Oil & Gas Marketing Companies: SHELL PAKISTAN LIMITED - Year Ended 30-06-2004
During the year under review the company has been able to offset the impact of declining fuel sales. Its net sales marginally improved but margins strengthened because of higher selling prices and superior product mixing. The dividend continued to be high. Retail network was further strengthened with increase in RUI sites to 761 and decommissioning of sub-economical sites. The year witnessed significant initiatives for upgrading the fuel quality and the recent introduction of special underground tank seals to ensure consistent quality of product across the supply chain to its customers.
The year also saw increase in offering of CNG on more sites and reshaping of the lubricant business. Shell Helix brand underwent major relaunch construction on the White Oil Pipeline has reached a stage where the commencement of full service was expected in the next quarter.
Shell Pakistan Limited is a limited liability company incorporated in the province of Sindh and is listed on the Karachi and Lahore Stock Exchanges. It was listed on the Karachi Stock Exchange (Guarantee) Ltd in 1970.
The address of its registered office is Shell House, 6 Chaudhry Khaliquzzaman Road, Karachi 75530. The website address of the company has not been reported in the company information page of its Annual Report under review.
It is a subsidiary of The Shell Petroleum Company Limited London a British Multinational Corporation. This MNC has 76.10% stake in the equity of its Pakistani subsidiary. The aggregate holding of 32 banks, financial institutions, etc works out to 3.81% of the company's stock. Five public sector companies and corporations hold 4.6% of its total 35.07 million shares.
This is a blue chip company and its shares are highly priced at the stock market. On 7th February 2005, the closing price of Shell Pakistan share was quoted at Rs 570.85 which is nearly 58 times of its par value.
During the last one year the price of its share followed steep rise and registered peak price of Rs 608 per share which shows appreciation of Rs 272.50 per share on the lowest price of the year at Rs 335.50 per share.
The company has highly attractive profit distribution profile both in terms of regular as well as exceptionally high rates of dividend payout. According to the Financial Statistical Summary of 10 years, the company never skipped dividend and the payouts remained within the rates of 40% and 350%. During the financial year July-June 2003-04, the company generated net revenue at Rs 79.18 billion as against the revenue of Rs 77.82 billion posted in the previous financial year 2002-03, registering 1.7% growth.
It continued to maintain robust financial backbone as evidenced from its solvency, liquidity and profitability ratios. Gross margin was slightly up which further spurred rise in profitability. According to Chairman Farooq Rahmatullah of Shell Pakistan the contributory factor to growth in profits is mainly higher selling prices and a superior product mix providing enhanced margins.
This was bolstered by inventory gains, thus offsetting the industry wide decline in Fuel Oil Sales volumes. The decrease in fuel oil sales has affected the operating margins of the petroleum marketing companies and refineries. It was because of gas/coal substitution by power generators and the cement industry. It is a great effort to offset the consequences of lower fuel oil sales.
During the year under review the company posted profit after taxation at Rs 1.508 billion as compared to Rs 1.255 billion booked in the preceding year. This is the second consecutive year that the company declared very high dividend at 350%. The company takes deserving pride for the highest average throughput per outlet amongst major oil marketing companies excluding new market entrants.
The company continued its emphasis on the robustness of its retail network by increasing the number of RVI sites to 761 whilst at the same time decommissioning sub-economical sites. Retail CNG sites increased to 72 from 54.
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Performance Statistics (Million Rupees)
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Balance sheet -As At-
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June 30
2004 2003
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Share Capital-Paid-up: 350.66 350.66
Reserves & Surplus: 5,781.87 5,501.16
Shareholders Equity: 6,132.53 5,851.82
Deferred Taxation: 126.42 17.26
L T Debts: 42.79 77.86
Current Liabilities: 9,042.39 7,191.52
Fixed Assets: 5,399.28 4,828.16
L T Investments: 1,877.00 1,877.00
L T Loans & Advances: 78.52 91.59
L T Deposits & Prepayments: 76.70 30.33
Current Assets: 7,912.63 6,311.38
Total Assets: 15,344.13 13,138.46
Sales, Profit & Pay Out
Net Revenue: 79,180.35 77,822.82
Gross Profit: 6,207.24 5,773.35
Operating Profit: 2,401.23 1,978.99
Other Income: 12.02 110.32
Financial (Charges): (73.82) (51.48)
(Depreciation/Amortisation): (616.98) (578.95)
Profit Before Taxation: 2,188.92 1,899.90
Profit After Taxation: 1,508.01 1,255.00
Earning Per Share (Rs): 43.01 35.79
Dividend Cash @ 350%
(2003: @ 350%): 1,227.30 1,227.30
Share Price (Rs) on 7/02/05: 570.85 -
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Financial Ratios
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Price/Earning Ratio: 13.27 -
Book Value Per Share: 174.88 166.88
Price/Book Value Ratio: 13.27 -
Debt/Equity Ratio: 1:99 1:99
Current Ratio: 0.88 0.88
Assets Turn Over Ratio: 5.16 5.92
Days Receivables: 10 8
Days Inventory: 23 14
Gross Profit Margin (%): 7.84 7.41
Net Profit Margin (%): 1.90 1.61
R O A (%): 9.82 9.55
R O C E (%): 23.93 21.10
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COMPANY INFORMATION: Chairman & Chief Executive: Farooq Rehmatullah; Director: Akbar Aziz; Company Secretary: M. Mahmud G. Dossa; Registered Office: Shell House 6, Chaudhry Khaliquzzaman Road Karachi-75530; Web Address: Not Reported.
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