| The Hub Power Company Limited |
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| Annual
Report 2000 |
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| CONTENTS |
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| Company
Information |
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| Notice
of Meeting |
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| Board
of Directors |
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| Chairman's
Review |
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| Report
of the Directors |
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| Auditors'
Report |
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| Profit
and Loss Account |
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| Balance
Sheet |
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| Statement of Changes in
Financial Position |
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| Notes
to the Accounts |
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| Pattern
of Shareholding |
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| Shareholders'
Information |
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| COMPANY
INFORMATION |
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| Head Office: |
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3rd Floor, Islamic
Chamber of Commerce Building |
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|
ST-2/A, Block-9, Clifton,
P.O. Box No. 13841 |
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|
Karachi-75600 |
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E.mail: info@
hubpower.com |
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Website: http://www.
hubpower.com |
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| Registered
Office: |
C/o Ford, Rhodes, Robson,
Morrow, |
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Premises No. 1 to 5,
Elahi Chambers, |
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C/o Ambassador Hotel
Building, |
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I&T Centre,
Khayaban-e-Suhrawardi, |
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Aabpara, P.O. Box No.
2388, Islamabad. |
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| Company
Secretary: |
Arshad A. Hashmi |
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| Principal
Bankers: |
Account Banks: |
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· National Development
Finance Corporation, Karachi |
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· Citibank N.A., Karachi |
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· ANZ Grindlays Bank
Limited, Karachi |
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· The Bank of
Tokyo-Mitsubishi Limited, London |
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· The Sakura Bank
Limited, London |
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· Credem International
(LUX) 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 &
Alliance, London |
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|
Kabraji & Talibuddin,
Karachi |
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|
Rizvi Isa & Co.,
Karachi |
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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 THE NINTH ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the Ninth Annual General Meeting of the Company will be
held on Wednesday, |
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| November
8, 2000 at 2.00 pm at Margala Motel, 1-Kashmir Highway, Near Jinnah Sports
Complex, Islamabad |
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| to
transact the following business: |
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| 1.
To confirm the minutes of the Extra-ordinary General Meeting of the Company
held on September 13, 2000. |
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| 2.
To receive and adopt the Audited Accounts of the Company for the year ended
June 30, 2000 togetherwith |
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| the
Directors' & Auditors Reports thereon. |
|
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| 3.
To appoint Auditors and to fix their remuneration. |
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|
By Order of the Board |
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|
Arshad A. Hashmi |
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| Karachi
- August 9, 2000 |
|
Company Secretary |
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|
| NOTES: |
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| 1.
The Share Transfer Books of the Company will remain closed from October 27,
2000 to November 8, 2000 |
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| (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 the 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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| 5.
CDC account holders will further have to follow the under mentioned
guidelines as laid down in Circular |
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| 1
dated ,January 26, 2000 issued by the Securities and Exchange Commission of
Pakistan. |
|
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| A
For Attending the Meeting |
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| i)
In case of individuals, the account holder or sub-account holder and/or the
person whose securities |
|
| are
in group account and their registration details are uploaded as per the
Regulations, shall authenticate |
|
| identity
by showing his original National Identity Card (NIC) or original passport at
the time of attending |
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| the meeting. |
|
|
| ii)
In case of corporate entity, the Board of Directors' resolution/power of
attorney with specimen signature |
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| of
the nominee shall be produced (unless it has been provided earlier) at the
time of the meeting. |
|
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| B
For Appointing Proxies |
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| (i)
In case of individuals, the account holder or sub-account holder and/or the
person whose securities |
|
| are
in group account and their registration details are uploaded as per the
Regulations, shall submit |
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| the
proxy form as per the above requirement. |
|
|
| (ii)
Attested copies of NIC or the passport of the beneficial owners and the proxy
shall be furnished with |
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| the
proxy form. |
|
|
| (iii)
The proxy shall produce his original NIC or original passport at the time of
the meeting. |
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| (iv)
In case of corporate entity, the Board of Directors' resolution/power of
attorney with specimen signature |
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| shall
be submitted (unless it has been provided earlier) alongwith proxy form to
the Company. |
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|
| BOARD
OF DIRECTORS |
|
|
| Mr.
M. A. Alireza H. I. |
|
| Chairman |
|
| Other
Directorships |
|
| Xenel
Industries Ltd |
|
| &
other Xenel Group Companies |
|
| Xenel
International Ltd |
|
|
| Mr.
P. J. Windsor |
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| Vice
Chairman |
|
| Other
Directorships |
|
| American
National Power, Inc |
|
| National
Power International Holdings BV |
|
| National
Power International Ltd |
|
| National
Power of America, Inc |
|
| National
Power Polska Spolka z.o.o. |
|
| National
Power (Kot Addu) Ltd |
|
| Bizkala
Energia SL |
|
|
| Mr.
S. K. Husain |
|
| Chief
Executive |
|
|
| Mr.
T. A. R. Allerbrand |
|
| Other
Appointments |
|
| Power
Sector Expert |
|
|
| Mr.
B. Chang |
|
| Other
Directorships |
|
| Task
Technology Ltd |
|
| Brian
Chang Group of Companies |
|
| Asia
Petroleum Ltd |
|
| Fauji
Oil Terminal Company Ltd |
|
| Pakistan
Power Ltd |
|
|
| Mr.
P.M. Grasby |
|
| Other
Directorships |
|
| National
Power |
|
| NP Enerji |
|
| Gurney
Ege Enerji |
|
| Baymina
Enerji |
|
| Tejo Energia |
|
|
| Mr.
C. R. W. Masterson |
|
| Other
Directorships |
|
| National
Power Share Schemes Ltd |
|
| De
Haviland Aircraft Museum Ltd |
|
|
| Mr.
T. Miura |
|
| Other
Directorships |
|
| Hub
Power Japan Corporation |
|
|
| Mr.
S. N. A. Shah |
|
| Other
Directorships |
|
| Jahangir
Siddiqui & Co. Ltd |
|
| Philips
Electrical Industries of Pakistan Ltd |
|
| Forbes,
Forbes, Campbell & Co. (Private) Ltd |
|
| National
Development Finance Corporation |
|
| Refrigerators
Manufacturing Co. Pakistan Ltd |
|
|
| Mr.
E. E. Silagy |
|
| Other
Appointments |
|
| Entergy
Pakistan Ltd |
|
| Entergy
Power Argentina Ltd |
|
| Entergy
Power BJE Holding Ltd |
|
| Entergy
Power BJE Ltd |
|
| Entergy
Power CBA Holding Ltd |
|
| Entergy
Power Chile S.A. |
|
| Entergy
Power Development Corporation |
|
| Entergy
Power Generation Argentina LDC |
|
| Entergy
Power Nogales LDC |
|
| Entergy
Power Nogales Ltd |
|
| Entergy
Power Transmission Argentina LDC |
|
| Entergy
Power Transmission Argentina Ltd |
|
| FP
Edegel Inc |
|
| EWO
Holdings Inc |
|
|
| Mr.
P. H. Smith |
|
| Other
Directorships |
|
| Kot
Addu Power Company Ltd |
|
| Intercontinental
Utilites (Group) pie |
|
| Bowman
Power Systems Ltd |
|
| ACT
(Administration) Ltd |
|
| Pan
African Sports Investments Ltd |
|
|
| Dr.
R. G. L. Spiers |
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| Other
Appointments |
|
| Intl,
Business, National Power |
|
|
| Mr.
M. A. Tumbi |
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| Other
Appointments |
|
| General
Manager Finance, Xenel |
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| Mr. A, Azim |
|
| Nominee of |
|
| Government
of Balochistan |
|
|
| Mr.
D.V. Johns |
|
| Nominee of |
|
| CDC
Group plc |
|
|
| Mr.
M. A. Said |
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| Nominee of |
|
| National
Development Finance |
|
| Corporation |
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|
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| CHAIRMAN'S
REVIEW |
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|
| In
the name of God the Most Merciful and Most Benevolent. |
|
|
| This
is the second year that the Company has operated under extremely difficult
circumstances. Its directors |
|
| and
management have spent a considerable amount of time and energy in order to
seek an acceptable negotiated |
|
| settlement
of the tariff dispute raised by the Water and Power Development Authority
(WAPDA). During the |
|
| year
the Company has made various good faith attempts to resolve the dispute and
has submitted several |
|
| proposals
in pursuit of this, all of which were rejected by WAPDA. Simultaneously, the
Company has continued |
|
| to
defend its rights under its contracts in the courts of law and through the
arbitration proceedings that were |
|
| commenced
in July 1998 under the auspices of the International Chamber of Commerce
(ICC), in accordance |
|
| with
the Power Purchase Agreement (PPA). Unfortunately, the Supreme Court, in a
three to two decision |
|
| on
June 14, 2000 restrained the Company from continuing arbitration in its
tariff dispute with WAPDA. |
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| The
Company, as a consequence, has filed a petition in the Supreme Court seeking
that the honourable court's |
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| decision
be reviewed. |
|
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| The
Company continues to receive significantly lower payments than originally
contracted with WAPDA and |
|
| guaranteed
by the Government of Pakistan (GOP). Despite all financial difficulties the
Company has operated the Power |
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| Plant
in accordance with the terms of its contracts and fulfilled all its
obligations to its creditors. Because of the |
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| length
of the ongoing dispute and in conformity with the generally accepted.
International Accounting Standards |
|
| (IAS)
the Company has provided fully for outstanding sums owed by WAPDA, its only
customer. The Company |
|
| remains
confident that its dispute will be resolved and that amounts outstanding will
be recoverable in due |
|
| course.
In amplification of this the attention of the shareholders is drawn
specifically to Notes 17.4 and 18 to |
|
| the
financial statements. |
|
|
| The
Company has throughout the year fulfilled all of its statutory and
contractual reporting requirements and |
|
| has
completed all responses required by the investigating agencies. It continues
to strenuously deny any |
|
| allegations
of wrongdoing and to defend itself vigorously. The Company is confident that
it will be vindicated |
|
| and
that the accusations made against it will be shown to be baseless.
Nevertheless, it continues to seek an |
|
| amicable
resolution of its disputes with WAPDA in an atmosphere of mutual respect and
co-operation. |
|
|
| On
behalf of all the shareholders, I offer thanks to the employees of the
Company who have worked hard and |
|
| with
dedication under very difficult circumstances. |
|
|
| Mohamed
A. Alireza |
|
| Chairman |
|
|
|
| REPORT
OF THE DIRECTORS |
|
|
| The
Directors have pleasure in presenting the Annual Report and the Accounts for
the year ended June 30, 2000. |
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|
| General |
|
| The
principal activities of the Company are to own, operate and maintain an
oil-fired power station with a net |
|
| capacity
of 1200MW. |
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|
| Finance |
|
| Turnover
for the year was Rs. 25,601 million (1999: Rs. 20,667 million) and operating
costs were Rs. 14,886 |
|
| million
(1999: Rs. 10,307 million) resulting in a gross profit of Rs. 10,715 million
(1999: Rs. 10,360 million). |
|
| These
amounts are higher than previous year figures due to the cumulative effect of
the continuous rise in the |
|
| price
of Residual Fuel Oil (RFO), higher electricity despatch by WAPDA at 61%
(1999: 51%) despite the declining |
|
| profile
of the tariff charged under the Power Purchase Agreement (PPA) due to
retirement of debt. The RFO |
|
| price,
a contracted pass through item to WAPDA, as fixed by the Government, at the
beginning of the |
|
| year
was Rs. 6,070.50 per tonne compared to the Rs. 9,680 per tonne at the end of
the year representing |
|
| an
increase of 60% in the current fiscal year. |
|
|
| During
the year, the Company's gross trade debts increased by Rs. 7,490 million and
stood at Rs. 17,377 |
|
| million
at June 30, 2000. This increase in trade debts is due to the tariff dispute
raised by WAPDA. As a |
|
| result
the Company suffered a net cash outflow. Due to the length of the dispute,
now entering its third |
|
| year,
the Company has decided to provide against all amounts disputed or not
recovered under the terms |
|
| of
the Power Purchase Agreement (PPA). In accordance with International
Accounting Standards |
|
| a
provision of Rs. 13,445 million is included in this year's accounts and has
resulted in a Rs. 6,985 |
|
| million
loss for the year. |
|
|
| Operations |
|
| The
Plant was operated to a very high standard of thermal efficiency and
availability comparing more |
|
| than
favourably with all other plants in Pakistan. Electricity generated during
the year amounted to |
|
| 6,404
GWhrs. Routine and preventive maintenance programmes have been completed
within budget as |
|
| scheduled
to ensure the long term integrity of the plant. |
|
|
| Environment,
Health, Safety and Social Actions |
|
| The
overall health and safety performance of the Plant was excellent throughout
the year. The Hub |
|
| Power
Station Site has an ongoing proactive approach to safely management. |
|
|
| The
Environment Management System (EMS) quality
certification was renewed during the year. No major |
|
| environmental
issues were reported. The plant continues to operate within the strict
guidelines and |
|
| limits
established by the World Bank for emission and waste. |
|
|
| Despite
the difficult financial circumstances the Company is committed to the
development and uplift |
|
| of
the people living near the Plant in particular in Hub in the province of
Balochisten. In this regard, |
|
| the
Company has donated Rs. 5 million to the Chief Executive of Pakistan Drought
Relief Fund. In addition |
|
| the
Company continued to support various programmes in order to help poverty
alleviation. In |
|
| Hub,
the Operations & Maintenance contractor runs mobile dispensary to 18
villages and provides basic |
|
| medical
services. |
|
|
| Appropriations |
|
| The
ongoing litigation, restrictions imposed by the Pakistan courts and the
failure of WAPDA to honour its |
|
| contractual
obligations places the directors in a position where they are unable to
recommend a dividend. |
|
|
|
| Board
of Directors |
|
|
| The
current members of the Board are listed earlier. During the year the changes
were as follows: |
|
|
| Mr.
M. A. Zafar |
|
Mr. A. Azim |
|
| (Resigned
w.e.f. 29.11.1999) |
|
(Appointed w.e.f.
29.11.1999) |
|
| Nominee,
Government of Balochistan |
|
Nominee, Government of
Balochistan |
|
|
|
Mr. T. A. R. Allerbrand |
|
|
(Appointed w.e.f.
09.02.2000) |
|
|
| Mr.
Y. Aashata |
|
Mr. T. Miura |
|
| (Resigned
w.e.f. 09.02.2000) |
|
(Appointed w.e.f.
09.02.2000) |
|
| Nominee,
Hub Power Japan Corporation |
|
Nominee, Hub Power Japan
Corporation |
|
|
| Mr.
D. P. G. Hadfield |
|
Dr. R. G. L. Spiers |
|
| (Resigned
w.e.f. 09.02.2000) |
|
(Appointed w.e.f.
09.02.2000) |
|
| Nominee,
National Power International Holdings BV |
|
Nominee, National Power
International Holdings BV |
|
|
| Mr.
M. B. Sheikh |
|
Mr. M. A. Said |
|
| (Resigned
w.e.f. 12.04.2000) |
|
(Appointed w.e.f.
12.04.2000) |
|
| Nominee,
National Development Finance Corporation |
|
Nominee, National
Development Finance Corporation |
|
|
| Auditors |
|
| The
retiring auditors Messrs Ford, Rhodes, Robson, Morrow, Chattered Accountants
being eligible offer |
|
| themselves
for re-appointment. |
|
|
| Shareholding
Pattern |
|
| A
statement reflecting the distribution of shareholding is attached with this
report. |
|
|
|
By Order of the Board |
|
|
|
S.K. Husain |
|
| Karachi
- August 9, 2000 |
|
Chief Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of The Hub Power Company Limited as at
June 30, 2000 and the |
|
| related
profit and loss account and statement of changes in financial position,
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 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 |
|
| 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; |
|
|
| (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 and the statement of changes in financial position,
together with the notes |
|
| forming
part thereof, 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, |
|
| 2000
and of the loss and the changes in financial position for the year then
ended; |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980; and |
|
|
| (e)
without qualifying our opinion, we draw attention to the contents of notes
17.4 and 17.5 relating to a |
|
| constitutional
petition filed in the Lahore High Court, suit filed by WAPDA for cancellation
of certain |
|
| amendments
in the Power Purchase Agreement and for the recovery of overpaid amount and
assessments |
|
| raised
by the Central Board of Revenue; the ultimate outcome of these matters cannot
presently be |
|
| determined. |
|
|
| Karachi
- August 9, 2000 |
|
Ford, Rhodes, Robson, Morrow |
|
|
Chattered Accountants |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE :30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
(Rs. '000s) |
(Rs, '000s) |
|
|
| Turnover |
|
25,600,782 |
20,887,454 |
|
|
| Operating
costs |
|
3 |
(14,885,874) |
(10,307,327) |
|
|
------------ |
------------ |
|
| GROSS
PROFIT |
|
10,714,908 |
10,360,127 |
|
|
| Selling,
general and administration expenses |
4 |
(375,813) |
(394,787) |
|
|
| Provision
for doubtful debts |
|
11.1 |
(13,444,967) |
-- |
|
|
|
|
|
| Other
operating income |
|
5 |
222,612 |
1,01 6,997 |
|
|
|
|
|
| Other
operating expenses |
|
6 |
(193,868) |
(152,551 ) |
|
|
------------ |
------------ |
|
| OPERATING
(LOSS) / PROFIT |
|
(3,077,128) |
10,829,786 |
|
|
|
|
| Financing
costs |
|
7 |
(3,907,639) |
(4,125,199) |
|
|
------------ |
------------ |
|
| NET
(LOSS) / PROFIT FOR THE YEAR |
|
(6,984,767) |
6,704,587 |
|
|
|
|
| Unappropriated
profit brought forward |
|
16,752,765 |
10,048,178 |
|
|
------------ |
------------ |
|
| Unappropriated
profit carried forward |
|
9,767,998 |
16,752,765 |
|
|
========== |
========== |
|
| BASIC
EARNINGS PER SHARE (RUPEES) |
|
23 |
(6.04) |
5.79 |
|
|
========== |
========== |
|
|
| The
annexed notes form an integral pad of these accounts. |
|
|
|
S. K. Husain |
|
S.N.A. Shah |
|
|
Chief Executive |
|
Director |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
(Rs. '000s) |
(Rs. '000s) |
|
|
| TANGIBLE
FIXED |
|
| Operating
fixed assets |
|
8 |
42,259,350 |
43,821 |
|
| Capital
work-in-progress |
|
9 |
17,807 |
13,822 |
|
|
| LONG
TERM DEPOSITS, PREPAYMENTS AND |
|
| DEFERRED
COSTS |
|
10 |
4,222,348 |
4,796,866 |
|
|
|
|
| CURRENT
ASSET9 |
|
11 |
11,185,587 |
18,419,942 |
|
|
---------- |
---------- |
|
|
57,685,092 |
67,051,761 |
|
|
========== |
========== |
|
| SHARE
CAPITAL AND RESERVE |
|
|
| Share capital |
|
| Authorised,
issued, subscribed and paid-up |
|
12 |
11,571,544 |
11,571,544 |
|
|
| Revenue
Reserve |
|
| Unappropriated
profit |
|
9,767,998 |
16,752,765 |
|
|
---------- |
---------- |
|
|
21,339,542 |
28,324,309 |
|
|
| LONG
TERM LOANS |
|
13 |
28,064,941 |
31,053,904 |
|
|
|
|
| OBLIGATIONS
UNDER FINANCE LEASE |
|
14 |
4,879 |
6,172 |
|
|
|
|
|
| DEFERRED
LIABILITY |
|
15 |
11,921 |
7,879 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
16 |
8,263,809 |
7,659,497 |
|
|
|
|
|
| COMMITMENTS
AND CONTINGENCIES |
|
17 |
-- |
-- |
|
|
---------- |
---------- |
|
|
57,685,092 |
67,051,761 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
S. K. Husain |
|
S.N.A. Shah |
|
|
Chief Executive |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) FOR THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
|
|
|
|
2000 |
1999 |
|
|
Note |
(Rs. '000s) |
(Rs. '000s) |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Net
(loss)/profit for the year |
|
(6,984,767) |
8,704,587 |
|
| Adjustment
for: |
|
| Depreciation |
|
|
1,623,516 |
1,625,499 |
|
| Amortisation
of deferred costs |
|
152,551 |
152,551 |
|
| Loss/(gain)
on disposal of fixed assets |
|
79 |
(179) |
|
| Staff gratuity |
|
|
4,058 |
4,346 |
|
| Interest/mark-up
on secured Ioans |
|
3,597,912 |
33,804,836 |
|
|
---------- |
---------- |
