| Pakistan State Oil Company Limited |
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| Annual
Report 1999 |
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| CONTENTS |
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| COMPANY
INFORMATION |
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| NOTICE
OF THE MEETING |
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|
|
| PSO
AT A GLANCE |
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|
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| MANAGING
DIRECTOR'S REVIEW |
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|
| AUDITORS'
REPORT |
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|
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| BALANCE
SHEET |
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|
| PROFIT
AND LOSS ACCOUNT |
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|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
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| (Cash
Flow Statement) |
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| NOTES
TO THE ACCOUNTS |
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|
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| STATEMENT
PURSUANT TO SECTION 237 OF THE |
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| COMPANIES
ORDINANCE, 1984 |
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|
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| PATTERN
OF HOLDING OF THE SHARES |
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| ACCOUNTS
OF SUBSIDIARY COMPANIES |
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| CONSOLIDATED
FINANCIAL STATEMENTS |
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| COMPANY
INFORMATION |
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| MANAGING
DIRECTOR |
|
| S. A. Q. Razvi |
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| SECRETARY |
|
| A.R. Mithani |
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|
| AUDITORS |
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| Sidat
Hyder Qamar & Co. |
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| Taseer
Hadi Khalid & Co. |
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| SOLICITORS |
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| Orr
Dignam & Co. |
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|
| BANKERS |
|
| ABN
AMRO Bank |
|
| Allied
Bank of Pakistan Limited |
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| ANZ
Grindlays Bank |
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| Askari
Commercial Bank Ltd. |
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| Citibank N.A. |
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| Deutsche
Bank AG |
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| Emirates
Bank International Limited |
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| Faysal
Bank Limited |
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| Habib
Bank A. G. Zurich |
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| Habib
Bank Limited |
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| Hongkong
& Shanghai Banking Corporation |
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| Muslim
Commercial Bank Limited |
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| Mashreq
Bank- PSC |
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| National
Bank of Pakistan |
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| Standard
Chartered Bank |
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| Societe Generale |
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| Union
Bank Limited |
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| United
Bank Limited |
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| REGISTERED
OFFICE: |
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| PSO
House, Khayaban-e-Iqbal, Clifton, Karachi. |
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| BOARD
OF MANAGEMENT |
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| CHAIRMAN |
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| MEMBERS |
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|
MR. G. A. SABRI |
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MR. ABDUS SATTAR |
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|
Director General (Oil) |
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Financial Advisor |
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Ministry of Petroleum & Natural |
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Ministry of Petroleum & Natural |
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|
Resources, Government of Pakistan |
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Resources Government of Pakistan |
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DR. SHAHID K. HAK |
|
MR. ASADULLAH KHAWAJA |
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|
Managing Director |
|
Managing Director |
|
|
Pak Arab Refinery Limited |
|
Investment Corporation of Pakistan |
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S. A. Q.
RAZVI |
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|
Managing
Director |
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|
Pakistan
State Oil Company Limited |
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| NOTICE
OF THE MEETING |
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| Notice
is hereby given that the 23rd Annual General Meeting of the Company will be
held at Hotel |
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| Metropole,
Club Road, Karachi on Tuesday, 15th February, 2000, at 11:00 A.M. under the
Chairmanship |
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| of
the Managing Director to transact the following business: |
|
|
| I.
Ordinary. Business |
|
|
| 1.
To confirm the minutes of the 22nd Annual General Meeting held on 27th January, 1999. |
|
|
| 2.
To receive and adopt the audited accounts for the year ended 30th June, 1999
together |
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| with
Auditors' report and the Managing Director's review thereon. |
|
|
| 3.
To lay information before the members of the Company of the appointment of
Messrs Sidar |
|
| Hyder
Qamar & Company and Taseer Hadi Khalid & Company, Chartered
Accountants, as |
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| Auditors
of the Company, for the year ending 30th June, 2000. |
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|
|
| 4.
To declare a final dividend of 60% in addition to the interim dividend of 30%
already paid, |
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| thereby
making a total dividend of 90% for the year ended 30th June, 1999. |
|
|
| II.
Special Business |
|
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| 5.
To consider and, if thought fit, pass the following Ordinary Resolution for
the capitalisation |
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| of
profits amounting to Rs. 238,220,700/-. |
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| Resolved that |
|
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| (i)
"a sum of Rs. 238,220,700/- from the Company's profit in the year ended
30th June, |
|
|
| 1999,
be capitalised for issuing 23,822,070 fully paid-up Ordinary Shares of Rs.
10/- |
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| each
as Bonus Shares to be allotted to those members whose names appear in the |
|
|
| Register
of Members on Monday, 7th February, 2000, in the proportion of Two shares |
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| for
every Ten shares held and that the Bonus Shares when issued shall rank pari
passu |
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| in
all respects with the existing Ordinary Shares of the Company except that the
said |
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|
| Bonus
Shares shall not be eligible for the dividend declared for the year ended
30th June, 1999. |
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|
|
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| (ii)
the members entitled to fractions of shares as a result of their holdings
either being |
|
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| less
or in excess of an exact multiple of proportion, referred in 5(i) above,
shall be |
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| given
the sale proceeds of their fractional entitlements for which purpose the
fractions |
|
|
| shall
be consolidated into whole shares and sold on the Karachi Stock Exchange; and |
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|
|
|
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| (iii)
for the purpose of giving effect to the above, the Managing Director be and
is hereby |
|
| authorised
to take all necessary actions and to settle any question or difficulty that
may |
|
| arise
in regard to the distribution of the said Bonus Shares or in the payment of
the |
|
|
| sale
proceeds of the fractional entitlements (referred above), as he deems
fit." |
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|
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|
AND |
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| 6.
To transact any other Ordinary Business of the Company with the permission of
the Chairman. |
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|
By Order of the Managing Director |
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|
A. R. MITHANI |
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| Karachi:
17th January, 2000. |
|
Secretary |
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|
| NOTES: |
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|
|
| 1.
A member entitled to attend and vote at this meeting may appoint any other
member as his/ |
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| her
proxy to attend and vote. A proxy form is enclosed. |
|
|
| 2.
The Share Transfer Books of the Company will remain closed from Tuesday, 8th |
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| February,
2000 to Tuesday, 15th February, 2000 (both days inclusive). Transfers
received |
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| in
order at the Registered Office of the Company upto the close of business on
Monday, 7th |
|
| February,
2000, will be considered in time to be eligible for payment of Final Dividend
and |
|
| issue
of Bonus Shares to the transferees. |
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|
|
| 3.
The instrument appointing a proxy and the power of attorney or other
authority under which |
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| it
is signed or a notarially attested copy of the power of attorney must be
deposited at the |
|
| registered
office of the Company at least 48 hours before the time of the meeting. |
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|
|
|
| 4.
Shareholder who have deposited their shares into Central Depository Company
of Pakistan |
|
| Limited,
are being advised to bring their National Identity Cards along with CDC
account |
|
| numbers
at the meeting venue. If any proxies are granted by any such shareholders the
same |
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| must
be accompanied with attested copies of the National Identity Cards of the
grantor and |
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| the
signature on the proxy forms should be the same as appearing on the National
Identity |
|
| Cards. |
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|
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| STATEMENT
UNDER SECTION 160 (1) (B) |
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| OF
THE COMPANIES ORDINANCE, I984 |
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| The
Reserves of the Company as on 30th June, 1999 represent accretion on its
existing share capital, |
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| it
has been thought expedient to capitalise a part of the said reserves by way
of issue of Bonus Shares |
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| to
the members. The Company has no direct interest in the event the capital is
increased as proposed. |
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| Upon
issuance of the Bonus Shares, the paid-up capital of the Company shall stand
increased to |
|
| Rs.
1,429,324,180/-. |
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|
|
| PSO
AT A GLANCE |
|
|
|
|
1999 |
1998 |
1997 |
1996 |
1995 |
1994 |
1993 |
1992 |
1991 |
1990 |
|
| Earning and |
|
| Dividend |
|
|
|
|
Rs. Per Share of Rs. 10 |
|
|
|
| Break-up value |
|
68.71 |
66.35 |
66.89 |
65.21 |
62.35 |
59.91 |
55.70 |
56.49 |
56.41 |
55.78 |
| Dividend |
|
9.00 |
8.00 |
8.00 |
6.00 |
5.00 |
5.00 |
5.00 |
4.75 |
4.50 |
4.00 |
| Bonus |
|
2:10 |
2:10 |
2:10 |
3:10 |
3:10 |
3:10 |
2:10 |
2:10 |
3:20 |
1:10 |
|
| Statistical
Summary |
|
|
|
|
Rs. in Million |
|
|
| Shareholders'
equity |
8,184.3 |
6,585.6 |
5,533.2 |
4,149.2 |
3,051.8 |
2,255.4 |
1,747.7 |
1,476.9 |
1,282.5 |
1,153.0 |
| New capital exp. |
|
397.3 |
408.0 |
820.5 |
920.7 |
461.9 |
321.8 |
364.9 |
207.4 |
138.9 |
216.4 |
| Profit before tax |
|
3,355.8 |
2,826.4 |
3,745.8 |
2,563.2 |
1,681.1 |
1,175.6 |
771.5 |
526.9 |
450.7 |
367.2 |
| Profit after tax |
|
2,670.8 |
1,846.4 |
2,045.8 |
1,498.2 |
1,041.1 |
696.0 |
427.6 |
318.7 |
231.8 |
199.2 |
| Cash Dividend |
|
1,072.0 |
794.1 |
661.7 |
381.8 |
244.7 |
188.2 |
156.9 |
124.2 |
102.3 |
82.7 |
|
| Financial Ratio |
|
|
|
|
|
Ratios |
|
| Current assets: |
|
| Current
liabilities |
1.3:1 |
1.2:1 |
1.1:1 |
1.1:1 |
1.1:1 |
1.1:1 |
1.1:1 |
1.2:1 |
1.1:1 |
1.4:1 |
| Long
term debt: equity |
5:95 |
6:94 |
5:95 |
5:95 |
7:93 |
8:92 |
12:88 |
17:83 |
24:76 |
28:72 |
| Total
Debt: equity |
32:68 |
26:74 |
28:72 |
29:71 |
29:71 |
23:77 |
33:67 |
24:76 |
51:49 |
49:51 |
|
|
| MANAGING
DIRECTOR'S REVIEW |
|
|
| It
is my pleasure to welcome you to the 23rd Annual General Meeting of your
Company and |
|
| present
the Annual Report and Financial Statements for the fiscal year ended 30th
June 1999. |
|
|
| Synopsis |
|
|
| Your
Company has entered the next millennium completely transformed. Replacing
decades old |
|
| attire
with new logo, refreshing color combination and structural design changes in
retail stations, |
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| PSO
has begun implementation of the New Vision Scheme. Substantial investment has
been |
|
| appropriated
for development of a chain of modern retail stations throughout the country. |
|
| Besides
electronic dispensing units these stations feature Quick Lube change, Shop
Stop, CNG |
|
| facility,
service station/car wash, full size canopy etc. First of such stations was
commissioned in |
|
| January
1999, with resounding success followed by commissioning of model New Vision
Stations |
|
| at
Lahore and Islamabad, with several other stations in various stages of
development at |
|
| different
locations. Initial results are reassuring for maintaining market leadership,
of your |
|
| company
in the longer perspective. Also we have launched a retail rationalization
program to |
|
| improve
on the performance of the existing network with a view to operating only
those |
|
| facilities
that contribute positively to our brand image. |
|
|
| Undoubtedly,
PSO's strength lies in its vast storage, distribution and retail network
existing |
|
| across
the country. It is capable of ensuring uninterrupted and steady supplies to
PSO's valued |
|
| customers,
therefore, in order to ensure that these facilities meet the growing
challenges of modern |
|
| trading
requirements, continued technological input is of vital importance. During
the year, |
|
| storage
and tank wagon facility at Pipri Marshalling Yard for dispatch of Furnace Oil
to |
|
| upcountry
destinations was completed. This facility, primarily meant for ensuring
steady |
|
| supplies
to IPP's is designed to increase railway tank wagon availability by reducing
turnaround |
|
| time.
Under a program launched during the year, computer networking of all the
depots and |
|
| terminals
was undertaken to improve coordination and inter-storage product movement. |
|
|
| Performance |
|
|
| Trading
results during the year depict a slight volumetric decline which is mainly
due to lower |
|
| upliftments
by IPPs. During the year PSO sold 12.141 million tonnes as compared to 12.749 |
|
| million
tonnes in the previous year. In terms of value the turnover for the current
year was Rs. |
|
| 115
billion as against Rs. 121 billion last year. |
|
|
| Shareholders
will be pleased to note that in spite of reduction in sales volume, the year
1998-99 |
|
| has
registered significant increase in pre-tax profit which is Rs. 3.4 billion as
compared to Rs. 2.8 |
|
| billion
last year, Your Company has improved the return for the year under review
which is 90% |
|
| Cash
and 20% Bonus share as compared to 80% cash and 20% Bonus shares in the
previous year. |
|
|
| As
reported last year, trade receivables from WAPDA/KESC remain a major factor
in |
|
| corporate
debt. As a result of intensive efforts made by PSO at various Government
levels |
|
| during
the year, with the support of Ministry of Petroleum & Natural Resources,
the pace of |
|
| recovery
was accelerated. Therefore, combined outstanding amount was brought down to
Rs. 8.0 |
|
| billion
as against Rs. 15.8 billion last year. |
|
|
| With
regards to improvement of your Company's infrastructure facilities, I would
like to present |
|
| following
projects completed during the year. |
|
|
| *
Booster Pumping Station at FOTCO Jetty to increase tanker discharge rates,
thus |
|
| reducing
berth occupancy and demurrage payment in foreign currency. Laying of |
|
| cables
and scada system at Port Qasim Jetty to monitor product transfer from |
|
| tankers
to PSO installations. Modification and extension of loading facilities to |
|
| accommodate
increased number of tank wagons and meterization of new 12-bay |
|
| loading
gantry at Keamari Terminal 'C'. New aviation refuelling facility at Multan |
|
| Airport
consisting of tanks, bowsers, loading and unloading arrangements were |
|
| also completed. |
|
|
|
| Projects
commenced/under completion during |
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| the
year are as under: |
|
|
| *
Improvement of facilities at Chakpirana depot; Construction of 200 KL
capacity |
|
| tank
at Juglot depot; Modification of tanks and pumping systems at Kala Shah Kaku. |
|
|
|
|
| As
in the past your company made the best use of its human and material
resources. The workplace |
|
| involvement
in decision making remained strong and productive. Employee dedication to |
|
| Company
and its corporate objectives are the factors underlying success story of your |
|
| Company. |
|
|
| In
a rapidly changing scenario, PSO adopts new strategies and organizational
plans which are |
|
| implemented
by the personnel fully equipped with required synergies. |
|
|
| It
gives me pleasuare to inform you that some of the units like Karachi Blending
Plant and Central |
|
| Laboratories
at Keamari are now ISO certified. Your Company is also Y2K compliant. |
|
|
| Our Vision |
|
|
| PSO
is committed to being the pre-eminent marketer of petroleum products,
providing the |
|
| highest
quality products and services to its customers through its professionally
trained and |
|
| motivated
work force, while at the same time contributing in the development of the
petroleum |
|
| products
infrastructure vital to the country. |
|
|
| We
are indeed grateful to PSO's Customers, Dealers, Distributors, Agents
Contractors, |
|
| Transporters
and other service providers for the confidence reposed in PSO. The Management |
|
| also
wishes to place on record its gratitude for the valuable guidance of the
Board of Management |
|
| and
support of the Ministry of Petroleum & Natural Resource. |
|
|
| The
management also wishes to acknowledge the support of PSO's employees and
esteemed |
|
| shareholders. |
|
|
|
|
|
|
S.A.Q. Razvi |
|
| 17th
January, 2000 |
|
Managing Director |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Pakistan State Oil Company Limited
as at 30 June 1999 |
|
| and
the related profit and loss account and statement of changes in financial
position, 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 and, after due verification thereof, we report that: |
|
|
| a)
in our opinion, proper books of account have been kept by the Company as
required by the |
|
| Companies
Ordinance, 1984; |
|
|
|
|
| b)
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 account and are further in accordance with accounting |
|
| policies
consistently applied; |
|
|
|
|
|
| ii)
the expenditure incurred during the year was for the purpose of the Company's |
|
| business; and |
|
|
|
|
| iii)
the business conducted, investments made and the expenditure incurred during
the |
|
| year
were in accordance with the objects of the Company; |
|
|
|
|
|
| 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 and the statement of changes
in financial |
|
| position,
together with the notes forming part thereof, 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 Company's affairs as at 30 June 1999 and of the profit
and the |
|
| changes
in financial position for the year then ended; and |
|
|
|
|
|
| d)
in our opinion, zakat deductible at source under the Zakat and Ushr
Ordinance, 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 note 22.2 to the financial
statements |
|
| on
trade debts of Rs. 2,899 million due from Water and Power Development
Authority |
|
| (WAPDA).
The Company has, due to the reasons stated in the aforementioned note to the |
|
| financial
statements, considered the amount due from WAPDA as good debts. |
|
|
|
Taseer Hadi Khalid & Co. |
|
Sidat Hyder Qamar & Co. |
|
|
Chartered Accountants |
|
Chartered Accountants |
|
|
| Karachi:
17th January, 2000. |
|
|
|
|
| BALANCE
SHEET AS AT 30 JUNE 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
|
|
(Rupees in
'000) |
|
|
|
|
| SHARE
CAPITAL |
|
3 |
1,191,104 |
992,587 |
|
| RESERVES |
|
4 |
6,993,232 |
5,592,987 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
5 |
8,184,336 |
6,585,574 |
|
| LONG
TERM LOANS |
|
|
6 |
23,753 |
28,503 |
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
|
| TO
FINANCE LEASE |
|
|
7 |
6,562 |
1,924 |
|
| DEFERRED
LIABILITY FOR STAFF GRATUITY |
|
8 |
516,504 |
457,333 |
|
| LONG
TERM DEPOSITS |
|
|
9 |
410,904 |
399,993 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Short term loans |
|
|
10 |
3,431,998 |
1,878,393 |
|
| Current
portion of long-term loans and |
|
|
| liabilities
under finance lease |
|
6 & 7 |
7,962 |
27,921 |
|
| Creditors,
accrued expenses and other liabilities |
|
11 |
12,062,005 |
19,063,225 |
|
| Dividends |
|
|
12 |
991,273 |
722,326 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
16,493,238 |
21,691,865 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
13 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
25,635,297 |
29,165,192 |
|
|
|
|
========== |
========== |
|
| FIXED ASSETS |
|
|
|
| Operating
fixed assets |
|
14 |
2,714,811 |
2,497,610 |
|
| Assets
subject to finance lease |
|
15 |
10,817 |
10,754 |
|
| Capital
work-in-progress |
|
16 |
237,797 |
462,484 |
|
| Inventory
held for capital expenditure |
|
|
388,881 |
395,983 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
3,352,306 |
3,366,831 |
|
|
|
|
|
|
| LONG
TERM DEPOSIT AND PREPAYMENTS |
|
17 |
112,862 |
124,546 |
|
| LONG
TERM INVESTMENTS |
|
18 |
483,660 |
483,660 |
|
| LONG
TERM LOANS |
|
19 |
5,503 |
4,123 |
|
|
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and spares |
|
20 |
51,059 |
84,888 |
|
| Stock-in-trade |
|
21 |
4,596,489 |
4,017,942 |
|
| Trade debts |
|
22 |
9,967,763 |
17,299,952 |
|
| Loans,
advances, deposits, prepayments |
|
|
|
| and
other receivables |
|
23 |
5,429,181 |
2,737,562 |
|
| Cash
and bank balances |
|
24 |
1,636,474 |
1,045,688 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
21,680,966 |
25,186,032 |
|
| NET
ASSETS IN BANGLADESH |
|
25 |
-- |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
25,635,297 |
29,165,192 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
A. R. Mithani |
|
S.A.Q. Razvi |
|
|
Secretary |
|
Managing Director |
|
|
|
|
|
| PROFIT
& LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE 1999 |
|
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
|
(Rupees in
'000) |
|
|
|
|
| REVENUES |
|
|
|
| Sales |
|
|
|
|
115,636,264 |
121,344,507 |
|
| Government
levies |
|
26 |
(53,939,714) |
(43,625,031) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
61,696,550 |
77,719,476 |
|
| Cost
of products sold |
|
27 |
56,451,145 |
72,885,832 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
5,245,405 |
4,833,644 |
|
| Other income |
|
|
28 |
325,088 |
138,974 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
5,570,493 |
4,972,618 |
|
|
|
|
| EXPENDITURE
AND CHARGES |
|
|
|
| Transportation |
|
29 |
177,539 |
181,492 |
|
| Administrative
and marketing |
|
30 |
1,153,265 |
1,154,654 |
|
| Depreciation |
|
|
417,492 |
378,819 |
|
| Financial |
|
31 |
289,823 |
282,448 |
|
| Workers'
profit participation fund |
|
|
176,619 |
1,418,760 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
2,214,738 |
2,146,173 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
BEFORE TAXATION |
|
|
3,355,755 |
282,644.50 |
|
| Provision
for taxation |
|
32 |
685,000 |
980,000 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
AFTER TAXATION |
|
|
|
2,670,755 |
1,846,445 |
|
| Unappropriated
profit brought forward |
|
|
1,129 |
1,270 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
|
|
2,671,884 |
1,847,715 |
