We are pleased to present, on behalf of the Board of Management, Pakistan State Oil Company Limited, the un-audited financial statements for First Quarter (July 1 - September 30, 2006) of the Financial Year 2006-07.

During the review period, the company’s sales revenue touched Rs 101 billion compared to Rs 71 billion in the corresponding period last year and the profit after tax came to Rs 0.6 billion versus Rs 2.5 billion during first quarter FY06, caused by inventory losses suffered because of a sharp fall in the international price of oil during September 2006, as against an increase during the corresponding period last year, which had resulted in inventory gains. This phenomenon also adversely affected other players in the oil sector of Pakistan during the review period.

Increasing receivables from GoP on account of subsidized oil prices also caused the company’s financial costs to climb, whereas change in the margin regime in March 2006 also impacted company’s earnings.

Higher global prices of petroleum products during July-August 2006 resulted in a countrywide decline of consumption in various fuel categories: Diesel usage was reduced by 5% and Motor Gasoline by 9.8%. PSO again emerged as a leader with 68% market share through an exceptional performance in Furnace Oil, which registered a growth of around 98% in volumes over 1QFY06.

Based on dedicated teamwork, the company enhanced market share in Motor Gasoline from 44.6% to 46.1%, in Diesel from 55.6% to 59.8%, in Furnace Oil from 74.5% to 80.2%, and sustained market shares in other products. A number of fresh marketing initiatives, in collaboration with major brands, were also launched during this period.

The BoM is confident that with continued marketing initiatives the company will further consolidate its market leadership position. We are grateful to our customers, employees, dealers, cartage contractors, vendors and all other stakeholders for their immense contribution towards the progress of their company.