| ATTOCK REFINERY LIMITED |
|
|
|
|
|
|
|
|
|
| ANNUAL
REPORT 1997 |
|
|
|
| In
The Name of Allah, Most Gracious, Most Merciful |
|
|
| CONTENTS |
|
|
| Company
Information |
|
| Notice
of the Meeting |
|
| Chairman's
Review |
|
| Ten
Years at a Glance |
|
| Report
of the Directors |
|
| Pattern
of Shareholding |
|
| Auditors'
Report to the Members |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
|
| Notes
to the Accounts |
|
|
| COMPANY
INFORMATION |
|
|
| Board
of Directors |
|
| Chairman |
|
Ch. Nisar Ali Khan |
|
| Directors |
|
Dr. Ghaith R. Pharaon |
|
|
Abdus Sattar |
|
|
G. A. Sabri |
|
|
M. M. Farid |
|
|
Shuaib Anwer Malik |
|
|
Laith Ghaith Pharaon |
|
|
Khalid Atiq Ghazi |
|
|
Mofarreh Said Al Ghamdi |
|
|
(Alternate Director Babar
Bashir Nawaz) |
|
|
|
Arif Kemal |
|
|
|
Mohammad Raziuddin |
|
|
Chief Executive Officer |
|
|
| Company
Secretary |
S. Ahmed Abid |
|
|
F.C.A. |
|
| Auditors |
|
A.F. Ferguson & Co. |
|
|
Chartered Accountants |
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| Legal
Advisors |
Zafar Law Associates |
|
|
Advocates &
Solicitors |
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| Registered
Office |
The Refinery, |
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|
Morgah, Rawalpindi. |
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|
Telephones: (051)
487041-5 |
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|
Fax: (051) 487254 |
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|
Telex: 5877 ATPOL PK |
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|
E-mail:address:arl@infolink.net.pk |
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|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the 19th Annual General Meeting of the Company will be
held at the Registered |
|
| Office
of the Company at Morgah, Rawalpindi on Monday, 29th December, 1997 at 2.00
p.m. to transact the |
|
| following
business: |
|
|
| ORDINARY
BUSINESS |
|
|
| 1.
To confirm the minutes of 9th Extra-ordinary General Meeting of the Company
held on |
|
| 18
July, 1997. |
|
|
| 2.
To receive, consider and approve the Audited Accounts of the Company together
with the |
|
| Directors'
and Auditors' Reports for the year ended 30 June, 1997. |
|
|
| 3.
To consider and, if thought fit, declare a final cash dividend as recommended
by the Board of |
|
| Directors
for the year ended 30 June, 1997. |
|
|
| 4.
To appoint Auditors for the next year and fix their remuneration. |
|
|
| 5.
To transact such other business as may be placed before the meeting with the
permission of the |
|
| Chairman. |
|
|
| SPECIAL
BUSINESS |
|
|
| 6.
To consider and, if thought fit, to pass the following Resolution as an
ordinary resolution: |
|
| "Resolved: |
|
| a.
that a sum of Rs 37,500,000 out of the profit of the Company for the year
ended 30 June, |
|
| 1997
be capitatised and applied for issue of 3,750,000 ordinary shares of Rs 10/-
each |
|
| allotted
as fully paid Bonus Shares to the members of the Company whose names appear |
|
| on
the register of members as at close of business on 19 December, 1997, in the
proportion |
|
| of
one new share for every five shares held. |
|
|
| b.
that the Bonus Shares so allotted shall rank pari passu in all respects with
the existing |
|
| shares
except that they shall not qualify for the dividend declared for the year
ended |
|
| 30
June, 1997. |
|
|
| c.
that the members entitled to fractions of a share shall be given sale
proceeds of their |
|
| fractional
entitlement for which purpose the fractions shall be consolidated into whole
shares |
|
| and
sold in the stock market. |
|
|
| d.
that the Secretary of the Company be authorised and empowered to give effect
to this |
|
| resolution
and to do or cause to do all acts, deeds and things that may be necessary or |
|
| required
for issue, allotment and distribution of Bonus Shares. In the case of
non-resident |
|
| shareholders
the Secretary is further authorised to issue/export the Bonus Shares after |
|
| fulfilling
the statutory requirements." |
|
|
| 7.
To consider and, if thought fit, to pass the following resolution, pursuant
to section 208 of the |
|
| Companies
Ordinance, 1984 in respect of the Company's investment: |
|
|
| "Resolved
that the Company be and is hereby authorised to further invest Rs 7.5 million
as long |
|
| term
investment in an associated company "Attock Petroleum Limited".
Further resolved that the |
|
| Chief
Executive be and is hereby authorised to sign such documents and take such
steps from |
|
| time
to time as and when may be necessary in acquiring the said equity interest in
Attock |
|
| Petroleum
Limited." |
|
|
| Notes: |
|
|
| i.
A member entitled to vote at this meeting may appoint another member as
his/her proxy to attend and |
|
| vote.
Proxies in order to be effective must be received by the Company 48 hours
before the meeting. |
|
|
| ii.
Share Transfer Books of the Company will remain closed and no transfer of
shares will be accepted for |
|
| registration
from 20 December to 29 December, 1997 (both days inclusive). Transfers
received in order |
|
| at
the registered office of the Company by the close of business on 19 December,
i997 will be treated in |
|
| time
for the purposes of payment of the final dividend and eligibility of Bonus
Shares. if declared. |
|
|
| iii.
Members are requested to promptly notify the Company of any change in their
addresses. |
|
|
| iv.
Statements of material facts under Section 160 (1) (b) of the Companies
Ordinance, 1984 pertaining |
|
| to
the Special Business referred above under agenda item 6 and 7 are annexed to
this Notice of Meeting |
|
| being
sent to members. |
|
|
| STATEMENT
UNDER SECTION 160 (1) (b) OF THE COMPANIES ORDINANCE, 1984 |
|
|
| 1.
ISSUE OF BONUS SHARES |
|
|
| The
Directors are of the view that with existing profitability, the Company's
financial position justifies |
|
| capitalisation
of Rs 37,500,000 out of profit by issuing fully paid Bonus Shares in the
ratio of 1:5 i.e. one Bonus |
|
| Share
for every five ordinary issued shares. |
|
|
| 2.
INVESTMENT IN ATTOCK PETROLEUM LIMITED |
|
|
| a.
Attock Petroleum Limited, a petroleum marketing Company, has been granted
permission to market |
|
| petroleum
products and to meet its capital requirements has called for additional
subscription from the |
|
| sponsor
companies. |
|
|
| b.
The Directors are of the view that the investment in the petroleum marketing
company would be viable |
|
| and
give a rational diversification to the Company and therefore recommend a
further investment of |
|
| Rs
7.5 million. |
|
|
| c.
The Directors have no vested interest in the above investment except that
majority of the Directors of the |
|
| Company
are also the Directors in the associated company. |
|
|
| CHAIRMAN'S
REVIEW |
|
|
| It
gives me great pleasure to welcome you all to the |
|
| 19th
Annual General Meeting and to present a review |
|
| of
operations and the Audited Accounts and Annual |
|
| Report
of the Company for the year to 30 June, 1997. |
|
|
| You
would be pleased to know that as the nation |
|
| commemorates
50 years of its independence, the |
|
| Company
celebrates 75 years of continuous |
|
| operations
of the Morgah Refinery. |
|
|
| PROFITABILITY |
|
|
| Operations
of your Company during the year remained |
|
| smooth
and efficient. The financial results of the |
|
| Company's
operations during the year ended 30 June, |
|
| 1997
are given in the annexed Directors' Report and |
|
| financial
statements. Despite reduced refiner's |
|
| margin,
which is largely governed by the fluctuations |
|
| in
the international prices of crude and petroleum |
|
| products,
and declining crude oil availability in |
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| the
northern region of Pakistan, the Company's |
|
| profitability
still remained attractive with the earnings |
|
| per
share of Rs 6.88. The company earned a net |
|
| surplus
of Rs 51.2 million in the current year over and |
|
| above
the maximum allowable return of Rs 75 million |
|
| calculated
at 40% on paid-up capital of |
|
| Rs
187.5 million. The surplus profit of Rs 30 million |
|
| after
making an adjustment in respect of prior years |
|
| has
been retained for the ongoing development |
|
| projects
of the Refinery as per the agreement with |
|
| the
Government. |
|
|
| FUTURE
OUTLOOK |
|
| As already advised
in the interim report of the |
|
| Directors,
the Company has awarded the contract for |
|
| the
Naphtha Hydrotreating/Reforming Plant and |
|
| Heavy
Crude Unit to a consortium of two Japanese |
|
| companies
namely, Mitsui Engineering & Ship- |
|
| building
Company Limited and Itochu Corporation. |
|
|
| By
the Grace of Allah work under this contract |
|
| is
progressing satisfactorily. These plants are |
|
| scheduled
to come into full operation in the second |
|
| quarter
of 1999 which will enable the Company to |
|
| produce
premium grade gasoline, replace the old |
|
| heavy
crude unit and enhance the capability to |
|
| process
imported crudes. |
|
|
| Due
to insufficient quantities of crude oil available |
|
| from
the depleting crude oilfields in the northern |
|
| region
of the country, the Company's management is |
|
| continuously
striving to enhance the utilisation of the |
|
| refining
capacity. To prepare itself for full capacity |
|
| operations
after the completion of the refinery |
|
| upgradation
projects, the Company is actively |
|
| considering
various options to import crude oil and is |
|
| also
engaged in negotiations for the storage, |
|
| handling
and transportation of this crude upcountry |
|
| to
the Morgah Refinery. The Company is also gearing |
|
| itself
to receive the increased quantities of crude oil |
|
| once
the imports are commenced and is presently |
|
| reviewing
various options to set up crude decanting |
|
| facilities
in order to avoid congestion at the Refinery |
|
| premises. |
|
|
| Your
Company is also presently studying proposals |
|
| to
enhance throughput further and reduce operating |
|
| costs
by energy conservation and optimisation of |
|
| process. |
|
|
| TRAINING
AND DEVELOPMENT |
|
|
| As
part of its commitments to develop Human |
|
| Resource,
your Company continued to provide |
|
| training
to its management staff and workers both |
|
| within
and outside the country. Like the past, special |
|
| emphasis
has been placed on safety, the latest |
|
| technology,
maintenance and quality control and |
|
| environmental
aspects. |
|
|
| HUMAN
RESOURCE |
|
|
| I
would like to record my appreciation of the efforts |
|
| and
dedication of the Human Resource of the |
|
| Company
which includes its officers, staff and |
|
| workers
that has enabled the management to run the |
|
| Company
smoothly and efficiently during the year. |
|
|
| I
am pleased to say that the management continued |
|
| to
have cordial relations with the workers and the |
|
| Collective
Bargaining Agent (CBA). The previous |
|
| Labour
Settlement expired in June, 1997 and a fresh |
|
| Charier
of Demands has been received from the CBA |
|
| and
negotiations thereon are in progress in a cordial |
|
| atmosphere. |
|
|
| In
line with the scheme for long-service awards |
|
| introduced for
its management staff last year, the |
|
| long-service
awards scheme for non-management |
|
| staff,
in existence since 1981, was also revised to |
|
| recognise
and reward the continued service with the |
|
| Company. |
|
|
| Both
as a short and long term strategy, your |
|
| Company
also endeavours to adopt modern and |
|
| viable
human resource management policies. |
|
|
| ACKNOWLEDGMENT |
|
|
| Finally,
I take this opportunity to express my thanks |
|
| to
all my colleagues on the Board, and the |
|
| Government,
for their continuing support and |
|
| cooperation
and the confidence placed in your |
|
| Company
by its crude oil suppliers and customers. |
|
| I
sincerely hope that your Company will continue to |
|
| enjoy
their full confidence and cooperation for the |
|
| development
and progress to achieve even better |
|
| results
in the years ahead. |
|
|
| I
would like to place on record my appreciation of |
|
| the
valuable contributions made by all the outgoing |
|
| Directors
and Chief Executive and welcome the new |
|
| directors
and Chief Executive. |
|
|
| Before
concluding, I wish to express my thanks |
|
| for
the continued interest and support of our |
|
| shareholders. |
|
|
| TEN
YEARS AT A GLANCE |
|
|
|
30 June |
|
(Rupees in Million) |
|
|
|
|
|
1997 |
1996 |
1995 |
1994 |
1993 |
1992 |
1991 |
1990 |
1989 |
1988 |
| PROFIT
& LOSS SUMMARY |
|
| Sales
(Net of Govt. Levies) |
6528.6 |
5112.5 |
3834.4 |
4746.2 |
5165.8 |
5179.9 |
4750.7 |
3810.2 |
2884.4 |
2962.6 |
| Reimbursement
from/(to) |
|
| Government |
|
67.8 |
17.4 |
692.8 |
(69.4) |
(9.5) |
(22.7) |
856.2 |
22.6 |
(26.9) |
(139.1) |
| Other
income |
|
98.2 |
99.9 |
59.5 |
88.3 |
57.4 |
47.6 |
32.6 |
19.6 |
18.3 |
18.5 |
| Income
from non-refinery |
|
| operations
after tax |
2.8 |
1.20 |
2.8 |
3.6 |
3.1 |
3.2 |
5.2 |
2.6 |
- |
- |
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
| Total
Revenue |
|
6,697.4 |
5,231.0 |
4,589.5 |
4,768.7 |
5,216.8 |
5,208.0 |
5,644.7 |
3,855.0 |
2,875.8 |
2,842.0 |
| Cost
of Sales, Administration |
|
| and
Selling Expenses etc. |
(6,492.8) |
(4,918.8) |
(4,695.0) |
(5,126.5) |
(5,126.5) |
(5,183.5) |
(5,603.6) |
(3,806.0) |
(2,827.5) |
(2,791.6) |
|
| Workers'
Funds |
|
(13.8) |
(21.9) |
(6.4) |
(4.8) |
(6.6) |
(1.5) |
(2.5) |
(3.6) |
(3.7) |
(3.9) |
| Taxation |
|
(61.8) |
(106.8) |
(43.5) |
(25.3) |
(48.6) |
(5.4) |
(19.0) |
(28.4) |
(30.2) |
(32.1) |
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
| Net
Profit after Tax |
129.0 |
183.5 |
52.8 |
43.6 |
35.1 |
17.6 |
19.6 |
17.0 |
14.4 |
14.4 |
| Adjustment
in net profit |
|
| for
prior years |
|
(21.1 ) |
- |
- |
- |
32.9 |
- |
- |
- |
- |
- |
|
| Unappropriated
profit |
|
| brought
forward |
|
3.3 |
9.6 |
6.8 |
3.2 |
0.9 |
0.8 |
0.4 |
0.8 |
0.8 |
0.8 |
| Dividend |
|
37.5 |
(30.0) |
(25.00) |
(19.0) |
(12.8) |
(17.6) |
(19.2) |
(14.4) |
(14.4) |
(14.4) |
| Transfer
to Reserves |
67.5 |
159.8 |
(25.0) |
(25.0) |
(52.9) |
- |
- |
(3.0) |
- |
- |
| Transfer
from Reserves |
- |
- |
- |
4.0 |
- |
- |
- |
- |
- |
- |
|
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
========== |
| BALANCE
SHEET SUMMARY |
|
|
| Paid-up Capital |
187.5 |
150.0 |
125.0 |
100.0 |
80.0 |
80.0 |
80.0 |
80.0 |
80.0 |
80.0 |
| Reserves |
|
228.8 |
198.7 |
63.9 |
63.9 |
62.9 |
10.0 |
10.0 |
10.0 |
6.5 |
6.5 |
| Unappropriated
Profit |
6.2 |
3.3 |
9.6 |
6.8 |
3.2 |
0.9 |
0.8 |
0.4 |
0.8 |
0.8 |
| Long
- Term Loans |
|
- |
- |
- |
- |
- |
- |
- |
- |
- |
30.5 |
| Fixed
Assets (Less depreciation) |
352.4 |
180.3 |
146.8 |
117.6 |
109.1 |
95.9 |
90.3 |
100.9 |
104.3 |
130.5 |
|
| SHARES
AND EARNINGS |
|
|
| Earning
(Rs per share) |
5.75 |
12.2 |
4.2 |
4.4 |
8.5 |
2.2 |
2.4 |
2.1 |
1.8 |
1.8 |
| Break-
Up Value (Rs per share) |
22.5 |
23.5 |
15.9 |
17.1 |
18.3 |
11.4 |
11.4 |
11.3 |
10.9 |
10.9 |
| Dividend |
|
20% |
20% |
20% |
19% |
16% |
22% |
24% |
18% |
18% |
18% |
| Bonus
Shares Issue |
|
20% |
25% |
20% |
25% |
25% |
- |
- |
- |
- |
- |
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
|
| REPORT
OF THE DIRECTORS |
|
|
| The
Directors of the Company have pleasure in presenting their Annual Report and
Audited Financial |
|
| Statements
of the Company together with Auditors' Report thereon for the year ended 30
June, 1997. |
|
|
|
1997 |
|
|
Rupees |
|
|
(000) |
|
| 1.
FINANCIAL RESULTS |
|
|
| These
are summarised below: |
|
|
| Profit
for the year, after providing for all expenses including |
|
| depreciation
workers' funds, as per the import parity pricing formula |
187,991 |
|
|
|
|
| Less:
Provision for taxation |
|
61,772 |
|
|
---------- |
|
| Profit
after taxation from refinery operations |
|
126,219 |
|
| Income
from non-refinery operations less applicable |
|
|
|
| charges,
workers' funds and taxation |
|
2,824 |
|
|
---------- |
|
| Net
profit for the year after taxation |
|
129,043 |
|
| Prior
year adjustment less applicable charges and taxation |
(21,168) |
|
|
---------- |
|
|
107,875 |
|
| Unappropriated
profit brought forward |
|
3,336 |
|
|
---------- |
|
| Profit
available for appropriation |
|
111,211 |
|
| APPROPRIATIONS: |
|
| The
Directors propose that this should be utilized in providing for: |
|
|
| -
Transfer to Reserve for expansion/modernisation being surplus |
|
| profits
over 40% retained as per Government stipulation |
|
30,051 |
|
|
| -
Interim dividend at the rate of 10% (equivalent to Re 1.00 |
|
| per
share of Rs 10/- each) paid in May, 1997 |
|
18,750 |
|
|
| - Final
dividend at the rate of 10% (equivalent to Re 1.00 |
|
| per
share of Rs 10/- each) now proposed |
|
18,750 |
|
|
| - Transfer to
Reserve for issue of bonus shares |
|
37,500 |
|
|
---------- |
|
|
105,051 |
|
|
---------- |
|
| Leaving
unappropriated profit to be carried forward to next year |
6,160 |
|
|
========== |
|
|
|
|
| The
Company continues to operate under the |
|
| import
parity pricing formula under which the |
|
| Company
is entitled to a minimum of 10% and |
|
| maximum
of 40% return net of tax on its paid-up |
|
| capital
in respect of its refinery operations and |
|
| further
allowed to retain surplus profits over 40%, |
|
| as
per agreed parameters, for utilisation in the |
|
| development
plans for Refinery Upgradation and |
|
| Expansion.
In the current year under review the |
|
| Company
earned a total net profit of Rs 126.2 |
|
| million
which represents Rs 75 million maximum |
|
| allowable
return at 40% on paid-up capital and |
|
| surplus
profits of Rs 51.2 million. After taking |
|
| into
account the prior year adjustment of Rs 21.2 |
|
| million
relating to asphalt prices, as explained in |
|
| the
notes to the accounts, a net amount of Rs 30 |
|
| million
has been retained for development projects |
|
| as
stipulated by the Government in the pricing |
|
| formula
applicable to your Company. |
|
|
| As
compared to last year the current year's |
|
| profits
have declined because of a lower refiner's |
|
| margin,
generally due to international prices for |
|
| crude
being higher during the last quarter of 1996 |
|
| and
first quarter of 1997, and reduced availability |
|
| of
crude oil from the prime source northern |
|
| region
of the country. |
|
|
| In
addition the Company has also earned other |
|
| income
of Rs 2.824 million (net of tax and |
|
| workers'
funds) from non-refinery operations |
|
| outside
the pricing formula. |
|
|
| The
price of asphalt was deregulated by the |
|
| Government
in June, 1996. The Company has |
|
| sought
the approval of the Government to treat |
|
| the
net profit from sale of asphalt outside the |
|
| import
parity pricing formula effective 1 July, 1996, |
|
| which
matter is currently under consideration by |
|
| the
Government. Pending approval of the |
|
| Government,
net profit from sale of asphalt has |
|
| been
accounted for under the import parity |
|
| pricing
formula and any adjustment arising |
|
| therefrom
relating to the current year are pro- |
|
| posed
to be accounted for in the following year. |
|
|
| As
the average prices of products and crude oil |
|
| in
the international market were comparatively |
|
| higher
in the current year, the Company was |
|
| allowed
upward revisions in ex-refinery prices due |
|
| to
which the sales revenue has recorded an |
|
| increase.
All crude oil receipts from indigenous |
|
| sources
were priced on the principles of import |
|
| parity
as per parameters defined by the |
|
| Government.
Although the crude throughput |
|
| reduced
during the year the total cost of crude |
|
| oil
consumed increased as the prices of crude |
|
| oil
processed at the Refinery were pushed up by |
|
| the
changes in the international prices upon which |
|
| is
also based the determination of local crude oil |
|
| price. |
|
|
| 2.
PAID-UP CAPITAL |
|
|
| The
Company's paid-up capital was increased |
|
| from
Rs 150 million to Rs 187.5 million through |
|
| capitalisation
of an amount of Rs 37.5 million, |
|
| out
of the profits of the Company, by way of |
|
| issue
of fully paid bonus shares to the Members |
|
| of
the Company in the proportion of one new |
|
| share
for every four shares held. |
|
|
| 3. DIVIDEND |
|
| The
Company has already paid an interim |
|
| dividend
of 10% in May, 1997 and Directors are |
|
| now
recommending final dividend at the rate of |
|
| 10%
(Re 1.00 per share of Rs 10/- each) making |
|
| a
total of 20% for the year ended 30 June, 1997. |
|
|
| 4.
BONUS SHARES |
|
| The
Directors are also pleased to recommend |
|
| capitalisation
of an amount of Rs 37.5 million |
|
| out
of the profits for the issue of fully paid bonus |
|
| shares
to the Members of the Company in the |
|
| proportion
of one new share for every five shares |
|
| held. |
|
|
| 5.
REFINERY OPERATIONS |
|
| The
Company's refining capacity continued to |
|
| be
under utilised due to non-availability of in- |
|
| digenous
crude oil. The Refinery processed the |
|
| indigenous
crude supplied from the Northern |
|
| Region
together with some condensate from |
|
| Badin
located in the southern region. The total |
|
| throughput
of the Refinery during the year was |
|
| 7,235,262
barrels (0.938 million M. Tons) as |
|
| compared
to its nameplate capacity of 10,065,000 |
|
| barrels
(1.330 million M. Tons) representing 72% |
|
| of
capacity utilisation. A total of 7.217 |
|
| million
barrels of crude oil (1996:7.467 million |
|
| barrels)
were received by the Company from |
|
| twenty
three different oilfields which was 3.3% |
|
| lower
than the receipts of the last year. Crude |
|
| receipts
decreased from a number of fields but |
|
| this
decrease was partly offset by increased |
|
| receipts
from new fields. The net decrease in |
|
| crude
receipts was 0.250 million barrels. |
|
|
| The
total crude receipts averaged 19,772 bpcd |
|
| of
which 10,906 bpcd (55%) was received through |
|
| road
transportation and the balance of 8,866 pbcd |
|
| (45%)
was received through pipeline. |
