20000103

Brief recordings

BY SCANNER

Fuel & Energy

National Refinery Limited

Year Ended June 30, 1999

Overview

The supplies of Arabian Light and Arabian Extra Light were arranged for National Refinery Ltd. (NRL) by the government from Saudi Aramco. The crude oil throughput for the year was 2.893 million tonnes including 0.367 million tonnes received from indigenous sources as against 2,903 million tonnes (including 0.633 million tonnes received from indigenous sources) of the previous year which was slightly higher than this year. Its gross and net sales substantially declined but gross profit substantially improved. The company posted profit before taxation at Rs 1.23 billion and net profit at Rs 0.643 billion which showed rise by 66.49% and 30% over the preceding year's. Earning per share at Rs 9.65 was the highest in the company's history. The company announced highest dividend of the last five year's at 40%. At the present price of its share the PER is placed at 3.63x showing improved confidence of investors in its share.

--------------

National Refinery Limited (NRL) was incorporated in August 1963 in the province Sindh. The NRL scrip was listed at Karachi Stock Exchange in 1964. The 6-year highest price of NRL share was recorded at Rs 142 in 1994. After that the price plummeted fast and the 6-year's lowest price was recorded at Rs 9 in 1998. The present price at Rs 35 carries 250% premium over its par value of Rs 10.

Since 1994, the company has been able to announce dividend only for three years, in 1994 (45%), 1997 (Rs 25%) and 1999 (40%).

In the NRL's shareholding profile, the largest category of shareholders comprised 21 investment companies whose aggregate stake in its equity was to the extent of 47.13 percent. This was followed by another category comprising 10 financial institutions holding 21.92% share capital of National Refinery. In this category, Islamic Development Bank Jeddah's holdings is also included which works out to 15% of the NRL's share capital. PERAC, the state organisation, holds 16.14% stock of the company. Individual investors were 4,456 out of total 4,541 shareholders and their aggregate holding was to the extent of 7.13% of the company's stock.

NRL is engaged in the production and sale of petroleum products. The company operates from its office located in the premises of refinery complex located in the Korangi Industrial Zone Karachi.

The refinery complex of the company comprises three refineries, consisting of two lube refineries, commissioned in 1966 and 1985, and a fuel refinery added in the complex in 1977. The design capacity of first lube refinery is 539,700 tonnes per year of crude processing and 76,200 tonnes per year. The fuel refinery's capacity is 2,170,800 tonnes per year of crude processing. The second lube refinery's capacity of 100,000 tonnes per of lube base oils.

The company has wholly owned subsidiary National Oil Marketing (Private) Ltd. (NOM) with the paid-up capital of Rs 1 million and equity base of Rs 518.19 million. NRL has not prepared to consolidated financial statements comprising its financial statements and its subsidiary NOM as at June 30, 1999 in view of NOM's the current dormant status coupled with the company's plan to subsequently restructure the operations of the wholly owned subsidiary in the near future.

Effective July 01, 1992, the government introduced an Import Parity Formula under which product prices had been fixed at CIF level, restricting the profitability of the Fuel Refinery in the range of 10% to 40% (including other income) on the paid-up capital with no such restriction in respect of the Lube Refinery. Effective July 1, 1994 the company has retained the non refining income in addition to the above restricted return on capital, in accordance with the 1994 petroleum policy.

During financial year, 1998-99, the period under review NRL's gross sales amounted to Rs 20,687 million (1997-98: Rs 22,122 million) and net sales at Rs 19,100.02 million (1997-98: Rs 20,709.9 million) reflected decline by 6.5% and 7.8% respectively as compared to previous year's figures.

Gross sales included local sales, (Rs 19.079 billion) export sales (Rs 545.07 million) and refund (Rs 1.06 billion) from the government under the import parity formula. The export products include Naptha and Ashphalt.

Despite decline in sales revenue the company's gross profit at Rs 2,138.78 million (FY 1997-98: Rs 1778.89 million) and operating profit at Rs 1,963.75 million (FY 1997-98: Rs 1,572.91 million) reflected increase by 20.2% and 24.8% respectively over previous year's. GP margin as improved by 2.62 percentage points.

The company posted highest earning per share at Rs 9.65 as well as largest break-up value of the share at Rs 29.71 in the company's history. The balance sheet reflects robust financial position as reflected by the long term debt to equity ratio at 11:89 and current ratio at 1.06.

--------------

Performance Statistics (Million Rupees)

June 30 1999 1998

Capital & LiabilitiesÉÉÉ

Paid-up Capital: 666.39 666.39

Reserves: 1,313.60 936.84

Equity: 1,979.99 1,603.23

L.T. Debts: 246.57 356.44

Deferred Liabilities: 122.03 153.33

Current Liabilities: 10,925.56 13,258.58

AssetsÉÉÉ

Fixed Assets ÑÊTangible: 1,561.47 1,687.27

Other Non Current Assets: 147.41 144.95

Current Assets: 11,565.27 13,539.36

Total Assets: 13,274.15 15,371.58

Sales, Profit & PayoutÉÉÉ

Gross Sales: 20,687.51 22,121.89

Net Sales: 19,100.02 20,709.87

Gross Profit: 2,138.78 1,778.89

Other Operating Income & Non-Refining Income: 2,293.52 1,883.55

Operating Profit: 1,963.75 1,572.91

Depreciation: 250.55 273.52

Financial Charges: 733.45 833.98

Profit Before Taxation: 1,230.31 738.93

Profit After Taxation: 643.31 491.82

Dividend Cash 40% (1998: 25%): 266.56 166.60

Financial RatiosÉÉÉ

Share Price (Rs) 31/12/99: 35.00 Ñ

Book Value Per Share: 29.71 24.06

Price Book Value Ratio: 1.18 Ñ

Debt/Equity Ratio: 11:89 18:82

Current Ratio: 1.06 1.02

Asset Turn Over Ratio: 1.44 1.35

Days Receivables: 103 151

Days Inventory: 37 22

Gross Profit Margin (%): 11.20 8.58

Operating Margin (%): 10.28 7.59

Net Profit Margin (%): 3.37 2.38

EPS (Rs): 9.65 7.38

Price/Earning Ratio: 3.63 Ñ

R.O.E. (%): 32.49 30.68

R.O.A. (%): 4.85 3.20

R.O.C.E. (%): 27.39 23.28

Capacity & Actual Performance (Metric Tonnes)ÉÉÉ

A. Fuel SectionÉÉÉ

Capacity (Throughput): 2,710.50 2,710.50

Actual Throughput: 2,892.77 2,902.63

Capacity Utilisation (%): 106.72 107.09

B. Lube SectionÉÉÉ

Capacity: 620.49 620.49

Actual Throughput: 691.50 650.01

Capacity Utilisation (%): 111.44 104.76

--------------

Company information: Chairman: Aitzaz Shahahbaz. Chief Executive & Managing Director: M.M. Husain. Director: Abdus Sattar. Company Secretary: Asad A. Siddiqui. Refinery & Registered Office: 7-B, Korangi Industrial Zone, Karachi-74900. Phones: 310261-66, 314160-62, 5064135-37. Fax: 5054663. email: NA. Website: NA.