| THE HUB POWER COMPANY LIMITED |
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(Annual Report 1996) |
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CONTENTS |
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PAGE NO. |
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| COMPANY
INFORMATION |
1 |
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| NOTICE
OF MEETING |
2 |
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| BOARD
OF DIRECTORS |
3 |
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| CHAIRMAN'S
REVIEW |
4 |
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| REPORT
OF THE DIRECTORS |
5 |
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| AUDITOR'S
REPORT |
8 |
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| BALANCE SHEET |
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9 |
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| CASH
FLOW STATEMENT |
11 |
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| NOTES
TO THE ACCOUNTS |
12 |
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| PATTERN
OF SHAREHOLDING |
29 |
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| SHAREHOLDER'S
INFORMATION |
30 |
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| PROXY FORM |
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COMPANY INFORMATION |
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| Head Office: |
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3rd Floor, Islamic
Chamber Building |
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ST-2/A, Block-9, Clifton,
P.O. Box 13841 |
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Karachi-75600. |
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| Registered
Office: |
C/o Ford, Rhodes, Robson,
Morrow |
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2nd Floor, Khyber Plaza, |
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96-West, Blue Area, |
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Fazal-ul-Haq Road, |
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Islamabad. |
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| Company
Secretary: |
S. Khurshid Husain |
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| Principal
Bankers: |
Account Banks: |
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· National Development
Finance Corporation, Karachi & Islamabad |
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· Citibank N.A., Karachi |
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· Bank of Tokyo-
Mitsubishi (UK) Limited, London |
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· The Sakura Bank
Limited, London |
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· Banco di Napoli
International S.A., Luxembourg |
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Inter-Creditor Agent: |
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Citibank International,
plc, London |
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| Legal
Advisors: |
Linklaters & Paines |
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Rizvi, Isa, Kabraji &
Co. |
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| Auditors: |
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Ford, Rhodes, Robson,
Morrow |
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| Registrar: |
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Ford, Rhodes, Robson,
Morrow |
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NOTICE OF FIFTH ANNUAL
GENERAL MEETING |
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| Notice
is hereby given that the Fifth Annual General Meeting of the Company will be
held on Wednesday, |
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| November
20, 1996 at 2.00 p.m. at 250-A, Street No. 23, Sector E-7, Islamabad to
transact the following business: |
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| 1.
To confirm the minutes of the Fourth Annual Genera! Meeting & the
Extraordinary General Meeting of |
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| the
Company both held on November 15, 1995. |
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| 2.
To receive and adopt the Audited Accounts of the Company for the year ended
June 30, 1996 and the |
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| Directors'
& Auditors' Reports thereon. |
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| 3.
To appoint the Auditors and fix their remuneration. |
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| Karachi:
August 21, 1996 |
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By Order of the Board |
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S. Khurshid Husain |
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|
Company Secretary |
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| NOTES: |
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| 1.
The Share Transfer Books of the Company will remain closed from November 11,
1996 to November 21, |
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| 1996
(both days included). |
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| 2.
A member entitled to attend and vote at the meeting may appoint a proxy in
writing to attend the meeting |
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| and
vote on a member's behalf. A Proxy need not be a member of the Company. |
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| 3.
Duly completed forms of proxy must be deposited with the Company Secretary at
the Head Office of the |
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| Company
not later than 48 hours before the time appointed for the meeting. |
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| 4.
Shareholders are requested to notify any change in their address immediately. |
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BOARD OF DIRECTORS |
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| Mr.
M. A. Alireza H.I. |
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| Chairman |
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| Other
directorships |
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| Xenel
Industries Ltd. |
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| &
other Xenel Group Companies |
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| Xenel
International Ltd. |
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| Mr.
P. H. Smith |
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| Vice Chairman |
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| Other
directorships |
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| Electra
Insurance Ltd. |
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| National
Power International Holdings BV. |
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| Kot
Addu Power Co. Ltd. |
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| Electricity
Pensions Trustee Ltd. |
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| Mr.
D. M. Woodroffe |
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| Chief
Executive |
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| Mr.Y. Asahata |
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| Other
directorships |
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| Hub
Power Japan Corp. |
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| Mr.
P.R Bennett |
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| Other
directorships |
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| Kot
Addu Power Co. Ltd. |
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| Mr.
C. J. Brown |
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| Other
appointments |
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| Vice
President & |
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| General
Manager |
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| Europe Energy |
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| Mr. B. Chang |
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| Other
directorships |
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| Promet
Berhad & Group |
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| Task
Technology Ltd. |
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| Taisun
Group of Company |
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| Asia
Petrolium Ltd. |
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| Fauji
Oil Terminal Co. Ltd. |
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| Pakistan
Power Ltd. |
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| Mr.
C. R.W. Masterson |
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| Other
directorships |
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| National
Power Share Schemes Ltd. |
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| Electricity
Pensions Trustees Ltd. |
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| De
Haviland Aircraft Museum Ltd. |
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| Dr.
I. M. H. Preston C. B. E. |
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| Other
directorships |
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| Mining
(Scotland) Ltd. |
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| Scottish
Coal Company Ltd. |
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| East
of Scotland Water Authority |
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| Motherwell
Bridge Holdings Ltd. |
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| Clydeport
plc. |
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| Deutsche
Morgan Grenfell (Scotland) Ltd. |
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| Scottish
Council for Development and Industry |
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| Kot
Addu Power Co. Ltd. |
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| Mr.
S. N. A. Shah |
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| Other
directorships |
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| Jahangir
Siddiqui & Co. Ltd. |
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| Philips
Electrical Industries (Pak) Ltd. |
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| Forbes,
Forbes, Campbell & Co. Ltd. |
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| National
Discounting Services Ltd. |
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| Mr.
M. A. Tumbi |
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| Other
appointments |
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| General
Manager Finance, Xenel |
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| Mr.
S. J. K. Wheeler |
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| Other
directorships & appointments |
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| American
National Power, Inc. |
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| Dagenham
& Barking Management Ltd. |
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| Vice
President, National Power of America Inc. |
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| Mr.
P. J. Windsor |
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| Other
directorships |
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| American
National Power, Inc. |
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| National
Power International Holdings BV. |
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| National
Power International Ltd. |
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| National
Power of America, Inc. |
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| National
Power Polska Spolka z.o.o. |
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| Tejo Energia. |
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| Mr. K. Iqbal |
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| Nominee of |
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| National
Development |
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| Finance
Corporation |
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| Capt.
F. Ahmed Zai |
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| Nominee of |
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| Government
of Balochistan |
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| Mr. S. Potter |
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| Nominee of |
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| Commonwealth
Development |
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| Corporation |
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CHAIRMAN'S REVIEW |
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| In
the Name of God the Most Merciful and Most Benevolent. |
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| It
gives me great pleasure to introduce the Company's Report and Accounts for
the year ending June 30, 1996. |
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| This
financial year has been one of continued progress with the balance of plant
and equipment to complete the |
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| construction
of the power station delivered to Site. Erection activity reached a peak
during the Spring. The |
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| remaining
civil engineering and electro-mechanical erection works are now close to
completion. I am pleased to |
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| be
able to confirm that all construction milestones that fell due during the
year were achieved either on or ahead |
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| of
the programme. Similar achievements are expected for the coming financial
year. |
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| The
successful completion of the first unit and the commencement of the supply of
electricity to the Water & |
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| Power
Development Authority are of great significance to both the Company and the
Government. The Prime |
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| Minister
Mohtarma Benazir Bhutto graciously visited Site on July 4 to mark this event.
Her visit and the |
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| commissioning
of the unit attracted the interest of the media and was widely reported
internationally. |
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| Progress
on completion and commissioning of the remaining three units continues in
line with our original |
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| expectations
and we are programmed for all three units to achieve commercial operation on
schedule. |
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| The
generation of revenue from the first unit marks. the coming of age of our
Company and means that next year's |
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| Report
will also include our first profit and loss account. We are now close to the
achievement of the main |
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| objective
of our Company - Full Commercial Operation of the whole Complex during March
1997. |
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| Finally,
I would like to express my appreciation of the achievements of both the
Company's contractors and its |
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| staff
during the year. |
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|
Mohamed A. Alireza |
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|
Chairman |
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| REPORT
OF THE DIRECTORS |
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| The
Directors have pleasure in presenting the Annual Report and the Audited
Accounts for the year ended June |
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| 30, 1996. |
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| Principal
Activities |
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| The
principal activities of the Company are to design, construct, finance, own
operate and maintain a 1292MW oil |
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| fired
power station in Pakistan. |
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| Finance |
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| During
the year the Company drew Rs. 15,861 (1995: Rs. 14,949) million from its
secured debt facilities to finance |
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| the
Construction Programme. Total drawings to June 30, 1996 amounted to Rs.
33,646 (1995: Rs. 17,785) million. |
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| The
Construction activity is both on programme and budget and adequate finance is
available to the Company to |
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| complete
the Project. |
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| As
required by the Fuel Supply Agreement (FSA) the Company opened a Letter of
Credit for a value up to Rs. |
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| 600m
in favour of Pakistan State Oil. The Company took delivery of supplies of
Residual Fuel Oil (RFO) which is |
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| the
fuel for running the power station. At the year end the Company had stocks of
29,906 metric tonnes of RFO. |
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| Under
the terms of the Power Purchase Agreement (PPA) the Water and Power
Development Authority (WAPDA) |
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| is
required to open a Letter of Credit in favour of the Company in respect of
its payment obligations under the PPA. |
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| As
at the year end, the Letter of Credit offered by WAPDA was subject to
discussion between WAPDA and the |
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| Company
in respect of certain technical definitions. In the meantime, WAPDA is
fulfilling its payment obligations. |
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| Construction
and Commissioning Progress |
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| At
the end of the 1995-96 Financial Year the Station has moved from a
construction to a commissioning phase |
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| culminating
in the achievement of full load operation of Unit t at 323 MWs. The status of
completion across the |
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| turnkey
contractor consortium members at June 30, 1996 expressed as percentages is
shown in the table below: |
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|
Civil Works |
Turbine/Common Plant |
Boilers |
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|
% |
|
% |
% |
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| Design
& procurement |
100 |
|
99 |
99 |
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| Construction |
|
99 |
|
95 |
90 |
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| Commissioning |
|
99 |
|
65 |
55 |
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| Progress
during the year has been marked by key events as the Station's systems have
been brought into |
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| service.
The principal milestone achievements have been: |
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| September
5, 1995 desalination plant commissioned. |
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| December
10, 1995 the 500 KV system interconnection established. |
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| March
6, 1996 unloading of RFO fuel oil road tankers commenced. |
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| May
9, 1996 Unit 1 Synchronised to the 500 KV System. |
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| May
29, 1996 Unit 1 achieved maximum capacity of 323 MWs. |
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| Contractual
Completion of Unit 1 was delayed by the contractor for one week due to a
boiler fuel oil fire which |
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| damaged
thermal insulation and cabling. Nevertheless, the Unit achieved its
Completion Certificate on July 16, |
|
| 1996
at the conclusion of a seven day reliability run and was deemed commissioned
as of July 8. |
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| Progress
to date in the current financial year is to plan and we have achieved the
following: |
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| July
16, 1996 Unit 1 declared available for Commercial Operation. |
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| July
24, 1996 Unit 2 synchronised to the 500 KV System |
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| Aug.
13, 1996 Boiler 3 first fired |
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| Unit
2, 3 and 4 are all on programme to achieve their Contractual Completion
dates. |
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|
| Staff |
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| The
Company's training and development programmes at all levels has continued
throughout the year in order to |
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| ensure
that employees are equipped to meet the challenges presented by the next
stage of the Company's |
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| development. |
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|
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| The
Company is appreciative of the contribution made and flexibility shown by all
its employees during the year. |
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| Social
Action and the Environment |
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| The
Company recognises its social responsibility in the surroundings in which it
operates. During the year the |
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| Company
supported the efforts of the Balochistan Rural Support Programme to introduce
a self help programme |
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| into
the area for the uplift of the population. In addition, the electrification
of five villages closest to the plant, was |
| completed
at the Company's cost. |
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|
|
| Appropriations |
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| No
dividend will be recommended this year as the Company has yet to achieve full
commercial operation. |
|
|
| Board
of Directors |
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| The
current members of the Board are listed separately above. Members of the
Board were appointed or |
|
| resigned
as follows: |
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| I.
M. H. Preston |
(Appointed August 16,
1995) |
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| T. Matsuya |
|
(Appointed November 15,
1995) |
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| M. B. Abbasi |
|
(Resigned November 15,
1995) |
M. Munawar |
|
(Appointed November 15,
1995) |
| G.T.B. Camsey |
|
(Resigned November 15,
1995) |
P.J. Windsor |
|
(Appointed November 15,
1995) |
| M. A. Boyd |
|
(Resigned March 6, 1996) |
|
S. Potter |
|
(Appointed March 27,
1996) |
| T.
L. Ogletree |
(Resigned August 1, 1996) |
|
C. Brown III |
|
(Appointed August 21,
1996) |
| M. Munawar |
|
(Resigned August 21,
1996) |
K. Iqbal |
|
(Appointed August 21,
1996) |
| T. Mastuya |
|
(Resigned August 21,
1996) |
Y. Asahata |
|
(Appointed August 21,
1996) |
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| Auditors |
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| The
retiring auditors Messrs. Ford, Rhodes, Robson, Morrow, Chartered Accountants
being eligible, offer themselves |
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| for
re-appointment. |
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| Shareholding
Pattern |
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| A
statement reflecting the distributions of shareholding is attached to the
Annual Report. |
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By order of the Board |
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|
D. M. Woodroff |
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| Karachi:
21 August 1996 |
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Chief Executive |
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| AUDITORS'
REPORT TO THE MEMBERS |
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| We
have audited the annexed balance sheet of The Hub Power Company Limited as at
June 30, 1996 and |
|
| statement
of changes in financial position, together with the notes forming part
thereof and we state that We have |
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| obtained
all the information and explanations which to the best of our knowledge and
belief were necessary for the |
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| purposes
of our audit and, after due verification thereof, we report that: |
|
|
| (a)
in our opinion, proper books of account have been kept by the Company as
required by the Companies |
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| Ordinance,
1984; |
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|
|
| (b)
in our opinion: |
|
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| (i)
the balance sheet and the notes thereon have been drawn up in conformity with
the Companies |
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| Ordinance,
1984, and are in agreement with the books of account and are further in
accordance with |
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| accounting
policies consistently applied; |
|
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| (ii)
the expenditure incurred during the year was for the purpose of the Company's
business; and |
|
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| (iii)
the business conducted, investments made and the expenditure incurred during
the year were in |
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| 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 |
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| sheet
and the statement of changes in financial position, together with the notes
forming part thereof give |
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| 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,
1996 and the changes in |
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| financial
position for the year then ended; and |
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|
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| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
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| A
profit and loss account has not been prepared as the Company has not yet
commenced commercial production. |
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| Karachi:
September 19, 1996 |
|
Ford, Rhodes, Robson,
Morrow |
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|
Chartered Accountants |
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|
|
| BALANCE
SHEET AS |
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| ON
30 JUNE 1996 |
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|
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|
1996 |
1995 |
|
|
Note |
Rs. '000s |
Rs. '000s |
|
|
|
|
|
| SHARE CAPITAL |
|
|
|
|
|
| Authorised |
|
|
|
|
|
| 1,200,000,000
(1995: 1,200,000,000) |
|
|
|
| Ordinary
shares of Rs. 10 each |
|
|
12,000,000 |
12,000,000 |
|
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|
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|
========= |
========= |
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| Issued, subscribed and paid-up |
|
3 |
11,571,544 |
9,026,748 |
|
| SHARE
APPLICATION MONEY |
|
|
- |
1,154,734 |
|
|
| LONG-TERM
LOANS |
|
4 |
33,646,284 |
17,785,041 |
|
| LONG-TERM
LIABILITIES |
|
|
- |
444,787 |
|
|
| OBLIGATIONS
UNDER FINANCE LEASE |
|
5 |
- |
1,089 |
|
| DEFERRED
LIABILITY- GRATUITY |
|
|
1,495 |
1,018 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
|
| Current
obligations under finance lease |
|
5 |
1,089 |
829 |
|
| Accrued
and other liabilities |
|
6 |
6,484,415 |
10,680,112 |
|
|
|
|
|
|
|
|
6,485,504 |
10,680,941 |
|
|
|
|
|
|
| COMMITMENTS
AND CONTINGENCIES |
|
7 |
- |
- |
|
|
|
|
|
-------- |
-------- |
|
|
|
|
51,704,827 |
39,094,358 |
|
|
|
========= |
========= |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
|
|
|
|
| Operating
fixed assets |
|
8 |
72,464 |
54,710 |
|
| Capital
work-in-progress |
|
9 |
35,126,102 |
28,529,539 |
|
|
|
|
|
| PROJECT
DEVELOPMENT AND |
|
|
|
| IMPLEMENTATION
COSTS |
|
10 |
10,070,481 |
6,597,309 |
|
|
| LONG-TERM
RECEIVABLE |
|
- |
121,923 |
|
|
| LONG
TERM DEPOSITS, PREPAYMENTS AND |
|
| DEFERRED
COSTS |
|
11 |
2,536,194 |
2,404,634 |
|
|
|
| CURRENT
ASSETS |
|
| Inventory of fuel oil |
|
140,212 |
- |
|
|
|
| Advances,
deposits, prepayments |
|
| and
other receivables |
|
12 |
2,672,253 |
921,840 |
|
|
| Cash
and bank balances |
|
13 |
1,087,121 |
464,403 |
|
|
|
-------- |
-------- |
|
|
3,899,586 |
1,386,243 |
|
|
|
|
-------- |
-------- |
|
|
|
51,704,827 |
39,094,358 |
|
|
========= |
========= |
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
| The
auditors' report is annexed hereto. |
|
|
|
|
|
|
STATEMENT OF CHANGES IN
FINANCIAL POSITION |
|
|
(CASH FLOW STATEMENT) |
|
|
FOR THE YEAR ENDED JUNE
30, 1996 |
|
|
1996 |
1995 |
|
|
|
Rs. '000s |
Rs. '000s |
|
|
|
| Cash
flow from investing activities |
|
|
|
|
|
|
|
| Purchase
of fixed assets |
|
(19,770) |
(30,812) |
|
| Sale
proceeds of fixed assets (insurance claim) |
|
630 |
1,400 |
|
| Loss
on sale of fixed assets |
|
24 |
275 |
|
| Capital
work-in-progress |
|
(6,595,524) |
(15,303,566) |
|
|
| Project
development and implementation costs |
|
(3,472,849) |
(3,343,146 |
|
|
| Staff
gratuity |
|
477 |
586 |
|
|
| Pension |
|
- |
(1,057) |
|
|
|
|
|
|
|
| Movement in: |
|
|
|
|
| Working capital |
|
(6,O86,322) |
420,411 |
|
|
| Long term receivable |
|
121,923 |
(121,628 |
|
| Long
term deposits, prepayments and deferred costs |
|
(131,560 ) |
(2,276,721) |
|
|
|
|
-------- |
-------- |
|
|
| Net cash used in investing activities |
|
(16,182,971) |
(20,654,258) |
|
|
|
|
|
|
|
| Cash
flow from financing activities |
|
|
|
|
|
|
|
|
| Proceeds
from issue of share capital |
|
1,390,062 |
8,196,565 |
|
|
| Share
application money |
|
- |
1,154,734 |
|
|
| Long
term loans |
|
15,861,243 |
14,948,947 |
|
|
| Long
term liabilities |
|
(444,787) |
444,787 |
|
|
|
|
|
| Repayment of: |
|
|
|
| Liability
under finance lease |
|
(829) |
(2,002) |
|
| Financing
under morabaha arrangement |
|
- |
(3,384,732) |
|
| Financing
under mark-up arrangement |
|
- |
(298,200) |
|
| Financing
under reimbursable grant scheme |
|
- |
(3,486) |
|
|
|
-------- |
-------- |
|
| Net
cash from financing activities |
|
16,805,689 |
21,056,613 |
|
|
|
|
|
| Net
increase/('decrease) in cash and cash equivalent |
|
622,718 |
402,355 |
|
| Cash
and cash equivalent at July 1, 1995 |
|
464,403 |
62,048 |
|
|
|
-------- |
-------- |
|
| Cash
and cash equivalent at June 30, 1996 |
|
1,087,121 |
464,403 |
|
|
|
========= |
========= |
|
| Movement
in working capital |
|
|
|
| (Increase)/decrease
in current assets |
|
|
|
|
|
|
| Advances,
deposits, prepayments and other receivables |
(1,750,413) |
(527,999) |
|
| Inventory
of fuel oil |
|
(140,212) |
- |
|
|
|
|
|
| Increase/(decrease)
in current liabilities |
|
|
|
| Accrued
and other liabilities |
|
(4,195,697) |
948,410 |
|
|
-------- |
-------- |
|
|
|
(6,086,322) |
420,411 |
|
|
|
|
========= |
========= |
|
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
|
|
| FOR
THE YEAR ENDED JUNE 30, 1996 |
|
|
|
|
|
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
|
|
| The
Hub Power Company Limited (the "Company") was incorporated in
Pakistan on August 1,1991 as a |
|
| public
limited company under the Companies Ordinance, 1984.The shares of the Company
are listed on |
|
| the
Karachi Stock Exchange and its Global Depository Receipts are listed on the
Luxembourg Stock |
|
| Exchange.
The principal activities of the Company are to design, construct, finance,
own, operate and |
|
| maintain
an oil-fired power-station with four generating units with a total initial
installed capacity of 1,292 |
|
| MW
in Tehsil Hub, District Lasbella, Balochistan. The Company has not yet
commenced commercial |
|
| production
and, therefore, a profit and loss account has not been prepared. Subsequent
to the year end, |
|
| the
first generating unit went into commercial operation. |
|
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting convention |
|
|
