Karachi: A meeting of the Board of Directors was held at 10:30 a.m. on August 17, 2011 to consider the accounts for the quarter & six months ended June 30, 2011.
The financial results of the company are as follows:
Half year ended
|Non-fuel retail – Others||–||1,255||–||–|
|Less: Sales tax||(14,346,098)||(12,070,457)||(7,199,150)||(6,311,299)|
|Cost of products sold||(108,759,087)||(84,422,177)||(53,959,829)||(44,059,720)|
|Distribution and marketing expenses||(1,908,327)||(1,787,802)||(735,094)||(1,106,719)|
|Other operating expenses||(612,861)||(340,338)||(306,818)||(241,947)|
|Other operating income||108,765||387,206||55,886||115,550|
|Share of profit of associate – net of tax||317,418||295,141||139,699||201,865|
|Profit before taxation||2,671,154||1,762,434||1,394,132||1,015,396|
|Profit after taxation||1,407,199||720,210||648,799||318,173|
|Earnings per share – basic||20.55||10.52||9.47||4.65|
A copy of the Chairman’s review for the half year ended June 30, 2011, enclosed.
For the half year ended June 30, 2011
On behalf of the Board of Directors of Shell Pakistan Limited, I am pleased to share the results of the Company for the half year ended June 30, 2011.
For this period, our Net Revenues were Rs. 116,318 million with Gross Profits of Rs 7,559 million, delivering Profit before Tax of Rs 2,671 million. During this half year the Company earned a profit after tax of Rs. 1,407 million as against a net profit of Rs. 720 million recorded in the same period last year.
This increase is primarily due to favourable movements in the international oil price during the period with support from improved performance in the export business of the Company and reduction of operating costs. However, your Company continues to be impacted by very low regulated margins set by the Government for motor gasoline and diesel and high financing costs due to significant delay in recovery of refunds of indirect taxes and subsidy claims from the Government.
Regulated margins for petrol and diesel in Pakistan remain one of the lowest in the region, having been further reduced by the Government in late 2010, at a time of both rising oil prices and increasing cost of doing business. In a high oil price and inflationary environment that was prevalent during this half-year period, the level of margins allowed by the Government do not provide appropriate returns to cover the cost of operations and the high cost of financing for the required investments in costlier stock and higher and delayed Government receivables.
Government receivables are now approaching in excess of Rs 13,000 million mainly related to refund of indirect taxes and fuel subsidies. This is causing a continually high financing charge on the company. Since the inception of these receivables, the delays in settlement have already cost the company over Rs. 3 billion in interest costs. Your management is vigorously following up with concerned Government authorities for the early settlement of these receivables.
We continue to emphasise that it is imperative for the Government to urgently address the unfavourable impacts of low margins in Oil Marketing Company’s margins and delay in settlement of Government receivables. The recent ECC decision on margin increase is a positive step in this direction and we are hopeful that this will be fully and immediately implemented. Also the delays in clearing receivables due from the Government needs to be addressed on an urgent basis to create an environment conducive to business continuity and growth in this key sector of the economy.
Due to these challenges and its impact on the operating position, your Board has not recommended an interim dividend for the current period and will only consider a final dividend at the year end.
We thank our shareholders, customers and staff for their sustained support and trusting Shell as their brand of first choice.
For more information, contact:
Shell Pakistan Limited
Shell House, 6, Ch. Khaliquzzaman Rood, Karachi-75530
Tel +92 (21) 111 888 222
P.O. Box 3901 Karachi