STAYING ON TRACK We at KAPCO instill a continued strength and fervor amongst our people as we maintain course, stay on track, and accelerate towards a bright future for all. KAPCO Annual Report 2018 1 CONTENTS Key Figures 3 Corporates Holding 10,000 and More Shares 48 Vision 4 Highlights 52 Mission 4 Organizational Structure 53 Company Information 6 Executive & Management Committees 55 Notice of 22nd Annual General Meeting 9 Statement of Compliance with Listed companies 56 Profile of the Board of Directors 12 Independent Auditor’s Review Report to the Members Review Report on the Statement of Compliance contained Code of Conduct 14 in Listed Companies (Code of Corporate Governance) Operational Highlights 20 Regulations, 2017 58 WhistleBlowing Policy 22 Independent Auditor’s Report to the Members Report on the Audit of the Financial Statements 60 Board Committees 24 Statement of Financial Position 66 Chairman’s Review 27 Profit and Loss Account 68 Directors’ Report 29 Statement of Comprehensive Income 69 Directors’ Report (Urdu) 37 Statement of Cash Flows 70 Social Action Programme 38 Statement of Changes in Equity 71 Key Operating and Financial Data 40 Notes to and Forming Part of the Financial Statements 72 Pattern of shareholding 42 Proxy Form (English) 115 Categories of shareholders 45 Proxy Form (Urdu) 117 Pattern of shareholding - Additional Information 46 KAPCO Annual Report 2018 3 KEY FIGURES TURNOVER RS. 91,916 MILLION GROSS PROFIT RS. 13,379 MILLION PROFIT AFTER TAX RS. 10,617 MILLION EARNING PER SHARE RS. 12.06 4 VISION To be a leading power generation company, driven to exceed our shareholders’ expectations and meet our customer’s requirements MISSION • To be a responsible corporate citizen • To maximise shareholders’ return • To provide reliable and economical power for our customer • To excel in all aspects relating to safety, quality and environment • To create a work environment which fosters pride, job satisfaction and equal opportunity for career growth for the employees KAPCO Annual Report 2018 5 6 COMPANY INFORMATION BOARD OF DIRECTORS GENERAL MANAGER FINANCE / Lt. General (Retd) Muzammil Hussain CFO (Chairman) Mr. M. Mohtashim Aftab Mr. Aftab Mahmood Butt (Chief Executive) Mr. Owais Shahid COMPANY SECRETARY Mr. Aqeel Ahmed Nasir Mr. A. Anthony Rath Mr. Saad Iqbal Mr. Muhammad Arshad Ch1 Mr. Muhammad Ikram Khan2 HEAD OF INTERNAL AUDIT Mr. Sikandar Usmani AUDIT COMMITTEE Mr. Owais Shahid AUDITORS (Chairman) Deloitte Yousuf Adil Mr. Saad Iqbal Chartered Accountants Mr. Muhammad Arshad Ch Mr. Muhammad Ikram Khan INTERNAL AUDITORS HR COMMITTEE EY Ford Rhodes Chartered Accountants Mr. Aqeel Ahmed Nasir (Chairman) Mr. Aftab Mahmood Butt LEGAL ADVISOR Mr. Muhammad Ikram Khan Cornelius, Lane & Mufti LDS COMMITTEE Mr. Aqeel Ahmed Nasir (Chairman) Mr. Aftab Mahmood Butt Mr. Saad Iqbal 1 Appointed director on October 10, 2017 in place of Mr. Badr-ul-Munir Murtiza 2 Appointed director on April 3, 2018 in place of Mr. Anwar-ul-Haq KAPCO Annual Report 2018 7 BANKS REGISTERED OFFICE Conventional House No. 4, Street No. 54-A Allied Bank Limited F-7/4, Islamabad 44210, Pakistan Askari Bank Limited Bank Al-Habib Limited CORPORATE OFFICE Citibank, N.A. Faysal Bank Limited 5 B/3, Gulberg III Habib Bank Limited Lahore 54660, Pakistan Habib Metropolitan Bank Limited Tel: +92 (0)42 3577 2912-6 MCB Bank Limited Fax: +92 (0)42 3577 2922 National Bank of Pakistan Samba Bank Limited POWER PROJECT Standard Chartered Bank (Pakistan) Limited United Bank Limited Kot Addu Power Complex, Kot Addu Islamic District Muzaffargarh, Punjab, Pakistan Tel: +92 (0)66 230 1047-9 AlBaraka Bank (Pakistan) Limited Fax: +92 (0)66 230 1025 Askari Bank Limited-IBD Bank Alfalah Limited BankIslami Pakistan Limited E-MAIL Dubai Islamic Bank Pakistan Limited Meezan Bank Limited [email protected] National Bank of Pakistan-IBD Standard Chartered Bank (Pakistan) Limited-IBD WEBSITE The Bank of Punjab - IBD www.kapco.com.pk SHARES REGISTRAR THK Associates (Private) Limited First Floor, 40-C, Block-6 P.E.C.H.S. Karachi 75400, Pakistan Tel: +92 (0)21 111 000 322 Fax: +92 (0)21 34168271 KAPCO Annual Report 2018 9 NOTICE OF 22ND ANNUAL GENERAL MEETING Notice is hereby given that the 22nd Annual General Meeting of Kot Addu Power Company Limited will be held at the Islamabad Serena Hotel, Khayban-e- Suhrawardy, Islamabad on Tuesday, October 23, 2018 at 10.00 a.m. to transact the following business: ORDINARY BUSINESS 1 To confirm the Minutes of the Ninth Extraordinary General Meeting of the Company held on October 2, 2018. 2. To receive, consider and adopt the Annual Audited Accounts of the Company for the year ended June 30, 2018 together with Directors’ and Auditor’s Reports thereon. 3. To approve the final cash dividend of Rs. 4.80 per share, that is, 48% for the year ended June 30, 2018 as recommended by the Board of Directors. This is in addition to the interim dividend of Rs. 4.35 per share, that is, 43.50% already paid making a total cash dividend of Rs. 9.15 per share, that is, 91.50% during the year. 4. To appoint Auditors and fix their remuneration for the year ending June 30, 2019. The present Auditors, Messrs. Deloitte Yousuf Adil, Chartered Accountants, retired and being eligible, offer themselves for reappointment. 5. To transact any other business with the permission of the Chairman. By Order of the Board Lahore A. Anthony Rath September 5, 2018 Company Secretary 10 NOTES: 1. The share transfer books of the Company will remain (ii) In case of corporate entity: The Board of Directors closed from October 17, 2018 to October 23, 2018 (both Resolution / Power of Attorney with specimen days inclusive). Transfers received in order at the office signature of the nominee shall be produced (unless of the Company’s Shares Registrar, THK Associates it has been provided earlier) at the time of Meeting. (Private) Limited at the close of business on October 16, 2018 will be treated in time for purposes of payment 5. E-Dividend (Mandatory) of the final cash dividend (subject to approval of the Members) and to attend and vote at the Meeting. In pursuance of Section 242 of the Companies Act, 2017 and Circular No. 18/2017 dated August 1, 2017, 2. A Member entitled to attend and vote at the Meeting is it is mandatory for all listed companies to pay dividend entitled to appoint a proxy to attend and vote on his/her only by way of electronic mode, directly into the bank behalf, provided such proxy is also a Member. accounts of entitled shareholders. 3. An instrument of proxy and the Power of Attorney or other Keeping in view the same, all cash dividend, if declared authority (if any) under which it is signed, or a Notary by the Company in future will be directly transferred in Public certified copy of such Power of Attorney, in order bank account of the shareholders. In order to enable to be valid, must be deposited with the Company’s the Company to follow the directives of the regulators in Registrar, THK Associates (Private) Limited not later regard to payment of dividend only through electronic than (48) forty-eight hours before the time of holding the mode, shareholders are requested to provide/update Meeting. your IBAN to our Share Registrar. Accordingly, all CDC shareholders are requested to send their IBAN details 4. CDC account holders will in addition have to follow the directly to their concerned Stock Broker / Central under mentioned guidelines as laid down in Circular No.1 Depository Company of Pakistan Limited. In case of non- dated January 26, 2000 of the Securities & Exchange availability/incorrect IBAN, the Company will not be in a Commission of Pakistan for attending the Meeting: position to pay the cash dividend of such shareholders. (i) In case of individuals: The account holder or sub 6. Submission of copy of CNIC (Mandatory) account holder and / or the person whose securities The Securities and Exchange Commission of Pakistan are registered on CDS; and their registration (SECP) vide their SRO 779(i) 2011 dated August 18, 2011 details are uploaded as per the regulations, shall has directed the company to print your CNIC number authenticate his/her identity by showing his/her on your dividend warrants and if your CNIC number is original Computerized National Identity Card (CNIC) not available in our records, your dividend warrant will or original passport at the time of attending the not be issued / dispatched to you. In order to comply Meeting. The Members are also required to bring their Participants’ I.D. number and account numbers in CDS. KAPCO Annual Report 2018 11 with the regulatory requirement, you are requested to Consent for Video Conference Facility kindly send photocopy of your CNIC to your Participant / Investor Account Services or to us (in case of physical Members can also avail video conference facility in {name shareholding) immediately to Company’s Shares of cities where facility can be provided keeping in view Registrar, THK Associates (Private) Limited. geographical dispersal of members}. In this regard please fill the following and submit to the Company’s Corporate Office 7. Transmission of Annual Financial Statements at 5-B/3, Gulberg III, Lahore 54660 10 days before holding of through E-Mail: the AGM. SECP vide SRO 787(1)/2014 dated September 8, 2014 If the Company receives consent from Members holding has provided an option to receive audited financial in aggregate 10% or more shareholding residing at a statements electronically through email. Hence, members geographical location, to participate in the meeting though who hold shares in physical form and are interested in video conference at least 10 days prior to date of the Meeting, receiving the annual reports electronically in future are the Company will arrange video conference facility in that city required to submit their e-mail addresses and consent subject to availability of such facility in that city.