Ar 2008 Finacialoverview

PSO: Financial Overview
Economy Nations
Drivingthe
PSO at a Glance
Rupees in Million (Unless Noted)
Sales Volume (Million Tons) Profit & Loss Account Sales Revenue Net Revenue Gross Profit Operating Profit Marketing & Administrative Expenses Profit before Tax Profit after Tax Earning before Interest, taxes, depreciation & Amortization (EBITDA) Capital Expenditure Balance Sheet Share Capital Reserves Shareholders' Equity Property Plant & Equipment Net current assets Long Term Liabilities Profitabiltiy Ratios Gross Profit ratio Net Profit ratio EBITDA margin Return on Shareholders' Equity Return on total assets Return on capital employed Asset utilisation Inventory turnover ratio Debtor turnover ratio Total asset turnover ratio Fixed asset turnover ratio Investment Earning per share Market value per share Breakup value Price earning ratio (P/E) Dividend per share Bonus share Dividend payout Dividend yield Dividend cover ratio Leverage Interest Cover ratio Current Ratio Quick Ratio Contribution Employees as remuneration Government as taxes Shareholders as dividends Retained within the business Financial charges to providers of finance % % % % % % (x) (x) (x) (x) Rs Rs Rs (x) Rs % % % (x) (x) (x) (x) 2008 13.0 583,214 495,279 30,024 22,451 4,425 21,377 14,054 23,912 620 1,715 29,250 30,965 7,567 22,143 2,409 5.1 2.4 4.10 45.4 11.1 68.1 12.7 24.6 5.78 74.3 81.94 417.24 180 5.1 23.5 28.68 5.63 3.48 16.4 1.24 0.57 2,438 85,208 4,031 10,000 1,368 2007 11.8 411,058 349,706 12,259 7,950 3,748 7,122 4,690 9,420 1,609 1,715 19,224 20,939 8,012 11,128 2,412 3.00 1.14 2.29 22.4 6.30 35.4 11.7 32.5 5.70 52.0 27.3 391.5 121.7 14.3 21.0 76.8 5.36 1.30 6.86 1.22 0.64 2,006 68,096 3,602 1,100 1,158 2006 9.8 352,515 298,250 17,207 11,264 3,428 11,418 7,525 13,385 717 1,715 19,098 20,813 7,519 10,978 2,299 4.88 2.13 3.80 36.2 10.72 54.2 11.5 37.8 5.76 44.4 43.9 309.0 121.0 7.0 34.0 77.5 11.00 1.29 12.74 1.24 0.63 1,857 58,822 5,831 1,900 884 2005 9.7 253,777 212,504 13,746 9,340 3,219 9,191 5,656 10,546 1,506 1,715 15,830 17,545 8,111 7,970 1,999 5.42 2.23 4.16 32.2 10.90 48.9 11.2 39.9 5.37 31.7 33.0 386.0 101.0 11.6 26.0 78.8 6.74 1.26 25.87 1.24 0.62 1,870 38,823 4,459 1,230 371 2004 8.6 195,130 161,538 9,191 6,452 2,654 6,263 4,212 7,244 2,096 1,715 13,731 15,446 7,619 6,309 1,636 4.71 2.16 3.71 27.3 9.90 40.8 13.1 40.1 5.22 27.5 24.6 256.8 90.0 10.4 17.5 71.3 6.82 1.40 34.14 1.25 0.66 1,474 50,942 3,002 1,210 189 2003 10.8 206,376 172,446 8,955 6,484 2,465 6,209 4,030 7,113 1,643 1,715 11,348 13,063 6,352 4,531 1,358 4.34 1.95 3.45 28.3 12.50 44.9 19.7 35.4 6.34 34.8 23.5 228.4 83.0 9.7 16.0 68.1 7.01 1.46 23.58 1.34 0.79 1,403 53,699 2,744 1,290 275 2002 11.5 182,323 153,111 6,777 5,709 1,907 5,137 3,188 6,328 1,430 1,429 9,823 12,396 5,427 4,183 1,103 3.72 1.75 3.47 25.7 9.70 46.1 18.7 22.5 5.79 36.3 18.6 140.0 87.0 7.5 13.0 20.0 80.7 9.29 1.71 9.98 1.28 0.80 990 45,946 1,858 1,040 571 2001 12.6 195,039 143,306 6,372 3,822 2,034 3,451 2,251 4,347 1,254 1,429 8,379 10,666 4,625 5,367 1,142 3.27 1.15 2.23 21.1 7.50 34.8 18.5 21.5 6.40 45.8 15.8 132.5 75.0 8.4 10.0 63.3 7.55 1.57 10.30 1.34 0.90 1,292 52,933 1,429 820 371 2000 12.7 135,040 102,467 5,670 3,927 1,788 3,581 2,231 4,368 967 1,429 7,557 9,987 3,897 5,615 1,099 4.20 1.65 3.23 22.3 7.20 38.6 16.0 13.7 4.79 37.3 15.6 163.0 70.0 10.4 10.0 64.1 6.14 1.56 11.35 1.34 0.91 1,102 33,923 1,429 800 346 1999 12.1 115,636 61,697 5,245 3,646 1,428 3,356 2,671 4,063 397 1,191 6,993 8,899 3,352 5,188 951 4.54 2.31 3.51 30.0 10.40 39.6 13.1 8.5 4.22 34.4 18.7 92.5 75.0 5.0 9.0 20.0 58.8 9.73 2.49 12.57 1.37 1.04 776 54,625 1,072 1,360 290
Financial Analysis
VERTICAL ANALYSIS BALANCE SHEET - Key Items
Property, plant and equipment Stock-in-trade Trade debts Cash and bank balances Total Current Assets Total Assets Total Shareholders Equity Trade and other payables Short term borrowings Total Current Liabilities 2008 5.95% 49.06% 26.67% 2.37% 91.16% 100.00% 24.36% 63.78% 8.65% 73.74% 100.00% 2007 10.89% 39.55% 18.20% 2.04% 83.64% 100.00% 28.02% 55.44% 12.13% 68.76% 100.00% 2006 10.94% 40.14% 16.70% 2.71% 82.71% 100.00% 29.66% 52.47% 10.90% 67.06% 100.00%
PROFIT & LOSS ACCOUNT - Key Items

Sales Net sales Cost of products sold Gross Profit Total Operating Costs Profit from Operations Finance cost Profit before taxation Net Profit 100% 84.9% 79.8% 5.15% 1.59% 3.85% 0.23% 3.67% 2.41% 100% 85.1% 82.1% 2.98% 1.46% 1.93% 0.28% 1.73% 1.14% 100% 84.6% 79.7% 4.88% 2.08% 3.20% 0.25% 3.24% 2.13%
73
Financial Analysis
HORIZONTAL ANALYSIS BALANCE SHEET - Key Items
Property, plant and equipment Stock-in-trade Trade debts Cash and bank balances Total Current Assets Total Assets Total Shareholders Equity Trade and other payables Total Current Liabilities 2008 99% 221% 289% 159% 200% 181% 149% 220% 199% 2007 106% 105% 116% 80% 108% 107% 101% 113% 109%
(Amounts in Rupees 000)
2006 100% 100% 100% 100% 100% 100% 100% 100% 100%
PROFIT AND LOSS ACCOUNT - Key Items

Sales Net sales Gross Profit Distribution and marketing expenses Administrative expenses Total Operating Costs Finance cost Profit before taxation Net Profit 165% 166% 174% 131% 124% 127% 155% 187% 187% 117% 117% 71% 111% 105% 82% 131% 62% 62% 100% 100% 100% 100% 100% 100% 100% 100% 100%
SUMMARY OF CASH FLOW STATEMENT

Cash inflow from operating activities Net cash (outflow) from investing activities Net cash (outflow) from financing activities Cash & Cash equivalents at end of the year 4,050,125 (172,926) (9,649,840) (7,190,672) 3,691,454 (707,953) (1,565,507) (1,418,031) 1,633,774 (173,687) (4,104,443) (2,836,025)
Financial Trend
75
Statement of Compliance
with the Code of Corporate Governance This statement is being presented to comply with the Code of Corporate Governance contained in the listing regulations of Karachi, Lahore and Islamabad Stock Exchanges for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance. The Company has applied the principles contained in the Code in the following manner: 1. Under section 5 of the Marketing of Petroleum Products (Federal Control) Act, 1974 (the Act), the Federal Government has taken over the management of the Company and the Act shall have effect notwithstanding anything contained in the Companies Act, 1913 (now Companies Ordinance, 1984) or the Companies (Managing Agency and Election of Directors) Order, 1972 or any other law for the time being in force. A ten-member Board of Management (BOM) including a Managing Director (MD), is appointed by the Federal Government to run the operations of the Company. Under section 6 of the Act, the administration and management of the Company is vested in MD of the Company and the MD shall exercise and perform all the powers and functions of the Board of Directors of the Company. Furthermore, provisions relating to the Boards affairs are governed through Board of Management Regulations, 1974 approved by the Federal Government. The Code of Corporate Governance promulgated by the Securities and Exchange Commission of Pakistan (SECP) has laid down certain criteria for the election, functioning and responsibilities of the Board of Directors. However, the said criteria of the Code are not considered applicable to the extent of overriding provisions of the Marketing of Petroleum Products (Federal Control) Act, 1974, and Board of Management Regulations, 1974 approved by the Federal Government. The members of BOM have confirmed that none of them is serving as a director in more than ten listed companies, including this Company. All the resident members of the BOM are registered as taxpayers except for one who is an agriculturalist, and none of them has defaulted in payment of any loan to a banking company, a DFI or an NBFI or, being a member of a stock exchange, has been declared as a defaulter by that stock exchange. A casual vacancy occurred in the board due to resignation of a BOM member during the year. The said vacancy has not yet been filled-up.
2.
3.
4.
with the Code of Corporate Governance 5. The Company has prepared a Statement of Ethics and Business Practices, which has been signed by employees of the Company. The BOM has developed a vision/mission statement, overall corporate strategy and significant policies of the Company. A complete record of particulars of significant policies, approved or amended, has been maintained. All the powers of the BOM have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the CEO and other executive directors, have been taken by the BOM. The meetings of the BOM were presided over by the Chairman and the BOM met at least once in every quarter. Written notices of the BOM meetings, along with agenda were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and were placed for approval of BOM in subsequent meetings. The members of BOM are well aware of their duties and responsibilities as outlined by corporate laws and listing regulations.
6.
7.
8.
9.
10. The board has approved the appointment of the Company Secretary and the Head of Internal Audit. There has been no change in the position of Chief Financial Officer during the year. 11. The directors report for this year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed. 12. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the BOM. 13. The directors, CEO and executives do not hold any interest in the shares of the Company other than that disclosed in the pattern of shareholding. 14. The Company has complied with all the corporate and financial reporting requirements of the Code.
77
with the Code of Corporate Governance 15. The BOM has formed an audit committee. It comprises of 4 members, all of whom are non-executive directors. 16. The meetings of the audit committee were held at least once every quarter prior to approval of interim and final results of the Company and as required by the Code. The terms of reference of the committee have been formed and advised to the committee for compliance. 17. The BOM has set-up an effective internal audit function. 18. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under the quality control review programme of the Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by Institute of Chartered Accountants of Pakistan. 19. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard. 20. We confirm that all other material principles contained in the Code have been complied with.
Muhammad Abdul Aleem Managing Director
Karachi: August 12, 2008
Review report to the members
on Statement of Compliance with Best Practices of Code of Corporate Governance We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance for the year ended June 30, 2008 prepared by the Board of Management of Pakistan State Oil Company Limited to comply with the Listing Regulations of respective Stock Exchanges, where the Company is listed. The responsibility for compliance with the Code of Corporate Governance is that of the Board of Management of the Company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the Companys compliance with the provisions of the Code of Corporate Governance and report if it does not. A review is limited primarily to inquiries of the Company personnel and review of various documents prepared by the Company to comply with the Code. As part of our audit of financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We have not carried out any special review of the internal control system to enable us to express an opinion as to whether the Boards statement on internal control covers all controls and the effectiveness of such internal controls. Based on our review nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Companys compliance, in all material respects, with the best practices contained in the Code of Corporate Governance for the year ended June 30, 2008 except that certain clauses of Code of Corporate Governance are considered inapplicable due to overriding provisions of Marketing of Petroleum Products (Federal Control) Act, 1974 applicable to the Company, as more fully explained in the Statement of Compliance with the Code of Corporate Governance.
A. F. FERGUSON & CO. Chartered Accountants
FORD RHODES SIDAT HYDER & CO. Chartered Accountants
Karachi: September 10, 2008
79
Auditors report to the members

for the year ended June 30, 2008 We have audited the annexed balance sheet of Pakistan State Oil Company Limited as at June 30, 2008 and the related profit and loss account, cash flow statement and statement of changes in equity together with the notes forming part thereof, for the year then ended and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit. It is the responsibility of the Companys management to establish and maintain a system of internal control, and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies and significant estimates made by management, as well as, evaluating the overall presentation of the above said statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that: a) b) in our opinion, proper books of accounts have been kept by the Company as required by the Companies Ordinance, 1984; in our opinion: i) the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with the Companies Ordinance, 1984, and are in agreement with the books of accounts and are further in accordance with accounting policies consistently applied; the expenditure incurred during the year was for the purpose of the Company's business; and the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects of the Company;
ii) iii) c)
in our opinion and to the best of our information and according to the explanations given to us, the balance sheet, profit and loss account, cash flow statement and statement of changes in equity together with the notes forming part thereof conform with approved accounting standards as applicable in Pakistan, and, give the information required by the Companies Ordinance, 1984, in the manner so required and respectively give a true and fair view of the state of the Companys affairs as at June 30, 2008 and of the profit, its cash flows and changes in equity for the year then ended; and
d)
in our opinion, Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the Company and deposited in the Central Zakat Fund established under Section 7 of that Ordinance.
Without qualifying our opinion, we draw attention to: Notes 14.1 & 14.3 to the financial statements. The Company considers the aggregate amount of Rs. 4,371 million due from the Government of Pakistan as good debts for the reasons given in the notes. The ultimate outcome of the matters cannot presently be determined. Note 24.1.2 to the financial statements. The High Court of Sindh decided the pending appeals of the Income Tax Department for the assessment years 1996-97 and 1997-98 against the Company, resulting in a tax liability of Rs. 958 million on the Company. The Company filed a petition for leave to appeal with the Supreme Court of Pakistan against the aforementioned decision, which was granted by the Supreme Court of Pakistan through its order dated March 7, 2007. Through this order the Supreme Court of Pakistan also suspended the operation of the impugned judgment of the High Court of Sindh. The ultimate outcome of the matter cannot presently be determined, and no provision for the liability has been made in the financial statements.
A. F. FERGUSON & CO. Chartered Accountants
FORD RHODES SIDAT HYDER & CO. Chartered Accountants
Karachi: September 10, 2008
81
Balance Sheet
as at June 30, 2008
ASSETS Non- Current Assets Property, plant and equipment Intangibles Long term investments Long term loans, advances and receivables Long term deposits and prepayments Deferred tax Current Assets Stores, spare parts and loose tools Stock-in-trade Trade debts Loans and advances Deposits and short term prepayments Other receivables Cash and bank balances Net Assets in Bangladesh EQUITY AND LIABILITIES Share Capital Reserves Non-Current Liabilities Long term deposits Retirement and other service benefits Current Liabilities Trade and other payables Provisions Accrued interest / mark-up Short term borrowings Taxes payable Contingencies and Commitments 17 18 1,715,190 29,249,864 30,965,054 19 20 834,598 1,574,148 2,408,746 21 22 23 81,067,565 726,116 217,928 10,997,908 726,703 93,736,220 24 127,110,020 The annexed notes 1 to 40 form an integral part of these financial statements. Muhammad Abdul Aleem Managing Director Sardar M. Yasin Malik Chairman 74,737,315 1,715,190 19,224,027 20,939,217 768,308 1,644,063 2,412,371 41,431,075 688,512 131,961 9,064,781 69,398 51,385,727 Note 3 4 5 6 7 8 2008 2007 ............. (Rupees in 000) ............. 7,460,549 105,502 2,701,097 477,745 79,098 407,337 11,231,328 9 10 11 12 13 14 15 16 115,814 62,360,067 33,904,728 396,220 401,433 15,681,790 3,018,640 115,878,692 127,110,020 8,012,317 126,212 2,990,591 627,972 65,913 401,037 12,224,042 127,891 29,562,055 13,599,966 365,974 1,583,913 15,751,198 1,522,276 62,513,273 74,737,315
Profit and Loss Account

for the year ended June 30, 2008
Note Sales - net of trade discounts and allowances amounting to Rs. 84,231 thousand (2007: Rs. 932,387 thousand) Less: - Sales tax - Inland freight equalization margin 2008 2007 ............. (Rupees in 000) ............. 583,213,959 (74,249,472) (13,685,954) (87,935,426) Net sales Cost of products sold Gross profit Other operating income Operating costs Transportation costs Distribution and marketing expenses Administrative expenses Depreciation Amortisation Other operating expenses Other income Profit from operations Finance costs Share of profit of associates Profit before taxation Taxation Profit for the year 33 32 27 28 29 3.1 4 30 31 (337,886) (3,264,599) (1,160,741) (1,119,137) (47,689) (3,352,969) (9,283,021) 313,860 22,450,992 (1,367,898) 21,083,094 294,318 21,377,412 (7,323,617) 14,053,795 (369,328) (2,745,289) (1,002,712) (1,098,157) (41,908) (755,420) (6,012,814) 424,238 7,949,786 (1,158,112) 6,791,674 330,306 7,121,980 (2,432,182) 4,689,798 26 25 495,278,533 (465,254,907) 30,023,626 1,396,527 411,057,592 (52,418,310) (8,932,956) (61,351,266) 349,706,326 (337,446,896) 12,259,430 1,278,932
................... (Rupees) ................... Earnings per share - basic and diluted 34 81.94 27.34
The annexed notes 1 to 40 form an integral part of these financial statements.
Sardar M. Yasin Malik Chairman
83
Cash Flow Statement

Note CASH GENERATED FROM OPERATING ACTIVITIES Cash generated from operations Long-term loans, advances and receivables Long-term deposits and prepayments Taxes paid Finance costs paid Payment against provisions Retirement benefits paid Net cash inflow from operating activities CASH FLOW FROM INVESTING ACTIVITIES Purchase Purchase Proceeds Dividends of property, plant and equipment of intangibles from disposal of operating assets received (593,314) (26,979) 57,189 390,178 (172,926) (1,596,166) (13,301) 30,740 870,774 (707,953) 35 12,479,055 149,747 (13,185) (6,672,612) (1,281,931) (610,949) 4,050,125 9,103,698 74,511 8,749 (4,050,775) (1,146,882) (10,126) (287,721) 3,691,454 2008 2007 ............. (Rupees in 000) .............
Net cash outflow from investing activities CASH FLOW FROM FINANCING ACTIVITIES Net proceeds from long-term deposits (Repayment of)/Proceeds from short-term finances Dividends paid Net cash outflow from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 36
66,290 (5,335,878) (4,380,252) (9,649,840) (5,772,641) (1,418,031) (7,190,672)
24,314 3,210,474 (4,800,295) (1,565,507) 1,417,994 (2,836,025) (1,418,031)
Mohammad Abdul Aleem Managing Director
Statement of Changes in Equity

Share Capital Capital Reserve General Reserve Unrealised gain/(loss) on revaluation of long term investments available for sale Company's Unappropriated share of unrealised Profit gain/(loss) of investments of associates Total
...........................................................................(Rupees in 000)............................................................................ Balance as at June 30, 2006 Profit for the year Final dividend for the year ended June 30, 2006 @ Rs. 18 per share Transfer to general reserve Unrealised gain due to change in fair values of long-term investments Unrealised gain due to change in fair values of investments of associates Dividends for the year ended June 30, 2007 - 1st interim dividend @ Rs. 6 per share - 2nd interim dividend @ Rs. 4 per share Balance as at June 30, 2007 Profit for the year Final dividend for the year ended June 30, 2007 @ Rs. 11 per share Transfer to general reserve Unrealised loss due to change in fair values of long-term investments Unrealised loss due to change in fair values of investments of associates Dividends for the year ended June 30, 2008 - 1st interim dividend @ Rs. 5 per share - 2nd interim dividend @ Rs. 6 per share Balance as at June 30, 2008 1,715,190 1,715,190 1,715,190 3,373 3,373 3,373 13,139,968 1,900,000 15,039,968 1,100,000 16,139,968 947,452 235,980 1,183,432 (244,809) 938,623 4,574 2,909 7,483 (9,731) (2,248) 5,002,502 4,689,798 (3,087,340) (1,900,000) (1,029,113) (686,076) 2,989,771 14,053,795 (1,886,709) (1,100,000) (857,596) (1,029,113) 12,170,148 20,813,059 4,689,798 (3,087,340) 235,980 2,909 (1,029,113) (686,076) 20,939,217 14,053,795 (1,886,709) (244,809) (9,731) (857,596) (1,029,113) 30,965,054
85
Notes to the Financial Statements

for the year ended June 30, 2008 1. LEGAL STATUS AND NATURE OF BUSINESS
1.1 Pakistan State Oil Company Limited is a public company incorporated in Pakistan under the repealed Companies Act, 1913 (now Companies Ordinance, 1984) and is listed on Karachi, Lahore and Islamabad stock exchanges. The address of its registered office is PSO House, Khayaban-e-Iqbal, Clifton, Karachi. The principal activities of the Company are procurement, storage and marketing of petroleum and related products. It also blends and markets various kinds of lubricating oils. The business operations of the six subsidiaries were discontinued effective July 1, 2000. The shareholders of the Company in their Annual General Meeting held on October 31, 2002 resolved for voluntary winding up of Salsons Lubricants (Private) Limited, Mohsin Lubricants (Private) Limited, Auto Oils (Private) Limited, Gizri Lubricants (Private) Limited, Salim Petroleum (Private) Limited and Aremai Petroleum (Private) Limited, and the winding up proceedings of these subsidiaries were completed by the end of financial year 2006. The acknowledgements of filing for winding up of these subsidiaries have not been received from Securities and Exchange Commission of Pakistan (SECP). Therefore, during the year, the Company has also applied for striking off the name of these subsidiaries from the Register of Companies under the Easy Exit Scheme announced by the SECP vide circular No. 16 of 2007 dated December 5, 2007, against which no response has been received from SECP as yet. The consolidated financial statements have not been attached with these financial statements in view of the exemption granted by the SECP vide its letter No. EMD/233/409/2002/7514 dated September 9, 2008, from the requirements of section 237 of the Companies Ordinance, 1984. The exemption, however is subject to certain conditions including that the audited financial statements of subsidiaries will be open for inspection of shareholders of the Company.
1.2
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. 2.1 Basis of preparation 2.1.1 These financial statements have been prepared on the basis of historical cost convention, except for certain available for sale investments which have been recognised at fair value and recognition of certain staff retirement benefits at present value. These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, provisions of and directives issued under the Companies Ordinance, 1984. In case requirements differ, the provisions or directives of the Companies Ordinance, 1984 have been followed, except in the case of investments in associates for the reasons explained in note 2.5. Critical accounting estimates and judgements The preparation of financial statements in conformity with the above requirements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Companys accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are set out below:
2.1.2
2.1.3
Residual values and useful lives of property, plant and equipment (note 2.2) Useful lives of intangible assets (note 2.3) Provision for impairment of trade debts and other receivables (note 2.8) Provision for impairment of non-financial assets (note 2.10) Provision for retirement and other service benefits (note 2.12) Taxation (note 2.16) Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 2.1.4 Standards, amendments to published standards and interpretations effective in 2007-08 and relevant: IAS 1 (Amendment) Presentation of Financial Statements Capital Disclosures, is mandatory for the Companys accounting periods beginning on or after January 1, 2007. It introduces capital disclosure requirements regarding how the entity manages its capital. Adoption of this amendment only impacts the format and extent of disclosures as presented in note 37.2.1 to the financial statements. 2.1.5 Standards, amendments to published standards and interpretations effective in 2007-08 but not relevant: The other new standards, amendments and interpretations that are mandatory for accounting periods beginning on or after July 1, 2007 are considered not to be relevant or to have any significant effect on the Companys operations. 2.1.6 Standards, amendments to published standards and interpretations that are not yet effective but relevant: IAS 1 Presentation of Financial Statements, issued in September 2007 revises the existing IAS 1 and requires apart from changing the names of certain financial statements, presentation of transactions with owners in the Statement of Changes in Equity and with the non-owners in the Comprehensive Income Statement. The revised Standard will be effective from January 1, 2009. Adoption of the above standard will only impact the presentation of the financial statements. IFRIC 13 Customer loyalty programmes (effective from July 1, 2008). IFRIC 13 clarifies that where goods or services are sold together with a customer loyalty incentive (for example, loyalty points or free products), the arrangement is a multiple-element arrangement and the consideration receivable from the customer is allocated between the components of the arrangement using fair values. The management is currently reviewing the implications. IFRIC 14 IAS 19 The limit on a defined benefit asset, minimum funding requirements and their interaction (effective from January 1, 2008). IFRIC 14 provides guidance on assessing the limit in IAS 19 on the amount of the surplus that can be recognised as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum funding requirement. The management has assessed that the adoption would not have a material impact on the Companys financial statements.
87

The SECP vide S.R.O. 411 (I)/2008 dated April 28, 2008 notified the adoption of International Financial Reporting Standard (IFRS) 7 Financial Instruments: Disclosures. IFRS 7 is mandatory for Companys accounting periods beginning on or after April 28, 2008 i.e. the date of notification. Adoption of IFRS 7 will only impact the format and extent of disclosures presented in the financial statements.
2.2
Property, plant and equipment These are stated at cost less accumulated depreciation except freehold land and capital work-in-progress, which are stated at cost. Cost in relation to certain fixed assets, including capital work-in-progress, signifies historical cost and financial charges on borrowings for financing the projects until such projects are completed or become operational. Depreciation is charged to profit and loss account using straight-line method so as to write off the historical cost of the assets over their estimated useful lives at the rates given in note 3.1. Depreciation on additions is charged from the month in which the asset is available for use and on disposals upto the preceding month of disposal. Assets residual values and useful lives are reviewed, and adjusted, if appropriate at each balance sheet date. An assets carrying amount is written down immediately to its recoverable amount if the assets carr ying amount is greater than its estimated recoverable amount. Major renewals and improvements for assets are capitalized and the assets so replaced, if any, are retired. Maintenance and normal repairs are charged to profit and loss account. The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is recognised as an income or expense.
2.3
Intangible assets - Computer softwares An intangible asset is recognised if it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and that the cost of such asset can also be measured reliably. Generally, costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. However, costs that are directly associated with identifiable software and have probable economic benefits exceeding one year, are recognised as an intangible asset. Direct costs include the purchase cost of software and related overhead cost. Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amor tisation and any accumulated impairment losses thereon. Expenditure which enhances or extends the performance of computer software beyond its original specification and useful life is recognised as a capital improvement and added to the original cost of the software. Intangible asset is amortised from the month when such asset is available for use on straight-line basis over its useful economic life.
2.4
Financial instruments Financial assets The Company classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, available for sale and held to maturity. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
(a)
Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading and financial assets designated upon initial recognition as at fair value through profit or loss. A financial asset is classified as held for trading if acquired principally for the purpose of selling in the short term. Assets in this category are classified as current assets. There were no financial assets held for trading at the balance sheet date.
(b)
Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than twelve months after the balance sheet date, which are classified as non-current assets. Loans and receivables are classified as trade debts, loans, deposits and other receivables in the balance sheet.
(c)
Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investments within twelve months from the balance sheet date.
(d)
Held to maturity Financial assets with fixed or determinable payments and fixed maturity, where management has intention and ability to hold till maturity are classified as held to maturity and are stated at amortised cost.
All financial assets are recognised at the time when the Company becomes a party to the contractual provisions of the instrument. Regular purchases and sales of investments are recognised on trade-date the date on which the Company commits to purchase or sell the asset. Financial assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the profit and loss account. Financial assets are derecognised when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all the risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest rate method. Changes in the fair value of securities classified as available-for-sale are recognised in equity. Investments in associates are accounted for using the equity method as explained in note 2.5. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the profit and loss account as gains and losses from investment securities. Interest on available-for-sale securities calculated using the effective interest method is recognised in the profit and loss account. Dividends on available-for-sale equity instruments are recognised in the profit and loss account when the Companys right to receive payments is established.
89

The fair values of quoted investments are based on current prices. If the market for a financial asset is not active (and for unlisted securities), the Company measures the investments at cost less impairment in value, if any. The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss is removed from equity and recognised in the profit and loss account. Impairment losses recognised in the profit and loss account on equity instruments are not reversed through the profit and loss account. Impairment testing of trade receivables is described in note 2.8.
Financial liabilities All financial liabilities are recognised at the time when the Company becomes a party to the contractual provisions of the instrument. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in respective carrying amounts is recognised in the profit and loss account. 2.5 Investment in associates Associates are all entities over which the Company has significant influence but not control, generally represented by a shareholding of 20% to 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Companys share of its associates post acquisition profits or losses is recognised in profit and loss account and its share in post acquisition movement of reserves is recognised in reserves. Cumulative post acquisition movements are adjusted against the carrying value of the investments. When the Companys share of losses in associate equals or exceeds its interest in the associate including any other long term unsecured receivable, the Company does not recognise future losses, unless it has incurred obligations or made payments on behalf of the associate. Gain on transactions between the Company and its associates are eliminated to the extent of the Companys interest in the associates. Upto June 30, 2005, based on a legal opinion obtained by the Company, Asia Petroleum Limited and Pak Grease Manufacturing Company (Private) Limited were not considered as Associated Companies as defined in the Companies Ordinance, 1984 and accordingly the Companys investment in the unquoted shares of these companies was stated as Available for sale and measured at cost less impairment, if any. However, regardless of the legal opinion, the Company decided to change its policy to account for these investments under the equity method of accounting, in accordance with IAS 28 Investments in Associates, as the management considers such presentation to be more relevant and inline with the generally accepted accounting methods for such investments.
2.6
Stores, spare parts and loose tools These are valued at lower of moving average cost and net realisable value, except items in transit, which are stated at cost. Cost comprises invoice value and other direct costs but excludes borrowing costs. Obsolete and used items are recorded at nil value. Provision is made for slow moving items where necessary and is recognised in the profit and loss account. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs necessary to make a sale.
2.7
Stock-in-trade Stock in trade is valued at the lower of average cost or cost on first-in-first-out (FIFO) basis, and net realisable value. The cost formula is dependent on the nature of the stock categories but the same formula is applied to all items of a similar nature. Cost comprise invoice value, charges like excise, custom duties and other similar levies and other direct costs but excludes borrowing costs. Stock-in-transit is valued at cost comprising invoice value plus other charges incurred thereon. Obsolete items are recorded at nil value. Provision is made for slow moving stocks where necessary and recognised in profit and loss account. Net realisable value is the estimated selling price in the ordinary course of business less estimated costs necessary to make a sale.
2.8
Trade debts and other receivables Trade debts and other receivables are stated initially at fair value and subsequently measured at amortised cost using the effective interest rate method less provision for impairment, if any. A provision for impairment is established where there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is charged to profit and loss account. Trade debts and receivables are written off when considered irrecoverable.
2.9
Cash and cash equivalents Cash and cash equivalents include cash in hand, with banks on current and deposit accounts and running finance under markup arrangements. Running finance under mark-up arrangements is shown in current liabilities.
2.10
Impairment of non-financial assets The carrying amounts of the Companys assets are reviewed at each balance sheet date to determine whether there is any indication of impairment loss. If any such indication exists, the assets recoverable amount is estimated in order to determine the extent of the impairment loss, if any. An impairment loss is recognised for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less cost to sell and value in use. Impairment losses are charged to profit and loss account.
91

2.11 Equity instruments These are recorded at their face value. 2.12 Retirement and other service benefits 2.12.1 Pension funds The Company operates approved funded defined benefit pension schemes separately for both management and nonmanagement employees. The schemes provide pension based on the employees last drawn salary. Pensions are payable for life and thereafter to surviving spouses and/or dependent children. Provisions are made to cover the obligations under the scheme on the basis of actuarial valuation and are charged to profit and loss account. The most recent valuations were carried out as of June 30, 2008 using the "Projected Unit Credit Method". The amount recognised in the balance sheet represents the present value of defined benefit obligations as adjusted for unrecognised actuarial gains and losses and unrecognised past service costs and as reduced by the fair value of the plan assets. Cumulative net unrecognised actuarial gains and losses at the end of previous year which exceed 10% of the greater of the present value of the Company's pension obligations and the fair value of plan assets at that date are amortised over the expected average remaining working lives of the employees. 2.12.2 Gratuity fund The Company also operates an approved funded defined benefit gratuity scheme for all its permanent employees. The Scheme provides for a graduated scale of benefits dependent on the length of service of the employee on terminal date, subject to the completion of minimum qualifying period of service. Gratuity is based on employees' last drawn salary. Provisions are made to cover the obligations under the scheme on the basis of actuarial valuation and are charged to profit and loss account. The most recent valuation was carried out as of June 30, 2008 using the "Projected Unit Credit Method". The amount recognised in the balance sheet represents the present value of defined benefit obligations as adjusted for unrecognised actuarial gains and losses and as reduced by the fair value of plan assets. Cumulative net unrecognised actuarial gains and losses at the end of previous year which exceed 10% of the greater of the present value of the Company's gratuity obligations and the fair value of plan assets at that date are amortised over the expected average remaining working lives of the employees. 2.12.3 Medical The Company also provides post retirement medical benefits to its permanent employees except for those management employees who joined the Company after July 1, 2001. Under the unfunded scheme all such employees and their spouses are entitled to the benefits.
Provisions are made to cover the obligations under the scheme on the basis of actuarial valuation and are charged to profit and loss account. The most recent valuation was carried out as of June 30, 2008 using the "Projected Unit Credit Method". The amount recognised in the balance sheet represents the present value of defined benefit obligations as adjusted for unrecognised actuarial gains and losses. Cumulative net unrecognised actuarial gains and losses at the end of previous year which exceed 10% of the present value of the Company's obligations at that date are amortised over the expected average remaining working lives of the employees. 2.12.4 Provident fund The Company also operates an approved funded contributory provident fund for its management and non-management employees. Equal monthly contributions are made both by the Company and the employee at the rate of 8.33% per annum of the basic salary. In addition, employees have the option to contribute at the rate of 16.66% per annum, however, the Company's contribution remains 8.33%. 2.12.5 Compensated absences The Company provides a facility to its management and non-management employees for accumulating their annual earned leave. Under the scheme, management employees who joined the Company before December 31, 2003 and all nonmanagement employees are entitled to 35 days and 30 days leave, respectively. Management employees who joined the Company on or after January 1, 2004 and complete 5 years of service are entitled to 35 days leave. Employees with less than 5 years of service are entitled to 21 days leave. In case of management employees, unutilised leave can be accumulated upto a maximum of 2 years. In case of nonmanagement employees leave can be accumulated upto 3 years. 50% of the leave is encashable during service subject to a maximum of 1 year, provided the employee proceeds for leave for the remaining balance period and has balance of more than 1 years entitlement at that time. At the time of retirement entire accumulated leave balance is encashable both for management and non-management employees. Provisions are made to cover the obligations under the scheme on the basis of actuarial valuation and are charged to profit and loss account. The most recent valuation was carried out as of June 30, 2008 using the "Projected Unit Credit Method". The amount recognised in the balance sheet represents the present value of defined benefit obligations. 2.13 Long term and short term borrowings These are recorded at the proceeds received. Finance costs are accounted for on accrual basis and are disclosed as accrued interest/mark-up to the extent of the amount remaining unpaid. Exchange gains and losses arising in respect of borrowings in foreign currency are added to the carrying amount of the instrument.
93

2.14 Trade and other payables These are stated initially at fair value and subsequently measured at amortised cost using the effective interest rate method. Exchange gains and losses arising in respect of liabilities in foreign currency are added to the carrying amount of the respective liability. 2.15 Provisions Provisions are recognised when the Company has a legal or constructive obligation as a result of a past event, and it is probable that outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect current best estimate. 2.16 Taxation 2.16.1 Current Provision for current taxation is based on the taxable income for the year determined in accordance with the prevailing law for taxation on income. The charge for current tax is calculated using prevailing tax rates. The charge for current tax also includes adjustments for prior years or other wise considered necessar y for such years. 2.16.2 Deferred Deferred tax is accounted for using the balance sheet liability method on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are generally recognised for all taxable temporary differences including on investments in associates and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilised. Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse, based on tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited to profit and loss account.
2.17
Foreign currency transactions and translation The financial statements are presented in Pakistan Rupees which is the Companys functional and presentation currency. Transactions in foreign currencies are accounted for in Pakistan Rupees at daily average rates. Monetary assets and liabilities in foreign currencies are translated into Pakistan Rupees at the rates of exchange prevailing at the balance sheet date. Exchange gains and losses from the settlement of foreign currency transactions and translation of monetary assets and liabilities at the balance sheet date rates are included in profit and loss account.
2.18
Offsetting of financial assets and liabilities A financial asset and a financial liability are offset and the net amount is reported in the balance sheet if the Company has a legally enforceable right to set-off the recognised amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
2.19
Revenue recognition Revenue is recognised to the extent it is probable that the economic benefits will flow to the Company and the revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable, and is recognised on the following basis: Sales are recorded when the significant risks and rewards of ownership of the goods have passed to the customers which coincide with the dispatch of goods to customers. Dividend income on equity investment is recognised when the Company's right to receive the payment has been established. Handling, storage and other services income and return on deposits is recognised on accrual basis.
2.20
Dividend and appropriation to reserves Dividend and appropriation to reserves are recognised in the financial statements in the period in which these are approved.
3.
PROPERTY, PLANT AND EQUIPMENT

Operating assets - note 3.1 Capital work in progress - note 3.3
2008 6,641,909 818,640 7,460,549
2007 6,612,796 1,399,521 8,012,317
95

3.1 Operating assets
Building Leasehold Tanks and Service and Plant and Furniture and Vehicles Office Railway sidings Gas cylinders/ Total On freehold On leasehold improvements pipelines filling Stations machinery fittings and other equipment regulators land land rolling stock ................................................................................................................................................ (Amounts in Rupees 000)................................................................................................................................................ Freehold Leasehold 133,521 133,521 92,235 (15,574) 76,661 571,567 (306,597) 264,970 719,911 (249,669) 470,242 1,071 (1,071) 3,017,312 (2,320,650) 696,662 5,926,431 (2,117,338) 3,809,093 1,825,583 (1,086,799) 738,784 232,389 (169,266) 63,123 599,136 (507,831) 91,305 379,340 (232,809) 146,531 53,031 (37,993) 15,038 116,693 (110,459) 6,234 13,668,220 (7,156,056) 6,512,164 Land
As at July 1, 2006 Cost Accumulated depreciation Net book value Year ended June 30, 2007 Opening net book value Additions Disposals Cost Depreciation Depreciation charge Closing net book value As at July 1, 2007 Cost Accumulated depreciation Net book value Year ended June 30 2008 Opening net book value Additions (note 3.1.2) Disposals Cost Depreciation Depreciation charge Closing net book value As at June 30, 2008 Cost Accumulated depreciation Net book value Annual rate of depreciation (%)
133,521 (1,769) (1,769) 131,752
76,661 (68) 68 (1,917) 74,744
264,970 (28,271) 236,699
470,242 124,288 (269) 269 (37,242) 557,288
696,662 48,683 (978) 978 (184,012) 561,333
3,809,093 727,257 (6,980) 4,632 (2,348) (593,796) 3,940,206
738,784 218,988 (1,093) 1,093 (137,918) 819,854
63,123 4,447 (880) 880 (14,919) 52,651
91,305 30,432 (7,868) 7,348 (520) (35,636) 85,581
146,531 49,342 (6,449) 6,438 (11) (59,780) 136,082
15,038 (3,995) 11,043
6,234 (779) 779 (671) 5,563
6,512,164 1,203,437 (27,133) 22,485 (4,648) (1,098,157) 6,612,796
131,752 131,752
92,167 (17,423) 74,744
571,567 (334,868) 236,699
843,930 (286,642) 557,288
1,071 (1,071)
3,065,017 (2,503,684) 561,333
6,646,708 (2,706,502) 3,940,206
2,043,478 (1,223,624) 819,854
235,956 (183,305) 52,651
621,700 (536,119) 85,581
422,233 (286,151) 136,082
53,031 (41,988) 11,043
115,914 (110,351) 5,563
14,844,524 (8,231,728) 6,612,796
131,752 84,193 (6,063) (6,063) 209,882
74,744
236,699 (28,079) 208,620
557,288 110,793 (43,164) 624,917
561,333 85,782 (3,569) 3,443 (126) (132,004) 514,985
3,940,206 311,139 (37,353) 18,827 (18,526) (636,287) 3,596,532
819,854 476,032 (799) 799 (167,650) 1,128,236
52,651 18,763 (746) 740 (6) (15,129) 56,279
85,581 38,863 (12,438) 11,244 (1,194) (38,404) 84,846
136,082 40,083 (1,836) 1,806 (30) (51,232) 124,903
11,043 201 (4,002) 7,242
5,563 8,346 (1) 1 (1,269) 12,640
6,612,796 1,174,195 (62,805) 36,860 (25,945) (1,119,137) 6,641,909
(1,917) 72,827
209,882 209,882
92,167 (19,340) 72,827
571,567 (362,947) 208,620
954,723 (329,806) 624,917
1,071 (1,071)
3,147,230 (2,632,245) 514,985
6,920,494 (3,323,962) 3,596,532
2,518,711 (1,390,475) 1,128,236
253,973 (197,694) 56,279
648,125 (563,279) 84,846
460,480 (335,577) 124,903
53,232 (45,990) 7,242
124,259 (111,619) 12,640
15,955,914 (9,314,005) 6,641,909
1-5
5-10
5-10
20
10-15
10-33
10-25
10-15
15-20
10-33
10
10
3.1.1
Service and filling stations include cost of Rs. 6,383,149 (2007: Rs. 6,123,939) incurred by the Company on underground storage tanks, dispensing units and other equipment, and construction and related work. It also includes cost incurred on modernisation and development under the "New Vision Scheme" on approximately 1,592 (2007: 1,571) out of the total 3,568 (2007: 3,366) retail filling stations of dealers. In view of large number of dealers, the management considers it impracticable to disclose particulars of assets not in the possession of the Company as required under Para 5 of Part I of the Fourth Schedule to the Companies Ordinance, 1984. The title of the freehold land, acquired during the year for Faisalabad depot, is in the process of being transferred in the name of the Company.
3.1.2 3.2
The details of operating assets disposed off during the year are as follows: Cost Free-hold land Tanks & Pipe lines 6,063 174 Accumulated Net Sale depreciation book value Proceeds 94 6,063 80 13,568 172 Mode of disposal Tender Tender Particulars of purchasers Mr. Abdul Qadir Flat No. 101, Noorani Arcade, Block 5, Clifton, Karachi M/S Mass Engg Enterprises Suit No. 103, First Floor, Gulshan Trade Centre Block 5, Gulshan Chowrangi Karachi
Vehicles " Service and filling stations " " " " " " Items having book value of less than Rs. 50,000 each 2007
843 843 21,532 6,142 655 372 372 127 249 25,433 62,805 27,133
168 323 8,088 2,818 573 265 265 51 116 24,099 36,860 22,485
675 520 13,444 3,324 82 107 107 76 133 1,334 25,945 4,648
850 520 13,444 4,826 655 135 135 135 135 22,614 57,189 30,740
Insurance claim National Insurance Company Ltd. Building Abbasi Shaheed Road, Karachi Company policy Mr. Jalees Ahmed Siddique, Ex-Employee Insurance claim National Insurance Company Ltd. Building, Abbasi Shaheed Road, Karachi Insurance claim National Insurance Company Ltd. Building, Abbasi Shaheed Road, Karachi Company policy Tender Tender Tender Tender M/S Razi Plot No. 13, Block 16, Gulshan-e-Iqbal, Karachi M/S Rehman Brothers, Km 14/15, D.I. Khan M/S Nawabshah, Sangarh Road, Nawabshah M/S Iqbal & Co, Mirpur Mathilo M/S Hidayatullah, R/o Canal Road,Rambagh, Mardan
97

2008 3.3 Capital work in progress Service and filling stations Tanks and pipelines Plant and machinery Furniture, fittings and equipment Advances to suppliers and contractors for tanks, pipelines and storage development projects Capital stores 232,112 140,062 63,440 1,050 17,348 364,628 818,640 484,659 162,984 405,767 11,275 21,015 313,821 1,399,521 2007
4.
INTANGIBLES - computer softwares Net carrying value Balance at beginning of the year Additions at cost Amortisation charge for the year - note 4.2 Balance at end of the year Gross carrying value Cost Accumulated amortisation Net book value 241,469 (135,967) 105,502 214,490 (88,278) 126,212 126,212 26,979 (47,689) 105,502 154,819 13,301 (41,908) 126,212
4.1 4.2
Computer softwares include ERP System - SAP , anti-virus softwares and other office related softwares. The cost is being amortised over a period of 3 to 5 years.
2008
2007
5.
LONG-TERM INVESTMENTS
Available-for-sale, in related parties In quoted company - at fair value Pakistan Refinery Limited Equity held 18% (2007 : 18%) In unquoted company - at cost Pak-Arab Pipeline Company Limited Equity held 12% (2007 : 12%) 864,000 1,817,721 Investments in associates - in unquoted companies - note 5.1 Asia Petroleum Limited Equity held 49% (2007 : 49%) Pak Grease Manufacturing Company (Private) Limited Equity held 22% (2007 : 22%) 836,547 46,829 883,376 2,701,097 884,420 43,641 928,061 2,990,591 864,000 2,062,530 953,721 1,198,530
5.1
Investment in associates Number of shares 2008 2007 46,058,600 686,192 46,058,600 686,192 Face value per share (Rupees) 10 10 Name of the Company
Asia Petroleum Limited (APL) Pak Grease Manufacturing Company (Private) Limited (PGMCL)
836,547 46,829 883,376
884,420 43,641 928,061
99

5.1.1 2008 Movement of investments in associates Balance at beginning of the year Share of profits - current year - adjustment for last year profits based on audited financial statements Unrealised (loss) / gain on investments of associates Dividends received Balance at end of the year 5.1.2 294,267 51 294,318 (9,731) (329,272) 883,376 354,500 (24,194) 330,306 2,909 (857,574) 928,061 928,061 1,452,420 2007
The summarised financial information of the associates over which the Company exercises significant influence, based on the un-audited financial statements for the year ended June 30, 2008, is as follows:
2008 (Un-audited) APL Total assets Total liabilities Revenues Profit after tax 2,487,813 780,579 1,089,228 560,277 PGMCL 246,862 34,008 161,944 89,678 APL 2,600,625 795,688 1,219,416 712,041
2007 (Audited) PGMCL 216,655 18,096 165,622 25,686
2008
2007
6.
LONG-TERM LOANS, ADVANCES AND RECEIVABLES

Loans - considered good Executives - notes 6.1, 6.2 & 6.4 Employees - note 6.2 Less:Current portion shown under current assets - note 12 31,877 139,857 171,734 48,582 123,152 Advances - considered good Employees - note 6.3 Less:Current portion shown under current assets - note 12 Receivables Due from Karachi Electric Supply Corporation (KESC) - considered good - note 6.5 Less:Current portion shown under current assets - note 14 457,188 130,625 326,563 Others - considered good - considered doubtful Less:Provision for impairment - note 6.6 27,560 8,143 35,703 (8,143) 27,560 477,745 587,813 130,625 457,188 41,370 7,663 49,033 (7,663) 41,370 627,972 758 288 470 2,628 1,011 1,617 31,071 144,331 175,402 47,605 127,797
101

2008 6.1 Reconciliation of carrying amount of loans to executives: Balance at beginning of the year Add:Disbursements Less: Repayments /amortisation Balance at end of the year 6.2 31,071 7,140 (6,334) 31,877 1,647 32,620 (3,196) 31,071 2007
These represent interest free loans to executives and employees for purchase of motor cars, motor cycles, house building, marriage, umrah and others, in accordance with the Companys policy. Loans for purchase of motor cars and motor cycles are secured against the respective assets. House building loans and certain category of management loans are secured against outstanding balance of provident fund and gratuity, whereas all other loans are unsecured. These loans are recoverable in monthly installments over a period of two to six years. These represent interest free advances against housing assistance given to employees once in service life for purchase and construction of residential property in accordance with the Companys policy. These advances are secured against respective asset and are recoverable in four to five years and are adjusted against the monthly house rent allowance of the respective employee. The maximum aggregate amount outstanding at the end of any month during the year in respect of loans to executives was Rs. 41,955 (2007: Rs. 31,071). On November 11, 2001 in a meeting of Economic Co-ordination Committee (ECC) chaired by the Finance Minister, Government of Pakistan (GoP), the Company was advised to treat the outstanding trade debt as a long term receivable, recoverable over a period of 10 years, including two years grace period. Accordingly, an agreement was signed between the Company and KESC under which the amount due is to be paid by KESC in quarterly installments over a period of 10 years, including a two years grace period, free of interest, which commenced on February 2004. In case of delayed payment, KESC is liable to pay a mark-up at State Bank of Pakistans (SBP) discount rate plus 2% per annum on the installment due. In the event any two installments, whether consecutive or not remain over due, KESC is liable to pay an additional sum as liquidated damages. 2008 2007 12,000 4,337 7,663 The movement in provision during the year is as follows: Balance at beginning of the year Add:Provided during the year Less:Reversal during the year and recognised in Other income Balance at end of the year 7,663 480 8,143
6.3
6.4 6.5
6.6
2008
2007
7.
LONG-TERM DEPOSITS AND PREPAYMENTS

- Considered good Long-term deposits Prepaid rentals Less: Current portion shown under current assets - note 13 53,071 58,309 32,282 26,027 79,098 26,849 69,558 30,494 39,064 65,913
8.
DEFERRED TAX
Debit balance arising in respect of: Provision for - retirement benefits - doubtful trade debts - doubtful receivables - impairment of stores and spare parts - excise, taxes and other duties - impairment of stocks-in-trade Others 321,443 669,017 278,023 7,700 68,905 7,510 2,847 1,355,445 Credit balance arising in respect of accelerated tax depreciation, amortisation and investments in associates (948,108) 407,337 410,839 636,266 282,129 5,082 67,445 7,789 2,782 1,412,332 (1,011,295) 401,037
103

for the year ended June 30, 2008 9.
2008 2007 133,378 8,513 141,891 (14,000) 127,891
STORES, SPARE PARTS AND LOOSE TOOLS

Stores Spare parts and loose tools Less: Provision for impairment - note 9.1 129,545 8,269 137,814 (22,000) 115,814 9.1 The movement in provision during the year is as follows: Balance at beginning of the year Add: Charged during the year and recognised in Other operating expenses - note 30 14,000 8,000 22,000 7,000 7,000 14,000
10.
STOCK-IN-TRADE
Petroleum and other products (gross) - note 10.1 and 10.2 Less: Stock held on behalf of third parties - note 10.3 37,449,353 (1,136,489) 36,312,864 Less: Provision for slow moving products - lubricants (21,456) 36,291,408 In pipeline system of Pak-Arab Pipeline Company Limited and Pak-Arab Refinery Limited 24,985,922 61,277,330 Add: Charges incurred thereon 1,082,737 62,360,067 17,051,313 (611,009) 16,440,304 (21,456) 16,418,848 12,124,591 28,543,439 1,018,616 29,562,055
10.1
These include stocks-in-transit amounting to Rs. 13,196,605 (2007: Rs. 2,830,388) and stocks held by: 2008 Pakistan Refinery Limited - related party Shell Pakistan Limited Bosicor Pakistan Limited 240,143 289,036 114,942 644,121 2007 476,261 76,183 16,841 569,285
10.2 10.3
Includes stock valued at net realisable value amounting to Rs. 240 thousand (2007: Nil). Represents stocks held in trust on behalf of third parties, net of storage, handling and other charges amounting to Rs. 23,730 (2007:Rs. 23,730) recoverable thereagainst. 2008 2007
11.
TRADE DEBTS
Considered good - Due from Government agencies and autonomous bodies - Secured - Unsecured - Due from other customers - Secured - Unsecured
13,744,074 3,522,672 17,266,746 7,501,646 9,136,336 16,637,982 33,904,728
4,394,528 1,986,398 6,380,926 2,933,924 4,285,116 7,219,040 13,599,966 1,752,798 15,352,764 (1,752,798) 13,599,966 1,602,050 150,748 1,752,798
Considered doubtful Less: Provision for impairment - note 11.1 11.1 The movement in provision during the year is as follows: Balance at beginning of the year Add: Charged during the year and recognised in Other operating expenses - note 30 Balance at end of the year
1,911,478 35,816,206 (1,911,478) 33,904,728 1,752,798 158,680 1,911,478
105

for the year ended June 30, 2008 12. LOANS AND ADVANCES - Unsecured, considered good
Loans to executives and employees - Current portion of long-term loans including Rs. 9,089 (2007: Rs. 7,718) to executives - note 6 - Short-term loans Current portion of long-term advances to employees - note 6 Advances to suppliers - note 12.1 Advances for Company owned filling stations 2008 2007
48,582 6,959 55,541 288 116,835 223,556 396,220
47,605 5,553 53,158 1,011 103,275 208,530 365,974
12.1
Includes Nil (2007: Rs. 2,515) to Pakistan Refinery Limited, a related party, against purchase of LPG.
13.
DEPOSITS AND SHORT TERM PREPAYMENTS

Deposits Duty and development surcharge Trade 2008 195,455 195,455 Prepayments Rentals and others Current portion of long-term prepaid rentals - note 7 173,696 32,282 205,978 401,433 42,545 30,494 73,039 1,583,913 2007 1,510,301 573 1,510,874
14.
OTHER RECEIVABLES - Unsecured, considered good

Due from Government of Pakistan (GoP) on account of: - Price differential claims - on imports (net of related liabilities) - note 14.1 - others - note 14.2 - Water and Power Development Authority (WAPDA) receivables - note 14.3 - Freight equalization (net of recoveries) Excise, Petroleum Development Levy (PDL) and custom duty Sales tax refundable Less: Provision for impairment - price differential claims on imports - note 14.1 - others
2008
2007
1,465,406 8,425,326 3,407,357 46,521 13,344,610 200,784 2,022,376 15,567,770 (501,730) (83,112) (584,842) 14,982,928
1,465,406 8,955,568 3,407,357 46,521 13,874,852 268,176 1,755,168 15,898,196 (501,730) (83,112) (584,842) 15,313,354 130,625 81,151 101,987 (101,987) 6,791 (6,791) 8,482 217,586 83,596 301,182 (83,596) 217,586 15,751,198
Current portion of long-term receivable from KESC - note 6 Handling and hospitality charges Product claims - insurance and others - considered doubtful Less: Provision for impairment Railway claims - considered doubtful Less: Provision for impairment Receivable from other oil marketing companies Others - considered good - note 14.4 - considered doubtful Less: Provision for impairment
130,625 124,800 101,987 (101,987) 14,225 (14,225) 443,437 93,296 536,733 (93,296) 443,437 15,681,790
107

14.1 In 2002 under an arrangement with the Ministry of Petroleum and Natural Resources (MoP & NR), Government of Pakistan (GoP), the Company carried out an independent verification and reconciliation of price differential claims due from the GoP and outstanding since 1991. Based on the exercise, the Company recognised the resulting net difference in its financial statements. Through its letter No. 3(386)/2002 dated August 7, 2002 the GoP confirmed that the report on independent verification will provide reasonable level of comfort to the authenticity and accuracy of outstanding import price differential claims and accordingly, against balance claimed, commenced repayment through a pricing mechanism for which a notification was issued. Such repayments amounted to Rs. 2,805,000 upto December 31, 2003. Since then no further amounts have been received and the notification for the pricing mechanism also expired on December 31, 2004. However, through its letter No. F.1(21)-CF.III/2005-386 dated March 3, 2007 the GoP-Finance Division intimated that it has been decided that these Price Differential Claims will be paid after confirmation of the reconciled claim by the MoP & NR and requested MoP & NR to confirm the agreed amount payable at the earliest. The Company is actively pursuing the matter with the MoP & NR and Ministry of Finance (MoF), for the recovery of the balance amount of Rs. 1,465,406 and considers that the balance will be recovered in due course. Pending recovery, confirmation of the MoP & NR and agreement of the amount due from GoP , the Company, as a matter of prudence carries a provision of Rs. 501,730 (2007: Rs. 501,730) against the balance due as at June 30, 2008. 14.2 Price Differential Claims (PDC) aggregating to Rs. 8,425,326 (2007: Rs. 8,955,568) These claims, as summarized below, have arisen on the instructions of MoP & NR and GoP for keeping the consumer prices of certain POL products stable. 2008 Balance at the beginning of the year Add: Claims pertaining to the current year 8,955,568 105,482,206 114,437,774 Less: Recovered - directly through GoP Less: Recovered - through syndicate finances - note 14.2.1 64,012,448 42,000,000 106,012,448 Balance at the end of the year 8,425,326 2007 7,784,300 14,728,268 22,512,568 13,557,000 13,557,000 8,955,568
14.2.1 GoP for the purposes of reimbursing the outstanding price differential claims, directed the Company to obtain term finances aggregating to Rs. 42 billion at the risk and liability of the GoP . Accordingly, the Company during the year entered into three Term Finance Agreements (the Agreements) for the aforementioned amount with various consortium of banks (the Syndicates). These finances were due at the end of three year term of respective agreements i.e. 2010 and 2011 in one bullet form, whereas mark-up were due semiannually/quarterly, repriced at every quarter and benchmarked to 3 months Karachi Interbank Offered Rate (KIBOR). GoP was fully responsible and liable as a Principal Obligor to repay the finance, mark-up and all other obligations arising under the Agreements to the Syndicates, through the Company, under separate irrevocable and unconditional guarantees thereagainst given in favour of the Syndicates. On June 30, 2008, GoP prepaid the entire aforementioned amount of the term finances upon which the Syndicates have subsequently released the above referred guarantees. The mark-up and other charges have also been fully paid by GoP except for Rs. 568,441 pertaining to May/June 2008 which is in the process of being paid by GoP . In view of substance of the Agreements, the repayment of principal, mark-up and other charges by GoP have not been recognised in the financial statements. 14.3 Price differential between the products Low Sulphur Furnace Oil (LSFO) and High Sulphur Furnace Oil (HSFO) of Rs. 3,407,357 (2007: Rs. 3,407,357) In 1996, through a decision taken at a meeting of the Privatisation Commission, and Finance Division, (GoP) the Company was advised to supply LSFO to Kot Addu Power Project at the HSFO price and WAPDA was advised to absorb the price differential between the two products. In accordance with the decision of ECC dated November 4, 2003, the Company was allowed to recover this amount through a pricing mechanism after recovery of the amount outstanding against its claims for Import Price Differential aggregating to Rs. 1,465,406 the notification for which expired on December 31, 2004. Although no recovery has been made on this account, the Company continues to follow up the matter with MoP & NR. In 2005, the Company submitted an independent report on the verification of the above claim to MoP & NR, upon their request. In 2006, a joint reconciliation exercise was carried out with WAPDA as per the decision taken in a meeting held on May 19, 2006 under the Chairmanship of Additional Finance Secretary (GoP) and the final reconciliation statements were submitted to MoF and WAPDA. Subsequently on February 3, 2007 the Company and WAPDA agreed upon the final receivable balance of Rs. 3,407,357. Further, the GoP-Finance Division through its letter No. F.1(21)-CF.III/2005385 dated March 3, 2007 intimated that the balance amount of Rs. 3,407,357 will be paid to the Company during financial year 2007-2008 and necessary provision in this respect will be made by GoP in the Budget of financial year 2007-2008. During the year, the Company through its letter No. AH-3010-LSFO/HSFO dated May 20, 2008 requested the GoP to arrange the payment of the agreed amount before the end of the budget year 2007-2008, however, GoP has not yet responded to Companys request. The Company, however, considers that the above amount will be recovered in full in due course of time. 14.4 Includes Rs. 5,931 (2007: Rs. 16,462) from Asia Petroleum Limited, a related party, on account of facilities charges.
109

for the year ended June 30, 2008 15. CASH AND BANK BALANCES
Cash in hand Cash at bank on: - current accounts - note 15.1 - deposit accounts 2,962,254 49,830 3,012,084 3,018,640 15.1 1,454,183 61,668 1,515,851 1,522,276 2008 6,556 2007 6,425
Includes Rs. 791,913 (2007: Rs. 524,474) kept in a separate bank account in respect of security deposits from the customers
16.
NET ASSETS IN BANGLADESH

Property, plant and equipment - at cost Less: Accumulated depreciation Capital work in progress Debtors Long-term loans relating to assets in Bangladesh Less: Provision for impairment 46,968 (16,056) 30,912 809 869 (4,001) 28,589 (28,589) 46,968 (16,056) 30,912 809 869 (4,001) 28,589 (28,589)
The Company has no control over these assets and has maintained in its record the position as it was in 1971. Full provision for impairment has been made against these net assets.
17.
SHARE CAPITAL
2008 Authorised capital (Number of shares) 200,000,000 200,000,000 Ordinary shares of Rs. 10/- each 2,000,000 2,000,000 2007 2008 2007
Issued, subscribed and paid-up capital (Number of shares)
3,000,000
3,000,000
Ordinary shares of Rs. 10/- each issued for cash
30,000
30,000
7,694,469
7,694,469
Ordinary shares of Rs. 10/- each issued against shares of the amalgamated companies
76,945
76,945
160,824,432
160,824,432
Ordinary shares of Rs. 10/- each issued as bonus shares
1,608,245
1,608,245
171,518,901
171,518,901
1,715,190
1,715,190
111

for the year ended June 30, 2008 18. RESERVES
Capital reserve - note 18.1 Unrealised gain on revaluation of long term investments available for sale 2008 3,373 938,623 2007 3,373 1,183,432
Company's share of unrealised (loss)/gain of investments of associates Revenue reserve - General - Unappropriated profit
(2,248) 16,139,968 12,170,148 28,310,116 29,249,864
7,483 15,039,968 2,989,771 18,029,739 19,224,027
18.1
This represents surplus arising on vesting of net assets of Esso Oil Marketing business in Pakistan under the Esso Undertakings (Vesting) Act, 1976.
19.
LONG-TERM DEPOSITS
Dealers Equipment - note 19.1 Cartage contractors - note 19.2 388,371 165,747 280,480 834,598 349,653 160,785 257,870 768,308
19.1 19.2
These represent interest-free deposits from customers against LPG equipment. The deposits are refundable on return of equipment. These represent deposits from contractors against the cartage contracts for transportation of petroleum products. The deposits are refundable on the cancellation of these contracts. Interest is payable on the deposits at saving bank account rate of National Bank of Pakistan after deducting 2% service charge, effective July 1, 2002. The service charge for the current year has been waived by the management due to low interest rates.
2008
2007
20.
RETIREMENT AND OTHER SERVICE BENEFITS
Gratuity - note 20.1 Pension - note 20.1 Medical benefits - note 20.1 Compensated absences
672,838 127,214 657,475 116,621 1,574,148
753,948 202,640 589,763 97,712 1,644,063
113

20.1 The details of employee retirement and other service benefit obligations are as follows:
Gratuity 2008 fund 2007 2008 Pension funds 2007 Medical 2008 benefits 2007
20.1.1
Reconciliation of obligations as at year end

Present value of defined benefit obligations Fair value of plan assets 1,327,265 (323,600) 1,003,665 Unrecognised actuarial loss Unrecognised past service cost Net liability at end of the year (330,827) 672,838 1,248,411 (103,125) 1,145,286 (391,338) 753,948 2,823,151 (2,317,725) 505,426 (334,517) (43,695) 127,214 2,584,891 (1,910,908) 673,983 (421,563) (49,780) 202,640 782,049 782,049 (124,574) 657,475 717,073 717,073 (127,310) 589,763
20.1.2
Movement in liability
Net liability at beginning of the year Charge for the year Contributions Benefits paid during the year Net liability at end of the year 753,948 218,890 (300,000) 672,838 724,322 175,870 (100,000) (46,244) 753,948 202,640 181,575 (257,001) 127,214 172,663 125,830 (95,853) 202,640 589,763 97,081 (29,369) 657,475 552,333 64,925 (27,495) 589,763
20.1.3
Movement in defined benefit obligations

Present value of defined benefit obligations at beginning of the year Service cost Interest cost Benefits paid during the year Acturial (gain) / loss Present value of defined benefit obligation at end of the year 1,248,411 84,997 124,537 (88,529) (42,151) 1,327,265 1,023,697 69,750 92,554 (46,244) 108,654 1,248,411 2,584,891 96,050 258,495 (106,712) (9,573) 2,823,151 2,248,346 80,102 202,065 (91,506) 145,884 2,584,891 717,073 21,506 71,603 (29,369) 1,236 782,049 540,277 16,365 48,560 (27,495) 139,366 717,073
20.1.4
Movement in fair value of plan assets

Fair value of plan assets at beginning of the year Expected return on plan assets Contributions made by the Company Benefits paid during the year Acturial gain Fair value of plan assets at end of the year 103,125 8,410 300,000 (88,529) 594 323,600 100,000 3,125 103,125 1,910,908 201,249 257,001 (106,712) 55,279 2,317,725 1,688,375 177,347 95,853 (91,506) 40,839 1,910,908
20.1.5
The principal assumptions used in the actuarial valuations carried out as of June 30, 2008 using the 'Projected Unit Credit' method are as follows:
Gratuity fund 2008 2007 Pension funds 2008 2007 Medical benefits 2008 2007 Compensated absences 2008 2007
Discount rate Expected per annum rate of return on plan assets Expected per annum rate of increase in future salaries Future per annum rate of increase in medical costs Indexation of pension Expected mortality rate
12% 12.5% 12% PMA/PFA 80 mortality table Age dependent 9,004
10% 10% PMA/PFA 80 mortality table Age dependent 3,125
12% 12.5% 12% 6% PMA/PFA 80 mortality table Age dependent 256,528
10% 10.5% 10% 4% PMA/PFA 80 mortality table Age dependent 218,186
12% 9% PMA/PFA 80 mortality table Age dependent
10% 7% PMA/PFA 80 mortality table Age dependent
12% 12%
10% 10%
PMA/PFA PMA/PFA 80 mortality 80 mortality table table Age dependent Age dependent
Expected withdrawal rate 20.1.6 Actual return on plan assets
20.1.7
Plan assets comprise the following: 2008 Amount Equity Debts Others 79,309 1,527,182 1,034,834 2,641,325 %age 3% 58% 39% Amount 74,749 1,447,209 492,075 2,014,033 2007 %age 4% 72% 24%
20.1.8 20.1.9
Plan assets include the Company's ordinary shares with a fair value of Rs. 79,309 (2007: Rs. 74,749). The expected return on plan assets was determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the balance sheet date. Expected return on equity investments reflect long-term real rates of return experienced in the market. Expected contributions to post employment benefit plans for the year ending June 30, 2009 are Rs. 405,840.
115
20. 1 . 1 0

20.1 .11 Comparison for five years: Present value of defined benefit obligation Fair value of plan assets Deficit Experience adjustments: (Gain)/Loss on plan liabilities Gain on plan assets 2008 (4,932,465) 2,641,325 (2,291,140) (50,488) 55,873 2007 (4,550,375) 2,014,033 (2,536,342) 232,294 43,964 2006 (3,812,320) 1,688,375 (2,123,945) 289,839 71,785 2005 (3,126,857) 1,119,979 (2,006,878) 151,143 64,264 2008 2004 (2,810,819) 985,303 (1,825,516) 178,863 75,722 2007
21.
TRADE AND OTHER PAYABLES

Creditors for : Purchase of oil - local - note 21.1 - foreign Others Accrued liabilities - note 21.2 Inland Freight Equalisation Margin Mechanism (IFEM) Due to other oil marketing companies and refineries Advances - from customers - against equipment Taxes and other government dues - Excise, taxes and other duties - Octroi - Income tax deducted at source 26,733,422 42,608,773 69,342,195 324,999 69,667,194 2,547,374 233,176 1,569,888 2,277,375 20,201 2,297,576 2,019,967 31,452 71,132 2,122,551 1,132,598 436,276 362,195 603,473 95,264 81,067,565 18,568,298 13,813,775 32,382,073 569,425 32,951,498 1,681,470 111,792 1,136,435 2,357,126 24,037 2,381,163 1,037,473 31,452 52,836 1,121,761 364,816 139,834 286,296 1,210,307 45,703 41,431,075
Workers' Profits Participation Fund - note 21.3 Workers' Welfare Fund Short term deposits - interest free Dividends Others
2008 21.1 21.2 Includes Rs. 2,106,487 (2007: Rs. 2,747,429) payable to Pakistan Refinery Limited, a related party. Includes following amounts due to related parties in respect of pipeline charges: Pak-Arab Pipeline Company Limited Asia Petroleum Limited 21.3 Workers' Profits Participation Fund Balance at beginning of the year Add: Allocation for the year - note 30 Less: Payments during the year Balance at end of the year 364,816 1,132,598 1,497,414 (364,816) 1,132,598 180,018 68,681 248,699
2007
229,290 90,236 319,526
573,472 364,816 938,288 (573,472) 364,816
117

2008 2007
22.
PROVISIONS
Balance at beginning of the year Add: Recognised during the year - note 30 Less: - Payments thereagainst - Reversals during the year - note 31 Balance at end of the year 688,512 37,604 726,116 726,116 777,276 777,276 (10,126) (78,638) (88,764) 688,512
These represent provisions for certain legal claims against the Company raised by the regulatory authorities. The outcome of these legal claims will not give rise to any significant loss beyond those provided for.
23.
SHORT-TERM BORROWINGS - secured

Short-term finances - notes 23.1 and 23.2 Finances under mark-up arrangements - notes 23.1 and 23.3 788,596 10,209,312 10,997,908 23.1 6,124,474 2,940,307 9,064,781
The total outstanding balance is against the facilities aggregating Rs. 22,910,000 (2007: Rs. 18,134,500) available from various banks. These facilities are payable on various dates by April 12, 2010 and are secured by way of floating charge on Company's all present and future assets, except land and building, and hypothecation of moveable assets, stocks and receivables. The rate of mark up for these facilities is Re. 0.03 (2007: Re. 0.03 to Re. 0.25) per Rs. 1,000 per day. The rate of mark up for these facilities ranges from Re. 0.34 to Re. 0.38 (2007: Re. 0.26 to Re. 0.29) per Rs. 1,000 per day, net of prompt payment rebates. These facilities are renewable subject to payment of repurchase price on specified dates.
23.2 23.3
24.
CONTINGENCIES AND COMMITMENTS

24.1 Contingencies The Company has contingent liabilities in respect of legal claims in the ordinary course of business. 24.1.1 24.1.2 Claims against the Company not acknowledged as debts amount to Rs. 1,596,700 (2007: Rs. 838,958), including claims by refineries for delayed payment charges. In the assessment years 1996-97 and 1997-98, the taxation authorities applied presumptive tax on the Company to the value of petroleum products imported by the Company on behalf of the Government of Pakistan (GoP) by treating the Company as the importer of such products. The Income Tax Appellate Tribunal (ITAT) cancelled the order of the assessing officer , and as a consequence of the order of the ITAT , an amount of Rs. 958,152 became refundable to the Company, which was adjusted against the tax liability of the subsequent years. The department had filed an appeal with the Honorable High Court of Sindh (High Court) against the aforesaid decision of the ITAT , which has been adjudicated against the Company, during the last year. The Company filed a petition for leave to appeal with the Honorable Supreme Court of Pakistan (Supreme Court) against the aforementioned decision, which was granted by the Supreme Court through its order dated March 7, 2007 also suspending the operation of the impugned judgment of the High Court. The management of the Company maintains that the Company was merely acting as a handling agent on behalf of GoP , who was in fact the importer of the products. Hence, the ultimate liability, if any, is recoverable from GoP , for which the management is in communication with the MoP & NR. Based on the merits of the above case, the Company's management believes that the ultimate decision will be in its favour and therefore, no provision has been made in this respect in these financial statements. 24.1.3 In the year 2005, a demand was raised by the Collector of Customs, Sales Tax and Central Excise (Adjudication) in respect of sales tax, central excise duty and petroleum development levy aggregating Rs. 165,781 inclusive of additional sales tax and central excise duty on exports of POL products to Afghanistan during the period August 2002 to November 2003. The demand was raised on the grounds that the export consignments were not verified by the Pakistan Embassy / Consulate in Afghanistan as required under Export Policy and Procedures 2000. It is the Company's contention that this requirement was in suspension as in the aforesaid period the Pakistan Embassy / Consulate was not fully functional. This condition of suspension was removed only on July 22, 2004 through Export Policy Order 2004 when the Pakistan Embassy / Consulate became fully functional in Afghanistan. Besides the issue of verification, it is also the Company's contention that export of POL products to Afghanistan can be verified from the relevant documents and therefore, the demand is unwarranted. The Company has filed an appeal against the above order before the Appellate Tribunal and also referred the matter for resolution in the Alternate Dispute Resolution Committee (ADRC) under section 47-A of the Sales Tax Act, 1990. Through its recommendation dated December 26, 2006, the ADRC has rejected the application filed by the Company. Subsequently, through its order dated June 16, 2007 the CBR accepted the recommendations of the ADRC. The Company will now contest the matter before the Appellate Tribunal. Based on the merits of the case, the Company is confident that the ultimate outcome of the matter would be in its favour and therefore no provision has been made in this respect in these financial statements.
119

24.1.4 The Company may be exposed to provincial cess in respect of certain imports. The same cess has been levied on other companies in the industry, who have challenged the levy at appellate forums. The existence of the possible obligation on the Company and the amount involved cannot be determined with sufficient reliability. However, the management of the Company is confident that it will not be liable to the levy. The Company has been extended a loan facility through MoF and MoP & NR for import of POL products, on behalf of GoP . Repayment of principal amount, financing cost and foreign exchange risk are the responsibility of MoF - GoP . The loan facility, provided by the National Bank of Pakistan, Bahrain; amounts to US Dollars100,000 thousand, repayable over three year period expiring on October 14, 2008, at a mark-up rate of LIBOR plus 0.8% per annum. As at June 30, 2008, the outstanding loan including mark-up amounted to US Dollars 100,740 thousand. 24.1.5
24.2
Commitments 24.2.1 Commitments in respect of capital expenditure contracted for but not as yet incurred is as follows: 2008 - Property, plant and equipment - Intangibles 476,246 7,043 483,289 24.2.2 Letters of credit and bank guarantees outstanding amount to Rs. 17,650,873 (2007: Rs. 2,696,917). 2007 254,965 13,332 268,297
2008
2007
25.
COST OF PRODUCTS SOLD

Opening stock Cost Charges thereon 28,564,895 1,018,616 29,583,511 Add: Purchases during the year Cost Charges thereon 494,132,216 3,920,703 498,052,919 Cost of products available for sale Less: Closing stock Cost Charges thereon (61,298,786) (1,082,737) (62,381,523) 465,254,907 (28,564,895) (1,018,616) (29,583,511) 337,446,896 527,636,430 327,786,735 11,053,583 338,840,318 367,030,407 26,889,554 1,300,535 28,190,089
26.
OTHER OPERATING INCOME

Commission and handling services Income from CNG operations Income from retail outlets - net Handling, storage and other recoveries Income from non fuel retail business 281,898 345,738 26,532 707,824 34,535 1,396,527 290,963 354,709 14,130 602,075 17,055 1,278,932
121

2008 2007
27.
TRANSPORTATION COSTS
Cost incurred during the year Realised against IFEM Less: Refinery share Receivable from other oil marketing companies / adjustments 8,219,929 (13,685,954) 5,998,784 (7,687,170) (194,873) (7,882,043) 337,886 6,860,622 (8,932,956) 3,042,484 (5,890,472) (600,822) (6,491,294) 369,328
28.
DISTRIBUTION AND MARKETING EXPENSES

Salaries, wages and benefits - note 29.1 Security and other services Rent, rates and taxes Repairs and maintenance Insurance Travelling and office transport Printing and stationery Communication Utilities Storage and technical services Legal and professional Sales promotion and advertisement Cards related costs Others 1,672,477 48,234 274,614 548,540 73,907 89,824 15,676 20,335 104,029 71,395 9,075 262,473 70,425 3,595 3,264,599 1,332,317 41,190 232,589 493,732 65,321 82,632 14,977 20,697 96,733 51,462 4,994 241,522 63,995 3,128 2,745,289
2008
2007
29.
ADMINISTRATIVE EXPENSES
Salaries, wages and benefits - note 29.1 Security and other services Rent, rates and taxes Repairs and maintenance Insurance Travelling and office transport Printing and stationery Communication Utilities Storage and technical services Legal and professional Auditors' remuneration - note 29.4 Sales promotion and advertisement Contribution towards expenses of Board of Management - Oil Donations - note 29.5 Fee and subscription 765,027 11,675 6,097 68,055 63,485 27,093 9,778 30,722 18,803 12,882 7,773 11,889 22,679 4,550 98,162 2,071 1,160,741 673,542 10,087 6,590 65,790 66,013 27,866 11,967 31,945 18,731 11,364 11,109 10,475 20,775 3,100 30,741 2,617 1,002,712
123

29.1 Salaries, wages and benefits include the following in respect of employee retirement and other service benefits: 2008 Gratuity fund Current service cost Interest cost Expected return on plan assets Recognition of actuarial loss Recognition of past service cost 84,997 124,537 (8,410) 17,766 218,890 Pension funds 96,050 258,495 (201,249) 22,194 6,085 181,575 Medical benefits 21,506 71,603 3,972 97,081 Total 2007
202,553 454,635 (209,659) 43,932 6,085 497,546
166,217 343,179 (177,347) 28,491 6,085 366,625
In addition, salaries, wages and benefits also include Rs. 40,104 (2007: Rs. 36,658) and Rs. 43,488 (2007: Rs. 10,266) in respect of Companys contribution towards provident funds and staff compensated absences.
29.2
The effects of a 1% movement in the assumed medical cost trend rate are as follows: 2008 Increase Effect on the aggregate of current service cost and interest cost Effect on the defined benefit obligation for medical benefits Decrease Increase 2007 Decrease
18,872 140,700
14,329 110,850
12,235 135,129
9,040 99,842
29.3
Remuneration of Managing Director and Executives The aggregate amount for the year in respect of remuneration and benefits to the Managing Director and Executives are as follows: 2008 Managing Managerial remuneration including performance bonus Retirement benefits Housing and utilities Leave fare Number , including those who worked part of the year Director 10,783 92 2,301 1,450 14,626 2 Executives 259,832 12,804 87,115 20,101 379,852 184 Managing Director 5,997 261 1,751 357 8,366 1 2007 Executives 217,961 10,605 71,863 16,350 316,779 169
In addition, the Managing Director and certain Executives are provided with free use of Company maintained cars. Further , the Managing Director and Executives are also entitled to avail medical facilities and other benefits as per the Company policy. The Company, based on actuarial valuations, has also charged amounts in respect of retirement benefits for above mentioned employees which are included in note 29.1.
125

29.4 Auditors' remuneration 2008 A. F. Ferguson & Co. Fee for the: - audit of annual financial statements - audit of half yearly financial statements - review of half yearly financial statements Tax services Certification of claims, audit of retirement funds and other advisory services Out of pocket expenses 2,772 504 7,759 29.5 652 478 4,130 3,424 982 11,889 1,309 427 5,937 452 336 4,538 1,761 763 10,475 2,200 800 1,483 2,200 800 4,400 1,600 1,483 2,000 750 750 701 2,000 750 750 250 4,000 1,500 1,500 951 Ford Rhodes Sidat Hyder & Co. Total A. F. Ferguson & Co. 2007 Ford Rhodes Sidat Hyder & Co. Total
The Managing Director and his spouse do not have any interest in any donees to which donations were made.
2008
2007
30.
OTHER OPERATING EXPENSES

Workers' Profits Participation Fund - note 21.3 Workers' Welfare Fund Exchange loss - net Stores and spare parts written off Claims and other receivable written off Handling charges written off Write-off against storage development projects Provision against - doubtful trade debts - note 11.1 - stores and spares - note 9.1 - disputed demands for custom duty, excise and petroleum development levy - note 22 - petroleum development claims - short term receivables - others - other receivables 158,680 8,000 37,604 17,614 3,352,969 150,748 7,000 9,486 28,051 755,420 1,132,598 436,276 1,558,947 1,467 1,783 364,816 139,834 6,498 5,748 10,737 15,787 16,715
127

2008 2007
31.
OTHER INCOME
Profit on disposal of operating assets Dividends - note 31.1 Interest and markup Liabilities no more payable written back Reversal of provisions - note 22 Penalties and other recoveries Scrap sales Others 31.1 Represents dividends from following related parties: Pakistan Refinery Limited Pak-Arab Pipeline Company Limited 17,982 42,924 60,906 13,200 13,200 31,244 60,906 16,214 113,129 84,231 2,403 5,733 313,860 26,092 13,200 6,759 184,793 78,638 100,094 6,595 8,067 424,238
32.
FINANCE COSTS
Mark-up on short-term borrowings Bank and other charges 745,502 622,396 1,367,898 891,590 266,522 1,158,112
2008
2007
33.
TAXATION
Current - for the year - for prior years Deferred - for the year 7,392,666 (62,749) (6,300) 7,323,617 2,483,725 (58,802) 7,259 2,432,182
33.1
Relationship between tax expense and accounting profit Accounting profit before taxation Tax at the applicable tax rate of 35% (2007: 35%) Tax effect of: - Lower rate applicable to certain income including share of associates - Adjustments relating to prior years (95,728) (62,749) 7,323,617 (1,709) (58,802) 2,432,182 21,377,412 7,482,094 7,121,980 2,492,693
129

2008 2007
34.
EARNINGS PER SHARE

There is no dilutive effect on the basic earnings per share of the Company, which is based on: Profit for the year 14,053,795 4,689,798
(Number of shares) Weighted average number of ordinary shares in issue during the year 171,518,901 171,518,901
(Rupees)
Earnings per share - basic and diluted
81.94
27.34
35.
CASH GENERATED FROM OPERATIONS

2008 Profit before taxation Adjustments for non-cash charges and other items: Depreciation Amortisation Provision against: - doubtful trade debts - stores and spare parts - disputed demands for customs duty and petroleum development levy - petroleum development claims - short term receivables - others - duty claims receivable Stores and spare parts written off Claims and other receivable written off Handling charges written off Liabilities no more payable written back Reversal of provisions Retirement and other services benefits accrued Profit on disposal of operating assets Share of profit of associates Dividend income Finance costs Working capital changes - note 35.1 158,680 8,000 37,604 17,614 1,467 (113,129) 541,034 (31,244) (294,318) (60,906) 1,367,898 2,799,526 (11,697,883) 12,479,055 150,748 7,000 9,486 28,051 5,748 10,737 15,787 (184,793) (78,638) 376,891 (26,092) (330,306) (13,200) 1,158,112 2,269,596 (287,878) 9,103,698 1,119,137 47,689 1,098,157 41,908 21,377,412 2007 7,121,980
131

2008 35.1 Working capital changes (Increase)/Decrease in current assets - Stores, spare parts and loose tools - Stock-in-trade - Trade debts - Loans and advances - Deposits and short term prepayments - Other receivables Increase/(Decrease) in current liabilities - Trade and other payables 40,356,453 (11,697,883) 4,794,486 (287,878) 4,077 (32,798,012) (20,463,442) (30,246) 1,182,480 50,807 (15,609) (1,393,422) (2,034,846) (90,245) (296,020) (1,252,222) 2007
36.
CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise the following items included in the balance sheet:
- Cash and bank balances - note 15 - Finances under mark-up arrangements - note 23
3,018,640 (10,209,312) (7,190,672)
1,522,276 (2,940,307) (1,418,031)
37.
FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

37.1 Financial assets and liabilities
Interest / Mark-up bearing Maturity upto Maturity after one year one year Subtotal 2008 Non Interest / Mark-up bearing Maturity upto Maturity after one year one year Subtotal Total Effective interest rates (%)
Financial Assets Investments Loans and advances Deposits Trade debts Other receivables Cash and bank balances 49,830 49,830 265,923 33,904,728 13,458,630 2,968,810 2,701,097 77,278 53,071 326,563 2,701,097 343,201 53,071 33,904,728 13,785,193 2,968,810 2,701,097 343,201 53,071 33,904,728 13,785,193 3,018,640 2 - 7.5
49,830 Financial Liabilities Long term deposits Trade and other payables Accrued interest/mark-up Short term borrowings 10,997,908
49,830
50,598,091
3,158,009
53,756,100
53,805,930
280,480
280,480 10,997,908
74,845,388 217,928
554,118
554,118 74,845,388 217,928
834,598 74,845,388 217,928 10,997,908
1.2 - 14.24 1.05 - 14
10,997,908
280,480
11,278,388
75,063,316
554,118
75,617,434
86,895,822
Financial Assets Investments Loans and advances Deposits Trade debts Other receivables Cash and bank balances
Interest / Mark-up bearing Maturity upto Maturity after one year one year 61,668
Subtotal 61,668
2007 Non Interest / Mark-up bearing Maturity upto Maturity after one year one year Subtotal 250,375 573 13,599,966 13,727,854 1,460,608 2,990,591 90,349 26,849 457,188 2,990,591 340,724 27,422 13,599,966 14,185,042 1,460,608
Total
Effective interest rates (%) 1.00 - 7.00
2,990,591 340,724 27,422 13,599,966 14,185,042 1,522,276
61,668 Financial Liabilities Long term deposits Trade and other payables Accrued interest/mark-up Short term borrowings 9,064,781 9,064,781
61,668
29,039,376
3,564,977
32,604,353
32,666,021
257,870 257,870
257,870 9,064,781 9,322,651
37,311,709 131,961 37,443,670
510,438 510,438
510,438 37,311,709 131,961 37,954,108
768,308 37,311,709 131,961 9,064,781 47,276,759
1.2 - 13 1.09 - 10.59
133

37.2 Financial risk management objectives and policies 37.2.1 Capital risk management The Company's objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for shareholders and benefit for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. The Company is not subject to any externally imposed Capital requirements. The Company manages its capital structure and makes adjustment to it in the light of changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders or issue new shares. During the year, the Company's strategy was to maintain leveraged gearing. The gearing ratios as at June 30, 2008 and 2007 were as follows: 2008 Total borrowings Less: Cash and bank balances Net Debt Total Equity Total Capital Gearing ratio 10,997,908 (3,018,640) 7,979,268 30,965,054 38,944,322 20.5% 2007 9,064,781 (1,522,276) 7,542,505 20,939,217 28,481,722 26.5%
The Company finances its operations through equity, borrowings and management of working capital with a view to maintaining an appropriate mix between various sources of finance to minimise risk.
37.2.2 Financial risk factors The Company's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance. Risk management is carried out by the Company's finance, and treasury department under policies approved by the Board of Management - Oil. (a) Market risk i) Foreign currency exchange risk Foreign currency risk is the risk of loss through changes in foreign currency exchange rates. The risk is mainly related to payments outstanding for purchases of imported oil. ii) Interest rate risk Interest risk arises from the possibility that changes in interest rate will affect the value of financial instruments. The Company is not materially exposed to interest rate changes. iii) Price risk The Company is not materially exposed to equity securities price risk as its majority of investments are in non-listed securities. However, the Company is exposed to commodity price risks, which are dependent on prices set by the regulator and international commodity price trends.
135

(b) Credit risk Credit risk represents the risk of a loss if the counter parties fail to perform as contracted. The Company's credit risk is primarily attributable to its receivables and its balances at bank. The credit risk on liquid fund is limited because the counter parties are banks with reasonably high credit ratings. Out of the financial assets aggregating Rs. 53,830,930 the financial assets which are subject to credit risk amount to Rs. 50,812,290. Significant concentration of credit risks on amounts due from Government agencies and autonomous bodies amounting to Rs. 30,564,835 is covered to a certain extent, by restricting current supplies on cash basis. Credit risk on private sector other than retail sales is covered to the maximum possible extent through legally binding contracts. Furthermore, the Company attempts to control credit risk by monitoring credit exposures, limiting transactions with specific customers and continuing assessment of credit worthiness of customers. (c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Due to effective cash management and planning policy, the Company aims at maintaining flexibility in funding by keeping committed credit lines available. (d) Cash flow and fair value interest rate risk As the Company has no significant interest bearing assets, the Company's income and operating cash flows are substantially independent of changes in market interest rates. The Company's interest rate risk arises from borrowings. Borrowings issued at variable rates expose the Company to cash flow interest rate risk. As there are no borrowings at fixed rates, the Company is not exposed to fair value interest rate risk.
37.3
Fair values of financial assets and liabilities Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arms length transaction. The carrying values of all financial assets and liabilities reflected in the financial statements approximate their fair values.
38.
TRANSACTIONS WITH RELATED PARTIES

38.1 Transactions with related parties during the year, other than those which have been disclosed elsewhere in these financial statements, are as follows: 2008 Name of related party and relationship with the Company Associates - Pak Grease Manufacturing Company (Private) Limited - Asia Petroleum Limited Nature of transactions 2007
Purchases Dividend received Income (facility charges) Rental income Dividend received Pipeline charges Contributions Benefits paid on behalf of fund Contributions Contributions Purchases Dividend received Pipeline charges Dividend received Purchases Sales Handling income Transportation charges Utility charges Rental charges Security deposits Insurance premium paid
103,242 6,862 125,873 4,721 322,410 1,210,895 257,001 88,529 300,000 40,104 34,099,108 17,982 3,263,981 42,924 105,853,882 114,485,348 28,385 89,879 70,192 19,745 32,662 555,900
86,065 5,489 187,178 4,757 852,085 1,290,768 95,853 46,244 100,000 36,658 22,242,259 2,706,166 13,200 70,462,246 70,764,442 32,770 103,219 60,407 29,442 385,540
Retirement benefit funds - Pension Funds - Gratuity Fund
- Provident Funds Other related parties - Pakistan Refinery Limited - Pak Arab Pipeline Company Limited Profit oriented state - controlled entities - various
137

38.2 38.3 There are no transactions with key management personnel other than under the terms of employment as disclosed in note 29.3 of the financial statements. The related party status of outstanding receivables and payable as at June 30, 2008 are included in respective notes to the financial statements.
39.
NON-ADJUSTING EVENTS AFTER THE BALANCE SHEET DATE

The Board of Management in its meeting held on August 12, 2008 (i) approved the transfer of Rs. 10,000,000 from unappropriated profit to general reserve; and (ii) proposed a final dividend of Rs. 12.5 per share for the year ended June 30, 2008, amounting to Rs. 2,143,988 for approval of the members at the Annual General Meeting to be held on October 15, 2008. These financial statements do not reflect these appropriations and the proposed dividend payable.
40.
DATE OF AUTHORISATION FOR ISSUE

These financial statements were authorised for issue on August 12, 2008 by the Board of Management - Oil of the Company.
Mohammad Abdul Aleem Managing Director
Attendance at Board Meetings

Names of Members of Board of Management** Total Number of Board Meetings* Number of Meetings Attended
Sardar M. Yasin Malik Shaukat Hayat Durrani Mahmood Akhtar Muhammad Abdul Aleem Muhammed Yousaf Qamar Husssain Siddiqui Haji Amin Pardessi Istaqbal Mehdi Iskander Mohammed Khan Arshad Said Pervaiz Kausar Jalees Ahmed Siddiqi Tariq Kirmani Tariq Iqbal Khan Kamran Mirza Iftikhar Asghar
6 6 6 3 3 3 6 3 6 3 3 3 3 3 3
6 5 6 3 3 1 4 3 4 3 3 3 2 2 1
*Held during the period the concerned Director was on the Board ** PSO is governed by Marketing of Petroleum Products (Federal Control) Act, 1974, whereby the Federal Government has constituted a Board of Management whose members are nominated by the Government.
139
Pattern of Holdings of Shares held by the Shareholders

as at June 30, 2008
Number of Shareholders Having Shares From To Shares Held Percentage
4716 2936 1576 2422 498 187 115 37 43 24 14 6 7 11 10 5 7 4 5 5 6 5 9 5 2 1 3 1 2 1
1 101 501 1001 5001 10001 15001 20001 25001 30001 35001 40001 45001 50001 55001 60001 65001 70001 75001 80001 85001 90001 95001 100001 105001 110001 115001 120001 125001 130001
100 500 1000 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 55000 60000 65000 70000 75000 80000 85000 90000 95000 100000 105000 110000 115000 120000 125000 130000 135000
142021 809779 1212826 5432748 3501491 2366340 2073031 832070 1173397 788213 530930 257205 331665 583501 582879 318359 481425 294228 387600 417202 523997 464291 894906 516900 220000 115000 350600 125000 255300 131400
.0828 .4721 .7071 3.1674 2.0414 1.3796 1.2086 .4851 .6841 .4595 .3095 .1499 .1933 .3401 .3398 .1856 .2806 .1715 .2259 .2432 .3055 .2706 .5217 .3013 .1282 .0670 .2044 .0728 .1488 .0766
Number of Shareholders
Having Shares From To
Shares Held
Percentage
1 3 1 4 2 1 1 1 2 4 2 1 1 1 3 1 1 2 1 1 1 1 1 2 1 1 1 1 1 1
135001 140001 145001 150001 155001 160001 165001 175001 180001 190001 195001 200001 205001 215001 220001 230001 240001 245001 250001 265001 280001 285001 290001 300001 305001 325001 345001 390001 410001 445001
140000 145000 150000 155000 160000 165000 170000 180000 185000 195000 200000 205000 210000 220000 225000 235000 245000 250000 255000 270000 285000 290000 295000 305000 310000 330000 350000 395000 415000 450000
140000 430600 147400 613400 317300 164596 167000 179000 365562 766280 397816 204500 205543 215400 666790 232000 245000 496115 254500 267000 284600 285800 292467 602910 307000 329000 346500 391000 414600 448236
.0816 .2510 .0859 .3576 .1849 .0959 .0973 .1043 .2131 .4467 .2319 .1192 .1198 .1255 .3887 .1352 .1428 .2892 .1483 .1556 .1659 .1666 .1705 .3515 .1789 .1918 .2020 .2279 .2417 .2613
141
Pattern of Holdings of Shares held by the Shareholders

as at June 30, 2008
Number of Shareholders Having Shares From To Shares Held Percentage
1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Total 12737
460001 465001 500001 515001 530001 565001 595001 650001 690001 795001 845001 905001 920001 990001 1005001 1060001 1095001 1365001 1450001 2105001 3210001 3735001 7780001 9995001 10975001 11680001 26010001 43755001
465000 470000 505000 520000 535000 570000 600000 655000 695000 800000 850000 910000 925000 995000 1010000 1065000 1100000 1370000 1455000 2110000 3215000 3740000 7785000 10000000 10980000 11685000 26015000 43760000
465000 466600 1006399 519100 534900 567088 599500 653400 695000 800000 848691 908000 923579 992618 1007800 1061200 1095300 1365400 1450878 2105480 3213479 3738731 7780142 9997584 10975800 11684741 26013948 43756324 171518901
.2711 .2720 .5867 .3026 .3118 .3306 .3495 .3809 .4052 .4664 .4948 .5293 .5384 .5787 .5875 .6187 .6385 .7960 .8458 1.2275 1.8735 2.1797 4.5360 5.8288 6.3991 6.8125 15.1668 25.5110 100.0000
Pattern of Shareholdings
as at June 30, 2008
NO. OF SHARES HOLDERS CATEGORIES OF SHAREHOLDERS INDIVIDUALS INSURANCE COMPANIES PUBLIC SECTOR COMPANIES FINANCIAL INSTITUTION AND BANKS MODARABA COMPANIES & MUTUAL FUNDS FEDERAL GOVERNMENT SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN FOREIGN INVESTORS OTHERS 12,217 13 21 63 76 1 1 121 224 18,854,832 1,155,990 52,267,445 2,641,940 13,204,721 43,756,324 2 24,097,774 15,539,873 10.99 0.67 30.47 1.54 7.70 25.51 0.00 14.05 9.06 No. OF SHARES %
TOTALS
12,737
171,518,901
100.00
143
Pattern of Shareholdings
as at June 30, 2008
NO. OF SHARES HOLDERS ADDITIONAL INFORMATION Associated Companies, Undertakings and related Parties Government of Pakistan NIT ICP National Investment Trust NBP , TrusteeDepartment Investment Corporation of Pakistan CEO, Directors and their Spouses and Minor Children Mohammad Abdul Aleem Public Sector Companies & Corporations Banks, DFIs NBFIs, Insurance Companies, Modarbas, Mutual Funds, Foreign Companies and other Orgnizations Individuals Others TOTALS 1 290 1 65,488,158 0.00 38.18 2 2 1 93,494 26,937,527 848,691 0.05 15.71 0.49 No. OF SHARES %
43,756,324
25.51
12,216 224 12,737
18,854,833 15,539,873 171,518,901
10.99 9.06 100.00
Audited Balance Sheet of Subsidiary Companies

for the period as given below
GIZRI LUBRICANTS (PVT) LTD
31st March, 2004
AREMAI PETROLEUM (PVT) LTD

31st March, 2004
SALIM PETROLEUM (PVT) LTD

30th June, 2004
AUTO OILS (PVT) LTD

31st December , 2005
MOHSIN LUBRICANTS (PVT) LTD

30th June, 2005
SALSONS LUBRICANTS (PVT) LTD

30th June, 2004
CAPITAL & RESERVES Share Capital Authorized Issued, Subscribed & Paid-up Reserves General Reserves Accumulated (Loss)/Profit Cumulative pre-operating expenditure written off Current Liabilities Due to holding company Due to associate undertaking Creditors, accrued & other liabilities Contigencies & Commitments TANGIBLE FIXED ASSETS Operating Fixed Assets At cost less accumulated depreciation Lease hold land Long term deposits Currents Assets Stores Balance due from associated companies Advances, deposits, prepayments and other receivables Cash & bank balances
5,000,000 2,359,500 6,525,000 (4,668,610) 1,856,390 9,791,821 510,237 1,223,294 11,525,352 15,741,242
5,000,000 4,999,780 6,800,000 (2,408,557) 4,391,443 8,282,765 417,554 180,520 8,880,839 18,272,062
6,000,000 1,600,000 (2,427,734) (2,427,734) 1,158,424 80,346 88,964 1,327,734 500,000
5,000,000 3,475,000 6,800,000 (4,728,519) 2,071,481 5,625,203 327,338 216,583 6,169,124 11,715,605
4,000,000 500 (1,544,577) (1,544,577) 2,234,659 140,030 2,374,689 830,612
5,000,000 3,829,500 4,625,000 (7,727,798) (3,102,798) 10,101,987 532,737 1,737,227 12,371,951 13,098,653
684,816 178,844 14,845,091 32,491 15,056,426 15,741,242
1,015,922 1,005,620 16,225,759 24,761 17,256,140 18,272,062
500,000 500,000
445,873 1,400 434,773 10,818,846 14,713 11,268,332 11,715,605
800,000 30,612 30,612 830,612
2,224,807 50,264 103,664 10,646,332 73,586 10,873,846 13,098,653
Note: As more fully explained in note 1.2 to the accounts of Pakistan State Oil Company Limited (PSO) for the year ended June 30, 2008, the aforementioned subsidiary companies are under liquidation and therefore no consolidated accounts have been prepared after the necessary approval of the Securities and Exchange Commission of Pakistan. Nine companies involved, or intended to be involved in blending operations, were wholly acquired by PSO during the year ended June 30, 2001. Winding-up proceedings have been completed in respect of all the subsidiary companies. SECP's confirmation for dissolution of above companies is awaited.
145
Profit & Loss Account of Subsidiary Companies

for the period as given below
GIZRI LUBRICANTS (PVT) LTD
31st March, 2004
AREMAI PETROLEUM (PVT) LTD

31st March, 2004
SALIM PETROLEUM (PVT) LTD

30th June, 2004
AUTO OILS (PVT) LTD

31st December , 2005
MOHSIN LUBRICANTS (PVT) LTD

30th June, 2005
SALSONS LUBRICANTS (PVT) LTD

30th June, 2004
Less: Excise duty paid Cost of Product sold Gross (Profit)/Loss Operating Expenses Administrative Financial Gain on disposal of fixed assets Operating (Profit) / Loss Other income (Profit) / Loss for the year Surplus on revaluation of fixed assets disposed of Taxation Prior Current Profit after taxation Accumulated Loss brought forward Accumulated profit/(loss) carried forward
621,045 621,045
350,355 350,355
110,677 110,677
661,485 661,485
621,045
350,355
110,677
661,485
(621,045) (4,047,565) (4,668,610)
(350,355) (2,058,202) (2,408,557)
(110,677) (4,617,842) (4,728,519)
(661,485) (7,066,313) (7,727,798)
Pakistan State Oil Company Limited

Thirty-second Annual General Meeting 2007-08
FORM OF PROXY I/We of A member of PAKISTAN STATE OIL COMPANY LIMITED and holder of Ordinary Shares as per Registered Folio No. /CDC Participants ID and Account No. Sub Account No. hereby appoint of or failing him of who is also a member of PAKISTAN STATE OIL COMPANY LIMITED vide Registered Folio No. /CDC Participants ID and Account No. As my/our proxy to vote for me/us and on my/our behalf at the Thirty-Second Annual General Meeting of the Company to be held on Wednesday, October 15, 2008 and at any adjournment thereof.
Signed by me/us this
day of
2008.
Signed by the said Important: This form of Proxy duly completed must be deposited at the Companys Registered Office, PSO House, Khayabane-Iqbal, Clifton, Karachi not later than 48 hours before the time of holding the meeting. A proxy should also be a Shareholder of the Company.
Five Rupees Revenue Stamps
for Office use
147

Ar 2008 Finacialoverview

Uploaded by

Copyright:

Available Formats

Ar 2008 Finacialoverview

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Ar 2008 Finacialoverview

Uploaded by

Copyright:

Available Formats

PSO: Financial Overview

PROFIT & LOSS ACCOUNT - Key Items

(Amounts in Rupees 000)

PROFIT AND LOSS ACCOUNT - Key Items

SUMMARY OF CASH FLOW STATEMENT

Muhammad Abdul Aleem Managing Director

Karachi: August 12, 2008

Review report to the members

A. F. FERGUSON & CO. Chartered Accountants

FORD RHODES SIDAT HYDER & CO. Chartered Accountants

Karachi: September 10, 2008

Auditors report to the members

A. F. FERGUSON & CO. Chartered Accountants

FORD RHODES SIDAT HYDER & CO. Chartered Accountants

Karachi: September 10, 2008

Profit and Loss Account

The annexed notes 1 to 40 form an integral part of these financial statements.

Muhammad Abdul Aleem Managing Director

Sardar M. Yasin Malik Chairman

Cash Flow Statement

66,290 (5,335,878) (4,380,252) (9,649,840) (5,772,641) (1,418,031) (7,190,672)

24,314 3,210,474 (4,800,295) (1,565,507) 1,417,994 (2,836,025) (1,418,031)

The annexed notes 1 to 40 form an integral part of these financial statements.

Mohammad Abdul Aleem Managing Director

Sardar M. Yasin Malik Chairman

Statement of Changes in Equity

The annexed notes 1 to 40 form an integral part of these financial statements.

Muhammad Abdul Aleem Managing Director

Sardar M. Yasin Malik Chairman

Notes to the Financial Statements

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(Amounts in Rupees 000)

Notes to the Financial Statements

(Amounts in Rupees 000)

Notes to the Financial Statements

(Amounts in Rupees 000)

Notes to the Financial Statements

(Amounts in Rupees 000)

Notes to the Financial Statements

(Amounts in Rupees 000)

PROPERTY, PLANT AND EQUIPMENT

2008 6,641,909 818,640 7,460,549

2007 6,612,796 1,399,521 8,012,317

Notes to the Financial Statements

133,521 (1,769) (1,769) 131,752

76,661 (68) 68 (1,917) 74,744

264,970 (28,271) 236,699

470,242 124,288 (269) 269 (37,242) 557,288

696,662 48,683 (978) 978 (184,012) 561,333

3,809,093 727,257 (6,980) 4,632 (2,348) (593,796) 3,940,206

738,784 218,988 (1,093) 1,093 (137,918) 819,854

63,123 4,447 (880) 880 (14,919) 52,651

91,305 30,432 (7,868) 7,348 (520) (35,636) 85,581

146,531 49,342 (6,449) 6,438 (11) (59,780) 136,082

15,038 (3,995) 11,043

6,234 (779) 779 (671) 5,563

6,512,164 1,203,437 (27,133) 22,485 (4,648) (1,098,157) 6,612,796

92,167 (17,423) 74,744

571,567 (334,868) 236,699

843,930 (286,642) 557,288