Oil & Gas Marketing Companies: PAKISTAN STATE OIL COMPANY LIMITED - Year Ended June 30 2004

The significant highlights of the company's performance are: Recorded an all-time high profit before tax of Rs 6.3 billion, the highest ever since the inception of the company; Posted unprecedented profit after tax of Rs 4.2 billion up by around 4.5% over prior year; Declared all-time record cash dividend of Rs 3 billion (Rs 17.5 per 10 rupee share) to its shareholders; Regained market leadership in Mogas after several years by recording a 44% market share.
Further consolidated HSD participation by increasing its share to 60.5%; Pioneered in introducing additized diesel "Green XL plus Diesel in Pakistan" to ensure greener and safer environment; Completed 1000 New Vision retail outlets by adding another 287 stations in line with international standards; Embarked upon ambitions Retail Automation Programme aimed at Complete online real-time regime.
The first company to launch "e-learning" programme and augment government efforts to promote and support education.
Pakistan State Oil Company Ltd (PSO) is a public limited company incorporated in Pakistan having its registered office located at PSO House Khayaban-e-Iqbal Clifton Karachi.
The company was listed at Karachi Stock Exchange in 1977. Its shares are also quoted on Lahore and Islamabad Stock Exchanges. At present the share of the company is trading at Rs 271.50 per share which is more than 27 times of the par value of Rs 10/- PSO is a blue chip organisation.
On 30th June 2004, the paid-up capital of the company was Rs 1.715 billion but its market capitalisation reached around Rs 44 billion (US $755 million) contributing US $873 million to the national exchequer.
PSO is the only Pakistani corporation to become member of the World Economic Forum (WEF) based on stringent and forward looking criteria. As a member of the Forum, PSO was represented by its Managing Director & CEO Tariq Kirmani at the WEF Annual Meeting in Davos, Switzerland, in January 2004 and at the Dead Sea meeting in Jordan on May 2004.
In the pattern of shareholdings based on shareholders date of 30-06-2004, Govt of Pakistan had 25.51% of the stock PSO. NBP, Trustee Department (NIT) held 15.2% of the company's stock. ICP held 11% of its stock.
The group which held the largest number of PSO shares comprised 452 institutions namely modarbas, mutual funds and other organisations. This Group's aggregate holding of PSO's share works out to 30.35%. Its 13582 individual shareholders' aggregate shareholding was 15.99%.
The business operations of all the nine subsidiaries of the company were discontinued effective July 1, 2000. The shareholders of the company in their, Annual General Meeting held on October 31, 2002 had resolved to initiate the process of Members Voluntary Winding up of all subsidiaries.
In the field of information technology (IT) the company has made substantial headway. The financial year 2003-04 witnessed the implementation of a Wide Area Network (WAN) and progress of SAP which was in its final stage in July 2004. Also a very important part of establishing the "Information Village," is the automation of all remote area sites.
This has been ensured by providing hardwares network nodes and Internet Connectivity to all locations. These strategic thrusts have enabled the company to enhance over all performance standards.
PSO's gross sales revenue during FY 2003-04 stood at Rs 195.34 billion which declined from Rs 206.38 billion posted in the preceding financial year. The net sales at Rs 161.517 billion (2002-03: Rs 172.446 billion) was arrived after deduction of sales tax and inland freight equalisation margin. Net sales declined by 6.3% as compared to the preceding year's figures.
The PSO's Annual Report under review states that there was massive decline in FO (Fuel Oil) sales volume to the tune of 2.3 million tons. Inspite of this volume decline, the company earned an all-time record profit before tax at Rs 6.263 billion, while profit after tax rose to Rs 4.212 billion (2002-03: Rs 4.030 billion) up by 4.51% from prior year.
Despite drop in Fuel Oil volume sales PSO retained its market leadership and sold 8.7 million tons of POL products.
In White Oil (Mogas, Diesel, Kerosene and Jet A-1) despite stiff competition, PSO successfully maintained its market share at 59%. But in Black Oil its share declined by 46% in line with industry drop. This was mainly due to power sector's continued conversion to gas, improved hydel generation and availability of cheaper fuels in industrial sector.
During FY 2003-04, PSO gained 1.6% market share in Mogas thus registering a substantial growth of 15% over last year. PSO Mogas volume sales in June 2004 were the highest ever sales.
PSO HSD (High Speed Diesel) during November 2003 achieved the highest ever market share of 64% in any single month. Due to the introduction of Green XL Plus Diesel, the company has differential its products and gained substantial volume in a highly competitive market.
In FY 2003-04, PSO continued to offer higher value to its customer's another 287 New Vision stations were added, bringing the total number of these outlets to 1,000.
The company owned, company operated (COCO) outlets network was also expanded to 36 during the financial year. The CNG facility was offered at another 32 stations bringing the total number to 105.

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Performance Statistics                (Million Rupees)

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Balance sheet                                  -As At-

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                                  June 30

                                     2004         2003

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Share Capital-Paid-Up:           1,715.19     1,715.19

Reserves:                       12,444.37    11,348.21

Shareholders Equity:            14,159.56    13,063.40

L T Debts:                              -         4.75

Deferred Liabilities:            1,023.25       859.26

L T Deposits:                      613.01       494.32

Current Liabilities:            26,612.70    17,916.26

Fixed Assets:                    7,737.91     6,436.59

L T Investments:                 1,865.93     1,980.05

L T Loans, Advances

 & Receivables:                    912.60     1,046.96

L T Deposits & Prepayments:         71.19        54.05

Deferred Tax:                      186.06       373.50

Current Assets:                 31,634.83    22,446.84

Total Assets:                   42,408.52    32,337.99

Sales, Profit & Pay Out

Net Sales:                     161,517.39   172,445.78

Gross Profit:                    9,170.53     8,955.20

Depreciation:                     (791.45)    (629.12)

Operating Profit:                6,095.38     6,204.94

Other Income (Charges)-Net:        356.67       279.17

Financial (Charges):              (189.07)    (274.78)

Profit Before Taxation:          6,262.98     6,209.32

Profit After Taxation:           4,211.86     4,030.32

Earnings Per Share (Rs):            24.56        23.50

Proposed Cash Dividend @

 17.5/Share (2003:@ 16.0/Share): 3,001.58     2,744.30

Share Price (Rs) Dated 13/12/04:   271.50            -

Financial Ratios

Price/Earning Ratio:                11.05            -

Book Value Per Share:               82.55        76.16

Price/Book Value Ratio:              3.28            -

Debt/Equity Ratio:                      -            -

Current Ratio:                       1.19         1.25

Asset Turn Over Ratio:               3.80         5.33

Gross Profit Margin (%):             5.68         5.19

Net Profit Margin (%):               2.61         2.34

R O E (%):                          29.74        30.85

R O A (%):                           9.93        12.46

R O C E (%):                        26.66        27.95

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