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Acknowledgement

We would like to thanks various people, colleagues, instructor, and fellow


batch mates, who provided the help and support directly or indirectly by providing,
sample reports, suggestions, shared the ideas of their reports, and pointed various
sources on the web to get help about the analysis of financial analysis. Without their
help and timely support this project report would not have been possible.
A special thanks to Mr. Khurram Nasir, course instructor, Financial
Management, whose guidance and supervision was instrumental. He was ever ready
to provide help to his students, especially after the class, including, for handing over
the old report on Shell, prepared by the previous batch group. That report not only
guided and gave the insight into the contents and general layout, as a first hand
knowledge, but also pointed out the mistakes to be avoided for, which were corrected
by the instructor himself.

Group Members
AGHA FAHAD
AMJAD HUSSAIN
AASIM HAMEED

Page # 1

Letter of Transmittal
July 9, 2007
SZABIST
100 Clifton
Karachi
Dear Mr. Khurram Nasir
Enclosed please find the report, Financial Statement Analysis of Shell Pakistan, in
the partial fulfilment of the course of Financial Management, offered to MBA
(Evening) IIIA in summer 2007. The report includes the basic analysis of four
financial statements of Shell Pakistan a company in oil and gas sector, from the year
2000 to 2006. The analysis includes ratios analysis, common size analysis, Du Pont
chart, graphical trends and forecast for the year 2007 on the basis of past seven years
data.
This is an amateur effort of our group members towards practical learning and
application of AFS theory that grasped during the class of financial management.
Indeed the job was challenging from collecting the data to analysis and interpretations
of results; but it was enthralling as well, to see the classroom theory into action.
The finding of the reports will be shared during class presentation, and clarification
will be provided if needed during question answer session.
We are eagerly looking forward your positive remarks, and criticism for the
improvement and our learning. We feel that this knowledge will be helpful in future
work terms, and in our career

Yours very truly,


Group Members

Page # 2

Executive Summary
Shell Pakistan Ltd. is a growing company in oil and gas distribution and marketing. It
is playing a major role in the economy of Pakistan along with its major competitor
Pakistan State Oil (PSO). The past five to seven years data and key financial statistics
summary indicates that company is quite stable, and leading towards more
profitability with a control on its costs. The share capital of the company grew from
234 (Rs./mn) to 438 in last decade, while reserves grew from 1238 (Rs./mn) to 7952.
Dividends per share rose from Rs.12.5 in 2001 to Rs.30 in 2006, with a peak of Rs.35
from 2003 05. On the other side current assets to current liabilities ratio thinned
from 1.2 to 1.13., no. of days stock grew from 18 to 27, including no. of days trade
debts from just 3 to 14.
Major performance of the company can be gauged from profit after tax as % of
average capital employed increased from 20.8 in 2000 to 33.6 in 2006. Also profit
after tax as % of sales also jumped from 1.4 in 2001 to 2.3 in 2006.
The company is quite stable according to its ratio analysis, and key performance
indicators showing a growing trend in yield and dividends per share.

Page # 3

Table of Contents
Introduction....................................................................................................................6
History of the company..............................................................................................6
Shell Pakistan Limited...............................................................................................6
Growth and development...........................................................................................8
Vision.........................................................................................................................8
Values.........................................................................................................................9
Corporate Responsibilities.........................................................................................9
Corporate Principles.................................................................................................10
Key Terms................................................................................................................13
Data..............................................................................................................................17
Balance Sheet...........................................................................................................17
Profit and Loss Account...........................................................................................20
Cash Flow Statement................................................................................................22
Modified Du Pont Chart Calculations......................................................................23
Computations...............................................................................................................24
Ratio Analysis..........................................................................................................24
Percentage Change...................................................................................................25
Percentage Change - Profit and Loss Account.........................................................27
Percentage Change - Cash Flow Statement.............................................................29
Common Size Balance Sheet................................................................................30
Common Size Profit and Loss Account................................................................32
Financial Statistics Summary...................................................................................34
Du Pont Analysis......................................................................................................35
Analysis of AFS...........................................................................................................42
Ratio Analysis..........................................................................................................42
Liquidity Ratios....................................................................................................42
Current Ratio............................................................................................................42
Interrelation between Current Assets and Current Liabilities..............................43
Components of Current Assets.............................................................................44
Components of Current Liabilities.......................................................................44
Quick Ratio..............................................................................................................46
Components of Quick Ratio.................................................................................46
Asset Management Ratios....................................................................................49
Inventory Turnover Ratio.........................................................................................49
Interrelation of Total Sales and Stock in Trade....................................................49
Other Factors Influencing the Ratio.....................................................................50
Components of Total Sales...................................................................................51
Days Sales Outstanding (DSO) Ratio......................................................................52
Fixed Assets Turnover..............................................................................................55
Interrelation of Total Sales and Total Fixed Assets..............................................56
Other Factors........................................................................................................56
Components of Total Sales...................................................................................57
Total Assets Turnover...............................................................................................58
Interrelation of Total Sales and Total Assets........................................................58
Analyzing Total Assets.........................................................................................59
Total Debt to Total Assets (Debt Ratio)...................................................................61
Times Interest Earned...............................................................................................63

Page # 4

Profitability Ratios...............................................................................................66
Profit Margin on Sales..............................................................................................66
Basic Earning Power................................................................................................69
Return on Assets.......................................................................................................72
Return on Equity (ROE)...........................................................................................75
Earnings per Share (EPS).........................................................................................78
Percentage and Common Size Analysis.......................................................................81
Total Sales................................................................................................................81
OVERALL PROFIT AND LOSS STATEMENT ANALYSIS................................84
Forecast for 2007......................................................................................................92
Contributions................................................................................................................96
Appendices.................................................................................................................100
References..............................................................................................................101

Page # 5

Introduction
History of the company
The SHELL is among one of the powerful brand across the globe and every where
its red and yellow emblem communicates the quality and convenience of the oil and
fuel industry, and its been more than 100 years now to its highly managed and
organized operations successfully.
The Shell brand name enjoys over a 100-year history in this part of the world, dating
back to 1899 when Asiatic Petroleum, the far eastern marketing arm of two
companies: Shell Transport Company and Royal Dutch Petroleum Company, began
importing kerosene oil from Azerbaijan into the subcontinent. Even today, the legacy
of the past is visible in a storage tank carrying the date - 1898.
The documented history of Royal Dutch Shell plc in IndoPak subcontinent dates back
to 1903 when partnership was struck between The Shell Transport & Trading
Company and the Royal Dutch Petroleum Company to supply petroleum to Asia.

Shell Pakistan Limited


In 1928, to enhance their distribution capabilities, the marketing interest of Royal
Dutch Shell plc and the Burma Oil Company Limited in India were merged and
Burma Shell Oil Storage & Distribution Company of India was born. After the
independence of Pakistan in 1947, the name was changed to the Burma Shell Oil
Distribution Company of Pakistan. In 1970, when 51% of the shareholding was

Page # 6

transferred to Pakistani investors, the name of changed to Pakistan Burma Shell (PBS)
Limited. The Shell and the Burma Groups retained the remaining 49% in equal
propositions. In February of 1993, as economic liberalization began to take root and
the Burma divested from PBS, Shell Petroleum stepped into raise its stake to 51%.
The years 2001-2 have seen the Shell Petroleum Company successively increasing its
share, with the Group now having a 76% stake in Shell Pakistan Ltd (SPL)- an
expression of confidence.

Page # 7

Growth and development


Along with all the achievements, organization development and network expansion
Shell Pakistan Limited (SPL) is successfully able to meet its financial performance
objectives as well. A very fast growth in the profits reporting year by year has become
the trend for SPL since last decade, and especially in last 5 years. Around only Rs.
200 million in 1995 to more than Rs. 2500 million current profits is really a handsome
growth. (Financial details are in later section)

In 1992 when Shell Pakistan Limited replaced PBS, it also changed traditional
corporate culture and endeavor all the modern strategies to set the trends in the Oil,
Fuel and Lubes Marketing and won retail consumer preferences up to 70 %1 and also
currently enjoying highest brand share preferences among the major OMCs (Oil
Marketing Companies).
Large investments in the above stated period also catalyzed to boost SPL corporate
image and quality preferences for performance. Only for year 2003 Capex 2500
million plus.

Vision
At Shell Pakistan Limited, we strive to deliver results, performance to the highest
standards, develop our people, provide quality customer service and actively pursue
consistent safety improvements.
A firm based on performance enables us to deliver strong returns and valued growth
for our shareholders, greater and better choices for our customers and opportunities
and improvements in the quality of life of our communities. In an unsettled world, our
commitment to performance at every level continues to be both challenge and the
aspiration.
1

Executive Corporate Planning

Page # 8

Values
Shell Pakistan Ltd. employees share a set of core values honesty, integrity and
respect for people. We also firmly believe in the fundamental importance of trust,
openness, teamwork and professionalism, and pride in what we do.

Corporate Responsibilities
Shell Pakistan Ltd. recognizes five areas of responsibility. It is the duty of
management continuously to assess the priorities and discharge these inseparable
responsibilities on the basis of that assessment.
a. To shareholders
To protect shareholders investment, and provide a long-term return competitive with
those of other leading companies in the industry.
b. To customers
To win and maintain customers by developing and providing products and services
which offer value in terms of price, quality, safety and environmental impact, which
are supported by the requisite technological, environmental and commercial expertise.
c. To employees
To respect the human rights of our employees and to provide them with good and safe
working conditions and competitive terms and conditions of employment.
To promote the development and best use of the talents of our employees; to create an
inclusive work environment where every employee has an equal opportunity to
develop his or her skills and talents.
To encourage the involvement of employees in the planning and direction of their
work; to provide them with channels to report concerns.

Page # 9

We recognize that commercial success depends on the full commitment of all


employees.
d. To those with whom we do business
To seek mutually beneficial relationships with contractors, suppliers and in joint
ventures and to promote the application of these Shell Pakistan Ltd. General Business
Principles or equivalent principles in such relationships. The ability to promote these
principles effectively will be an important factor in the decision to enter into or
remain in such relationship.
e. To society
To conduct business as responsible corporate members of society, to comply with
applicable laws and regulations, to support fundamental human rights in line with the
legitimate role of business, and to give proper regard to health, safety, security and the
environment.

Corporate Principles
Principle 1: Economic
Long-term profitability is essential to achieving our business goals and to our
continued growth. It is a measure both of efficiency and of the value that customers
place on Shell Pakistan Ltd. products and services. It supplies the necessary corporate
resources for the continuing investment that is required to develop and produce future
energy supplies to meet customer needs. Without profits and a strong financial
foundation, it would not be possible to fulfil our responsibilities.
Criteria for investment and divestment decisions include sustainable development
considerations (economic, social and environmental) and an appraisal of the risks of
the investment.
Principle 2: Competition
Shell Pakistan Ltd. supports free enterprise. We seek to compete fairly and ethically
and within the framework of applicable competition laws; we will not prevent others
from competing freely with us.

Page # 10

Principle 3: Business Integrity


Shell Pakistan Ltd. insists on honesty, integrity and fairness in all aspects of our
business and expects the same in our relationships with all those with whom we do
business. The direct or indirect offer, payment, soliciting or acceptance of bribes in
any form is unacceptable. Facilitation payments are also bribes and should not be
made. Employees must avoid conflicts of interest between their private activities and
their part in the conduct of company business. Employees must also declare to their
employing company potential conflicts of interest. All business transactions on behalf
of Shell Pakistan Ltd. must be reflected accurately and fairly in the accounts of the
company in accordance with established procedures and are subject to audit and
disclosure.
Principle 4: Political Activities
a. Of companies
Shell Pakistan Ltd. acts in a socially responsible manner within the laws of the
countries in which we operate in pursuit of our legitimate commercial objectives.
Shell Pakistan Ltd. does not make payments to political parties, organizations or their
representatives. Shell Pakistan Ltd. does not take part in party politics. However,
when dealing with the government, Shell Pakistan Ltd. has the right and the
responsibility to make our position known on any matters which affect us, our
employees, our customers, our shareholders or local communities in a manner which
is in accordance with our value and the Business Principles.
b. Of employees
Where individuals wish to engage in activities in the community, including standing
for election to public office, they will be given the opportunity to do so where this is
appropriate in the light of local
circumstances.
Principle 5: Health, Safety, Security and the Environment

Page # 11

Shell Pakistan Ltd. has a systematic approach to health, safety, security and
environmental management in order to achieve continuous performance
improvement.
To this end, Shell Pakistan Ltd. manages these matters as critical business activities,
sets standards and targets for improvement, and measures, appraises and reports
performance externally.
We continually look for ways to reduce the environmental impact of our operations,
products and services.
Principle 6: Local Communities
Shell Pakistan Ltd. aims to be good neighbours by continuously improving the ways
in which we contribute directly or indirectly to the general well-being of the
communities within which we work.
We manage the social impacts of our business activities carefully and work with
others to enhance the benefits to local communities, and to mitigate any negative
impacts from our activities.
In addition, Shell Pakistan Ltd. takes a constructive interest in societal matters,
directly or indirectly related to our business.
Principle 7: Communication and Engagement
Shell Pakistan Ltd. recognizes that regular dialogue and engagement with our
stakeholders is essential. We are committed to reporting of our performance by
providing full relevant information to legitimately interested parties, subject to any
overriding considerations of business confidentiality. In our interactions with
employees, business partners and local communities, we seek to listen and respond to
them honestly and responsibly.
Principle 8: Compliance
We comply with all applicable laws and regulations of the counties in which we
operate.
Page # 12

Key Terms
Non Current Assets: All those assets which cant be converted into cash
immediately. All those assets which company will be using for long term operations.
Fixed Assets: At SPL fixed assets involve land, tanks, pumps, pipelines, plants,
machinery, computers, furniture and vehicles.
Long Term Investments: SPL has made long term investments in terms of Shares of
Pak Arab Pipeline Company Limited, Arabian Sea Country Club Limited and non
trading shares for Provident and Pension Trust of Shell Pakistan.
Long Term Loans and Advances: Advance payments to C.E.O, Directors, Executives,
Employees and contractors for housing, motorcar/motorbike or general purpose;
recoverable in 2 to 5 years with normal interest rate say 1% .
Long Term Deposits and Prepayments:
Current Assets:
Stores and Spares: Stores are valued at the lower of average cost and net realizable
value whereas spares are valued at the lower of cost worked out on FIFO basis and net
realizable value. Items in transit are stated as cost incurred to date.
Stock in trade: Valued at the lower of cost, calculated on FIFO basis and net realizable
value. Charges such as excise, customs, and similar levies on unsold stock of product
are added to the value of stock and carried forward.
Trade debts: original invoice amount less provision for impairment which is based on
a review of outstanding amounts at the balance sheet date. Bad debts are written off to
PL account when identified.

Page # 13

Loans and Advances: Again Advance payments to C.E.O, Directors, Executives and
Employees considered good and recoverable in short term.
Trade Deposits and Short Term Prepayments: Customs, Duties, Levies and short term
prepayments for SPL.
Other Receivables: Comprises of 10 different accounts but major share is of price
differentials on import purchases and claims. Other than this staff retirement and
worker participation funds, sales tax and customs receivable, due from related parties
and advances to suppliers etc.
Taxation Recoverable: Last time observed in 2003 accounts books, since then this
account has been closed and no more existing in current records.
Cash and Bank Balances: Cash in hand and deposits with banks with interest bearing
current accounts
Current Liabilities:
Current Maturity of Liabilities against Assets Subject to Finance Lease: SPL has
leasing agreements with various leasing companies for the lease of operational
vehicles like trucks, transport vans, mobile training units etc. These liabilities are
payable by 2009.
Short Term Running Finances Utilized Under Mark-up Arrangements: Short term
running finances available from various banks and secured by stock in trade, trade
debts and other receivables.
Short Term Loans: Again available from various banks and secured by stock in trade,
trade debts and other receivables of SPL.

Page # 14

Creditors, Accrued and Other Liabilities: Payables to contract dealers, creditors, for
accrued liabilities, duties and surcharge etc.
Mark-up Accrued: for the arrangements of short term loans and running finances.

Non-current liabilities:
Asset Retirement Obligation: A separate Account has been created since last two years
for those assets which are going to be retired.
Deferred taxation: Deferred tax liability arising in respect of tax depreciation
allowances and deferred tax asset in respect of short term provision and add back to
taxable income expected to be reversed in future periods.
Liabilities against Assets Subject to Finance Lease: Accounted for at the net present
value of minimum payments under the lease agreement. Finance charges under the
lease agreement are allocated to periods during the lease term so as to produce a
constant periodic rate of financial cost on the remaining balance of principal liability
for each period.
Share Capital: SPL share capital is the amount they generated by selling its shares to
general public, employees and other corporations. These include ordinary shares with
the face value of Rs.10.
PL A/C
Sales: Sales of the companys products including non fuel retail sales and other
revenues.
Other Revenue: License and franchise fee charge to the dealers.
Net Revenue: Earnings after sales tax

Page # 15

Cost of Products Sold: Cost of all material, work in process, finished goods and
manufacturing cost less closing finished good inventory.
Administrative and Marketing Expenses: At SPL it includes salaries, wages, stores,
material, fuel, power, lease and rentals, repair and maintenance, insurance, travelling,
advertising and publicity, depreciation and amortization etc.
Other Operating Income: Dividend income, insurance commission, markup for short
term deposits and delayed payments and few other accounts provides other operating
income to SPL.
Worker's Profit Participation and Worker's Welfare Fund: At SPL these are the two
separate investment funds to benefit the worker. Theyve separate authorized shares
and books of accounts which are audited as well.
Operating Profit: At SPL operating profits include Financial Charges such as bank
charges, interest workers fund, markups, exchange losses and few more.
Earnings per share - basic and diluted: There is diluted effect as the numbers of shares
are the same but net operating profit after tax (NOPAT) in year 2006 was more than
2005 which jumped EPS from 55.90 to 70.92.

Page # 16

Data
Balance Sheet
2000

2001

2002

2003

2004

2005

2006

3,940,58
8
5,00
1
82,74
2
8,73
4
4,037,06
5

4,302,72
0
5,00
1
92,77
2
16,22
8
4,416,72
1

4,501,20
9
88,20
1
90,15
5
7,91
0
4,687,47
5

4,828,15
7
1,877,00
1
91,59
1
30,33
2
6,827,08
1

5,399,28
2
1,877,00
1
78,51
4
76,70
0
7,431,49
7

5,587,84
0
1,877,00
1
84,87
9
48,24
4
7,597,96
4

5,728,07
5
1,877,00
1
139,64
0
110,44
5
7,855,16
1

15,17
1
2,361,48
0
413,92
6
11,37
7
55,37
4
815,14
2

18,33
5
2,699,91
0
521,77
7
18,49
9
31,55
1
1,943,36
5

11,63
8
4,605,19
9
1,193,24
3
27,02
3
70,93
0
758,42
5

22,18
4
4,536,96
5
2,038,01
6
33,52
3
78,07
8
637,22
9

16,36
6
6,608,16
7
3,738,12
8
33,27
3
144,45
1
1,690,65
5

28,86
5
9,979,88
6
5,235,84
0
41,82
1
167,31
7
3,881,79
5

2,325,50
9

2,411,61
9

478,76
4

24,22
7
2,826,98
1
1,577,22
8
33,82
1
118,26
3
587,66
5
67,49
3
1,075,69
8

566,63
6

752,11
2

981,19
7

Non Current Assets


Fixed assets
Long term investments
Long term loan and advances
Long term deposits and
prepayments
Total Non Current Assets
Current Assets
Stores and spares
Stock in trade
Trade debts
Loans and advances
Trade deposits and short term
prepayments
Other receivables
Taxation recoverable
Cash and bank balances

Page # 17

5,997,97
9

7,645,05
6

7,145,22
2

6,311,37
6

7,912,63
1

12,983,15
2

20,316,72
1

10,035,044

12,061,777

11,832,697

13,138,457

15,344,128

20,581,116

28,171,882

29,47
6

38,03
5

54,40
2

24,06
1

58,26
8

50,33
0

26,48
0

1,396,22
1

4,261,40
7

6,039,40
9

5,353,00
2

6,273,28
1

6,580,79
6

106,40
9
280,52
6
6,464,37
9

36,43
7
490,92
1
5,934,76
2

0
894,17
8
7,191,52
0

7,73
0
999,37
5
9,042,39
0

1,779,86
0
3,250,00
0
11,938,37
0
77,03
5
830,63
2

Total current liabilities

348,77
4
420,79
0
5,060,44
7

3,416,35
0
250,00
0
7,739,83
6
46,79
7
705,76
7
12,209,08
0

17,902,37
7

Net Current Assets


Total Assets less Current
Liabilities

937,53
2
4,974,59
7

1,180,67
7
5,597,39
8

1,210,46
0
5,897,93
5

(880,14
4)
5,946,93
7

(1,129,759
)
6,301,73
8

774,07
2
8,372,03
6

2,414,34
4
10,269,50
5

2,94
6
110,20
0
89,60
7

2,94
6
141,00
0
63,90
2

2,94
6
29,23
6
44,57
5

17,25
7
77,86
2

126,41
8
42,79
1

20,74
7
16,27
0

50,05
9
7,01
9

Total Current Assets


Total Assets
Current Liabilities
Current maturity of liabilities
against assets subject to finance
lease
Short term running finances
utilised under mark-up
arrangements
Short-term loans
Creditors, accrued and other
liabilities
Mark-up accrued
Taxation
Proposed dividends

Non-current liabilities
Surplus on Revaluation of Fixed
Assets
Deferred taxation
Liabilities against assets subject to
finance lease

Page # 18

Total liabilities

202,75
3
5,263,20
0

207,84
8
6,672,22
7

76,75
7
6,011,51
9

95,11
9
7,286,63
9

169,20
9
9,211,59
9

31,94
6
68,96
3
12,278,04
3

98,32
0
155,39
8
18,057,77
5

Net assets

4,771,84
4

5,389,55
0

5,821,17
8

5,851,81
8

6,132,52
9

8,303,07
3

10,114,10
7

350,65
8
2,233,02
6
2,188,16
0
4,771,84
4

350,65
8
2,233,02
6
2,805,86
6
5,389,55
0

350,65
8
2,233,02
6
3,237,49
4
5,821,17
8

350,65
8
2,233,02
6
3,268,13
4
5,851,81
8

350,65
8
2,233,02
6
3,548,84
5
6,132,52
9

350,65
8
2,233,02
6
5,719,38
9
8,303,07
3

438,32
3
2,233,02
6
7,442,75
8
10,114,10
7

Asset retirement obligation

Financed by:
Share capital
Reserves
Unappropriate profit
Shareholder's equity

Page # 19

Profit and Loss Account


2000

2001

2002

2003

2004

2005

2006

62,012,729

74,996,942

78,898,045

88,959,942

90,107,570

111,495,036

132,840,460

Non-fuel retail sales

118,874

154,891

137,671

129,445

118,504

124,935

Non-fuel retail others

24,227

20,515

35,792

23,172

25,189

19,542

151,993

207,218

315,098

403,322

300,759

413,517

Sales

Other revenue
Total Sales

62,012,729

75,292,036

79,280,669

89,448,503

90,663,509

111,939,488

133,398,454

Less: Sales tax

25,889,469

9566887

10,238,615

11,625,686

11,483,159

13,516,798

16,135,935

Net Revenue

36,123,260

65,725,149

69,042,054

77,822,817

79,180,350

98,422,690

117,262,519

Cost of products sold

32,720,625

61628478

64,164,232

72,049,466

72,973,109

89,684,584

107,301,071

3,402,635

4,096,671

4,877,822

5,773,351

6,207,241

8,738,106

9,961,448

1,438,203

2486672

3,292,917

3,794,361

3,806,007

3,454,308

3,807,932

1,155,458

989,263

Administrative and marketing


expenses
Distribution expenses

157,237

1,807,195

1,609,999

1,584,905

1,978,990

2,401,234

4,128,340

5,164,253

422,107

191,717

154,463

110,324

12,017

111,196

161,564

2,229,302

1,801,716

1,739,368

2,089,314

2,413,251

4,239,536

5,325,817

Worker's Profit Participation fund

88,000

84,631

101,892

116,972

195,430

246,390

Worker's Welfare Fund

33,000

35,546

36,037

33,538

70,181

81,924

Other operating income

Page # 20

Operating Profit

2,229,302

1,680,716

1,619,191

1,951,385

2,262,741

3,973,925

4,997,503

Financial Charges

216,414

50,269

46,755

51,480

73,817

330,941

398,009

2,012,888

1,630,447

1,572,436

1,899,905

2,188,924

3,642,984

4,599,494

713,800

574419

509,624

644,908

680,910

1,191,914

1,491,025

Profit after taxation


Unappropriated profit brought
forward
Surplus on revaluation of FA to
unappropriate profit

1,299,088

1,056,028

1,062,812

1,254,997

1,508,014

2,451,070

3,108,469

1,467,658

2,188,160

2,805,866

3,237,494

2,946

Profit avaiable for appropriation

2,766,746

3,244,188

3,868,678

4,495,437

1,508,014

2,451,070

3,108,469

37.05

30.12

30.31

35.79

43.01

70.92

55.92

Profit before taxation


Taxation

Earnings per share - basic and


diluted

Page # 21

Cash Flow Statement


2000

2001

2002

2003

2004

2005

2006

2,931,123
(49)
(388,260)
(32,901)
3,624
73,570
2,587,107

2,194,426
(752)
(785,984)
(10,030)
(7,494)
194,327
1,584,493

(154,607)
(255)
(691,360)
2,617
8,318
159,380
(675,907)

4,803,157
(1,357)
(760,817)
(1,436)
(22,422)
84,751
4,101,876

887,035
(4,038)
(496,526)
13,077
(46,368)
17,212
370,392

705,132
(85,741)
(599,548)
(6,365)
28,456
6,108
48,042

2,581,820
(235,819)
(1,336,848)
(54,761)
(62,201)
10,388
902,579

Cash Flow from Investing Activities


Fixed capital expenditures
Long term investment made
Proceeds from sale of property, plant and equipment
Net cash used in investing activities

(887,033)
11,043
(875,990)

(897,053)
4,648
(892,405)

(703,146)
(83,200)
8,541
(777,805)

(814,005)
(1,788,800)
12,607
(2,590,198)

(1,118,137)
47,432
(1,070,705)

(816,319)
29,674
(786,645)

(724,924)
43,700
(681,224)

Cash Flow from Financing Activities


Dividends paid
Repayment of liability under fianance lease
Net cash used in financing activities

(531,269)
(54,055)
(585,324)

(574,697)
(31,281)
(605,978)

(418,672)
(60,471)
(479,143)

(817,936)
(96,808)
(914,744)

(1,114,666)
(90,304)
(1,204,970)

(1,271,990)
(74,060)
(1,346,050)

(1,285,490)
(70,290)
(1,355,780)

1,125,793
1,199,716
2,325,509

86,110
2,325,509
2,411,619

(1,932,855)
2,411,619
478,764

596,934
478,764
1,075,698

(1,905,283)
1,075,698
(829,585)

(2,084,653)
(829,585)
(2,914,238)

(1,134,425)
(2,914,238)
(4,048,663)

Cash flow from operating activities


Cash generated from/(used in) operations
Mark-up and short term finances and short term loans paid
Taxes paid
Long term loans and advances (net)
Long term deposits and prepayments (net)
Mark-up received on short term deposits
Net cash inflow from operating activities

Net decrease/increase in cash and cash equivalents


Cash and cash equivalents at July 1
Cash and cash equivalents at June 30

Page # 22

Modified Du Pont Chart Calculations

2000

2001

2002

2003

2004

2005

2006

Total Cost

59,245,983

72,047,848

75,411,991

84,953,066

89,155,495

109,488,418

130,289,985

Sales

62,012,729

75,292,036

79,280,669

89,448,503

90,663,509

111,939,488

133,398,454

Fixed Assets

4,037,065

4,416,721

4,687,475

6,827,081

7,431,497

7,597,964

7,855,161

Current Assets

5,997,979

7,645,056

7,145,222

6,311,376

7,912,631

12,983,152

20,316,721

Total Assets

10,035,044

12,061,777

11,832,697

13,138,457

15,344,128

20,581,116

28,171,882

Net Income

2,766,746

3,244,188

3,868,678

4,495,437

1,508,014

2,451,070

3,108,469

4.46%

4.31%

4.88%

5.03%

1.66%

2.19%

2.33%

6.18

6.24

6.70

6.81

5.91

5.44

4.74

27.57%

26.90%

32.69%

34.22%

9.83%

11.91%

11.03%

2.10

2.24

2.03

2.25

2.50

2.48

2.79

57.98%

60.19%

66.46%

76.82%

24.59%

29.52%

30.73%

Profit Margin
Total Asset Turnover
ROA
Asset/Equity
ROE

Page # 23

Computations
Ratio Analysis
Liquidity Ratios
Current
Quick
Asset Management Ratios
Inventory Turnover
Days Sales Outstanding
Fixed Assets Turnover
Total Assets Turnover
Debt Management Ratios
Total debt to total assets
Times Interested Earned
EBTIDA Coverage
Profitabaility Ratios
Profit margin on sales
Basic Earning Power (BEP)
Return on Total Assets (ROA)
Return on Common Equity (ROE)

2000

2001

2002

2003

2004

2005

2006

1.19
0.72

1.18
0.76

1.20
0.43

0.88
0.48

0.88
0.37

1.06
0.52

1.13
0.58

26.26
4.73
15.36
6.18

27.89
9.29
17.05
6.24

17.22
3.44
16.91
6.70

31.64
2.37
13.10
6.81

19.98
2.53
12.20
5.91

16.94
5.44
14.73
5.44

13.37
10.48
16.98
4.74

0.52
10.30

0.55
33.43

0.51
34.63

0.55
37.91

0.60
30.65

0.60
12.01

0.64
12.56

4.46%
22.22%
27.57%
57.98%

4.31%
13.93%
26.90%
60.19%

4.88%
13.68%
32.69%
66.46%

5.03%
14.85%
34.22%
76.82%

1.66%
14.75%
9.83%
24.59%

2.19%
19.31%
11.91%
29.52%

2.33%
17.74%
11.03%
30.73%

Page # 24

Percentage Change
Non Current Assets
Fixed assets
Long term investments
Long term loan and advances
Long term deposits and prepayments
Total Long Term Assets
Current Assets
Stores and spares
Stock in trade
Trade debts
Loans and advances
Trade deposits and short term prepayments
Other receivables
Taxation recoverable
Cash and bank balances
Total Current Assets
Total Assets
Current Liabilities
Current maturity of liabilities against assets subject to finance
lease
Short term running finances utilised under mark-up
arrangements
Short-term loans

2001

2002

2003

2004

2005

2006

9.19
0.00
12.12
85.80
9.40

4.61
1663.67
(2.82)
(51.26)
6.13

7.26
2028.09
1.59
283.46
45.65

11.83
0.00
(14.28)
152.87
8.85

3.49
0.00
8.11
(37.10)
2.24

2.51
0.00
64.52
128.93
3.39

20.86
14.33
26.06
62.60
(43.02)
138.41

(36.53)
70.57
128.69
46.08
124.81
(60.97)

108.17
(38.61)
32.18
25.16
66.73
(22.52)

(8.43)
60.49
29.22
(0.88)
(33.98)
8.43

(26.23)
45.65
83.42
(0.75)
85.01
165.31

76.37
51.02
40.07
25.69
15.83
129.60

3.70
27.46

(80.15)
(6.54)

124.68
(11.67)

(47.32)
25.37

32.73
64.08

30.46
56.49

20.20

(1.90)

11.04

16.79

34.13

36.88

29.04

43.03

(55.77)

142.17

(13.62)

(47.39)

144.69

(47.90)
1200.00

Page # 25

Creditors, accrued and other liabilities


Mark-up accrued
Taxation
Proposed dividends
Total current liabilities

41.72

(11.37)

17.19

4.90

17.61

(69.49)
(33.33)
27.74

(65.76)
75.00
(8.19)

(100.00)
82.14
21.18

11.76
25.74

9030.23
(100.00)
35.02

Net Current Assets

25.93

2.52

(172.71)

28.36

(168.52)

211.90

Total Assets less Current Liabilities

12.52

5.37

0.83

5.97

32.85

22.66

0.00
27.95
(28.69)

0.00
(79.27)
(30.24)

(100.00)
(40.97)
74.68

632.56
(45.04)

(83.59)
(61.98)

2.51

(63.07)

23.92

77.89

(59.24)

141.28
(56.86)
207.77
125.34

Total liabilities

26.77

(9.90)

21.21

26.42

33.29

47.07

Net assets

12.94

8.01

0.53

4.80

35.39

21.81

Financed by:
Share capital
Reserves
Unappropriate profit

0.00
0.00
28.23

0.00
0.00
15.38

0.00
0.00
0.95

0.00
0.00
8.59

0.00
0.00
61.16

25.00
0.00
30.13

Shareholder's equity

12.94

8.01

0.53

4.80

35.39

21.81

Non-current liabilities
Surplus on Revaluation of Fixed Assets
Deferred taxation
Liabilities against assets subject to finance lease
Asset retirement obligation

54.25
64.62
17.69
46.63

Page # 26

Percentage Change - Profit and Loss Account

Sales
Non-fuel retail sales
Non-fuel retail others
Other revenue
Less: Sales tax
Net Revenue
Cost of products sold
Administrative and marketing expenses
Distribution expenses
Operating Profit
Other operating income

2001
20.94

21.41
(63.05)
81.95
88.35
20.40
72.90
(100.00)
(10.91)
(54.58)
(19.18)

Worker's Profit Participation fund


Worker's Welfare Fund

2002
5.20
30.30
(15.32)
36.33
5.30
7.02

2003
12.75
(11.12)
74.47
52.06
12.83
13.55

2004
1.29
(5.98)
(35.26)
28.00
1.36
(1.23)

2005
23.74
(8.45)
8.70
(25.43)
23.47
17.71

2006
19.14
5.43
(22.42)
37.49
19.17
19.38

5.05
4.11
19.07
32.42

12.72
12.29
18.36
15.23

1.74
1.28
7.52
0.31

24.30
22.90
40.77
(9.24)

(1.56)
(19.43)
(3.46)
(3.83)
7.72

24.86
(28.58)
20.12
20.40
1.38

21.34
(89.11)
15.50
14.80
(6.93)

71.93
825.32
75.68
67.07
109.26

19.14
19.64
14.00
10.24
(14.38)
25.09
45.30
25.62
26.08
16.73

Operating Profit
Financial Charges

(24.61)
(76.77)

(3.66)
(6.99)

20.52
10.11

15.96
43.39

75.62
348.33

25.76
20.27

Profit before taxation


Taxation

(19.00)
(19.53)

(3.56)
(11.28)

20.83
26.55

15.21
5.58

66.43
75.05

26.26
25.10

Profit after taxation


Unappropriated profit brought forward
Surplus on revaluation of FA tounappropriate profit

(18.71)
49.09

0.64
28.23

18.08
15.38

20.16
(100.00)
(100.00)

62.54

26.82

Page # 27

Profit avaiable for appropriation


Earnings per share - basic and diluted

17.26

19.25

16.20

(66.45)

62.54

26.82

(18.70)

0.63

18.08

20.17

64.89

(21.15)

Page # 28

Percentage Change - Cash Flow Statement


Cash flow from operating activities
Cash generated from/(used in) operations
Mark-up and short term finances and short term loans paid
Taxes paid
Long term loans and advances (net)
Long term deposits and prepayments (net)
Mark-up received on short term deposits
Net cash inflow from operating activities

2001

2002

2003

2004

2005

2006

(25.13)
1434.69
102.44
(69.51)
(306.79)
164.14
(38.75)

(107.05)
(66.09)
(12.04)
(126.09)
(211.00)
(17.98)
(142.66)

(3206.69)
432.16
10.05
(154.87)
(369.56)
(46.82)
(706.87)

(81.53)
197.57
(34.74)
(1010.65)
106.80
(79.69)
(90.97)

(20.51)
2023.35
20.75
(148.67)
(161.37)
(64.51)
(87.03)

266.15
175.04
122.98
760.35
(318.59)
70.07
1778.73

37.36
(100.00)
276.24
(58.66)

(26.99)

(11.20)

(37.44)
(26.53)

47.27
(13.40)

Cash Flow from Investing Activities


Fixed capital expenditures
Long term investment made
Proceeds from sale of property, plant and equipment
Net cash used in investing activities

1.13

(21.62)

(57.91)
1.87

83.76
(12.84)

15.77
2050.00
47.61
233.01

Cash Flow from Financing Activities


Dividends paid
Repayment of liability under finance lease
Net cash used in financing activities

8.17
(42.13)
3.53

(27.15)
93.32
(20.93)

95.36
60.09
90.91

36.28
(6.72)
31.73

14.11
(17.99)
11.71

1.06
(5.09)
0.72

Net decrease/increase in cash and cash equivalents


Cash and cash equivalents at July 1
Cash and cash equivalents at June 30

(92.35)
93.84
3.70

(2344.63)
3.70
(80.15)

(130.88)
(80.15)
124.68

(419.18)
124.68
(177.12)

9.41
(177.12)
251.29

(45.58)
251.29
38.93

Page # 29

Common Size Balance Sheet


2000

2001

2002

2003

2004

2005

2006

Non Current Assets


Fixed assets
Long term investments
Long term loan and advances
Long term deposits and prepayments
Total Long Term Assets

39.27
0.05
0.82
0.09
40.23

35.67
0.04
0.77
0.13
36.62

38.04
0.75
0.76
0.07
39.61

36.75
14.29
0.70
0.23
51.96

35.19
12.23
0.51
0.50
48.43

27.15
9.12
0.41
0.23
36.92

20.33
6.66
0.50
0.39
27.88

Current Assets
Stores and spares
Stock in trade
Trade debts
Loans and advances
Trade deposits and short term prepayments
Other receivables
Taxation recoverable
Cash and bank balances
Total Current Assets

0.15
23.53
4.12
0.11
0.55
8.12
0.00
23.17
59.77

0.15
22.38
4.33
0.15
0.26
16.11
0.00
19.99
63.38

0.10
38.92
10.08
0.23
0.60
6.41
0.00
4.05
60.39

0.18
21.52
12.00
0.26
0.90
4.47
0.51
8.19
48.04

0.14
29.57
13.28
0.22
0.51
4.15
0.00
3.69
51.57

0.08
32.11
18.16
0.16
0.70
8.21
0.00
3.65
63.08

0.10
35.42
18.59
0.15
0.59
13.78
0.00
3.48
72.12

100.00

100.00

100.00

100.00

100.00

100.00

100.00

0.29

0.32

0.46

0.18

0.38

0.24

0.09

0.00
0.00
42.47

0.00
0.00
50.07

0.00
0.00
45.24

0.00
0.00
47.75

9.10
0.00
42.89

16.60
1.21
37.61

6.32
11.54
42.38

Total Assets
Current Liabilities
Current maturity of liabilities against assets subject
to finance lease
Short term running finances utilised under mark-up
arrangements
Short-term loans
Creditors, accrued and other liabilities

Page # 30

Mark-up accrued
Taxation
Proposed dividends
Total current liabilities

0.00
3.48
4.19
50.43

0.00
0.88
2.33
53.59

0.00
0.31
4.15
50.16

0.00
0.00
6.81
54.74

0.00
0.05
6.51
58.93

0.23
3.43
0.00
59.32

0.27
2.95
0.00
63.55

9.34

9.79

10.23

-6.70

-7.36

3.76

8.57

49.57

46.41

49.84

45.26

41.07

40.68

36.45

0.03
1.10
0.89
0.00
2.02

0.02
1.17
0.53
0.00
1.72

0.02
0.25
0.38
0.00
0.65

0.00
0.13
0.59
0.00
0.72

0.00
0.82
0.28
0.00
1.10

0.00
0.10
0.08
0.16
0.34

0.00
0.18
0.02
0.35
0.55

Total liabilities

52.45
0.00

55.32
0.00

50.80
0.00

55.46
0.00

60.03
0.00

59.66
0.00

64.10
0.00

Net assets

47.55

44.68

49.20

44.54

39.97

40.34

35.90

Financed by:
Share capital
Reserves
Unappropriate profit

3.49
22.25
21.81

2.91
18.51
23.26

2.96
18.87
27.36

2.67
17.00
24.87

2.29
14.55
23.13

1.70
10.85
27.79

1.56
7.93
26.42

Shareholder's equity

47.55

44.68

49.20

44.54

39.97

40.34

35.90

Net Current Assets


Total Assets less Current Liabilities
Non-current liabilities
Surplus on Revaluation of Fixed Assets
Deferred taxation
Liabilities against assets subject to finance lease
Asset retirement obligation

Page # 31

Common Size Profit and Loss Account


2000
100.00

2001
99.61
0.16
0.03
0.20

2002
99.52
0.20
0.03
0.26

2003
99.45
0.15
0.04
0.35

2004
99.39
0.14
0.03
0.44

2005
99.60
0.11
0.02
0.27

2006
99.58
0.09
0.01
0.31

100.00
41.75

100.00
12.71

100.00
12.91

100.00
13.00

100.00
12.67

100.00
12.08

100.00
12.10

58.25
52.76
5.49
2.32
0.25
2.91
0.68
3.59

87.29
81.85
5.44
3.30
0.00
2.14
0.25
2.39
0.12
0.04

87.09
80.93
6.15
4.15
0.00
2.00
0.19
2.19
0.11
0.04

87.00
80.55
6.45
4.24
0.00
2.21
0.12
2.34
0.11
0.04

87.33
80.49
6.85
4.20
0.00
2.65
0.01
2.66
0.13
0.04

87.92
80.12
7.81
3.09
1.03
3.69
0.10
3.79
0.17
0.06

87.90
80.44
7.47
2.85
0.74
3.87
0.12
3.99
0.18
0.06

Operating Profit
Financial Charges

3.59
0.35

2.23
0.07

2.04
0.06

2.18
0.06

2.50
0.08

3.55
0.30

3.75
0.30

Profit before taxation


Taxation

3.25
1.15

2.17
0.76

1.98
0.64

2.12
0.72

2.41
0.75

3.25
1.06

3.45
1.12

Profit after taxation


Unappropriated profit brought forward
Surplus on revaluation of FA to unappropriate profit

2.09
2.37

1.40
2.91

1.34
3.54

1.40
3.62

1.66

2.19

2.33

Sales
Non-fuel retail sales
Non-fuel retail others
Other revenue
Less: Sales tax
Net Revenue
Cost of products sold
Administrative and marketing expenses
Distribution expenses
Operating Profit
Other operating income
Worker's Profit Participation fund
Worker's Welfare Fund

Page # 32

Profit available for appropriation

4.46

4.31

4.88

5.03

1.66

2.19

Page # 33

2.33

Financial Statistics Summary


Share Capital (Rs. / mn)
Reserves (Rs. / mn)
Shareholders Equity (Rs. / mn)
Break up Value (Rs.)
Dividends per share (Rs.)
Bonus
Profit Before Tax (Rs. / mn)
Profit after Tax (Rs. / mn)
Earnings per share of Rs.10 (Rs.)
Price earnings ratio
Working Capital
Current assets to current liabilities
Number of days stock
No. of days trade debts
Performance
Profit after tax as % of average capital employed
Profit after tax as % of average shareholders equity
Cost of sales as % of sales
Profit before tax as % of sales
Profit after tax as % of sales
Total debt ratio

2000
351
4421
4772
136
16.5

2001
351
5039
5390
154
12.5

2002
351
5470
5821
166
18.0

2003
351
5501
5852
167
35.0

2004
351
6781
7132
203
35.0
2189
1508
43.0
8.1

2005
351
7952
8303
237
35.0
1:4
3643
2451
55.92*
9.89*

2006
438
9676
10114
231
30.0
1:4
4599
3108
70.92
6.78

2013
1299
37.0
7.0

1630
1056
30.1
9.3

1572
1063
30.3
7.3

1900
1255
35.8
11.8

1.2
18
3

1.2
14
3

1.2
24
5

0.9
16
6

1.0
22
8

1.1
22
10

1.13
27
14

28.6
29.4
94.7
3.2
2.1
2.5

20.3
20.8
94.9
2.2
1.4
1.9

18.6
19.0
94.3
2.0
1.3
1.7

21.1
21.5
94.1
2.1
1.4
1.7

21.4
21.7
93.7
2.4
1.7
1.4

31.4
31.8
92.6
3.3
2.2
0.8

33.6
33.8
92.9
3.5
2.3
0.3

Page # 34

Du Pont Analysis

Shell Pakistan
Modified Du Pont Chart
For the year 2000
ROE
57.98%

ROA
27.57%

Assets/Equity
2.10

Profit Margin
4.46%

Sales
62,012,729

Total Cost
59,245,983

Total Asset Turn Over


6.18

Net Income
2,766,746

Sales
62,012,729

Sales
62,012,729

Total Assets
10,035,044

Fixed Assets
4,037,065

Current Assets
5,997,979

Page # 35
Note: Details of total cost and current assets are omitted form this chart for clarity.

Shell Pakistan
Modified Du Pont Chart
For the year 2001
ROE
60.19%

ROA
26.90%

Assets/Equity
2.24

Profit Margin
4.31%

Sales
75,292,036

Total Cost
72,047,848

Total Asset Turn Over


6.24

Net Income
3,244,188

Sales
75,292,036

Note: Details of total cost and current assets are omitted form this chart for clarity.

Sales
75,292,036

Total Assets
12,061,777

Fixed Assets
4,416,721

Current Assets
7,645,056

Page # 36

Shell Pakistan
Modified Du Pont Chart
For the year 2002
ROE
66.46%

ROA
32.69%

Assets/Equity
2.03

Profit Margin
4.88%

Sales
79,280,669

Total Cost
75,411,991

Total Asset Turn Over


6.70

Net Income
3,868,678

Sales
79,280,669

Note: Details of total cost and current assets are omitted form this chart for clarity.

Sales
79,280,669

Total Assets
11,832,697

Fixed Assets
4,687,475

Current Assets
7,145,222

Page # 37

Shell Pakistan
Modified Du Pont Chart
For the year 2003
ROE
76.82%

ROA
34.22%

Assets/Equity
2.25

Profit Margin
5.03%

Sales
89,448,503

Total Cost
84,953,066

Total Asset Turn Over


6.81

Net Income
4,495,437

Sales
89,448,503

Note: Details of total cost and current assets are omitted form this chart for clarity.

Sales
89,448,503

Total Assets
13,138,457

Fixed Assets
6,827,081

Current Assets
6,311,376

Page # 38

Shell Pakistan
Modified Du Pont Chart
For the year 2004
ROE
24.59%

ROA
9.83%

Assets/Equity
2.50

Profit Margin
1.66%

Sales
90,663,509

Total Cost
89,155,495

Total Asset Turn Over


5.91

Net Income
1,508,014

Sales
90,663,509

Note: Details of total cost and current assets are omitted form this chart for clarity.

Sales
90,663,509

Total Assets
15,344,128

Fixed Assets
7,431,497

Current Assets
7,912,631

Page # 39

Shell Pakistan
Modified Du Pont Chart
For the year 2005
ROE
29.52%

ROA
11.91%

Assets/Equity
2.48

Profit Margin
2.19%

Sales
111,939,488

Total Cost
109,488,418

Total Asset Turn Over


5.44

Net Income
2,451,070

Sales
111,939,488

Note: Details of total cost and current assets are omitted form this chart for clarity.

Sales
111,939,488

Total Assets
20,581,116

Fixed Assets
7,597,964

Current Assets
12,983,152

Page # 40

Shell Pakistan
Modified Du Pont Chart
For the year 2006
ROE
30.73%

ROA
11.03%

Assets/Equity
2.79

Profit Margin
2.33%

Sales
133,398,454

Total Cost
130,289,985

Total Asset Turn Over


4.74

Net Income
3,108,469

Sales
133,398,454

Sales
133,398,454

Total Assets
28,171,882

Fixed Assets
7,855,161

Current Assets
20,316,721

Page # 41
Note: Details of total cost and current assets are omitted form this chart for clarity.

Analysis of AFS
Ratio Analysis
Liquidity Ratios

Current Ratio
The current ratio for Shell over the five years between 2002 and 2006 shows a mixed
trend, as illustrated by the following bar chart.

The ratio dropped dramatically from 1.2 in 2002 to 0.88 in 2003, remained constant at
this level in 2004 and then increased to 1.06 in 2005 and then to 1.13 in 2006. The
fluctuations in the ratio can best be explained by considering the changes in the
components of current assets and current liabilities over the five years under
consideration.

Page # 42

Interrelation between Current Assets and Current Liabilities


The following graph shows the interrelation between the current assets and current
liabilities.

The narrow gap between the current assets and current liabilities throughout the five
years, as illustrated in the above chart, explains why the current ratio is so close to 1
and averages out to be 1.03. The graph also shows that the current liabilities have
been steadily increasing between 2002 and 2006. In contrast, current assets decreased
sharply in 2003, before they began to show an increase. This dip in the current assets
in 2003 explains why the current ratio was less than 1 (current ratio in 2003 was 0.88)
during that particular year. Even though current assets increased the following year
(2004), so did current liabilities, and the current ratio remained constant at 0.88, as
current liabilities remained higher than current assets. Current assets rose above
current liabilities in 2005 and 2006, giving current ratios greater than 1 in both years
(1.06 in 2005 and 1.13 in 2006).
Negative Working Capital
Because in 2003 and 2004, the current ratio was lower than 1 (0.88 in both cases), this
means that current liabilities were greater than current liabilities which means that
Shell has negative working capital. Theoretically, this means that Shell has taken on
more than it can chew, running up more debts and liabilities than it can pay off,
which has the potential to culminate in bankruptcy. However, since the current ratio
subsequently improved in 2005 and continued to improve in 2006, this seems only to
be a temporary setback.

Page # 43

Components of Current Assets


The reason for the changes in the current ratio can also be explained by looking at the
components of the current assets as well as the current liabilities.
The changes in the components of current assets are depicted in the following graph.

The graph shows that the overall trend in current assets over the years has been
increasing, with slight variations. In 2003, there was a drastic decline in the value of
Stock in trade, falling from Rs. 4,605,199,000 to Rs. 2,826,981,000, a decline of
38.61%. During this year, all other assets (except for taxation recoverable) were on
the rise. Therefore, the decline in the current ratio in 2003, at least at this stage, is
primarily attributable to the decrease in stock in trade. After 2003, stock in trade
increased, as did all the other current assets. In addition, in 2004, an additional current
asset was present taxation recoverable (value of Rs. 67,493,000), which did not
exist previously. Despite this increase the current assets, the current ratio did not
manage to increase in 2004, and remained at 0.88, the same as in 2003. This serves to
support the earlier assertion that current liabilities have also increased, so that the
current ratio remains constant.

Components of Current Liabilities


The increase in the components of current liabilities helps to explain where and how
current liabilities have increased. This is illustrated in the following graph.

Page # 44

According to the graph, the major component of current liabilities is creditors,


accrued and other liabilities. This is the only current liability which has been showing
an increasing trend over the years. The other current liabilities show a mixed trend,
declining in some years and increasing in others. There seems to be no dramatic
increase in the current liabilities in 2003, which could account for a decrease in the
current ratio in that particular year. This suggests that the decline in the current ratio
in 2003 is due primarily to the decline in stock in trade.
In 2004, the current liabilities begin to increase. Before 2004, short term running
finances utilized under mark-up arrangements did not exist on the balance sheet. The
first time this appears is in 2004, and it peaks in 2005. This increase in current
liabilities offsets the increase in current assets, so that the current ratio in 2004 (0.88)
remains the same as in 2003. In 2005, Short term running finances utilized under
mark-up arrangements reaches its peak, which theoretically should have depressed
the current ratio. However, in 2005, the current assets increase more than the current
liabilities do, and, as a consequence, the current ratio improves.

Page # 45

Quick Ratio
The quick ratio for the five years, like the current ratio, also shows a mixed trend, as
illustrated in the following graph.

The quick ratio increases from 0.43 in 2002 to 0.48 in 2003. However, the following
year, the quick ratio drops to 0.37. After that, in 2005 and 2006, the quick ratio
increases to 0.52 and 0.58 respectively.

Components of Quick Ratio


The drop in the quick ratio, like the drop in the current ratio, can be analyzed by
looking at the individual components making up the ratio. These components are
illustrated in the following graph.

Page # 46

In Rs.
000

The quick ratio has been calculated first by subtracting stock in trade from the total
current assets, and then dividing the resulting figure (hereinafter referred to as
Current Assets Less Stock in Trade) by the current liabilities. The components of
this equation are illustrated in the graph, namely:
1.
2.
3.
4.

Total Current Assets


Stock in Trade
Total Current Assets Less Stock in Trade
Total Current Liabilities

The quick ratio will increase (improve) if current assets increase, stock in trade
decreases and/or if current liabilities decrease. Similarly, if current assets decline,
and/or if one or both of stock in trade and current liabilities increase, the quick ratio
will also deteriorate. This is what the above graph attempts to analyze: changes in the
total current assets, stock in trade and current liabilities.
In 2002, the quick ratio stood at 0.43, which increased to 0.48 in 2003. This increase
was due mainly to the sharp decline in the stock in trade. The value of stock in trade
was Rs. 4,605,199,000 in 2002, but it fell to Rs. 2,826,981,000 in 2003, a decline of
38.61%. Because of this decrease, the value of Current Assets Less Stock in Trade
increased, and, despite the increase in current liabilities, the quick ratio improved in
2003.
In 2004, however, the quick ratio dropped from 0.48 to 0.37. This can be explained by
looking at the current assets and the stock in trade for that particular year. Total
current assets increased from 2003 (from Rs. 6,311,376,000 in 2003 to Rs.
Page # 47

7,912,631,000 in 2004, an increase of 25.37%), this should have improved the quick
ratio. However, the value of stock in trade also increased from Rs. 1,577,228,000 in
2003 to Rs. 2,038,016,000, an increase of 60.49%. As a consequence, as is also shown
on the graph, the gap between the current assets and stock in trade has decreased,
resulting in a decrease in the value of Current Assets Less Stock in Trade. Similarly,
current liabilities also increased from Rs. 7,191,520,000 to Rs. 9,042,390,000, by
25.74%. Since the percentage increase in the current liabilities as well as the stock in
trade is greater than the increase in the total current assets, the quick ratio declines in
2004.
In 2005, and then in 2006, the quick ratio increased. In both these years, the value of
total current assets, stock in trade and total current liabilities have all increased.
However the magnitudes of these changes have been such that the quick ratios for
both 2005 and 2006 have improved. In both the years, current assets have increased
by 64.08% in 2005 and 56.49% in 2006 (as explained in the section Current Ratio).
Current liabilities have also increased by 35.02% and 46.63% in 2005 and 2006
respectively (as explained in the section Current Ratio). At the same time, stock in
trade also increased by 45.65% and 51.02% in 2005 and 2006 respectively. Since the
percentage increase in the current assets in both years is more than the percentage
increase in both the current liabilities and stock in trade, the overall effect is an
increase in the quick ratio.

Page # 48

Asset Management Ratios

Inventory Turnover Ratio


The inventory turnover ratio provides a measure of how many times a companys
inventory (or, in Shells case, stock in trade) is sold and replaced over the year. It is
calculated by dividing sales for the year by the stock in trade for the year. Shells
inventory turnover ratio for the years 2002 to 2006 is illustrated in the following
graph.

According to the graph, the inventory turnover increased dramatically from 17.22 in
2002 to 31.64 in 2003. However, after that, the ratio continued to decline, to 19.98 in
2004 and then 16.94 in 2005 and 13.37 in 2006. There could be two main factors
responsible for any changes in the ratio, namely:
1. Sales
2. Inventory (or stock in trade)
An increase in sales and/or decrease in stock in trade will improve the inventory
turnover. Similarly, if sales decrease and/or stock in trade increase, the ratio will
decline. For this reason, the analysis of the changes in the inventory turnover ratio
focuses on these two items.

Interrelation of Total Sales and Stock in Trade


The following graph analyzes the interrelationship between total sales and stock in
trade.

Page # 49

In 2003, the total sales increased from Rs. 79,280,669,000 (in 2002) to Rs.
89,448,503,000 (2003), an increase of 152.06%, which was the largest increase in the
five years. In this year, the stock in trade also declined, from Rs. 4,605,199,000 in
2002 to Rs. 2,826,981,000, a decline of 38.61%, which was the only decrease in stock
in trade between 2002 and 2006. The increase in total sales and the decrease in the
stock in trade contributed to the increased turnover in 2003 (31.64 times, as compared
to 17.22 in 2002).
However, after 2003, the inventory turnover declined, and this decline continued until
2006. In 2004, 2005 as well as 2006, both the sales and the stock in trade increased.
Therefore, the decline in the inventory turnover ratio depended on the relative change
in both the variables. In 2004, sales increased by only 1.36%, whereas stock in trade
increased by 160.49%. Thus, 2004 seems to be a difficult year for Shell, as far as sales
were concerned. The year 2004 showed the smallest increase in sales, and the largest
increase in stock in trade, resulting in the most dramatic fall in the inventory turnover
(from 31.64 in 2003 to 19.98 in 2004). Sales seemed to have picked up in 2005 when
the increases in sales and stock in trade were 23.47% and 45.65% respectively. The
corresponding figures for 2006 were 19.17% for sales and 51.02% for stock in trade.
Since the percentage change in sales has, in all three years, been smaller than the
percentage change in the stock in trade, the inventory turnover has worsened.

Other Factors Influencing the Ratio


Stock in trade has increased throughout 2004, 2005 and 2006. It could be argued that
it was necessary to maintain higher levels of inventories because of increased sales.
However, although sales have increased in 2004, 2005 and 2006, they have been
increasing at a declining rate, as compared to the stock in trade, where the rate of
Page # 50

increase is positive. At first glance, this is suggestive of the fact that the company is
having problems selling off its inventory, or is maintaining obsolete stores of stock,
which cannot be sold. However, this could be due to other reasons as well, which are
not immediately apparent by looking at the balance sheets and profit and loss
accounts.
Fluctuations in Exchange Rate
One reason is the fact that many of Shells inputs, including its stock in trade, are
imported, and are purchased in US dollars. The amounts are then converted into
Pakistani Rupees, using the exchange rate prevailing on the date of the transaction,
and the converted amount appears on the financial statements. The exchange rate has
been continually increasing over the years, and this continues to make Shells imports
more expensive. Since stock in trade is valued at cost on the balance sheet, this means
an increase in the monetary value of stock in trade shown on the balance sheet, even
though the actual quantity purchased may not have changed. Details about the natures
of the imports could not be obtained from the financial statements, so the role (if any
did in fact exist) of the exchange rate in determining the value of stock in trade could
not be ascertained.
Fluctuations in Oil Prices
Similarly, fluctuating international oil prices have also contributed to the changes in
the sales figures. In 2006, according to the notes to the accounts, and the directors
review, international oil prices increased, and this helped increase sales revenues for
Shell. This is contrary to reports in news and business magazines that oil prices have
fallen in 2006. Quantities sold have increased over the years, but the reduction in oil
prices are reflected in the total sales revenues figures. For example, if the quantity of
fuel sold increases by 25%, but prices fall by 10%, the net increase in the sales
revenue is only 12.5%. As a consequence, it is difficult to categorize a decrease in the
sales revenue (in absolute terms), or a decrease in the rate of increase of sales
revenues as a shortcoming on the part of Shell. It could be a result of decreasing fuel
prices, or government regulation (as has been the case in 2006) of the oil and gas
industry.

Components of Total Sales


Shells sales revenues comprise non-fuel components (labeled non-fuel retail) as
well as fuel sales (labeled Sales). The non-fuel components are not affected by
international oil prices, or by government regulation, but they do contribute to total
sales revenues. Therefore, it is necessary to analyze these components in order to
obtain a better idea of the changes in sales revenue.
The following chart illustrates the extent (as a percentage) to which each of the
various fuel and non-fuel components contribute to total sales revenue in each of the
years between 2002 and 2006.

Page # 51

Sales
Non-fuel retail sales
Non-fuel retail others
Other revenue

2002
99.52
0.20
0.03
0.26
100.00

2003
99.45
0.15
0.04
0.35
100.00

2004
99.39
0.14
0.03
0.44
100.00

2005
99.60
0.11
0.02
0.27
100.00

2006
99.58
0.09
0.01
0.31
100.00

The chart illustrates that sales of fuels comprise the majority of the sales revenue for
each of the five years. As a consequence, the changes in the total sales revenues are
dictated to a large degree by the sales in the fuel sector, rather than in the non-fuel
sector. Therefore, it will not help to analyze the contribution of the non-fuel
components in the total sales revenue.

Days Sales Outstanding (DSO) Ratio


The DSO ratio illustrates how many days sales are represented by accounts
receivables, or, in other words, how many days the company must wait after making a
sale to collect the receipts. The following chart shows the changes in the days sales
outstanding (DSO) ratio between 2002 and 2006.

According to this graph, the DSO ratio has been increasing continuously over the
years. It started out at 5.42 in 2002, then eventually increased to 14.13 in 2006.
The two components making up this ratio are Accounts Receivable (or trade debts)
and average daily sales (Total sales divided by 360). The trends in these two
components are shown in the following graph.

Page # 52

This graph shows that both average daily sales and trade debts have increased over the
years. However, the sharp increases in the trade debts are the main reason behind the
changes in the DSO ratio. In 2003, the average daily sales increased by 5.3% from the
figures for 2002. In contrast, the trade debts increased by 32.18% in the same period.
Subsequent years show a similar pattern: the percentage increase in trade debts is
more drastic, and always greater than the percentage increase in the average daily
sales. In contrast the increase in average daily sales is more gradual.
At first glance, this could suggest that Shell is failing to manage its trade debts
properly and efficiently, and is letting more days lapse before it collects its debts.
However, before making such a categorical statement, it is necessary to consider
Shells credit policy how many days credit is being allowed to creditors? If, for
example, 15 days credit is being allowed, then the changes in the ratio are acceptable
in all the five years, although it does mean that Shell is relaxing its credit collection
procedure. However, relaxing its credit collection procedure could also mean that it is
trying to attract more clients, and this, in the long run, could mean more sales and
more profits in later years (albeit at the risk of more bad debts).Therefore, a relaxation
of debt collection procedure is not necessarily a bad thing.
On the other hand, if, for example, Shells debt collection procedure is 10 days, then
the DSO figures for 2005 and 2006 are not acceptable. Because both figures are
greater than 10, this means that Shell is taking longer to collect its debts than its credit
policy allows, and therefore it needs to make its debt collection procedures more
efficient.

Page # 53

However, no comment could be made on Shells DSO ratio, as information regarding


Shells credit policy could not be obtained. Therefore, it could not be ascertained
whether the DSO ratio was going well for Shell or not.

Page # 54

Fixed Assets Turnover


The following chart depicts the changes in the fixed asset turnover ratio between 2002
and 2006.

The ratio started out at 17.61 in 2002, and except for a decline in 2004, showed an
overall increasing trend.
There could be two main factors responsible for any changes in the ratio, namely:
1. Sales
2. Total fixed assets
An increase in sales and/or decrease in total fixed assets will improve the fixed asset
turnover. Similarly, if sales decrease and/or total fixed assets increase, the ratio will
decline. For this reason, the analysis of the changes in the fixed asset turnover ratio
focuses on these two items.

Page # 55

Interrelation of Total Sales and Total Fixed Assets


The following graph analyzes the interrelationship between total sales and total fixed
assets.

In 2003, sales increased by 12.75%, whereas total fixed assets increased by 7.26%.
Because sales increased more than fixed assets did, the fixed asset turnover ratio
increased in 2003. However, the following year, in 2004, the fixed asset ratio
declined. This can again be explained by analyzing the relative changes in sales and
fixed assets. Fixed assets increased by 11.83%, whereas sales increased by only
1.29%. Because fixed assets increased more than sales, the fixed asset turnover ratio
declined. In subsequent years (2005 and 2006), however, the fixed asset turnover ratio
increased. This, like the previous year (2004) can be explained by looking at the
relative percentage changes in sales and total fixed assets. In 2005, fixed assets
increased by 3.49%, whereas total sales increased by 23.47%. Similarly, in 2006,
fixed assets increased by 2.51%, whereas total sales increased by 19.17%. Since in
both cases, the percentage increase in fixed assets has been less than the percentage
increase in sales, the fixed asset turnover has managed to improve. Theoretically, this
could mean that the companys situation (despite a temporary setback in 2003) is
improving and it is becoming more efficient at utilizing its fixed assets to generate
sales.

Other Factors
However, an opinion cannot be formed about the ratios without considering other
factors. These factors are discussed in the following sections.
Fluctuations in Exchange Rate
Several of Shells fixed assets are imported and are purchased in US dollars. The
amounts are then converted into Pakistani Rupees, using the exchange rate prevailing
on the date of the transaction, and the converted amount appears on the financial
statements. The exchange rate has been continually increasing over the years, and this
continues to make Shells imports more expensive. Since fixed assets are valued at
cost on the balance sheet, this means an increase in the monetary value of fixed assets
Page # 56

shown on the balance sheet, even though the actual quantity purchased may not have
changed. Details about the natures of the imports could not be obtained from the
financial statements, so the role (if any did in fact exist) of the exchange rate in
determining the value of fixed assets could not be ascertained.
Fluctuations in Oil Prices
Similarly, fluctuating international oil prices have also contributed to the changes in
the sales figures. In 2006, according to the notes to the accounts, and the directors
review, international oil prices increased, and this helped increase sales revenues for
Shell. This is contrary to reports in news and business magazines that oil prices have
fallen in 2006. Quantities sold have increased over the years, but the reduction in oil
prices are reflected in the total sales revenues figures. For example, if the quantity of
fuel sold increases by 25%, but prices fall by 10%, the net increase in the sales
revenue is only 12.5%. As a consequence, it is difficult to categorize a decrease in the
sales revenue (in absolute terms), or a decrease in the rate of increase of sales
revenues as a shortcoming on the part of Shell. It could be a result of decreasing fuel
prices, or government regulation (as has been the case in 2006) of the oil and gas
industry.

Components of Total Sales


Shells sales revenues comprise non-fuel components (labeled non-fuel retail) as
well as fuel sales (labeled Sales). The non-fuel components are not affected by
international oil prices, or by government regulation, but they do contribute to total
sales revenues. Therefore, it is necessary to analyze these components in order to
obtain a better idea of the changes in sales revenue.
The following chart illustrates the extent (as a percentage) to which each of the
various fuel and non-fuel components contribute to total sales revenue in each of the
years between 2002 and 2006.

Sales
Non-fuel retail sales
Non-fuel retail others
Other revenue

2002
99.52
0.20
0.03
0.26
100.00

2003
99.45
0.15
0.04
0.35
100.00

2004
99.39
0.14
0.03
0.44
100.00

2005
99.60
0.11
0.02
0.27
100.00

2006
99.58
0.09
0.01
0.31
100.00

The chart illustrates that sales of fuels comprise the majority of the sales revenue for
each of the five years. As a consequence, the changes in the total sales revenues are
dictated to a large degree by the sales in the fuel sector, rather than in the non-fuel
sector. Therefore, it will not help to analyze the contribution of the non-fuel
components in the total sales revenue.

Page # 57

Total Assets Turnover


The following chart depicts the changes in the total asset turnover ratio between 2002
and 2006.

The ratio started out at 6.70 in 2002, and except for a rise in 2003, showed an overall
decreasing trend.
There could be two main factors responsible for any changes in the ratio, namely:
1. Sales
2. Total assets
An increase in sales and/or decrease in total assets will improve the total asset
turnover. Similarly, if sales decrease and/or total fixed assets increase, the ratio will
decline. For this reason, the analysis of the changes in the total asset turnover ratio
focuses on these two items.

Interrelation of Total Sales and Total Assets


The following graph analyzes the interrelationship between total sales and total assets.

Page # 58

In 2003, total sales increased by 12.83%, whereas total assets increased by only
11.04%. This slight difference between the rate of increase of sales and total assets
explains why the total asset turnover increased slightly. However, from 2004 onward,
the total asset turnover ratio declined, with the most drastic decline in 2006, when it
fell from 5.44 in 2005 to 4.74 in 2006. In all three of these years (2004, 2005 and
2006), total assets increased at a greater rate than sales did, and therefore the total
assets turnover declined. Theoretically, this could mean that Shell is not generating a
sufficient volume of business given its total asset investment, and should therefore
consider disposing of some of its assets.

Analyzing Total Assets


A clearer picture can be obtained by analyzing the components of the total assets. This
is illustrated in the following graph, which depicts the levels of all the different
components of total assets over the past five years.

Page # 59

The graph shows how the different components of total assets (fixed plus current)
have been changing over the years. In 2003, despite an increase in long term
investments of 2028.09%, and in long term deposits of 283.46%, the total asset
turnover ratio managed to increase. This was first because of a decline in several
components of current assets, most notably stock in trade, which decreased by
38.61%, which offset the increase in the non-current assets, causing total assets to
increase only by 11.04%. Similarly, in 2003, sales also increased by 12.83%, which
helped improve the total asset turnover ratio slightly.
From 2004 onwards, all assets, fixed as well as current, registered an increase. Sales
did not increase at the same rate, and therefore in each year the total asset turnover
ratio declined. However, it cannot be said that the companys position is in danger,
because of the factors mentioned earlier, namely fluctuations in the exchange rate and
declines in oil prices. The appreciating dollar makes it more expensive to import fixed
assets and inventory (assuming the other assets have nothing to do with the exchange
rate), and this increases the monetary values of the fixed assets and the inventory.
Similarly, declines in oil prices result in declines in sales revenue (or increases sales
revenue at a slower rate). Both these factors combine to reduce the total asset turnover
ratio. However, it has not been possible to ascertain whether this has been the case
with Shell or not (although it definitely is a possibility), as no data regarding the
extent of the impact of exchange rates and oil prices was available from the annual
reports.

Page # 60

Total Debt to Total Assets (Debt Ratio)


The following graph illustrates the changes in the total debt to total assets ratio
between 2002 and 2006.

The chart shows that the ratio of total debt (or total liabilities) to total assets has been
increasing over the years. It started out at 0.51 in 2002 and gradually increased to 0.64
in 2006, while it remained constant at 0.60 in both 2004 and 2005. Analysis of the
gaps between total assets and total liabilities explains the changes in the ratio.
The following graph shows the changes in the total assets and total liabilities over the
years.

According to the graph, both total assets and total liabilities have increased over the
years. Therefore, it is necessary to look at the percentage change in the figures over
the years in order to determine the reason behind the increase in the debt ratio.

Page # 61

The following table summarizes the percentage changes in both total assets and total
liabilities.
2002

Total Assets
Total liabilities

2004

2005

2006

(1.90)

2003
11.04

16.79

34.13

36.88

(9.90)

21.21

26.42

33.29

47.07

In all cases, the percentage increase in the total liabilities has been greater than the
percentage change in the total assets, which explains why the ratio has increased
between 2002 and 2006.
To help analyze the changes further, it would help to consider the changes in the total
assets and the total liabilities separately. Changes in total assets are first broken down
into changes in current assets and in non-current assets, and are illustrated in the
following graph.

According to the graph, total current assets declined from 2002 to 2003, whereas total
long term assets increased during the same period. The end result was therefore to
bring about a small increase in total assets (11.04%, the smallest in the period).
Following this, total current assets continued to rise rapidly, whereas the value of total
long term assets increased only slightly (8.85% in 2004, 2.24% in 2005 and 3.39% in
2006). Therefore, the increase in total assets can primarily be attributed to increases in
current assets.
These increases in total assets should have been sufficient to improve the debt ratio,
not worsen it. However, total liabilities have increased at a faster rate than total assets,
and this has contributed to the increase in the ratio over the years. The changes in the
liabilities are broken down into current liabilities and long-term liabilities, and are
illustrated in the following graph

Page # 62

The graph shows that the increase in total liabilities is primarily due to the increase in
total current liabilities over the years. However, a better idea can be obtained by
looking at the percentage changes in the figures, as the scale of the graph covers up
many changes in the long term liabilities. The percentage changes are summarized in
the following table.

Total current liabilities


Total long term liabilities

2002
(8.19)
(63.07)

2003
21.18
23.92

2004
25.74
77.89

2005
35.02
(59.24)

2006
46.63
125.34

Following 2002, current assets increased steadily. In contrast, the changes in the long
term liabilities fluctuated widely, showing a sharp decline (59.24%) in 2005, followed
by an increase of 125.34% in 2006. Despite the decline in the long-term liabilities
during 2005, total liabilities still increased, suggesting that the long term liabilities did
not constitute a significant portion on total debt. This is further confirmed by looking
at the balance sheet.
By looking at the balance sheet, one could conclude that the position of the company
is worsening, and it will eventually be unable to pay off its debts using its total assets.
However, the annual reports do not provide any information as to why additional
liabilities are being incurred. There has, for instance, been an increase in short term
loans (of 1200%) in 2006, and it could be possible that the increase in liabilities is
only because of an attempt on the companys part to invest in, for instance, better
technology or assets. This means that, while the financial statements are looking bad
now (because of increases in debt), the situation might improve later on.

Times Interest Earned


The times interest earned (TIE) ratio illustrates the extent to which operating profit
before taxation can be used to pay interest expense i.e. how many times can
operating profit be used to pay off interest expense (in this case, financial charges).
The changes in Shells TIE ratio are illustrated in the following chart.

Page # 63

The graph illustrates that the TIE ratio shows a mixed trend, rising slightly from
34.63% in 2002 to 37.91% in 2003, and then declining until 2005, after which it
increased slightly in 2006. Fluctuations in the ratio could be because of a change in
either operating profit or in financial charges. An increase in financial charges and/or
decrease in operating profit will depress the ratio, whereas the reverse situation will
increase it. For this reason, the analysis focuses on the changes in operating profit and
financial charges.
Changes in the operating profit are illustrated in the following graph.

This shows that operating profit has been increasing over the years. However, this is
not sufficient to explain why the TIE ratio has been declining over the years. Because
the TIE ratio has shown a mixed trend, this also means that the financial charges have
also played a role in the ratio, and that they have also been increasing. This is
confirmed by looking at the changes in the financial charges as well. The changes are
in the financial charges are illustrated in the following graph.

Page # 64

The graph shows that financial charges have also increased over the years. The
increase was slight between 2002, 2003 and 2004, but they increased dramatically in
2005, showing a 348.33% increase. This was what was responsible for the fall in the
TIE ratio from 30.65 in 2004 to 12.56 in 2005.
The fall in the TIE ratio in 2004 can be explained by considering both the financial
charges and the operating profit together. The reason that this was not done earlier
was because the scale of the graph was such that it failed to illustrate the changes in
the financial charges. The analysis is therefore done by looking at the percentage
changes in the two figures, which are shown in the following table.

Financial Charges

2002
(6.99)

2003
10.11

2004
43.39

2005
348.33

2006
20.27

Operating Profit

(24.61)

(3.66)

20.52

15.96

75.62

In 2004, financial charges increased by 43.39%, whereas operating profit only


increased by 15.21%. Therefore, the TIE ratio dropped, as the financial charges
increased more than the operating profit did. Similarly, in 2006, the TIE ratio showed
a slight improvement from the 2005 figures. This was due to an increase in the
operating profit, which was more than the increase in financial charges.
In this case, also, one might be tempted to say that the increase in the interest charges
will ultimately prove harmful for the company, as they are increasing their liabilities,
whereas their operating profit is not increasing to match it. However, at this point, this
conclusion would be premature. The rate of increase of operating profit is fluctuating,
and declines in the year in which interest expense is the highest (2005), but this could
also mean that the company is taking out loans to improve the state of the business,
by, for example, purchasing fixed assets, or investing in new technology, and this
would translate to higher profits later on.

Page # 65

Profitability Ratios

Profit Margin on Sales


The profit margin on sales ratio describes the percentage profit that is made on every
dollar of sales. The following graph illustrates the changes in Shells profit margin on
sales over the years

The graph shows that the profit margin increased from 2002 to 2003, after which it
declined in 2004. After 2004, the profit margin began to increase until 2006. Changes
in the profit margin could be because of changes in one or both of the following:
1. Sales Revenue
2. Profit available for appropriation
This change can be analyzed by looking at the changes in the profit available for
appropriation and the changes in sales revenue. An increase in profit available for
appropriation and/or a decrease in sales revenue will improve the ratio, whereas a
decrease in profit available for appropriation and/or an increase in sales revenue will
depress the ratio. For this reason, the analysis focuses on these two variables.
The following graph illustrates the changes in the profit available for appropriation
between 2002 and 2006.

Page # 66

The graph shows that between 2002 and 2003, the profit available for appropriation
increased, but in 2004, this figure dropped, after which it began to rise. This appears
to be mostly responsible for the large fall in the profit margin (from 5.03% in 2003 to
1.66% in 2004). The decline in profit available for appropriation in 2004 could be
because of a variety of factors. In that year, sales increased by 1.36%, but cost of
products sold, and administration and distribution expenses all increased too.
Similarly, financial charges increased by 43.39%, and taxation increased by 5.58%
(although this was the smallest percentage increase in the amount of taxation in the
five years between 2002 and 2006). The real culprit behind the drop in profit available
for appropriation appeared to be the large fall in other income, which reached 89.11%,
the largest in the five years. This appears to be the primary factor behind the fall in the
profit available for appropriation.
Similarly, the profit margin can also be considered by looking at the trend in the sales
revenue over the period. This trend is illustrated in the following graph.

The graph shows that sales revenue has been continually increasing over the years.
However, except for 2004, the rate of increase has been such that the profit margin
Page # 67

has managed to increase. In 2004, too, sales increased (albeit by a meager 1.36%).
Had the profit available for appropriation not changed, or if the profit had increased
more than the sales, the profit margin would have increased. However, the exact
opposite happened. Sales increased, and profit available for appropriation declined by
66.45% also. The combined effect, naturally, was to decrease the profit margin for
2004.

Page # 68

Basic Earning Power


The basic earning power provides a measure of the capability of the firms assets to
generate operating income. The following graph illustrates changes in Shells basic
earning power (BEP) between 2002 and 2006.

The graph shows that BEP shows a mixed trend over the years. BEP increased from
13.68% in 2002 to 14.85% in 2003, declined slightly to 14.75% in 2004, rose to
19.31% in 2005 and then declined to 17.74% in 2006. In order to explain the
fluctuations in BEP, it is essential to look at the changes in the variables making up
the ratio. These two variables are:
1. Earnings before Interest and Taxation (Operating Profit)
2. Total Assets
An increase in operating profit and/or decrease in total assets will increase the BEP,
whereas a decrease in operating profit and/or increase in total assets will decrease the
BEP. Therefore, the analysis focuses on changes in operating profit and total assets.
Changes in operating profit are illustrated in the following graph.

Page # 69

The operating profit has been increasing over the years. The largest increase was in
2005 (75.62%), which was caused primarily by an increase of 23.47% in sales and an
increase of 825.32% in other operating income, the largest percentage increases in all
the five years. All other factors remaining constant, the BEP would have increased.
Because the BEP is fluctuating, this means that total assets are either fluctuating too,
or they are increasing at a higher rate than the operating profit is. To find out what the
actual reason is, it is necessary to look at the trend in the total assets, which are
illustrated in the following graph

This graph also shows that total assets have been increasing over the years. If
operating profit had not increased, this would have made the BEP decline. However,
because of the different scales of the graphs, one cannot compare the two and decide
whether total assets or operating profit was responsible for the fluctuating BEP. For
this reason it is necessary to look at the percentage changes in both operating profit
and EBIT. The percentage changes are illustrated in the following table.
2002

Total Assets

(1.90)

2003
11.04

2004

2005

2006

16.79

34.13

36.88

Page # 70

Operating Profit

(3.66)

20.52

15.96

75.62

25.76

In 2003 and 2005, the operating profit increased more than the total assets. Therefore,
the BEP ratio increased in both these years. Similarly, the decline in the BEP in 2004
and 2006 was due to the fact that the increase in total assets was more than the
increase in the operating profit. By looking at the ratio, one could conclude that
Shells ability to utilize its total assets in order to generate operating profit is not
managed properly. However, one must consider another factor: the influence of the
exchange rate. As discussed earlier, Shell relies on imports, the value of which
depends on the exchange rate, which has been increasing over the years. It might be
possible that Shells fixed assets are fluctuating because of the exchange rate. Since
fixed assets constitute the largest component of total assets, the value of total assets
also changes at a variable rate. This might have been a reason behind the fluctuations
in the BEP. However, although the exchange rate is mentioned as a factor influencing
the financial statements in the annual reports, the exact extent of the impact of the
exchange rate is not mentioned. Therefore, the theory that fixed assets are affected by
fluctuations in the exchange rate is suggested only as a possibility, not as a definite
reality.

Page # 71

Return on Assets
The return on assets (ROA) ratio measures the rate of return on the companys
investments in total assets. The changes in the ratio are shown in the following chart.

According to this graph, the ROA increased in 2003, after which it declined to 9.83%
in 2004 (from 34.22% in 2002). The ROA rose to 11.91% in 2005, but then declined
slightly to 11.03% in 2006. In order to analyze the changes in the ratio, it is necessary
to look at the factors behind the ratio, namely:
1. Profit available for appropriation
2. Total assets
If the total profit available for appropriation increases and/or total assets decrease, the
ROA will improve. If, however, total profit available for appropriation decreases
and/or total assets increase, the ROA will decline. Therefore the analysis looks at
changes in both the total assets and the profit available for appropriation.
Changes in total assets are discussed in the section on BEP and are only summarized
here for the sake of continuity. Total assets have increased over the years (Refer to
graph of total assets in BEP), and had the increase not been offset by changes in the
profit available for appropriation, the ROA would have declined over the years. If that
had been the case, it would also have implied that Shell is not making efficient use of
its assets, and is putting in more and more investment in the form of assets and not
obtaining sufficient return out of it. However, when it comes to total assets, as
emphasized earlier (in the BEP section), the influence of the exchange rate cannot be
ignored.
Changes in profit available for appropriation are illustrated in the following graph.

Page # 72

The graph shows that between 2002 and 2003, the profit available for appropriation
increased, but in 2004, this figure dropped, after which it began to rise. This appears
to be mostly responsible for the large fall in the ROA (from 34.22% in 2003 to 9.83%
in 2004). The decline in profit available for appropriation in 2004 could be because of
a variety of factors. In that year, sales increased by 1.36%, but cost of products sold,
and administration and distribution expenses all increased too. Similarly, financial
charges increased by 43.39%, and taxation increased by 5.58% (although this was the
smallest percentage increase in the amount of taxation in the five years between 2002
and 2006). The real culprit behind the drop in profit available for appropriation
appeared to be the large fall in other income, which reached 89.11%, the largest in the
five years. This appears to be the primary factor behind the fall in the profit available
for appropriation.
In 2005 and 2006, the profit available for appropriation increased. However, while the
ROA increased in 2005, it decreased in 2006. This can again be explained by
comparing the changes in the profit available for appropriation and the sales. It was
not possible to put both on the same graph, because the scale ended up distorting the
changes in the profit available for appropriation. Similarly, both graphs cannot be
compared in isolation, as the scales differ. Therefore, the best method is to look at the
percentage changes in the figures. These percentage changes are shown in the
following table.

Total Assets
Profit available for appropriation

2002
(1.90)

2003
11.04

2004
16.79

2005
34.13

2006
36.88

19.25

16.20

(66.45)

62.54

26.82

By looking at the table, it is clear that in 2005, as well as in 2003, the increase in
profit available for appropriation was greater than the increase in total assets, and that
is why the ratio managed to improve in 2005. However, in 2006, the total assets
increased by 36.88%, whereas profit available for appropriation increased only by
26.82%. The increase in total assets was greater than the increase in profit available
for appropriation, and this is why the ROA declined. Again, it is not possible to ignore
the influence of the exchange rate as far as total assets are concerned. Had the
Page # 73

exchange rate remained the same, it might have been possible that the ROA would
have been different.

Page # 74

Return on Equity (ROE)


The return on equity (ROE) ratio measures the rate of return on common
stockholders investments in the company. The changes in the ratio are shown in the
following chart.

The graph shows that the ROE increased from 2002 and reached its peak in 2003 at
76.82%. After that there was a drastic decline in the ROE in 2004, and it fell to
24.59%. After 2004, it increased to 29.52% in 2005, and then to 30.73% in 2006.
In order to analyze the changes in the ratio, it is necessary to look at the factors behind
the ratio, namely:
1. Profit available for appropriation
2. Share capital
If the total profit available for appropriation increases and/or share capital decrease,
the ROE will improve. If, however, total profit available for appropriation decreases
and/or share capital increases, the ROE will decline. Therefore the analysis looks at
changes in both the share capital and the profit available for appropriation.
Changes in profit available for appropriation are illustrated in the following graph.

Page # 75

The changes are discussed in the section on ROA and are therefore not discussed
further in this section. Therefore, only the changes in share capital are discussed.
Changes in share capital are illustrated by the following graph.

The graph shows that while shareholders equity increased only slightly between 2002
and 2004, in 2005 and 2006 the rate of increase accelerated. In 2005, the
shareholders equity increased by 35.39% and in 2006 by 21.81%, as opposed to
single-digit increases in the years 2002, 2003 and 2004. Since the profit available for
appropriation has also been increasing in 2005 and 2006, the increase in the ROE was
only very slight. Similarly, in 2004, the profit available for appropriation declined,
while the shareholders equity increased. The combined impact of this was to reduce
the ROE in 2004.
It is also necessary to see why shareholders equity increased over the years. For this
it is useful to break down the components of shareholders equity and analyze the
changes therein. This is shown in the following graph.

Page # 76

According to the graph, reserves have not changed at all over the years. Similarly,
from 2002 to 2005, share capital did not increase. In 2006, there was a slight increase
in share capital (25%), due to a 1:4 issue of bonus shares. The graph also shows that
the increases in shareholders equity was due primarily to an increase in the
unappropriated profit

Page # 77

Earnings per Share (EPS)


The earnings per share can be thought of as the portion of a company's profit allocated
to each outstanding share of common stock. Shells EPS, as reported on the profit and
loss account is illustrated in the following figure.

The graph shows that the EPS has been increasing from 2002 to 2005, and then
declined in 2006. The changes in the EPS can be analyzed by looking at the factors
making it up, namely:
1. Number of outstanding shares
2. Profit after taxation
Changes in the number of outstanding shares are illustrated in the following graph.

The graph shows that except for 2006, the number of shares outstanding has not
changed. Therefore, it appears that changes in the EPS from 2002 to 2005 were due to
changes in the profit after taxation only. In 2006, because of a bonus issue, the
number of shares increased by 25%, which brought the EPS down, since the EPS
Page # 78

reported on the profit and loss account was calculated on the new number of shares
(diluted EPS).
However, this is not actually the case. In 2002 and 2006, depreciation rates of fixed
assets were revised downwards, which increased the profit before taxation, and
therefore increased the amount of tax payable as well. The effect on the EPS of
revising the depreciation rates for 2002 is illustrated in the following table (assuming
that only a 35% tax rate is applied and no other deductions are made).
Profit before taxation
Taxation (35% tax rate)
Profit after Taxation

1,508,318
527,911
980,407

Rupees
Earnings per share

27.96

Number of shares in issue

35,065,800

Similarly, for 2006, the following situation would exist


Profit before taxation
Taxation (35% tax rate)
Profit after Taxation

4,567,725
1,598,704
2,969,021

Rupees
Earnings per share

67.74

Therefore, it appears that the depreciation rates were only revised to inflate the EPS.
Adjusting for these two changes, the EPS would have been as illustrated on the
following graph

Page # 79

However, this does not present a true picture as it is based on the simple assumption
that only a 35% rate of taxation is applied. In reality, several other deductions are
made before EPS is calculated. Since the exact interrelation between the profit before
taxation and these deductions is not known, the exact EPS cannot be calculated.

Page # 80

Percentage and Common Size Analysis


Total Sales
TOTAL SALES

As can be seen from the graph above that the Total Sales of Shell is increasing
continuously. The percentage increase in year 2001 and year 2007 has been the
highest i.e. almost 20%. This is because of increasing demand of petrol and LPG in
the country. The company is on the rise although it is facing intense competition from
PSO. New petrol pumps are being opened and still long lines are observed on almost
all the stations with LPG. Non-fuel retail sales and other revenues started coming but
they only contributes to 0.5 % of the total sales.

Page # 81

TAXATION

In 2001 the taxation was 0.76% of the Total Sales. Total sales amounted to Rs75,
296,036 where as the taxation was Rs574419. From 2001 onwards company were
able to pay less sales tax due to change in their taxation system, this increased the net
income however the Cost of Good sold and administrative and marketing expenses
were reported almost double that that of Year 2000. Moreover the company started
Workers Welfare Fund and Workers Profit Participation Fund; this improved the
workers compensation and caused decrease in the operating profit as well. Thus the
increase in profits was not proportional to the increase in sales, resulting less taxation.
In 2005 the taxation was 1.06% of the Total Sales. Total Sales amounted to
Rs11,939,488 where as the taxation was Rs1,191,941. This was due to huge sales in
2005, increase of 23.74% than the previous year.

Page # 82

PROFIT AFTER TAXATION

In 2000, the profits after tax were only 2.09% of the total sales. Total sales amount to
Rs62,012,729 and Profit after tax was only Rs1299088. After 2000, the sales
increased in 2001 but total profits shows 18.71% decrease than that in 2000. The
reason was that Shell doubles their marketing expense and focus more on advertising
and marketing due to increasing competition with PSO. PSO was rising with good
pace and Shell needed to change its strategy. More over Shell started the workers
profit participation and welfare funds in order to reduce its turnover rate and retain the
good employees. These changes in the company resulted in lesser profits but in long
run produced good effect.
If you move from 2001 onwards, you will find increase in companys profit. In 2003
12% increase in sales resulted in 18% increase in profits, similarly in 2005 23%
increase in sales resulted in 62.54% increase in profits. In 2004 the company got the
highest profits in its history because of the result of higher oil and natural gas prices,
higher LNG volumes and prices, as well as higher refining margins and trading profits
in Oil Products, and higher volumes and margins in Chemicals. In 2005 this was
improved even further and in 2005 Shell broke its record the third time and achieved
about 4.6 million

Page # 83

OVERALL PROFIT AND LOSS STATEMENT ANALYSIS

Overall Break-up of Total Sales

As can be seen from the above graph, the major portion of cash inflow from sales is
eaten up by the Sales Tax and the Cost of products sold. No doubt being in petroleum
industry the cost of product is high. In 2001 Shell sales tax decreased.

Page # 84

EARNING PER SHARE BASIC AND DILUTED

SHAREHOLDERS EQUITY

Page # 85

TOTAL NON CURRENT ASSETS

The Total Non-Current Assets were about Rs4 million in 2000, they showed a gradual
increase till year 2002 but in year 2003 and above it shows a sudden increase. The
shift is due to the reason that Shell Pakistan made Long Term Investment of
Rs88,201. Later in year 2003 this Long Term Investment rose to Rs1877001. This
investment was in the purchase of 26% ordinary shares of Pak Arab Pipeline
Company Limited (PAPCO) Rs18,720,000 and Rs5000 in Arabian Sea Country Club
Limited. This was a major component of increased of Non Current Assets to
Rs7855161 by the year 2006.

Page # 86

TOTAL CURRENT ASSETS

Page # 87

As seen from the graph above that Total Current Assets fall initially in the year 2002
and 2003 from Rs7645056 to Rs71454222 and than to Rs6311376. The reason of this
decline in year 2002 Stock in Trade increased from Rs2699,910 to Rs4605,199 and
the Cash and bank balance decreased from Rs2411619 to Rs478764 only and Other
receivables decreased from 1943365 to 758425 only. Decrease in Other receivables
was due to increase in Price differential on imported purchases. With increase in
prices of packaging material and increase in Sales the Stock in Trade increased.
Decrease in Cash and bank balances was due to significant decrease in balances with
banks on interest bearing current accounts, again reason being Cash generated from/
(used in) operations resulted in negative 154607 for the first time in the history of
Shell and long term investments. However in 2004 With banks on interest bearing
current accounts shooted up from 530,313 to 1,046,69 but it was not enough to
increase the companys Total Current Assets until in the year2005 when companys
Other receivables jumped from Rs637229 to Rs1690655. The overall Total Current
Assets are on the rise due to continuous increase in Stocks in Trade,

Page # 88

TOTAL CURRENT LIABILITIES

Most of the accounts contributing in Total Current Liabilities showed no significant


change except the Taxation, Short Term Loans and Short term Running Finances
accounts. The company has entered into lease agreements with various leasing
companies for lease of motor vehicles, including tank lorries, fork lift trucks, mobile
training units, transport vans and Compressed Natural Gas (CNG) equipment. This
resulted in increase in Current Maturity of Liabilities against assets subject to finance
lease in 2004. Moreover in year 2004 the company utilized Short term running
finances under mark-up arrangements amounting to 1396221. These arrangements are
secured by hypothecation of the company's stock-in-trade, trade debts and other
receivables. The company paid all the outstanding taxes in year 2003 and just in year
2004 as well the taxation outstanding was just 7703. Overall the Current liabilities of
the company is on the rise due to continuous increase in accrued liabilities and
creditor liabilities is not being paid.

Page # 89

OVERALL ANALYSIS OF BALANCE SHEET

As seen from the graph above the Total Current Assets, Total Current Liabilities and
Shareholders equity are all uprising. Total Non Current Liabilities makes a very
Page # 90

minor portion of the Total Liabilities and mostly is from Current Liability. Similarly
the Non-Current Assets are somewhat stable on Assets side. The increase in fixed
assets is a positive sign since the company is increasing its plants and equipments;
Dispensing pumps buildings on leasehold land and vehicles mainly. However the
increase in Current liabilities is not a good sign. Share Holders equity has been almost
doubles in 5 years however the company is maintaining its Total Debt to Total Equity
ratio near 0.5 and return on equity is also significant more than 50%, so there is no
such benefit from debt financing. Company must focus on its Current liabilities and
control its increasing trend to get more profitability,

Page # 91

Forecast for 2007

Balance Sheet
2007
Non Current Assets
Fixed assets
Long term investments
Long term loan and advances
Long term deposits and prepayments
Total Non Current Assets
Current Assets
Stores and spares
Stock in trade
Trade debts
Loans and advances
Trade deposits and short term prepayments
Other receivables
Taxation recoverable
Cash and bank balances
Total Current Assets
Total Assets
Current Liabilities
Current maturity of liabilities against assets subject to
finance lease
Short term running finances utilised under mark-up
arrangements
Short-term loans
Creditors, accrued and other liabilities
Mark-up accrued
Taxation
Proposed dividends
Total current liabilities
Net Current Assets
Total Assets less Current Liabilities

6,159,806
2,679,287
114,794
105,221
9,059,109
26,354
9,174,584
5,208,768
46,674
176,392
2,698,231
9,642
189,637
17,530,281
26,589,389

42,931
2,880,133
1,964,286
10,835,091
70,658
664,476
252,975
16,703,968
826,313
9,885,421

Non-current liabilities
Surplus on Revaluation of Fixed Assets
Deferred taxation

24,453
Page # 92

Liabilities against assets subject to finance lease


Asset retirement obligation
Total liabilities

(398)
69,874
92,666
16,796,634

Net assets

9,792,755

Financed by:
Share capital
Reserves
Unappropriate profit
Shareholder's equity

400,752
2,233,026
7,158,977
9,792,755

Profit and Loss Account


Sales
Non-fuel retail sales
Non-fuel retail others
Other revenue
Total Sales
Less: Sales tax
Net Revenue
Cost of products sold
Administrative and marketing expenses
Distribution expenses
Other operating income
Worker's Profit Participation fund
Worker's Welfare Fund
Operating Profit
Financial Charges
Profit before taxation
Taxation
Profit after taxation
Unappropriated profit brought forward
Surplus on revaluation of FA to unappropriate profit
Profit avaiable for appropriation
Earnings per share - basic and diluted

2007
133,714,233
121,553
22,421
475,121
134,333,329
11,191,473
123,141,856
112,740,570
10,401,285
4,519,707
1,056,186
4,825,392
11,182
4,836,574
258,826
84,795
4,492,953
328,697
4,164,257
1,363,507
2,800,750

2,800,750
64.86
Page # 93

Cash Flow Statement


2007
Cash flow from operating activities
Cash generated from/(used in) operations
Mark-up and short term finances and short term loans
paid
Taxes paid
Long term loans and advances (net)
Long term deposits and prepayments (net)
Mark-up received on short term deposits
Net cash inflow from operating activities
Cash Flow from Investing Activities
Fixed capital expenditures
Long term investment made
Proceeds from sale of property, plant and equipment
Net cash used in investing activities

1,566,176
(172,726)
(1,048,200)
(19,656)
(39,764)
(23,202)
262,628

(818,259)
49,223
(769,036)

Cash Flow from Financing Activities


Dividends paid
Repayment of liability under fianance lease
Net cash used in financing activities

(1,481,138)
(91,624)
(1,572,761)

Net decrease/increase in cash and cash equivalents


Cash and cash equivalents at July 1
Cash and cash equivalents at June 30

(2,334,712)
(2,320,070)
(4,654,782)

Page # 94

Ratios Analysis
2007
Liquidity Ratios
Current
Quick
Asset Management Ratios
Inventory Turnover
Days Sales Outstanding
Fixed Assets Turnover
Total Assets Turnover
Debt Management Ratios
Total debt to total assets
Times Interested Earned
EBTIDA Coverage
Profitabaility Ratios
Profit margin on sales
Basic Earning Power (BEP)
Return on Total Assets (ROA)
Return on Common Equity (ROE)

1.05
0.50

14.64
13.96
14.83
5.05

0.63
13.67

2.08%
16.90%
10.53%
28.60%

Page # 95

Contributions
Contribution Statement: Syed Hammad Ishrat
I have contributed:

I have downloaded the previous reports for auditors comments


Reviewed data analysis and corrected percentage change sheet
Prepared all graphs for common size analysis
Wrote down complete analysis for common size and percentage change
Reviewed the written material of fellows

Zaki Rashidi

Zohaib Aftab

Syed Hammad Ishrat

Sufia Zamir

Page # 96

Contribution Statement: Sufia Mariyah

Read auditors comments and reports for final analysis


Reviewed all ratios and corrected some ratios XL
Prepared various graphs for ratio analysis
Wrote down complete ratio analysis part
Reviewed the written material of fellows

Zaki Rashidi

Zohaib Aftab

Syed Hammad Ishrat

Sufia Zamir

Page # 97

Contribution Statement: Zaki Rashidi


I have contributed for this project in the following ways:

Collected the photocopy of reports through a colleague


Downloaded the complete report of 2006 for key statistics
Entered the data of 3 years into XL sheet
Prepared XL sheet of Common size
Prepared XL sheet of Percentage change
Prepared XL sheet of Du Pont Analysis
Prepared XL sheet to forecast the data
Developed Modified Du Pont Charts
Performed graphical analysis
Collate various parts of the reports prepared by group members
Reviewed the written material of fellows
Format and align the report for coherent exhibit
Print and bind the report

Zaki Rashidi

Zohaib Aftab

Syed Hammad Ishrat

Sufia Zamir

Page # 98

Contribution Statement: Zohaib Aftab


I, Zohaib Aftab of MBA (eve) 3A have worked together in a group of four students for
the term report of the course Financial Management given by our instructor Mr.
Khurram Nasir. Following is the elements for the participation/contribution from my
side to our groupi performed:

Visit to the Karachi Stock Exchange for the data collection and to obtain
copies of annual reports.

Revisit of Karachi Stock Exchange physical Annual and quarterly reports

Data Collection and Gathering for section: History & Introduction of the
Company

Typing & compilation of the Key terms of Company and Industry:

Theoretical support for data and supplemental.

Reviewed the written material of fellows

I have read the above statement carefully and am fully aware of the details.

Zaki Rashidi

Zohaib Aftab

Syed Hammad Ishrat

Sufia Zamir

Page # 99

Appendices
1. Financial Statements for the year 2000
2. Financial Statements for the year 2001
3. Financial Statements for the year 2002
4. Financial Statements for the year 2003
5. Financial Statements for the year 2004
6. Financial Statements for the year 2005
7. Financial Statements for the year 2006

Page # 100

References
Websites
www.shell.com/home
http://www.shell.com/home/content/pken/about_shell/how_we_work/generalbusinessprinc_10171002.html
http://www.shell.com/home/Framework?siteId=pk-en&FC2=/pken/html/iwgen/about_shell/who_we_are/zzz_lhn.html&FC3=/pken/html/iwgen/about_shell/who_we_are/shellhistory_10171001.html
www.investopedia.com/university/financialstatements/
Books
Fundamentals of Financial Management by Eugene F. Brigham, and Joel F. Houston

Page # 101

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