| JAPAN POWER GENERATION LIMITED |
|
|
|
|
|
|
|
|
| Annual
Reports 2002 |
|
| |
| Contents |
|
| |
|
| Company Information |
|
| Notice of the Meeting |
|
| Directors
'Report |
|
| Auditors
'Report |
|
| Balance
Sheet |
|
| Profit and Loss Account |
|
| Cash Flow Statement |
|
| Statement of Changes in Equity |
|
| Notes to the Accounts |
|
| Pattern of Shareholdings |
|
| Categories of Share Holders |
|
| Form of Proxy |
|
| |
|
| COMPANY
INFORMATION |
|
| |
|
| BOARD
OF DIRECTORS |
|
| Mr. ZAFAR MAHMOOD |
(Chief Executive) |
|
| SHEIKH NAZAZALI |
(Chairman) |
|
| Mr. HASEEB KHAN |
|
| Mr. ASAD
ALI UPPAL |
|
| Mr.AKHTARALI
UPPAL |
|
| Mr. FAISAL
QAMAR UPPAL |
|
| Mr.SAITOYOSHIHIRO |
|
| Mr. TAKASHI
KABURAGI |
|
| Mr.
MUHAMMAD ALI |
|
| Mr. KHALID
IMRAN |
|
| Mr. MAHMOOD
AHMED |
|
| SYED
MAJEEDULLAH HUSAINI |
|
| SHEIKH
MAHMOOD ALI |
|
| Mrs. SAMINA
ZAFAR |
|
| COMPANY
SECRETARY SYED ZAFAR HAIDER |
|
| |
|
| COMPANY'S AUDIT |
|
| COMMITTEE |
|
| |
|
| Mr. HASEEB KHAN (Chairman) |
|
| SHEIKH MAHMOOD ALI |
|
| Mr. FAISAL QAMAR UPPAL |
|
| Mrs. SAMINA
ZAFAR |
|
| |
|
| AUDITORS |
|
| HYDERBHIMJI&CO., |
|
| CHARTERED
ACCOUNTANTS |
|
| & |
|
| JAVAID
JALAL AMJAD & CO., |
|
| CHARTERED
ACCOUNTANTS |
|
| |
|
| LEGAL ADVISORS |
|
| WALKER MARTINEAU |
|
| SALEEM |
|
| |
|
| BANKERS |
|
| PRIME COMMERCIAL BANK LTD. |
|
| ASKARI COMMERCIAL BANK LTD. |
|
| ALLIED BANK
OF PAKISTAN LTD. |
|
| |
|
| REGISTERED
OFFICE |
|
| 26,
PESHAWAR BLOCK, FORTRESS STADIUM, |
|
| LAHORE CANTT. |
|
| TEL:
+92-42-6668156-57 FAX: +92-42-6664625 |
|
| |
|
| PLANT LOCATION |
|
| JIA BAGGA
RAILWAY STATION |
|
| RAIWIND
ROAD, DISTRICT LAHORE. |
|
| TEL:
+92-42-5835864-68 FAX: +92-42-5835860 |
|
| |
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| Notice
is hereby given that the 8"'Annual General Meeting of the members of
Japan Power Generation Limited |
|
| will
be held on Wednesday, the 30"' October 2002 at 11:00 a.m. at plant site
located at Khan-e-Nepal Road, Near Jia |
|
| Bagga
Railway Station, Raiwind Road, District Lahore to transact the following
business: |
|
| |
|
| 1. To confirm the minutes of the lastAnnual
General Meeting held on December 31,2001. |
|
| |
|
| 2. To receive, consider and adopt the
audited accounts of the company for the financial year ended June |
|
| 30,2002
together with the Auditors' and Directors' Reports thereon. |
|
| |
|
| 3. To appoint Auditors of the company for
the year ending June 30, 2003 and fix their remuneration. |
|
| |
|
| 4. To transact any other business that may
be placed before the meeting with the permission of the chair. |
|
| |
|
| For and
on behalf of |
|
| the Board of Director |
|
| |
|
| Lahore: |
|
SYEDZAFARHAIDER |
|
| Dated: October 08,2002. |
(Company Secretary) |
|
| |
|
| NOTES: |
|
| 1. The Share Transfer Book of the Company
will remain closed from October 20,2002 to October 30. |
|
| (Both days inclusive) |
|
| |
|
| 2. A member entitled to attend and vote at
the above meeting may appoint another person as proxy. |
|
| Proxies,
in order to be effective, must be received at 26-Peshawar Block, Fortress
Stadium, Lahore |
|
| Cantt,
to the Registered Office of the Company not later than 48 hours before the
time of the meeting |
|
| and must be
duly stamped, signed and witnessed. |
|
| |
|
| 3. Members are requested to immediately
notify the change in address, if any. |
|
| |
|
| DIRECTORS'
REPORT TO THE MEMBERS |
|
| The
Directors of your company take pleasure in presenting the 8"' Annual
Report and the Audited Accounts of the |
|
| |
|
| company for
the year ended June 30,2002. |
|
| |
|
| PRINCIPALACTIVITIES |
|
| The
principal activities of the company are to own, operate and maintain a
thermal power house with an installed |
|
| capacity of
135 MW at Raiwind Road, Lahore and to generate power for onward supply to
WAPDA. |
|
| |
|
| PRESENT STATUS |
|
| The
complex (plant) was operated to a high standard of technical efficiency which
was achieved after regular |
|
| supervision
and preventive maintenance. WAPDA recently conducted Annual Dependable
Capacity Test from August |
|
| 27,
2002 to August 30, 2002 and your Directors feel pleasure in informing the
shareholders that the complex |
|
| successfully
qualified the test by generating 116.094 MW against the net capacity
requirement of 107 MW i.e. an |
|
| excess
generating capacity of 9 MW. |
|
| |
|
| FINANCIAL
RESULTS |
|
| Turnover
for the year was Rs. 1,960 million (2001:Rs. 1,508 million) and operating
costs were Rs. 1,484 million (2001: |
|
| |
|
| Rs.
1,087 million) resulting in a gross profit of Rs. 476 million (2001: Rs. 421
million). The average dispatch to |
|
| WAPDA
in term of percentage of dependable capacity was 45.88% (2001: 30%). However,
inspite of increase in |
|
| turnover
during the year, the company suffered a net loss ofRs. 257 million (as
compared to Rs. 187 million last year) |
|
| after
deducting administrative and financial expenses. |
|
| |
|
| Major
reasons for continuous losses are as follows: |
|
| |
|
| 1. Your company's levellized tariff was
reduced to US cents 4.3 perkWh in July, 1999 against US cents 5.56 per |
|
| kWh
as per original Power Purchase Agreement (PPA). Other IPPs in the same
vicinity with almost the same |
|
| capacity
are paid a levellized tariff of US cents 5.19 perkWh. This reduction was
reluctantly agreed by your |
|
| company
in the larger interest of the shareholders and lenders for the revival of the
complex because WAPDA |
|
| had
already issued a notice of intent to terminate the PPA. The management is
soliciting a request to WAPDA |
|
| to increase
the agreed tariff to a reasonable level in order to improve the operational
results of the company. |
|
| |
|
| 2. Presently the company is paid by WAPDA
for consumption of furnace oil @ 211 gm per kWh in fuel |
|
| component
of energy payment against actual consumption ranging between 218 - 222 gm per
kWh. Your |
|
| directors
also plan to take up this issue with WAPDA and are confident to convince
WAPDA to increase the |
|
| consumption
factor on merit. Positive response from WAPDA will significantly improve the
operating results |
|
| and
financial liquidity of the company. |
|
| |
|
| 1. Similar to last year, liquidated
damages ofRs 74 million invoiced by WAPDA and charged in these |
|
| accounts
have also contributed to loss for the year. The management is vigorously
making efforts to |
|
| arrange
funds for timely purchase of HFO to avoid the levy of such damages in the
future. |
|
| |
|
| 2. Heavy financial cost is another factor
for continuing losses. The financial expenses for the current year are
Rs. |
|
| 603.603
million as compared to Rs. 541.267 million for the previous year. The company
is making payments |
|
| regularly
to reduce its debts and financial charges will start decreasing after payment
of last installment of |
|
| supplier's
credit which is due on March 26,2004. |
|
| |
|
| 3. Loss of revenue ofRs. 26.667 million
resulted from short receipt of capacity payments from WAPDA due to |
|
| the
depressing effect of the decrease in US $ exchange rate during the period
from January to June 2002. This |
|
| loss may
further increase ifUS$ continues to fall in the future. |
|
| |
|
| 4. After the mishap of September 11, 2001
the insurance premium has almost doubled to secure the complex |
|
| under a
proper insurance cover. |
|
| |
|
| The
above facts highlight the urgent need for improving the financial position of
the company and your |
|
| management
is sincerely trying to mobilize all its resources to overcome this adverse
situation, and thereby |
|
| converting
your company into a profitable unit in the years to come. In this regard the
management is taking |
|
| the
following steps to improve the overall profitability and financial health of
the company. |
|
| |
|
| i) It is planned to approach WAPDA for
sale of additional 9 MW, the extra generating capacity |
|
| demonstrated
during annual dependable capacity test as mentioned above. In case of
successful |
|
| negotiations
it will increase revenues and reduce the accumulated loss resulting from
decrease in |
|
| tariff rate. |
|
| |
|
| ii) The company is in the process of
reconciling its balances with WAPDA on account of liquidated |
|
| damages
charged by WAPDA in the First Agreement Year and your Directors are confident
to |
|
| claim a
refund of about Rs. 66 million, which will also reduce the accumulated loss. |
|
| |
|
| iii) The sponsoring directors are also
injecting a sum of Rs.60 million in due course of time which will |
|
| improve the
overall liquidity and the working capital position of the company. |
|
| |
|
| By
the grace of Allah and Prophet's blessing (pbuh), and with the untiring
efforts of the management, your |
|
| company is
expected to show much better results in the future. |
|
| |
|
| CORPORATE
AND FINANCIAL REPORTING FRAMEWORK |
|
| We
are pleased to report that your company has taken necessary steps to comply
with the provisions of the |
|
| Code of
Corporate Governance issued by Securities and Exchange Commission of
Pakistan. |
|
| |
|
| We give
below Statements on Corporate and Financial Reporting Framework. |
|
| |
|
| • The financial statements, prepared by
the management of the company, present fairly its state of affairs, the |
|
| result of
its operations, cash flows and changes in equity. |
|
| |
|
| • The financial statements for the year
ended June 30, 2002 were presented before the Board after duly signed |
|
| by
the CEO and CFO. The Board after due consideration and approved, authorized
the signing of the financial |
|
| statements
for issuance and circulation. |
|
| |
|
| • Proper books of account of the company
have been maintained. |
|
| |
|
| • Appropriate accounting policies have
been consistently applied in preparation of the financial statements and |
|
| accounting
estimates are based on reasonable and prudent judgment. |
|
| |
|
| •' International Accounting Standards, as
applicable in Pakistan, have been followed in preparation of the |
|
| financial statements. |
|
| |
|
| • A sound system of internal control is
being effectively implemented and continuously reviewed and |
|
| monitored. |
|
| |
|
| • For the reasons stated in the relevant
paras of this report, there are no significant doubt upon the company's |
|
| abi 1 ity
to continue as a going concern. |
|
| |
|
| • There has been no material departure
from the best practices of corporate governance, as detailed in the
listing |
|
| regulations. |
|
| |
|
| • Note 9 of the annexed audited accounts
relate to outstanding taxes and levies. |
|
| |
|
| • In compliance with the requirements of
the Securities and Exchange Commission of Pakistan, the company |
|
| has been
issuing the quarterly financial statements within the prescribed time limits. |
|
| |
|
| • The key operating and financial data of
the company is as under: |
|
| |
|
| Financial
year ended June 30, |
2002 |
2001 |
2000 |
|
| |
|
| Turnover |
Rs. in million |
1,960 |
1,508 |
374 |
|
| Net loss |
Rs. in million |
(257) |
(187) |
(67) |
|
| Total assets |
Rs. in million |
6,895 |
6,961 |
7,058 |
|
| Generation |
(MWH) |
430,058 |
281,544 |
70,507 |
|
| Load factor |
% |
46 |
30 |
26 |
|
| |
|
| *
(Operating results for the year 2000 are for the period of three and a half
months only) |
|
| |
|
| BOARD MEETINGS |
|
| During the
year, four meetings of the Board of Directors were held. Attendance by each
director was as follows: |
|
| |
|
| |
Attendance |
|
| Mr. Zafar
Mahmood (Chief Executive) |
|
4 |
|
| Sheikh Nazaz Ali |
|
4 |
|
| Mr. Haseeb Khan |
|
4 |
|
| Mr. Akhtar Ali Uppal |
|
4 |
|
| Mr. Asad Ali Uppal |
|
4 |
|
| Mr. Faisal
Qamar Uppal |
|
4 |
|
| Mr. Mahmood
Ahmed (Crescent Investment Bank Ltd) |
0 |
|
| Sheikh Mahmood Ali |
|
4 |
|
| Mr. Muhammad Ali |
|
2 |
|
| Mr. Saito Yoshihiro |
|
0 |
|
| Mr. Takashi
Kaburagi |
|
0 |
|
| Mrs. Samina Zafar |
|
2 |
|
| Mr. Khalid
Imran (Nominee Prime Commercial Bank Ltd) |
4 |
|
| Mr. Majeed
Ullah Hussaini (Nominee National Bank of Pakistan) |
0 |
|
| |
|
| Leave
of absence was granted to directors including Japanese directors who could
not attend the Board meetings. |
|
| |
| SHAREHOLDING
PATTERN |
|
| A
statement indicating the distribution of shareholding is attached with this
report. |
|
| |
| AUDITORS |
|
| The
present Auditors' M/s. Hyder Bhimji & Company, Chartered Accountants
& Javaid Jalal Amjad & Company, |
|
| Chartered
Accountants retire and being eligible, offer themselves for re-appointment. |
|
| |
|
| GENERAL |
|
| During
the year, there were a number of changes in the Banking Sector which also
affected the lending syndicate of our |
|
| project.
Effective November 1,2001 National Development Finance Corporation (NDFC), a
Syndicate Member and a |
|
| Lender,
amalgamated with the National Bank of Pakistan (NBP) under a scheme notified
by the Federal Government |
|
| Similarly
Gulf Commercial Bank Ltd. another member of the lending syndicate, was taken
over by PICIC and its name |
|
| changed
to PICIC Commercial Bank Ltd. Similarly another lender. Prudential Commercial
Bank Ltd. was taken |
|
| over
by Saudi Pak Investment Co. and is now knows as Saudi Pak Commercial Bank
Ltd. AL-Faysal Investment Bank |
|
| Ltd.
Merged with Faysal Bank Ltd. Beside this, the share of the Indus Bank Ltd.
(under liquidation) in the lender's |
|
| syndicate
has been taken over by Allied Bank of Pakistan Ltd. |
|
| |
|
| Your
Directors are pleased to report that during the year all payments to the
lenders have been made on time and in |
|
| |
|
| accordance
with the SFA-I and SFA-II. |
|
| |
|
| ACKNOWLEDGEMENT |
|
| All
the employees of the company have put in a real team work. The directors wish
to thank the members, staff and |
|
| management
of the company for their hard and dedicated efforts. |
|
| |
|
| on behalf of |
|
| the Board of Director |
|
| |
| Lahore: September 30,2002 |
CHIEFEXECUTIVE |
|
| |
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed balance sheet of Japan Power Generation Limited as
at June 30, 2002 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 purpose 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 responsibi lity is to express an opinion on
these statements based on our audit. |
|
| |
|
| We
conducted 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 with accounting policies consistently applied
except for the |
|
| change as
mentioned in note 2.3 with which we concur; |
|
| |
|
| 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, 2002 and
of the loss, 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. |
|
| |
|
| Lahore: September 30, 2002 |
|
| |
|
| Javaid Jalal Amjad & Co. |
|
| Chartered Accountants |
|
| |
|
| Hyder
Bhimji & Co |
|
| Chartered
Accountants |
|
| |
|
| REVIEW REPORT TO THE
MEMBERS ON STATEMENT OF |
|
| COMPLIANCE WITH
BEST PRACTICES OF CODE OF CORPORATE |
|
| GOVERNANCE |
|
| |
|
| We
have reviewed the Statement of Compliance with the best practices contained
in the Code of Corporate Governance |
|
| prepared
by the Board of Directors of Japan Power Generation Limited to comply with
the Listing Regulation No. 37 |
|
| (Chapter
XI) and No. 40 (Chapter XIIT) of the Karachi and Lahore Stock Exchanges
respectively 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
system 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 reflects the Company's compliance, in all material
respects, with the best practices contained in |
|
| the Code of
Corporate Governance effective for the period from May 2,2002 to June
30,2002. |
|
| |
|
| Lahore: September 30, 2002 |
|
| |
|
| Javaid Jalal Amjad & Co. |
|
| Chartered Accountants |
|
| |
|
| Hyder
Bhimji & Co |
|
| Chartered
Accountants |
|
| |
|
| BALANCE
SHEET AS AT JUNE 30, 2002 |
|
| |
|
| |
|
2002 |
2001 |
|
| |
Note |
Rupees |
Rupees |
|
| Capital and reserves |
|
| Authorized capital |
|
| 150,000,000
ordinary shares of Rs. 10 each |
|
1,500,000,000 |
1,500,000,000 |
|
| Issued,
subscribed and paid-up capital |
|
|
|
| 133,200,000
ordinary shares ofRs.10 each, |
|
|
|
| fully paid-up in cash |
|
1,332,000,000 |
1,332,000,000 |
|
| Accumulated loss |
|
(512,181,100) |
(255,131,474) |
|
| Shareholders' equity |
|
819,818,900 |
1,076,868,526 |
|
| Non current liabilities |
|
|
|
| Sponsors'
interest free loan - unsecured |
|
168,375,918 |
168,375,918 |
|
| Long term
loans / finances |
|
3 |
5,407,941,950 |
4,221,590,446 |
|
| Liabilities
against assets |
|
|
|
| subject to
finance lease |
|
4 |
11,495,382 |
- |
|
| Deferred liabilities |
|
5 |
4,405,620 |
3,812,900 |
|
| |
5,592,218,870 |
4,393,779,264 |
|
| Current liabilities |
|
|
|
| Short term
borrowings |
|
6 |
146,040,486 |
76,607,678 |
|
| Current
portion of long term liabilities |
|
7 |
86,091,023 |
820,166,402 |
|
| Creditors,
accrued and other liabilities |
|
8 |
251,101,903 |
593,136,412 |
|
| |
483,233,412 |
1,489,910,492 |
|
| Contingencies
and commitments |
|
9 |
|
|
| Total equity
and liabilities |
|
6,895,271,182 |
6,960,558,282 |
|
| |
|
| The annexed
notes form an integral part of these financial statements. |
|
| |
|
| CHIEF
FINANCIAL OFFICER |
|
| |
|
| |
|
2002 |
2001 |
|
| |
Note |
Rupees |
Rupees |
|
| Non Current Assets |
|
| Tangible fixed assets |
|
| Operating
fixed assets |
|
10 |
6,342,732,047 |
6,575,065,767 |
|
| Capital
work-in-progress |
|
11 |
24,723,272 |
26,785,070 |
|
| |
6,367,455,319 |
6,601,850,837 |
|
| |
|
|
| Long term deposits |
|
12 |
3,477,170 |
800,000 |
|
| Deferred cost |
|
13 |
35,118,788 |
48,105,980 |
|
| |
6,406,051,277 |
6,650,756,817 |
|
| Current assets |
|
|
|
| Stores and spares |
|
14 |
8,966,388 |
7,997,450 |
|
| Stock in trade |
|
15 |
47,946,433 |
48,702,941 |
|
| Trade debts |
|
16 |
350,631,710 |
155,666,753 |
|
| |
|
|
| Advances,
deposits, prepayments |
|
|
|
| and other receivables |
|
17 |
78,515,479 |
48,476,435 |
|
| Cash and
bank balances |
|
18 |
3,159,895 |
48,957,886 |
|
| |
489,219,905 |
309,801,465 |
|
