ANNUAL REPORT 2018 Attock Petroleum Limited ANNUAL REPORT 2018 Attock House, Morgah, Rawalpindi, Pakistan. Tel: +92-51-5127250-54, Fax: +92-51-5127255 Attock Petroleum Limited Email: [email protected] www.apl.com.pk

Growth on STRONG FOOTING

ATTOCK PETROLEUM LIMITED

DESIGN MEDIA INC.

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FINANCIAL HIGHLIGHTS

PROFIT OPERATING AFTER TAX PROFIT Rs. 5,656 GROSS Rs. 8,085 million PROFIT million 7% 27% Rs. 9,743 million 33% EARNINGS PER SHARE NET SALES Rs. 68.19 REVENUE 7% Rs. 177,344 million

12 28% TABLE OF CONTENTS

Introduction (2-21) Review Report on Statement of Compliance

Our Vision, Our Mission (3) with the Code of Corporate Governance (90) Corporate Strategy (4) Statement of Compliance with the Code of Core Values (6) Corporate Governance (91) Management’s Objectives & Strategies (8) Financial Analysis (93-106) Code of Conduct (10) DuPont Analysis (94) Geographical Presence & Brief Company Key Operating and Financial Profile and Group Structure (16) Data for Six Years (95) Quality Policy Statement (18) Vertical Analysis (98) Environment, Health & Safety Policy (19) Horizontal Analysis (99) Product Portfolio (20) Graphical presentation (100) Comments on Financial Analysis (103) Chairman’s Review (22-23) Statement of Economic Value Added (104) Chairman’s Review (22) Analysis of Variation in Results of Governance (24-92) Interim Reports (105) Board of Directors (26) Statement of Charity Account (105) Statement of Value Added (106) Profile of Board of Directors (28) Board Committees and Corporate Financial Statements (107-166) Information (32) Independent Auditor’s Report to the Whistle Blower Protection Members (109) Mechanism Policy (33) Statement of Financial Position (114) Board Committees and their Terms Statement of Profit or Loss (116) of Reference (34) Statement of Comprehensive Income (117) Management Committees (37) Statement of Cash Flows (118) Statement of Changes in Equity (119) Directors’ Report (39) Notes to and forming part of the Pattern of Shareholding (60) Financial Statements (120) Other Corporate Governance Matters (64) Corporate Sustainability (70) Annual General Meeting (167-169) Human Resource Management (74) Notice of Annual General Meeting (167) Social and Environmental Responsibility (75) Prospects of the Entity including Targets for Definition & Glossary of Terms (170) Financial and Non-Financial Measures (76) Directors’ Report (Urdu) (190) Proxy Form Risk and Opportunity Report (77) Proxy Form (Urdu) Segmental Review of Business Performance (81) Audit Committee & Internal Control Framework (82) Share Price Sensitivity Analysis (83) Calendar of Major Events (84) Information Technology Governance (86) Organizational Chart (88) APL ANNUAL REPORT 2018

2 OUR VISION To become a world class, professionally managed, fully integrated, customer focused, Oil Marketing Company, offering Value added quality & environment friendly products and services to its customers in Pakistan and beyond. OUR MISSION To continuously provide quality and environment friendly petroleum products and related services to industrial, commercial and retail consumers, and exceeding their expectations through reliability, economy and quality of products and services. We are committed to benefiting the community and ensuring the creation of a safe, responsible and innovative environment geared to client satisfaction, end user gratification, employees’ motivation and shareholders value. 3 APL ANNUAL REPORT 2018

CORPORATE STRATEGY

To enable APL to attain new heights of success through investment in human capital, implementation of lean production methods and a commitment to Total Quality and Environment Management, we plan, with the help of Almighty Allah, to further expand our existing retail network and penetrate untapped markets with pro-active measures and effective planning, implementation and execution. Our objective is to successfully deliver premium quality products and services, which will translate into maximum customer satisfaction. Beyond the technical excellence of our products, we intend to set an example in all dimensions of our entrepreneurial activities. We see ourselves committed to the self defined models of economic, social and ecological responsibility, which means not only economic success but also conscientious interaction with our employees, people and the environment.

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5 APL ANNUAL REPORT 2018 ETHICAL PRINCIPLES AND MORAL VALUES We promote a commitment to the highest moral values and ethical principles, demanding both personal and professional dedication towards the realization of these values and principles.

MAXIMUM STAKEHOLDER

RETURN

Through our streamlined business processes and commitment to total quality management we seek to ensure maximum company performance and rewards for shareholders and stakeholders alike.

CORPORATE SOCIAL CITIZENSHIP We strongly believe in the promotion of societal well-being and awareness within ones community, actively engaging in activities and initiatives to meet this objective. COMMITMENT & COOPERATION Two core fundamentals for the success of any business CORE VALUES are complete employee commitment and cooperation. At APL we foster an environment of solid teamwork and professionalism to ensure that our employees engage in both personal and professional development.

ENVIRONMENT CONSCIOUSNESS We believe that it is our responsibility to safeguard our natural resources for future generations and actively engage in environment friendly practices, policies and management techniques. APL ANNUAL REPORT 2018 MANAGEMENT’S and there is no significant outlets along with customer OBJECTIVES AND change from the previous base. It also includes STRATEGIES FOR MEETING years. enhancement of storage THOSE OBJECTIVES capacities, improvement in The objectives of the RELATIONSHIP BETWEEN operational performance, Company are defined in THE COMPANY’S RESULTS efficiency in supply chain a manner such that the & MANAGEMENT’S management, maintaining realization of short-term OBJECTIVES safe work environment, goals leads to achieving those In the year under review, develop workforce diversity objectives. The management volatility of oil prices at and increase in shareholders’ formulates strategies keeping global stage demanded wealth. Management believes in view the vision and mission dexterous steering by the that current critical measures statement of the Company. A Company’s management to performance continue to be balanced approach is adopted achieve better profitability. relevant in future as well. in this regard to come up APL maintained its market The Company monitors the to the expectations of all presence by venturing into performance of its business stakeholders. Actions are a variety of projects and through detailed operational prioritized and performance effectively managing the and financial reporting, such objectives are periodically stock. The Company added as profitability & investment/ assessed to reduce deviations a number of retail outlets market ratios and analysis, also from the corporate strategy of during the year and is in the with comparisons to budgets the Company. process of establishing bulk and updated forecasts being The management takes terminals, APL enhanced its routinely made. In order to measures to transform the storage capacity to cater assess performance against weaknesses into strengths and the demand of the country. targets and objectives, threats into opportunities. The Company is en-route to the Company has a Long term goals can only go above and beyond the comprehensive measurement be achieved by mitigating expectations of the investors system in place. The Company the risks and minimizing the and the customers. also engages external bodies threats arising due to change such as ISO-9001 Quality in external and internal CRITICAL PERFORMANCE Management System to environment. MEASURES measure performance. The critical performance SIGNIFICANT CHANGES measures and indicators IN OBJECTIVES AND against stated objectives STRATEGIES FROM of the Company include PREVIOUS PERIODS delivering premium quality Management believes that products and services with our business objectives and customers’ satisfaction, strategies are well planned increase in number of retail

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9 APL ANNUAL REPORT 2017

CODE OF CONDUCT

Attock Petroleum Limited has committed itself to conduct its business in an honest, ethical and legal manner. The Company wants to be seen as a role model in the community by its conduct and business practices. All this depends on the Company’s personnel, as they are the ones who are at the forefront of Company’s affairs with the outside world. Every member of the Company has to be familiar with his/her obligations in this regard and has to conduct him/her accordingly.

This statement in general is Respect, Honesty and to comply and take all in accordance with Company Integrity reasonable actions for goals and principles that must Directors and employees are compliance, with all be interpreted and applied expected to exercise honesty, applicable laws, rules and within the framework of laws objectivity and due diligence regulations of state or local and customs in which the in the performance of their jurisdiction in which the Company operates. This code duties and responsibilities. Company conducts business. will be obligatory for each They are also directed to Every director and employee, director and employee to perform their work with due no matter what position he adhere to. professionalism. or she holds, is responsible for ensuring compliance with Compliance with Laws, Rules applicable laws. and Regulations The Company is committed Full and Fair Disclosure Directors and employees are expected to help the Company in making full, fair, accurate, timely and understandable disclosure, in compliance with all applicable laws and regulations, in all reports and documents that the Company files with, furnishes to or otherwise submits to, any governmental authorities in the applicable jurisdiction and in all other public communications made by

10 the Company. Employees from time to time by Media Relations and or directors who have corporate management in Disclosures complaints or concerns accordance with applicable To protect commercially regarding accounting, laws. sensitive information, financial reporting, internal financial details released Inside Information accounting control or to the media should never Directors and employees may auditing matters are expected exceed the level of detail become aware of information to report such complaints or provided in quarterly and about Company that has not concerns in accordance with annual reports or official been made public. The use of the procedures established statements issued at the such non-public or “inside” by the Company’s Board of presentation of these figures. information about the Directors. As regards topics such as Company other than in the financial performance, Prevent Conflict of Interest normal performance of one’s acquisitions, divestments, Directors and employees, work, profession or position joint ventures and major irrespective of their function, is unethical and may also be a investments, no information grade or standing, must avoid violation of law. should be released to conflict of interest situations Directors and employees the press without prior between their direct or becoming aware of information consultation with the indirect (including members which might be price sensitive Management. Employees of immediate family) personal with respect to the Company’s should not make statements interests and the interest of shares have to make sure that that might make third parties the Company. such information is treated capable of “insider trading” Employees must notify their strictly confidential and not on the stock market. direct supervisor of any disclosed to any colleagues or actual or potential conflict to third parties other than on a of interest situation and strict need-to-know basis. obtain a written ruling as to Potentially price sensitive their individual case. In case information pertaining to of directors, such ruling can shares must be brought only be given by the Board promptly to the attention of and will be disclosed to the the Management, who will shareholders. deliberate on the need for Trading in Company Shares public disclosure. Only the Trading by directors and Management will decide on employees in the Company such disclosure. In case of shares is possible only in doubt, seek contact with the accordance with the more CFO. detailed guidelines issued

Corporate Opportunities Directors and employees are Directors and employees are expected to put aside their expected not to: personal interests in favor of the a) take personal use of Company interests. opportunities that are Competition and Fair Dealing discovered through the The Company seeks to use of Company property, outperform its competition information or position. fairly and honestly. Stealing b) use Company property, proprietary information, information or position for possessing trade secret personal gains. 11 APL ANNUAL REPORT 2018

information that was obtained without the owner’s consent or inducing such disclosures by past or present employees of other companies is prohibited. Each director and employee is expected to deal fairly with Company’s customers, suppliers, competitors and other employees. No one is to take unfair advantage of anyone through manipulation, abuse of privileged information or any other unfair practice. The Company is committed to expenses should be reported highly committed to providing selling its products and services and recorded in the Company’s its employees and directors honestly and will not pursue books of accounts. with a safe, healthy and open any activity that requires to act work environment, free from Equal Employment Opportunity unlawfully or in violation of this harassment, intimidation The Company believes in Code. or personal behavior not providing equal opportunity Bribes, kickbacks and other conducive to a productive to everyone around. The improper payments shall not be work climate. In response the Company laws in this regard made on behalf of the Company Company expects consummate have to be complied with in connection with any of its employee allegiance to the and no discrimination upon businesses. However, tip, gratuity Company and due diligence in race, religion, age, national or hospitality may be offered his job. origin, gender or disability is if such act is customary and The Company also encourages acceptable. No harassment is not illegal under applicable constructive reasonable or discrimination of any kind law. Any commission payment criticism by the employees will be tolerated; directors and should be justified by a of the management and its employees need to adhere clear and traceable service policies. Such an atmosphere standards with regard to child rendered to the Company. can only be encouraged in an labor and forced labor. The remuneration of agents, environment free from any distributors and commissioners Work Environment prospects of retaliation due cannot exceed normal business All employees are to be treated to the expression of honest rates and practices. All such with respect. The Company is opinion.

12 Protect Health, Safety and Security The Company intends to provide each director and employee with used for legitimate business a safe work environment and comply with all applicable health and purposes only. safety laws. Employees and directors should avoid violence and The use, directly or threatening behavior and report to work in fair condition to perform indirectly, of Company their duties. funds for political contributions to any Record Keeping organization or to any The Company is committed to compliance with all applicable laws candidate for public office is and regulations that require the Company to maintain proper records strictly prohibited. and accounts which accurately and fairly reflect the Company’s Corporate funds and assets transactions. It is essential that all transactions be recorded and will be utilized solely for described truthfully, timely and accurately on the Company’s books. lawful and proper purposes No false, artificial or misleading transactions or entries shall be in line with the Company’s reflected or made in the books or records of the Company for any objectives. reason. Records must always be retained or destroyed according to the Gift Receiving Company’s record retention policies Directors and employees will not accept gifts or Protection of Privacy and Confidentiality favors from existing or All directors and employees, both during and after their employment, potential customers, must respect the exclusivity and trade secrets of the Company, its vendors or anyone doing or customers, suppliers and other colleagues and may not disclose any seeking to do business with such information unless the individual or firm owning the information the Company. properly authorizes the release or disclosure. However, this does not All the Company’s assets (processes, data, designs, etc) are considered preclude giving or receiving as certified information of the Company. Any disclosure will be gifts or entertainment considered as grounds, not only for termination of services/ which are customary and employment, but also for criminal prosecution, legal action or proper in the circumstances, other legal remedies available during or after employment with the provided that no obligation Company to recover the damages and losses sustained. could be or be perceived Protection & Proper use of Company Assets / Data to be, expected in Each director and employee is expected to be the guardian of connection with the gifts or the Company’s assets and should ensure its efficient use. Theft, entertainment. carelessness and waste have a direct and negative impact on the Company’s profitability. All the Company assets should be 13 APL ANNUAL REPORT 2018

Communication purposes. Technology related resources All communications, whether and facilities are provided only Employee Retention internal or external, should be for internal use and/or business- High quality employee’s accurate, forthright and where related matters. Information attraction and retention is very ever required, confidential. Technology facilities which have important. The Company will The Company is committed to been provided to employees offer competitive packages to conduct business in an open should never be used for the deserving candidates. The and honest manner and provide personal gain or profit, should Company strongly believes in open communication channels not be misused during work personnel development and that encourage candid dialogue time and remain the property employee-training programs are relative to employee concerns. of the Company. Disclosure or arranged regularly. The Company strongly believes in dissemination of confidential or a clean desk policy and expects Internet use / Information proprietary information regarding its employees to adhere to it not Technology the Company, its products or its only for neatness but also security As a general rule, all Information customers outside the official

14 communication structures is It is not permitted to combine employment, legal action and strictly prohibited. business trips with a vacation or reimbursement to the Company to take along spouse, relative or for any losses or damages Compliance with Business Travel friend without the prior written resulting from such violation. Policies authorization from Management. Compliance also includes the The safety of employees while responsibility to promptly report on a business trip is of vital Compliance any apparent violation of the importance to the Company. The It is the responsibility of each provisions of this code. Company encourages the traveler director and employee to comply and his/her supervisor to exercise with this code. Failure to do Any person meeting with good judgment when determining so will result in appropriate difficulties in the application whether travel to a high-risk disciplinary action, including of this code should refer to the area is necessary and is for the possible warning issuance, Management. Company’s business purposes. suspension and termination of

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BRIEF COMPANY PROFILE AND GROUP STRUCTURE

Attock Petroleum Limited was to establish its presence and Motor Gasoline, Furnace incorporated in Pakistan as a reputation as a progressive Oil, Bitumen, Kerosene and Public Limited Company on and dynamic organization, Lubricants etc. December 03, 1995. APL is the having its focus on providing Though a new entrant in 4th Oil Marketing Company quality petroleum products the field and having no that was granted marketing and services in Pakistan and linkage with the global oil license and commenced its abroad, with special emphasis majors, APL takes pride in operations in February 1998. on meeting all safety and its heritage being associated The Company was listed environment standards. Our with the Attock Oil Group of on Pakistan Stock Exchange steady and substantially Companies which rightly claim (formerly known as Karachi growing market share and to be the pioneers in the Oil Stock Exchange) on March customer confidence is a & Gas Sector in this part of 07, 2005. Within a short span testimony to our successful the world, having started its of time, APL has managed policies, proactive endeavors operations in 1913. and visionary approach. APL Attock Group of Companies is engaged in the marketing is the only fully vertically and distribution of numerous integrated Group covering all petroleum products including aspects of the Oil and Gas High Speed Diesel, Premier sectors of Pakistan, ranging Marketing & Sales Office / from exploration, production, Head Office refining to marketing of a wide Morgah, Rawalpindi range of petroleum products. Besides oil & gas, Attock Bulk Oil Terminals Group is also involved in other Rawalpindi Bulk Oil Terminal diversified businesses; like Machike Bulk Oil Terminal Karachi Bulk Oil Terminal cement, energy & information Mehmood Kot Bulk Oil Terminal technology. APL’s sponsors include Pharaon Investment Group Limited Holding s.a.l GEOGRAPHICAL and Attock Oil Group of PRESENCE Companies.

Regional Marketing & Sales Offices Invoicing Points Karachi, Lahore, Faisalabad Mehmood Kot, Gatti 16 Multan, Peshawar Vehari, Tarujabba, Shikarpur Mehmood Kot Faisalabad-Machike Bulk Oil Terminals Virtual Depots White Oil Pipeline (WOP) Pipeline (MFM)

Regional Marketing Head Office & Sales Offices Invoicing Points 17 APL ANNUAL REPORT 2018

Provide confidence to management, our employees, clients, and stakeholders that the requirements for quality are being fulfilled and maintained and that quality improvement is continuously taking place.

To develop measurement QUALITY techniques to gauge performance for improving POLICY effectiveness of our services, operations and quality STATEMENT management system.

Fulfill all quality system To further enhance its It is the policy of Attock requirements stated in our commitment towards Quality, Petroleum Limited to provide Quality Manual, including the APL management has set the quality products and services requirements of ISO 9001:2008. following quality objectives: based on needs of our valued customers. We approach the To be a trustworthy and leading The primary objective of the challenge of getting customer oil marketing organization for Quality Management System satisfaction and loyalty providing consistent high quality is to ensure conformance to by focusing on two way products and services in the product specifications of all communication, unparalleled market. goods shipped to customers. performance, training, learning from our group experiences With this vision we want to Clearly identify and and those of others, to foster create a culture of continuous understand our internal and continuous improvement quality improvement at APL. external customers stated and culture in all functions of hidden needs, to develop a organization. way of working to meet and exceed the expectations of customers.

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ENVIRONMENT, HEALTH & SAFETY POLICY

Attock Petroleum Limited’s As a minimum we will comply overriding objective is to with all relevant legislation ensure that none of our and any other requirements to activities harm our employees, which we subscribe. seen to be performed the public or the environment. safely. We will encourage a pro-active In order to achieve this safety culture and ensure that We will strive to objective... each employee is trained, continually improve experienced and competent to performances in all areas We embrace a comprehensive perform his or her duties. of EHS performance and policy on the Environment, priorities on the basis of

Safety and Health that We will strive to remove risk. includes: all causes of accidents and events and to minimize the We will apply our We consider that none of our consequences of such if they EHS policy, standards, activities are more important occur. objectives and targets than health and safety of any to our Retail Outlets, individual or protection of We will ensure that all our Distributors, Dealers and environment. operations are performed, and Contractors. 19 APL ANNUAL REPORT 2018

High Speed Diesel High speed diesel is used in generators, cement factories (for ignition), vehicles etc. It PRODUCT is an end user product and is used in diesel engines, a type of internal combustion engine. Diesel engines are PORTFOLIO used in heavy vehicles, boats and locomotives etc.

Kerosene Oil It is primarily used for cooking and illumination purposes in Pakistan. APL Kerosene is less smoky, has high heat content and gives better illumination. Kerosene also has limited industrial use.

Premier Motor Gasoline Gasoline or petrol is a petroleum-derived liquid mixture that is primarily used Jet Fuel as a fuel in internal combustion Jet fuel is a type of aviation engines. It is also used as a fuel designed for use in aircraft solvent, mainly known for its powered by gas-turbine ability to dilute paints. Some engines. It is clear to straw additives are also added in it to colored in appearance. The improve quality. most commonly used fuels for commercial aviation are Jet A and Jet A-1 which are produced to a standardized international specification. Furnace Fuel Oil Furnace oil is largely an industrial fuel. It acts as a key ingredient in the generation of electricity and heat in a number of production units. Furnace oil is used for power generation, boilers, furnaces, air preheater, other heaters and for bunkering and feedstock in fertilizer plants.

Light Diesel Oil It serves to run construction, petroleum drilling and other off road equipments; and to Residual Furnace run prime movers in a wide Fuel Oil range of power generations, It is special high industrial boilers, vessels with viscosity residual high & medium speed engines and pumping applications oil requiring that remain liquid at low preheating. This temperatures. It is also utilized fuel is specially for direct combustion in manufactured for industrial kitchens. power plants.

20 Solvent Oil Mineral Turpentine Oil Solvents are used to dissolve It is colorless petroleum other substances during solvent with a boiling industrial processes. This range of 125-240 degrees petrochemical is used centigrade. It is mainly extensively in the production used as a solvent for textile of paint, print ink, agricultural printing, dry cleaning and chemicals, for dyeing, curing metal degreasing, as well as homesickness, dry cleaning, and for insecticidal formulations, treatment of furs etc. It is also polish manufacture, thinner, oil used as a high purity catalyst. soluble and as a rust inhibitor.

Naphtha Naphtha is a flammable liquid mixtures of hydrocarbons i.e. a component of natural gas condensate or a distillation product. Some uses of naphtha gas are as a fuel for camp stoves and blowtorches, providing light Cutback Asphalts in gas lanterns. Cutback Asphalt is manufactured by blending asphalt cement with a solvent. There are two major types based on the relative rate of evaporation of the solvent. It is used for prime coat, surface treatment, stock pile patching mixes etc.

Polymer Modified Bitumen Bitumen is further treated with polymer which improves consistency, reduce temperature susceptibility, improve stiffness and cohesion, improve flexibility, resilience and toughness, and improve binder aggregate adhesion. It is used in making highways.

Jute Batching Oil It is predominantly used in the jute Lubricants industry for making Different types jute fiber pliable. It of Lubricants also finds application (Automotive and as Wash Oil in the Industrial) are steel industry. sold under APL brand name. Use of a lubricant is to reduce the overall system friction.

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On behalf of the Board introduce Company’s tactical, of Directors, prestigious operational and financial shareholders of the Company strategies to new insights CHAIRMAN’S are warmly welcomed to utilizing their broad visions, the 23rd Annual General in depth knowledge and Meeting of the Company. vast market experience. I REVIEW I also welcome the newly would also like to place elected Board of Directors on record my appreciation and recently constituted of the contributions made various Board committees by outgoing Board and its and hope that they will Committees.

22 Upholding the vision and core controlling challenges regarding year 2017-18 is characterized by values of the business, the Board energy crisis, unemployment, transformation in APL’s business and followed a proactive approach infrastructure development and strategic direction. The Company to maximize shareholders’ value other sectors. Lack of Foreign successfully stepped into the by equipping the Company with Direct Investment also contributed Aviation business with the official all necessary resources enabling to slow down of economy. commissioning of fuel farm at the Company’s management to Islamabad International Airport in The energy requirements of the exploit all possible opportunities collaboration with another OMC. Country are met through domestic and at the same time achieving production and import channels. Besides creating wealth for the an appropriate tradeoff between Indigenous resources are unable to shareholders, APL actively plays risk and returns. Good corporate fulfill the total demand, therefore, role for the benefit of the society governance has been ensured heavy reliance is placed on import and the environment and being by maintaining high levels of of petroleum products. However, a good corporate citizen, has professional and business conduct, technological advancements always maintained its image implementing effective internal and upgradation in the refining and reputation of playing its controls and audit functions sector has led to an increase in role towards corporate social including risk management production of Premier Motor responsibility. Moving forward, I framework. The Board not only Gasoline (PMG) and APL exploited have confidence in the Board and focused on implementing the this opportunity to its benefit by the management to shape the strategy set in the previous years increasing its local procurement of Company in such a manner that to continue with the momentum PMG. The same also contributed potential opportunities are utilized of growth and progression but also to increased sale of PMG by 12%. to our benefit and continued took benefit of the new business The total market share of the success remains our fate. opportunities. The year was started, Company increased from 9.0% under the visionary stewardship of I wish to place on record my in 2016-17 to 9.7% in 2017-18. This the Board, with a clear roadmap on appreciation and gratitude for growth in sales volume resulted how to create and capture value for the support received by the in an increase in profitability by all stakeholders. Company from the Ministry 7% to Rs 5,656 million (2016-17: Rs of Energy, other Government 2017-18 was another volatile year 5,299 million) which is the highest organizations, customers, suppliers for the international oil market ever profit after tax earned by APL. and contractors. I would also like with prices finally appearing These results translate into earnings to thank our shareholders, for their to be on track to a sustainable per share of Rs 68.19 (2016-17: Rs confidence and trust reposed in recovery by the end of the year. 63.89). Given the leadership of the the Company and our Board of The global economy during the Board, the decision-making of the Directors and employees for their fiscal year remained contentious. management and the effort of untiring endeavors and contribution The energy industry has faced every member of the Company, it that have made achievements to several challenges and pressures is certain that APL will remain on date possible and hope that with during the recent years which the path of delivering excellent these joint dedication we can lead still need be addressed to make performance consistently. our Company to new heights of the business more viable in light A streamlined supply chain is the success. of slowing global economy and backbone of any business’ success. changing political and socio- The Company has been consistently economic factors. Growth in contributing to the Country’s emerging markets shall provide economic growth by incurring an opportunity to support and substantial capital expenditure strengthen this industry to make it to develop its infrastructure, Laith G. Pharaon more lucrative and profitable. strengthening its supply chain cycle Chairman The economic factors within and enhancing its storage capacity. Dubai, U.A.E. the Country deteriorated in the As part of this, refinements have backdrop of political upheaval been carried out in procurement, August 14, 2018 and the Government focused on operations and logistics. The 23 APL ANNUAL REPORT 2018

GOVERNANCE

Attock Petroleum Limited has established state of the art retail outlets, where the concept of all facilities under one roof is reflected.

At these retail outlets, our customers get to experience world class facilities of refueling their vehicles in a friendly and secure environment at all times.

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25 APL ANNUAL REPORT 2018 BOARD OF DIRECTORS

26 27 APL ANNUAL REPORT 2018 PROFILE OF BOARD OF DIRECTORS Mr. Laith G. Pharaon Chairman Non Executive Director A businessman and an international investor who has financial and trading interests in Pakistan and other parts of the world in various sectors like petroleum, power generation, chemical, real estate and cement etc. Mr. Laith holds a graduate degree from the University of Southern California.

Other Engagements Chairman & Director Director The Attock Oil Company Limited Pakistan Oilfields Limited Attock Cement Pakistan Limited Attock Refinery Limited National Refinery Limited Attock Gen Limited

Mr. Wael G. Pharaon Non Executive Director A businessman and an international investor who has financial and trading interests in Pakistan and other parts of the world in various sectors like petroleum, power generation, chemical, real estate and cement etc. Mr. Wael holds a graduate degree. He is a Director on the Board of various Companies in the Attock Group of Companies.

Other Engagements Director The Attock Oil Company Limited Attock Cement Pakistan Limited Pakistan Oilfields Limited National Refinery Limited Attock Refinery Limited Attock Gen Limited

Mr. Shuaib A. Malik Chief Executive Officer Executive Director Mr. Shuaib A. Malik has been associated with Attock Group of Companies for around four decades. He started his career as an Executive Officer in The Attock Oil Company Limited in July 1977 and served in different Companies in the Group at various times with the responsibility to supervise and oversee the operations and affairs of these Companies. He has exhaustive experience related to various aspects of upstream, midstream and downstream petroleum business. He obtained his bachelor’s degree from Punjab University and has attended many international management programs, workshops and conferences including two such programs at British Institute of Management, UK and Harvard Business School, USA.

28 Other Engagements Chairman, Chief Executive Officer & Director & Alternate Director Director Attock Cement Pakistan Limited Pakistan Oilfields Limited Attock Gen Limited Chairman, Director & Alternate Resident Director Director Pharaon Investment Group Limited Attock Refinery Limited (Holding) s.a.l Group Chief Executive Chief Executive Officer, Deputy Chairman & Director National Refinery Limited Chief Executive Officer & Director The Attock Oil Company Limited

Mr. Abdus Sattar Non Executive Director Mr. Abdus Sattar has over 35 years of Financial Management experience at key positions of responsibility in various Government organizations/ministries, commercial organizations with the main objective of controlling costs of various commodities, to watch consumer interest, minimize government subsidies, improve government revenues, eliminate wasteful expenses/ leakages and fixation of gas and POL prices. After serving as Financial Advisor to Ministry of Petroleum & Natural Resources, Government of Pakistan, he also remained Financial Advisor for Mari Gas Company Limited for around 8 years including 6 years as its Director on the Board. While working as Financial Advisor in Ministry of Petroleum he also served as Director on a number of boards like OGDCL, PPL, SNGPL, SSGCL, PSO, PARCO, ARL, POL, NRL, PMDC etc. as a nominee of Government of Pakistan for about seven years. He is a fellow member of Institute of Cost and Management Accountant of Pakistan (ICMAP) and was also nominated as council member of ICMAP for the three years (Jan 2000 to Dec 2002) by the Government of Pakistan. He has attended many advance financial management courses, programs and trainings in institutions of international repute in Pakistan and abroad.

Other Engagements Director Pakistan Oilfields Limited Attock Cement Pakistan Limited Attock Refinery Limited National Refinery Limited

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Mr. Babar Bashir Nawaz Non Executive Director Mr. Babar has over 30 years of experience with the Attock Group of Companies. During this period he has held various positions in Finance, Personnel, Marketing & General Management before being appointed as the Chief Executive of Attock Cement Pakistan Limited in 2002. Mr. Bashir holds a Master’s degree in Business Administration from the Quaid-e-Azam University in Islamabad and at present is also a Director on the Board of all the listed companies of the Group in Pakistan. He has attended various courses, workshops and seminars in Pakistan and abroad on the business management and has substantial knowledge of the cement industry in Pakistan. Currently he is also a member of the Management Committee of the Overseas Investors Chamber of Commerce and Industry and the All Pakistan Cement Manufacturing Association.

Other Engagements Chief Executive Officer & Director Alternate Director Attock Cement Pakistan Limited Pakistan Oilfields Limited Attock Refinery Limited National Refinery Limited

Lt General Javed Alam Khan (Retd.) Independent Non Executive Director Lt General Javed Alam Khan was commissioned in Pakistan Army in April 1971 and subsequently joined the Armoured Corps – 24 Cavalry (Frontier Force) in 1972. He is a graduate of Armour Officer Advance Course, Fort Knox (USA),

Command and Staff College, Camberley (UK), National Defense College, Islamabad and INSEAD, France. He holds a Master’s degrees in War Studies. During the tenure of his service, the General has held various command, staff and instructional appointments which include General Staff Officer-3 (Intelligence) in an Independent Armoured Brigade Group, Instructor School of Armour, Brigade Major of an Infantry Brigade, Commandant 24 Cavalry (Frontier Force), Directing Staff Command and Staff College Quetta, Army Advisor High Commission of Pakistan, United Kingdom, Commander of an Armoured Brigade and an Infantry Brigade, General Officer Commanding of an Infantry Division, Director General Analysis, Directorate General Inter Service Intelligence. His military career of nearly 35 years achieved its peak when appointed as Commander of a Strike Corps followed by his retirement in April 2006. After his retirement from Pakistan Army, he was appointed as CEO/MD of Fauji Kabirwala Power Company Limited and also served as CEO/MD of Fauji Cement Company Limited from September 2008 to February 2011. In recognition of his meritorious services, he has been awarded Hilal-e- Imtiaz (Military).

30 Mr. Mohammad Raziuddin Independent Non Executive Director Mr. Mohammad Raziuddin has over 30 years of rich experience in the energy sector. He holds a Master’s Degree in Engineering from University of Detroit, Michigan, USA and did his MBA from Syracuse University, New York, USA. During his career, he has held top-level advisory positions in various organizations within the Country and also served as Technical Advisor in Saudi Arabia, Pakistan and Bangladesh. He has served as the CEO of Attock Refinery Ltd. and Managing Director, OGDCL. He has extensive knowledge and vast experience in energy consultancy, oil refining, exploration and production, petroleum marketing etc. Currently he is serving as the CEO of KP Oil & Gas Company Ltd.

Other Engagements Chief Executive Officer KP Oil & Gas Co. Limited

Mr. Iqbal A. Khwaja Alternate Director to Mr. Laith G. Pharaon Mr. Iqbal Ahmad Khwaja is a Bachelor of Commerce from Karachi University and to obtain a professional degree, he proceeded to UK to qualify as Chartered Accountant from England and Wales. On his return from UK, he served with Attock Group of Companies for nearly thirty years in various capacities. He has been Chief Financial Officer and Corporate Secretary of Pakistan Oilfields Limited (POL), for many years. He rose to the position of its Deputy Chief Executive and also served on the Board of POL. He has also been CEO of POL’s subsidiary Attock Chemicals (Pvt) Limited and CAPGAS (Pvt) Limited. During his tenure with the Group, he attended many national and international courses and seminars to remain up-to-date with his professional knowledge. Due to his knowledge and vast experience, he has been retained by The Attock Oil Company Limited, in the capacity of an advisor.

Mr. Rehmat Ullah Bardaie Alternate Director to Mr. Wael G. Pharaon & Company Secretary Mr. Rehmat Ullah Bardaie is associated with Attock Group of Companies since June 1997 and has been part of the various assignments / projects undertaken from time to time. Presently, he is holding the charge of

General Manager (Finance and Accounts) and Company Secretary. He has attended various financial management courses, training programs, seminars and conferences in Pakistan and abroad. He is a fellow member of The Institute of Chartered Accountants of Pakistan, The Institute of Cost and Management Accountants of Pakistan and Association of Chartered Certified Accountants (UK).

Other Engagements Alternate Director Company Secretary Attock Gen Limited The Attock Oil Company Limited

31 APL ANNUAL REPORT 2018

BOARD COMMITTEES & CORPORATE INFORMATION

Board Audit Committee Share Registrar

1. Mr. Mohammad Raziuddin Chairman Central Depository Company of 2. Mr. Abdus Sattar Member Pakistan Limited 3. Mr. Babar Bashir Nawaz Member CDC House, 99-B, Block ‘B’ 4. Lt Gen (Retd) Javed Alam Khan Member S.M.C.H.S, Main Shahra-e-Faisal Karachi Human Resource & Remuneration Tel: +92-21-111-111-500 Committee Fax: +92-21-34326053 1. Mr. Mohammad Raziuddin Chairman Customer Support Service: 2. Mr. Shuaib A. Malik Member (Toll Free) 0800-CDCPL (23275) 3. Mr. Iqbal A. Khwaja Member Bankers (Alternate director to Mr. Laith G. Pharaon) Allied Bank Limited Auditors Askari Bank Limited A. F. Ferguson & Co. Bank Alfalah Limited Chartered Accountants, Islamabad. Faysal Bank Limited Habib Bank Limited JS Bank Limited Registered Office MCB Bank Limited Attock House, Morgah, Rawalpindi. National Bank of Pakistan The Bank of Khyber The Bank of Punjab Legal Advisor The Bank of Tokyo Mitsubishi United Bank Limited Ali Sibtain Fazli Associates Mall Mansion, 30-The Mall, Lahore. Correspondence Address

Attock House, Morgah Rawalpindi, Pakistan. Tel: +92-51-5127250-54 Fax: +92-51-5127255 Email: [email protected] Website: www.apl.com.pk

32 WHISTLE BLOWER PROTECTION MECHANISM POLICY

Whistle blower means an to all the stakeholders, • The Whistle Blower understands employee who reports a concern implementation of sound, that his/her act will cause to management about illegal effective and efficient internal more good than harm to the activities or a breach of code of control system and operational Company and he/she is doing conduct. procedures. this because of his/her loyalty with the Company; and The management encourages All employees have signed a code whistle blowing culture in the of conduct and the Company • The Whistle Blower organization and has adopted takes any deviation very seriously. understands the seriousness a culture to detect, identify Employees should report in of his/her action and is and report any activity which good faith about illegal or ready to assume his/her own is not in line with the Company unethical conduct. The Company responsibility. policies, any misuse of Company’s encourages Whistle Blowing properties or any breach of The management understands to raise the issue directly to law which may affect the that through the use of a good Chairman Audit Committee and reputation of the Company. The Whistle Blowing Plan, they can / or to Chief Executive and/or to Company has adopted the best discover and develop a powerful the Company Secretary provided corporate policies to protect ally in building trust with its that:- employee(s) who report corporate employees and manage fair and wrongdoings, illegal conduct, • The Whistle Blower has sufficient transparent operations. The internal fraud and discrimination evidence(s) to ensure genuineness Company therefore provides against retaliation. The Company of the fact after a proper a mechanism whereby any promotes transparency and investigation at his/her own employee who meets the above accountability through publication end; referred conditions can report any of accurate financial information case based on merit without any fear of retaliation and reprisal to any of the above offices. Allegations made by the whistle blower shall be investigated and claims made will be probed and scrutinized fairly. The management reserves the right to put forth the claims made by the whistle blower, as they deem appropriate.

33 APL ANNUAL REPORT 2018 BOARD COMMITTEES AND THEIR TERMS OF REFERENCE

34 90th Board of Directors’ Meeting in progress

Board Committees and operational controls. It assists Human Resource & Remuneration The management is committed the Board in discharge of its Committee to follow the principles of good fiduciary responsibilities. The Audit The Board has established Human Corporate Governance and being Committee reviews the periodical Resource and Remuneration a responsible corporate entity it statement of the Company before Committee which is responsible believes in transparency of system their respective presentation to the for recommending human for effective monitoring and to Board and ensures implementation resource management policies. enhance governance process. of relevant controls for the The Committee is also responsible Keeping in view the requirements integrity of the information. for recommending the selection, of Listed Companies (Code of The Committee recommends evaluation, compensation Corporate Governance) Regulations, to the Board of Directors the (including retirement benefits) of 2017, the Board has revised the appointment of external auditors key management personnel and terms of reference of Audit and discusses major observations for consideration and approval Committee and Human Resource with the external auditors arising on recommendations of Chief and Remuneration Committee. The from interim review and final Executive Officer on such matters following Board Committees have audit. In doing so, Committee also for key management positions who been formed to assist the Board in reviews the management letter report directly to Chief Executive fulfilling its responsibilities. issued by the external auditors Officer. and management’s response Audit Committee Budget Committee thereto. The Committee also The Audit Committee reviews the The Committee comprises of three goes through the legal matters financial and internal reporting directors and their responsibility is which may significantly impact processes, the system of internal to assist the Board in formulating the financial statements and control, management of risk and the annual budget and forecasts ensure compliance with relevant the internal and external audit and reviewing analysis of actual statutory requirements. Besides processes. The Audit Committee performance with those budgeted/ this, monitoring compliance with ensures that the Company has a forecasted. The Committee also the best practices of corporate sound system of internal financial keeps an eye on the developments governance, investigating any and trends in the industry to assist violations thereof and ensuring the Board in planning for future coordination between internal capital intensive investments and and external auditors are also the growth of the Company. main responsibilities of the Audit Committee.

35 APL ANNUAL REPORT 2018

Share Transfer Committee dealing with matters relating to and related legal and regulatory The Committee consists of three the shares of the Company like requirements. directors and is responsible for transfers, issuance of new shares

36 MANAGEMENT COMMITTEES

Executive Committee Budget Committee Pricing Committee Consist of all departmental heads Reviews and recommends the Reviews and recommends the and chaired by the CEO, they annual budget proposals and pricing of deregulated products meet regularly to coordinate the discusses deviations with the on regular intervals. activities, accomplishments and departmental heads. other pertinent issues. Safety and Technical Information Technology Committee Retail Outlet Development Committee Reviews and monitors, the safety, Committee Responsible for automation health and environment matters Responsible for recommending of process and system in line for safe operations and better proposals for setting up retail with latest technology and environment and matters relating outlets and reviewing progress. developments. to technological problems and operational risks affecting the business.

37 APL ANNUAL REPORT 2018

Mr. Shuaib A. Malik Chief Executive Officer

38 DIRECTORS’ REPORT The Board of Directors PRINCIPAL BUSINESS ACTIVITIES Attock Petroleum Limited (APL) started operations as an Oil Marketing takes pleasure Company (OMC) in 1998. Being part of a fully integrated oil group based in Pakistan, the Company deals in a wide range of petroleum in presenting products and serves local and international clients. APL markets and supplies fuels to retail outlets, industries, armed forces, power producers, government/semi-government entities, developmental the annual sector and agricultural customers etc. A range of automotive and report on the industrial grades lubricants is offered as well. The oil industry operates under the regulations framed by the performance Government of Pakistan (GoP) through Ministry of Energy and Oil & Gas Regulatory Authority (OGRA). Prices of some of the petroleum products are regulated by OGRA and prices of other products are and progress declared by the Company as per its own mechanism. of the Company together with FINANCIAL PERFORMANCE the audited During the year under review, the Company recorded net sales revenue of Rs 177,344 million, resulting in an financial increase of 28% as compared to last year (2016-17: Rs 138,661 million). This increase is attributed to increased prices of statements petroleum products and partially attributable to increase in sales volume by 6%. The increase in sales revenue led to increase of 33% in the gross profit which was made possible due to proactive for the year approach and dedicated efforts by the management through intelligent decision making and by ensuring a seamless supply chain ended June along with effective stock management leading to inventory gains. The profit after tax increased by 7% which stands at Rs 5,656 million (2016-17: Rs 5,299 million) due to reversal of provision 30, 2018. of other charges in last year amounting to Rs 437 million (net of tax) relating to the Workers Welfare Fund recorded as per the decision of Supreme Court of Pakistan and increase in operating expenses including increase in exchange loss by Rs 292 million. The net profit translated into earnings per share of Rs 68.19 (2016-17: Rs 63.89).

39 APL ANNUAL REPORT 2018

Financial results and appropriations for the year ended June 30, 2018 have been Rs in summarized below: Million

Profit before taxation 8,289 Less: Provision for taxation (2,633) Profit after taxation 5,656 Add: un-appropriated profit as at June 30, 2017 15,250 Less: Transfer to special reserve by associated companies (35) Less: Other comprehensive loss for the year (8) 20,863 Appropriations during the year: Final cash dividend for the year 2016-17 @ 275% (Rs 27.50 per share of Rs 10/- each) 2,281 Interim cash dividend for the year 2017-18 @ 150% (Rs 15/- per share of Rs 10/- each) 1,244 3,525 Balance as at June 30, 2018 17,338 Subsequent Effects: Final cash dividend for the year 2017-18 @ 250% (Rs 25/- per share of Rs 10/- each) 2,074 Transfer from reserve for issue of bonus shares in the proportion of one share for every 166 five shares held i.e. 20%

15,098

PRICE TREND ANALYSIS HIGH SPEED DIESEL PREMIER MOTOR GASOLINE

100 100

90 90

80 80

70 70 Rupees/Litre Rupees/Litre 60 60

50 50 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

2017-18 2016-17 2017-18 2016-17

KEROSENE OIL LIGHT DIESEL OIL

80 80

70 70

60 60

50 50 Rupees/Litre Rupees/Litre

40 40

30 30 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

40 2017-18 2016-17 2017-18 2016-17 Dividend ex-chequer in the form of payments of petroleum products The Board has recommended a taxes and levies thus serving its and operating expenses. Cash final cash dividend @ 250% (Rs community and nation. Expansion and cash equivalents at year end 25/- per share of Rs 10/- each) of its network of retail outlets were Rs 4,198 million. Availability and bonus issue @ 20% i.e. one and distributors by including of funds is ensured by employing share for every five shares held remote and far flung localities different methods including out of the profits for the year in the development plan has led financial projections which are ended June 30, 2018. This is in to generation of employment in updated on a regular basis to addition to the interim cash those areas and the quality of stay up-to-date with the liquidity dividend @ 150% (Rs 15/- per life of the local populace is being requirements. Even though the share of Rs 10/- each) already improved. Company has sufficient borrowing declared and paid to the capacity and is adequately geared shareholders, thus making a total Liquidity Management, to meet its future commitments of 400% cash dividend for the Financing arrangements & and development plans, currently, year under review. Cash Flow Strategy all fund requirements are met by During the year under review, cash internal cash generation. Contribution towards and cash equivalents decreased National Exchequer and by Rs 6,735 million. The cash Economy was used mainly for purchase The Company contributed Rs of property, plant & equipment, 60,795 million towards national

OVERALL MARKET SHARE REVENUE CONTRIBUTION

6% 2.4% 1.7% 2.1% 86% 3.3% 8%

4.6%

6.9%

8.7%

9.7%

49.3%

11.3%

Gross Pro t Net Finance Income PSOCL HASCOL APL TPPL SPL

BPPL (MKTG) GO PARCO (PEARL) BEL OTHERS* Other Income Share of Pro t of Associates

*PUMA, OTO, ZOOM, ASKAR

Source: Oil Companies Advisory Council (OCAC)

41 APL ANNUAL REPORT 2018

Strategies to Overcome Significant Changes in Cash outflow from operating Financial Problems Financial Position and activities for the year was Rs The Company does not expect Liquidity from last year 1,030 million as compared to any financial difficulties in the As at June 30, 2018, total assets cash inflow of Rs 4,848 million foreseeable future. Nonetheless, increased by Rs 7,764 million to Rs last year mainly due to excess of various standby arrangements 46,131 million as compared to last payments to suppliers etc over with financial institutions have year and total liabilities increased receipts from customers. Outflow been made to ensure smooth to Rs 27,714 million, an escalation of Rs 2,503 million was recorded continuation of the operations. of Rs 5,641 million. Focusing on from investment in property, increasing its storage capacity, plant and equipment. Purchase of Capital Structure the Company invested substantial short term and other long term The capital of the Company is amount of Rs 2,193 million for investments resulted in outflow entirely structured on equity purchase of land and construction of Rs 839 million while income finance. There was no change in of bulk oil terminals and retail earned on investments resulted in the capital structure during the outlets which resulted in increase an inflow of Rs 688 million. Total year and the management is of in non-current assets from Rs cash out flow of Rs 2,620 million the view that the capital structure 5,867 million to Rs 7,983 million. was recorded from investing is appropriate for the foreseeable An increase of Rs 185 million was activities. Outflow relating to future. observed in net current assets, dividend was Rs 3,089 million resulting into Rs 11,346 million at (2016-17: Rs 3,313 million). As the entire capital structure is the year end. Trade debtors and equity financed, hence no default trade payables increased mainly in payments of any debts was due to market forces. observed. MARKET AND INDUSTRIAL REVIEW

Global the ‘Declaration of Cooperation’ Globally, the oil prices increased continue to support the oil significantly since last year. The market/prices. oil market was underpinned by Global oil demand growth renewed geopolitical issues, remains healthy driven by tightening product inventories developing countries in Asia, even and robust global demand. This as oil consumption growth slows all dampened the effects of a down in China due to the new stronger dollar and rising US environmental policies designed production. Strong conformity to curb air pollution and other from OPEC and participating economic factors. non-OPEC nations, in terms of The world economy continues production adjustments, under to grow, driven by increasing prosperity in the developing world. The competitive pressures within global energy markets are intensifying. International research indicates that the

42 demand will continue to grow, with global energy consumption set to increase by approximately a third or so by the year 2040. However, exponential advancement in technology means the ability to produce energy is growing faster – be that in unconventional oil and gas, or in the renewables sector like wind and solar energy etc. Indeed, the continuing rapid growth of renewables is leading to the most diversified fuel mix ever seen in history. Abundant and diversified energy supplies will make for a challenging marketplace in times to come. Growth in global energy demand is broad-based across all the main sectors. Differing trends in the way energy is used and consumed in these sectors has an important role and will have a bearing on the energy transition in future.

Domestic As a developing country, Pakistan’s energy requirements have been growing steadily over time. However, in the year under review, a decrease of 2.3% was recorded in the industry

43 APL ANNUAL REPORT 2018

volumes but APL outperformed the industry increasing its sales volumes year on year by 5.4%. The Country observed increase in consumption of Premier Motor Gasoline (PMG) due to increase in passenger motor vehicles and less usage of Compressed Natural During the year under review Gas (CNG). The Country also multiple restoration projects witnessed a surge in consumption related to existing roads network, of High Speed Diesel (HSD) which construction of new motorways was mostly due to the growth and CPEC development in development projects by the nationwide also contributed GoP; owing mainly to China substantially in the consumption Pakistan Economic Corridor of Bitumen/Asphalt. (CPEC) activities and other construction projects nationwide. In order to meet the Country’s growing demand, the dependency on imports also augmented. Generally, prices of petroleum products in the Country followed the increasing global pricing trend in the year 2017-18.

44 COMPANY’S SALES AND MARKETING REVIEW

Operational robustness is a tough HOBC-97 – imported through our product lines (ENEOS). attribute to achieve and grow trusted international suppliers, consistently. However, in line also witnessed phenomenal During the last year, the company with the Company’s vision and growth over the last year. focused on strategic expansion past performances and despite of its retail network – especially the ever increasing competition All of this was only possible in the urban and suburban areas - APL managed to achieve great through a steady and robust of the major cities and towns of milestones in almost all of its supply line of the Company, Pakistan. This not only helped us business activities and operations. which includes the domestic to create a wider presence of our During the year under review, refineries but also the brand, but also to capture the the operational and marketing international suppliers through opportunities within the growing landscape of the oil and gas which APL imports the desired PMG market/consumption of industry within Pakistan has products – ensuring ample the Country. Several outlets rapidly evolved with further product availability despite are being commissioned, or issuance of OMC licenses to new numerous operational and are under various construction entrants within the field. The exchange rate related challenges phases, within the major cities Company stood by its resolve of and price volatilities within of Pakistan; Islamabad, Lahore, positively contributing towards the international market. The Karachi, Quetta and northern the over-all growth and prosperity Company further added reliable areas of Pakistan. This will further of the Country churning the international suppliers in its list increase our footprint and enable wheel of economic growth for a of suppliers, thereby improving us to serve our clients as per the better, brighter future of Pakistan. not only the availability of the highest standards of quality and highest quality products but also convenience. APL has expanded The Company was also able to economically more viable. its retail outlet network and as at secure landmark contracts of June 30, 2018 the total number of HSD, PMG and Jet Petroleum The Company further improved retail outlets is 629. (JP) with respect to major CPEC and sustained its market share projects and also the armed within the Lubricant division. The Company continues to grow forces. This resulted in achieving Renewed focus on the over-all on being a responsible corporate growth of 12% in PMG over the production, blending, packaging citizen. During the year under last year. Similarly, for Bitumen, and promotional activities not review, APL embarked on several the Company entered into only created better customer green projects in order to further arrangements with major CPEC experience but also better reduce our carbon footprint and contractors and FWO – helping product line management. The contribute towards the overall connect the nation via the best in Company ventured into long environment that we operate in. class road and highways network. term contracts with a few vehicle Conversion of our old outlets The premium grade product, manufacturers for one of its towards the SMART lighting 45 APL ANNUAL REPORT 2018

system will also play a vital Attock Smart Fuel Cards. customers on retail outlets by role in reducing the electricity During the year, the Company venturing with different consumer consumption and thereby the launched its Attock Smart Fuel products and creative solutions power burden on the national Cards for corporate and individual for ease and premium fuelling grids. In order to further enhance clients. The Attock Smart Fuel experience. By modernizing the the outlook and visibility of the Card facilitates customers with fuelling experience and enabling outlets, introduction of LED based cashless and secure transactions various consumer facilitating Pylons and the 85 feet tall Mega/ and offers complete control on services, Company will not only Zoom signs were made to create fuel budget, real-time online engage and serve more customers an edge over the competition. reporting, eliminate unauthorized but also generate revenue from purchases and provides maximum non-fuel retail services. Other Business Activities convenience. Being a consumer convenience Infrastructure Development To enhance the over-all focused Company, Attock The Company firmly believes experience at retail outlets, state- Petroleum Limited further that infrastructure expansion is of-the-art and technically elegant equipped its retail outlets with absolutely imperative to grow lube oil change facilities have been different payment solutions i.e. and gain competitive advantage, installed. This will not only boost Credit Cards, ATM facilities and especially when the competition efficiency in the process of oil is intensifying. Premium quality change, but also add and improve products, innovative services the outlook of the retail outlets. and solutions, new ventures and Company is also planning to bring infrastructural expansion remained more convenience for its valued the primary goals during the year. The Company marked its footprint

46 Inauguration Ceremony of Capital Filling Station, F-11 Islamabad in the Aviation Fuels business and pocket and the Company wanted but also boost sales and help to started refueling operations at to explore the potential business attain cost efficiencies in terms of Islamabad International Airport opportunities to help cut-down freight advantages. on May 03, 2018. This Fuel Farm on the freight charges as well as Quality Assurance of Products and Hydrant Refueling System is become more responsive to market APL has continued its tradition the largest facility in the Country, demands and opportunities within to provide quality products to having a storage capacity of 10,000 that region. its customers. Quality Assurance M.Tons of Jet Fuel. The refueling New infrastructure developments (QA) team ensures that quality system has a 14 km hydrant line of will help the Company to cater and premium product is delivered 14 inch diameter with 55 hydrants to volatility within the rapidly by regular testing at terminals pits to fuel the aircrafts around evolving operational and marketing and retail outlets by employing the clock and is equipped with dynamics within the industry. state-of-the-art ground and robust and latest monitoring and Construction of storages and new mobile quality assurance labs, control systems, state of the art terminals is underway; resources equipped with contemporary and product pumping system, modern have been aligned and mobilized technically advanced apparatus. and technologically advanced for speedy work at sites for earliest Surprise quality checks are carried refueling equipment and fool proof commissioning. Construction of out throughout the year by the security system - which all together bulk oil terminals at Shikarpur, QA team to ensure that premium makes it the most advanced and Sahiwal and Daulatpur is under quality product is delivered to largest Fuel Farm of Pakistan serving progress. the end user. Furthermore, the national and international air The Company has purchased land Company has maintained and carriers. at Tarujabba for development of upgraded its certification of During the year, the Company a bulk oil terminal and actively Quality Management System also commissioned Mehmood Kot pursuing land acquisitions at (QMS) ISO 9001:2008 to Quality Bulk Oil Terminal with a storage Faisalabad (Gatti) and Dera Management System (QMS) ISO capacity of 13,100 M.Tons of HSD Ismail Khan. The management is 9001:2015 thereby ensuring its and 4,000 M.Tons of PMG. Special optimistic that these developments commitment to adherence to focus on this project was given will not only increase effectiveness highest quality standards of the as the region is a natural fuelling and efficiency of the operations Country.

47 APL ANNUAL REPORT 2018

Risk Management Framework The adoption of a risk management framework that embeds best RISK MANAGEMENT practices into the Company’s risk culture is the cornerstone of the Company’s financial future. Our Company’s risk management framework is built upon following APL faces economic uncertainties due to various factors pillars: including uneven demand and supply of products and price fluctuations. Cleaner and greener energy source, • risk identification technological progressions, surplus production and low • risk assessment demand all present risks, which need cautious foresight • risk mitigation to stay beneficial in times to come. However, increase in • risk reporting and monitoring population, economic development and growth in energy • risk governance utilization is expected in times to come. The Board of Directors has approved a Risk Management Policy to ensure Company’s level of risk tolerance is determined and identified risks are appropriately reported, managed or mitigated within timely manner. Risk exposures are periodically gauged in accordance with the risk management framework. The Board of Directors have carried out a robust assessment of principal risks facing the Company including those that might affect the future performance, solvency or liquidity.

Volatility in International Oil Prices and Regulatory Risks Businesses operating across the oil and gas supply chain continue to evolve and adapt to the new operational landscape driven by volatility in the oil price. During the year 2017-18, a series of geopolitical and market factors have driven volatility in the oil prices. The exponential advancements in technology enabled cheaper oil production creating surplus supplies within the global arena. OPEC is determining supply volumes, with its consequent effect on price and intense scrutiny is carried out to resolve the market tension resulting in different geo-political scenarios globally.

Navigating this new operational landscape present variety of challenges, but also potential opportunities and the Company prudently built on them and managed its stocks at optimum levels. The Company continues to focus on developing new clients and new supply sources along with effective management of existing partners, in order to fulfill the requirements of our clients and optimizing the stock management in this highly volatile international market.

48 Geopolitical and Security Risks The daunting challenges like slow economic growth, economic inconsistencies, energy crisis, immobile exports, high rate of unemployment, undersized investment along with unhinged political situation of the Country is affecting the businesses. During the past years, Pakistan’s law and order situation has improved considerably due to Furthermore, consistent and teamwork and through these implementation of the National imports have also supported behaviours, they contribute to the Action Plan. the Company’s strategic trade overall success of the Company. relations and strengthening The paradigm shift within the oil Company’s position and market Company strives to provide and gas sector has been witnessed share within the Country. During market competitive benefits due to renewable energy sources, the year, OGRA issued multiple thus sending a powerful message latest machinery and new and new oil marketing licenses and to employees about their elegant technologies. The new these new entrants have made importance at the organization global energy landscape have the competition extremely resulting in retention of affected overall global demand pungent. In order to compete, competent personnel. supply gap and pricing of oil the Company is exploring and in international market. The building on opportunities, Health, Safety, Environment and fast growing and emerging challenges to stay competitive Security markets have taken over the and continue to be the preferred Attock Petroleum Limited is traditional centres of demand choice of all consumers. The committed to an incident-free and due to global technological Company introduced Fleet workplace; everyday, everywhere. improvements and environmental Management System (Attock While protecting people and concerns; the energy mix has Smart Fuel Card), technically minimising the impact on the evolved rapidly. The Company advanced and sophisticated Lube environment, our performance believes our industry should Change Facilities and strive to depends on our ability to proactively respond towards create innovative solutions at all continually improve the quality changing energy needs of the its retail network for convenience of the services provided to our consumer segments. In the of our valued consumers and to clients. Company believes on near future, our emphasis will provide a one-window service for active commitment to HSE in remain on the continuous fine- all their needs. all work activities wherever we tuning of the oil market. Sizable operate by ensuring compliance advancements have been made Human Resource with all HSE policies, procedures in this regard but the journey still APL, being equal opportunity and standards. Company ensures goes on. employer, focuses on attracting safety, security, health and competitive, talented and environmental responsibilities Intense Competition innovative professionals. APL beyond protection and The Company has always been considers employees as Human enhancement of our own ahead of the competition by Capital and invests on them facilities. staying proactive towards the for nurturing their skills and market trends and using our talents, incessant motivation and The company is managing HSE strategically placed refineries retention. and social performance in line for smooth and uninterrupted with its commitment and policy, supply of petroleum products. Company fosters the culture of local laws and the terms of employee empowerment, respect relevant permits and approvals. 49 APL ANNUAL REPORT 2018

The Company also includes duly and fully put into practice. monthly backups are generated and requirements for integrating Besides, the security environment maintained on hard drives and data environmental and social factors is continuously monitored in tapes. An offsite backup mechanism into the way we plan, design and close coordination with District is also in place as an additional take investment decisions on Authorities, Law Enforcement measure to safeguard data integrity. new projects. This commitment Agencies and other relevant is in the best interest of the quarters to update the security customers, employees, contractors, standards regularly. Disaster Recovery and Business stakeholders and communities. Continuity Planning The Company’s HSE policy is a Economic inconsistencies, true reflection of the fact that Information Technology Risk unstable law and order situation, the business practices do not Information technology risk energy crisis, political anarchy, contravene to law pertaining to includes internal factors such as the technological innovations, unstable health, safety and environment. number and duration of systems global prices, global slant towards failures, employee access controls, renewable energies and increasing In APL, security of employees, protection of confidential data number of oil marketing companies materials and installations is and information, as well as external has led to the need of assessing accorded high priority. All bulk factors such as the introduction of and gauging steadiness of the oil terminals have been duly advanced software and hardware business and to undertake measure categorized as “Key Points” as into the industry and incidents of to enrich the resilience capacity of defined in the Key Point Intelligence cybercrime. the manoeuvres and set-ups against Division’s pamphlet, “Security and such disturbances. Protection of Key Point, 1983”. All The Company maintains a central recommended security measures database environment where online To mitigate the disaster/disruption for the Key Point, as enunciated transactions are entered in real events, sophisticated and effective by the authorities have been time. An automated procedure business techniques have been generates a daily data backup at employed for continual smooth midnight. Further, incremental and business operations via strategic infrastructure and alternative supply channels. The Board reviews the effectiveness and usefulness of the system from time to time.

50 CORPORATE GOVERNANCE

Good Corporate Governance holds and implemented to align the Board Company with the CEO to ascertain a paramount importance to the with principles of good corporate smooth operation of the Company’s Company. The Board makes certain governance. affairs. that all the activities carried out are at par with the best practices. Role of the Chairman and CEO The Board is well contented with In light of the recent changes in The Chairman heads the Board the CEO’s performance for the Corporate Governance framework of Directors and is appointed by year. Multiple new ventures, better by regulators, Attock Petroleum the Board from amongst the Non- profitability, improving market Limited has taken steps to ensure Executive directors. Heading the presence, up-gradation of the that it is fully compliant with meetings, defining agendas and current bulk oil terminals along with the new requirements of law signing the minutes are the primary construction of the new ones are and therefore, the Company is responsibilities of the Chairman a few examples of the Company’s highly trusted by the investors. and making sure that the duties excellent performance during the Transparency in communication of the Board of Directors are year. with stakeholders remains at met. He also manages conflicts of core and implementation of a interests arising, if any, and makes Directors’ Training Programme professional corporate culture is recommendations to improve and Formal Orientation for critical for complying with the performance and effectiveness Directors principles of good governance at of the Board. The Chairman, at The Company ensures that it every step. the start of the term of Directors, meets the requirements set intimates them regarding their roles, forth by Securities and Exchange Board Annual Evaluation responsibilities, duties and powers Commission of Pakistan (SECP) Code of Corporate Governance to help them manage the affairs of through Code of Corporate has been adopted by the Board the Company effectively. Governance and is complying in its true spirit. The performance with criteria of Directors’ Training of Board and its Committees The CEO manages the Company Programme (DTP) by obtaining effectively shapes the overall and is responsible for all of its certification for half of the performance of the Company operations. The CEO designs and Directors on Board till June 30, 2019. hence remains crucial. Performance proposes strategies and implements Two of the Directors, Mr. Babar of the Board and Committees decisions of the Board. The CEO Bashir Nawaz and Mr. Mohammad can be improved by promoting reports to the Board regarding Raziuddin, have attended the best practices and professional the Company’s performance and Directors’ Training Programme from corporate culture. As required by profitability along with suggesting recognized institution of Pakistan the Code of Corporate Governance, improvements to enhance approved by the SECP whereas performance of the Board and shareholders’ wealth. four of the Directors meet the its Committees is internally exemption criteria for this purpose. evaluated through a mechanism The Board of Directors has clearly developed and approved by the defined and segregated the roles The Company keeps the Directors Board of Directors to evaluate and responsibilities of the Chairman updated about the prevailing the efficacy of the Board and its and the CEO. relevant laws and the current Committees on an annual basis. matters regarding corporate During the year, the Board and CEO Performance Review governance. The Directors are its Committees were evaluated The Board assesses the CEO’s well-equipped with a thorough using this mechanism to further performance using key performance and practicable knowledge of the improve the effectiveness of the indicators set on financial and regulations in addition to the Code Board. Developments in corporate non-financial measures. The Board of Corporate Governance. governance are constantly reviewed also discusses the prospects of the 51 APL ANNUAL REPORT 2018

Inauguration Ceremony of Jet Fuel Farm Facility at New Islamabad International Airport

Whistleblower Decisions taken by the Board and Delegated to Management Protection Mechanism The Board of Directors ensures that the management upholds the vision and mission set by the shareholders of the Company. To achieve The Whistleblower this objective, policies and objectives are set by the Board in such a Policy encompasses the manner that implementation by the management results in benefit to procedure for reporting, the Company. The Board is involved in top-level strategic decisions handling, investigating and having long-term implications including major investments, capital eliminating inconsistent financing, capital expenditure, disposal of fixed assets, approval of and fraudulent activities budgets, approval of financial statements, future projects, acquisitions in the Company’s and dividend declarations etc. operations. The policy Operational level decisions, having 1-2 years medium-term implications, ensures protection of are delegated by the Board to the management including short term the whistleblowers. investments, sale/purchase contracts, implementation of policies, The Company makes treasury, taxation and stock management and Board has given them certain that an open the responsibility of day to day running of the Company. and transparent working environment is maintained Security Clearance of Foreign circulated to all the directors and and employees who intend Directors the employees of the Company for to report such activities Foreign Directors elected on the their compliance as required under are provided with an Board of Attock Petroleum Limited Code of Corporate Governance 2017. adequate forum also requires security clearance from This Code provides the standard for Ministry of Interior through SECP. All professional behaviour in order to ensuring their anonymity legal formalities and requirements ensure that the business is carried if required. No incident have been met and fulfilled in this out in an honest and ethical manner. of whistle blowing was regard. reported during the year. Compliance with Code of Code of Conduct for Directors Corporate Governance and Employees The Company is compliant in all The Code of Conduct has been respects with the Code of Corporate

52 Governance. Specific statements Employees’ Gratuity fund efficient and smooth running are being given hereunder: Rs 84.540 million of the business, safeguarding of 1) The financial statements, Company’s assets, prevention and prepared by the management, Employees’ Provident fund detection of fraud and errors, present its state of affairs fairly, Rs 151.383 million accuracy and completeness of the result of its operations, cash books of accounts and timely flows and changes in equity. 12) The total number of preparation of reliable financial 2) Proper books of account have Company’s shareholders as information. Adequate internal been maintained. at June 30, 2018 was 3,111. The controls provide reasonable 3) Appropriate accounting pattern of shareholding as at assurance about the achievements policies have been consistently June 30, 2018 is annexed. of Company’s objectives through applied in preparation of A separate statement of reliable financial reporting. financial statements and compliance signed by the Compliance with applicable laws accounting estimates are based Chairman of the Board of Directors and regulations also depends on reasonable and prudent is included in this Annual Report. upon internal controls and the judgment. Company has dependable internal 4) International Financial Adequacy of Internal Financial controls put in place to make sure Reporting Standards, as Controls that regulatory requirements are applicable in Pakistan, Internal financial controls of the complied with. Internal Financial have been followed in the Company have been formulated Controls are periodically reviewed preparation of financial and implemented by the Board to ensure these remain effective statements. of Directors through various and are updated with changing 5) The system of internal control policies. These controls have laws and regulations. is sound in design and has been been put in place to ensure effectively implemented and monitored. 6) There are no significant doubts upon the Company’s ability to continue as a going concern. 7) Significant deviations from the last year’s operating results have been disclosed in this Report. 8) Key operating and financial data of the last 6 years in summarised form is annexed with the Report. 9) All major Government levies in the normal course of business, payable as at June 30, 2018, have been cleared subsequent to the year-end. 10) The Company does not envisage corporate restructuring or discontinuation of its operations in the foreseeable future. 11) The values of investments in employee retirement funds based on the latest audited accounts as of June 30, 2018 are as follows: 53 APL ANNUAL REPORT 2018

Board of Directors Structure, in the Statement of Compliance as non-executive directors including its Committees and Meetings required under Code of Corporate two independent directors and On completion of statutory term Governance, 2017. the Chairman of the Committee of three years, the election of is an independent director having directors was held on March 01, During the year the Board remained relevant expertise and experience. 2018 and new directors assumed actively involved in performing The Audit Committee met four offices effective March 10, 2018. their duties under various laws and times during the year and these The new Board comprises of 07 the Memorandum and Articles of meetings were held prior to the directors out of which 06 are Association of the Company with Board meetings non-executive directors. Mr. Sajid the ultimate objective of enhancing Nawaz retired from the Board on the profitability of the Company Human Resource & completion of his term and Lt. thus increasing shareholders return. Remuneration Committee Gen (Retd.) Javed Alam Khan is The Board Human Resource the newly appointed director. 06 During the year, five meetings and Remuneration (HR&R) directors were re-elected. The of Board of Directors were held Committee comprises of two elected Board possesses necessary for review of periodic Financial non-executive directors and Chief skills, competence, knowledge and Statements as well as for Executive Officer. Chairman of experience to deal with various consideration of significant and the Committee is an independent business issues. The Chairman routine matters including those director. The Committee met once of the Board is a non-executive referred to it by Board committees. during the year to review the HR director. related agendas. The status of each director on the Audit Committee Company’s Board whether male, The Audit Committee consists female or non-executive, executive of four members comprising of or independent has been disclosed Attendance by Directors in the Meetings Meetings attended / Eligible to attend Board of Directors Audit Committee HR&R Committee Name Sr. No. meetings meetings meetings 1 Mr. Laith G. Pharaon* 5/5 - 1/1 2 Mr. Wael G. Pharaon* 5/5 - - 3 Mr. Shuaib A. Malik 5/5 - 1/1 4 Mr. Abdus Sattar 5/5 4/4 - 5 Mr. Babar Bashir Nawaz 5/5 4/4 - 6 Lt Gen (Retd.) Javed Alam Khan 2/2 1/1 - 7 Mr. Sajid Nawaz 3/3 - - 8 Mr. Mohammed Raziuddin 4/5 3/4 1/1

*Overseas directors attended the meetings either in person or through alternate directors

The above is an exhaustive list of all persons who have remained director of the Company during the year.

54 Meetings held outside Director’s Remuneration also provides for reimbursement Pakistan Board of Directors of the of expenses in connection with During the year ended June 30, Company has approved the Policy attending board meetings. 2018, one meeting of the Board for Honorarium/Remuneration of Directors was held outside of directors for attending board Pakistan to review and approve meetings. Meeting fee has been Annual Financial Statements for fixed for attending the board the year ended June 30, 2017. meetings whereas the policy

AUDITORS

The present auditors Messrs A. 2018-19. The Audit Committee of approval of the shareholders in F. Ferguson and Co., Chartered the Board has recommended the the forthcoming Annual General Accountants, a member firm of re-appointment of the retiring meeting. the Price water house Coopers auditors for the year ending network, retire and are eligible June 30, 2019. The Board has for reappointment for the year recommended the same for the

55 APL ANNUAL REPORT 2018

FORWARD LOOKING STATEMENT AND FUTURE PLANS

The Company’s prime and core Since inception, the Company first half of year 2018-19 objective is supplying premium remains proactive to coup all • Sahiwal Bulk Oil quality products and innovative the challenges and succeed Terminal is also under solutions for end consumers. at all times. Some major construction and shall The Company believes in quality developments underway and start operations during products, values over volumes achievements made are as first half of year 2018-19 and focus on competitiveness to follows: • Daulatpur Bulk Oil stay ahead of the competition. Terminal is under Management always prioritizes • In order to increase the construction and will technical improvements for storage capacity and for start operations during efficient operations, capability smooth and uninterrupted second half of year enhancement for smooths supplies, the Company 2018-19 supplies, unique fortes to stay is building the following • The Company is establishing ahead of competition and infrastructures: bulk oil terminal at Port innovative and convenient • Shikarpur Bulk Oil Qasim. Terminal will be solutions to be the preferred Terminal is under connected through pipeline choice of the consumers. construction and shall to effectively and efficiently be completed during manage imports. Currently 56 the terminal is in design phase. as safety and operational risk, oil prices. In recent times, erratic • Contract for Country wide environmental and social practices, behaviour in international oil supplies of High Octane Blending procurement, technology and price trends have been observed, Component (HOBC-97) to treasury management. which is mostly accounted to Pakistan Army for 2018-19 has geo political factors and political been completely secured by Geographic diversity of the unrest in major oil producing the Company. Company gives access to growing nations. Moreover, local currency Management always work on markets and new resources and devaluation eventually translates achieving the sustainable growth provides robustness to geopolitical into exchange rate losses for and success for the long term events. The Company has a the importers. All these factors interests of our shareholders, diverse integrated portfolio that combined reduce the reliability partners and society at large. Being is balanced across resource types, of price forecasts and expected an energy supply Company, the geographies and businesses and is trends. Company feels responsible for adaptable to evolving conditions. running the wheel of economy Our activities generate jobs, Performance related to and touching lives of all and investment, infrastructure and forward-looking disclosure sundry, improvement in economy revenues for government and local made in last year by developments, employment communities. opportunities and introducing APL has successfully accomplished premium quality products and Trends and uncertainties the development and operation services is the prime objective of affecting Company’s revenues of Country’s largest and most management and Company. and operation advanced fuel farm and hydrant refueling facility at Islamabad The Company is also geared to One of the major external factors International Airport under JV with share functional excellence more that affects the oil marketing another OMC. efficiently across areas such company’s revenues is international

57 APL ANNUAL REPORT 2018

Falcon Filling Station - New Islamabad International Airport, Islamabad

In order to meet market needs penetration and larger client base. has been operational and running through better services and at its full capacity to cater the facilities, APL has successfully Construction of oil terminal at growing demand of Petroleum launched its own Fuel Card Mehmood Kot was completed products within the region. system enabling further market during the year under review and ACKNOWLEDGEMENT

The Board would like to take appreciation and gratefulness customers and strategic partners this opportunity to express to Government of Pakistan for their resolute dedication and its gratitude to our esteemed and regulatory bodies for their contribution. shareholders for their support. cooperation. The Directors The Board also extends its are thankful to employees,

On behalf of the Board

Shuaib A. Malik Abdus Sattar Chief Executive Director

Dubai, U.A.E. August 14, 2018

58 Bringing the best to our customers

59 APL ANNUAL REPORT 2018 PATTERN OF SHAREHOLDING As on June 30, 2018 Corporate Universal Identification Number: 0035831 Form-34 Sr. Number of <------HAVING SHARES------> Total No. Shareholders From To Shares Held Percentage 1 614 1 100 29,912 0.04 2 699 101 500 202,709 0.24 3 379 501 1,000 303,933 0.37 4 1,142 1,001 5,000 1,766,884 2.13 5 91 5,001 10,000 700,317 0.84 6 50 10,001 15,000 621,971 0.75 7 21 15,001 20,000 376,162 0.45 8 24 20,001 25,000 550,695 0.66 9 7 25,001 30,000 194,929 0.24 10 8 30,001 35,000 260,000 0.31 11 7 35,001 40,000 262,092 0.32 12 2 40,001 45,000 84,420 0.10 13 6 45,001 50,000 291,050 0.35 14 6 50,001 55,000 311,904 0.38 15 2 55,001 60,000 116,150 0.14 16 2 60,001 65,000 125,797 0.15 17 1 65,001 70,000 65,674 0.08 18 2 70,001 75,000 142,740 0.17 19 2 75,001 80,000 154,450 0.19 20 3 80,001 85,000 250,108 0.30 21 3 85,001 90,000 258,800 0.31 22 1 90,001 95,000 93,000 0.11 23 1 95,001 100,000 99,350 0.12 24 4 100,001 105,000 409,660 0.49 25 1 105,001 110,000 110,000 0.13 26 3 115,001 120,000 351,400 0.42 27 2 130,001 135,000 267,900 0.32 28 2 140,001 145,000 285,800 0.34 29 1 145,001 150,000 147,700 0.18 30 2 150,001 155,000 307,216 0.37 31 3 155,001 160,000 469,955 0.57 32 1 175,001 180,000 177,450 0.21 33 2 180,001 185,000 367,162 0.44 34 1 235,001 240,000 238,850 0.29 35 1 300,001 305,000 304,450 0.37 36 1 325,001 330,000 327,579 0.39 37 1 350,001 355,000 350,400 0.42 38 1 370,001 375,000 370,200 0.45 39 1 425,001 430,000 427,600 0.52 40 1 545,001 550,000 550,000 0.66 41 1 840,001 845,000 842,994 1.02 42 1 1,045,001 1,050,000 1,048,651 1.26 43 1 1,310,001 1,315,000 1,311,050 1.58 44 1 1,335,001 1,340,000 1,338,450 1.61 45 1 1,820,001 1,825,000 1,824,768 2.20 46 1 5,530,001 5,535,000 5,534,821 6.67 47 1 5,805,001 5,810,000 5,836,017 7.04 48 1 5,820,001 5,825,000 5,820,595 7.02 49 1 18,140,001 18,145,000 18,144,138 21.88 50 1 28,515,001 28,520,000 28,516,147 34.38 3,111 82,944,000 100.00

60 CATEGORIES OF SHAREHOLDERS As on June 30, 2018

Sr. Number of Categories Shares Held Percentage No. Shareholders Directors, Chief Executive Officer, their 1 9 5,548,859 6.69 Spouses & Minor Children Associated Companies, Undertakings and 2 5 60,141,665 72.51 Related Parties National Investment Trust & Industrial 3 1 50,229 0.06 Corporation of Pakistan Banks, Development Finance Institutions, non 4 9 3,347,741 4.04 Banking Finance Companies

5 Insurance Companies 12 2,989,325 3.60

6 Modarabas & Mutual Funds 40 2,142,451 2.58

7 Foreign Companies 11 930,701 1.12

8 Trust and Funds 102 1,566,442 1.89

9 Joint Stock Companies 57 729,128 0.90

10 General Public (Local) 2,861 5,481,507 6.59

11 General Public (Foreign) 4 15,952 0.02

12 Shareholders Holding 10% or More 2 46,660,285 56.26

61 APL ANNUAL REPORT 2018 INFORMATION REQUIRED Under Companies Act, 2017 Number of Shares Held Shareholders Associated Companies, undertakings and related parties THE ATTOCK OIL COMPANY LIMITED 1 1,824,768 PAKISTAN OILFIELDS LIMITED 1 5,820,595 PHARAON INVESTMENT GROUP LTD. (HOLDING) S.A.L 1 28,516,147 TRUSTEES ATTOCK PETROLEUM LIMITED EMPLOYEES WELFARE TRUST 1 5,836,017 ATTOCK REFINERY LIMITED 1 18,144,138 5 60,141,665 Mutual Funds CDC - TRUSTEE MCB PAKISTAN STOCK MARKET FUND 1 2,150 CDC - TRUSTEE JS LARGE CAP. FUND 1 32,000 CDC - TRUSTEE ALHAMRA ISLAMIC STOCK FUND 1 300 CDC - TRUSTEE MEEZAN BALANCED FUND 1 10,000 CDC - TRUSTEE JS ISLAMIC FUND 1 48,300 CDC - TRUSTEE AKD INDEX TRACKER FUND 1 4,450 CDC - TRUSTEE HBL ENERGY FUND 1 87,500 CDC - TRUSTEE ALHAMRA ISLAMIC ASSET ALLOCATION FUND 1 550 CDC - TRUSTEE AL MEEZAN MUTUAL FUND 1 71,740 CDC - TRUSTEE MEEZAN ISLAMIC FUND 1 327,579 CDC - TRUSTEE UBL STOCK ADVANTAGE FUND 1 85,300 CDC - TRUSTEE ATLAS ISLAMIC STOCK FUND 1 75,850 CDC - TRUSTEE AL-AMEEN SHARIAH STOCK FUND 1 102,100 CDC - TRUSTEE NAFA STOCK FUND 1 153,800 CDC - TRUSTEE NAFA MULTI ASSET FUND 1 18,951 CDC - TRUSTEE MEEZAN TAHAFFUZ PENSION FUND - EQUITY SUB FUND 1 42,370 CDC - TRUSTEE JS PENSION SAVINGS FUND - EQUITY ACCOUNT 1 9,000 CDC - TRUSTEE NAFA ISLAMIC ASSET ALLOCATION FUND 1 133,900 CDC - TRUSTEE APIF - EQUITY SUB FUND 1 18,700 MC FSL - TRUSTEE JS GROWTH FUND 1 115,400 CDC - TRUSTEE NIT-EQUITY MARKET OPPORTUNITY FUND 1 23,148 CDC - TRUSTEE LAKSON EQUITY FUND 1 102,910 CDC - TRUSTEE NAFA ASSET ALLOCATION FUND 1 23,500 CDC - TRUSTEE AL-AMEEN ISLAMIC ASSET ALLOCATION FUND 1 99,350 CDC - TRUSTEE AL-AMEEN ISLAMIC RET. SAV. FUND-EQUITY SUB FUND 1 19,650 CDC - TRUSTEE ABL ISLAMIC PENSION FUND - EQUITY SUB FUND 1 50 CDC - TRUSTEE NAFA ISLAMIC STOCK FUND 1 101,250 CDC - TRUSTEE AL AMEEN ISLAMIC DEDICATED EQUITY FUND 1 183,050 CDC - TRUSTEE NAFA ISLAMIC ACTIVE ALLOCATION EQUITY FUND 1 37,600 CDC - TRUSTEE NAFA ISLAMIC ENERGY FUND 1 144,600 CDC - TRUSTEE LAKSON TACTICAL FUND 1 18,322 CDC - TRUSTEE LAKSON ISLAMIC TACTICAL FUND 1 3,181 CDC - TRUSTEE MEEZAN ENERGY FUND 1 10,000 CDC - TRUSTEE JS ISLAMIC PENSION SAVINGS FUND-EQUITY ACCOUNT 1 11,000 CDC - TRUSTEE FIRST HABIB STOCK FUND 1 2,700 CDC - TRUSTEE KSE MEEZAN INDEX FUND 1 2,700 CDC - TRUSTEE FIRST HABIB ISLAMIC STOCK FUND 1 3,100 CDC - TRUSTEE FIRST HABIB ASSET ALLOCATION FUND 1 2,500 CDC - TRUSTEE JS ISLAMIC DEDICATED EQUITY FUND (JSIDEF) 1 13,800 39 2,142,351

62

Number of Shares Held Shareholders DIRECTORS, THEIR SPOUSES AND MINOR CHILDREN MR. WAEL G. PHARAON 1 1 MR. LAITH G. PHARAON 1 1 MR. SHUAIB A. MALIK 1 5,534,821 MR. ABDUS SATTAR 1 600 MR. BABAR BASHIR NAWAZ 1 1 LT. GEN (RETD) JAVED ALAM KHAN 1 50 MR. MOHAMMAD RAZIUDDIN 1 1 MR. IQBAL A. KHWAJA 1 13,296 MR. REHMAT ULLAH BARDAIE 1 88 9 5,548,859

Executives 4 69,517

National Investment Trust & Industrial Corporation of Pakistan 1 50,229

Public Sector Companies and Corporations 1 50,500

Banks, Development Finance Institutions, Non-Banking Finance Companies, Insurance Companies, Takaful, Modarabas and Pension 40 6,848,490 Funds

Share holders holding 5% or more voting rights PHARAON INVESTMENT GROUP LTD. (HOLDING) S.A.L 1 28,516,147 ATTOCK REFINERY LIMITED 1 18,144,138 PAKISTAN OILFIELDS LIMITED 1 5,820,595 ATTOCK PETROLEUM LTD. EMPLOYEES WELFARE TRUST 1 5,836,017 MR. SHUAIB A. MALIK 1 5,534,821 5 63,851,718

Trade in shares by Directors, Executives, their spouses and minor children during 2017-18: No trade in shares was made by Directors, Executives*, their spouses and minor children from July 01, 2017 to June 30, 2018 in the shares of Company.

* “Executive means Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Head of Internal Audit, Company Secretary and other employees of the Company who are drawing an annual basic salary of Rs. 1,200,000 or more.”

63 APL ANNUAL REPORT 2018

OTHER CORPORATE GOVERNANCE MATTERS

Investor Grievance Handling complaints at any time. is required to disclose about Investor satisfaction is the prime Complaints are addressed by his interest in any contract, focus of the Company to retain designated employees without agreement or appointment etc. long lasting relationship with any delay. The CSM section These disclosures are circulated its prestigious investors. The has maintained a record of to the Board and it is ensured Company’s existing and potential complaints mentioning status that interested director does not investors are allowed access to of pending complaints and participate in decision making and information regarding Company’s their resolution. voting on the subject. The effect operations in addition to details of to the above facts is recorded in investments, dividend distribution Issues raised at last AGM minutes of meeting, if any. Any or circulation of regulatory The Annual General Meeting such conflicts of interests are publications. provides the best platform to recorded in Company’s statutory Investor Grievances are managed interact with the shareholders register while disclosures of related centrally by Company Secretarial of the company. Last AGM party transactions are provided in Matters (CSM) section. The of the company was held on financial statements. section has an effective Investor October 19, 2017 at which Grievance redressal mechanism queries of shareholders were Safety of Records of the in place to handle investor’s appropriately responded. Company queries and complaints promptly On a shareholder’s inquiry about To ensure prompt and accurate and effectively. The Company’s status of the company’s upcoming retrieval of records, protection of grievance handling is supported by depots and terminals, it was stated vital information in the event of a review mechanism to minimize that construction of terminal at disaster and to ensure compliance recurrence of similar issues in Mehmood-Kot, Shikarpur and with legal and regulatory future. Sahiwal shall be completed soon requirements, the Company has Investors’ queries and and that land has been acquired for an established procedure for complaints are dealt with terminal at Tarujabba. preservation of records holding courtesy at all the times. On query of another Shareholder significant value, in line with Investors have facility to call on regarding lubricant segment, it was good governance practices and the contact number provided stated that continuous efforts have administrative requirements. for the purpose on the been made to enhance the brand Records include books of Company’s website. and that sales of lubricants have accounts, documents pertaining The Company has maintained increased by 20%. to secretarial, legal, taxation and other matters etc. Key records are an investor’s relations section Conflict of Interest archived in a manner to protect on the website. Management An email ID is designated for them from physical deterioration, A formal Code of conduct is in the investor’s queries and accidental fire and natural place governing the actual or complaints. calamities. perceived conflict of interest Feedback/complaint forms Documents in physical forms relating to the Board members of are available on website where are stored at specifically the Company. Under the guidelines investors can lodge their designated record rooms with of code of conduct every director

64 proper safety features. regulations, including but not website can be used to promote Financial data and other limited to financial reports, investor relations and to facilitate records in the ERP system financial highlights, investor’s investors’ access for grievance or are periodically backed up at notices / announcements, other queries. various servers and protected pattern of shareholding, dividend APL ensures to present the latest under secure access protocols. declarations and much more have information by regularly updating Paperless environment is been placed on the Company’s its website and to improve also being promoted and an website: “www.apl.com.pk”. the websites’ usability for its e-record management system is The Company is in full compliance shareholders and investors. being put in place to safeguard with the current SECP regulations the records of the Company relating to the maintenance along with optimizing storage of functional website by the spaces. listed companies. A Compliance Certificate by the Chief Executive is Investors’ Relations Section on placed on the website as well. APL Website The comprehensive “Investor Detailed Company information Relations” section on the Company specified under the relevant

65 APL ANNUAL REPORT 2018 STAKEHOLDER ENGAGEMENT

Stakeholders Management of Stakeholder Engagement Effect and value to APL

The confidence put in the Company by the investors is honored The financiers of capital and acknowledged by providing them with a steady rate of return help APL: Institutional on their investment. General meetings provide the shareholders a • Convert its business plans Investors/ platform to voice their concerns and raise their queries which are into actions. Shareholders addressed appropriately. The Company also engage shareholders • Achieve its business through issuance of annual/quarterly financial reports and targets. notices/updates. The Company’s primary customers include dealers, distributors and institutional customers. APL Customer Relationship Customers’ loyalty and Management is beyond extending credit facilities and trade Customers and effective supply chain is discounts. Periodic engagements are held with customers in Suppliers the key to the Company’s the form of dealers/ distributors conference. Various informal sustainable business growth. meetings are also held with customers and suppliers to maintain effectiveness of Supply Chain Management. Banks and other financial institutions are engaged by the Company Bank dealings are central to on regular basis in relation to negotiation of mark-up rates, the Company’s performance short term financing arrangements, deposits and investments. in terms of: Banks Banks are also consulted on issues linked with letters of credit • Access to better interest and payments to suppliers, along with other disbursements of rates and financing terms. operational nature including payment of dividends and foreign • Efficient Customer remittances. Service.

The Company engages with the media through regular press • Media communication releases regarding key achievements. Statutory notices and of the Company’s other public announcements required by law are generally achievements helps circulated through print media. Multiple mediums are also used strengthen APL brand image. Media for advertisement and marketing purposes. Employees of the • Awareness of the Company have made appearances on media as well, for brand company’s status and advertisement and awareness. Retail prices are notified through activities is developed press-gazette. Furthermore, the website of the Company is also among the general public used as a medium to communicate information to stakeholders. and potential investors.

APL prides itself for being a responsible corporate citizen. The Company abides by the laws and regulations of the Pakistan and makes certain that all the requirements of relevant regulators Country’s laws, regulations are met in a timely manner. Regulators are continuously engaged and other factors controlled at various local, provincial and federal levels. Various statutory Regulators by the Regulators, set forms and returns are periodically submitted as per requirements operating guidelines for the of the law in addition to the information required by regulators. Company. Company constantly liaisons with the Government authorities and regulators in terms of matters/ issues relating to energy requirements of the Country.

66 Providing required information to analysts helps: The Company regularly engages with analysts on its financial • Attracting potential Analysts and operating results, with due regard to regulatory restrictions investors. imposed on inside information/trading. • Clarifying misconceptions/ market rumors. The competent employees Focus on the Company’s most valuable resource “our competent are the backbone of the and committed workforce” is the base of APL’s Human Resource Company. The Company’s Strategy. Multiple in-house and external training are conducted strategic, operational and Employees for continuing professional developments of our employees. APL tactical decisions taken by provides a nurturing and employee friendly work environment. management are effectively APL has also invested in health and fitness activities for its implemented through our employees. committed workforce. Being a good corporate citizen, APL always tries to add value to A contented and peaceful General Public the society. APL engages with general public at large through its nation fixes the roots for a CSR activities. prosperous society.

67 APL ANNUAL REPORT 2018 EFFORTS MADE TO MITIGATE THE ADVERSE IMPACT OF INDUSTRIAL EFFLUENTS Waste Management Plan APL Waste Management Plan (WMP) provide a comprehensive methodology for the minimization, proper management and disposal of wastes generated during the operation, with the aim of protecting the environment, the health and safety of employees. To facilitate achievement of the Waste Management Policy, a series of specific waste management objectives are being followed:

Apply the Waste Management Policy to its full extent to protect people, the environment and company assets.

Achieve and appropriately and safely reporting systems. maintain compliance according to their characteristics, with the National composition and the availability of Ongoing commitment for the Environmental Quality recycling, appropriate storage and/ minimization of waste, including Standards of Pakistan. or disposal options. the optimum reuse and/ or recycling of materials, and Ensure that all Appropriate standardized waste establish goals & measures to wastes are managed management documentation and target waste minimization. 68 Pakistan environmental protection act. To comply with all existing environmental laws and other requirements APL monitors environmental emissions and effluent at all its installation through recognized Laboratories and renowned testing laboratories on an annual basis for the compliance of NEQS.

Promote and pursue ‘continuous through incineration process, whereas improvement’ in management of non-hazardous waste is recycled through wastes. approved third party contractors. Effluent Monitoring All the waste from facilities is segregated APL has committed to comply into Class I (Hazardous), Class II (Non all environmental applicable and Hazardous) and Class III (Inert) waste. The regulatory requirements and ensures hazardous waste is properly disposed-off its effectiveness through NEQS as per 69 APL ANNUAL REPORT 2018 ENERGY SAVING MEASURES

The Company took initiative for of lightning system in terminals. of lights were installed which energy saving by replacing of Pole/Flood lights have been were the causes of high energy large quantities of Pole/Flood converted from conventional consumption. The Company LED lights at its all terminals. 400 watts to LED 100 watts-150 further plans to fully or partially These initiatives were taken to watts. Before installation of LED switch over to solar generated increase efficiency and reliability Lights, Mercury/sodium types electricity wherever feasible.

CORPORATE SUSTAINABILITY

Corporate Social summer internship program 20 Management trainees in Responsibility 2017-18, 22 students from different different departments. These Corporate Social Responsibility institutions i.e. Foundation trainees undergo rigorous (CSR) is one of the core values and University, Bahria University, NUST training programs to practically an integral part of the Company’s (Business and Engineering School), implement their knowledge overall mission. APL is committed National College of Business and equip them with skills and to play vital role in supporting Administration & Economics competences necessary for their and working with its stakeholders (NCBA&E) Lahore, Institute of career advancements. for sustainable community and Space Technology – Islamabad, social development program and PMAS Arid Agriculture University- Educational Scholarship have clear guidelines in place to Rawalpindi were offered The Company realizes the meet its Social & Environmental internships in various disciplines importance of basic & higher responsibilities. like Engineering, Finance, Supply education in building a strong By integrating CSR into our Chain, Human Resource and Nation and always supports the business strategy, APL is helping Marketing & Sales. bright students by sponsoring to drive shared value amongst These internships not only their education. its stakeholders and enhance provide them the exposure of a APL through its Trust awarded its corporate brand image corporate environment, but also a scholarships to 61 brilliant community wide. platform to apply their academic children of employees including skills in order to jump-start their 03 sponsorships at graduation Internship Opportunities professional careers. Students level. As per APL’s Internship Policy, are provided with an opportunity the Company considers it a to experience and preview the Sports promotion social responsibility to provide practical environment, building APL has played its role in opportunity for first hand their professional confidence promotion and development of practical experience to students through these internship sports and provided sponsorship of Higher Education Commission programs. of Chief Naval Staff Golf (HEC) recognized educational To infuse fresh talent, the Championship and Stadium Trust institutions of the country. Under Company recruited about Cricket Tournament.

70 Orientation session in progress for interns from various institutes

71 APL ANNUAL REPORT 2018

Health Care will stick to following principles: team ensures premium quality of Besides providing Medical To comply with all existing petroleum products received at coverage to its regular & environmental laws and other our terminals and supply points. contractual staff, company also requirements in this context We ensure consistency in quality provides need based medical and also endeavor to set and quantity of all the products assistance to its 3rd party staff. achievable goals and targets supplied to customers at retail to go beyond prevailing outlets and other valuable clients Recreational Activities environmental laws. by employing state-of-the-art APL always strives on developing To motivate its employees for ground and mobile Quality harmonious working environment setting environmental targets Assurance Labs - equipped with among the employees through and objectives. modern apparatus followed by different recreational activities. To take corrective and quick responsiveness to queries This helps them develop team preventive actions for proper on quality whenever required by work and socialize with each functioning of the system. the customers. other thus satisfying their social To train its employees to Keeping its spirit of continuous appetite. Endeavoring it, Annual recognize and handle unsafe improvement and highest Sports gala is held each year or environmentally harmful standards, the company has gone with maximum participation of conditions. through a detailed audit exercise employees to various indoor and There will be qualitative and and successfully got certification outdoor games. quantitative (where possible) of Quality Management System estimation of environmental (QMS) ISO 9001:2015. Energy Conservation aspects and impacts. The contents Electric lighting is a major energy of this policy will be accessible Industrial Relations consumer. Enormous energy to all the employees, interested APL is the member of Oil savings are possible using energy parties and the public living in the Companies Advisory Council efficient equipment and effective surrounding environment. (OCAC) a forum of oil industry controls. Using less electric With this pledge at hand we which is responsible to ensure lighting reduces heat gain. Electric aim to continuously improve that its members i.e. refineries lighting also strongly affects visual our Environmental Management and OMCs abide by the ethical performance and visual comfort System (EMS). standards, observe regulations by aiming to maintain adequate applicable to industry, including and appropriate illumination. For Community Welfare those related to HSEQ, laws APL’s energy saving initiatives, APL is also a donor to various of country, conduct business please refer to Page 70. trusts working for the public with integrity and honesty. The welfare. It includes donation to Downstream Oil Sector (Refining, Environmental Protection Attock Sahara Foundation and Marketing, and Distribution) Measures assistance to Tehzib-ul-Akhlaq plays a very significant role in APL is pledged to offer priority Trust, Sunbeans Schools and Pakistan’s economic development, to the protection of environment Ziauddin University in educational ensuring uninterrupted supply of in the conduct of its business. endeavors. petroleum product to the country Our Environmental Management in order to keep the wheels of the System (EMS) is aimed to Consumer Protection economy moving. provide safest and healthiest Measures possible working conditions to In line with its vision, APL always its employees and to the people strives to protect its valued working in outside environment. customers by providing the For the purpose of protection and highest quality products and betterment of environment APL services. Our quality assurance

72 Employment of Special and incidents. Our workforce honestly and will not pursue Persons truly believes that incidents any activity that requires to act APL fully supports the are preventable and that “zero unlawfully or in violation of the employment of special persons. incidents” is achievable. We have Code of conduct. Ethical codes The Company is aware and policies, processes, tools and and policies are implemented committed to comply with the behavioral expectations in place to eliminate corruption, each mandatory requirements of to assist us in achieving that director and employee is expected employment under quota of goal. We take steps to extend to deal fairly with Company’s disabilities in accordance with these safety principles to our customers, suppliers, competitors section 459 of Companies Act, contractors by reinforcing our and other employees. No one 2017. expectations and monitoring is to take unfair advantage of compliance with requirements anyone through manipulation, Occupational & throughout the life cycle of our abuse of privileged information, Environmental Health & projects. This includes engaging or any other unfair practice. The Safety with our contractors to improve Company has zero tolerance to APL strives to achieve world-class oversight of their activities. all types of corrupt practices. All performance and eliminate all Our approach to sustainability employees are required to sign the possible injuries, occupational includes sharing benefits with the compliance of Code of Conduct illnesses, unsafe practices and communities where we operate. annually, certifying adherence incidents of environmental harm And we’re helping to shape a to business ethics and anti- caused by Company’s Operational more sustainable energy future, corruption measures. activities. by collaborating with others on APL is committed to preventing global energy challenges. Contribution To National serious injuries and fatalities, Compliance to all regulatory Exchequer which requires operational requirements as stated in NEQS Please refer to Page 41 for details. discipline from assessing hazards is strictly adhered to and all to executing each step of the operations are carried out in Rural Development job to conducting a post-activity such a way so as to have minimal The Company comprehend the review. To accomplish this, we impact on the environment. significance of rural development have developed our hazard Advanced technology, new ways and supported NGOs such as the identification tool along with our of operating and partnerships Attock Sahara Foundation, which job hazard and safety analysis are helping to manage our is playing a vital role in uplifting procedures. Written safe-work environmental impact as we the economic conditions of the practices are a core part of our contribute to meeting the world’s surrounding communities through comprehensive safety program. growing energy needs. various welfare activities. The These safe-work practices help Company has developed many ensure that potentially hazardous Business Ethics & Anti- retail outlets (fuel stations) in the work, such as electrical work Corruption Measures rural and far-flung areas, creating or entry into a confined space, The Company is committed to the livelihood opportunities is properly planned, permitted, conduct/govern its business for local inhabitants resulting in executed and closed out to operations and relationship, improvement of quality of life. prevent workplace injuries

73 APL ANNUAL REPORT 2018 HUMAN RESOURCE MANAGEMENT

Competent workforce is the of competent personnel in website of the Company. back bone of any Organization. each department through a Our employees are the most comprehensive succession Human Resource Management valuable assets of the Company. planning policy in order to System APL’s Human resource is the maintain its leadership continuity. APL has implemented Human appropriate mix of employees APL believes in proactive Resource Management System with professional & other approach towards succession (HRMS) across the organization qualifications. planning. We recruit employees, which is integrated with HR- APL is an equal opportunity develop their knowledge, skills specific business processes Employer. To ensure our & abilities through different such as employee records workforce competency, we at training programs and employee management, attendance and APL have a sophisticated system job rotation to more challenging payroll. APL is in next phase of of Employee Hiring in place. roles to prepare them for future HRMS integration where HRMS Through this process we ensure endeavors. APL’s Human Resource will be connected with other to hire competent personnel with Department works closely with supporting systems such as leave appropriate qualification & skills other departments to look records. The implementation in line with Job requirements. promptly into the needs for of HRMS has streamlined Candidates’ evaluation is based new hiring or filling up of any employee database management on their academic & professional vacancy. Job requirements & by providing swift yet reliable portfolio. Transparency is job descriptions are thoroughly employee information. maintained in employee discussed with the relevant selection, evaluation & hiring. department’s management & the Training and Organizational On becoming part of Team hiring is processed accordingly. Development APL, the Company endeavors Training & Development is to facilitate employees in Employee Benefits the prime focus area of the achieving their career progression Competitive Salary packages organization. Training our and helping them refine their are offered to employees along workforce equips them with personal and professional skills. with annual bonuses & rewards. new skill sets, refines existing Training & development programs Perquisites include Life insurance one, reveals employees are planned throughout the year coverage, Medical coverage potential capabilities, enhances to keep the employees abreast and Membership of Morgah productivity & efficiency and with latest market trends. Club- where employee can avail improve their leadership skills. Annual performance appraisal subsidized meals, gym and sports APL engages its employees in is carried out of employees activities. different in-house and open in person to assess & manage audience workshops to enhance the individual performances. It Code of Conduct their working skills at different helps to bridge the gap between To integrate the culture of levels to meet departmental Organization’s developmental organizational discipline and competency requirements. needs at Company & Individual core ethical values in conduct During 2017-18 approximately level and its Strategic & of the Company’s employees, 62 staff members got training operational objectives. a Code of conduct is in place opportunity out of which 52 which is circulated annually members attended in-house Succession Planning to employees to acknowledge workshops. Trainings Conducted Market Flux due to emergence their commitment towards during the year are: of new OMCs has increased the Company’s Disciplinary • Tax Planning (Concepts, the Human Capital flow. The Mechanism. The Code of Methods & Development) Company ensures availability Conduct is available on the by UHY Hassan Naeem & Co.

74 Chartered Accountants Confucius institute on latest professional • Health Safety & Environment • MS Excel beginner level trends, industrial norms and Conference by Attock program departmental functions are also Refinery Limited Employees are also encouraged arranged. • 3rd Plant Maintenance & to participate in various seminars Culture of Intra & Inter- Operations Conference by to align them with current market Departmental rotation of Attock Refinery Limited best practices. employees is another step • Awareness session on ISO Besides these, in-house intra towards the Company’s 9001:2015 by SGS Academy departmental trainings & commitment to Organizational • Chinses Language Course presentation with the oversight Development. by Pakistan-China & the of Departmental Management SOCIAL AND ENVIRONMENTAL RESPONSIBILITY

HSE Manual • Remain trained, equipped Safety Trainings Attock Petroleum Limited is and ready for effective APL’s HSE department is committed to conduct business and prompt response to committed to deliver the safety with strong environment accidents and emergencies. based trainings to their employees conscience ensuring sustainable on regular basis which include: • Welcome audit of our HSE development, safe workplaces conduct by external body, so • Firefighting drills and enrichment of quality of life that stakeholder confidence of Employees, Customers and the • Earthquake Evacuation plans is safeguarded. Community. We, at APL, believe • First Aid training that good HSE performance is • Conduct safety audits on an integral part of efficient and monthly basis & Safety • Oil Spill Prevention & profitable business management. manual revision on the basis Management of GAP Analysis. Accordingly, the Corporation’s • Road safety training, endeavor is to: • Adopt and promote industry through motorway police, best practices to avert was conducted for our • Establish and maintain high accidents and improve our management staff at MBT standards for safety of the HSE performance. as well as contractors (Tank people, the processes and Lorry Drivers) the assets. • Remain committed to be a leader in Safety, Occupational Implementation of ISO 9001:2015 • Comply with all Rules and Health and Environmental standard is another milestone Regulations on Safety, Protection through achieved at APL in FY 2017-18. A Occupational Health and continuing improvement. step towards systems development Environmental Protection. and ensuring “Quality” during all • Make efforts to preserve • Plan, design, operate and its operations. Compliance with ecological balance and maintain all facilities, all relevant industry standards and heritage. processes and procedures executing all its operations in a safe to secure sustained Safety, and environment friendly manner Health and Environmental is a core value here at APL. Protection.

75 APL ANNUAL REPORT 2018

PROSPECTS OF THE ENTITY INCLUDING TARGETS FOR FINANCIAL AND NON-FINANCIAL MEASURES

Retail network expansion, Stiff market competition coupled observe and reduce deviation effective Supply chain with volatile International from the defined goals. management and Partnerships prices of POL products are Non-financial Measures agreement with leading local & the basic challenges to effect The Company has identified foreign companies are milestones Company’s strategy and in turn following areas as key non- of the Company towards business its profitability. The Company financial measures: expansion and sustainable combated these challenges by its Human resource profitability. Establishment of effective strategic, tactical and development, training and bulk storage facilities and other operational direction, efficient Succession planning capital ventures are also there inventory management, control Product Quality maintenance to improve the operation’s over supply chain and growth in & improvement assurance throughput. sales volumes hence maintained Corporate Social to be in good profits. Financial Measures Responsibility Sticking to the targets set; APL APL has projected its financial Healthy & Safe Environment achieved sales volume growth of targets based on historical Revamping of business 5% and profitability growth of 7% financial performance keeping in processes in line with best as of comparative financial year. view multiple risk & uncertainties practices Performance targets are prevailing in the market. Management responsibility continuously monitored to for effective implementation of business plans, under strategic directions of the Board

76 RISK & OPPORTUNITY REPORT

Effective risk management decision makers is to exploit the commercial, operational and remains of utmost importance best opportunities in favor of financial risks. An overview of to the companies for sustainable the Company, generating viable major risks faced by Attock business growth. Management returns and adhering to the vision Petroleum Limited and the endeavors to stay committed and mission of the Company. mitigating strategies to overcome to the long-term strategy of the these risks are outlined below: Risks Company while minimizing the Businesses face various types risks associated with short-term of risks including strategic, goals. Another challenge for the

77 APL ANNUAL REPORT 2018

Risk Category Mitigating Strategy APL’s customer focused strategy and proactive Increased industry approach towards potential opportunities restricts competition resulting in loss Strategic any loss in market share and enable retention of of market share existing customers. Volatility in international oil Efficient and effective stock management results in Strategic prices minimal losses from decline in prices and vice versa. Increased focus on pushing volume based sales Operating in a fixed margin generating optimum returns and diverse portfolio Strategic/ Financial industry of products including deregulated high margin products. Proactive approach by the management in timely Non-compliance with implementation of and compliance with any statutory requirements and Strategic changes in the regulatory environment of the regulatory framework industry. Shortage of products due Adequate stock levels are maintained and regular to delay in supplies by imports are planned to counter the risk arising from local refineries/ strikes Commercial/Operational these situations to maintain smooth uninterrupted by transporters disrupting operations of the Company. supply chain APL’s succession planning policy coupled with Turnover of trained employees’ job rotations & training practices employees at critical Operational have been put in place to cater this risk. A formal positions/ employee code of conduct is in place to ensure employees’ misconduct disciplinary mechanism. Risks of accidents causing A sound system of HSE is in place for hazard serious injuries to employees Operational identification & threat management to ensure / stakeholders or damage to workplace safety. Company’s property System integrated controls are in place to prevent IT security risks, internal unauthorized access to confidential information external frauds and system Operational and to avoid breaches, errors & other irregularities. failures Data auto backup mechanism is also followed. These events are beyond the Company’s control Natural calamities/ force however with the APL’s disaster recovery/ business Operational majeure continuity plans, Company is well equipped to recover from any natural disaster.

78 Lights of Celebration, Pakistan Independence Day - APL Head Office, Attock House, Morgah, Rawalpindi 79 APL ANNUAL REPORT 2018

Opportunities participating in bidding for other on ongoing basis to check for The Company is always presented OMCs which were offered for any revision in the estimates. with a lot of opportunities for sale. Previously, the Company Effect of revision in accounting improvement of business in participated in bidding for estimates are recognized general and profit maximization acquisition of OMCs. prospectively i.e. in the period in specific. Enhancement of The Company has remained of revision or future period if market share always remains proactive tapping in to contracts it effects so. Key sources of a challenging opportunity for with new customers to provide estimation of uncertainty are the Company as the industry them with superior quality detailed below: volumes grow and with ever products and unmatched increasing competition, services. Recoverable amount and Company has aligned itself The untapped segment of valuation of investment in to achieve maximum benefit aviation presents a huge associated companies from this growth in industry. An opportunity for APL to enter APL has investment in associated opportunity to be geographically and grab market share. APL has companies ARL, NRL and AITSL. present and appropriately established its fuel farm facility in The value of investments in listed spread across the Country to the largest airport of the Country associated companies NRL and attain competitive advantage is i.e. New Islamabad International ARL is based on valuation analysis accessible to the Company. APL Airport. The Company has carried out based on value in use has recognized this opportunity positioned itself in such a manner calculation described in notes and setting up storage terminals to gain maximum advantage from 15.5, 15.6 while value of unlisted across the Country to exploit the sector including financial and associated company AITSL is this opportunity and gain non-financial benefits. based on its financial statements cost and freight advantages. as described in note 15.7 of Geographical presence through Key Sources of Estimating financial statements. retail development is also part of Uncertainty this strategy. Financial Statement preparation Assessment of significant Development of China Pakistan requires the management influence in associated and the Board of Directors to Economic Corridor (CPEC) companies make estimates that affect the presents enormous opportunities NRL, ARL and AITSL are treated reported figures of financial to businesses across Pakistan. APL as associated companies statements’ elements and use has started to actively participate in spite of having less than their professional judgment while in the project and contracts 20% shareholding by APL in applying appropriate accounting have been obtained for supply these companies, as APL has policies. of petroleum products. With representation on their Board of These estimates are developed increasing focus on CPEC in the Directors. near future, Company shall make on assumptions based on efforts to generate maximal historical experience and other Provision for taxation benefits from the available reasonable factors, the result of Current tax liability of Rs 2,499 prospects. which form the basis for making million has been recognized The Company is geared to make judgment about the carrying in financial statements taking the best use of opportunities values of assets and liabilities account of relevant laws and presented. APL remains interested which are not readily available decisions taken by appellate in acquisition of entities available from other sources. Actual results authorities. Contingent liabilities for sale which can add to the may differ from the estimates are disclosed in financial Company’s strength by way of under different assumptions or statements where the Company’s offering associated services or conditions applicable. view differs from the tax The estimates are reviewed

80 authorities at the assessment assumptions such as discount other than those provided stage and where the Company rate, expected rate of return on under the regulations is matter considers that its view on plan assets, expected rate of of professional judgment and is items of material nature is in growth in salaries and expected organization specific. Materiality accordance with law. Deferred average remaining working life levels are reviewed periodically tax liability of Rs 134 million of employees and detailed and updated appropriately where is recorded in the Company’s extensively in note 32 to the necessary. financial statements. financial statements. Power of the Board of Directors and the Company’s Management Materiality approach Useful life of property, plant have been defined in line with adopted by the Management and equipment the guidelines of the Companies Information and events are Act 2017, the Code of Corporate The useful lives are estimated considered to be material if, having regard to the factors as Governance, Company’s Article individually or in aggregate, of Association and regulations asset usage, maintenance, rate they have significant impact on of technical and commercial of professional bodies and best the Company’s performance or practices. All the decisions obsolescence. The useful lives of profitability which in turn can assets are reviewed annually. are taken and new risks and influence the economic decisions opportunities are identified, Value of staff retirement of the Company’s Stakeholders. assessed and disclosed in light benefit obligations APL’s management has of Company’s materiality policy The defined benefit obligations developed a materiality policy in addition to other regulatory are based on actuarial duly approved by the Board. requirements. Assessment of materiality levels SEGMENTAL REVIEW OF BUSINESS PERFORMANCE

APL’s financial statements have been prepared on the basis of a single reportable segment. Total sales revenue is broadly divided into following categories:

2018 2017

4.12% 0.42%

24.55% 75.03% 32.94% 62.94%

White Oil & Lubricants Black Oil Sales Revenue from Other Products 81 APL ANNUAL REPORT 2018 AUDIT COMMITTEE AND INTERNAL CONTROL FRAMEWORK The Board of Directors of the members, the meetings were also and efficiency of operations, Company has formed a Board attended by the Chief Financial reliability of financial reporting Audit Committee as required Officer (CFO). The Committee and compliance with applicable under the Code of Corporate also met with the External laws and regulations. Internal Governance (the Code). The Auditors separately in the absence auditors play an important role Committee comprises of 04 non of Head of Internal Audit and in evaluating the effectiveness executive directors including CFO to get feedback on the of control systems and have 02 independent directors. The overall control and governance a significant monitoring role Chairman of the Committee is Mr. framework within the Company. because of authority and Mohammad Raziuddin. Detailed The Internal Control Framework is independency in the organization. profile of Mr. Mohammad a major part of overall governance The Head of Internal Audit has Raziuddin is given in “Profile of structure. It is fundamental to the direct access to the Committee. Board of Directors” section. successful operation and day-to- Audit observations along with The Audit Committee met 04 day running of a business. The compliance status are regularly times during the year ended scope of internal control is very presented to the Committee. The June 30, 2018. The meetings of broad. It encompasses all controls role of Internal Audit department the Committee were held at incorporated into the strategic, includes review of systems within least once every quarter prior governance and management the Company at appropriate to approval of interim and processes, covering the Company’s intervals to determine whether final results of the Company entire range of activities and they are effectively designed as required by the Code. The operations and not just those and carrying out the functions agenda of the meetings included directly related to financial in accordance with management discussions on financial matters operations and reporting. instructions, policies and of the Company along with Internal control as a process procedures and in a manner that review of other matters as per the designed to provide reasonable is in agreement with Company’s Terms of Reference (TOR) of the assurance regarding the objectives and high standard of Committee. achievement of objectives in administrative practices. Head of Internal Audit relation to the effectiveness Department, being the Secretary to the Committee, arranged all the Committee meetings. In addition to the Committee

82 SHARE PRICE SENSITIVITY ANALYSIS

The shares of Attock Petroleum term retention of the shares. reflected on the share price of Limited are regarded as blue chip Following factors or events may the Company. stock and considered as a secure affect the share price of the investment. The share price has Company: Exchange Losses reflected our strong market The Country is highly dependent position and prospects of growth Sales Volume for its energy requirements on but might respond to exogenous Operating in an industry where import of petroleum products. factors in the future as there margins are fixed, the profitability APL also actively imports various are number of events that are of the Company is highly POL products. Movement in affecting the share prices either in dependent on sales volume Rupee – Dollar parity incurs the short or broad spectrum. which ultimately also affects the exchange can also indirectly During the year, the share price share price. Increase in economic affect the share price. varied from Rs 486 to the mark activity will lead to increased of Rs 706. The spread between sales and ultimately reflected on Inventory Gains / Losses the prices is attributable to the the net profit and share price of High volatility in international milestones achieved by the the Company. oil prices also severely affects Company during the period the profitability of the under review. Strong performance Sales Margin Company. Downward trend resulted in higher dividend As stated above, the profitability leads to inventory losses while payouts over the years, which in is positively correlated to fixed an increasing trend positively turn has gradually increased the sales margin on petroleum impacts the profitability and share price of the Company. We products. Any change in hence affects the share price continuously build confidence margins by the Government of accordingly. of our investors, providing Pakistan (GoP) for the regulated them optimal returns on their products shall directly affect the investment promoting the long profitability and the same shall be

83 APL ANNUAL REPORT 2018

CALENDAR OF Successful implementation of Microload Meters Integration MAJOR EVENTS System. Which enhanced system controls monitoring and efficiency. It also provides error free work and control on overspilling. Awarded 2nd position in Fuel and Energy Sector in “Best Corporate Report Award 2016” ceremony jointly organized by the Institute AUGUST NOVEMBER JANUARY of Chartered Accountants 2017 2017 2018 of Pakistan and the Institute of Cost and Management Accountants of Pakistan.

july AUGUST 2017 2017 APRIL APRIL NOVEMBER 2018 2018 2017

Successful commissioning Successfully launched of new PMG Tank at Attock Smart Fuel Card; Machike Bulk Oil Terminal Smart Fuel Card not only (Sheikhupura) which not only facilitates customers enhanced our storage but with cashless and secure also enabled us to continue transactions, but also uninterrupted supplies to offers complete control customers. on fuel budget, real-time online reporting, eliminate unauthorized purchases FEBRUARY MARCH 2018 2018 and maximum convenience. Successfully imported a parcel of Group - I Lube Base Oil (LBO) at Keamari Port for the 1st time in Company’s history.

84 Imported Bitumen Bulk for the first time in history of the Company.

AUGUST NOVEMBER JANUARY 2017 2017 2018

Commissioned two Company Operated fuel stations at the New International Islamabad Airport namely Aero and Falcon Filling Stations. july AUGUST 2017 2017 APRIL APRIL NOVEMBER 2018 2018 2017

Advances in aviation business under JV with PSO & successful commissioning of Fuel farm Operations.

FEBRUARY MARCH 2018 2018

Successful commissioning of Following the ritual of inculcating health culture; Mehmoodkot Bulk Oil Terminal. APL organized an annual By this, our storage capacity has sports competition to been increased & this Terminal promote physical activities will also play an important role and sportsmanship amongst in enhancing market share & the staff and to help build a expansion of Company business sense of cooperation and in central Punjab. team-spirit.

85 APL ANNUAL REPORT 2018 INFORMATION TECHNOLOGY GOVERNANCE

As businesses evolve and adapt Business Process Streamlining Business Intelligence for to the changing market dynamics, Business Processes are being Planning and Forecasting they require a flexible approach continuously mapped, APL is continuing to explore to Information Technology documented, re-engineered Business Intelligence Tools and introduction and utilization for and improved upon for Technologies that will provide achieving their strategic goals and transformation in to automated insights in to the hows and objectives. functions. Plans are also being whys of the Business through developed for introduction of an dashboards and analytical drill- Information Systems automated Work Flow System. downs across all business areas Strategic Planning and functions. This will open The APL IT Committee oversees IT for Internal Controls up the possibilities for targeted the requirements, approves the Automated controls are being planning and forecasting based planning and supervises the incorporated at each step of on existing data and what-if introduction of new automated the APL Supply Chain to check scenarios. functionalities required for and validate information being optimal business operations. entered to reduce the possibility Value Addition and Return Generic and industry-specific of human error. System generated on Investment Best Practices are also reviewed audit and consistency mechanism APL has an on-going commitment and incorporated in to APL are being planned to ensure to continuously improve upon its functions. system integrity. IT infrastructure, technologies, processes and procedures. Business Alignment with Real Time Reporting for This directly translates in to Information Technology Decision Making improved controls, enhanced APL is endeavoring to An Online Real Time System reporting, optimized procedures transform its strategic vision opens up the possibilities for and better overall performance. into automated systems that Real Time Reporting and Real Key Performance Indicators are encapsulate the APL Business Time Decision Making: Business being developed to quantify the Cycle in to a web based outcomes can be positively value added to various business environment to process and track impacted when actionable data is functions across APL. every key transaction in a real on hand in real time. time environment.

86 TOTAL RETAIL OUTLETS 629 and counting retail outlets spread strategically across the Country to provide the best petroleum products and services to the local populace.

87 APL ANNUAL REPORT 2018 ORGANIZATIONAL CHART Departmental Head Department

Exchange Policy Board off DirectorsDirectoDiD t Administrative Reporting

Functional Reporting

Board Humanmann ResourceRResourcResourResouReso & Remunerationn CommCCommittee Board Auditt CommittCommiComCCommitteem t e

Chief Executivetiveiveve OfficerOfficeOfficOffOfO

Advisorrrt totoCEOo CEC.E.O.

General Manager (Finance & Accounts)/ Assistant GeneralenneralnerallMl ManaManMaMManager Company Secretary (Admin & Management)

Exchange Policy Exchange Policy Exchange Policy Exchange Policy

Finance & AccountsAccountccoun Indenting & CreditCd CControl Human Resourceesourc Administrationtrationtii Legall HSEE

Managerger Managerger Managerager Managerager Managerger Managerager Managerger Manager Incharge Incharge Resident Manager Manager (Marketing & Sales) (Projects) (Engineering) (Aviation) (Lubricants) (Retail Sales) (Retail Development) (Terminal Operations) (Procurement) (MIS) (South) (Internal Audit)

88 Departmental Head

Department

Exchange Policy Board off DirectorsDirectoDiD t Administrative Reporting

Functional Reporting

Board Humanmann ResourceResouResoRResourcResour & Remunerationn CommCCommittee Board Auditt CommittCommiComCCommitteem t e

Chief Executivetiveiveve OfficerOfficeOfficOffOfO

Advisorrrt totoCEOo CEC.E.O.

General Manager (Finance & Accounts)/ Assistant GeneralenneralnerallMl ManaManMaMManager Company Secretary (Admin & Management)

Exchange Policy Exchange Policy Exchange Policy Exchange Policy

Finance & AccountsAccountccoun Indenting & CreditCd CControl Human Resourceesourc Administrationtrationtii Legall HSEE

Managerger Managerger Managerager Managerager Managerger Managerager Managerger Manager Incharge Incharge Resident Manager Manager (Marketing & Sales) (Projects) (Engineering) (Aviation) (Lubricants) (Retail Sales) (Retail Development) (Terminal Operations) (Procurement) (MIS) (South) (Internal Audit)

89 A F FERGUSON&CO Review Report to the Members on the Statement of Compliance with the Code of Corporate Governance We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate Governance) Regulations, 2017 (the Regulations) prepared by the Board of Directors of Attock Petroleum Limited, the Company) for the year ended June 30, 2018 in accordance with the requirements of regulation 40 of the Regulations. The responsibility for compliance with the Regulations is that of the Board of Directors of the Company. Our responsibility is to review whether the Statement of Compliance reflects the status of the Company’s compliance with the provisions of the Regulations and report if it does not and to highlight any non-compliance with the requirements of the Regulations. A review is limited primarily to inquiries of the Company personnel and review of various documents prepared by the Company to comply with the Regulations. As a part of our audit of the 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 are not required to consider whether the Board of Directors’ statement on internal control covers all risks and controls or to form an opinion on the effectiveness of such internal controls, the Company’s corporate governance procedures and risks. The Regulations require the Company to place before, the Audit Committee, and upon recommendation of the Audit Committee, place before the Board of Directors for their review and approval, its related party transactions and also ensure compliance with the requirements of section 208 of the Companies Act, 2017. We are only required and have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of the Audit Committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm’s length price or not. 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 requirements contained in the Regulations as applicable to the Company for the year ended June 30, 2018.

Chartered Accountants Islamabad August 14, 2018

Engagement partner: Asim Masood Iqbal

90 Statement of Compliance with the Listed Companies (Code of Corporate Governance) Regulations, 2017 for the Year Ended June 30, 2018

The Company has complied with the requirements of the Regulations in the following manner: 6. All the powers of the Board have been duly 1. The total number of directors are seven (7) as exercised and decisions on relevant matters per following: have been taken by the Board/shareholders as empowered by the relevant provision of the Act a) Male: Seven and these Regulations. b) Female: None 7. The meetings of the Board were presided 2. The composition of Board is as follows: over by the Chairman and in his absence, by a director elected by the Board for this purpose. Category Names The Board has complied with the requirements of Act and the Regulations with respect to Independent Lt Gen (Retd.) Javed Alam Khan frequency, recording and circulating minutes of Director Mr. Mohammad Raziuddin meeting of Board. Mr. Laith G. Pharaon Mr. Wael G. Pharaon 8. The Board of Directors have a formal policy Non Executive Mr. Abdus Sattar and transparent procedures for remuneration of Directors Mr. Babar Bashir Nawaz Directors in accordance with the Act and these Mr. Iqbal A. Khwaja Regulations. (Alternate Director) 9. The Company is fully compliant with the Mr. Shuaib A. Malik Executive requirements of directors’ training under the Mr. Rehmat Ullah Bardaie Directors Code. Till June 30, 2018, two directors namely (Alternate Director) Mr. Babar Bashir Nawaz and Mr. Mohammad Raziuddin have obtained the certification. None 3. The directors have confirmed that none of them of the Directors have attended any directors’ is serving as a director on more than five listed training during the year. companies, including this Company (excluding the listed subsidiaries of listed holding 10. The Board has approved appointment of CFO, companies where applicable). Company Secretary and Head of Internal Audit, including their remuneration and terms and 4. The Company has prepared a Code of Conduct conditions of employment and complied with and has ensured that appropriate steps have relevant requirements of the Regulations. been taken to disseminate it throughout the Company along with its supporting policies and 11. Chief Financial Officer and Chief Executive procedures. Officer duly endorsed the financial statements before approval of the Board. 5. The Board has developed vision and mission statements, overall corporate strategy and 12. The Board has formed committees comprising significant policies of the Company. A complete of members given below: record of particulars of significant policies along with the dates on which they were approved or amended has been maintained.

91 APL ANNUAL REPORT 2018

HR and Remuneration 17. The statutory auditors or the persons associated Audit Committee Committee with them have not been appointed to provide other services except in accordance with the Mr. Mohammad Raziuddin Mr. Mohammad Raziuddin Act, these regulations or any other regulatory (Chairman) (Chairman) requirement and the auditors have confirmed that Mr. Abdus Sattar Mr. Shuaib A. Malik they have observed IFAC guidelines in this regard. Mr. Babar Bashir Nawaz Mr. Iqbal A. Khwaja Lt Gen (Retd.) Javed Alam 18. We confirm that all other requirements of the - Khan Regulations have been complied with.

13. The terms of reference of the aforesaid committees have been formed, documented and advised to the committees for compliance.

14. Audit Committee meetings were held once every quarter and Human Resource and Remuneration Laith G. Pharaon Committee meeting was held once during the Chairman year. Dubai, U.A.E. 15. The Board has set up an effective internal audit August 14, 2018 function and that is involved in Internal Audit on full time basis relating to the business and other affairs of the Company.

16. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under the quality control review program of the Institute of Chartered Accountants of Pakistan and registered with Audit Oversight Board of Pakistan, that they or any of the partners of the firm, their spouses 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 (IFAC) guidelines on code of ethics as adopted by the Institute of Chartered Accountants of Pakistan.

92 FINANCIAL ANALYSIS

93 APL ANNUAL REPORT 2018 DUPONT ANALYSIS Return on equity decreased by 6% to 32.59% against 34.62% of year 2016-17 on account of decrease in net profit margin by 17% as a result of decrease in EBIT margin by 16%. EBIT margin decreased due to increase in operating expenses and reversal of worker’s welfare fund provision in the year 2016-17 coupled with increase in sales volume by 5% and increase in price trend during the year resulted in higher sales revenue and gross profits. Interest and tax burden remained almost at 2016-17 level. Financial Leverage and Assets turnover increased due to increase in sales and assets. YEAR 2017-18 4.67% 3.19% EBIT Net Profit Margin Margin 0.68 Tax Burden 2.43 Leverage

01 4.20 Interest Assets Burden Turnover

32.59% Return on Equity

YEAR 2016-17 5.55% 3.82% EBIT Net Profit Margin Margin 0.69 Tax Burden 2.25 Leverage

01 4.03 Interest Assets Burden Turnover

34.62% Return on Equity 94 Key Operating and Financial Data for Six Years from 2012-13 to 2017-18 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 Profit and Loss Summary

Sales volumes Metric Tons 2,488,810 2,360,529 2,034,818 2,368,990 2,190,293 1,837,357

Net sales Rs thousand 177,344,437 138,660,665 109,234,361 171,729,782 205,162,911 164,710,177

Gross profit Rs thousand 9,743,294 7,335,321 5,749,061 4,926,509 5,942,294 5,176,801

Operating profit Rs thousand 8,085,325 6,367,177 4,984,849 3,885,822 5,381,469 4,873,355

Profit before tax Rs thousand 8,289,312 7,699,168 5,633,450 4,537,855 5,906,565 5,593,404

Profit after tax Rs thousand 5,656,349 5,299,168 3,828,585 3,286,384 4,326,764 3,906,534

Profit before interest, tax, depreciation Rs thousand 8,711,258 8,046,868 5,951,622 4,828,902 6,228,433 5,817,731 and amortization (EBITDA)

2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 Balance Sheet Summary

Share capital Rs thousand 829,440 829,440 829,440 829,440 829,440 691,200 Reserves Rs thousand 17,588,222 15,465,051 13,487,726 12,730,365 12,970,282 13,352,257 Shareholders' equity Rs thousand 18,417,662 16,294,491 14,317,166 13,559,805 13,799,722 14,043,457 Non- current liabilities Rs thousand 911,540 733,581 626,159 604,814 581,682 462,871 Current assets Stock in trade Rs thousand 12,460,539 7,234,415 4,836,653 5,572,867 6,787,904 5,156,298 Trade debts Rs thousand 16,475,576 10,801,077 6,046,556 8,214,189 13,009,051 8,227,392 Cash, bank balances & Short term Rs thousand 5,839,645 11,843,739 11,030,176 10,303,318 9,432,730 11,914,100 investments Others Rs thousand 3,372,804 2,620,715 4,088,455 2,033,203 2,019,134 2,058,876 Rs thousand 38,148,564 32,499,946 26,001,840 26,123,577 31,248,819 27,356,666 Current liabilities Trade and other payables Rs thousand 26,138,159 21,061,447 15,434,650 15,719,096 19,492,073 15,396,560 Others Rs thousand 663,965 277,433 147,330 27,939 212,387 194,631 Rs thousand 26,802,124 21,338,880 15,581,980 15,747,035 19,704,460 15,591,191 Net current assets Rs thousand 11,346,440 11,161,066 10,419,860 10,376,542 11,544,359 11,765,475 Property, plant and equipment Rs thousand 6,417,787 4,339,301 3,011,665 2,444,164 1,931,085 1,862,742 Other non-current assets Rs thousand 1,564,975 1,527,705 1,511,800 1,343,913 905,960 878,111 Capital expenditure during the year Rs thousand 2,503,439 1,676,134 886,972 808,421 392,261 485,684 Total assets Rs thousand 46,131,326 38,366,952 30,525,305 29,911,654 34,085,864 30,097,519 Total liabilities Rs thousand 27,713,664 22,072,461 16,208,139 16,351,849 20,286,142 16,054,062

2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 Cash Flow Summary

Cash flows of operating activities Rs thousand (1,030,368) 4,848,276 3,700,253 4,735,369 1,456,813 6,035,751 Cash flows of investing activities Rs thousand (2,620,019) 235,566 3,660,211 (3,999,956) 778,567 (636,059) Cash flows of financing activities Rs thousand (3,088,661) (3,312,880) (3,064,694) (3,521,257) (4,555,092) (2,244,902) Effect of exchange rate changes Rs thousand 3,822 142 698 1,206 (153) 1,797 Net change in cash and cash equivalents Rs thousand (6,735,226) 1,771,104 4,296,468 (2,784,638) (2,319,865) 3,156,587 Cash & cash equivalents at end of the Rs thousand 4,198,160 10,933,386 9,162,282 4,865,814 7,650,452 9,970,317 year 95 APL ANNUAL REPORT 2018

Performance Indicators (Ratios) 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 Profitability and Operating Ratios

Gross profit % 5.49 5.29 5.26 2.87 2.90 3.14 Net profit to sales % 3.19 3.82 3.50 1.91 2.11 2.37 EBITDA margin to sales % 4.91 5.80 5.45 2.81 3.04 3.53 Operating leverage % 27.48 136.12 (66.34) 142.20 22.80 (12.17) Return on equity % 32.59 34.62 27.47 24.02 31.08 29.56 Return on capital employed % 32.59 34.62 27.47 24.02 31.08 29.56

2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 Liquidity Ratios

Current Times 1.42 1.52 1.67 1.66 1.59 1.75

Quick / Acid test ratio Times 0.96 1.18 1.36 1.30 1.24 1.42

Cash to current liabilities Times 0.16 0.51 0.59 0.31 0.39 0.64

Cash flows from operations to sales Times (0.01) 0.03 0.03 0.03 0.01 0.04

2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 Activity / Turn Over Ratios Inventory turnover Times 17.02 21.76 19.88 26.99 33.36 34.23 No. of days in inventory 21 17 18 14 11 11 Debtors turnover Times 13.00 16.46 15.32 16.18 19.32 14.75 No. of days in receivables 28 22 24 23 19 25 Creditors turnover Times 7.10 7.20 6.64 9.47 11.42 9.65 No. of days in payables 51 51 55 39 32 38 Total assets turnover Times 4.20 4.03 3.61 5.37 6.39 5.43 Fixed assets turnover Times 32.97 37.73 40.04 78.50 108.16 95.09 Operating cycle Days (2) (12) (13) (2) (2) (2) Number of retail outlets 629 604 563 516 468 414

96 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 Investment / Market Ratios Basic and diluted EPS Rs 68.19 63.89 46.16 39.62 52.16 56.52 Basic and diluted EPS (restated) Rs 68.19 63.89 46.16 39.62 52.16 47.10 Price earning Times 8.65 9.81 9.48 14.32 11.31 9.93 Price to book Times 2.66 3.19 2.53 3.47 3.55 2.76 Dividend yield % 6.68 6.94 8.32 6.26 9.01 8.96 Dividend payout % 58.66 66.52 86.66 87.07 91.06 79.62 Dividend cover Times 1.70 1.50 1.15 1.15 1.10 1.26 Cash dividends Rs thousand 3,317,760 3,525,120 3,317,760 2,861,568 3,939,840 3,110,400 Cash dividend per share Rs 40.00 42.50 40.00 34.50 47.50 45.00 Bonus shares issued Rs thousand 165,888 - - - - 138,240 Bonus per share % 20 - - - - 20.00 Break-up value per share without surplus on Rs 222.05 196.45 172.61 163.48 166.37 203.18 revaluation of Property plant and equipment Break-up value per share with surplus on revaluation of Property plant and equipment Rs 222.05 196.45 172.61 163.48 166.37 203.18 including the effect of all investments Break-up value per share including investment in related party at fair/ market value and with surplus Rs 235.77 210.90 184.75 174.24 177.07 205.88 on revaluation of Property plant and equipment Market value per share Year end Rs 590 626 438 567 590 561 Highest (during the year) Rs 706 765 596 610 607 585 Lowest (during the year) Rs 486 430 398 494 414 471

2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 Capital Structure Ratios Debt to equity 0:100 0:100 0:100 0:100 0:100 0:100 Financial leverage ------Weighted average cost of debt ------Interest cover ------Market Share (Source: OCAC) % 9.7 9.0 8.5 10.4 10.1 9.3

97 APL ANNUAL REPORT 2018 VERTICAL ANALYSIS 3.1 3.1 1.5 3.4 3.4 2.9 2.4 6.2 3.0 51.8 46.7 46.7 96.9 96.9 90.9 90.9 100.0 100.0 100.0 % 2012-13 878,111 878,111 462,871 5,176,801 5,176,801 15,591,191 15,591,191 1,862,742 1,862,742 4,873,355 3,906,534 3,906,534 5,593,404 5,593,404 14,043,457 14,043,457 30,097,519 30,097,519 30,097,519 30,097,519 27,356,666 27,356,666 164,710,177 164,710,177 159,533,376 159,533,376 Rs (‘000) 1.7 1.7 2.1 5.7 5.7 2.9 2.9 2.6 2.6 97.1 97.1 91.7 91.7 57.8 57.8 40.5 % 100.0 100.0 100.0 2013-14 581,682 905,960 905,960 1,931,085 1,931,085 5,381,469 5,381,469 4,326,764 4,326,764 5,942,294 5,942,294 5,906,565 5,906,565 13,799,722 13,799,722 31,248,819 19,704,460 19,704,460 205,162,911 205,162,911 34,085,864 34,085,864 199,220,617 199,220,617 Rs (‘000) 1.9 1.9 2.3 4.5 2.9 8.2 2.6 2.0 97.1 97.1 87.3 87.3 45.3 52.6 52.6 % 100.0 100.0 100.0 2014-15 604,814 1,343,913 1,343,913 4,537,855 4,537,855 2,444,164 2,444,164 3,286,384 3,885,822 15,747,035 15,747,035 29,911,654 29,911,654 29,911,654 29,911,654 4,926,509 4,926,509 26,123,577 26,123,577 13,559,805 13,559,805 171,729,782 171,729,782 166,803,273 Rs (‘000) 2.1 3.5 5.3 9.9 5.2 4.6 5.0 85.1 85.1 51.0 94.7 94.7 46.9 46.9 % 100.0 100.0 100.0 626,159 626,159 2015-16 1,511,800 3,011,665 5,749,061 5,749,061 14,317,166 14,317,166 5,633,450 5,633,450 3,828,585 4,984,849 4,984,849 15,581,980 15,581,980 30,525,305 30,525,305 30,525,305 30,525,305 109,234,361 109,234,361 26,001,840 103,485,300 103,485,300 Rs (‘000) 1.9 1.9 5.3 3.8 5.6 4.6 11.3 4.0 94.7 94.7 42.5 55.6 84.7 84.7 % 100.0 100.0 100.0 733,581 2016-17 7,335,321 7,335,321 6,367,177 6,367,177 1,527,705 1,527,705 4,339,301 4,339,301 7,699,168 7,699,168 5,299,168 5,299,168 21,338,880 38,366,952 38,366,952 32,499,946 16,294,491 16,294,491 131,325,344 131,325,344 138,660,665 Rs (‘000) 3.2 3.4 3.4 4.7 4.7 5.5 4.6 2.0 13.9 13.9 58.1 58.1 39.9 82.7 82.7 94.5 % 100.0 100.0 100.0 911,540 2017-18 6,417,787 6,417,787 8,289,312 8,289,312 1,564,975 1,564,975 9,743,294 9,743,294 5,656,349 46,131,326 46,131,326 46,131,326 46,131,326 8,085,325 8,085,325 18,417,662 18,417,662 38,148,564 38,148,564 167,601,143 167,601,143 26,802,124 26,802,124 177,344,437 177,344,437 Rs (‘000) Total Shareholders' Equity & Liabilities Shareholders' Total Non- Current Liabilities Non- Current Liabilities Current Balance Sheet Items Plant and Equipment Property, Assets Other Non-Current Assets Current Assets Total Equity Shareholders' Profit & Loss Items Net Sales Sold of Products Cost the Year for Profit Gross Profit Gross Profit Operating Taxation before Profit HORIZONTAL ANALYSIS 1.3 7.6 7.6 7.8 7.8 12.1 12.1 13.4 13.4 16.3 (1.4) (1.4) 12.8 (3.5) (5.2) (2.5) (0.9) (12.1) year (%) year from last from (decrease) (decrease) Increase / Increase 2012-13 878,111 878,111 462,871 5,176,801 5,176,801 15,591,191 15,591,191 1,862,742 1,862,742 4,873,355 3,906,534 3,906,534 5,593,404 5,593,404 14,043,457 14,043,457 30,097,519 30,097,519 30,097,519 27,356,666 27,356,666 164,710,177 164,710,177 159,533,376 159,533,376 Rs (‘000) 3.7 3.7 3.2 5.6 13.3 13.3 (1.7) 14.2 14.8 10.4 10.4 25.7 25.7 10.8 24.9 24.9 26.4 26.4 24.6 year (%) year from last from (decrease) (decrease) Increase / Increase 2013-14 581,682 905,960 905,960 1,931,085 1,931,085 5,381,469 5,381,469 4,326,764 4,326,764 5,942,294 5,942,294 5,906,565 5,906,565 13,799,722 13,799,722 31,248,819 19,704,460 19,704,460 205,162,911 205,162,911 34,085,864 34,085,864 199,220,617 199,220,617 Rs (‘000) 4.0 (1.7) (17.1) 48.3 26.6 (16.3) (16.3) (12.2) (12.2) (20.1) (16.4) (27.8) (23.2) (24.0) year (%) year from last from (decrease) (decrease) Increase / Increase 2014-15 604,814 1,343,913 1,343,913 4,537,855 4,537,855 2,444,164 2,444,164 3,286,384 3,885,822 15,747,035 15,747,035 29,911,654 29,911,654 29,911,654 29,911,654 4,926,509 4,926,509 26,123,577 26,123,577 13,559,805 13,559,805 171,729,782 171,729,782 166,803,273 Rs (‘000) 2.1 2.1 3.5 5.6 24.1 24.1 16.7 16.7 12.5 16.5 (1.0) 23.2 28.3 (0.5) (36.4) (38.0) year (%) year from last from (decrease) (decrease) Increase / Increase 2015-16 626,159 626,159 1,511,800 3,011,665 5,749,061 5,749,061 14,317,166 14,317,166 5,633,450 5,633,450 3,828,585 4,984,849 4,984,849 15,581,980 15,581,980 30,525,305 30,525,305 30,525,305 30,525,305 109,234,361 109,234,361 26,001,840 103,485,300 103,485,300 Rs (‘000) 1.1 1.1 17.2 17.2 44.1 44.1 13.8 27.7 27.7 25.7 25.7 25.7 25.7 36.7 36.7 27.6 27.6 36.9 36.9 38.4 38.4 26.9 26.9 26.9 26.9 25.0 year (%) year from last from (decrease) (decrease) Increase / Increase 2016-17 733,581 7,335,321 7,335,321 6,367,177 6,367,177 1,527,705 1,527,705 4,339,301 4,339,301 7,699,168 7,699,168 5,299,168 5,299,168 21,338,880 38,366,952 38,366,952 32,499,946 16,294,491 16,294,491 131,325,344 131,325,344 138,660,665 Rs (‘000) 7.7 6.7 6.7 2.4 17.4 17.4 13.0 47.9 27.9 27.9 27.6 27.6 24.3 32.8 32.8 27.0 27.0 25.6 20.2 20.2 year (%) year from last from (decrease) (decrease) Increase / Increase 2017-18 911,540 6,417,787 6,417,787 8,289,312 8,289,312 1,564,975 1,564,975 9,743,294 9,743,294 5,656,349 46,131,326 46,131,326 46,131,326 46,131,326 8,085,325 8,085,325 18,417,662 18,417,662 38,148,564 38,148,564 167,601,143 167,601,143 26,802,124 26,802,124 177,344,437 177,344,437 Rs (‘000) Profit for the Year for Profit Current Liabilities Current Equity & Shareholders' Total Liabilities Sold of Products Cost Profit Operating Taxation Before Profit Balance Sheet Items Plant and Equipment Property, Profit & Loss Items Net Sales Other Non-Current Assets Other Non-Current Assets Total Equity Shareholders' Liabilities Non- Current Profit Gross Current Assets Current APL ANNUAL REPORT 2018 GRAPHICAL PRESENTATION

Profit and Loss Balance Sheet Rupees in Billion Rupees in Billion

2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Gross profit Operating profit Profit before tax Profit after tax Shareholders’ equity Net current assets Total assets Total liabilities

Cash Flows Profitability Ratios entage c e r P Rupees in Billion

2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Cash flow from Cash flow from Cash flow from operating activities investing activities financing activities Gross profit Net profit to sales EBITDA margin to sales

Liquidity Ratios Activity Ratios Days Times

2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

100 Current ratio Quick / Acid test ratio No. of days in inventory No. of days in receivables No. of days in payables Turnover Ratios Investment Ratios

Rupees Times

2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Fixed assets turnover Total assets turnover Earnings per share Cash dividend per share

Market Ratios Composition of Assets

100% 03 04 05 05 02 03 06 06 08 14 11 10

80%

60%

40% 83 85 85 87 92 91 Rupees

20%

0% 2013 2014 2015 2016 2017 2018 2018 2017 2016 2015 2014 2013

Break-up value per share Market value per share (Year End) Current Assets Property, Plant and Equipment Other Non-Current Assets

Composition of Total Liabilities Composition of & Shareholders' Equity Profit and loss

100% 02 02 02 02 02 01 100% 01 02 02 01 01 01 03 04 03 02 02 02 40 42 47 45 40 47

80% 80%

60% 60%

52 40% 58 56 51 53 58 40% 96 94 95 97 97 97

20% 20%

0% 0% 2018 2017 2016 2015 2014 2013 2018 2017 2016 2015 2014 2013

Current Liabilities Shareholders' Equity Non- Current Liabilities Expenditure Pro t Income Tax 101 APL ANNUAL REPORT 2018

Total Assets Total Liabilities

50 30

45

40 24

35

30 18

25 12 20 Rupees in Billion Rupees in Billion 10 6 5

0 0 2018 2017 2016 2015 2014 2013 2018 2017 2016 2015 2014 2013

Total Shareholders’ Equity Net Sales

20 250

200 15

150

10 100

Rupees in Billion 5 Rupees in Billion 50

0 0 2018 2017 2016 2015 2014 2013 2018 2017 2016 2015 2014 2013

Gross Profit Net Profit

10 6.0

8 4.5

6 3.0

4

1.5 2 Rupees in Billion Rupees in Billion

0 0.0 2018 2017 2016 2015 2014 2013 2018 2017 2016 2015 2014 2013

102 COMMENTS ON FINANCIAL ANALYSIS

CASH FLOW RATIOS ANALYSIS ratio remained in line with last year. Total assets turnover has Profitability ratios: Increase Cash flow from operating increased by 4% compared to in sales volume and inventory activities: In the year 2017-18, last year whereas fixed assets gains due to rising price trend of it declined due to maintenance turnover has decreased by 13% petroleum products during the of higher stock level as per due to significant investment year 2017-18 resulted in increase requirements, increase in prices in construction of new storage in gross profit ratio from last year. of petroleum products and terminals and depots. extension of credit to customers Net profit to sales and EBITDA as per market demand. In the margin to sales decreased due Investment / Market ratios: year 2012-13, it was on higher side to recording in the year 2016-17 Earnings per share improved due to increase in cash collection of reversal of WWF provision due to higher profits from last from the customers. for prior years after High Courts’ year. However, price earnings decision in favor of tax payers ratio of 8.65 has shown decrease Cash flow from investing and increase in operating over last year. Market value per activities: Company invested expense. Further these ratios share stood at Rs 590, down by substantial amount of Rs 2.5 fluctuate over the years due to around 36% compared to last billion in the year 2017-18 in varying margins and product sale year. Dividend payout ratio for property, plant and equipment prices. the year 2017-18 was recorded at that resulted decrease in cash 58%, translating into a total cash Liquidity ratios: Increase in flow from investing activities dividend of Rs 40.00 per share. trade debts and corresponding from last year. In the year 2015- Bonus shares are issued @ 20% trade payable due to supply of 16, cash flow was highest due i.e. one share for every five shares products to IPPs and increase to encashment of short term held. investments. in stock and corresponding liabilities has resulted in decrease Capital Structure ratios: All Cash flow from financing in Liquidity ratios. capital requirements are financed activities: Financing activities through equity contribution and Activity / Turn over ratios: mainly comprises of dividends no loan has been received hence Stock levels, debtors and payment which was at high level zero leverage. in year 2013-14 as no interim creditors and varying prices dividend was announced in year results in fluctuation of these VERTICAL ANALYSIS 2012-13 and due to this reason ratios over the period. Inventory higher final dividend was paid in turnover and No. of days in Balance sheet: Substantial year 2013-14. inventory has changed over last investment in new storage year due to increase in stock terminals, enhancement in Free cash flow:It remains level. There is also change in existing terminals and facilities the Company’s policy to grow Debtors turnover ratio and and procurement of other sustainable free cash flow and No. of days in receivable over Capital nature items in the year distributions to share holders in last year due to extension of 2017-18 resulted in increase in the long term. credit to customers. Creditors’ weightage of Property, plant

103 APL ANNUAL REPORT 2018

and equipment over last 05 HORIZONTAL ANALYSIS as per operational requirements. years period. Increase in trade Current liabilities also increased Balance sheet: Property, plant payable in excess to increase in in the year 2017-18 due to and equipment increased by Rs shareholders equity has resulted increase in payables relating 4,555 Million over last 05 years in increased weightage of current to Circular debt and increase period due to investment in new liabilities in the year 2017-18. in procurement of petroleum storage terminal, enhancement products. Profit & loss: Overall sales in existing terminals and facilities volume grew since 2012-13 and procurement of other Profit & loss: Overall sales however fluctuation in prices of Capital nature items. Current volume grew since 2012-13 products and stock management assets constitute of stores and however fluctuation in prices are the factors which affected spares, stock in trade, trade of products which depends weightage of components of debts, other receivables, short on international prices and tax profit and loss items. Efficient term investments and cash structure resulted in varying stock management and import & bank balances. Variation in sales and profits during the at competitive prices resulted current assets’ balances during years. Increase in sales volume, in better weightage of profits in the five years since 2012-13 increasing price trend and 2015-16, 2016-17 and 2017-18 as was mainly due to fluctuations efficient stock management compared to previous years. in trade debts due to circular resulted in improved debts issue and stock balances performance in the year 2017-18.

STATEMENT OF ECONOMIC VALUE ADDED

2018 2017 Rs (‘000) Rs (‘000) Net Profit After Tax 5,656,349 5,299,168 Cost of Equity Finance (2,075,755) (1,778,192) Economic Value Added 3,580,594 3,520,976 Economic Value Added Per share (Rupees) 43.17 42.45

Composition of Net Profit After Tax 2018 2017

36.7% 63.3% 33.6% 66.4%

Economic Value Added Cost of Equity Finance

Statement of Economic Value Added represents value created in excess of the required return of the Company’s shareholders. 104 ANALYSIS OF VARIATION in results of interim reports with the final accounts Total Fourth Quarter Third Quarter Second Quarter First Quarter Rs (‘000) Rs (‘000) Rs (‘000) Rs (‘000) Rs (‘000) Profit & Loss Items

Net Sales 177,344,437 55,985,292 45,013,777 37,814,112 38,531,256 Gross Profit 9,743,294 2,873,167 2,471,411 2,428,284 1,970,432 Profit Before Taxation 8,289,312 2,376,567 2,020,271 2,062,462 1,830,012 Net Profit 5,656,349 1,392,604 1,453,271 1,480,462 1,330,012

Earnings Per share (Rupees) 68.19 16.79 17.52 17.85 16.04

Net Profit

25% 23%

First Quarter

Second Quarter

Third Quarter

26% 26% Fourth Quarter

Net sales revenue was highest in fourth quarter as volume sold in fourth quarter were highest based on product seasonal demand and high prices. This resulted in highest gross profit for the quarter. Net sales revenue was lowest in second quarter as volume sold in second quarter were lowest due to low demand of Furnace Fuel Oil resulting from availability of alternate source (LNG) for electricity production to fulfill country demand, however inventory gains on account of increasing price trend resulted in highest net profit for the quarter.

Statement of Charity Account*

2017-18 Particulars Rs in thousand

Education and Scholarship 3,425 Health care and Environment 209 Sports Development 885 Community Welfare 634 5,153 * Includes through Company's trust

105 APL ANNUAL REPORT 2018 STATEMENT OF VALUE ADDED

2017-18 2016-17

Rs in thousand % Rs in thousand %

Gross revenue and other income 218,581,899 174,525,619 Cost of sales and operating expenses (150,878,772) (115,763,806)

Total value added 67,703,127 58,761,813

DISTRIBUTION

Employee remuneration: 830,163 1.23 652,335 1.11

Government as:

Company taxation 2,632,963 3.89 2,400,000 4.08

Sales tax, duties and levies 57,722,231 85.26 50,363,837 85.71

WPPF & WWF 439,475 0.65 (301,227) (0.51)

Shareholders as: Dividends 3,317,760 4.90 3,525,120 6.00 Bonus share 165,888 0.25 - Society as: Donation - - - - Providers of finance as: Financial charges - - - - Retained in business:

Depreciation 421,946 0.62 347,700 0.59 Net earnings 2,172,701 3.21 1,774,048 3.02 67,703,127 100.00 58,761,813 100.00 2018 2017

1.23% 1.11% 3.83% 3.61% 6.00% 5.15% 89.79% 89.28%

Government Shareholders Retained in business Employee remuneration Provider of nance Society 106