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Byco: Post strong growth in sales volume

NINE MONTHS 2016 (MARCH 31, 2016)

Your Company continued to build on its operational performance during the period by registering a strong growth in sales volume. The Company earned a gross profit for the third quarter of Rs. 1.88 billion and for the nine months of Rs. 4.22 billion, translating into profit after tax of Rs. 440.2 million for the third quarter and Rs. 549.9 million for the nine months. The earnings per share for the third quarter were Rs. 0.45 and for the nine month were Rs. 0.56, compared to a loss after tax of Rs. 1.2 billion and loss per share of Rs. 1.28, in the corresponding period of last year.

The performance in current period improved due to better margins between International prices of products and crude oil, however the management expects continued volatility in crude oil and product prices. In order to minimize exposure against fluctuations in oil prices, several key steps were taken including rationalizing refinery capacity; focus on selling through the marketing arm of the Company and pursuing growth in high margin products etc. The outcome of these steps translated into a significant increase in sales volume during the period. Finance costs have reduced primarily due to payment of loan installments, decrease in KIBOR rates and early LC settlements. Administrative and selling expenses remained within budget with the exception of transportation and handling cost, which increased to cater to the increased sales volume.

The SPM of the Company’s Subsidiary Company, Byco Terminals Pakistan Limited (BTPL) operated successfully throughout the period and continued to provide support for economical crude oil and petroleum product imports.

Last year, in order to improve the capital structure of the Company, the Company sold its Isomerization Unit to a wholly owned subsidiary company namely Byco Isomerization Pakistan (Private) Limited. We are pleased to inform that No Objection Certificates (NOCs) have been obtained from the all the lenders of the Company.

ANNUAL REPORT 2016 (JUNE 30, 2016)

This was another challenging year for the oil sector as declining price trend continued to persist in most part of the year. The price of crude oil has fallen significantly since 2014, reflecting slowing down of demand, high global crude oil production and inventories. During the review year, oil prices have further declined by about 23%.

Pakistan, being a net importer of oil, has benefited significantly from falling global oil prices as oil generally constitutes about 20% of the country’s import bill. With the availability of fuel at substantially lower price compared to prior years, the domestic consumption increased substantially and during the year, 22% growth was recorded in the consumption of Motor Spirit(MS) followed by 4% growth in High Speed Diesel (HSD). The government partially passed on the benefits of decreased oil prices to general public. This has been a catalyst for increasing the consumption of petrol and has also helped in containing inflation rate to lowest seen in the last 10 years.

Seeing the enhanced consumption of MS, the government has taken a proactive view on environment and has revised country specifications for MS by introducing 92 Research Octane Number (RON) MS. This should improve the consumption efficiency of vehicles and protect the environment. 87 RON will continue to be sold alongside 92 RON.

FIRST QUARTER 2017 (SEPTEMBER 30, 2016)

Oil prices remained relatively stable in current quarter and decline of 7% was recorded during the period under review. In order to benefit from this trend, the Company focused on importing and selling more of high margin products as a result of which volumetric growth of 15% was achieved in middle and light distillates and the Company earned a gross profit of Rs. 1.26 billion compared to Rs. 0.78 billion last year.

Administrative expenses increased by 13% primarily due to increase in rent, legal and IT related costs whereas selling expenses declined by 20% due to lower sales to customers on delivered basis. The Rupee versus US Dollar remained stable which helped in minimizing the exchange losses. As a result, the Company earned profit after tax of Rs. 320 million compared to loss after tax of Rs. 425 million in same period last year.

Last year, in order to bring efficiencies in the operations of the Group, the Board of Directors of the Company considered and approved in principle a potential merger of the Company, its wholly owned subsidiary Byco Terminals Pakistan Limited and the Parent Company and under the said scheme, the Company would be the surviving entity. During the current period, the shareholders and creditors of the company have given their consent for the said scheme.

The Company continues to maintain highest standards of Health, Safety, Environment and Quality and successfully achieved 10.8 million man-hours with Lost Time Injury as at September30, 2016. Focus remained on efficient and safe operations including safety of employees, customers and contractors along with compliance with national standards for production of quality products.

HALF YEAR 2017 (DECEMBER 31, 2016)

We are pleased to inform that the Company continued its growth momentum and was able to increase sales revenue by 9% to Rs. 52.679 billion during the period under. Oil prices remained favorable with better spread between the cost of crude oil and petroleum products which helped the Company in getting positive refining margins. During this period the Company also focused on importing and selling higher margin products which increased light and middle distillate products volumetric growth by 19%.

The Company was able to generate gross profit of Rs. 3.098 billion compared to Rs. 2.335 billion in same period last year.

Administrative expenses remain well within budget whereas selling expenses declined by 37% due to reduction of volumetric sales on delivered basis.

The Company earned profit after tax of Rs. 620 million compared to profit after tax of Rs. 109 million in same period last year.

The company had filed merger petition in the court and under the scheme of merger, the Company be the surviving entity. During the current period, the shareholders and creditors of the Company have given their consent for the said scheme and subsequent to the period end, the court has sanctioned the same; however, the written order is awaited.

The Company continues to maintain highest standards of Health, Safety, Environment and Quality and successfully achieved 11.24 million man-hours with Lost Time Injury as at 31st December, 2016. Focus remained on efficient and safe operations including safety of employees, customers and contractors along with compliance with national standards for production of quality products.

NINE MONTHS 2017 (MARCH 31, 2017)

We are pleased to inform that by the grace of Allah Almighty, your Company has earned a gross profit of Rs. 5.2 billion in current period compared to gross profit of Rs. 4.2 billion in the same period last year. This significant increase in the profit reflects the Company’s strength of having forward and backward integration in the form of petroleum marketing and dedicated oil port facility which provides flexibility in operations and the ability to quickly adapt to the changing market dynamics. As a result of this, the Company focused on importing and selling higher margin products and was able to increase their volume by 17% during the current period.

Oil prices generally displayed an upward trend during the period and crude prices increased by about 10% during the period under review. Since December 2016 the crude price crossed the US$ 50 per barrel mark and continued to go upward, with only March witnessing a decline.

The Company earned profit after tax of Rs. 1.1 billion, translated into earnings per share of Rs. 1.13, compared to profit after tax of Rs. 549 million, translated into earnings per share of Rs. 0.56, in the same period last year.

We are pleased to inform that the honorable High Court of Sindh at Karachi through its order dated January 19, 2017, received on April 3, 2017, and has sanctioned the merger of Byco Oil Pakistan Limited (BOPL) and Byco Terminals Pakistan Limited (BTPL) with and into the Company from the effective date of the scheme. Pursuant to this sanction, the entire business of BTPL including its properties, assets, liabilities and rights and obligations now vest into the Company whereas BOPL will be dissolved from the date on which shares of the Company are allotted to the shareholders of BOPL. The share issuance process has already been initiated.

The Company continues to maintain highest standards of Health, Safety, Environment and Quality and successfully achieved 11.60 million man-hours without any Lost Time Injury as at March 31, 2017. Focus remained on efficient and safe operations including safety of employees, customers and contractors along with compliance with national standards for production of quality products.

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