calculated under agreed parameters. The Government

has, effective July 1, 2007 made certain modifications in the agreed parameters which has effectively reduced the ex-refinery price of Kerosene

oil, Light Diesel Oil (LDO) and JP-8 which will correspondingly reduce the sales revenue. The Government is also reviewing the pricing formula

for Motor Gasoline and it is expected that a pricing formula for this product would be finalised with mutual consultations ensuring that the

refineries do not suffer loss on account of these changes to remain commercially viable.

Under the pricing formula the Company was entitled to a net of tax return on its paid-up capital with a guaranteed minimum of 10% and allowable

maximum of 40% in respect of its refinery operations.

Effective July 1, 2002, the Government has further modified the pricing formula applicable to the Company. Under this modified formula the

Refinery shall not claim from the Government any shortfall in profitability and net profit after tax (if any) from refinery operations above 50% of

paid-up capital as at July 1, 2002 is required to be diverted to a special reserve to offset any future loss or make investment for expansion or

upgradation of Refinery. However, the Company has contested the abolition of minimum rate of return of 10% and represented to the Government

to modify the already existing agreement for guaranteed return with mutual consent of both the parties.

iii) Dividend income is recognised when the right to receive dividend is established.

iv) Other income is recognised on accrual basis.

2.11 Related party transactions

The transactions with related parties in respect of sale of petroleum products, the prices of which are regulated and notified by the Government, and

crude oil purchases, the prices of which are determined in accordance with the agreed pricing formula as approved by the Government, are recorded

at the prices so notified or determined.

In case of sale of deregulated petroleum products, the transactions are made at Company notified prices for all its customers. In certain cases,

reduced price is allowed on commercial considerations. All other transactions are carried out on commercially negotiated terms.

2.12 Borrowing cost

Borrowing cost related to the financing of major projects during construction phase is capitalised. All other borrowing costs are expensed as incurred.

2.13 Staff retirement benefits

The main features of the retirement benefit schemes operated by the Company for its employees are as follows:


61A N N U A L R E P O R T 2 0 0 7

(i) Defined benefit plans

A pension plan for its Management Staff and a gratuity plan for its Non-Management Staff. The pension plan is invested through an approved

trust fund while the gratuity plan is book reserve plan. Contributions are made in accordance with actuarial recommendation. Actuarial valuations

are conducted annually using projected unit credit method. The obligation is measured at the present value of the estimated future cash outflows.

Unrealised net gains and losses are amortised over the expected remaining service of current members.

(ii) Defined contribution plans

Approved contributory provident fund for all employees to which equal monthly contribution is made both by the Company and the employee

at the rate of 10% of basic salary.

2.14 Employees compensated absences

The Company also provides for compensated absences for all employees in accordance with the rules of the Company.

2.15 Financial instruments

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument and

de-recognised when the Company loses control of the contractual rights that comprise the financial asset and in case of financial liability when the

obligation specified in the contract is discharged, cancelled or expired. The particular measurement methods adopted are disclosed in the individual

policy statements associated with each item as shown below:

a) Trade and other payables

Liabilities for trade and other amounts payable including amounts payable to related parties are carried at cost which is the fair value of the

consideration to be paid in the future for goods and services received.

b) Provisions

Provisions are recognised when a Company has a legal or constructive obligation as a result of past event if it is probable that an outflow of

resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made.

c) Trade and other receivables

Trade receivables and other receivables are recognised and carried at original invoice amount/cost less an allowance for any uncollectible

amounts.

d) Cash and cash equivalents

Cash in hand and at banks are carried at fair value. For the purpose of cash flow statement, cash and cash equivalents consist of cash in hand,

balances in banks and highly liquid short term investments.



The preparation of financial statements in conformity with the approved accounting standards requires the use of certain critical accounting estimates. It also

requires management to exercise its judgment in the process of applying the Company's accounting policies. Estimates and judgments are continually

evaluated and are based on historical experience, including expectation of future events that are believed to be reasonable under the circumstances. The

areas where various assumptions and estimates are significant to the Company's financial statements or where judgment was exercised in application of

accounting policies are as follows:

i) Revaluation surplus on freehold land - note 11.1

ii) Estimate of recoverable amount of investment in associated companies - note 13.1

iii) Price adjustment related to crude oil purchases - note 23.1

iv) Provision for retirement benefits - note 28

v) Provision for taxation - note 30

2007 2006Rupees Rupees

Authorised

100,000,000 (2006: 100,000,000) ordinary shares of Rs 10 each 1,000,000,000 1,000,000,000

Issued, subscribed and paid up

Shares issued for cash

8,000,000 (2006: 8,000,000) ordinary shares of Rs 10 each 80,000,000 80,000,000

Shares issued as fully paid bonus shares



The Attock Oil Company Limited held 31,274,100 (2006: 23,882,040) ordinary shares at the year end.

3. Critical accounting estimates and

judgments

4. Share capital


63A N N U A L R E P O R T 2 0 0 7


Capital reserve

Liabilities taken over from The Attock Oil

Company Limited no longer required 4,799,955 4,799,955

Capital gain on sale of building 653,906 653,906

Insurance and other claims realised relating to

pre-incorporation period 494,645 494,645

5,948,506 5,948,506

Revenue reserves

Special reserve for expansion/modernisation - note 5.1

Additional revenue under processing fee formula

related to 1990-91 and 1991-92 32,929,000 32,929,000

Surplus profits under the import parity pricing formula 2,513,232,607 2,154,699,247

2,546,161,607 2,187,628,247

General reserve 55,000 55,000

Surplus - unappropriated profit 657,879,535 381,152,083

3,204,096,142 2,568,835,330

3,210,044,648 2,574,783,836

5.1 Represents amounts retained as per stipulations of the Government under the pricing formula and is available only for offsetting any future loss or

making investment in expansion or upgradation of the refinery. Transfer to / from special reserve is recognised at each quarter end and is reviewed

for adjustment based on profit / loss on an annual basis.

This represents surplus over book value resulting from revaluation of freehold land as referred to in note 11.1 and is not available for distribution to shareholders.


Syndicate Financing Facility – 3,597,000,000

Morabaha Financing Facility – 950,000,000

– 4,547,000,000

Less:Current portion

Syndicate Financing Facility – 899,250,000


– 1,136,750,000

– 3,410,250,000

5. Reserves and surplus

6. Surplus on revaluation

of freehold land

7. Long term loans - secured



7.1 The Company obtained a long term syndicate financing facility of Rs 3,597 million from a consortium of banks under the lead of Faysal Bank Limited

and a separate Morabaha financing facility from Faysal Bank Limited of Rs 950 million. These facilities were repayable in eight half yearly equal

installments commencing July 2006 and carried profit at base rate (six month KIBOR) plus 2.05% per annum upto January 1, 2006 and thereafter

at base rate plus 1.90% per annum for the remaining period of facilities. These facilities were secured by first pari passu charge by way of hypothecation

over all present and future current and movable fixed assets of the Company and mortgage over immovable property.

During December 2006, the Company repaid the entire outstanding balance of these loans.

The Company's short term finance facility under mark-up arrangements aggregating Rs 70 million (2006: Rs 70 million) available from MCB bank expired

during the year. The Company is in the process of arranging fresh running finance facilities from various commercial banks to the extent of Rs 3.5 billion at

varying mark-up rates linked to three months and one month KIBOR.


Creditors - note 9.1 18,020,915,256 11,481,267,334

Due to The Attock Oil Company Limited – Holding Company 275,108,397 432,891,332

Due to associated companies

Pakistan Oilfields Limited 1,384,104,431 1,471,797,733

Attock Petroleum Limited 1,430,155 21,113,426

Attock Information Technology Services (Private) Ltd. 5,542,677 –

Accrued liabilities and provisions - note 9.1 737,636,316 223,933,625

Due to the Government under pricing formula - note 9.2 4,707,073,386 4,689,396,074

Advance payments from customers - note 9.3 5,532,717 10,518,689

Sales tax payable 7,197,593 127,011,850

Accrued mark-up/interest on long term loans – 124,133,100

Workers' Welfare Fund 131,988,739 103,033,871

Workers' Profit Participation Fund - note 9.4 65,840,211 36,869,261

Staff Provident Fund – 54,127

Deposits from customers adjustable against freight

and Government levies payable on their behalf 1,270,705 1,018,470

Security deposits 48,940,150 48,861,150

Unclaimed dividends 939,496 969,669

25,393,520,229 18,772,869,711

9.1 Creditors include an amount of Rs 5,434.461 million (2006 : Rs 1,615.257 million) in respect of crude oil price in excess of US$ 50 per barrel withheld

by the Company, pending finalisation of discount thereon, from payments made to suppliers for purchase of local crude oil as per the directive of

Ministry of Petroleum & Natural Resources (the Ministry).

8. Short term finance

9. Trade and other payables


65A N N U A L R E P O R T 2 0 0 7

Further, as per directive of the Ministry dated May 31, 2006, the Company is required to make payments alongwith the mark-up generated after the

final discount rates in respect of crude oil price in excess of US$ 50 per barrel are decided between the parties and such withheld amounts are being

retained in a designated 90-day interest bearing account. Accumulated profits amounting to Rs 377.568 million (2006: Rs 32.000 million) earned

thereon are included in accrued liabilities and provisions.

9.2 The amount due to the Government under pricing formula is net of Rs 2,404 million (2006: Rs 1,570 million) price differential claim as referred to in

note 21.1 with a corresponding effect in creditors.

9.3 Advance payments from customers include Rs 2,855,486 (2006: nil) from Pakistan Oilfields Limited, an associated company, against sales of LPG.


9.4 Workers' Profit Participation Fund

Balance at the beginning of the year 36,869,261 118,649,647

Add: Interest on funds utilised in the

Company's business - note 26 528,081 2,168,584

37,397,342 120,818,231

Less: Amount paid to the Fund 37,261,056 120,541,846

136,286 276,385

Add: Amount allocated for the year - notes 27 and 31 65,703,925 36,592,876

65,840,211 36,869,261

Contingencies:

i) Performance and commitment guarantees arranged by the Company

on behalf of Attock Gen Limited (AGL), an associated company,

as main sponsors 214,255,000 –

ii) Guarantees issued by banks on behalf of the Company 300,000 250,000

iii) Claims for land compensation contested by the Company 1,300,000 1,300,000

iv) Price adjustment related to crude oil purchases as referred to in note 23.1,

the amount of which can not be presently quantified – –

Commitments outstanding:

i) Capital expenditure 55,423,626 41,868,873

ii) Letters of credit other than for capital expenditure 125,775,143 33,659,700

10. Contingencies and commitments



Freehold Buildings on Plant & Computer Furniture, fixturesland freehold land machinery equipment and equipment Vehicles Total

(note 11.1)Rupees Rupees

Cost

As at July 1, 2005 1,927,250,000 69,815,152 3,711,648,064 50,260,000 57,144,771 53,664,457 5,869,782,444

Additions during the year – 541,110 84,352,647 3,248,604 4,187,145 9,961,847 102,291,353

Disposals during the year – – (100,000) (1,631,619) (725,117) (991,610) (3,448,346)

As at June 30, 2006 1,927,250,000 70,356,262 3,795,900,711 51,876,985 60,606,799 62,634,694 5,968,625,451

Additions during the year – 14,374,730 113,947,125 3,687,304 1,545,900 7,974,750 141,529,809

Disposals during the year – – – – (187,993) (290,110) (478,103)

As at June 30, 2007 1,927,250,000 84,730,992 3,909,847,836 55,564,289 61,964,706 70,319,334 6,109,677,157

Depreciation

As at July 1, 2005 – 25,475,882 2,558,643,971 35,545,197 28,424,465 37,216,765 2,685,306,280

Charge for the year – 3,162,722 319,613,278 5,753,320 4,959,392 6,920,885 340,409,597

On disposals – – (100,000) (1,492,900) (266,881) (939,648) (2,799,429)

As at June 30, 2006 – 28,638,604 2,878,157,249 39,805,617 33,116,976 43,198,002 3,022,916,448


On disposals – – – – (80,056) (290,107) (370,163)

As at June 30, 2007 – 32,546,803 3,209,096,207 48,804,545 37,820,402 51,146,931 3,379,414,888

Written down value

As at June 30, 2006 1,927,250,000 41,717,658 917,743,462 12,071,368 27,489,823 19,436,692 2,945,709,003

As at June 30, 2007 1,927,250,000 52,184,189 700,751,629 6,759,744 24,144,304 19,172,403 2,730,262,269

Annual rate of depreciation (%) – 5 10 20 10 20

11. Property, plant and equipment


67A N N U A L R E P O R T 2 0 0 7

12. Capital work-in-progress

11.1 Value of freehold land includes revaluation surplus of Rs 1,923.339 million arising from revaluation of freehold land in January 2001 carried out by

an independent value. Valuation was made on the basis of market value. The original cost of the land as at June 30, 2007 is Rs 3.911 million.

11.2 Effective from the current year, the Company has revised its estimate regarding useful life of computers. Accordingly, the annual depreciation rate

has been increased from 14.3% in previous years to 20% to reflect the pattern in which the assets' economic benefits will be consumed. Had the

change in accounting estimate not been made, the depreciation charge for the year would have been lower by Rs 4.470 million and the profit for

the year would have been higher to that extent. Correspondingly, the operating assets and equity as at June 30, 2007 would have been higher by

the same amount.


11.3 The depreciation charge for the year has been allocated as follows:

Cost of sales 341,975,356 328,326,550

Administration expenses 13,360,853 10,875,215

Distribution cost 899,894 575,332

Desalter operating cost 632,500 632,500

356,868,603 340,409,597

Civil works 2,486,951 11,725,973

Plant and machinery 186,976,759 161,182,102

Pipeline project 28,218,675 27,964,992

Power plant project - note 12.1 – 19,673,277

217,682,385 220,546,344

12.1 Cost incurred by the Company on the Power Plant Project has been fully recovered from Attock Gen Limited, an associated company, set up for

the purpose of independently operating the Power Plant.



13. Long term investments

2007 2006

% age Rupees % age Rupees

Holdiing Holding

Associated companies

Quoted

National Refinery Limited (NRL) - note 13.1 25 8,046,635,100 25 8,046,635,100

16,659,700 (2006: 16,659,700) fully paid

ordinary shares of Rs 10 each

Market value as at June 30, 2007: Rs 5,681 million

(2006: Rs 4,448 million)

Attock Petroleum Limited 21.70 668,203,956 20.91 569,778,830

8,681,400 (2006: 8,363,300) fully paid ordinary shares

including 3,500,000 (2006: 3,500,000) bonus shares

of Rs 10 each


(June 30, 2006: Rs 2,701 million)

Unquoted

Attock Gen Limited 30 540,000,000 – –

5,400,000 fully paid ordinary shares of Rs 100 each

Value based on net assets as at June 30, 2007: Rs 542 million

Attock Information Technology Services (Private) Limited 10 4,500,000 10 4,500,000

450,000 (2006 : 450,000) fully paid ordinary shares of Rs 10 each

Value based on net assets as at June 30, 2007: Rs 4.92 million

(June 30, 2006: Rs 4.62 million)

9,259,339,056 8,620,913,930

Subsidiary company

Unquoted

Attock Hospital (Private) Limited 100 2,000,000 100 2,000,000

200,000 (2006: 200,000) fully paid ordinary shares of Rs 10 each


(2006: Rs 7.261 million)

9,261,339,056 8,622,913,930


69A N N U A L R E P O R T 2 0 0 7

13.1 Based on a valuation analysis carried out by an external investment advisor engaged by the Company, the recoverable amount of investment in NRL

exceeds its carrying amount. The recoverable amount has been estimated based on a value in use calculation. These calculations have been made

on discounted cash flow based valuation methodology which assumes gross profit margin of 6.4% (2006: 6.30%), terminal growth rate of 5% (2006:

5%) and capital asset pricing model based discount rate of 14.30% (2006: 13.40%).


Loans to employees - considered good - note 14.1 21,079,761 20,748,226

Less: Amounts due within twelve months shown under current assets - note 19 10,990,473 9,999,521

10,089,288 10,748,705

Security deposits 865,021 865,021

10,954,309 11,613,726

14.1 Loans to employees are for purchase of car, refrigerator and for other purposes which are recoverable in 36, 24 and 60 equal monthly installments

respectively and are secured by a charge on the asset purchased and/or amount due to the employee against provident fund or a third party guarantee.

Loans to employees for refrigerator and other purposes are interest free while loans for purchase of car carry interest rates ranging from 3% to 15%

(2006: 3% to 15%) per annum. These do not include any amount outstanding for more than three years. These include an amount of Rs 3,551,595

(2006: Rs 2,232,870) receivable from executives of the Company and does not include any amount receivable from Directors or Chief Executive.

The maximum amount due from executives of the Company at the end of any month during the year was Rs 3,805,412 (2006: Rs 2,493,776).


14.2 Reconciliation of carrying amount of loans to executives:

Opening balance as at July 1 2,232,870 283,000

Add: Disbursements during the year 3,922,053 3,044,644

6,154,923 3,327,644

Less: Repayments during the year 2,603,328 1,094,774

Closing balance as at June 30 3,551,595 2,232,870

14. Long term loans and deposits



15. Deferred Taxation


Debit balances arising on

Provisions for obsolete stores, doubtful debts and gratuity 48,979,811 39,315,681

Accelerated depreciation allowances 124,673,071 130,284,153

Credit balance arising on finance lease arrangements (15,896,942) (31,793,885)

157,755,940 137,805,949

Stores (including items in transit

Rs 119.67 million; 2006: Rs 82.54 million) 446,578,908 410,806,882

Spares 219,661,310 208,976,739

Loose tools 595,775 708,542

666,835,993 620,492,163

Less: Provision for slow moving items 36,000,000 34,500,000

630,835,993 585,992,163

Crude oil - in stock 1,488,647,552 1,310,846,837

- in transit 176,064,444 173,356,867

1,664,711,996 1,484,203,704

Semi-finished products 311,633,383 278,876,166

Finished products 1,876,300,457 1,760,727,860

3,852,645,836 3,523,807,730

Finished products include stocks carried at net realisable value of Rs 236 million (2006: Rs 334 million). Adjustments amounting to Rs 43.8 million

(2006: Rs 72.9 million) have been made to closing inventory to write down stocks of finished products to their net realizable value.

All debtors are unsecured and considered good.

Aggregate amount receivable from an associated company as at June 30, 2007 was Rs 1,010,953,152 (2006: Rs 1,062,120,659).

16. Stores, spares and loose tools

17. Stock-in-trade

18. Trade debts


71A N N U A L R E P O R T 2 0 0 7


Loans and advances - considered good

Current portion of long-term loans to employees - note 14 10,990,473 9,999,521

Advances to suppliers 19,301,031 32,552,811

Advances to employees 1,728,728 1,683,662

32,020,232 44,235,994

Deposits, prepayments and current account

balances with statutory authorities

Trade deposits 285,673 285,673

Short term prepayments 17,238,584 14,269,925

Current account balances with statutory authorities in respect

of petroleum development levy, excise duty and sales tax 287,247 23,725

17,811,504 14,579,323

Other receivables

Due from subsidiary company - Attock Hospital (Private) Limited 1,966,040 1,668,749

Due from associated companies

National Refinery Limited 4,677,170 2,363,777

Attock Gen Limited 2,415,270 –

Attock Information Technology Services (Private) Limited – 139,817

National Cleaner Production Centre Foundation 2,464,971 522,052

Attock Industrial Products Limited (net of provision of

Rs 3,015,145; 2006: Rs 3,015,145) – –

Attock Cement Pakistan Limited 155,340 –

Due from Staff Pension Fund 4,096,686 1,697,890

Income accrued on bank deposits 78,867,031 39,199,241

Crude oil freight recoverable through inland freight equalisation margin 39,220,600 150,716,052

Other receivables 7,560,627 8,350,204

141,423,735 204,657,782

191,255,471 263,473,099

Loans to employees include Rs 2,265,248 (2006: Rs 1,289,790) due from executives of the Company and does not include any amount receivable from

Directors or the Chief Executive.

19. Loans, advances, deposits,

prepayments and other

receivables



20. Cash and bank balances


Cash in hand 291,366 541,946

With banks:

On current accounts 2,790,058 4,654,915

On interest/ mark-up bearing savings accounts (including

US $ 379,624; 2006: US $ 643,379) 8,877,032,292 8,026,397,219

8,880,113,716 8,031,594,080

20.1 Balances with banks include Rs 5,381.864 million (2006: 1,000.136 million) in respect of deposits placed on 90-day interest-bearing account consequent

to a directive issued by the Ministry on account of amounts withheld as referred to in note 9.1 alongwith related interest earned thereon.

20.2 A lien on the Company's savings account has been marked by a bank to the extent of guarantees issued on behalf of the Company as referred to

in note 10 (i).

20.3 Balances with banks include Rs 48.940 million (2006: Rs 48.861 million) in respect of security deposits received.

20.4 The balances in savings accounts at the year end earn weighted average interest/ mark-up of 9.73% (2006: 8.93%) per annum.


Gross sales - note 21.1 66,083,778,877 61,362,743,941

Naphtha export sales 8,232,839,936 8,512,982,645

Less:Cost of Naphtha purchased from third parties and

related handling charges recovered 1,175,285,235 1,761,308,376

7,057,554,701 6,751,674,269

Less:Duties, taxes and levies - note 21.2 13,986,554,360 12,177,586,475

59,154,779,218 55,936,831,735

21.1 Under the products import parity pricing formula, effective July 1, 2000, the Government had imposed a cap on an element of pricing of Premium

Motor Gasoline (PMG) which has not been accepted by the Company. The Company has strongly urged the Government to remove this cap. The

sales revenue to the extent of related aggregate price differential claims of Rs. 2,404 million (including Rs. 1,570 million for prior years) is not being

reflected in sales till this matter is resolved. In this context, the tax authorities have raised demands for income tax against these price differential

claims which have been contested in appeals by the Company.


21.2 Duties, taxes and levies

Development surcharge 5,356,523,313 3,858,634,023

Sales tax 8,166,096,090 7,810,481,336

Custom duties and other levies 463,934,957 508,471,116

13,986,554,360 12,177,586,475

21. Sales


73A N N U A L R E P O R T 2 0 0 7

This represents amount due from the Government of Pakistan on account of shortfall in ex-refinery prices of certain petroleum products under the import

parity pricing formula.


Opening stock of semi-finished products 278,876,166 174,528,868

Crude oil consumed - note 23.1 56,326,788,162 53,529,997,346

Transportation and handling charges 1,016,614,947 1,042,847,253

Salaries, wages and other benefits - note 23.2 250,261,568 236,931,536

Printing and stationery 1,822,173 2,208,099

Chemicals consumed 347,235,336 368,336,337

Fuel and power 279,485,676 243,640,822

Rent, rates and taxes 6,524,583 5,644,009

Telephone and telex charges 1,602,062 2,309,376

Professional charges for technical services 2,455,174 2,849,672

Insurance 46,544,043 36,578,388

Repairs and maintenance (including stores and spares consumed Rs 65,330,509;

2006: Rs 79,543,503) 118,433,291 141,527,067

Staff transport and travelling - note 23.3 9,815,175 12,187,347

Cost of receptacles 8,618,744 24,775,920

Research and development 108,000 8,550,012

Depreciation - note 11.3 341,975,356 328,326,550

59,037,160,456 56,161,238,602

Closing stock of semi-finished products (311,633,383) (278,876,166)

58,725,527,073 55,882,362,436

Opening stock of finished products 1,760,727,860 1,369,045,483

Closing stock of finished products (1,876,300,457) (1,760,727,860)

(115,572,597) (391,682,377)

58,609,954,476 55,490,680,059

23.1 Crude oil consumed

Stock at the beginning of the year 1,484,203,704 557,049,967

Purchases 56,507,296,454 54,457,151,083

57,991,500,158 55,014,201,050

Stock at the end of the year (1,664,711,996) (1,484,203,704)

56,326,788,162 53,529,997,346

Certain crude purchases have been recorded based on provisional prices notified by the Government and may require subsequent adjustment.

23. Cost of sales

22. Reimbursement due from the

government under import parity

pricing formula



23.2 Salaries, wages and other benefits under cost of sales, administration expenses, distribution cost and income from crude desalter operations include

the Company's contribution to the Provident Fund amounting to Rs 11,552,458 (2006: Rs 10,682,306).

23.3 Staff transport and travelling

Staff transport and travelling under cost of sales, administration expenses and distribution cost include lease rentals amounting to Rs nil

(2006: Rs 764,819) related to nil (2006: 11) motor vehicles used during the year under terminable lease agreements.



Staff transport, travelling and entertainment - note 23.3 12,064,930 13,600,784


Electricity, gas and water 4,430,040 4,023,580


Auditors' remuneration and expenses:

Statutory audit 350,000 300,000

Special certifications, half yearly review, audit of consolidated accounts and staff funds 553,000 483,500

Out of pocket expenses 82,995 91,540

985,995 875,040

Legal and professional charges 5,874,513 7,951,800

Repairs and maintenance 21,490,375 24,795,439

Subscription 5,271,778 5,444,940

Publicity 4,043,563 4,029,913

Scholarship scheme 2,054,950 1,398,801


Insurance 866,898 794,336

Donations* 414,619 10,275,147

Training expenses 744,814 2,389,783

Other expenses 51,638 245,421


175,107,589 183,298,609

* No director or his spouse had any interest in the donee institutions.

24. Administration expenses


75A N N U A L R E P O R T 2 0 0 7



Staff transport, travelling and entertainment - note 23.3 568,338 661,935

Telephone and telex charges 209,812 174,908

Electricity, gas, fuel and water 1,476,680 1,341,193

Printing and stationery 81,097 70,976

Repairs and maintenance including packing and other stores consumed 1,295,190 1,911,219

Rent, rates and taxes 316,677 263,096

Legal and professional charges 144,000 216,285

Cost of samples 2,587 52,730

Depreciation - note 11.3 899,894 575,332

16,716,333 13,779,850

Interest / mark-up on

Long term loans 233,361,071 493,541,346

Workers' Profit Participation Fund - note 9.4 528,081 2,168,584

Financial charges on liability against assets subject to finance lease – 346,028

Bank and other charges 388,827 2,368,817

234,277,979 498,424,775

Employees' retirement benefits

Staff gratuity benefits - note 28 15,320,547 15,378,909

Staff pension benefits - note 28 8,572,332 7,008,130

Less: Charged to subsidiary company (954,525) (852,696)

7,617,807 6,155,434

Contribution to employees old age benefits scheme 2,202,230 1,717,248

25,140,584 23,251,591

Provision for slow moving stores 1,500,000 1,500,000

Stores written off 12,560 –



102,150,812 67,912,109

25. Distribution cost

26. Finance cost

27. Other charges



28. Employees' defined benefit plans The latest actuarial valuation of the employees' defined benefit plans was conducted at June 30, 2007 using the projected unit credit method. Details of the

defined benefit plans are:

Defined Benefit Pension Plan Defined Benefit Gratuity Plan

2007 2006 2007 2006

Rupees Rupees

a) The amounts recognised in the profit and loss account:

Current service cost 12,263,424 9,579,615 3,099,301 2,996,315

Interest on obligation 27,771,892 24,541,741 10,075,566 10,064,728

Expected return on plan assets (30,234,890) (26,233,559) – –

Contribution from an associated company (127,200) (160,898) – –

Net actuarial losses / (gains) recognised during the year (1,100,894) (718,769) 2,145,680 2,317,866

8,572,332 7,008,130 15,320,547 15,378,909

b) The amounts recognised in the balance sheet:

Fair value of plan assets 359,485,371 280,495,084 – –

Present value of defined benefit obligations (291,335,050) (263,054,407) (121,894,107) (96,057,559)

68,150,321 17,440,677 (121,894,107) (96,057,559)

Unrecognised actuarial gains / (losses) (64,053,635) (15,742,787) 36,094,107 20,257,559

Net liability 4,096,686 1,697,890 (85,800,000) (75,800,000)

c) Movement in the present value of defined benefit obligation:

Present value of defined benefit obligation as at July 1 263,054,407 215,382,051 96,057,559 88,577,526


Interest cost 27,771,892 24,541,741 10,075,566 10,064,728

Benefits paid (11,145,551) (9,714,214) (5,320,547) (4,493,785)

Actuarial (gains) / losses (609,122) 23,265,214 17,982,228 (1,087,225)

Present value of defined benefit obligation as at June 30 291,335,050 263,054,407 121,894,107 96,057,559

d) Changes in the fair value of plan assets:

Fair value of plan assets as at July 1 280,495,084 225,120,520 – –

Expected return 30,234,890 26,233,559 – –

Benefits paid (11,145,551) (9,714,214) – –

Contributions by employer 10,971,128 9,677,208 – –

Contributions by associated company 127,200 160,898 – –

Actuarial gains / (losses) 48,802,620 29,017,113 – –

Fair value of plan assets as at June 30 359,485,371 280,495,084 – –

Actual return on plan assets 79,037,510 55,250,672 – –

Expected contributions to the defined benefit pension plans for the year ending June 30, 2008 are Rs 12.6 million.


77A N N U A L R E P O R T 2 0 0 7

Defined Benefit Pension Plan Defined Benefit Gratuity Plan

2007 2006 2007 2006

Rupees Rupees

e) The major categories of plan assets:

Investment in equities 109,497,755 89,667,869 – –

Investment in mixed funds 136,836,898 54,852,274 – –

Cash 113,150,718 135,974,941 – –

359,485,371 280,495,084 – –

f) Significant actuarial assumptions at the balance sheet date:

Discount rate 11.00% 10.78% – –

Expected return on plan assets 11.00% 10.78% – –

Future salary increases 8.89% 8.66% – –

Future pension increases 5.71% 5.50% – –

2007 2006 2005 2004 2003Rupees Rupees Rupees Rupees Rupees

g) Comparison for five years:

Defined Benefit Pension Plan

Present value of defined benefit obligation (291,335,050) (263,054,407) (215,382,051) (190,998,371) (176,177,000)

Fair value of plan assets 359,485,371 280,495,084 225,120,520 196,917,528 174,386,000

Surplus / (deficit) 68,150,321 17,440,677 9,738,469 5,919,157 (1,791,000)

Actuarial (gains) / losses on plan liabilities (609,122) 23,265,214 9,382,000 1,303,000 (11,671,000)

Actuarial (gains) / losses on plan assets (48,802,620) 29,017,113 13,388,000 9,384,000 10,642,000

Defined Benefit Gratuity Plan


Fair value of plan assets – – – – –

Deficit (121,894,107) (96,057,559) (88,577,526) (80,831,692) (59,094,000)

Actuarial (gains) / losses on plan liabilities 17,982,228 (1,087,225) 3,611,000 16,991,000 (1,085,000)

Actuarial (gains) / losses on plan assets – – – – –



29. Other income


Income from financial assets

Income on bank deposits 569,024,303 527,198,018

Income on other balances – 2,029

Exchange gain 269,581 2,992,990

569,293,884 530,193,037

Income from non-financial assets

Income from crude decanting 11,205,337 8,835,527

Income from crude desalter operations - note 29.1 9,264,467 10,541,984

Insurance agency commission 4,719,025 2,206,024

Rental income 3,057,084 2,003,552

Sale of scrap 10,612,725 6,957,758

Profit on sale of fixed assets 846,422 1,660,588

Calibration charges 3,742,400 3,996,300

Handling and service charges 15,900,912 21,419,332

Registration charges from carriage contractors – 20,941,563

Penalties from carriage contractors 3,888,219 15,070,661

Old liabilities written back 693,597 2,603,288

Miscellaneous 1,941,992 653,351

65,872,180 96,889,928

635,166,064 627,082,965

29.1 Income from crude desalter operations

Income 43,927,953 49,598,239

Less:Operating costs


Chemical consumed 7,058,352 8,577,336

Fuel and power 16,828,288 20,449,799



34,663,486 39,056,255

9,264,467 10,541,984


79A N N U A L R E P O R T 2 0 0 7


Current - for the year 476,500,000 400,000,000

Deferred - for the year (19,949,991) (45,155,916)

456,550,009 354,844,084

Numerical reconciliation between the average effective tax rate and the applicable tax rate

% %

Applicable tax rate 35.00 35.00

Tax effect of:

Income chargeable to tax at special rate and other differences 12.51 46.51

Average effective tax rate charged to profit and loss account 47.51 81.51


Less applicable charges and taxation

Dividend income from associated companies



277,697,450 253,335,200

Less:Related charges



Taxation 13,884,873 12,666,760

33,045,998 30,146,889

244,651,452 223,188,311

Attock Oil Company Limited holds 55% (2006: 52.50%) shares of the Company at the year end. Therefore, all subsidiaries and associated undertakings of

Attock Oil Company Limited are related parties of the Company. The related parties also comprise of directors, major shareholders, key management personnel,

entities over which the directors are able to exercise influence and employees' funds. Amount due from and due to these undertakings are shown under

receivables and payables. The remuneration of Chief Executive, directors and executives is disclosed in note 33 to the financial statements.

30. Provision for taxation

31. Income from non-refinery

operations

32. Related party transaction



Sale of goods 12,941,980,204 15,315,597,351

Sale of services 76,773,297 46,784,718

13,018,753,501 15,362,382,069

Purchase of goods 7,591,741,626 9,016,821,119

Purchase of services 311,331,415 296,693,858

7,903,073,041 9,313,514,977

Holding company

Sale of services 284,675 –



1,302,830,820 2,001,662,895

Subsidiary company

Sale of goods 614,043 541,408

Sale of services 18,834,184 16,601,311

19,448,227 17,142,719


Employees' benefits funds

Payments made during the year 22,523,586 20,359,514

The aggregate amounts charged in the financial statements for remuneration, including benefits and perquisites, were as follows:

Chief Executive Directors Executives

2007 2006 2007 2006 2007 2006

Rupees Rupees Rupees Rupees Rupees Rupees

Managerial remuneration / honorarium 3,909,722 2,482,256 1,219,140 1,215,792 22,187,830 18,528,616

Company's contribution to provident

and pension funds 789,421 574,200 – – 4,738,926 3,994,086

Housing and utilities 1,037,149 834,960 – – 11,261,606 8,768,688

Leave passage 330,000 298,356 – – 2,100,970 2,034,140

6,066,292 4,189,772 1,219,140 1,215,792 40,289,332 33,325,530

No of person(s) 1 1 3 3 20 18

33.1 In addition, the Chief Executive and 18 (2006: 17) executives were provided with limited use of the Company's cars. The Chief Executive and allexecutives were provided with medical facilities and 7 (2006: 7) executives were provided with unfurnished accommodation in Company ownedbungalows. Limited residential telephone facility was also provided to the Chief Executive and 11 (2006: 7) executives. Payments to Chief Executiveinclude Rs 789,156 representing arrears of salary for the period February 2005 to June 2006.

Fee paid to directors during the year was Rs nil (2006: Rs nil).



33. Remuneration of Chief Executive,

Directors and Executives


81A N N U A L R E P O R T 2 0 0 7

34.1 Financial assets and liabilities2007 2006

Interest/markup Non-interest / Interest/markup Non-interest /

bearing markup bearing Total bearing markup bearing Total


Financial assets:

Maturity upto one year

Trade debts – 6,234,917,655 6,234,917,655 – 4,675,133,457 4,675,133,457

Loans, advances, deposits and

other receivables – 154,428,609 154,428,609 – 214,262,861 214,262,861

Cash and bank balances

Foreign currency - US $ 22,815,414 201,063 23,016,477 38,667,078 201,063 38,868,141

Local currency 8,854,216,878 2,880,361 8,857,097,239 7,987,730,141 4,995,798 7,992,725,939

Maturity after one year

Long term investments – 9,261,339,056 9,261,339,056 – 8,622,913,930 8,622,913,930

Long term loans and deposits – 10,954,309 10,954,309 – 11,613,726 11,613,726

8,877,032,292 15,664,721,053 24,541,753,345 8,026,397,219 13,529,120,835 21,555,518,054

Financial liabilities:


Long term loans and lease obligations

Local currency – – – 1,136,750,000 – 1,136,750,000

Short term finance – – – – – –

Trade and other payables 9,471,565,027 15,916,422,485 25,387,987,512 1,615,257,575 17,147,093,447 18,762,351,022



Local currency – – – 3,410,250,000 – 3,410,250,000

Staff gratuity – 85,800,000 85,800,000 – 75,800,000 75,800,000

9,471,565,027 16,002,222,485 25,473,787,512 6,162,257,575 17,222,893,447 23,385,151,022

Off balance sheet items

Commitments (other than letters of credit) – 55,423,626 55,423,626 – 41,868,873 41,868,873

Letters of credit – 125,775,143 125,775,143 – 33,659,700 33,659,700

Bank guarantees – 214,555,000 214,555,000 – 250,000 250,000

– 395,753,769 395,753,769 – 75,778,573 75,778,573

34.2 Concentration of credit risk

The Company's credit risk is primarily attributable to its trade debts and placements with banks. The sales are essentially to six oil marketing companies

and reputable foreign customers. The Company's placements are with reputable banks. Due to the high credit worthiness of corresponding parties

the credit risk is considered minimal.

34.3 Currency risk

Currency risk is the risk of loss through changes in foreign currency rates. The exchange risk against foreign currency liabilities has been hedged

by the Company through foreign currency deposits.

34. Financial instruments



34.4 Interest rate risk

The effective interest / mark up rates for the monetary financial assets and liabilities are mentioned in respective notes to the financial statements.

34.5 Liquidity risk

Liquidity risk reflects an enterprise's inability in raising funds to meet commitments. The Company follows an effective cash management and planning

policy to ensure availability of funds and to take appropriate measures for new requirements.

34.6 Fair value of financial assets and liabilities

The carrying value of financial assets and liabilities approximates their fair value except for long term investments, which are stated at cost.

2007 2006

35.1 Earnings per share

Profit for the year after taxation Rs. 748,984,812 Rs. 303,706,028

Number of ordinary shares outstanding during the year 56,862,000 56,862,000

Earnings per share Rs. 13.17 Rs. 5.34

Basic earnings per share for the year 2006 reported in the previous year was Rs 6.68. This has been restated on account of 11,372,400 bonus shares

issued without consideration during the year ended June 30, 2007.

There is no dilutive effect on the basic earnings per share of the Company for the year ended June 30, 2007.

35.2 Capacity and production

Against the designed annual refining capacity of 14,240,000 (2006: 14,280,000) US barrels the actual throughput during the year was 14,074,644

(2006: 14,567,216) US barrels. The actual throughput was lower than the annual refining capacity on account of the plant shut down for maintenance

and reductions in throughput to minimize losses during adverse periods of refining margins.

35.3 Number of employees

Total number of employees at the end of the year was 731 (2006: 684).

35.4 Corresponding figures

Sales for the corresponding year were net of discount of Rs. 108,693,725 which has now been disclosed separately in the profit & loss account.

35.5 Non adjusting events after the balance sheet date

The Board of Directors, in its meeting held on September 10, 2007, has proposed for the approval of members at the next Annual General Meeting

(i) a 40% cash diviend of Rs. 4 per share and (ii) an issue of bonus share in the proportion of one share for every four shares held i.e. 25% out of

unappropriated profits. These financial statements do not include the effect of these appropriations which will be accounted for in the financial

statements for the year ending June 30, 2008 as follows:

Transfer from unappropriated profit to: Rupees

Proposed dividend 227,448,000

Reserve for issue of bonus shares 142,155,000

35.6 Date of authorisation

These financial statements have been authorised for issue by the Board of Directors of the Company on September 10, 2007.


35. General

Administrator

Sd

Administrator

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ANNUAL AUDITEDCONSOLIDATED FINANCIAL STATEMENTS 2007

ATTOCK REFINERY LIMITED

83A N N U A L R E P O R T 2 0 0 7


Auditors' Report to the Members

85A N N U A L R E P O R T 2 0 0 7

We have audited the annexed consolidated f inancial

statements comprising consolidated balance sheet of

Attock Refinery Limited (ARL) and its subsidiary company,

Attock Hospital (Private) Limited as at June 30, 2007 and

the re la ted conso l ida ted pro f i t and loss account ,

consol idated cash f low statement and consol idated

statement of changes in equity together with the notes

forming part thereof, for the year then ended. We have

also expressed seperate opin ions on the f inancia l

statements of ARL and its subsidiary company. These

f inancial statements are the responsibi l i ty of ARL's

management. Our responsibility is to express an opinion

on these financial statements based on our audit.

Our audi t was conducted in accordance wi th the

International Standards on Auditing and accordingly included

such tests of accounting records and such other auditing

procedures as we cons idered necessary in the

circumstances.

In our opinion, the consolidated financial statements present

fairly the financial position of ARL and its subsidiary company

as at June 30, 2007 and the results of their operations for

the year then ended.

Chartered Accountants

Islamabad: September 10, 2007

A member firm of

Administrator

Sd

Consolidated Balance Sheetas at June 30, 2007



Share capital and reserves

Share capital

Authorised 4 1,000,000,000 1,000,000,000

Issued, subscribed and paid-up 4 568,620,000 454,896,000

Reserves and surplus 5 5,371,775,791 3,596,538,319

5,940,395,791 4,051,434,319

Surplus on revaluation of freehold land 6 1,923,338,591 1,923,338,591

7,863,734,382 5,974,772,910

Long term and deferred liabilities

Long term loans 7 – 3,410,250,000

Provision for staff gratuity 85,800,000 75,800,000

85,800,000 3,486,050,000

Current liabilities and provisions

Current maturity of long term loans 7 – 1,136,750,000

Short term finance 8 – –

Trade and other payables 9 25,394,393,517 18,774,848,746

Provision for taxation 1,006,629,216 747,596,998

26,401,022,733 20,659,195,744

Contingencies and commitments 10

34,350,557,115 30,120,018,654

Consolidated Balance Sheetas at June 30, 2007

87A N N U A L R E P O R T 2 0 0 7


Property, plant and equipment

Operating assets 11 2,734,127,289 2,950,640,961

Capital work-in-progress 12 217,682,385 220,546,344

Stores and spares held for capital expenditure 20,190,054 77,695,655

2,971,999,728 3,248,882,960

Long term investments 13 11,416,311,675 9,637,407,375

Long term loans and deposits 14 10,954,309 11,613,726

Deferred taxation 15 158,007,940 137,805,949

Current assets

Stores, spares and loose tools 16 630,835,993 585,992,163

Stock-in-trade 17 3,853,388,292 3,524,396,943

Trade debts 18 6,235,379,020 4,675,412,060

Loans, advances, deposits, prepayments and other receivables 19 192,627,061 264,779,937

Cash and bank balances 20 8,881,053,097 8,033,727,541

19,793,283,463 17,084,308,644

34,350,557,115 30,120,018,654



Administrator

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Administrator

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Consolidated Profit & Loss Accountfor the year ended June 30, 2007



Sales 21 59,154,779,218 55,936,831,735

Less: Discount 46,247,604 108,693,725

59,108,531,614 55,828,138,010

Reimbursement due from the Government

under import parity pricing formula 22 355,392,880 234,236,228

59,463,924,494 56,062,374,238

Less: Cost of sales 23 58,609,954,476 55,490,680,059

Gross profit 853,970,018 571,694,179

Less:Administration expenses 24 175,107,589 183,298,609

Distribution cost 25 16,716,333 13,779,850

Finance cost 26 234,277,979 498,424,775

Other charges 27 102,150,812 67,912,109

528,252,713 763,415,343

325,717,305 (191,721,164)

Other income 29 635,166,064 627,082,965

Profit before taxation 960,883,369 435,361,801

Provision for taxation 30 456,550,009 354,844,084

Profit after taxation 504,333,360 80,517,717

Non-refinery income:

Share in profit of associated companies 31 1,384,628,112 1,112,353,142

Profit for the year 1,888,961,472 1,192,870,859

Earnings per share 35.1 33.22 20.98



Administrator

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Administrator

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Consolidated Cash Flow Statementfor the year ended June 30, 2007

89A N N U A L R E P O R T 2 0 0 7

2007 2006 Rupees Rupees

Cash flows from operating activities

Cash receipts from – customers 72,736,845,273 69,316,381,920

– others 98,995,648 131,684,336

72,835,840,921 69,448,066,256

Cash paid for operating costs (52,833,884,020) (52,442,238,773)

Cash paid to Government for duties, taxes and other levies (14,106,632,140) (12,089,104,107)

Income tax paid (231,932,305) (823,198,684)

Net cash flows from operating activities 5,663,392,456 4,093,524,692

Cash flows from investing activities

Additions to property, plant and equipment (81,167,010) (230,456,284)

Proceeds from sale of property, plant and equipment 954,362 2,309,505

Long term investments (638,425,126) (6,213,929,559)

Long term loans and deposits 659,417 426,715

Income on bank deposits received 529,385,678 502,002,429

Dividends received 277,697,450 253,335,200

Net cash flows from investing activities 89,104,771 (5,686,311,994)

Cash flows from financing activities

Long term loans (4,547,000,000) 4,547,000,000

Repayment of principal portion of finance lease – (30,000,000)

Financial charges paid (358,411,079) (374,917,154)

Dividends paid (30,173) (8,606)

Net cash flows from financing activities (4,905,441,252) 4,142,074,240

Effect of exchange rate changes 269,581 2,992,990

Increase in cash and cash equivalents 847,325,556 2,552,279,928

Cash and cash equivalents at the beginning of the year 8,033,727,541 5,481,447,613

Cash and cash equivalents at the end of the year 8,881,053,097 8,033,727,541



Administrator

Sd

Administrator

Sd

Consolidated Statement of Changes in Equityfor the year ended June 30, 2007


Special reserve for Surplus onShare Capital expansion / General Un-appropriated revaluation ofcapital reserve modernisation reserve Profit freehold land TotalRupees Rupees Rupees Rupees Rupees Rupees Rupees

Balance at June 30, 2005 349,920,000 44,948,506 2,187,628,247 55,000 276,011,707 1,923,338,591 4,781,902,051



Profit for the year – – – – 1,192,870,859 – 1,192,870,859


expansion / modernisation – – – – – – –

Transfer to special reserves by

an associated company – – 329,803,946 – (329,803,946) – –

Balance at June 30, 2006 454,896,000 44,948,506 2,517,432,193 55,000 1,034,102,620 1,923,338,591 5,974,772,910



Profit for the year – – – – 1,888,961,472 – 1,888,961,472


expansion / modernisation – – 358,533,360 – (358,533,360) – –

Transfer to special reserves by

an associated company – – 124,108,492 – (124,108,492) – –

Balance at June 30, 2007 568,620,000 44,948,506 3,000,074,045 55,000 2,326,698,240 1,923,338,591 7,863,734,382



Administrator

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Administrator

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Notes to the Consolidated Financial Statementsfor the year ended June 30, 2007

91A N N U A L R E P O R T 2 0 0 7

Attock Refinery Limited (ARL) was incorporated in Pakistan on November 8, 1978 as a private limited company and was converted into a public limited

company on June 26, 1979. The registered office of the Company is situated at Morgah, Rawalpindi. Its shares are quoted on the Karachi, Lahore and

Islamabad Stock Exchanges in Pakistan. It is principally engaged in the refining of crude oil. ARL is a subsidiary of The Attock Oil Company Limited, UK and

its ultimate parent is Bay View International Group S.A.

Attock Hospital (Private) Limited (AHL) was incorporated in Pakistan on August 24, 1998 as a private limited company and commenced its operations from

September 1, 1998. AHL is engaged in providing medical services. The Company is a wholly owned subsidiary of Attock Refinery Limited.

For the purpose of these financial statements, ARL and its above referred wholly owned subsidiary AHL is referred to as the Company.

2.1 Basis of presentation of financial statements

These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements

of the Companies Ordinance, 1984 (the Ordinance). Approved accounting standards comprise of such International Accounting Standards as notified

under the provisions of the Ordinance. Wherever, the requirements of the Ordinance or directives issued by the Securities and Exchange Commission

of Pakistan differ with the requirements of these standards, the requirements of the Ordinance or the requirements of the said directives take

precedence.

Amendments to the published standards and new interpretations effective for accounting periods beginning on or after January 1, 2006:

IAS 19 (Amendment) – Employee Benefits is mandatory for the Company’s accounting periods beginning on or after January 1, 2006. This

amendment introduces the option of an alternate recognition approach for actuarial gains and losses and requires new disclosures. As the

Company does not intend to change its accounting policy adopted for the recognition of actuarial gains and losses, the adoption of this amendment

only impacts the format and extent of disclosures as given in note 28 to these financial statements.

Standards, amendments and interpretations effective for accounting periods beginning on or after January 1, 2006 but not relevant:

The other new standards, amendments and interpretations that are mandatory for accounting periods beginning on or after January 1, 2006

are not considered to be relevant or do not have any significant effect on the Company’s operations.

Standards or interpretations not yet effective but relevant:

The following new accounting standards and amendments to existing accounting standards have been published and are not effective for the

purpose of these financial statements.

i) IAS 1 Presentation of Financial Statements – Capital Disclosures

ii) IFRS 7 – Financial Instruments: Disclosures

iii) IAS 39 and IFRS 4 (Amendment), Financial Guarantee Contracts

Adoption of the above accounting standards is not considered to have any significant effect on the Company's financial statements.

1. Legal status and operations

2. Summary of significant accounting

policies



2.2 Basis of measurement

These financial statements have been prepared under the historical cost convention modified by revaluation of free hold land referred to in note 2.6

and certain other modifications as required by International Accounting Standards referred to in the accounting policies given below.

2.3 Basis of Consolidation

The consolidated financial statements include the financial statements of Attock Refinery Limited and its wholly owned subsidiary, Attock Hospital

(Private) Limited.

Subsidiaries are all entities over which the Company has the power to govern the financial and operating policies generally accompanying a shareholding

of more than one half of the voting rights or otherwise has power to elect and appoint more than one half of its directors. Subsidiaries are fully

consolidated from the date on which control is transferred to the Group and are de-consolidated from the date that control ceases.

The assets and liabilities of subsidiary company have been consolidated on a line by line basis and the carrying value of investments held by the

parent company is eliminated against the subsidiary shareholders' equity in the consolidated financial statements.

Material intra-company balances and transactions have been eliminated for consolidation purposes.

2.4 Dividend appropriation

Dividend is recognised as a liability in the financial statements in the period in which it is declared.

2.5 Taxation

Provision for current taxation is based on taxable income at the current rates of taxation or half percent of turnover, whichever is higher.

Deferred income tax is accounted for using the balance sheet liability method in respect of all temporary differences arising between the carrying

amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax

liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that future taxable

profits will be available against which the deductible temporary differences can be utilised.

Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse based on the tax rates that have been

enacted. Deferred tax is charged or credited to income except in the case of items credited or charged to equity in which case it is included in equity.

2.6 Property, plant and equipment

a) Cost

Operating fixed assets except freehold land are stated at cost less accumulated depreciation. Freehold land is stated at revalued amount.

Capital work-in-progress and stores held for capital expenditure are stated at cost. Cost in relation to certain plant and machinery items includes

borrowing cost related to the financing of major projects during construction phase.

b) Depreciation

Depreciation is charged to income on straight line method to write off the cost of an asset over its estimated useful life at the rates specified in

note 11. The carrying values of tangible fixed assets are reviewed for impairment when events or changes in circumstances indicate that carrying


93A N N U A L R E P O R T 2 0 0 7

value may not be recoverable. If any such indication exists and where the carrying value exceeds the estimated recoverable amount, the assets

are written down to recoverable amount.

c) Repairs and maintenance

Maintenance and normal repairs, including minor alterations, are charged to income as and when incurred. Renewals and improvements are

capitalised and the assets so replaced, if any, are retired.

d) Gains and losses on deletion

Gains and losses on deletion of assets are included in income currently.

2.7 Investments

a) Investments in associated companies

Investments in associated companies are accounted for using the equity method. Under this method investments are stated at cost plus the

Company's equity in undistributed earnings and losses after acquisition, less any impairment in the value of individual investments.

b) Available for sale investments

Investment securities held by the Company which may be sold in response to needs for liquidity or changes in interest rates, exchange rates

or equity prices are classified as available for sale. These investments are initially recognised at cost and subsequently re-measured at fair

value.

Unrealised gains and losses arising from changes in the fair value in respect of exchange differences of available for sale investments are

treated as referred to in note 2.10.

2.8 Stores, spares and loose tools

These are valued at moving average cost less allowance for obsolete items. Items in transit are stated at invoice value plus other charges paid

thereon.

2.9 Stock-in-trade

Stock-in-trade is valued at the lower of cost and net realisable value. Crude oil in transit is valued at cost comprising invoice value. Cost in relation

to crude oil is determined on the basis of annual average cost of purchases during the year on the principles of import parity and in relation to

semi-finished and finished products it represents the cost of crude oil and refining charges consisting of direct expenses and appropriate production

overheads. Direct expenses are arrived at on the basis of average cost for the year per barrel of throughput. Production overheads, including

depreciation, are allocated to throughput proportionately on the basis of nameplate capacity.

Net realisable value in relation to finished product represents selling prices in the ordinary course of business less costs necessarily to be incurred

for its sale, as applicable, and in relation to crude oil represents replacement cost at the balance sheet date.



2.10 Foreign currency transactions

Transactions in foreign currencies are converted into rupees at the rates of exchange ruling on the date of the transaction. All monetary assets and

liabilities denominated in foreign currencies at the year end are translated at exchange rate prevailing at the balance sheet date. Exchange differences

are dealt with through the profit and loss account.

2.11 Revenue recognition

Revenue is recognised to the extent that it is probable that economic benefits will flow to the Company and the revenue can be reliably measured.

Revenue is recognised as follows:

i) Revenue from sales is recognised on delivery of products ex-refinery to the customers with the exception that Naphtha export sales are

recognised on the basis of products shipped to customers.

ii) The Company is operating under the import parity pricing formula, as modified from time to time, whereby it is charged the cost of crude on

'import parity' basis and is allowed product prices equivalent to the 'import parity' price, calculated under agreed parameters. The Government

has, effective July 1, 2007 made certain modifications in the agreed parameters which has effectively reduced the ex-refinery price of Kerosene

oil, Light Diesel Oil (LDO) and JP-8 which will correspondingly reduce the sales revenue. The Government is also reviewing the pricing formula

for Motor Gasoline and it is expected that a pricing formula for this product would be finalised with mutual consultations ensuring that the

refineries do not suffer loss on account of these changes to remain commercially viable.

Under the pricing formula the Company was entitled to a net of tax return on its paid-up capital with a guaranteed minimum of 10% and allowable

maximum of 40% in respect of its refinery operations.

Effective July 1, 2002, the Government has further modified the pricing formula applicable to the Company. Under this modified formula the

Refinery shall not claim from the Government any shortfall in profitability and net profit after tax (if any) from refinery operations above 50% of

paid-up capital as at July 1, 2002 is required to be diverted to a special reserve to offset any future loss or make investment for expansion or

upgradation of Refinery. However, the Company has contested the abolition of minimum rate of return of 10% and represented to the Government

to modify the already existing agreement for guaranteed return with mutual consent of both the parties.

iii) Income on investment in associated companies is recognised using the equity method. Under this method, the company's share of

post-acquisition profit or loss of the associated company is recognised in the profit and loss account, and its share of post-acquisition

movements in reserve is recognised in reserves. Dividend distribution by the associated companies is adjusted against the carrying

amount of the investment.

iv) Dividend income is recognised when the right to receive dividend is established.

v) Other income is recognised on accrual basis.

2.12 Related party transactions

Transactions with related parties in respect of sale of petroleum products, the prices of which are regulated and notified by the Government, and

crude oil purchases, the prices of which are determined in accordance with the agreed pricing formula as approved by the Government, are recorded

at the prices so notified or determined.


95A N N U A L R E P O R T 2 0 0 7

In case of sale of deregulated petroleum products, the transactions are made at Company notified prices for all its customers. In certain cases,

reduced price is allowed on commercial considerations. All other transactions are carried out on commercially negotiated terms.

2.13 Borrowing cost

Borrowing cost related to the financing of major projects during construction phase is capitalised. All other borrowing costs are expensed as incurred.

2.14 Staff retirement benefits

The main features of the retirement benefit schemes operated by the Company for its employees are as follows:

(i) Defined benefit plans

A pension plan for its Management Staff and a gratuity plan for its Non-Management Staff. The pension plan is invested through an approved

trust fund while the gratuity plan is book reserve plan. Contributions are made in accordance with actuarial recommendation. Actuarial valuations

are conducted annually using projected unit credit method. The obligation is measured at the present value of the estimated future cash outflows.

Unrealised net gains and losses are amortised over the expected remaining service of current members.

(ii) Defined contribution plans

Approved contributory provident fund for all employees to which equal monthly contribution is made both by the Company and the employee

at the rate of 10% of basic salary.

2.15 Employees compensated absences

The Company also provides for compensated absences for all employees in accordance with the rules of the Company.

2.16 Financial instruments

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument and

de-recognised when the Company loses control of the contractual rights that comprise the financial asset and in case of financial liability when the

obligation specified in the contract is discharged, cancelled or expired. The particular measurement methods adopted are disclosed in the individual

policy statements associated with each item as shown below:

a) Trade and other payables

Liabilities for trade and other amounts payable including amounts payable to related parties are carried at cost which is the fair value of the

consideration to be paid in the future for goods and services received.

b) Provisions

Provisions are recognised when a Company has a legal or constructive obligation as a result of past event if it is probable that an outflow of

resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made.



The preparation of financial statements in conformity with the approved accounting standards requires the use of certain critical accounting estimates. It also

requires management to exercise its judgment in the process of applying the Company's accounting policies. Estimates and judgments are continually

evaluated and are based on historical experience, including expectation of future events that are believed to be reasonable under the circumstances. The

areas where various assumptions and estimates are significant to the Company's financial statements or where judgment was exercised in application of

accounting policies are as follows:

i) Revaluation surplus on freehold land - note 11.1

ii) Estimate of recoverable amount of investment in associated companies - note 13.1

iii) Price adjustment related to crude oil purchases - note 23.1

iv) Provision for retirement benefits - note 28

v) Provision for taxation - note 30


Authorised

100,000,000 (2006: 100,000,000) ordinary shares of Rs 10 each 1,000,000,000 1,000,000,000

Issued, subscribed and paid up

Shares issued for cash


Shares issued as fully paid bonus shares



The Attock Oil Company Limited held 31,274,100 (2006: 23,882,040) ordinary shares at the year end.

3. Critical accounting estimates and

judgments

4. Share capital

c) Trade and other receivables

Trade receivables and other receivables are recognised and carried at original invoice amount/cost less an allowance for any uncollectible

amounts.

d) Cash and cash equivalents

Cash in hand and at banks are carried at fair value. For the purpose of cash flow statement, cash and cash equivalents consist of cash in hand,

balances in banks and highly liquid short term investments.


97A N N U A L R E P O R T 2 0 0 7


Capital reserve

Liabilities taken over from The Attock Oil Company Limited no longer required 4,799,955 4,799,955

Capital gain on sale of building 653,906 653,906

Insurance and other claims realised relating to pre-incorporation period 494,645 494,645

Donations received for purchase of hospital equipment 4,000,000 4,000,000

Bonus shares issued by associated company 35,000,000 35,000,000

44,948,506 44,948,506

Revenue reserves

Special reserve for expansion/modernisation - note 5.1

Additional revenue under processing fee formula related to 1990-91 and 1991-92 32,929,000 32,929,000

Surplus profits under the import parity pricing formula 2,513,232,607 2,154,699,247

Surplus profits of associate under the import parity pricing formula 453,912,438 329,803,946

3,000,074,045 2,517,432,193

General reserve 55,000 55,000

Surplus - unappropriated profit 2,326,698,240 1,034,102,620

5,326,827,285 3,551,589,813

5,371,775,791 3,596,538,319

5.1 Represents amounts retained as per stipulations of the Government under the pricing formula and is available only for offsetting any future loss or

making investment in expansion or upgradation of the refinery. Transfer to / from special reserve is recognised at each quarter end and is reviewed

for adjustment based on profit / loss on an annual basis.

This represents surplus over book value resulting from revaluation of freehold land as referred to in note 11.1 and is not available for distribution to shareholders.


Syndicate Financing Facility – 3,597,000,000


– 4,547,000,000

Less: Current portion

Syndicate Financing Facility – 899,250,000


– 1,136,750,000

– 3,410,250,000

5. Reserves and surplus

6. Surplus on revaluation

of freehold land

7. Long term loans - secured



7.1 The Company obtained a long term syndicate financing facility of Rs 3,597 million from a consortium of banks under the lead of Faysal Bank Limited

and a separate Morabaha financing facility from Faysal Bank Limited of Rs 950 million. These facilities were repayable in eight half yearly equal

installments commencing July 2006 and carried profit at base rate (six month KIBOR) plus 2.05% per annum upto January 1, 2006 and thereafter

at base rate plus 1.90% per annum for the remaining period of facilities. These facilities were secured by first pari passu charge by way of hypothecation

over all present and future current and movable fixed assets of the Company and mortgage over immovable property.

During December 2006, the Company repaid the entire outstanding balance of these loans.

The Company's short term finance facility under mark-up arrangements aggregating Rs 70 million (2006: Rs 70 million) available from MCB Bank Limited

expired during the year. The Company is in the process of arranging fresh running finance facilities from various commercial banks to the extent of Rs 3.5

billion at varying mark-up rates linked to three months and one month KIBOR.


Creditors - note 9.1 18,021,733,795 11,482,332,142

Due to The Attock Oil Company Limited - Holding Company 275,089,035 432,869,001

Due to associated companies

Pakistan Oilfields Limited 1,383,270,935 1,470,961,701


Attock Cement Pakistan Limited – 39,363

Attock Information Technology Services (Private) Limited 5,542,677 –

Accrued liabilities and provisions - note 9.1 738,703,445 225,681,895

Due to the Government under pricing formula - note 9.2 4,707,073,386 4,689,396,074

Advance payments from customers - note 9.3 5,532,717 10,518,689

Sales tax payable 7,197,593 127,011,850

Accrued mark-up / interest on long term loans – 124,133,100



Staff Provident Fund – 54,127

Deposits from customers adjustable against freight

and Government levies payable on their behalf 1,270,705 1,018,470

Security deposits 49,165,150 49,091,150

Unclaimed dividends 939,496 969,669

25,394,393,517 18,774,848,746

9.1 Creditors include an amount of Rs 5,434.461 million (2006 : Rs 1,615.257 million) in respect of crude oil price in excess of US$ 50 per barrel withheld

by the Company, pending finalisation of discount thereon, from payments made to suppliers for purchase of local crude oil as per the directive of

Ministry of Petroleum & Natural Resources (the Ministry).

8. Short term finance

9. Trade and other payables


99A N N U A L R E P O R T 2 0 0 7

Further, as per directive of the Ministry dated May 31, 2006, the Company is required to make payments alongwith the mark-up generated after the

final discount rates in respect of crude oil price in excess of US$ 50 per barrel are decided between the parties and such withheld amounts are being

retained in a designated 90-day interest bearing account. Accumulated profits amounting to Rs 377.568 million (2006: Rs 32.000 million) earned

thereon are included in accrued liabilities and provisions.

9.2 The amount due to the Government under pricing formula is net of Rs 2,404 million (2006: Rs 1,570 million) price differential claim as referred to in

note 21.1 with a corresponding effect in creditors.

9.3 Advance payments from customers include Rs 2,855,486 (2006: nil) from Pakistan Oilfields Limited, an associated company, against sales of LPG.


9.4 Workers' Profit Participation Fund

Balance at the beginning of the year 36,869,261 118,649,647

Add: Interest on funds utilised in the

Company's business - note 26 528,081 2,168,584

37,397,342 120,818,231

Less:Amount paid to the Fund 37,261,056 120,541,846

136,286 276,385

Add: Amount allocated for the year - notes 27 and 31 65,703,925 36,592,876

65,840,211 36,869,261

Contingencies:

i) Performance and commitment guarantees arranged by the Company

on behalf of Attock Gen Limited (AGL), an associated company,

as main sponsors 214,255,000 –

ii) Guarantees issued by banks on behalf of the Company 300,000 250,000

iii) Claims for land compensation contested by the Company 1,300,000 1,300,000

iv) Price adjustment related to crude oil purchases as referred to in note 23.1,

the amount of which can not be presently quantified – –

Commitments outstanding:

i) Capital expenditure 55,423,626 41,868,873

ii) Letters of credit other than for capital expenditure 125,775,143 33,659,700

10. Contingencies and commitments



Freehold Buildings on Plant & Computer Furniture, fixturesland freehold land machinery equipment and equipment Vehicles Total

(note 11.1)Rupees Rupees

Cost

As at July 1, 2005 1,927,250,000 69,815,152 3,720,312,389 50,842,064 58,561,368 53,664,457 5,880,445,430

Additions during the year – 541,110 84,506,557 3,253,776 4,199,500 9,961,847 102,462,790

Disposals during the year – – (100,000) (1,631,619) (725,117) (991,610) (3,448,346)

As at June 30, 2006 1,927,250,000 70,356,262 3,804,718,946 52,464,221 62,035,751 62,634,694 5,979,459,874

Additions during the year – 14,374,730 113,952,925 3,687,304 1,546,861 7,974,750 141,536,570

Disposals during the year – – – – (187,993) (290,110) (478,103)

As at June 30, 2007 1,927,250,000 84,730,992 3,918,671,871 56,151,525 63,394,619 70,319,334 6,120,518,341

Depreciation

As at July 1, 2005 – 25,475,882 2,562,496,765 35,979,188 28,931,719 37,216,765 2,690,100,319


On disposals – – (100,000) (1,492,900) (266,881) (939,648) (2,799,429)

As at June 30, 2006 – 28,638,604 2,882,891,867 40,323,315 33,767,125 43,198,002 3,028,818,913


On disposals – – – – (80,056) (290,107) (370,163)

As at June 30, 2007 – 32,546,803 3,214,713,229 49,370,547 38,613,542 51,146,931 3,386,391,052

Written down value

As at June 30, 2006 1,927,250,000 41,717,658 921,827,079 12,140,906 28,268,626 19,436,692 2,950,640,961

As at June 30, 2007 1,927,250,000 52,184,189 703,958,642 6,780,978 24,781,077 19,172,403 2,734,127,289

Annual rate of depreciation (%) – 5 10 20 10 20

11. Property, plant and equipment


101A N N U A L R E P O R T 2 0 0 7

12. Capital work-in-progress

11.1 Value of freehold land includes revaluation surplus of Rs 1,923.339 million arising from revaluation of freehold land in January 2001 carried out by

an independent valuer. Valuation was made on the basis of market value. The original cost of the land as at June 30, 2007 is Rs 3.911 million.

11.2 Effective from the current year, the Company has revised its estimate regarding useful life of computers. Accordingly, the annual depreciation rate

has been increased from 14.3% in previous years to 20% to reflect the pattern in which the assets' economic benefits will be consumed. Had the

change in accounting estimate not been made, the depreciation charge for the year would have been lower by Rs 4.470 million and the profit for

the year would have been higher to that extent. Correspondingly, the operating assets and equity as at June 30, 2007 would have been higher by

the same amount.


11.3 The depreciation charge for the year has been allocated as follows:

Cost of sales 341,975,356 328,326,550

Administration expenses 13,360,853 10,875,215

Distribution cost 899,894 575,332

Desalter operating cost 632,500 632,500

Depreciation of subsidiary company 1,073,699 1,108,426

357,942,302 341,518,023

Civil works 2,486,951 11,725,973

Plant and machinery 186,976,759 161,182,102

Pipeline project 28,218,675 27,964,992

Power plant project - note 12.1 – 19,673,277

217,682,385 220,546,344

12.1 Cost incurred by the Company on the Power Plant Project has been fully recovered from Attock Gen Limited, an associated company, set up for

the purpose of independently operating the Power Plant.


Investments in associated companies

Beginning of the year 9,637,407,375 2,534,407,873

Investment in associates during the year 638,425,126 6,213,929,559

Share of profit after tax of associated companies for the year 1,418,176,624 1,142,405,143

Less: Dividend from associated companies received during the year 277,697,450 253,335,200

11,416,311,675 9,637,407,375

13. Long term investments



2007 2006

% age Rupees % age RupeesHolding Holding

13.1 The Company's interest in associates are as follows:

Quoted

National Refinery Limited (NRL) - note 13.2 25 9,558,250,900 25 8,715,833,650

16,659,700 (2006: 16,659,700) fully paid



(2006: Rs 4,448 million)

Attock Petroleum Limited 21.70 1,311,090,646 20.91 916,949,458

8,681,400 (2006: 8,363,300) fully paid

ordinary shares including 3,500,000

(2006: 3,500,000) bonus shares of Rs 10 each


(June 30, 2006: Rs 2,701 million)

Unquoted

Attock Gen Limited 30 542,053,580 – –

5,400,000 fully paid ordinary shares of Rs 100 each

Value based on net assets as at June 30, 2007: Rs 542 million

Attock Information Technology Services (Private) Limited 10 4,916,549 10 4,624,267

450,000 (2006 : 450,000) fully paid



(June 30, 2006: Rs 4.62 million)

11,416,311,675 9,637,407,375


103A N N U A L R E P O R T 2 0 0 7

13.2 Based on a valuation analysis carried out by an external investment advisor engaged by the Company, the recoverable amount of investment in NRL

exceeds its carrying amount. The recoverable amount has been estimated based on a value in use calculation. These calculations have been made

on discounted cash flow based valuation methodology which assumes gross profit margin of 6.4% (2006: 6.30%), terminal growth rate of 5% (2006:

5%) and capital asset pricing model based discount rate of 14.30% (2006: 13.40%).


Loans to employees - considered good - note 14.1 21,079,761 20,748,226

Less: Amounts due within twelve months shown under current assets - note 19 10,990,473 9,999,521

10,089,288 10,748,705

Security deposits 865,021 865,021

10,954,309 11,613,726

14.1 Loans to employees are for purchase of car, refrigerator and for other purposes which are recoverable in 36, 24 and 60 equal monthly installments

respectively and are secured by a charge on the asset purchased and/or amount due to the employee against provident fund or a third party guarantee.

Loans to employees for refrigerator and other purposes are interest free while loans for purchase of car carry interest rates ranging from 3% to 15%

(2006: 3% to 15%) per annum. These do not include any amount outstanding for more than three years. These include an amount of Rs 3,551,595

(2006: Rs 2,232,870) receivable from executives of the Company and does not include any amount receivable from Directors or Chief Executive.

The maximum amount due from executives of the Company at the end of any month during the year was Rs 3,805,412 (2006: Rs 2,493,776).


14.2 Reconciliation of carrying amount of loans to executives:

Opening balance as at July 1 2,232,870 283,000

Add: Disbursements during the year 3,922,053 3,044,644

6,154,923 3,327,644

Less: Repayments during the year 2,603,328 1,094,774

Closing balance as at June 30 3,551,595 2,232,870

14. Long term loans and deposits



15. Deferred Taxation


Debit balances arising on

Provisions for obsolete stores, doubtful debts and gratuity 48,979,811 39,315,681

Accelerated depreciation allowances 124,925,071 130,284,153

Credit balance arising on finance lease arrangements (15,896,942) (31,793,885)

158,007,940 137,805,949

Stores (including items in transit

Rs 119.67 million; 2006: Rs 82.54 million) 446,578,908 410,806,882

Spares 219,661,310 208,976,739

Loose tools 595,775 708,542

666,835,993 620,492,163

Less: Provision for slow moving items 36,000,000 34,500,000

630,835,993 585,992,163

Crude oil - in stock 1,488,647,552 1,310,846,837

- in transit 176,064,444 173,356,867

1,664,711,996 1,484,203,704

Semi-finished products 311,633,383 278,876,166

Finished products 1,876,300,457 1,760,727,860

Medical supplies 742,456 589,213

3,853,388,292 3,524,396,943

Finished products include stocks carried at net realisable value of Rs 236 million (2006: Rs 334 million). Adjustments amounting to Rs 43.8 million

(2006: Rs 72.9 million) have been made to closing inventory to write down stocks of finished products to their net realizable value.

All debtors are unsecured and considered good.

Aggregate amount receivable from an associated company as at June 30, 2007 was Rs 1,010,953,152 (2006: Rs 1,062,120,659).

16. Stores, spares and loose tools

17. Stock-in-trade

18. Trade debts


105A N N U A L R E P O R T 2 0 0 7


Loans and advances - considered good

Current portion of long-term loans to employees - note 14 10,990,473 9,999,521

Advances to suppliers 19,301,031 32,552,811

Advances to employees 1,728,728 1,683,662

32,020,232 44,235,994

Deposits, prepayments and current account

balances with statutory authorities

Trade deposits 285,673 285,673

Short term prepayments 17,266,084 14,297,425

Current account balances with statutory authorities in respect

of petroleum development levy, excise duty and sales tax 287,247 23,725

17,839,004 14,606,823

Other receivables

Due from associated companies

Attock Chemicals (Private) Limited – 268



Attock Information Technology Services (Private) Limited – 139,817

National Cleaner Production Centre Foundation 2,464,971 522,052

Capgas (Private) Limited – 370

Attock Cement Pakistan Limited 103,492 –

Attock Industrial Products Limited (net of provision of Rs 3,015,145; 2006: Rs 3,015,145) – –

Due from Staff Pension Fund 4,096,686 1,697,890

Income accrued on bank deposits 78,867,031 39,207,362

Income Tax Refundable 3,361,978 2,939,328

Crude oil freight recoverable through inland freight equalisation margin 39,220,600 150,716,052

Other receivables 7,560,627 8,350,204

142,767,825 205,937,120

192,627,061 264,779,937

Loans to employees include Rs 2,265,248 (2006: Rs 1,289,790) due from executives of the Company and does not include any amount receivable from

Directors or the Chief Executive.

19. Loans, advances, deposits,

prepayments and other

receivables



20. Cash and bank balances


Cash in hand 338,827 587,318

With banks:

On current accounts 2,804,509 4,659,995

On interest / mark-up bearing savings accounts (including

US $ 379,624; 2006: US $ 643,379) 8,877,909,761 8,028,480,228

8,881,053,097 8,033,727,541

20.1 Balances with banks include Rs 5,381.864 million (2006: 1,000.136 million) in respect of deposits placed on 90-day interest-bearing account consequent

to a directive issued by the Ministry on account of amounts withheld as referred to in note 9.1 alongwith related interest earned thereon.

20.2 A lien on the Company's savings account has been marked by a bank to the extent of guarantees issued on behalf of the Company as referred to

in note 10 (i).

20.3 Balances with banks include Rs 49.165 million (2006: Rs 49.091 million) in respect of security deposits received.

20.4 The balances in savings accounts at the year end earn weighted average interest/ mark-up of 9.73% (2006: 8.93%) per annum.


Gross sales - note 21.1 66,083,778,877 61,362,743,941

Naphtha export sales 8,232,839,936 8,512,982,645

Less:Cost of Naphtha purchased from third parties and

related handling charges recovered 1,175,285,235 1,761,308,376

7,057,554,701 6,751,674,269

Less:Duties, taxes and levies - note 21.2 13,986,554,360 12,177,586,475

59,154,779,218 55,936,831,735

21.1 Under the products import parity pricing formula, effective July 1, 2000, the Government had imposed a cap on an element of pricing of Premium

Motor Gasoline (PMG) which has not been accepted by the Company. The Company has strongly urged the Government to remove this cap. The

sales revenue to the extent of related aggregate price differential claims of Rs. 2,404 million (including Rs. 1,570 million for prior years) is not being

reflected in sales till this matter is resolved. In this context, the tax authorities have raised demands for income tax against these price differential

claims which have been contested in appeals by the Company.


21.2 Duties, taxes and levies

Development surcharge 5,356,523,313 3,858,634,023

Sales tax 8,166,096,090 7,810,481,336

Custom duties and other levies 463,934,957 508,471,116

13,986,554,360 12,177,586,475

21. Sales


107A N N U A L R E P O R T 2 0 0 7

This represents amount due from the Government of Pakistan on account of shortfall in ex-refinery prices of certain petroleum products under the import

parity pricing formula.


Opening stock of semi-finished products 278,876,166 174,528,868

Crude oil consumed - note 23.1 56,326,788,162 53,529,997,346

Transportation and handling charges 1,016,614,947 1,042,847,253



Chemicals consumed 347,235,336 368,336,337

Fuel and power 279,485,676 243,640,822



Professional charges for technical services 2,455,174 2,849,672

Insurance 46,544,043 36,578,388

Repairs and maintenance (including stores and spares consumed Rs 65,330,509 ;

2006: Rs 79,543,503) 118,433,291 141,527,067

Staff transport and travelling - note 23.3 9,815,175 12,187,347

Cost of receptacles 8,618,744 24,775,920

Research and development 108,000 8,550,012


59,037,160,456 56,161,238,602

Closing stock of semi-finished products (311,633,383) (278,876,166)

58,725,527,073 55,882,362,436

Opening stock of finished products 1,760,727,860 1,369,045,483

Closing stock of finished products (1,876,300,457) (1,760,727,860)

(115,572,597) (391,682,377)

58,609,954,476 55,490,680,059

23.1 Crude oil consumed

Stock at the beginning of the year 1,484,203,704 557,049,967

Purchases 56,507,296,454 54,457,151,083

57,991,500,158 55,014,201,050

Stock at the end of the year (1,664,711,996) (1,484,203,704)

56,326,788,162 53,529,997,346

Certain crude purchases have been recorded based on provisional prices notified by the Government and may require subsequent adjustment.

23. Cost of sales

22. Reimbursement due from the

government under import parity

pricing formula



23.2 Salaries, wages and other benefits under cost of sales, administration expenses, distribution cost and income from crude desalter operations include

the Company's contribution to the Provident Fund amounting to Rs 11,552,458 (2006: Rs 10,682,306).

23.3 Staff transport and travelling

Staff transport and travelling under cost of sales, administration expenses and distribution cost include lease rentals amounting to Rs nil

(2006: Rs 764,819) related to nil (2006: 11) motor vehicles used during the year under terminable lease agreements.



Staff transport, travelling and entertainment - note 23.3 12,064,930 13,600,784


Electricity, gas and water 4,430,040 4,023,580


Auditors' remuneration and expenses:

Statutory audit 350,000 300,000

Special certifications, half yearly review, audit of consolidated accounts and staff funds 553,000 483,500

Out of pocket expenses 82,995 91,540

985,995 875,040

Legal and professional charges 5,874,513 7,951,800


Subscription 5,271,778 5,444,940

Publicity 4,043,563 4,029,913

Scholarship scheme 2,054,950 1,398,801


Insurance 866,898 794,336

Donations* 414,619 10,275,147

Training expenses 744,814 2,389,783

Other expenses 51,638 245,421


175,107,589 183,298,609

* No director or his spouse had any interest in the donee institutions.

24. Administration expenses


109A N N U A L R E P O R T 2 0 0 7



Staff transport, travelling and entertainment - note 23.3 568,338 661,935

Telephone and telex charges 209,812 174,908

Electricity, gas, fuel and water 1,476,680 1,341,193

Printing and stationery 81,097 70,976

Repairs and maintenance including packing and other stores consumed 1,295,190 1,911,219

Rent, rates and taxes 316,677 263,096

Legal and professional charges 144,000 216,285

Cost of samples 2,587 52,730


16,716,333 13,779,850

Interest / mark-up on

Long term loans 233,361,071 493,541,346

Workers' Profit Participation Fund - note 9.4 528,081 2,168,584

Financial charges on liability against assets subject to finance lease – 346,028

Bank and other charges 388,827 2,368,817

234,277,979 498,424,775

Employees' retirement benefits

Staff gratuity benefits - note 28 15,320,547 15,378,909

Staff pension benefits - note 28 8,572,332 7,008,130

Less: Charged to subsidiary company (954,525) (852,696)

7,617,807 6,155,434

Contribution to employees old age benefits scheme 2,202,230 1,717,248

25,140,584 23,251,591

Provision for slow moving stores 1,500,000 1,500,000

Stores written off 12,560 –



102,150,812 67,912,109

25. Distribution cost

26. Finance cost

27. Other charges



28. Employees' defined benefit plans The latest actuarial valuation of the employees' defined benefit plans was conducted at June 30, 2007 using the projected unit credit method. Details of the

defined benefit plans are:Defined benefit Defined benefit

Pension plan Gratuity plan

2007 2006 2007 2006

Rupees Rupees

a) The amounts recognised in the profit and loss account:


Interest on obligation 27,771,892 24,541,741 10,075,566 10,064,728

Expected return on plan assets (30,234,890) (26,233,559) – –

Contribution from an associated company (127,200) (160,898) – –

Net actuarial losses / (gains) recognised during the year (1,100,894) (718,769) 2,145,680 2,317,866

8,572,332 7,008,130 15,320,547 15,378,909

b) The amounts recognised in the balance sheet:

Fair value of plan assets 359,485,371 280,495,084 – –

Present value of defined benefit obligations (291,335,050) (263,054,407) (121,894,107) (96,057,559)

68,150,321 17,440,677 (121,894,107) (96,057,559)

Unrecognised actuarial gains / (losses) (64,053,635) (15,742,787) 36,094,107 20,257,559

Net liability 4,096,686 1,697,890 (85,800,000) (75,800,000)

c) Movement in the present value of defined benefit obligation:

Present value of defined benefit obligation as at July 1 263,054,407 215,382,051 96,057,559 88,577,526


Interest cost 27,771,892 24,541,741 10,075,566 10,064,728

Benefits paid (11,145,551) (9,714,214) (5,320,547) (4,493,785)

Actuarial (gains) / losses (609,122) 23,265,214 17,982,228 (1,087,225)

Present value of defined benefit obligation as at June 30 291,335,050 263,054,407 121,894,107 96,057,559

d) Changes in the fair value of plan assets:

Fair value of plan assets as at July 1 280,495,084 225,120,520 – –

Expected return 30,234,890 26,233,559 – –

Benefits paid (11,145,551) (9,714,214) – –

Contributions by employer 10,971,128 9,677,208 – –

Contributions by associated company 127,200 160,898 – –

Actuarial gains / (losses) 48,802,620 29,017,113 – –

Fair value of plan assets as at June 30 359,485,371 280,495,084 – –

Actual return on plan assets 79,037,510 55,250,672 – –

Expected contributions to the defined benefit pension plans for the year ending June 30, 2008 are Rs 12.6 million.


111A N N U A L R E P O R T 2 0 0 7

Defined benefit Defined benefit

Pension plan Gratuity plan

2007 2006 2007 2006

Rupees Rupees

e) The major categories of plan assets:

Investment in equities 109,497,755 89,667,869 – –

Investment in mixed funds 136,836,898 54,852,274 – –

Cash 113,150,718 135,974,941 – –

359,485,371 280,495,084 – –

f) Significant actuarial assumptions at the balance sheet date:

Discount rate 11.00% 10.78% – –

Expected return on plan assets 11.00% 10.78% – –

Future salary increases 8.89% 8.66% – –

Future pension increases 5.71% 5.50% – –

2007 2006 2005 2004 2003Rupees Rupees Rupees Rupees Rupees

g) Comparison for five years:

Defined Benefit Pension Plan


Fair value of plan assets 359,485,371 280,495,084 225,120,520 196,917,528 174,386,000

Surplus / (deficit) 68,150,321 17,440,677 9,738,469 5,919,157 (1,791,000)

Actuarial (gains) / losses on plan liabilities (609,122) 23,265,214 9,382,000 1,303,000 (11,671,000)

Actuarial (gains) / losses on plan assets (48,802,620) 29,017,113 13,388,000 9,384,000 10,642,000

Defined Benefit Gratuity Plan


Fair value of plan assets – – – – –

Deficit (121,894,107) (96,057,559) (88,577,526) (80,831,692) (59,094,000)

Actuarial (gains) / losses on plan liabilities 17,982,228 (1,087,225) 3,611,000 16,991,000 (1,085,000)

Actuarial (gains) / losses on plan assets – – – – –



29. Other income


Income from financial assets

Income on bank deposits 569,024,303 527,198,018

Income on other balances – 2,029

Exchange gain 269,581 2,992,990

569,293,884 530,193,037

Income from non-financial assets

Income from crude decanting 11,205,337 8,835,527

Income from crude desalter operations - note 29.1 9,264,467 10,541,984

Insurance agency commission 4,719,025 2,206,024

Rental income 3,057,084 2,003,552

Sale of scrap 10,612,725 6,957,758

Profit on sale of fixed assets 846,422 1,660,588

Calibration charges 3,742,400 3,996,300

Handling and service charges 15,900,912 21,419,332

Registration charges from carriage contractors – 20,941,563

Penalties from carriage contractors 3,888,219 15,070,661

Old liabilities written back 693,597 2,603,288

Miscellaneous 1,941,992 653,351

65,872,180 96,889,928

635,166,064 627,082,965

29.1 Income from crude desalter operations

Income 43,927,953 49,598,239

Less:Operating costs


Chemical consumed 7,058,352 8,577,336

Fuel and power 16,828,288 20,449,799



34,663,486 39,056,255

9,264,467 10,541,984


113A N N U A L R E P O R T 2 0 0 7


Current - for the year 476,500,000 400,000,000

Deferred - for the year (19,949,991) (45,155,916)

456,550,009 354,844,084

Numerical reconciliation between the average effective tax rate and the applicable tax rate

% %

Applicable tax rate 35.00 35.00

Tax effect of:

Income chargeable to tax at special rate and other differences 12.51 46.51

Average effective tax rate charged to profit and loss account 47.51 81.51


Share in profit of associated companies is based on their audited financial statement

for the year ended June 30, 2007

National Refinery Limited 1,050,663,500 852,455,250


Attock Information Technology Services (Private) Limited 292,282 169,568


1,428,116,864 1,143,818,734

Less:Unrealised profit from intra-group transactions included in closing stocks 9,940,240 1,413,591

1,418,176,624 1,142,405,143

Less:Related charges



Taxation 13,884,873 12,666,760

33,045,998 30,146,889

1,385,130,626 1,112,258,254

(Loss) / profit of Attock Hospital (Private) Limited,

a wholly owned subsidiary - note 31.1 (502,514) 94,888

1,384,628,112 1,112,353,142

30. Provision for taxation

31. Share of profit of associates


31.1 (Loss) / Profit from Attock Hospital (Private) Limited

Revenue* 31,329,141 29,547,146

Less:Operating expenses

Salaries, wages and other benefits (including employees'

retirement benefits of Rs 1,063,935; 2006: Rs 923,156) 17,499,287 15,020,268

Medical supplies 2,953,382 2,945,262

Dietary cost 571,211 539,021

Sanitation and general services 3,433,072 3,733,226

Utilities and other office expenses 6,331,004 6,173,055

Audit fee 65,000 60,000

Depreciation 1,073,699 1,108,426

31,926,655 29,579,258

Loss before taxation (597,514) (32,112)

Provision for taxation - Current 157,000 168,000

- Deferred (252,000) (295,000)

(95,000) (127,000)

(Loss) / Profit after taxation (502,514) 94,888

* The revenue includes inter - company billings amounting to Rs 22,702,770 (2006 : Rs 21,328,674) which have not been eliminated from revenue

and costs. It is considered that this gives a fairer view of the operating results of the Group. The revenue also includes income on bank deposits

Rs 21,044 (2006: Rs 22,394).




115A N N U A L R E P O R T 2 0 0 7

31.2 Summarised financial information of associated companies:

The assets, liabilities and equity of National Refinery Limited , Attock Petroleum Limited, Attock Information Technology Services (Private) Limited

and Attock Gen Limited as at June 30, 2007 based on their audited financial statements are as follows:


Assets

National Refinery Limited 32,641,559,000 24,992,541,000

Attock Petroleum Limited 8,983,767,000 6,584,116,000

Attock Information Technology Services (Private) Limited 52,541,040 49,060,301

Attock Gen Limited 1,820,220,548 300,500

43,498,087,588 31,626,017,801

Liabilities




Attock Gen Limited 13,375,281 500

25,441,393,515 20,087,066,820

Revenue





135,481,246,679 121,743,704,500

Profit / (loss)





5,941,028,092 4,804,122,684

The Company's share in shareholders' equity

National Refinery Limited 25.00% 25.00%

Attock Petroleum Limited 21.70% 20.91%

Attock Information Technology Services (Private) Limited 10.00% 10.00%

Attock Gen Limited 30.00% 0.00%



Sale of goods 12,941,980,204 15,315,597,351

Sale of services 76,773,297 46,784,718

13,018,753,501 15,362,382,069



7,903,073,041 9,313,514,977

Holding company

Sale of services 284,675 –



1,302,830,820 2,001,662,895

Employees' benefits funds

Payments made during the year 22,523,586 20,359,514

The aggregate amounts charged in the financial statements for remuneration, including benefits and perquisites, were as follows:

Chief Executive Directors Executives

2007 2006 2007 2006 2007 2006


Managerial remuneration / honorarium 3,909,722 2,482,256 1,219,140 1,215,792 24,673,508 20,752,589

Company's contribution to provident

and pension funds 789,421 574,200 – – 5,209,292 4,422,443

Housing and utilities 1,037,149 834,960 – – 11,585,996 9,064,108

Leave passage 330,000 298,356 – – 2,323,690 2,256,860

6,066,292 4,189,772 1,219,140 1,215,792 43,792,486 36,496,000

No of person(s) 1 1 3 3 22 20

33.1 In addition, the Chief Executive and 19 (2006: 19) executives were provided with limited use of the Company's cars. The Chief Executive and all

executives were provided with medical facilities and 9 (2006: 9) executives were provided with unfurnished accommodation in Company owned

bungalows. Limited residential telephone facility was also provided to the Chief Executive and 13 (2006: 9) executives. Payments to Chief Executive

include Rs 789,156 representing arrears of salary for the period February 2005 to June 2006.

Fee paid to directors during the year was Rs nil (2006: Rs nil).



33. Remuneration of Chief Executive,

Directors and Executives

32. Related party transaction The Group is controlled by Attock Oil Company Limited which holds 55% (2006: 52.50%) of ARL's shares. Therefore, all subsidiaries and associated undertakings

of Attock Oil Company Limited are related parties of the Company. The related parties also comprise of directors, major shareholders, key management

personnel, entities over which the directors are able to exercise influence and employees' funds. Amount due from and due to these undertakings are shown

under receivables and payables. The remuneration of Chief Executive, directors and executives is disclosed in note 33 to the consolidated financial statements.


117A N N U A L R E P O R T 2 0 0 7

34.1 Financial assets and liabilities2007 2006

Interest/markup Non-interest / Interest/markup Non-interest /

bearing markup bearing Total bearing markup bearing Total


Financial assets:


Trade debts – 6,235,379,020 6,235,379,020 – 4,675,412,060 4,675,412,060

Loans, advances, deposits and

other receivables – 155,772,699 155,772,699 – 215,542,199 215,542,199

Cash and bank balances

Foreign currency - US $ 22,815,414 201,063 23,016,477 38,667,078 201,063 38,868,141

Local currency 8,855,093,382 2,942,273 8,858,035,655 7,989,813,150 5,046,250 7,994,859,400


Long term investments – 11,416,311,675 11,416,311,675 – 9,637,407,375 9,637,407,375

Long term loans and deposits – 10,954,309 10,954,309 – 11,613,726 11,613,726

8,877,908,796 17,821,561,039 26,699,469,835 8,028,480,228 14,545,222,673 22,573,702,901

Financial liabilities:



Local currency – – – 1,136,750,000 – 1,136,750,000

Short term finance – – – – – –

Trade and other payables 9,471,565,027 15,917,290,773 25,388,855,800 1,615,257,575 17,149,072,482 18,764,330,057



Local currency – – – 3,410,250,000 – 3,410,250,000

Staff gratuity – 85,800,000 85,800,000 – 75,800,000 75,800,000

9,471,565,027 16,003,090,773 25,474,655,800 6,162,257,575 17,224,872,482 23,387,130,057

Off balance sheet items

Commitments (other than letters of credit) – 55,423,626 55,423,626 – 41,868,873 41,868,873

Letters of credit – 125,775,143 125,775,143 – 33,659,700 33,659,700

Bank guarantees – 214,555,000 214,555,000 – 250,000 250,000

– 395,753,769 395,753,769 – 75,778,573 75,778,573

34.2 Concentration of credit risk

The Company's credit risk is primarily attributable to its trade debts and placements with banks. The sales are essentially to six oil marketing companies

and reputable foreign customers. The Company's placements are with reputable banks. Due to the high credit worthiness of corresponding parties

the credit risk is considered minimal.

34.3 Currency risk

Currency risk is the risk of loss through changes in foreign currency rates. The exchange risk against foreign currency liabilities has been hedged

by the Company through foreign currency deposits.

34. Financial instruments



34.4 Interest rate risk

The effective interest / mark up rates for the monetary financial assets and liabilities are mentioned in respective notes to the financial statements.

34.5 Liquidity risk

Liquidity risk reflects an enterprise's inability in raising funds to meet commitments. The Company follows an effective cash management and planning

policy to ensure availability of funds and to take appropriate measures for new requirements.

34.6 Fair value of financial assets and liabilities

The carrying value of financial assets and liabilities approximates their fair value except for long term investments, which are stated at cost.

2007 2006

35.1 Earnings per share

Profit for the year after taxation Rs. 1,888,961,472 Rs. 1,192,870,859

Number of ordinary shares outstanding during the year 56,862,000 56,862,000

Earnings per share Rs. 33.22 Rs. 20.98

Basic earnings per share for the year 2006 reported in the previous year was Rs 26.22. This has been restated on account of 11,372,400 bonus

shares issued without consideration during the year ended June 30, 2007.

There is no dilutive effect on the basic earnings per share of the Company for the year ended June 30, 2007.

35.2 Capacity and production

Against the designed annual refining capacity of 14,240,000 (2006: 14,280,000) US barrels the actual throughput during the year was 14,074,644

(2006: 14,567,216) US barrels. The actual throughput was lower than the annual refining capacity on account of the plant shut down for maintenance

and reductions in throughput to minimize losses during adverse periods of refining margins.

35.3 Number of employees

Total number of employees at the end of the year was 763 (2006: 706).

35.4 Corresponding figures

Sales for the corresponding year were net of discount of Rs. 108,693,725 which has now been disclosed separately in the profit & loss account.

35.5 Non adjusting events after the balance sheet date

The Board of Directors, in its meeting held on September 10, 2007, has proposed for the approval of members at the next Annual General Meeting

(i) a 40% cash dividend of Rs. 4 per share and (ii) an issue of bonus share in the proportion of one share for every four shares held i.e. 25% out of

unappropriated profits. These financial statements do not include the effect of these appropriations which will be accounted for in the financial

statements for the year ending June 30, 2008 as follows:

Transfer from unappropriated profit to: Rupees

Proposed dividend 227,448,000

Reserve for issue of bonus shares 142,155,000

35.6 Date of authorisation

These financial statements have been authorised for issue by the Board of Directors of the Company on September 10, 2007.


35. General

Administrator

Sd

Administrator

Sd

A N N U A L R E P O R T 2 0 0 7

Form of ProxyAttock Refinery Limited

Important:

1. This Proxy Form, duly completed and signed, must be received at the SharesDepartment of M/s. Noble Computer Services (Pvt) Limited, 2nd Floor, SohniCentre, BS 5&6, Main Karimabad, Block-4, Federal B Area, Karachi-75950,Pakistan, not less than 48 hours before the time of holding the meeting.

2. If a member appoints more than one proxy and more than one instruments ofproxies are deposited by a member with the Company, all such instruments ofproxy shall be rendered invalid.

3. For CDC Account Holders / Corporate Entities

In addition to the above the following requirements have to be met.

i. Attested copies of NIC or the passport of the beneficial owners and the proxyshall be provided with the proxy form.

ii. The proxy shall produce his original NIC or original passport at the time ofthe meeting.

iii. In case of a corporate entity, the Board of Directors resolution / power ofattorney with specimen signature shall be submitted (unless it has beenprovided earlier) alongwith proxy form to the Company.

I / We

of

being member(s) of Attock Refinery Limited holding

ordinary shares hereby appoint Mr. / Mrs. / Miss

of another member of the Company or failing him / her

of

another member of the Company as my / our proxy in my / our absence to attend and vote for me / us and on my / our behalf at the Twenty

Nineth Annual General Meeting of the Company to be held on Thursday, 25th October, 2007 at 11:00 a.m. at Pearl Continental Hotel,

Rawalpindi and at any adjournment thereof.

As witness my / our hands seal this day of 2007.

Signed by

in the presence of

Signature onFive Rupees

Revenue Stamp.

The Signature should agreewith the specimen registered

with the Company.

Folio No. CDC Account No.

Participant I.D. Account No.

AF

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The C

ompany S

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efinery, Morgah,

Raw

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A N N U A L R E P O R T 2 0 0 7

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Attock Refinery Limited (Annual Report 2007)

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