Atlas Honda : Transmission of Half Yearly Report for the Period Ended September 30, 2023

Table of Contents

Company Information	2
Chairman's Review (English)	4
Chairman's Review (Urdu)	7
Independent Auditor's Review Report to the Members	8
Condensed Interim Statement of Financial Position	9
Condensed Interim Statement of Profit or Loss and Other Comprehensive Income	10
Condensed Interim Statement of Changes in Equity	11
Condensed Interim Statement of Cash Flows	12
Notes to the Condensed Interim Financial Statements	13

Company Information

Board of Directors

Aamir H. Shirazi

Chairperson

Nurul Hoda

Director

Abid Naqvi

Director

Mashmooma Zehra Majeed

Director

Masanori Kito

Director

Shunsuke Miyazaki

Director

Kazushi Yamanaka

Director

Saquib H. Shirazi

Chief Executive Officer

Maheen Fatima

Company Secretary

Audit Committee

Mashmooma Zehra Majeed

Chairperson

Nurul Hoda

Member

Abid Naqvi

Member

Muhammad Asim

Head of Internal Audit

Maheen Fatima

Secretary

Human Resource &

Remuneration Committee

Nurul Hoda

Chairperson

Abid Naqvi

Member

Saquib H. Shirazi

Member

Saadullah Ejaz

Secretary

Management

Saquib H. Shirazi

Chief Executive Officer

Afaq Ahmed

Vice President Marketing

Shunsuke Miyazaki

Vice President Technical

Kazushi Yamanaka

General Manager Technical

Danyal Ahmed Rasheed

Chief Financial Officer

Saadullah Ejaz

General Manager Human Resources &

Administration

Faisal Mahmud

General Manager New Model Center

Muhammad Ammar

General Manager Engineering & Projects

Hassan Mushtaq Cheema

General Manager Production, Planning & Control

Zia Ul Hassan Khan

General Manager Plants

Muhammad Zafar Iqbal

General Manager After Sales

Mujahid-ul-Mulk Butt

General Manager Sales

Rashid Ahmed

General Manager Commercial & Planning

Tahir Nazir

General Manager Supply Chain

Muhammad Rashad Rashid

General Manager Quality Assurance

Mohammad Tahir Khan

General Manager Information Technology

02 Half Yearly Report September 2023

Company Information

Auditors

Shinewing Hameed Chaudhri & Co. Chartered Accountants

Legal Advisors

Mohsin Tayebaly & Co.

Tax Advisors

EY Ford Rhodes,

Chartered Accountants

Shares Registrar

Hameed Majeed Associates (Pvt.) Limited

H. M. House, 7-Bank Square,

Shahrah-e-Quaid-e-Azam, Lahore

Tel: [phone]

Fax: [phone]

Bankers

Allied Bank Limited

Askari Bank Limited

Bank Al-Habib Limited

Bank Alfalah Limited

Faysal Bank Limited

Habib Bank Limited

Habib Metropolitan Bank Limited

Khushali Bank Limited

MCB Bank Limited

Meezan Bank Limited

National Bank of Pakistan

Standard Chartered Bank (Pakistan) Limited United Bank Limited

Registered Office

1-McLeod Road, Lahore-54000

Tel: [phone]

Fax: [phone]

E-mail: [e-mail]

Website: www.atlashonda.com.pk

Factories

F-36, Estate Avenue, S.I.T.E., Karachi-75730

UAN: (92-21)111-111-245

Tel: [phone]

Fax: [phone]

26-27 KM, Lahore-Sheikhupura Road,

Sheikhupura-39321

Tel: [phone]

Fax: [phone]

Branch Offices & Customer Care Centres

Azmat Wasti Road, Multan Tel: [phone](92-61)111-112-411 Fax: [phone]

Islamabad Corporate Center,

Plot No. 784/785, Golra Road, Islamabad

Tel: [phone],

Fax: [phone]

Makhdoom Altaf Road, West Sadiq Canal

Bank, Near City School, Rahimyar Khan

Tel: [phone],

Fax: [phone]

2nd Floor, Dawood Centre, Autobhan Road, Hyderabad.

Tel: [phone]

Fax: [phone]

1st Floor, Meezan Executive Tower, 4 - Liaquat Road, Faisalabad

Tel: [phone]

1st Floor, 28-Mozang Road, Lahore Tel: [phone]

Show Room

West View Building, Preedy Street, Saddar, Karachi

Tel : [phone]

Customer Contact Centre

UAN: (92-42)111-245-222

Toll Free: 0800-245-22

Email: [e-mail] (Within working hours from Monday to Friday)

Atlas Honda Limited 03

Chairman's Review

I am pleased to present the unaudited condensed interim financial information of the Company for the half year ended September 30, 2023.

MACROECONOMIC OVERVIEW

The economy has been facing challenges over time, but there are positive indicators in the current fiscal year. This progress can be attributed to the restoration of macroeconomic stability, the implementation of structural reforms, and favorable developments in external factors. This resulted in an upward revision of GDP growth to 2.5%, surpassing the initial target of 1.9%. To achieve this, various fundamental measures have been taken, including the implementation of an economic revival plan and prudent actions such as the establishment of the Special Investment Facilitation Council (SIFC) and disbursements from the International Monetary Fund (IMF) under the Staff Level Agreement (SBA). These measures are expected to create a multiplier effect in the economy, driving higher and more inclusive economic growth in FY24.

On the external front, the current account has recorded a deficit of USD 0.9 billion for 3M FY24, which is a 58% reduction compared to the same period last year. The balance of trade recorded a deficit of USD 5.3 billion for 3M FY24, down by 42%. This progress is largely attributed to a 26% reduction in the import bill resulting from various government measures. Home remittances provided much-needed support and held up well at USD 6.3 billion. However, as of September 2023, the State Bank of Pakistan's foreign exchange reserves recorded at USD 7.6 billion, down by 4%, reflecting 2 months import cover. On a positive note, the ongoing regulatory measures aimed at managing the flow of dollars, led to the appreciation of the local currency, which closed at 287.9 in September 2023, compared to a record low of 307 in August 2023. Furthermore, the inflation rate has risen to 31.4% year-on-year due to high fuel and energy price adjustments. To curb excessive demand, the Central bank adopted a prudent fiscal stance, maintaining the policy rate at 22%, with a projection of a downward trajectory in inflation during the second half of the fiscal year. On the fiscal front, revenue collection for the quarter exceeded the target, with a total of PKR 2 trillion collected against a quarterly target of PKR 1.9 trillion. These recent improvements have boosted confidence in the capital markets, leading to the PSX 100 index surpassing 50,000 points for the first time in six years.

In the first quarter of the FY24, the agricultural sector exhibited strong performance, particularly in the cultivation of Cotton crop, which outperformed last year's yield by 80%. This notable improvement can be attributed primarily to the availability of higher-quality seeds and fertilizers. Further to support the sector, financial institutions allocated a credit of PKR 1.8 billion, up by 25% increase compared to the corresponding period. This financial support, combined with favorable pricing policies, will result in consistent growth in farm incomes. Consequently, demand for consumer durables is expected to remain upbeat in rural areas.

The Large-scale manufacturing (LSM) sector saw a year-on-year growth of 2.52%, signaling
a shift from the trend of contraction that lasted for 11 consecutive months. Recent high-
frequency indicators show signs of improvement. There is a
moderate pick up in sales of key inputs, like POL, fertilizer and	Sales Growth
cement. The relaxation of import restrictions has enhanced access		(Rs. in million)
to essential inputs, fostering growth in these sectors. Nonetheless,
+10%
industries still struggle due to limited financing options and the	5.8%
sustained impact of inflationary pressures, which continue to	6.0%
hinder industrial activities.

OPERATING RESULTS		67,265	74,185
During the half year ended September 30, 2023, the Company
achieved net sales of Rs. 74.2 billion, an increase of 10.3% as
compared to the corresponding period of the last year. However,
Sep	Sep
gross profit, as a percentage of	sales, declined from 6.1% to
2022	2023
5.8%. The decline in gross margin was due to lower sales volume,	Sales	Gross Profit (%)
increase in material prices, rising	energy cost and devaluation

04 Half Yearly Report September 2023

of Pak rupee with a less than commensurate increase in selling prices. The key challenge will be to improve this over the course of the year. Sales and marketing expenses rose to Rs. 1.48 billion, an increase of 16.1% which is attributable to an increase in fuel prices and promotional activities. Administrative expenses increased by 17.8% mainly because of continued inflation and new initiatives for CSR activities. Other income, net of other operating expenses and financial charges, contributed an encouraging Rs. 3.8 billion to the bottom line. This is on account of efficient treasury operations and prudent management of enhanced liquidity. The above factors supported the Company in achieving six months profit before tax of Rs. 6.2 billion, reflecting a recovery in supply and demand. However, due to provision for super tax for the current and prior year, the profit after tax for the six months period ended registered at Rs. 3.6 billion. This translated into Earnings per Share (EPS) of Rs. 28.68 against Rs. 18.37 for the corresponding period of last year.

Profit Growth
+56%	28.68
18.37
2,280	3,559
Sep	Sep
2022	2023
Profit after tax (Rs. in million)
Earning per share (Rs.)

FUTURE OUTLOOK

Over the years, the economy has displayed remarkable resilience, and managed to withstand unexpected fluctuations and uncertainties. Looking ahead, it is crucial to maintain the ongoing reform efforts and concentrate on strategies that ensure stability and foster sustainable growth. Adherence to IMF's SBA remains vital for the Country's economic prospects. Any slippages in the agreed IMF agreement can quickly result in economic volatility. To sustain positive momentum, the Country needs to adopt structural changes, curtail the circular debt, maintain a tight monetary stance, and focus on increasing exports. Inflationary pressures will continue to be a challenge for the Country and will begin to ease in the second half of FY 24. Moreover, continuation of the IMF program and influx of external funding remain crucial for the economy as external repayments stand close to USD 25 billion for the year. Privatization, enhancing institutional capabilities and implementing supply-side initiatives can address Country's economic challenges and will offer lasting advantages. Nevertheless, achieving this will necessitate a consensus among all national stakeholders when formulating long-term policies for sustainable development. As the economy returns to its full potential and recovery becomes more robust, the two-wheeler sector is expected to regain its growth momentum.

While the macroeconomic situation undergoes a re-alignment, the Company remains confident in continuing its journey of sustained long-term growth. The Company is well poised and has demonstrated its ability to avail new opportunities and handle adversity with an aim to keep building a long-term business proposition that increases stakeholder value. In this regard, the "Atlas Way" and "Atlas Systems" continue to remain the corner stone of our business philosophy.

(Entrepreneurial ability and management always grows and grows better)

ACKNOWLEDGEMENT

The Atlas Group takes great pride in its partnership with Honda Motor Company Limited and would like to acknowledge their continued support and cooperation in maintaining high standards of excellence. I would like to thank our valued customers for the confidence they continue to place in us, the management team for their sincere efforts, the Board of Directors for their guidance, Mr. Saquib H. Shirazi - C.E.O. for his inspiring leadership and all stakeholders - Bankers, Dealers, Vendors, Associates and Shareholders for helping to build Atlas Honda Limited into a unique company.

Dated: October 23, 2023	Aamir H. Shirazi
Karachi

Atlas Honda Limited 05

Profit Growth
+56%	28.68
18.37
2,280	3,559
Sep	Sep
2022	2023
Profit after tax (Rs. in million)
Earning per share (Rs.)

(Entrepreneurial ability and management always grows and grows better)

06 Half Yearly Report September 2023

Sales Growth

(Rs. in million)

+10%

5.8%

6.0%

67,265	74,185
Sep	Sep
2022	2023
Sales	Gross Profit (%)

Atlas Honda Limited 07

Independent Auditor's Review Report To The Members Of Atlas Honda Limited

Report on review of Interim Financial Statements

Introduction

We have reviewed the accompanying condensed interim statement of financial position of Atlas Honda Limited as at September 30, 2023 and the related condensed interim statement of profit or loss and other comprehensive income, condensed interim statement of changes in equity, and condensed interim statement of cash flows, and notes to the financial statements for the half year then ended (here-in-after referred to as the "interim financial statements"). Management is responsible for the preparation and presentation of these interim financial statements in accordance with accounting and reporting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusion on these financial statements based on our review.

The figures of the condensed interim statement of profit or loss and other comprehensive income for the quarters ended September 30, 2023 and 2022 have not been reviewed, as we are required to review only the cumulative figures for the half year ended September 30, 2023.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial statements are not prepared, in all material respects, in accordance with the accounting and reporting standards as applicable in Pakistan for interim financial reporting.

The engagement partner on the review resulting in this independent auditor's review report is Osman Hameed Chaudhri.

SHINEWING HAMEED CHAUDHRI & CO.

CHARTERED ACCOUNTANTS

KARACHI;

UDIN: RR202310104GNo4TOneP

08 Half Yearly Report September 2023

Condensed Interim Statement of Financial Position as at September 30, 2023

Assets	Note
Non current assets

(Unaudited)	(Audited)
September 30,	March 31,
2023	2023

------- (Rupees in '000) -------

Property, plant and equipment	5
Intangible assets	6
Long term investments
Long term loans and advances
Long term deposits
Current assets
Stores, spares and loose tools	7
Stock-in-trade
Trade debts
Loans and advances	8
Trade deposits and prepayments
Sales tax receivable - net
Accrued mark-up / interest
Other receivables	9
Short term investments
Bank balances
Equity and Liabilities
Equity
Authorized capital
150,000,000 (March 31, 2023: 150,000,000)
ordinary shares of Rs.10 each
Issued, subscribed and paid-up capital
124,087,935 (March 31, 2023: 124,087,935)
ordinary shares of Rs.10 each
Reserves
Liabilities
Non current liabilities
Lease liabilities
Staff retirement benefits
Deferred taxation
Current liabilities	10
Trade and other payables
Taxation - net
Unclaimed dividend
Dividend payable
Current portion of lease liabilities
Contingencies and commitments	11

12,520,559

18,562

346,793

90,224

41,672

13,017,810

1,054,607

11,538,461

1,788,448

81,566

1,085,507

128,929

213,370

4,429

9,346,373

36,034,105

61,275,795

74,293,605

1,500,000

1,240,879

23,485,194

24,726,073

133,824

604,087

813,954

1,551,865

46,201,601

1,018,227

146,926

564,600

84,313

48,015,667

49,567,532

74,293,605

12,158,765

35,311

340,816

75,469

41,662

12,652,023

1,083,666

8,005,452

797,382

94,502

2,242,128

-

343,803

1,874

10,114,241

34,702,516

57,385,564

70,037,587

1,500,000

1,240,879

21,539,063

22,779,942

148,102

559,591

633,022

1,340,715

44,545,823

50,005

222,975

1,044,510

53,617

45,916,930

47,257,645

70,037,587

The annexed notes 1 to 19 form an integral part of these condensed interim financial statements.

Aamir H. Shirazi	Saquib H. Shirazi	Daniyal Ahmed Rasheed
Chairman	Chief Executive Officer	Chief Financial Officer

Atlas Honda Limited 09