PSO Announces Financial Results for 1HFY15

Date: 3rd March, 2015
PSO Announces Financial Results for 1HFY15

Karachi-3rd March, 2015: Pakistan State Oil Company Limited (PSO) had its Board of Management (BOM) meeting scheduled for February 19, 2015 to consider and approve the half yearly accounts of the Company. The Board Audit Compliance Committee (BACC) meeting was scheduled to be held on February 17, 2015 for making recommendations to the BOM for review of the Accounts for the half-year ended December 31, 2014 and the working papers of this BACC meeting were also circulated to the members of BACC.

The scheduled BOM meeting was postponed vide PSO's letter dated February 13, 2015 pursuant to the Notification from the Ministry of Petroleum & Natural Resources (MPNR), dated February 12, 2015 whereby PSO was informed by the MPNR that the Federal Government in exercise of the powers under Section 7 of the Marketing of Petroleum Products (Federal Control) Act, 1974 "the Act" has dissolved/de-notified the BOM with immediate effect. The above-referred Notification also stated that the Managing Director, PSO shall exercise and perform all the powers and functions of the Board under Section 6(4) of the Act till a new BOM is appointed by the Government of Pakistan.

The performance of the Company for the first half of Financial Year 2014-15 (1H FY2015) has been reviewed on the foregoing basis and this report is being presented accordingly.

During the period under review PSO's total market share stood at 57% (1H FY2014: 63%), whereas market share of Black Oil products was 67% (IH FY2014: 75%) and White Oil products was 49% (1H FY2014: 53%).

The Company's sale volume of Motor Gasoline grew by 4% (1H FY2014: 15% growth), however, the Furnace Oil sales volume and the High Speed Diesel sales volume both declined by 16% (1H FY2014: 14% growth) and 10% (1H FY2014: 1% decline) respectively during the period under review.

Moreover, the decline in crude oil prices from USD 109 per barrel in July 2014 to USD 52 per barrel in December 2014 during the period under review has also adversely affected the performance of the Company as the Company's margins for Motor Gasoline and High Speed Diesel are fixed amounts per litre, whereas the Furnace Oil margins are in percentage terms.

Together the volume and decline in oil prices has resulted in a reduction in the sales turnover to Rs. 605 billion (1H FY2014: Rs. 727 billion). In percentage terms the decline is 17% (1HFY2014: 15% decline).

The Company has reported a Profit after Tax of Rs 4.3 billion (1H FY2014: Rs 15.8 billion) during the period under review. The decline of 73% (1H FY2014: 150% growth) during the review period mainly related to the following:


IH FY2015

1H FY2014

Receipts relating to late payment surcharge from the power sector

Rs 3.0 billion

Rs 11.0 billion

Inventory (loss)/gain due to drop in oil prices

(Rs 2.7 billion)

Rs 6.4 billion

Exercising the powers of the Board, the Managing Director has approved a change in the Company's Corporate Social Responsibility (CSR) policy whereby as a policy the budget for all future CSR contributions by the Company would be equivalent to one percent (1%) of the reported annual Profit before Tax from the current financial year onwards.

The Managing Director on behalf of the Company takes this opportunity to express his gratitude to its shareholders, customers, suppliers, bankers and other stakeholders for their continuous trust, confidence and support. A special vote of thanks to the Government of Pakistan and the Ministry of Petroleum & Natural Resources for their guidance and support. The Managing Director also takes this opportunity to thank the employees of PSO whose relentless hard work and valuable contribution continues to fulfill the energy needs of Pakistan in a responsible manner.

Moving forward the Company is confident that with the ongoing reorganization of its processes, necessary restructuring and continual support from all the stakeholders, the Company's growth and future profitability is In shaa Allah assured.