Company Information Directors’ Report on the Unconsolidated and Consolidated Financial Statements Unconsolidated Financial Statements Auditor’s Review Report to the M · 2017-3-30

The Hub Power Company Limited

Unaudited Half Yearly Financial Statements

for the Half Year ended

December 31, 2014

Contents

Company Information

Directors’ Report on the Unconsolidated and Consolidated Financial Statements

Unconsolidated Financial Statements

Auditor’s Review Report to the Members

Condensed Interim Profit & Loss Account

Condensed Interim Statement of Comprehensive Income

Condensed Interim Balance Sheet

Condensed Interim Cash Flow Statement

Condensed Interim Statement of Changes in Equity

Notes to the Condensed Interim Financial Statements

Consolidated Financial Statements

Condensed Interim Consolidated Profit & Loss Account

Condensed Interim Consolidated Statement of Comprehensive Income

Condensed Interim Consolidated Balance Sheet

Condensed Interim Consolidated Cash Flow Statement

Condensed Interim Consolidated Statement of Changes in Equity

Notes to the Condensed Interim Consolidated Financial Statements

Company Information

Board of Directors Hussain Dawood Chairman

Khalid Mansoor Chief Executive

Syed Ahmed Iqbal Ashraf NBP Nominee

Masood Ahmed GOB Nominee

Qaiser Javed

Syed Muhammad Ali

Iqbal Alimohamed

Abdul Samad Dawood

Shabbir H.Hashmi

Ajaz Ali Khan

Ruhail Mohammed

Ali Munir

Shahid Hamid Pracha

Inam ur Rahman

Syed Khalid Siraj Subhani

Audit Committee Iqbal Alimohamed

Shabbir Hussain Hashmi

Qaiser Javed

Ruhail Mohammed

Ali Munir

Company Secretary Shamsul Islam

Management Khalid Mansoor

Syed Hasnain Haider

Shamsul Islam

Tahir Jawaid

Mohammad Kaleem Khan

Shahid Mahmood

Abdul Nasir

M. Inam ur Rahman Siddiqui

Nazoor Baig

Registered & Head 11th Floor, Ocean Tower,

Office G‐3, Block 9, Main Clifton Road,

P.O. Box No. 13841, Karachi‐75600

Email: [email protected]

Website: http://www.hubpower.com

Principal Bankers Allied Bank of Pakistan

Askari Bank Limited

Bank Al‐Falah Limited

Bank Al‐Habib Limited

Bank of Punjab

Bank Islami Pakistan Limited

Barclays Bank PLC Pakistan

Burj Bank Limited

Citibank N.A. Karachi.

Faysal Bank Limited

Habib Bank Limited

Habib Metropolitan Bank Limited

Meezan Bank Limited

MCB Bank Limited

National Bank of Pakistan

NIB Bank Limited

Industrial and Commercial Bank of China

Pak Brunei investment Company Limited

Pak China Investment Company Limited

Pak Kuwait Investment Company (Pvt) Ltd.

Samba Bank Limited

Standard Chartered Bank (Pakistan) Ltd.

Sumitomo Mitsui Banking Corp. Europe Ltd., London

United Bank Limited

Inter‐Creditor Agents National Bank of Pakistan

Habib Bank Limited

Allied Bank Limited

Legal Advisors RIAA LAW, Karachi

Auditors Ernst & Young Ford Rhodes Sidat Hyder

Registrar Famco Associates (Pvt) Limited

Hub Plant Mouza Kund,

Post Office Gaddani,

District Lasbela, Balochistan

Narowal Plant Mouza Poong,

5 KM from Luban Pulli Point on Mureedkay‐Narowal

Road, District Narowal, Punjab

Laraib Energy Limited 12‐B/1, Multi Mansion Plaza,

(Subsidiary) G‐8, Markaz, Islamabad

EYrrnst & Young Ford RfLodes Sld,ri l!Ce, leL: +9221 3565 0007-f1Char fered Ac.-ountants i ai: +9221 3563 I 9b5Proqfrssi,,rl-l,.rr.r,Beaulrcnff?oao tyfrsir.ui:,pk..'r,..r:i'

Buirding a better F.?;.?31 1554i' Karachi 75510 lv.c.nr/Di1

workino world

AUDITORS' REPORT TO THE MEMBERS ONREVIEW OF INTERlM FINANCIAL INFORMATION

Introduction

We have reviewed the accompanying condensed interim unconsolidated balance sheet of TheHub Power Company Limited as at 31 December 2O!4, the related condensed interimunconsolidated profit and loss account, condensed interim unconsolidated statement ofcomprehensive income, condensed interim unconsolidated cash flow statement, condensedinterim unconsolidated statement of changes in equity and notes to the accounts for the sixmonths period then ended (here-in-after referred to as "interim financial information").Management is responsible for the preparation and presentation of this interim financialinformation in accordance with approved accounting standards as applicable in Pakistan forinterim financial reporting. Our responsibility is to express a conclusion on this interimfinancial information based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements24LO, "Review of Interim Financial Information Performed by the Independent Auditor of theEntity". A review of interim financial information consists of making inquiries, primarily ofpersons responsible for financial and accounting matters, and applying analytical and otherreview procedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing and consequently does not enable us toobtain assurance that we would become aware of all significant matters that might be

identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that theaccompanying interim financial information is not prepared, in all material respects, in

accordance with approved accounting standards as applicable in Pakistan for interim financialreporting.

4r".r-1. * Vt*7 6rd ez"-e /'' l* ry a

Chartered AccountantsEngagement Partner: Riaz A. Rehman ChamdiaDate: 16 February 2015Place: Karachi

@grd^4tt drruqft dcrg/

THE HUB POWER COMPANY LIMITEDCONDENSED INTERJM UNCONSOLIDATEDPROFIT AND LOSS ACCOUNT (UNAUDITED)

FOR THE HALF YEAR ENDED DECEMBER 3I.2OI4

Note

3 months ended

Dec 2014

(Rs.'000s)

32.565,481

(28,474,834)

3 months ended

Dec 2013

(Rs.'000s)

39,764,973

(37,349,685)

78,319,609

(70,669,974\

77,820,272

(72,592,160)

6 months ended 6 months ended

Dec 2014 Dec 2013

(Rs.'000s) (Rs.'000s)

Tumover

Operating costs

GROSS PROFIT

General and adminishation expenses

Other income

Workers' profi t participation fund

PROFIT FROM OPERATIONS

Finance costs

PROFIT BEFORETAXATION

Taxation

PROFIT FORTHE PERIOD

Basic and diluted earnings per share (Rupees)

4,090,647

(200,602)

13,3 | 0

2,415,288

(147,449)

t6,570

7,649,635

(365,4e8)

19,902

5,228,1t2

(26t,096)

72.299

3,903,355

(r,25 r,415)

2,284,409

(t,t6t,177)

7,304,039

(2,5s7,s25)

5,039,3 l5

(2, | 00,565)

2,651,940

(t,233)

1,123,232

(r,r60)

4,746,514

(t,742\

2,938,750

( |,e55)

2,650,707 4,744,772

4. l0

Iqbal Alimohamed

Director

The annexed notes from I to 20 form an integral part ofthese condensed interim unconsolidated financial statements.

fua*

ItLLs 0-*rrr*-Khalid Mansoor

Chief Executive

@tr*dtdrmi|trmr!,

Profit for the period

Othcr comprchcnsivc incomc for thc pcriod

Itcttts thot will not be rcclasslficdto profit or loss lnsubseqacat pcriods

Gain / (loss) on remeasurement! of post employment benefit obligation

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

The annexed notes from I to 20 form an integral part ofthese condensed interim unconsolidated financial statements.

t*4,

3 months endcd 3 monthc cndcd 6 months cndcd 6 months ended

Dcc 2014 Dec 2013 Dec 2014 Dcc 2013(Rs.'mOr) (Rs.'lXX)s) (Rs.'0ffis) (R*'lXX)s)

2,650,707 1,t22,072 4,744,772 2,936,795

3,797 (2,e83) s27 (s,966)

4,745,299 2,930,829

--

THE HUB POWER COMPANY LIMITEDCONDENSED INTERIM UNCONSOLIDATED

STATEMENT OF COMPREHENSwE TNCOME (UNA[ rltTED)FOR THE HALF YEAR ENDED DECEMBER 3I.2OI4

fll,ttX or^er-Khalid Mansoor

Chief Executive

@gwth thrcugh ereryy


BALANCE SHEETAS AT DECEMBER 3I.2OI4

Dec 2014 Jun 2014

(Rs. '000s) (Rs.'000s)

Note (Unaudited) (Audited)

ASSETS

NON-CURRENT ASSETSFixed Assets

Property, plant and equipment 7 39,957 ,472 4l ,223,196

Intangibles 6,323 I l'857

Long term investments 8 4,917,276 4,674,189

Long term loan 60'296 62,529

Long term deposits and prepayments 22,126 2l '303

CURRENT ASSETS

Stores, spares and consumables

Stock-in-trade

Trade debts

Loan and advances

Prepayments and other receivables

Cash and bank balances

TOTAL ASSETS

EOUITY AND LIABILITIES

SHARE CAPITAL AND RESERVE

Share CapitalAuthorised

Issued, subscribed and paid-uP

Revenue Reserve

Unappropriated profit

NON-CURRENT LIABILITIESLong term loans

CURRENT LIABILITIESTrade and other payables

Interest / mark-up accrued

Short term borrowings

Current maturity of long term loans

COMMITMENTS AND CONTINGENCIES

TOTAL EQUITY AND LIABILITIES

t0

2,179,323

3,394,594

93,662,695

126,203

3,294,147

I.705.040

t04,36 t,002

1 ,599,1 61

2,388,435

79,879,236

78,201

2,8t7,541

2,676,177

89.438.751

149,324,49s l35.431.825

12.000,000 | 2.000.000

11,571,544

I 9,589,899

| | ,571 ,544

19,473,218

ll

31,161,443

20,670,402

82,698,563

|,094,836

10,040,500

3,658,75 r

31,044,762

20,033,860

62,794,145

1,t57,756

t6,878,r l83,523,184

t2

l3il

l4

97,492,650 84,353,203

149,324,495 | 35,43 r,825

The annexed notes from I to 20 form an integral part ofthese condensed interim unconsolidated financial statements.trr/^^

itt^t{4 dlr',r^rl-t--Khalid Mansoor

Chief Executive

IqbalAlimoffiDirector

@grorudl *rugh ercryy

THE HUB POWERCOMPANY LIMITEDCONDENSED INTERIM UNCONSOLIDATEDCASH FLOW STATEMENT (UNAUDITED)

FOR THE HALF YEAR ENDED DECEMBER 3I.2OI4

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation

Adjustments for:Depreciation

Amortisation

Gain on disposal of fixed assets

Staff gratuity

Interest income

Interest / mark-up

Amortisation of transaction cost

Operating profit before working capital changes

Working capital changes

Cash generated from / (used in) operations

Interest received

Interest / mark-up paid

Taxes paid

Net cash generated from / (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Fixed capital expenditure

Proceeds from disposal offixed assets

Investment in an associate

Long term loan and advance

Long term deposits and prepayments

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid

Proceeds from long term loans

Repayment of long term loans - Hub plant

Repayment of long term loans - Narowal plant

Repayment of long term loans - Laraib's investment

Net cash used in financing activities

Net increase / (decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning ofthe period

Cash and cash equivalents at the end ofthe period

6 months ended

Dec 20t4(Rs.'000s)

4,746,514

1,363,286

5,534(74e)

10,301

( 16,800)

2,459,584

44,280

6 months ended

Dec 2013

(Rs.'000s)

2,938,750

1,342,291

9,801

(14)

7,854(64,199)

2,018,798

30,742

8,611,950

4,004,t27

6,284,023

(23,214,673)

t2,6r6,077

't )'t'l

(2,s22,s04)(1,742)

( 16,930,650)

66,466

(2,331,234)

( I,955)

l 0,099,108 (19,197,373)

(112,209)

t,567

16,912(2,366)

( r 02,089)

5,276

(243,087)) )77

(823)

(338,490)

(4,62t,966)

2,500,000

(489,531)

(809,360)(473,280)

(e6,0e6)

(5,190,146)

(489,53 I )(696, I 0o)

(3,894,t37) (6,37 5,777)

5,866,481

(14,201,94r)

(8,335,460) (13,127,196)

The annexed notes from I to 20 form an integral part ofthese condensed interim unconsolidated financial statements'tfial

(25,669,246)

12,542,050

l6

ru$ r}l.r"rtr-Khalid Mansoor

Chief Executive

--'IqbatRtim-o11-il-

Director

@gror/th t rrorrSh crrersy


STATEMENT OF CHANGES IN EQUITY (UNAUDITED)FOR THE HALF YEAR ENDED DECEMBER 3I. 2OI4

Issued capital

Balance at the beginning of the period

Balance at the end ofthe period



Total comprehensive income for the period

Transactions with owners in their capacity as owners

Final dividend for the fiscal year 2013-2014 @ Rs. 4,00(2012-2013: @ Rs. 4.50) per share


Total equity


Dec 2014 Dec 2013

(Rs.'000s) (Rs.'000s)

11,571,544 11,571,544

11,571,544 11,571,544

19,473,218 21,039,569

4,745,299 2,930,929

(4,629,61

(4,629,619)(5,207,lg5)(5,207,195)

19,589,899 18,762,203

31,161,443 _30333Jn

The annexed notes from I to20 form an integral part ofthese condensed interim unconsolidated financial statements.

f+/fi^'r

['."UV O,un'--Khalid Mansoor

Chief ExecutiveIqbalAlimohamEf

Director

@Sewth tnru8h certl

l.

THE HUB POWER COMPANY LIMITEDNOTES TO THE CONDENSED INTERIM UNCONSOLIDATED

FINANCIAL STATEMENTS (UNAUDITED)FOR THE }IALF YEAR ENDED DECEMBf,R 3I.2014

THE COMPANY AND ITS OPf,RATIONS

The Hub Power Company Limited (the "Company") was incorporated in Pakistan on August l, l99l as a public limited company under the Companies

Ordinance, 1984 (the "Ordinance"). The shares of the Company are listed on the Karachi, Lahore and Islamabad Stock Exchanges and its Global

Depository Receipts are listed on the Luxembourg Stock Exchange. The principal activities of the Company are to develop, own, opsrate and maintain

power stations. The Company owns an oil-fired power station of |,200 MW (net) in Balochistan (Hub plant) nd a2l4 MW (net) oil-fired power station in

Punjab (Narowal plant). The Company also has a 75% controlling interest in Laraib Energy Limited "Subsidiary". The subsidiary owns a hydel power

station of 84 MW which commenced operations on March 23,2013.

Proposed Narowrl Demerger

Under the tax laws of Pakistan, if Narowal were demerged into a separate legal entity, it would have lost its tax exempt status from taxation on the income

from power generation as is the case now and in line with the government's policy for IPPs which are exempt from taxation on the income from power

generation. The Company requested the PPIB for the appropriate changes in the tax laws so that Narowal could be demerged into a separate legal entity.

During the period, the Company has received the Economic Coordination Committee's (ECC) approval for the changes in tax laws to be incorporated

enabling the Company to demerge Narowal into a separate legal entity having the same tax exempt status, after demerger, as it enjoys now. While

appropriate changes in the tax laws are still to be made by Federal Board ofRevenue (FBR), the Company has started the process to demerge Narowal into

a separate legal entity. It is expected that this process will be completed by December 2015.

SIGNIFICANT ACCOUNTING POLICIES

The accounting policies and methods ofcomputation followed for the preparation ofthese condensed interim unconsolidated financial statements are same

as those applied in preparing the annual unconsolidated financial statements for the year ended June 30, 2014.

BASIS OF PRI,PARATION

These condensed interim unconsolidated financial statements of the Company for the half year ended December 3 I , 20 I 4 are unaudited but subject to

limited scope review by the statutory auditors as required by the Code of Corporate Govemance. These condensed interim unconsolidated financial

statements have been prepared in accordance with the requirements oflAS 34 "lnterim Financial Reporting" and provisions ofand directives issued under

the Ordinance. In case requirements differ, the provisions ofand directives issued under the Ordinance have been followed.

The figures ofthe condensed interim unconsolidated profit and loss account for the quarters ended December 31, 2014 and 2013 have not been reviewed

by the extemal auditors of the Company as they have reviewed the cumulative figures for the half years ended December 31,2014 and 2013. These

condensed interim unconsolidated financial statements do not include all the information and disclosures as required in the annual unconsolidated

financiaf statements and should be read in conjunction with the Company's annual unconsolidated financial statements for the year ended June 30,2014.

These condensed interim unconsolidated financial statements are the separate condensed interim financial statements ofthe Company in which investment

in a subsidiary and investment in an associate have been accounted for at cost less accumulated impairment losses, ifany.

3 months ended 3 months ended 6 months ended 6 months ended

Dec 2014 Dec 2013 Dec 2014 Dec 2013

(Rs.'000s) (Rs.'000s) (Rs.'000s) (Rs.'(X)Os)

OPERATING COSTS

Fuel cost

Stores and spares

Operation and Maintenance

Insurance

Depreciation

Amortisation

Repairs, maintenance and other costs

WORKERS' PROFIT PARTICIPATION FUND

Provision for Workers' profi t participation fu nd

Workers' profit participation fund recoverable

from WAPDA / NTDC

132,597 56.t62

(t32,s97) (56,t62)

:::The Company is required to pay 5%o of its profit to the Workers' profit participation fund (the "Fund"). However, such payment does not affect the

Company's overall profitability because after payment to the Fund, the Company bills this to Water and Power Development Authority (WAPDA) /

National Transmission and Despatch Company Limited (NTDC) as a pass through item under the PPAs.

t#llt-

4.

26,356,347 34,682,921

56,636 r I s,829

913,448 965,681

203,596 243,537

675,9s0 666,067

2,683 4,109

266,174 67 |,s4l

66,377,320

114,484

|,957 ,734412,083

l ,349,418

5,366

453.s69

6't,674,726

2t9,847l ,904,5 l3

48 1,783

|,330,472

9,429

97 |,390

28,474,834 37,349,685 70,669,974 72,592,160

)17 '1)6

(237.126)

r 46,93 8

( l 46,938)

@8rcwrh rh@gft cnc€/

1

6. FINANCECOSTS

Interest / mark-up on long term loans

Mark-up on short term bonowings

Amortisation of transaction cost

Other finance costs

PROPERTY, PLANT AND EQUIPMf,NT

Operating property, plant and equipment

Capital work-in-progress

7.l Additions to property, plant and equipment during the period were Rs.

million.

8. LONGTERMINVESTMENTS

Investment in Subsidiary

lnvestment in an Associate

I 0l ,9 t 9 127 ,3967.1 39,951.,4n 41223J%

-

102.089 million and disposal therefrom at net book value were Rs.4.527

3 months ended

Dec 2014

(Rs.'000s)

720,t04

477,3t222,314

3 I,685

1,251,4t5

3 months ended

Dec 2013

(Rs.'000s)

780,306

339,993

15,348

25,530

_____IJ9UZ_

Note

6 months ended

Dec 2014

(Rs.'000s)

|,468,647

990,937

44,280

53.66 I

t {<7 {)s:Dec 2014

(Rs,'000s)

(Unaudited)

39,8 5 5,5 s3

4,674,189

243,087

6 months ended

Dec 2013

(Rs.'flXh)

I,557,396

461,402

30,742

51,02s

__lJgJg:_Jun 2014

(Rs.'000s)

(Audited)

4 I ,095,800

Jun 20t4

(Rs.'000s)

(Audited)

4,674,t89

Dec 2014

(Rs.'ffiOs)

Note (Unrudited)

8.1

__4 9)l_27j_ _4,67 4,t 8e

8.1 Pursuant to the Shareholders Agreement with Engro Powergen Limited and Thal Limited for Joint Investm€nt in Sindh Engro Coal Mining

Company Limited (SECMC), the Company invested Rs. 240 million to acquire 16,194j32 Ordinary shares having face value of Rs. l0 each at a

price of Rs. l4.82persharerepresentingshareholdingof 6.3%o. TheCompany'stotal investmentcommitmentinSECMCisUSD20millionand

the remaining amount will be invested at or soon after SECMC achieving financial close which is expected to be achieved by December 2015. The

Investment in an associate is recognised at cost less impairment losses, ifany.

Althougtr the Company has less than 20Vo equity interest in SECMC, the management believes that the significant influence over the associate

exists due to the Company's representation on the Board of Directors of SECMC and participation in policy making process by virtue ofShareholders Agreement.

9. STORES,SPARESANDCONSUMABLES

This includes material purchased for boiler rehabilitation works amounting to Rs. 444.033 million (June 2014: Rs. Nil) which will be charged to profit and

loss account when consumed.

Dec 2014

(Rs.'000s)

(Unaudited)

Jun 2014

(Rs.'00s)(Audited)

TRADE DEBTS - Secured

Considered good l0.l 93,662,695 79,879,236

l0.l ThesereceivablesincludeanoverdueamountofRs.T6,242mrllion(June20l4: Rs.6l,540million)fromWAPDAandRs.5,564million(June20 l4: Rs. 4,63 I million) from NTDC. These are not impaired because the trade debts are secured by a guarantee from the Govemment of Pakistan

(GOP) under lmplementation Agreements.

The delay in payments from WAPDA carries mark-up at State Bank of Pakistan (SBP) discount rate plus 2Yo per annum compounded semi-

annually and the delay in payment from NTDC carries mark-up at a rate of 3 month KIBOR plus 4.5% per annum compounded semi-annually.

&tn--

@€rcM,l th@!i cm|8y

ll. LONG TERM LOANS - Secured

Hub plant

Narowal plant

Laraib's investment

Musharaka agreement

Less : Current portion oflong term loans

13. SHORT TBRM BORROWINGS - Secured

Finances under mark-up arangements

Dec 201 4

(Rs,'000s)

(Unaudited)

1,907,260

r 6, I 88,658

3,733,2352.500.000

24,329,ts3 23,557,044

(3.6s8,7s l) (3,523.184)

20,670,402 20,033,860

Jun 2014

(Rs.'000s)

(Audited)

2,396,791

t6,967,7864.t92,467

I L I During the period, the Company has entered into a long term Musharaka arrangement with a bank for an amount of Rs. 2,500 million to finance

boiler rehabilitation works at Hub Plant. The facility is repayable in sixteen equal installments on quarterly basis at a mark-up rate of3 months

KIBOR plus Ll0% per annum. The mark-up is payable on quarterly basis in arrear. Any late payment by the Company is subject to a markup of

l4%o per annum. This loan is secured by way of second ranking / subordinated charge over all present and future assets (excluding land and

buildings) pertaining to Hub River Project of the Company other than: (i) assets relating to the Narowal power plant; (ii) Commercial Facility

Disbursement Account; (iii) any shares in Demerged Company (special purpose vehicle that the Company may incorporate under the laws of

Pakistan for the purpose ofconstruction, ownership, operations & maintenance ofNarowal project); and (iv) present and future shares acquired in

the Subsidiary including bonus shares and right shares.

TRADE AND OTHER PAYABLES

This includes Rs. 78,726 million (June 2014: Rs. 57,680 million) payable to Pakistan State Oil Company Limited (PSO), out of which overdue amount is

Rs. 74,879 million (June 2014: Rs. 52,608 million).

The delay in payments to PSO canies mark-up at SBP discount rate plus 2%o per unum compounded semi-annually.

Dec 201 4

(Rs,'000s)

Note (Unaudited)

Jun 201 4

(Rs.'000s)

(Audired)

l3.l to 13 3 10.040.500 16.878.1 l8

l3.l The facilities for running finance available from various banks / financial institutions amounted to Rs. 27,265 million (June 2014: Rs.25,165

million) at mark-up ranging between 0.7\oh to 3.00o/o per annum above one / three month KIBOR. The mark-up on the facilities is payable on

monthly / quarterly basis in arrear. The facilities will expire during the period from February 28, 2015 to December 31, 2015. Any late payment by

the Company is subject to an additional payment of 1.00% to 2.007o per annum above the normal mark-up rate.

l3.l.l The facilities amounting to Rs. 22,340 million (June 2014: Rs. 20,240 million) are secured by way of charge over the trade debts and

stocks ofthe Company pari passu with the existing charge.

13.1.2 ThefacilitiesamountingtoRs.4,925million(June20l4: Rs.4,925million)aresecuredbywayof:

(a) a first ranking charge on all present and future (i) amounts standing to the credit of the Energy Payment Collection Account and

the Master Facility Account, (ii) Fuel, lube, fuel stocks at the Narowal plant and Spares parts; and (iii) the Energy Payment

Receivables of Narowal plant.

(b) a subordinated charge on all present and future plant, machinery and equipment and other moveable assets of the Narowal plant

excluding; (i) the immoveable properties; (ii) Hypothecated Assets under first ranking charge; (iii) the Energy Payment Collection

Account, Working Capital Facility Accounts and the Master Facility Account; (iv) the Energy Payment Receivables; (v) all of the

Project Company's right, title and interest in the Project Documents (including any receivables thereunder); and (vi) all current

assets.

13.1.3 This includes a sum of Rs. 775 million (June 2014: Rs. 275 million) payable to an associated undertaking. The available facilities

amounted to Rs. 775 million (June 2014: Rs. 275 million). These facilities are secured by way of securities mentioned in note l3.l.l and

t3.t.2.

13.2 The Company also has Murabahah facility agreements with banks for an amount of Rs. 625 million (June 2014: Rs. 625 million) at a mark-up of2.00%oper annum above three month KIBOR. The mark-up on the facilities is payable on quarterly basis in anear. These facilities will expire on

August 29, 201 5. Any late payment by the Company is subject to an additional payment of 4.00%o per annum above the normal mark-up rate. These

facilities are secured by way ofsecurities mentioned in note 13. L2 t*/h-

@gryrh dr@8h emr87

13.3 The Company also entered into a Musharaka agreement amounting to Rs. 635 million (June 2014: Rs. 635 million) at a mark-up of 2.00%oper

annum above three month KIBOR. The mark-up on the facility is payable on quarterly basis in arrear. This facility will expire on October 31,2015.

Any late payment by the Company is subject to an additional payment of2.00Vo per annum above the normal mark-up rate. This facility is secured

by way of securities mentioned in note 13. I .2 (a).

I4. COMMITMENTS AND CONTINGENCIES

There is no material change in the status ofcontingencies and commitments as disclosed in the annual unconsolidated financial statements ofthe Company

for the year ended June 30, 20 I 4 except as follows:

l4.l In 1998, the Federal Board ofRevenue ("FBR") made assessments under section 52186 ofthe lncome Tax Ordinance, 1979 I"lTO,79"l amounting

to Rs. 1,896 million stating that the Company did not withhold tax at the time of issue of shares to sponsors against project development costs

incuned by them. The Company deposited Rs. 297 million against the above assessments in accordance with the departmental procedures prevalent

at that time. Appeals filed by the Company before the Commissioner of lncome tax (Appeals) [the "CIT (A)"] and thereafter with the Income Tax

Appellate Tribunal ("nAT") were decided against the Company. Against the decision of the ITAT, the Company filed appeals before the High

Court ("HC") which were also decided against the Company in March 2012. Against the decision of the HC, the Company filed further appeals

before the Honourable Supreme Court of Pakistan ('SCP").

In order to restrict the penal exposure ofthe Company, in May 2012 the Company availed the scheme offered by the FBR vide SRO 547(l\/2012

datedMay22,2012andmade paymentofRs. l,6l5million. InJuly20l4,theSCPdecidedthecasein favoroftheCompany.TheFBRisseekinga review ofthe SCP decision and has filed a review petition before the SCP which is pending adjudication.

(i) Under the Implementation Agreement (tA) with GOP and under the tax laws, the Company's interest income is exempt from income tax.

However, the tax authorities issued a tax demand for the tax years 2006-2010 amounting to Rs. 143 million on the grounds that interest

income from term deposits is not covered under the exemption allowed under the tax law. The Company's appeal before the

Commissioner of Inland Revenue Appeals (CIR-A) and the Appellate Tribunal Inland Revenue ("ATIR) were rejected. Against the order

of the ATIR the Company filed Income Tax Reference Applications (lTRAs) before the Honorable Islamabad High Court (lHC). The IHC

while setting aside the judgement of the ATIR remanded back the appeals to the ATIR for a fresh hearing by a new bench. The ATIR re-

heard the appeals and has decided against the Company. The Company filed appeals before the IHC which were heard during November

2014 and the judgements were reserved. The Company's maximum exposure as at December 31,2014 including the principal amount,

penalty and default surcharge is approximately Rs. 228 million.

The management and their tax and legal advisors are of the opinion that the position of the Company is sound on technical basis and

eventual outcome ought to be in favour ofthe Company. Pending the resolution ofthe matters stated above, no provision has been made in

these condensed interim unconsolidated financial statements.

(ii) FBR also imposed 2% WWF for tax years 2006-2010 and issued a demand for Rs. l9l million which was subsequently reduced to Rs. 8

million by the CIR-A. The Company's appeals filed in IHC mentioned in (i) above also included this matter. The IHC while setting aside

thejudgement ofthe ATIR remanded back the appeals to the ATIR for a fresh hearing by a new bench. The ATIR re-heard the appeals and

decided against the Company. The Company filed appeals before the IHC which were heard during November 2014 andjudgements were

reserved . The Company's maximum exposure as at December 31,2014 including the principal amount, penalty and default surcharge is

approximately Rs. l0 million.

WWF is a pass through under the PPA and is recoverable from the WAPDA. No provision has been made in these condensed interim

unconsolidated financial statements.rs any payment made by the Company is a pass through item under the PPA.

(i) Under the lA with GOP and under the tax laws, the Company's interest income is exempt from income tax, However, during March 2014,

the FBR issued tax demand for tho tax year 201I amounting to Rs. 1.2 million on the grounds that interest income from term deposits is

not covered under the exemption allowed under the tax law. Appeals filed by the Company before the CIR-A and thereafter with the ATIR

were decided against the Company. The Company filed appeal with the IHC which was heard during November 2014 and the judgements

were reserved. The Company's maximum exposure as at December 31,2014 including the principal amount, penalty and default

surcharge is approximately Rs. 3.8 million.

The management and their tax and legal advisors are of the opinion that the position of the Company is sound on technical basis and

eventual outcome ought to be in favour ofthe Company. Pending the resolution ofthe matter stated above, no provision has been made in

these condensed interim unconsolidated financial statements.

(ii) FBR also imposed 2% WWF for the tax year 201I and issued a demand for Rs. 108.5 million. Appeals filed by the Company before the

CIR-A and thereafter with the ATIR were decided against the Company. The Company filed appeal with the IHC which was heard during

November 2014 and thejudgements were reserved. The Company's maximum exposure as at December 31,2014 including the principal

amount, penalty and default surcharge is approximately Rs. I14.9 million.

WWF is a pass through under the PPA and is recoverable from WAPDA. No provision has been made in these condensed interim

unconsolidated financial statements as any payment made by the Company is a pass through item under the PPA.

L*r'7'

14.2

t4.3

@grcunh thru3fi mryr

15. RELATED PARTY TRANSACTIONS AND BALANCES

Related party comprises subsidiary, associated companies, companies where directors also hold directorship, retiremcnt benefits fund and key management

personnel. Significant transactions and balances with related parties, other than those which have been disclosed elsewhere in these condensed interimunconsolidated financial statements are as follows:

I5.l Details ofTransactions


Dec 2014 Dec 2013

Note (Rs.'Offis) (Rs.'000s)

Subsidiary

Interest income on subordinated loan

Reimbursement of expenses

Associrted Undertakings

Interest income on placement offunds

Amounts paid for the purchase of assets

Amounts paid for services rendered

Donation

Reimbursement of expense

Repayment of long term loans

Interest / mark-up on long term loans


Other finance costs

Other related parties

Other income


Repayment of short term borrowings and related mark-up

Remuneration to key management personnel

Salaries, benefits and other allowances

Retirement benefits

40.9 t 2

6,969 9,806

rs.r,r ___19291 _-___ AJJ_

Directors' fee l5.l.2 7,050 5,200

Contribution to staffretirement benefit plans --

tJJJ- --- ,t -I5.LI Transactions with key management personnel are carried out under the terms of their employment. Key management personnel are also

provided with the use ofCompany maintained automobiles and certain other benefits.

| 5. I .2 This represents fee paid to Board of Directors for attending meetings.

15.1.3 Thetransactionswithrelatedpartiesaremadeundernormal commercial termsandconditions.

I 5.2 Details of Outstanding Balances

7,248 5,989

l6,78 l

---_---.:-----.----:

'71 ))1

17 A)A

23,367

5l

327

5,000 10,000

32

635,818

351,990

3,956

t7.939

9.247

49

15,537

f-4a sl T-- 4r jzl| 3,688 I | 6,653 |

Subsidiary

Outstanding balance of subordinated loan

Interest receivable on subordinated loan

Receivable against reimbursement of expenses

Associated Undertakings

Outstanding balance of long term loans

Accrued markup on long term loans

Accrued markup on short term borrowings

Dec 201 4

(Rs.'000s)

(Unaudited)

80.395

24.085

Jun 2014

(Rs.'l[0s)(Audited)

_____qgt9l_I 6,837

t03,263

__t26sw___1eB.ll_________220J_

t'/1tu

112,478

6.788

@trora'| theftr em,t|/

Dec 2014

(Rs.'000s)

Dec 2013

(Rs.'000s)

17.

18.

16. CASH AND CASH EQUIVALENTS


Financos under mark-up arrangementsr,705,040 294.923

( 10,040,500) (t3,422,n9)(8,335,460) (t3,t27,t96)::

DIVIDEND

The Board ofDirectors declared an interim dividend forthe halfyear ended December3l,20l4 ofRs.4.00 per share, amounting to Rs.4,628:618 million,at their meeting held on February 16,2015. These condensed interim unconsolidated financial statemcnts do not reflect this dividend oavable which willbe accounted for in the period in which it is approved.

SUBSEQUENT EVENTS

I 8. I Subsequent to the period end, the Company has given notice to the Operator of its Hub Plant for the termination of the Operations & Maintenance(O&M) Agreement. As per the O&M Agreement, the Company is required to serve 12 months prior witten notice. The Company will manage theOperations & Maintenance of Hub Plant after the end of the notice period or earlier if mutually agreed upon. In the initial years, the Company mayincur additional expenditures on the operation & maintenance ofthe power plant which cannot be measured reliably at this stage.

18.2 Subsequent to the period end, one ofthe crank shaft at Narowal plant was found damaged and consequently resulted in shutdown ofone Engine.The Company's insurance policies cover this event which is subject to the final assessment and approval by the insurers. Efforts are in hand tobring the Engine back to service in the shortest possible time and it is expected that the Engine will be back in service by May 2015. The Companyis in the process offinalizing the terms for the replacement ofthis crank shaft and any financial impact cannot be measured reliably at this stage.

18.3 Under the Operation and Maintenance (O&M) agreement for the Hub plant, the Company pays fixed and variable fees to the operator. On Januaryl7'2015' the FBR passed an order amounting to Rs. 1,034 million relating to the tax years 2010 to 2013 for the recovery ofFederal Excise Duty(FED). The FBR is ofthe view that the O&M is a franchise agreement and not a service agreement and payments made thereon are in the nature oftechnical fees which are subject to FED. The Company is in the process offiling an appeal against'this order before the CIR-A.

The management and their tax and legal advisors are ofthe opinion that the position ofthe Company is sound on technical basis and eventualoutcome ought to be in favour ofthe Company. Pending the resolution ofthe matter stated above, no provision has been made in these condensedinterim unconsolidated fi nancial statements.

DATE OFAUTHORISATION

These condensed interim unconsolidated financial statements were authorised for issue on February 16, 2015 in accordance with the resolution of theBoard of Directors.

t*^rft*GENERAL

Figures have been rounded off to the nearest thousand rupees.

19.

ItL"h:,lovr*-Khalid Mansoor

Chief Executive

I

\*- -1-

*-Iqbal Alimohamed

Director

@srotid dtrugh co€rg/

THE HUB POWER COMPANY LIMITEDCONDENSED INTERIM CONSOLIDATED

PROFIT AND LOSS ACCOUNT (UNAUDITED)FOR THE HALF YEAR ENDED DECEMBER 3I,2OI4

Note

3 months ended

Dec 2014

(Rs.'000s)

33,83 l ,481

(28,826,747)

3 months ended

Dec 2013

(Rs.'000s)

40,661,436

(37,722,340)

80,58 r,307

(7 l,408,838)

79,734,448

(73,337,388)


Dec 2014 Dec 2013

(Rs.'000s) (Rs. '000s)

Tumover

Operating costs

GROSS PROFIT

General and administration expenses

Other income

Workers' profi t participation fu nd


Finance costs

PROFIT BEFORETAXATION

Taxation

PROFIT FOR THE PERIOD

Attributable to:

- Owners of the holding company

- Non-controlling interest

5,004,734

(230, r 9e)

2 t,833

2,939,096

(t74,906)

24,418

9,172,469

(4 r 9,000)

56,8 r 3

8,8 t 0,282

(3, r 7e,084)

6,397,060

(324,837\

I 00,606

4,796,368

( r,575,909)

2,788,608

( r,470, r 99)

6,172,829

(2,702,759)

3,220,459

( r,233)

|,3 18,409

(r,r60)

t,3t7 ,249

1,265,877

51,372

5,63 I, r 98

(t,742)

3,470,070

( l ,955)

3,219,226

3,074,331

I 44,895

5,629,456

5,402,88 t

226,575

3,468, I I 5

3,330,058

I 38,057

Basic and diluted eamings per share attributable

to owners of the holding company (Rupees)

The annexed notes from I to 2l form an integral part ofthese condensed interim consolidated financial statements'

1,317,249 5,629,456 3,468,1 l5

4.67

*-Iqbal Alimohamed

Director

l[^k]'l 0rrr rr---Khalid Mansoor

Chief Executive

@gDridndc'!/

THE HUB POWER COMPANY LIMITEDCONDENSED INTERIM CONSOLIDATEI)

STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

FOR THE HALF YEAR ENDED DECEMBER 3I,2OI4

3 montbs cndcd 3 months cndcd 6 months cnded 6 months;ndcd

Dcc 20t4 Dcc 2013 Dcc 2014 lloc 2013

(Rs'lXX)r) (Rs.'m0s) (Rr.'lX[s) (Rr.'lXnc)

Profit forthe period 3,219,226 1,317,249 5,629,456 3,468,115

Othcr comprebcnslvc incomc for thc pcriod

Itcrrrs thslviL not bc rcctw@to profrl or toss lnsubscquent pcrlods

Gain /(loss) on remeasurements ofpostcmploym€nt b€nefitobligption 3,797 (2,983) 527 (5,966)

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD

Attributable to:

- Ownen ofthe holding company

- Non-controlling interest

The annexed notes from I to 2l form an integral part of0resc condensed interim consolidated financial stat€ments.

3223,023 1,314266 5,629,983 3,462,149

-i-----3,078,t28 1,262,894 5,403308 3,324,092

t44.895 51,372 226,575 138,057

3ln,onffi s,6rr,gQ @

--:-i=---

lqbal Alimohamed

Director

lU^tX on"r'rnt-Khalid Mansoor

ChiefExecutive

@goidr ttrouSt ef,ctg/

THE HUB POWER COMPANY LIMITEDCONDENSED INTERIM CONSOLIDATED

BALANCE SHEETAS AT DECEMBER 3I,2OI4

Dec 2014

(Rs.'000s)

Note (Unaudited)

Jun 2014

(Rs.'000s)(Audited)

ASSETS

NON-CURRENT ASSETSFixed Assets

Property, plant and equiPment

Intangibles


Long term deposits and prepayments

CURRENT ASSETS

Stores, spares and consumables

Stock-in-trade

Trade debts

Advances, deposits, prepayments and other receivables


TOTAL ASSETS

EOUITY AND LIABILITIES

SHARE CAPITAL AND RESERVE

Share CapitalAuthorised

Issued, subscribed and Paid-uP

Revenue Reserve


Attributable to owners of the holding company

NON-CONTROLLING INTEREST

NON-CURRENT LIABILITIESLong term loans

Liabilities against assets subject to finance lease

Deferred liability

CURRENT LIABILITIESTrade and other payables

Interest / mark-up accrued

Short term borrowings

Current maturity of long term loans

Current maturity of liabilities against assets subject to

finance lease

COMMITMENTS AND CONTINGENCIES

TOTAL EQUITY AND LIABILITIES

169,473,502 t 55.204.834

59,425,052

1,420,419

243,087

3l,898

60,866,502

1,425,953

34,822

l0

l2,000,000 12,000,000

11 ,571 ,544

21,543,374

I t,571,544

22,318,164

33,889,708

| ,7 13,369

33,114,918

1,486,794

il

35,603,077

31,075,620

3,0 l 8,696

5,513

34,601,712

30,859,272

3,113,527

4,900

63,095,616

|,688,275

16,878,1 l84,660,612

86,625,423

l2

l3n

l4

t69.473.502 I 55,204,834

The annexed notes from I to 2l form an integral part ofthese condensed interim consolidated financial statements.

Itl"tJ r!'rqnr-Khalid Mansoor

Chief Executive

Vr-Iqbal$ffitm-cdr

Director

2,28t,7303,394,594

94,781,642

3,365,588

4,529,492

r 08.353.046

1,703,764

2,3 88,43 5

80,938,582

2,831, t 38

5,01 5,63 8

92,877,557

82,994,443

I,6 r r,705

t 0,040,500

4,8t4,502

309,446

99,770,596

@grcrti thrugfi encryy

THE HUB POWER COMPANY LIMITEDCONDENSED INTERIM CONSOLIDATEDCASH FLOW STATEMENT (UNAUDITED)


Note

6 months ended

Dec 2014

(Rs.'000s)

5,63 1 ,1 98

|,829,288

5,534

(77e)

10,914

(53,676)

2,980,897

78,972

6 months ended

Dec 2013

(Rs.'0fi)s)

3,470,070

| ,81 8,585

9,850

I

8,467

(79,609)

2,580,023

41,970

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation

Adjustments for:

Depreciation

Amortisation(Gain) / loss on disposal offixed assets

Staff gratuity

Interest income

Interest / mark-uP

Amortisation of transaction costs

Operating profit before working capital changes

Working capital changes

Cash generated from / (used in) operations

Interest received

Interest / mark-up paid

Taxes paid

Net cash generated from / (used in) operating activities

CASH FLOWS FROM II\IVESTING ACTIVITIES

Fixed capital expenditure

Proceeds from disposal offixed assets


Long term advance, deposits and prepayments

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid to owners of the holding company

Proceeds from long term loans

Repayment of long term loans - Hub plant

Repayment of long term loans - Narowal plant

Repayment of long term loans - Laraib's investment

Repayment of long term loans - Subsidiary

Repayment of liabilities against assets subject to finance

lease - Subsidiary

Net cash used in financing activities

Net increase / (decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning ofthe period

Cash and cash equivalents at the end ofthe period

| 0,482,348

3,932,552

7,849,357

(23,293,297)

r 4,4 14,900

46,431

(3,0s7,467)(6,283)

( r 5,443,940)

89,925

(3,03 r,002)(4,403)

I1,397,581

( r 63,320)

5,307

(243,087)

2,924

( l 8,389,420)

(r 32,506)

2,8s1

(2,102)

(398, r 76)

(4,62t,966)

2,500,000(489,53 l )(809,360)

(473,280)

(602,605)

(r5r,r9t)

(r 3 r,7s7)

(s,1 90,1 46)

(489,53 I )(6e6, r 00)

(43 r,660)

(l r 3,605)

(4,647,933) (6,92t,042)

6,351,472

(r r,862,480)

t7 (s,5 r 1,008): (l 1,590,473)

The annexed notes from I to 2l form an integral part ofthese condensed interim consolidated financial statements.

(2s,442,2t9)

13,851 ,746

tlt-t)$ o*r'r.c't-Khalid Mansoor

Chief Executive

rcaurffiDirector

@gmwth throuSft cnergy

THE HUB POWER COMPANY LIMITED

CONDENSED INTERIM CONSOLIDATEDSTATEMENT OF CHANGES IN EQUITY (UNAUDITED)


6 months ended

Dec 2014

(Rs.'000s)

6 months ended

Dec 2013

(Rs.'000s)


Issued capital


Balance at the end of the period




Transactions with owners in their capacity as owners

Final dividend for the fiscal year 2013-2014 @ Rs. 4.00

(2012-2013: @ Rs. 4.50) per share



Non-controlling interest




Total equity

The annexed notes from 1 to2l form an integral part ofthese condensed interim consolidated financial statements.

11 ,57 1 ,544 11,571,544

11,571,544 n,571,544

21,543,374

5,403,408

4,628,618)(4,628,618)

22,168,390

3,324,092

(s I

(5,207,195)

22,318,164 20,285,287

33,889,708 31,856,831

7,486,794

226,575

1,159,273

138,057

1,713,369 1,297,330

35,603,077 33,1 54,1 6 1

l[^,lal or''rT l'--Khalid Mansoor

Chief Executive

lqbalfiffifiififi-Director

@grcwl'| ti.ouSn ffryy

THE HUB POWER COMPANY LIMITEDNOTES TO THE CONDENSED INTf,RIM CONSOLIDATED

FINANCIAL STATEMENTS (UNAUDITED)FOR THE HALF YEAR ENDED DECEMBER 3I,20I4

I. STATUSAND NATURE OF BUSINESS

The Hub Power Company Limited (the "holding company") was incorporated in Pakistan on August l, l99l as a public limited company under the

Companies Ordinance, 1984 (the "Ordinance"). The shares ofthe holding company are listed on the Karachi, Lahore and lslamabad Stock Exchanges and

its Global Depository Receipts are listed on the Luxembourg Stock Exchange. The principal activities ofthe holding company are to develop, own, operate

and maintain power stations. The holding company owns an oil-fired power station of 1,200 MW (net) in Balochistan (Hub plant) and a 214 MW (net) oil-

fired power station in Punjab (Narowal plant).

The Group consists of:

. The Hub Power Company Limited (the holding company); and

. Laraib Energy Limited (the subsidiary) - Holding of 74.95%.

The subsidiary was incorporated in Pakistan on August 9, 1995 as a public limited company under the Companies Ordinance, 1984. The subsidiary owns a

84 MW hydropower generating complex near the New Bong Escape, which is 8 km downstream of the Mangla Dam in Azad Jammu & Kashmir. The plant

commenced operations on March 23,2013. As per the terms of the PPA, the Reference Tariff approved by the National Electric Power Regulatory

Authority (NEPRA) is to be adjusted at Commercial Operation Date (COD) and the subsidiary is in the process of obtaining tariff adjustment from

NEPRA. The prior period results include the results of operations on the basis of reference tariff approved by NEPRA. During the period, NEPRA

approved indexation ofO&M components oftariffand accordingly revenue related thereto have been recognized. Differential amount ofrevenue due to

tariffadjustment on the remaining components will be recognized in the subsequent period.

Proposed Nrrowal Demerger

Under the tax laws of Pakistan, if Narowal were demerged into a separate legal entity, it would have lost its tax exempt status from taxation on the income

fiom power generation as is the case now and in line with the government's policy for IPPs which are exempt from taxation on the income fiom power

generation. The holding company requested the PPIB for the appropriate changes in the tax laws so that Narowal could be demerged into a separate legal

entity. During the period, the holding company has received the Economic Coordination Committee's (ECC) approval for the changes in tax laws to be

incorporated enabling the holding company to demerge Narowal into a separate legal entity having the same tax exempt status, after demerger, as it enjoys

now. While appropriate changes in the tax laws are still to be made by Federal Board of Revenue (FBR), the holding company has started the process to

demerge Narowal into a separate legal entity. It is expected that this process will be completed by December 2015.

SIGNIFTCANT ACCOUNTING POLICIES

The accounting policies and methods ofcomputation followed for the preparation ofthese condensed interim consolidated financial statements are same as

those applied in preparing the annual consolidated financial stalements for the year ended June 30, 2014.

BASIS OF PREPARATION

These unaudited condensed interim consolidated financial statements for the half year ended December 3l, 2014 have been prepared in accordance with

the requirements of IAS 34 "lnterim Financial Reporting" and provisions of and directives issued under the Ordinance. In case requirements differ, the

provisions ofand directives issued under the Ordinance have been followed.

These condensed interim consolidated financial statements do not include all the information and disclosures as required in the annual consolidated financial

statements and should be read in conjunction with the holding company's annual consolidated financial statements for the year ended June 30, 2014

3 months ended 3 months ended 6 months ended 6 months ended

Dec 2014 Dec 2013 Dec 2014 Dec 2013

(Rs.'fiXh) (Rs.'fiXh) (Rs.'fiXh) (Rs"fiXh)

OPERATING COSTS

Fuel cost

Water use charges

Stores and spares

Operation and Maintenance

lnsurance

Depreciation

Amortisation

Repairs, maintenance and other costs

WORKERS' PROFIT PARTICIPATION FUND

Provision for Workers' profit participation fund

Workers' profit participation fund recoverable

from WAPDA / NTDC

------:--------

--=-The hofding company is required to pxy 5o/o of its profit to the Workers' profit participation fund (the "Fund"). However, such payment does not affect the

holding company's overall profitability because after payment to the Fund, the holding company bills this to WAPDA / NTDC as a pass through item under

the PPAs.

28,826J47 37,722,340 7l,408,838 73,337,388::::

26,356,347 34,682,921

22,09t 20,925

57,061 116,925

990,524 1,040,987

229,748 274,131

885,426 896,77 |

2,683 4,109

282.867 685,s71

66,37732035,904

l I 5,680

2,112,021

463,693

I ,813, I 88

5,366

485,666

23't,326

(217,326)

67,674,726

3 l,000222,720

2,055,850

542,246

r,804,3 l69,429

997,l0l

132,597

(t32,5e7)

66,416

(66,4 l 6)

174,494

(t74.4e4)

@g@dt 6rou8tr .cr&/


Dec2014 Dec 2013

(Rs.'lXXh) (Rs.'fiXls)


Dec 20t4 Dec 2013

(k.'fiXh) (Rs.'fiXh)

6. FINANCECOSTS

lnterest / mark-up on long term loans

lnterest on finance lease


Amortisation of transaction costs

Other finance costs

7, PROPERTY, PLANT AND EQUIPMENT

Operating property, plant and equipment

Capital work-in-progress

Holding company

Subsidiary

10. TRADE DEBTS - Secured

Considered good

936,28'7

44,952

477,3t239.025

I ,010,04949,7 t4

339,993

26,576

t,900,320

89,640

990,937

78,972

I19,215

2,019,206

99,415

46t,4024t,97080.76678,333 43,867

1.575,909 1,470,199 ____3.t7 9 W_ __*_2 J n.? 9_

Dec 2014 Jun 2014

(Rs.'fiXh) (Rs.'fiXh)(Unaudited) (Audited)

59,205,7s4 60,665,680

f- ror,rtrl l--trJJxl| il7,37e | 1 73,426

1

7, ffi.ffi7.1 Additions to prop€rty, plant and equipment during the period were Rs. 163.320 million and disposal therefrom at net book value were Rs. 4.528

million.

INVESTMENT IN AN ASSOCIATE

During the period, the holding company entered into a Shareholders Agreement with Engro Powergen Limited and Thal Limited for Joint Investment in

Sindh Engro Coal Mining Company Limited (SECMC). The holding company has invested Rs. 240 million to acquire 16,194,332 Ordinary shares having

face vafue of Rs. l0 each at a price of Rs. 14.82 per share representing shareholding of 6.3%. The holding company's total investment commitment in

SECMC is USD 20 million and the remaining amount will be invested at or soon after SECMC achieving financial close which is expected lo be achieved

by December 2015. The investment in an associate will be accounted for under equity method ofaccounting. As the acquisition took placejust before the

end ofthe period, therefore there was no impact ofchange in net assets acquired at the reporting date.

Although the holding company has less than 20o/oequity interest in SECMC, the management of the holding company believes that the significant influence

over the associate exists due to the holding company's representation on the Board of Directors of SECMC and participation in policy making process by

virtue of Shareholders Agreement.

STORES. SPARES AND CONSUMABLES

This includes material purchased by the holding company for boiler rehabilitation works at Hub plant amounting to Rs.444.033 million (June 2014: Rs.

Nil) which will be charged to profit and loss account when consumed.

Dec 2014

(Rs.'fiXh)

Note (Unaudited)

Jun 2014

(Rs.'fift)(Audited)

10. I 94,781,642 80,938,582

t0.l These receivables include an overdue amount of Rs.76,242 million (June 2014: Rs.61,540 million) from WAPDA and fu' 6,048 million (June

2014: Rs. 4,276 million) from NTDC. These are not impaired because the trade debts are secured by a guarantee from the Govemment of Pakistan

(GOP) under lmplementation Agreements.

The delay in payments from WAPDA canies mark-up at State Bank of Pakistan (SBP) discount rate plus 2%o per annum compounded semi-annually

and the delay in payments from NTDC canies mark-up at a rate of three / six month KIBOR plus 2Vo to 4.5%o per annum compounded semi-

@8rcwdr l,|@8it crc.p,

LONG TERM LOANS - Secured

Holding company

Hub plant

Narowal plant

Laraib's investment

Musharaka agreement

Less : Cunent portion of long term loans

Long term loans ofthe holding company

Subsidiary

Laraib plant

Less : Current portion oflong term loans

Long term loans ofthe subsidiary

13. SHORT TERM BORROWINGS - Secured

Finances under mark-up alTangements

Dec 2014

(Rr.'{XXh)

(Unaudited)

t,907,26016, I 88,658't ?11 ?15

2,500,000

Jun 2014

(Rs.'UXh)(Audited)

2,396,791

t6,967,786

4,192,467

24,329,153

(3,658,75 l )

23,557,044

(3,s23, l 84)

20,033,860

10,405,218

@ll.l During the period, the holding company has entered into a long term Musharaka arrangement with a bank for an amount of Rs.2,500 million to

finance boiler rehabilitation works at Hub Plant. The facility is repayable in sixteen equal installments on quarterly basis at a mark-up rate of 3

months KIBOR plus I . l0% per annum. The mark-up is payable on quarterly basis in anear. Any late payment by the holding company is subject to

a markup of l4o/o per annum. This loan is secured by way of second ranking / subordinated charge over all present and future assets (excluding land

and buildings) pertaining to Hub River Project of the holding company other than: (i) assets relating to the Narowal power plant; (ii) Commercial

Facility Disbursement Account; (iii) any shares in Demerged Company (special purpose vehicle that the holding company may incorporate under the

laws of Pakistan for the purpose of construction, ownership, operations & maintenance of Narowal project); and (iv) present and future shares

acquired in the subsidiary including bonus shares and right shares.

I2. TRADE AND OTHER PAYABLES

This includes Rs. 78,726 million (June 2014: Rs. 57,680 million) payable to Pakistan State Oil Company Limited (PSO), out of which overdue amount is

Rs. 74.879 million (June 2014: Rs. 52,608 million).

The delay in payments to PSO canies mark-up at SBP discount rate plus 2%o per annum compounded semi-annually.

l3.l Thefacilitiesforrunningfinanceavailabletotheholdingcompanyfromvariousbanks/financial instilutionsamountedtoRs.2T,265million(June

2014: Rs. 25,165 million) at mark-up ranging between 010%to 3.00% per annum above one / three month KIBOR, The mark-up on the facilities is

payable on monthly / quarterly basis in arrear. The facilities will expire during the period from February 28, 2015 to December 31,2015. Any late

payment by the holding company is subject to an additional payment of 1.00% to 2.00Vo per annum above the normal mark-up rate.

l3.l.l The facilities amounting to Rs. 22,340 million (June 2014: Rs. 20,240 million) are secured by way of charge over the trade debts and

stocks ofthe holding company pari passu with the existing charge.

13.1.2 ThefacilitiesamountingtoRs.4,925million(June20l4: Rs.4,925million)aresecuredbywayof:

(a) a first ranking charge on all present and future (i) amounts standing to the credit of the Energy Payment Collection Account and the

Master Facility Account, (ii) Fuel, lube, fuel stocks at the Narowal plant and Spares parts; and (iii) the Energy Payment Receivables

of Narowal plant.

(b) a subordinated charge on all present and future plant, machinery and equipment and other moveable assets ofthe Narowal plant

excluding; (i) the immoveable properties; (ii) Hypothecated Assets under first ranking charge; (iii) the Energy Payment Collection

Account, Working Capital Facility Accounts and the Master Facility Account; (iv) the Energy Payment Receivables; (v) all of the

Project Company's right, title and interest in the Project Documents (including any receivables thereunder); and (vi) all current

assets.

13.1.3 This includes a sum of Rs. 775 mitlion (June 2014: Rs. 275 million) payable to an associated undertaking of the holding company. The

available facilities amounted to Rs. 775 million (June 2014: Rs. 275 million). These facilities are secured by way of securities mentioned in

note 13.l.l and 13.1.2.

|ttse-o,r?tl| (l.lss.75l)l I (1,137,428)l

t0,82s,4t2

@

Dec 2014 Jun 2014

(Rs.'fiXh) (Rs.'fixh)

Note (Unaudited) (Audited)

13 rto 13 3 __J_0,040J99- _l_q!ZgJI_

@tbrydr ttrouth cerg/

13.2 TheholdingcompanyalsohasMurabahahfacilityagreementswithbanksforanamountofRs.625million(June20l4: Rs.625million)atamark-up of 2.00% per annum above three month KIBOR. The mark-up on the facilities is payable on quarterly basis in arrear. These facilities will expireon August 29, 2015. Any late payment by the holding company is subject to an additional payment of 4.00o/o per annum above the normal mark-uprate. These facilities are secured by way ofsecurities mentioned in note |3. L2.

13.3 The holding company also entered into a Musharaka agreement amounting to Rs. 635 million (June 2014: Rs. 635 million) at a mark-up of 2.00%o

per annum above three month KIBOR. The mark-up on the facility is payable on quarterly basis in arrear. This facility will expire on October 31,

2015. Any late payment by the holding company is subject to an additional paymenl of 2.00%o per annum above the normal mark-up rate. Thisfacility is secured by way ofsecurities mentioned in note I 3. I .2 (a).

I4. COMMITMENTS AND CONTINGENCIES

There is no material change in the status of contingencies and commitments as disclosed in the annual consolidated financial statemenls of the holdingcompany for the year ended June 30, 2014 except as follows:

l4.l In 1998, the Federal Board ofRevenue ("FBR") made assessments under section 52186 ofthe Income Tax Ordinance, 1979 ["1TO,79"1 amountingto Rs. 1,896 million stating that the holding company did not withhold tax at the time of issue of shares to sponsors against project developmentcosts incurred by them. The holding company deposited Rs. 297 million against the above assessments in accordance with the departmentalprocedures prevalent at that time. Appeals filed by the holding company before the Commissioner of Income tax (Appeals) [the "CIT (A)"] and

thereafter with the Income Tax Appellate Tribunal ("|TAT') were decided against the holding company. Against the decision of the ITAT, the

holding company filed appeals before the High Court ("HC") which were also decided against the holding company in March 2012. Against the

decision of the HC, the holding company filed further appeals before the Honourable Supreme Court of Pakistan ("SCP").

In order to restricl the penal exposure ofthe holding company, in May 2012 the holding company availed the scheme offered by the FBR vide SRO547(l)/2012 dated May 22,2012 and made payment of Rs. 1,615 million. In July 2014, the SCP decided the case in favor of the holding company.The FBR is seeking a review ofthe SCP decision and has filed a review petition before the SCP which is pending adjudication.

Under the Implementation Agreement (tA) with GOP and under the tax laws, the holding company's interest income is exempt fromincome tax. However, the tax authorities issued a tax demand for the tax years 2006-2010 amounting to Rs. 143 million on the grounds thatinterest income from term deposits is not covered under the exemption allowed under the tax law. The holding company's appeal before theCommissioner of Inland Revenue Appeals (CIR-A) and the Appellate Tribunal Inland Revenue C'ATIR) were rejected. Against the orderof the ATIR the holding company filed Income Tax Reference Applications (lTRAs) before the Honorable Islamabad High Court (lHC).The IHC while setting aside thejudgement ofthe ATIR remanded back the appeals to the ATIR for a fiesh hearing by a new bench. TheATIR re-heard the appeals and has decided against the holding company. The holding company filed appeals before the IHC which wereheard during November 2014 and the judgemens were reserved. The holding company's maximum exposure as at December 31,2014including the principal amount, penalty and default surcharge is approximately Rs. 228 million.

The management and their tax and legal advisors are of the opinion that the position of the holding company is sound on technical basisand eventual outcome ought to be in favour of the holding company. Pending the resolution of the matters stated above, no provision has

been made in these condensed interim consolidated financial statements.

FBR also imposed 2o/oWWF for tax years 2006-2010 and issued a demand for Rs. l9l million which was subsequently reduced to Rs. 8million by the CIR-A. The holding company's appeals filed in IHC mentioned in (i) above also included this matter. The IHC while settingaside the judgement of the ATIR remanded back the appeals to the ATIR for a fresh hearing by a new bench. The ATIR re-heard theappeals and decided against the holding company. The holding company filed appeals before the IHC which were heard during November2014 andjudgements were reserved . The holding company's maximum exposure as at December 31,2014 including the principal amount,penalty and default surcharge is approximately Rs. l0 million.

WWF is a pass through under the PPA and is recoverable from the WAPDA. No provision has been made in these condensed interimconsolidated financial statements as any payment made by the holding company is a pass through item under the PPA.

Under the I-A with GOP and under the tax laws, the holding company's interest income is exempt from income tax. However, duringMarch 2014, the FBR issued tax demand for the tax year 201I amounting to Rs. 3.2 million on the grounds that interest income from lermdeposits is not covered under the exemption allowed under the tax law. Appeals filed by the holding company before the CIR-A andthereafter with the ATIR were decided against the holding company. The holding company filed appeal with the IHC which was heardduring November 2014 and thejudgements were reserved. The holding company's maximum exposure as at December 31,2014 includingthe principal amount, p€nalty and default surcharge is approximately Rs. 3.8 million.

The management and their tax and legal advisors are ofthe opinion that the position ofthe holding company is sound on technical basisand eventual outcome ought to be in favour ofthe holding company. Pending the resolution ofthe matter stated above, no provision has

been made in these condensed interim consolidated financial statements.

FBR also imposed 2o/o WWF for the tax year 201I and issued a demand for Rs. 108.5 million. Appeals filed by the holding companybefore the CIR-A and thereafter with the ATIR were decided against the holding company. The holding company filed appeal with the IHCwhich was heard during November 2014 and the judgements were reserved. The holding company's maximum exposure as at December

31,2014 includingtheprincipalamount,penaltyanddefaultsurchargeisapproximatelyRs. ll4.9million.

WWF is a pass through under the PPA and is recoverable from WAPDA. No provision has been made in these condensed interimconsolidated financial statements as any payment made by the holding company is a pass through item under the PPA.

(i)t4.2

( ii)

(i)t4.3

(ii)

@gwth |Jrtugh ercrgf

I5. SEGMENT INFORMATION

I5.I SEGMENT ANALYSIS

The unallocated items of profit and loss relate to

represent amounts payable in respect of investment

Turnover

Operating costs

GROSS PROFIT


Other income



Finance costs

PROFIT BEFORE TAXATION

Taxation


Turnover

Operating costs

GROSS PROFIT


Other income



Finance costs


Taxation


Tumover

Operating costs

GROSS PROFIT


Other income

Workers' profi t particrpation fu nd


Finance costs


Taxation


costs incuned by the holding company for investment in the subsidiary. The unallocated liabilities

in the subsidiary' 3 months ended Dec 2014 .,....,,...,...

Hub plant Nrrowal plant Larrib plant Unrllocrtcd Total

. (Rs.'000s)

26,081,282 6.484.199

(23,5t7,397) (4,9s7,437)

I,266,000

(35r,913)

- 33,831,481

(28,826,747)

2,563,885

(t64,243)

7,477

2,407,t t9

(386,30r )

t,526,762

(36,369)

2,079

9t4,087

(2e,se7)

t2.277

l0

s,004,734

(230, | 99)

2 | ,833

|,492,472

(738, r 34)

896,767

(324,4e4)

l0 4,796,368

(r26,980) (1,s7s,909)

3,220,4s9

(t.233)

7 54,338

(7 t4)

572,273 (t26,970)

(41l)

2,020,7t0 753,624 572,273 (127,381) 3,219,226

....3 months ended Dec 2013...............

Hub plant Narowal plant Laraib plant Unallocated Totrl

(Rs.'000s)

32,045,263 7,719,710

(30,56s,936) (6,783,749)

896,463

(372.655)

40,66t,436

(37,722,340)

|,479,]27

( | 08,623)

I 0,578

1,38t,282

(322,s60)

tpsSJn

o15 06 |

(38,s30)

2,876

523,808

(27,4s't)

10,964 24,418

,J88"608

( r,470,1 99)

I ,3 r 830'

- 2,939,096

(296) (t74,e06)

900,307

(7t2,192)

507,3 I 5

(]09,022)

(2e6)

(t26,425)

188,1 l5

(et2)

198,293 (126,721)

- (248) (1,160)

|.oslJ'2 l si2o3 198293 @6,%r\ |,3t7,249

6 months ended Dec 2014 ...............

Hub phnt Narowal plant Laraib plrnt Unallocatcd Total

64,2 r 8,1 90 14.|0t.419 2.261.698 - 80.581,307

- (7 I,408,838)(s9,368,r64) (l r,301,6r0) (738,864)

4,|/.r,816

(304,886)

8,702

4,553,64'

(7s0,0 l 2)

3"803r30

(108)

1 en2 <tt:

2,799,809

(60,589)

'l ost

|,522,834

(53,s02)

44.159

(23)

9,172,469

(4 r e,000)

56,8 r3

2,'t43,172

( l ,s40,489)

I ,5 I 3,491

(62 l,ss9)

(23) 8,810,282

(267,024) (3,r79,084)

|,202,683

(8e8)

89 I ,932 (267,047) s,63 r, r98

(736) (t,742)

5,629,4561.20r.78s 891,932 (267,783)

@srow$ th@gtr dErgt

6 months cndcd Dec 20t3 ......,..,....,

Hub plrnt Nerowrl plrnt Lrraib plent Unrllocatcd Tolll

........ (Rs.'000s) ............

Tumover

Operating costs

GROSS PROFIT


Other income

Workers' profit participation fund

PROFIT FROM OPERATTONS

Finance costs


Taxation


SEGMENT ASSETS & LIABILITIES

TOTAL ASSETS

TOTAL LIABILITIES

TOTAL ASSETS

TOTAL LIABILITIES

63,110,610 t4,709,662

(s9,8s2,719) (t2,739,44t)

|,914,176

(745,228)

79,734,448

(73,337,388)

32s?,891

(2 l 3,865)

59,474

3,r03J00

(477,364)

= z,olo, I Jo

|,970,221

(46,638)

6,836

| , | 68,948

(63,74t)

34,296

l,930,419

(t,370,244)

l, I 39,503

(602,t94)

(se3)

6,397,060

(324,837\

l 00,606

(593) 6,t72,829

(2s2,9s7) (2,702,7se)

s60,l7s 537,309

( l,s37)

(2s3,550) 3,470,070

(4r8) (l,ess)

2,626,t36 ss8r38 s3?J0' (2s3,r6s") 3/6qt ts

(Unaudited)

Dec 2014

Hub plent Nerowat plant Lrrrib plant Unrllocrted Totel

(Rs.'000s)

u3,734,224 30,698,26t 25,040,154 863 169,473,502

9l,640,926 22,683,262 t5,707,373 3,838,864 t33,870,42s

-

: :(Audited)

Jun 2014

Hub plrnt Nrrowal plant Laraib plant Unrllocrted Total

(Rs.'000s)

9s,902,749 34,6s4,t02 24,647,693 290 15s,204,834

74,025,071 26,051,673 16,216,059 4,310,319 120,603,122

@Irasdtr tn@8fi crcr8/

I6. Rf,LATED PARTY TRANSACTIONS AND BALANCES

Related party comprises associated companies, companies where directors also hold directorship, retiremenl benefits fund and key management personnel.

Significant transactions and balances with related parties, other than those which have been disclosed elsewhere in these condensed interim consolidated

financial statements are as follows:

16.1 Detaih ofTransactions6 months ended 6 months ended

Dec 2014 Dec 2013

Note (Rr.'fiXh) (Rs.'fiXh)

Associated Undertakings

Interest income on placement of funds

Amounts paid for the purchase of assets

Amounts paid for services rendered

Donation

Reimbursement of expense

Repayment of long term loans

lnterest / mark-up on long term loans

Mark-up on short term borrowings

Other finance costs

0ther relrted parties

Other income


Repayment of short term bonowings and related mark-up

Remuneration to key management personnel

Salaries, benefits and other allowances

Retirement benefits

Directors'fee

Contribution to staffretirement benefit plans

Associrted Undertakings

Outstanding balance of long term loans

Accrued markup on long term loans

Accrued markup on short term borrowings

t7.939

9,247

6,969 9,806

5,000 10,000

32

1) 1)1

77,624

)1 141

5l

635,8 I 8

35 t,990

3,956

I 1,084

327

49

t5 <17

16. l. I

t6.t.2

Dec 2014

(Rs.'fiXh)(Unaudited)

_t,tn,8n_3 8,071

6.788

Jun 2014

(Rs.'fiXh)(Audited)

_t26s962_

-______124t_2,207

I 6112r I l- r.nrl| +,soall t.totl

65,985 60,534

9,050 7,200

7,39t 4,730

16,LI Transactions with key management personnel are carried out under the terms of their employment. Key management personnel are also

provided with the use of Company maintained automobiles and certain other benefits.

16.1.2 This represents fee paid to Board ofDirectors for attending meetings.

16. I .3 The transactions with related parties are made under normal commercial terms and conditions.

16.2 Details of Outstanding Balances

@srqitrf| ftdrgfi *rrt

17. CASH AND CASH EQUIVALENTS


Finances under mark-up arrangements

DIVIDEND

The Board ofDirectors ofthe holding company declared an interim dividend for the halfyear ended December 31, 2014 ofRs. 4.00 per share, amounting tofu. 4,628.618 million, at their meeting held on February 16,2015. These condensed interim consolidated financial statements do not reflect this dividendpayable which will be accounted for in the period in which it is approved.

SUBSEQUENT EVENTS

l9.l Subsequent to the period end, the holding company has given notice to the Operator of its Hub Plant for the termination of the Operations &Maintenance (O&M) Agreement. As per the O&M Agreement, the holding company is required to serve 12 months prior written notice. Theholding company will manage the Operations & Maintenance of Hub Plant after the end of the notice period or earlier if mutually agreed upon. Inthe initial years, the holding company may incur additional expenditures on the operation & maintenance of the power plant which cannot bemeasured reliably at this stage.

19.2 Subsequent to the p€riod end, one ofthe crank shaft at Narowal plant was found damaged and consequently resulted in shutdown ofone Engine.The holding company's insurance policies cover this event which is subject to the final assessment and approval by the insurers. Efforts are in handto bring the Engine back to service in the shortest possible time and it is expected that the Engine will be back in service by May 2015. The holdingcompany is in the process offinalizing the terms for the replacement ofthis crank shaft and any financial impact cannot be measured reliably at thisstage.

19,3 Under the Operation and Maintenance (O&M) agreement for the Hub plant, the holding company pays fixed and variable fees to the Operator. OnJanuary 17, 2015, the FBR passed an order amounting to Rs. I ,034 million relating to the tax years 20 | 0 to 2013 for the recovery of Federal ExciseDuty (FED). The FBR is of the view that the O&M is a franchise agreement and not a service agreement and payments made thereon are in thenature oftechnical fees which are subject to FED. The holding company is in the process of filing an appeal against this order before the CIR-A.

The management and their tax and legal advisors are ofthe opinion that the position ofthe holding company is sound on technical basis and eventualoutcome ought to be in favour of the holding company. Pending the resolution of the matter stated above, no provision has been made in thesecondensed interim consolidated financial statements.

DATE OF AUTHORISATION

These condensed interim consolidated financial statements were authorised for issue on February 16,2015 in accordance with the resolution ofthe Board ofDirectors of the holding company.

GENERAL

Figures have been rounded offto the nearest thousand rupees.

21.

Dec 2014 Dec 2013

(k.'fiXls) (R!.'fiXh)

4,529,492 l,83 r,646(r0,040,500) (t3,422,u9)

__(5J.lt99Q_ _( l t,5eo,4?:).

IMDirector

[t^l.til 0rel,rlr-Khalid Mansoor

Chief Executive

18.

t9.