| IDEAL ENERGY LIMITED |
|
|
|
|
| ANNUAL
REPORT 2004 |
|
|
| DIRECTORS
REPORT TO THE MEMBER |
|
|
| In
the name of Allah the Most Merciful and Most Benevolent. |
|
|
| The
Directors feel pleasure in submitting their Annual report together with the
company |
|
| Financial
statements for the year ended June 30, 2004 and Auditors report thereon. |
|
| Operating
result during 01-07-2003 to 30-06-2004 are given below: |
|
|
| Dividend: |
|
|
| Inspite
of increase in Furnace oil prices, your company has earned net profit Rs. |
|
|
| 24,003,024
and Board of Directors are pleased to approve 20% cash dividend as |
|
|
| compared
to last year dividend (@25%). |
|
|
| Sale: |
|
|
| Sales
revenue during the year has decreased by 85.918 million due to one Engine
stopped |
|
|
| (
stand by position ) |
|
|
| Your
directors wish to place their appreciation on record to the shareholders and
Bankers |
|
|
| of
the Company for their continued guidance and support and also playing the
vital role |
|
|
| in
the progress of the Company. |
|
|
| The
Company continues to benefits from the efforts and dedication of all its
employees. |
|
|
| The
Directors are passed to record their appreciation and hope that the same
spirit of |
|
|
| devotion
and dedication will continue in future. |
|
|
| STATEMENTS
OF CORPORATE AND FINANCIAL REPORTING FRAME WORK |
|
|
| a. The financial statements prepared by the
management of company, present fairly |
|
| its
State of affairs, the result of its operations, cash flow and changes in
equity. |
|
|
| b. Proper books of account of the company
have been maintained. |
|
|
| c. Appropriate accounting policies have been
consistently applied in preparation of |
|
| Financial
statements and accounting estimates are based on reasonable and |
|
| prudent
Judgment. |
|
|
| STATEMENT
OF COMPLIANCE WITH THE CODE OF CORPORATE |
|
|
| GOVERNANCE |
|
|
| This
Statement is being presented to comply with the Code of Corporate Governance |
|
| contained
in Regulations No. 37 of listing regulations of Chapter XIII of the purpose
of |
|
| establishing
a framework of good governance, whereby a listed company is managed in |
|
| compliance
with the best practices of corporate governance. |
|
|
| The
Company has applied the principles contained in the Code in the following
manner: |
|
|
| 1. The Company encourages representation of
independent non-executive directors |
|
| representing
minority interests on its Board of Directors. At present the Board |
|
| includes
one executive and six non-executive directors. |
|
|
| 2. The directors have confirmed that none of
them is serving as a director in more |
|
| than
ten listed companies, including this Company. |
|
|
| 3. All the directors of the Company are
registered as tax payers and non of then has |
|
| defaulted
in payment of any loan to a banking company, or a DPI or and NBFI or, |
|
| being
a member of a stock exchange, has been declared as a defaulter by that |
|
| stock exchange. |
|
|
| 4. The company has prepared a "
Statement of Ethics and Business Practices" which |
|
| has
been singed by all the directors and employees of the company. |
|
|
| 5. The Board has developed a vision/mission
statement, overall corporate strategy |
|
| and
significant policies of the Company. A complete record of particulars of |
|
| significant
policies along with the dates on which they were approved and |
|
| amended
has been maintained. |
|
|
| 6. All the powers of the Board have been duly
exercised and decisions on material |
|
| transactions,
including appointment and determination and terms and conditions |
|
| of
employment of the CEO and other executive directors, have been taken by the |
|
| Board. |
|
|
| 7. The meeting of the Board were presided
over by the Chairman and, in his |
|
| absence,
by a director elected by the Board for this purpose and the Board met at |
|
| least
once in every quarter. Written notice of the Board meetings, along with |
|
| agenda
and working papers, were circulated at least seven days before the |
|
| meetings.
The minutes were appropriately record and circulated. |
|
|
| 8. The Board arranged an orientation course
for its directors during the year to |
|
| apprise
them of their duties and responsibilities. More course will follow in |
|
| future. |
|
|
| 9. The Board has been approved appointment of
CFO, Company Secretary and Head |
|
| of
Internal Audit, Including Their remuneration and terms and conditions of |
|
| employment,
as determined by the CEO, when new appointments are made. |
|
|
| 10.
The director's report for this year has been prepared in compliance with the |
|
| requirements
of the Code and fully describes the salient matters required to be |
|
| disclosed |
|
|
| d. International accounting standards, as
applicable in Pakistan have been followed |
|
| in
preparation of financial statements. |
|
|
| e. The system of internal control is sound
in design and has been effectively |
|
| implemented
and monitored. |
|
|
| f. There are no significant doubt upon the
company's ability to continue as going |
|
| concern. |
|
|
| g. There has been no material departure from
the best practices of corporate |
|
| governance
as detailed in the listing regulations of stock exchanges. |
|
|
| h. Key operating and financial data of last
six year is annexed. |
|
| i. During the year 4 meetings of the board
of directors were held and attendance of |
|
| the
directors was as under. |
|
|
| Name
of Directors
No of meetings attended |
|
|
| NISAR
AHMAD SHEIKH
4 |
|
|
| MUHAMMAD
ARSHAD
4 |
|
|
| MUHAMMAD
ANWAR SAJJAD 3 |
|
|
| MUHAMMAD
SAEED
3 |
|
|
| AMJAD
SAEED
4 |
|
|
| SHAH^AD
AHMAD
3 |
|
| NAUREEN
SHAHZAD |
|
|
| Stater at of Director's Responsibility |
|
|
| Board
of Directors is mindful of its responsibilities and duties under legal and
corporate |
|
| framework. The board defines and establishes Company's overall
objectives and |
|
| directions
and monitors status thereof. Short term and long term plans and business |
|
| performance
targets are set by Chief Executive under over all policy frame work of the
board. |
|
| There
has been non-material departure from the best practices of Corporate
Governance, |
|
| as
detailed in the listing regulations. |
|
| Audit
Committee: |
|
| Audit
committee was established to assist Board in discharging its responsibilities
for |
|
| Corporate
Governance, Financial Reporting and Corporate Control. The Committee |
|
| consists
of three members. |
|
| Pattern
of Share Holding: |
|
| The
pattern of share holding of the company is annexed along with trading in
shares of |
|
| the
company by its directors, CFO and Company Secretary. |
|
| Future
Prospects: |
|
| Due
to deregulation of the Furnace oil prices have been changed 24 times during
the year. |
|
| As
the prices of Furnace oil are fixed fortnightly. |
|
| Future
profitability of the company mainly depend on electricity tariff and Furnace
oil prices. |
|
| Acknowledgement: |
|
| I
also express my appreciation to the workers, staff and officers of your
company for their |
|
| hard
work, zeal and dedication. |
|
| OPERATING
AND FINANCIAL |
|
|
| Particulars
Financial Position |
|
2004 |
2003 |
2002 |
|
| Paid up Capital |
|
80,000,000 |
80,000,000 |
80,000,000 |
|
| Capital
Reserve share premium |
|
80,000,000 |
80,000,000 |
80,000,000 |
|
| Revenue reserve |
|
105,818,192 |
86,814,142 |
70,019,744 |
|
| Fixed
Assets at cost |
|
354,638,585 |
365,353,264 |
365,353,264 |
|
| Accumulated
Depreciation |
|
202,830,785 |
191,264,841 |
172,075,522 |
|
| Long Term Loans |
|
— |
- |
- |
|
| Long
Term Deposits |
|
- |
- |
- |
|
| Deffered Liabilites |
|
3,403,079 |
2,955,097 |
3,466,639 |
|
| Current Assets |
|
168,707,052 |
158,268,883 |
115,850,755 |
|
| Current Liabilites |
|
51,293,581 |
67,588,067 |
75,642,114 |
|
| INCOME |
|
|
|
| Sales |
|
243,538,497 |
329,456,483 |
289,430,272 |
|
| Other Incomes |
|
|
503,490 |
|
| Statistics
and Ratios |
|
|
| Current Ratio |
|
3.28:1 |
2.34:1 |
1.53:1 |
|
| Paid
up value Per Share |
|
10 |
10 |
10 |
|
| Earning per Share |
|
1 |
1 |
1 |
|
| Cash Dividend % |
|
20 |
25 |
20 |
|
| Generation
(Mega watt hours) |
|
59,561 |
80,897 |
79,037 |
|
|
| 11. The financial statements of the Company
were duly endorsed by CEO and CFO |
|
| before
approval of the Board. |
|
|
| 12. The directors, CEO and executives do not
hold any interest in the share of the |
|
| company
other than that disclosed in the pattern of shareholding. |
|
|
| 13. The
Company have complied with all
the corporate and financial
reporting |
|
| requirements
of the Code. |
|
|
| 14. The Board has formed an audit committee. It
comprises three members, majority |
|
| of
whom non-executive directors. |
|
|
| 15. The meetings of the audit committee were
held at least once every quarter prior to |
|
| approval
of interim and final results of the Company and as required by the Code. |
|
| The
terms of reference of the Committee have been formed and advised to the |
|
| committee
for compliance. |
|
|
| 16. The Board has set up an effective internal
audit function. The audit staff are |
|
| suitably
qualified and experienced for the purpose and are conversant with the |
|
| policies
and procedures of the company and they are involved in the internal audit |
|
| function
on a full time basis. |
|
|
| 17. The Statutory auditors of the Company have
confirmed that they have been given |
|
| a
satisfactory rating under the quality control review programme of the
Institute of |
|
| (.halted
Accountants of Pakistan and that they or any of the partners of the firm, |
|
| their
spouse and minor children do not hold shares of the Company and that the |
|
| firm and
all its partners are
in compliance with
International Federation of |
|
| Accountants
(1FAC) guidelines on code of ethics as adopted by the Institute of |
|
| Chartered
Accountants of Pakistan. |
|
|
| 18. The
statutory auditors or
the persons associated
with them have
not been |
|
| appointed
to provide other services except in accordance with listing regulations |
|
| and
the auditors have confirmed that they have observed IFAC guide lines in this |
|
| regard, |
|
|
| 19. We confirm that ail other material
principles contained in the Code have been |
|
| complied with. |
|
|
| 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 Ideal Energy |
|
| Limited
to Comply with the Listing Regulation no. 37 and Chapter No XIII of the |
|
| Karachi
and Lahore Stock Exchange 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 personal and review of various documents prepared by the Company
to |
|
| comply
with the Code. |
|
|
| As
part of our audit of financial statements we are required to obtain an
understanding of |
|
| the
accounting and internal control systems sufficient to plan the audit and
develop an |
|
| effective
audit approach. We have not carried out any special review of the Internal |
|
| Control
system to enable us to express on opinion as to whether the Board's statement
on |
|
| internal
control covers all controls and the effectiveness of such internal controls. |
|
|
| Based
on our review nothing has come to our attention which causes us to believe
that the |
|
| statement
of Compliance does not appropriately reflect the Company's Compliance, in all |
|
| material
respects, with the best practices contained in the Code of Corporate
Governance. |
|
|
| DATA
OF LAST SIX YEARS |
|
|
|
2001 |
2000 |
1999 |
1998 |
|
|
80,000,000 |
80,000,000 |
80,000,000 |
80,000,000 |
|
|
80,000,000 |
80,000,000 |
80,000,000 |
80,000,000 |
|
|
74,493,527 |
71,080,609 |
48,856,232 |
34,032,776 |
|
|
346.613,444 |
346,354,094 |
342,794,143 |
341,389,263 |
|
|
151,902,630 |
130,212,619 |
106,372,654 |
79,800,131 |
|
|
18,300,000 |
- |
38,252,621 |
71,748,632 |
|
|
- |
13,000,000 |
13,649,407 |
14,298,812 |
|
|
2,522.59 |
2,091,813 |
855,330 |
643,823 |
|
|
84.191,893 |
91,620.27 |
66,234,430 |
51,330,822 |
|
|
33.748,945 |
87,769,319 |
68.341,143 |
60,793,535 |
|
|
292,091,321 |
264,794,868 |
254,047,927 |
243,674,412 |
|
|
610,800 |
- |
- |
- |
|
|
2.49:1 |
1.04:1 |
0.97: 1 |
0.84:1 |
|
|
10 |
10 |
10 |
10 |
|
|
1 |
5.28 |
4.35 |
2.4 |
|
|
10 |
25 |
25 |
12.5 |
|
|
85,577 |
82,060 |
78,626 |
79,106 |
|
|
| BALANCE
SHEET AS |
|
|
|
|
Note |
2004 |
2003 |
|
|
|
Rupees |
Rupees |
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
| Authorised
10,000,000 Ordinary shares of Rs. 10/=each |
|
100,000,000 |
1 00,000,000 |
|
| Issued
subscribed and paid up 8,000,000 Ordinary shares of Rs. 10/= |
80,000,000 |
80,000,000 |
|
| each
fully paid in cash |
|
|
80,000,000 |
80,000,000 |
|
| Capital
reserve-share premium |
|
5 |
89,817,166 |
81,814,142 |
|
| Revenue reserves |
|
|
249,817,166 |
241,814,142 |
|
|
6 |
3,403,079 |
2,955,097 |
|
| DEFERRED
LIABILITY Staff retirement gratuity |
7 |
34,300,000 |
42,650,000 |
|
| CURRENT
LIABILITIES |
|
8 |
16,879,851 |
24,864,736 |
|
| Short
term borrowing |
|
|
84,688 |
57,593 |
|
| Creditors,
accrued and other liabilities |
9 |
16,028,988 |
20,015,738 |
|
| Taxation |
|
|
67,293,527 |
87,588,067 |
|
| Dividends |
|
10 |
— |
— |
|
|
|
320,513,772 |
332,357,306 |
|
|
|
|
|
| AUDITORS
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Ideal Energy Limited as at June 30,
2004 and the |
|
| related
profit and loss account, statement of changes in equity and cash flow
statement together |
|
| with
the notes forming part thereof, for the year then ended and we state that we
have obtained all |
|
| the
information and explanations which, to the best of our knowledge and belief,
were necessary |
|
| for
the purposes of our audit. |
|
|
| It
is the responsibility of the company's management to establish and maintain a
system of |
|
| internal
control, and prepare and present the above said statements in conformity with
the |
|
| approved
accounting standards and the requirements of the Companies Ordinance, 1984.
Our |
|
| responsibility
is to express an opinion on these statements based on our audit. |
|
|
| We
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)
ii iii opinion.per books of account
have been kept by the company as |
|
| required
by tht Co.npames Ordinance, 1984; |
|
|
| (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; |
|
|
| (11)
the expenditure incurred during the year was for the purpose of the |
|
| company's
business; and |
|
|
| (in)
the business conducted, investments made and the expenditure incurred |
|
| dm
ing 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, statement of |
|
| changes
in equity and cash tlow statement 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, 2004 and of the profit, its changes in equity and |
|
| cash
flows for the year then ended; and |
|
|
| (d) in'our opinion. Zakat deductible at
source under the Zakat and Ushr Ordinance. |
|
| 1980,
was deducted by the company and deposited in the Central Zakat Fund |
|
| established
under Section 7 of that Ordinance. |
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2004 |
|
|
|
|
Note |
2004 |
2003 |
|
|
|
|
Rupees |
Rupees |
|
| Sales |
|
17 |
243,538,497 |
329.456,483 |
|
| Cost of generation |
|
18 |
214,104,709 |
290,363,839 |
|
| Gross profit |
|
|
29,433,788 |
39,092,644 |
|
| Operating
expenses |
|
19 |
3,191,193 |
3,515,683 |
|
| Operating profit |
|
|
26,242,595 |
35,576,961 |
|
| Loss
on disposal of fixed assets |
|
|
-11,351 |
|
|
|
|
26,231,244 |
35,576,961 |
|
| Other
Charges Financial |
|
20 |
928,403 |
3,034,355 |
|
| Workers'
profit participation fund |
|
|
1,272,722 |
1,630,498 |
|
|
|
2,201,125 |
4,664,853 |
|
| Net
profit for the year before taxation |
|
|
24,030,119 |
30,912,108 |
|
| Taxation Current |
|
21 |
27,095 |
39,713 |
|
| Net
profit for the year after taxation |
|
|
24,003,024 |
30.872,395 |
|
| Unappropriated
profit brought forward |
|
|
66,814.14 |
55,941,747 |
|
| Profit
available for appropriations |
|
|
90,817,166 |
86,814,142 |
|
| Appropriation
Proposed cash dividend @ Rs. 2.00 per share (2003 Rs. 2.5 per share) |
|
|
16,000,000 |
20,000,000 |
|
| Unappropriated
profit carried forward |
|
|
74,817,166 |
66,814,142 |
|
| Earnings
per share - Basic |
|
22 |
3 |
3.86 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares and loose tools |
|
12 |
22,065,802 |
15,612,415 |
|
| Stock
of oil and lubricants |
|
13 |
10,883,917 |
32,245,554 |
|
| Debtors |
|
14 |
115 291 373 |
04 SR4 Q1 9 |
|
| Advances,
deposits prepayments and other receivables |
15 |
5,391,649 |
6,917,096 |
|
| Cash
and bank balances |
|
16 |
15,074,311 |
8,908,906 |
|
|
|
|
168,707,052 |
158,268,883 |
|
|
|
|
320,513,772 |
332,357,306 |
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 2004 |
|
|
|
|
2004 |
2003 |
|
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM |
|
|
|
| OPERATING
ACTIVITIES |
|
|
|
| Profit
for the year before taxation |
|
24,030,119 |
30,912,108 |
|
| Depreciation |
|
16,620,352 |
19,189,319 |
|
| Provision
for gratuity |
|
757,318 |
731,399 |
|
| Loss
on disposal of fixed asset |
|
11,351 |
-- |
|
| Financial charges |
|
928,403 |
3,034,355 |
|
| Operating
profit before working capital changes |
|
42,347,543 |
53,867,181 |
|
| Changes
in working capital |
|
|
|
| (Increase)/decrease
in current assets |
|
|
|
| Stores,
spares and loose tools |
|
-6,453,387 |
-925,041 |
|
| Stock
of oil and lubricants |
|
21,361,637 |
-15,711,408 |
|
| Debtors |
|
-20,706,461 |
-19,467,932 |
|
| Advances,
deposit, prepayments |
|
|
|
| And
other receivable |
|
1,525,447 |
853,742 |
|
| (Decrease) Increase in current liabilities |
|
|
|
| Creditors,
accrued and other liabilities |
|
-7,497,519 |
8,231,532 |
|
|
-11,770,283 |
-27,019,107 |
|
| Cash
generated from operations |
|
30,577,260 |
26,848,074 |
|
| Gratuity paid |
|
-309,336 |
-320,938 |
|
| Financial
charges paid |
|
-1,415,769 |
-3,211,197 |
|
| Net
cash from operating activities |
|
28,852,155 |
23,315.94 |
|
| CASH
FLOW FROM |
|
|
|
| INVESTING
ACTIVITIES |
|
|
|
| Proceeds
from disposal |
|
|
|
| of fixed asset |
|
5,650,000 |
- |
|
| Net
cash from investing activities |
|
5,650,000 |
— |
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| FOR
THE YEAR ENDED JUNE 30, 2004. |
|
|
|
Share Capital |
Capital Reserve |
|
Total |
|
Rupees |
Share Premium Rs |
Gen. Reserve Rs |
Unaprot. Profit Rs |
Rupees |
| Balance
as at July 01, 2002 |
80,000,000 |
80,000,000 |
15,000,000 |
55,941,747 |
230,941.75 |
| Profit
for the year |
|
— |
-- |
-- |
30,872,395 |
30,872,395 |
| Dividend
Rs. 2.5 per share |
-- |
-- |
-- |
20,000,000 |
20.000,000 |
| Balance
as at June 30, 2003 |
80,000,000 |
80,000,000 |
15,000,000 |
66,814,142 |
241,814,1 |
