Analysis of Financial Statements

PAKISTAN PETROLEUM LIMITED

INTRODUCTION

Pakistan Petroleum Ltd is Pakistan's Premier E&P company, the oldest and largest
Exploration and Production Company in the country was incorporated on 5th June 1950
subsequent to the promulgation of the Pakistan Petroleum Production Rules, 1949 with
the main objective of conducting exploration, development and production of Pakistan's
oil and natural gas resources. PPL inherited all the assets and liabilities of the Burmah Oil
Company (Pakistan Concessions) Limited and commenced business on 1st July 1952.

PPL and its ex-parent Burmah Oil Company have been active in the subcontinent since
the early part of the 20th century. A total of 239 wells including 65 exploratory and 174
appraisal / development wells have so far been drilled which resulted in the discovery of
about 19.90 Tcf gas (both operated and non-operated leases). A gas condensate/oil field at
Adhi with original recoverable reserves of 1,253 MT liquefied Petroleum Gas and 39.4
MMbbl of oil/condensate was also discovered by PPL.

The Company also operates a Baryte mine in Balochistan province. It produces oil well
drilling grade Baryte powder from the mine, which has proven reserves of 1.25 million
tones. For the year 2004-05, PPL's share of average production from its operated and
non-operated fields was 953 MMcfd of gas, 1,372 bpd of oil/NGL and 26 tones per day
of LPG. Production of gas from these fields meets about 25.1% of the country's
indigenous production. The gas, LPG and NGL production from PPL operated and non-
operated fields for the year 2004-05 in terms of oil equivalent, was about 171,205 barrels
of crude oil per day.

The Company has a staff of about 2520 as at 31 May, 2006 employees with about 431
qualified technical staff in the fields of engineering, computer and earth sciences. PPL
has well established IT department and all staff in the Head Office has access to
computers and are interconnected through Local Area Network (LAN). The Wide Area
Network (WAN) has also been established connecting PPL's three major producing fields
and Regional Office in Islamabad with the Head Office at Karachi. The Company has
implemented SAP in 2004 integrating core business processes using Costing, Finance,
Human Resources, Materails Managemnet, Plant maintenance and Project Systems
modules.

The Government of Pakistan (GoP) in September 1997 purchased the entire equity
interest of Burmah Castrol PLC, formerly Burmah Oil Company, in the Company
(comprising 21 million ordinary shares of Rs.10 each) representing 63.91 percent of the
Share Capital thereby increasing its holding in the Company to 93.35 percent.
Subsequent to June 2004, the GoP has disinvested a portion of its equity in the Company
equivalent to 15% of the paid up share capital of (i.e. 102.873 million shares of Rs.10
each) through an Initial Public Offering (IPO). The GoP has made a policy decision to
privatize PPL and IPO is a significant step towards this direction.

-1- AINI
 Analysis of Financial Statements

A consortium led by Merrill Lynch International and KASB securities (Pvt) Limited have
been appointed by the Privatization Commission (PC) as the Financial Advisor (FA) for
the strategic sale of GoP's 51 % interest in the company. Five (5) parties were
prequalified as potential bidders for the transaction. The Government of Pakistan
continues to pursue the privatization process through sale of its majority interest in the
Company to a strategic investor and remains committed to proceed with the transaction
with a view to concluding the process at an early date.

PPL CAPITAL STRUCTURE

The current shareholding structure of the Company is as follows:

S.No Shareholders Percentage

(i) Government of Pakistan 78.40%
(ii) International Finance Corporation 4.26%
(iii) Private shareholders 17.34%
100.0%

-2- AINI
 Analysis of Financial Statements

SCHLUMBERGER LIMITED

INTRODUCTION

Schlumberger is the world’s leading oilfield services company supplying technology,

information solutions and integrated project management that optimize reservoir
performance for customers working in the oil and gas industry. The company employs
more than 70,000 people of over 140 nationalities working in approximately 80
countries. Schlumberger supplies a wide range of products and services from seismic
acquisition and processing; formation evaluation; well testing and directional drilling to
well cementing and stimulation; artificial lift and well completions; and consulting,
software, and information management. Schlumberger also provide similar products and
services for the groundwater industry.

HISTORY

Schlumberger Limited began life as the Société de Prospection Électrique (Electric

Prospecting Company) founded in 1926 by Conrad and Marcel Schlumberger. Prior to
founding their company, the brothers had worked conducting geophysical surveys in
countries such as Romania, Canada, Serbia, South Africa, the Democratic Republic of the
Congo, and the United States. The newly founded SPE (not to be confused with the
Society of Petroleum Engineers) sold electrical-measurement mapping services, and
quickly began expanding. The company recorded the first electrical resistivity well log in
Merkwiller-Pechelbronn, France in 1927, and logged their first well in the US (in Kern
County, California) in 1929.

In 1934, the Schlumberger Well Surveying Corporation was founded. This was later to
become Schlumberger Well Services (and later Schlumberger Wire line & Testing). 1940
saw the company move its headquarters to the US oil capital, Houston, Texas. The next
few decades brought numerous breakthroughs in Schlumberger's logging technology
offerings, including the Microlog tool, Laterolog system, and Microlaterolog tool; the
latter designed to measure resistivity near the borehole. The Ridgefield, Connecticut
Research Center (Schlumberger-Doll Research or SDR) was inaugurated in 1948.
In 1956, the company known as Schlumberger Limited was officially set up in Curacao
as a holding company for all Schlumberger businesses. The American testing and

-3- AINI
 Analysis of Financial Statements

production company Johnston Testers was acquired this year as well. 1960 marked the
formation of the well-known Dowell Schlumberger (50% Schlumberger, 50% Dow
Chemical), which specialized in pumping services for the oil industry. Two years later,
Schlumberger Limited became listed on the New York Stock Exchange.

Schlumberger purchased 50% of Forex in 1964 and merged it with 50% of

Languedocienne to create the Neptune Drilling Company. The first computerized
reservoir analysis, SARABAND, was introduced in 1970. The remaining 50% of Forex
was acquired the following year; Neptune was renamed Forex Neptune Drilling
Company. In 1979, Fairchild Camera and Instrument (including Fairchild
Semiconductor), became a subsidiary of Schlumberger Limited.
The Schlumberger Cambridge Research Centre, designed by Michael Hopkins and
Partners was opened in 1985.Continuing the trend of supporting high-technology
solutions, Schlumberger quickly integrated e-mail into their business model, establishing
the first international data links with e-mail in 1981. In 1983, Schlumberger opened their
Cambridge Research Center in Cambridge, England.

The SEDCO drilling company and half of Dowell of North America were acquired in
1984, resulting in the creation of another well-known Schlumberger trademark, the
Anadrill drilling segment, a combination of Dowell and The Analysts' drilling segments.
Forex Neptune was merged with SEDCO to create the Sedco Forex Drilling Company
the following year, when Schlumberger purchased Merlin and 50% of GECO.
Schlumberger's Information Network, or SINet, launched in 1985, is the world's second
largest internal corporate network and the first commercial ARPANet-based intranet.
In 1987, Schlumberger completed their purchases of Neptune (North America), Bosco
and Cori (Italy), and Allmess (Germany). That same year, National Semiconductor
acquired Fairchild Semiconductor from Schlumberger for $122 million, and the domain
name www.slb.com was registered by the company. In 1991, Schlumberger acquired
PRAKLA-SEISMOS, and pioneered the use of geosteering to plan the drill path in
horizontal wells.

Schlumberger acquired the software company GeoQuest Systems, Inc. in 1992. With the
purchase came the conversion of SINet to TCP/IP and www capability. The remainder of
the decade saw Schlumberger buy out the petroleum division, AEG meter, and ECLIPSE
reservoir study team Intera Technologies Corp. A joint venture between Schlumberger
and Cable & Wireless plc saw the creation of Omnes, which today handles all of
Schlumberger's internal IT business. Oilphase and Camco International were also
purchased. In 1999, Schlumberger and Smith International created a joint venture, M-I
L.L.C., the world's largest drilling fluids (or mud) company. The company consists of
60% Smith International, and 40% Schlumberger. Since the joint venture was prohibited
by a 1994 antitrust consent decree barring Smith from selling or combining their fluids
business with certain other companies, including Schlumberger, the U.S. District Court in
Washington, D.C. found Smith International Inc. and Schlumberger Ltd. guilty of
criminal contempt and fined each company $750,000 and placed each company on five
years probation. Both companies also agreed to pay a total of $13.1 million, representing

-4- AINI
 Analysis of Financial Statements

a full disgorgement of all of the joint venture's profits during the time the companies
were in contempt.

At the turn of the 21st century, the Geco-Prakla division was merged with Western
Geophysical to create the seismic contracting company WesternGeco, of which
Schlumberger held a 70% stake, the remaining 30% belonging to competitor Baker
Hughes. Under new business policy, the company got rid of its famous brand names in
the oilfield service industry viz, Anadrill, Dowell, GeoQuest, Geco-Prakla, Wireline &
Testing in order to promote and sell its oil & gas services under the single trading name
of Schlumberger Oilfield Services (OFS). Also that year, Sedco Forex was spun off, and
merged with Transocean Drilling Company. The following year, Schlumberger acquired
the IT consultancy company Sema plc for $5.2 billion. The company was an Athens 2004
Summer Olympics partner, but Schlumberger's venture into IT consultancy did not pay
off, and divestiture of Sema to Atos Origin was completed that year for $1.5 billion. That
same year, the Cards division was divested through an IPO to form Axalto, which later
merged with its competitor Gemplus to form Gemalto. In 2003 the Automated Test
Equipment group, part of the 1979 Fairchild Semiconductor acquisition, was spun off to
NPTest Holding, which later sold it to Credence.
On January 10, 2005 Schlumberger purchased Waterloo Hydrogeologic, which was
followed by several other groundwater industry related companies, such as Westbay
Instruments, and Van Essen Instruments.

In late 2006, the corporate head office moved from its previous location in New York
back to Houston, Texas. In 2006, a 2 for 1 stock split was announced, effective as of
March 1, 2006. On April 21, 2006, Schlumberger purchased of the remaining 30% stake
in WesternGeco from Baker Hughes for US$2.4 billion. In 2006, Schlumberger built a
new research facility in Cambridge, Massachusetts to replace the Ridgefield, Connecticut
research center. The move was completed at the end of 2006. The new facility joins the
other research centers operated by the company in Cambridge, England; Moscow,
Russia; Stavanger, Norway; and Dhahran, Saudi Arabia.

-5- AINI
 Analysis of Financial Statements

COMPARISON OF PAKISTAN PETROLEUM LIMITED AND

SCHLUMBERGER RATIOS

 ACTIVITY ANALYSIS

RECEIVABLE TURNOVER

Pakistan Petroleum limited 35.78

Schlumberger 5.0435

40
35
30
Pakistan Petroleum
25
limited
20
Schlumberger
15
10
5
0
1

Receivable turnover means how quickly company’s receivable are converted into cash it
must be higher. The comparison shows that PPL ratio is 35.78 and Schlumberger ratio is
5.04 which shows that PPL receivable turnover ratio is more as compare to
Schlumberger. This shows that PPL is in better position as compare to Schlumberger
because more ratio shows the effectiveness of firm credit policy and economic operating
performance.

-6- AINI
 Analysis of Financial Statements

AVERAGE NO. OF DAYS RECEIVABLES OUTSTANDING

Pakistan Petroleum limited 10.20 days

Schlumberger 72.4 days

It is the debt collection period. This ratio describes that how quickly a company collect
its outstanding receivable. PPL debt collection period is 10 days and Schlumberger debt
collection period is 75 days. This shows that PPL is better as compare to Schlumberger
because PPL collect cash from receivables in 10 days but Schlumberger collect in 72
days. Less the collection period better the company’s performance and this comparison
shows that PPL is in better position as compare to Schlumberger.

WORKING CAPITAL RATIO

Pakistan Petroleum limited 2.149

Schlumberger 6.572

7
6
5 Pakistan
4 Petroleum limited
3 Schlumberger
2
1
0
1

Working capital ratio shoes that how company utilize its capital for generating sales and
higher the ratio better the company’s performance. Working capital ratio of PPL is 2.14
and Schlumberger ratio is 6.57 its mean PPL by investing Rs.1 in capital get the sales of
Rs.2.14 and the Schlumberger by investing Rs.1 in capital generate a sales of Rs.6.57.
And this comparison shows that Schlumberger is in better position as compare to PPL.

-7- AINI
 Analysis of Financial Statements

FIXED ASSETS TURNOVER

Pakistan Petroleum limited 2.63

Schlumberger 4

4.5
4
3.5
3 Pakistan Petroleum
2.5 limited
2 Schlumberger
1.5
1
0.5
0
1

This ratio shows that how company is utilizing its fixed assets efficiently for generating
sales and higher the ratio better the company performance. PPL fixed assets turnover
ratio is 2.63I and Schlumberger ratio is 4 which show the efficiency of the company in
utilizing their fixed assets. And this comparison shows that Schlumberger company is in
better position as compare to PPL. Because by utilizing fixed assets of Rs.1
Schlumberger company generate a sale of Rs.4 and PPL by utilizing fixed assets of Rs.1
generate a sales of Rs.2.63 and it clearly shows that Schlumberger is better.

TOTAL ASSETS TURNOVER

Pakistan Petroleum limited 0.871

Schlumberger 0.94

-8- AINI
 Analysis of Financial Statements

0.94
0.92
0.9 Pakistan
Petroleum limited
0.88
Schlumberger
0.86
0.84
0.82
1

This ratio shows that how company is utilizing its total assets efficiently for generating
sales and more the ratio better the company’s performance. Total assets turnover ratio of
PPL is 0.871 and Schlumberger is 0.94 which shows that Schlumberger company is
better as compare to PPL.

 LIQUIDITY ANALYSIS

CURRENT RATIO

Pakistan Petroleum limited 3.246

Schlumberger 1.423

3
Pakistan
Petroleum limited
2
Schlumberger
1

0
1

This ratio shows that how much current assets a company has against current liabilities.
And how efficiently company uses its current assets to generate more profit and higher
ratio shows better performance. Current ratio of PPL is 3.246 which show that PPL has
current assets of rs.3.246 against liabilities of Rs.1 and Schlumberger ratio is 1.423 which
shows that Schlumberger has current assets of Rs.1.423 against liabilities of Rs.1 and

-9- AINI
 Analysis of Financial Statements

PPL has more current assets to fulfill its current liabilities. This comparison shows that
PPL is in better position as compare to Schlumberger because PPL has more current
assets as compare to Schlumberger.

QUICK RATIO

Pakistan Petroleum limited 2.099

Schlumberger 1.12178

2.5

2
Pakistan
1.5 Petroleum limited
1 Schlumberger

0.5

0
1

Quick ratio or liquid ratio measures the ability of a company to use its near cash or quick
assets to immediately extinguish its current liabilities. Quick assets include those current
assets that presumably can be quickly converted to cash at close to their book values.
Such items are cash, marketable securities, and some accounts receivable. This ratio
indicates a firm's capacity to maintain operations as usual with current cash or near cash
reserves in bad periods. As such, this ratio implies a liquidation approach and does not
recognize the revolving nature of current assets and liabilities. The ratio compares a
company's cash and short-term investments to the financial liabilities the company is
expected to incur within a year's time.
Quick ratio of PPL is 2.099 and Schlumberger ratio is 1.122. PPL is better as compare to
Schlumberger.

CASH RATIO

- 10 - AINI
 Analysis of Financial Statements

Pakistan Petroleum limited 2.079

Schlumberger 0.46596

2.5

2
Pakistan
1.5 Petroleum limited

1 Schlumberger

0.5

0
1

The cash ratio measures the extent to which a corporation or other entity can quickly
liquidate assets and cover short-term liabilities, and therefore is of interest to short-term
creditors. The cash ratio of PPL is 2.079 and Schlumberger ratio is 0.469. This
comparison shows that PPL performance is better as compare to Schlumberger because
PPL has more cash to pay its current liabilities.

 LONG TERM DEBT AND SOLVENCY ANALYSIS

DEBT TO TOTAL CAPITAL

Pakistan Petroleum limited 0.264

Schlumberger 0.142

0.3
0.25
0.2 Pakistan
Petroleum limited
0.15
Schlumberger
0.1
0.05
0
1

- 11 - AINI
 Analysis of Financial Statements

The Debt to Capital Ratio (D/C ratio) shows the proportion of a company's debt to its
total capital, which consists of the sum of its debt and equity combined. The D/C ratio is
regularly used to measure a company's capital structure and its financial solvency. The
debt to total capital ratio of PPL is 0.264 and it shows that PPL has Rs.0.246 against
capital of Rs.1 which means PPL debt is less as compare to its capital. And Schlumberger
ratio is 0.142 its mean Schlumberger debt is also les as compare to its capital. And this
comparison shows that Schlumberger is better as compare to PPL because Schlumberger
debts are less as compare to PPL.

DEBT TO EQUITY

Pakistan Petroleum limited 0.36

Schlumberger 0.3

0.36
0.34 Pakistan
Petroleum
0.32 limited
0.3 Schlumberger
0.28

0.26
1

The debt to equity ratio (D/E) is a financial ratio indicating the relative proportion of
equity and debt used to finance a company's assets. This ratio is also known as Risk,
Gearing or Leverage. PPL D/E ratio is 0.36 which means company has a debt of RS.0.36
against equity of Rs.1 it shows that company has more equity to fulfill the debts. And
D/E ratio of Schlumberger 0.3 which also shows that company has more equity to fulfill
it debts. This comparison shows that Schlumberger company is better because its debts
are less as compare to PPL.

CAPITAL EXPENDITURE RATIO

- 12 - AINI
 Analysis of Financial Statements

Pakistan Petroleum limited 3.94

Schlumberger 0.33

Pakistan
3
Petroleum
limited
2
Schlumberger
1

0
1

This ratio shows a company's ability to maintain plant and equipment from cash provided
by operations, rather than by borrowing or issuing new stock. The ratio equals cash flow
from operations less dividends divided by expenditures for plant and equipment. The
capital expenditure ratio of PPL is 3.94 which shows that company has more cash from
operation to maintain its plants and equipment. And the capital expenditure ratio of
Schlumberger is 0.33 which shows that company has less cash from operation to
maintain its plants and equipment and in this case Schlumberger company borrows or
issue new stock to maintain its equipment.

 PROFITABILITY ANALYSIS

OPERATING PROFIT MARGIN

Pakistan Petroleum limited 62%

Schlumberger 27%

- 13 - AINI
 Analysis of Financial Statements

80%

60%
Pakistan
Petroleum limited
40%
Schlumberger
20%

0%
1

Operating margin is a measurement of what proportion of a company's revenue is left

over after paying for variable costs of production such as wages, raw materials, etc. A
healthy operating margin is required for a company to be able to pay for its fixed costs,
such as interest on debt. Operating margin gives analysts an idea of how much a
company makes (before interest and taxes) on each dollar of sales. The operating margin
of PPL is 62% which shows that company has more revenue that it easily fulfill its
variable cost of production and pay interest on debts. The Schlumberger ratio is 27%
which shows that company has enough revenues to fulfill its variable cost and pay
interest on debts.
And the comparison shows that PPL performance is better and it generate more revenues
as compare to Schlumberger Company.

NET INCOME PROFIT MARGIN

Pakistan Petroleum limited 42%

Schlumberger 19.3 %

50%
40% Pakistan
Petroleum
30% limited
20% Schlumberger
10%
0%
1

- 14 - AINI
 Analysis of Financial Statements

Net Profit Ratio refers to a measure of profitability and shows that a company earns how
much profit after deducting all expenses. The profit margin of PPL is 42% which shows
company’s net profit is 42% after deducting all expenses and interest and Schlumberger
ratio is 19.3%. And this comparison shows that PPL profit margin is more as to
Schlumberger which shows PPL performance is better as compare to Schlumberger.

 RETURN ON INVESTMENT

RETURN ON ASSETS

Pakistan Petroleum limited 36%

Schlumberger 18 %

40%
Pakistan
30%
Petroleum
limited
20%
Schlumberger
10%

0%
1

This ratio shows that how much return a company gets from its assets. This is an
important ratio for companies deciding whether or not to initiate a new project. The basis
of this ratio is that if a company is going to start a project they expect to earn a return on
it, ROA is the return they would receive. Simply put, if ROA is above the rate that the
company borrows at then the project should be accepted, if not then it is rejected. ROA of
PPL is 36% which shows company return on its assets and Schlumberger ratio is 18%.
The comparison shows that PPL performance is better as compare to Schlumberger
because PPL return on assets is more as compare to Schlumberger.

RETURN ON EQUITY

- 15 - AINI
 Analysis of Financial Statements

Pakistan Petroleum limited 48.8%

Schlumberger 39%

50.00%
40.00% Pakistan
Petroleum
30.00% limited
20.00%
Schlumberger
10.00%
0.00%
1

Return on equity (ROE in financial shorthand) measures how much a company earns on
each dollar that investors in its common stock have put into the company. It’s calculated
by dividing shareholders’ equity into net income for the period (after deducting preferred
stock dividends from income but without deducting common stock dividends). The
number tells shareholders how effectively a company and its management are using their
money. It is a more global measure of management efficiency than return on assets, and
one which works across a broader selection of industries.
This ratio shows how much return a company gets on its equity. ROE of PPL is 48.8%
which shows company get 48.8% return on equity and Schlumberger ratio is 39%. And
this comparison shows that PPL is better as compare to Schlumberger because PPL return
on equity is more as compare to Schlumberger.

RETURN ON TOTAL CAPITAL

Pakistan Petroleum limited 36.8%

Schlumberger 24.1%

- 16 - AINI
 Analysis of Financial Statements

40.00%
Pakistan
30.00% Petroleum
20.00% limited
Schlumberger
10.00%

0.00%
1

Return on capital how much return a company is realizing from its capital. Calculated as
profit before interest and tax divided by the difference between total assets and current
liabilities. The resulting ratio represents the efficiency with which capital is being utilized
to generate revenue. ROTC ratio of PPL is 36.8% which shows company return on
capital and Schlumberger ratio is 24.1%. the comparison shows that PPL is better as
compare to Schlumberger because PPL return on capital is more as compare to
Schlumberger and it clearly shows that PPL performance is better.

COMPARISION OF COMMON SIZE STATEMENTS

TREND ANALYSIS

Trend analysis is an aspect of technical analysis that tries to predict the future movement
of a stock based on past data. Trend analysis is based on the idea that what has happened
in the past gives traders an idea of what will happen in the future.
Trend analysis tries to predict a trend like a bull market run and ride that trend until data
suggests a trend reversal (e.g. bull to bear market). Trend analysis is helpful because
moving with trends, and not against them, will lead to profit for an investor.

FIXED ASSETS

Fixed assets include property, plants and equipment and intangible assets and fixed ratio
of PPL in 2003 is 41.7%, and in 2004 the percentage is decrease to 39.01, and it is also

- 17 - AINI
 Analysis of Financial Statements

decreased in 2005to 35.46% and in 2006 it is decreased to 31.33%. The trend shows that
company decreased its investment in fixed assets each year.
Fixed assets of Schlumberger in 2003 is 18.96% and it is decreased in 2004 to 23.91%,
and in 2005 it is decreased to 23.24% which shows a very small change as compare to
previous year and in 2006 it is increased to 24.42%. This trend shows that company
increases its investment in fixed assets.
The comparison of trend analysis shows that PPL investment in fixed assets is more as
compare to Schlumberger Company. But PPL decreased its investment in current assets
while Schlumberger increase its investment in fixed assets.

50

40

30
PPL
20 Schlumberger
10

0
2003 2004 2005 2006

LONG TERM ASSETS

Long term assets include long term investment, receivables, staff loans and deferred
taxation. PPL investment in long term assets in 2002 is14.6% and in next year it is
decreased to 11.1%, and in 2004 it is again decreased to 7.79% and in 2006 it is also
decreased to 2.78%. This shows a decreasing trend and its mean company decreased its
investment in long term assets.
Long term assets ratio of Schlumberger in 2003 is 27.98%, and next year it is increasing
to 30.66% but in 2005 it is decreased to 28.5% and in 2006 it was again increasing to
34.66%.This trend shows that company decreased its investment in long term assets in
2005 but in next company increased its investment.
The trend shows that PPL invest less in long term assets as compare to Schlumberger.
And PPL investment is also decreasing in long term assets while Schlumberger increased

- 18 - AINI
 Analysis of Financial Statements

its investment. This shows Schlumberger company is better as compare to PPL because it
invest more in long term assets.

35
30
25
20
PPL
15
Schlumberger
10
5
0
2003 2004 2005 2006

CURRENT ASSETS

Current assets include stores and spares, trade debts, cash etc. the current assets of PPL in
2003 is 43.48%, and in next year it is increased to 49.84% which shows a little higher
increase as compare to previous year, and in 2005 it is 56.74% which shows a greater
change as compare to previous year and in 2006 it is again increased to 65.87%. This
shows an increasing trend because company invests more in current assets.
Schlumberger current assets in 2003 is 51.74%, and in next year it is decreased to
44.12% which shows a greater decreased in current assets, and in 2005 it is increased to
47.32% and in 2006 it is again decreased to 40.23% which also shows a greater decline
in current assets.
The trend shows that PPL is better as compare to Schlumberger because PPL investment
in current assets is more as compare to Schlumberger. And PPL increased its investment
in current assets over last four years while Schlumberger decreased its investment, in
next year increased the investment but again decreased in next year.

- 19 - AINI
 Analysis of Financial Statements

70
60
50
40
PPL
30
Schlumberger
20
10
0
2003 2004 2005 2006

NON CURRENT LIABILITIES

Non current liabilities includes decommissioning cost, deferred taxation, long term
liabilities, minority interest etc. the non current liabilities of PPL in 2003 is 13.10%, and
in next year it is increased to 14.70% which shows a little increased as compare to
previous year, and in 2005 it is decreased to 10.47% and in 2006 it is again decreased to
6.19% which shows a greater decline.
The Schlumberger non current liabilities in 2003 is 36.78%, and in next year it is
decreased to 32.45%, and in 2005 it is again decreased to 28.19% and in 2006 it is again
decreased to 26.06%. This shows a decreasing trend its mean company’s non current
liabilities decreased.
The comparison trend shows that PPL non current liabilities are less as compare to
Schlumberger company. And this trend shows that PPL is better as compare to
Schlumberger because its non current liabilities are less. The trend also shows that non
current liabilities of both companies are decreasing.

40
35
30
25
20 PPL
15 Schlumberger
10
5
0
2003 2004 2005 2006

CURRENT LIABILITIES

- 20 - AINI
 Analysis of Financial Statements

Current liabilities includes trade debts, proposed dividend, taxation and other liabilities.
The current liabilities of PPL in 2003 is 34.05%, and in next year it is decreased to
21.95% which shows a greater decreased in current liabilities, and in 2005 it is increased
to 22.70% which shows a little increased as compare to previous year, and in 2006 it is
again decreased to 20.28%.
The Schlumberger current liabilities in 2003 is 33.9%, and in next year it is decreased to
29.38%, and in 2005 it is increased to 30.05% and in 2006 it is again decreased to
28.97%.
The trend shows that in 2003 current liabilities of both companies are equal and in next
years it is declining. This trend also shows that PPL is better because its current liabilities
are less as compare to Schlumberger.

35
30
25
20
PPL
15
Schlumberger
10
5
0
2003 2004 2005 2006

STAKEHOLDERS EQUITY

The stakeholder’s equity of PPL in 2003 is 52.83%, and in next year it is increased to
63.34%, and in 2005 it is also increased to 66.82% and in 2006 it is again increased to
73.51%. This shows an increasing trend in stakeholder’s equity.
The stakeholders equity of Schlumberger in 2003 is 29.34%, and in next year it is
increased to 38.227%, and in 2005 it is also increased to 42%,a and in 2006 it is again
increased to 45.64% which shows an increasing trend.
The trend shows that both companies stakeholders equity increasing in last four years but
the PPL is better because its equity is more as compare to Schlumberger. And it is good

- 21 - AINI
 Analysis of Financial Statements

for a company to have more equity and less debts because PPL more equity and
borrowing is less.

80
70
60
50
40 PPL
30 Schlumberger
20
10
0
2003 2004 2005 2006

COMPARISON OF COMMON SIZE INCOME STATEMENTS

SALES

For common size of income statement we take 2003 as a base year. In 2004 the sales of
PPL is 145, and in 2005 it is 191.2 which shows the sales is decreasing in this year and in
2006 the sales are 260.7 which shows higher increase as compare to previous year.
The sales of Schlumberger company in 2004 is 118.9, and in next year it is 148.17 which
shows sales are increasing in this year, and in 2006 it is 199.12 which also shows a

- 22 - AINI
 Analysis of Financial Statements

higher increase in sales. This increasing trend shows that company increase its sales in
each year.
The trend shows that both companies sales are increasing in each coming year but the
PPL is in better position as compare to Schlumberger because sales of PPL is more than
Schlumberger.

300
250
200
150 PPL
Schlumberger
100
50
0
2004 2005 2006

OPERATING PROFIT

Operating profit of PPL in 2004 is 191.4, and in next year it is 276.8 which shows a
higher increase, and in 2006 the it is 401.8 which also shows a higher increase as
compare to previous years. The trend shows that PPL operating profit is increasing and it
reflect the better performance of company.
The operating profit of Schlumberger in 2004 is 202.7, and in next year it is increased to
453.7,and in 2006 it is again increasing. The trend shows that company’s operating profit
is increasing.
The trend shows that companies earn almost equal operating profit in 2004 and it is
increasing in next two years. But the Schlumberger is in better position because its
operating profit is more as compare to PPL.

- 23 - AINI
 Analysis of Financial Statements

800
700
600
500
400 PPL
300 Schlumberger
200
100
0
2004 2005 2006

NET INCOME

Net income of PPL in 2004 is 157.9, and it is increased in next year to 205.7, and in 2006
it is again increased to 319.7. This shows an increasing trend and company’s net income
is increasing in last three years.
Net income of Schlumberger in 2004 is 52.7, and in next year it is increased to 95.12, and
in 2006 it is again increased to 159.9 which show a higher increase as compare to
previous years.
The trend shows that both companies net income is increasing but the PPL ratio of net
income is more as compare to Schlumberger. And this also shows that PPL performance
is better as compare to Schlumberger.

350
300
250
200
PPL
150
Schlumberger
100
50
0
2004 2005 2006

- 24 - AINI
 Analysis of Financial Statements

COMPARISION OF REFORMULATED BALANCE SHEET AND

INCOME STATEMENT

Return on assets (ROA)

PPL 0.768
Schlumberger 4.091

- 25 - AINI
 Analysis of Financial Statements

PPL return on assets is 0.768 and Schlumberger return on assets is 4.091. This
comparison shows that Schlumberger is better because its return on assets is more as
compare to PPL.

3 PPL
2 Schlumberger

0
1

Return on common equity (ROCE)

PPL 63.92%
Schlumberger 22.44%

80.00%

60.00%
PPL
40.00%
Schlumberger
20.00%

0.00%
1

PPL return on common equity is 63.92% and Schlumberger return on common equity is
22.44% which shows that PPL is better because its return on equity is more as compare
to Schlumberger. The spread of PPL is 17% and it is negative. Negative spread decreased
the equity and company has less potential to grow. And the spread of Schlumberger is
22% which is also negative. In this case PPL is better because its spread is less negative
as compare to Schlumberger.

- 26 - AINI
 Analysis of Financial Statements

FREE CASH FLOW

PPL 174674796
Schlumberger 2529176

Free cash flow is cash from operation and investment. PPL generate more cash from
operation as compare to Schlumberger.

DIVIDEND

PPL 174699552
Schlumberger 5583744

PPL pay more dividend to its shareholders as compare to Schlumberger because PPL has
more cash to distribute.

GROWTH IN OPERATING ASSETS

PPL 49.6%
Schlumberger 18%

50.00%
40.00%
30.00% PPL
20.00% Schlumberger
10.00%
0.00%
1

- 27 - AINI
 Analysis of Financial Statements

PPL operating assets growth rate is 49.6% and Schlumberger growth rate in operating
assets is 18% which shows that PPL is better because its growth rate is more as compare
to Schlumberger.

GROWTH IN CSE

PPL 42%
Schlumberger 10.97%

50%
40%
30% PPL
20% Schlumberger
10%
0%
1

PPL growth rate in CSE is 42% and Schlumberger growth rate is 10.97% which shows
that PPL is better because its rate is more as compare to Schlumberger.

PAKISTAN PETROLEUM LIMITED

ACTIVITY ANALYSIS

 Receivable Turnover = Sales/ Average Receivables

= 31756712 / 887546
= 35.78

Average Receivables= (Opening receivable + Closing Receivables) / 2

- 28 - AINI
 Analysis of Financial Statements

= (381065 + 1394028) / 2
= 1775093 / 2
= 887546

 Average No. of days receivables outstanding = 365 / Receivable Turnover

= 365 / 35.78
= 10.20 days

 Working Capital Ratio = Sales / Average working capital

= 31756712 / 147717605
= 2.149

Average working capital = (Opening working capital + Closing Working Capital) / 2

= [ (Current assets – Current Liabilities) + ( C.A –C.L)] /2
= [(18039558 – 7217129) + (27053297- 8332205)] / 2
= 18721092 + 10822429 / 2
= 29543521 / 2
= 147717605

 Fixed assets turnover = Sales / Average fixed assets

= 31756712 / 12072173
= 2.63

 Average fixed assets = (Opening fixed assets + Closing fixed assets) / 2

= (11274763 + 12869583) / 2
= 24144346 / 2
= 12072173

 Total assets turnover = Sales / Average total assets

- 29 - AINI
 Analysis of Financial Statements

= 31756712 /36428949
= 0.871

Average total assets = (Opening total assets + Closing Total Assets) / 2

= ( 31791802 + 41066097) / 2
= 72857899 / 2
= 36428949

LIQUIDITY ANALYSIS

 Current ratio = Current assets / Current liabilities

= 27053297 / 8332205
= 3.246

 Quick ratio = (Cash + Marketable securities +A/c Receivables) / Current

Liabilities
= [17326903 + (2395 + 156890 + 9922)] / 8332205
= 17496110 / 8332205
= 2.099

 Cash ratio = Cash + Marketable securities / Current liabilities

= 17326903 + 0 / 8332205
= 2.079

LONG TERM DEBT AND SOLVENCY ANALYSIS

 Debt to total capital = Total debt / Total capital

= 10877550 / 41066097
= 0.264

- 30 - AINI
 Analysis of Financial Statements

 Debt to equity = Total debt / Total equity

= 10877550 / 30188547
= 0.36

 Capital expenditure ratio = Cash from operation / Capital expenditure

= 13119599 / 3324595
= 3.94

PROFITABILITY ANALYSIS

 Operating profit margin = Operating income / Sales

= 19840830 / 31756712
= 0.62
= 62%

 Margin before interest and tax = Earning before interest and tax / Sales
= 20219629 / 31756712
= 0.63
= 63%

 Pretax margin = Earning before tax / Sales

= 20189533 / 31756712
= 0.64
= 64%

 Net income profit margin = Net income / Sales

= 13401001 / 31756712
= 0.421

- 31 - AINI
 Analysis of Financial Statements

= 42%

RETURN ON INVESTMENT

i. Return on assets
ii. Return on equity
iii. Return on total capital

ROA
a. Return on assets (ROA) = earning before interest and tax / Average total
assets
= 20219629 / 36428949
= 0.55
= 55%

b. Return on assets = (Net income + After tax interest expense) / Avg. total
assets
= (13401001 + 195624) / 36428949
= 13420563 / 36428949
= 0.36
= 36%

After tax interest expense = Interest expense * (1-t)

= 30096 * (1- 0.35)
= 30096 * 0.65
= 19562

ROE
c. Return on equity = ROA + debt/equity (ROA – cost of debt)
= 0.36 + 10877550/30188547 (0.36 – 0.002)

- 32 - AINI
 Analysis of Financial Statements

= 0.36 + 0.36*0.358
= 0.36 + 0.12888
= 0.4888
= 48.8%

Spread = ROA – Cost of debt

= 0.36 – 0.002
= 0.358
= 35.8%
ROTC
d. Return on total capital = EBIT / Avg. Total capital
= 20219629 / 36428949
= 0.555
= 55.5%

Avg. Total capital = (Opening total liabilities + Closing total liabilities) / 2

= (31791802 + 41066097) / 2
= 72857899 / 2
= 36428949

e. Return on total capital = (Net income + After tax interest expense) / Avg.
Total liabilities
= (13401001 + 19562) / 36428949
= 13420563 / 36428949
= 0.368
= 36.8%

- 33 - AINI
 Analysis of Financial Statements

2006
Inventory Turnover 11.71
Avg. No. of days inventory in Stock 31 days
Receivable Turnover 5.0435
Avg. No. of days Receivable Outstanding 72.4days
Payable Turnover 5.188
Avg. No. of days Payable outstanding 70.4days
Working Capital Turnover 6.572
Fixed Asset Turnover 4
Total Asset Turnover 0.94

LIQUIDITY ANALYSIS

2006

Current Ratio 1.423

Quick Ratio 1.12178
Cash Ratio 0.46596
CFO Ratio 0.740
Defensive Interval 181.4 days

- 34 - AINI
 Analysis of Financial Statements

LONG TERM AND SOLVENCY ANALYSIS

2006
Debt to Total Capital 0.142
Debt to Equity 0.3
Times Interest earned 22.1
Times Interest earned (cash basis) 20.45
Capital Expenditure Ratio 0.33
CFO to Debt 1.5

PROFITABILITY ANALYSIS

2006
Gross Profit Margin 31.29%
Operating Margin 27%
Profit Margin 19.3 %
Return on Assets 18 %
Return on Equity 39%

ROE=ROA + D/E (ROA-COST OF DEBT)

=0.18+12412255/10419883 (0.18-0.003)
=0.18+1.192 (0.18-0.003)
=0.18+1.192 (0.177)
=0.18+0.211
=0.391

- 35 - AINI
 Analysis of Financial Statements

=39

Pakistan Petroleum Limited

Common size Balance Sheet
At 30 June

2003 2004 2005 2006

ASSETS
FIXED ASSETS
38.6512 35.2264
Property, Plant and Equipment 30.6 5 2 31.07
Intengible assets 11.14 0.36 0.23 0.25
41.7 39.01 35.46 31.33
Long Term Investment - 0.53 2.05 0.75
Long term receivable 10.7 5.95 2.57 0.51
Long term loans staff 0.04 0.04 0.035 0.03
Deferred taxation 3.80 4.59 3.12 1.48

CURRENT ASSETS
Stores and spares 4.85 4.45 4.06 3.10
Trade debts 12.9 15.16 14.4 16.91
Current maturity of long term receivable 2.31 1.98 2.22 1.71
Current maturity of long term investment - - 0.00006 0.83
Loans, advances, deposits, prepayments and other
receivables 1.53 2.03 2.49 1.129
Cash and bank balances 21.84 26.19 33.54 42.19
43.48 49.84 56.74 65.87
TOTAL ASSETS 100 100 100 100

LIABILITIES
SHARE CAPITAL AND RESERVES
Share capital 33.53 27.06 21.57 16.70
Reserves 19.30 36.27 45.25 56.81
52.83 63.34 66.82 73.51

- 36 - AINI
 Analysis of Financial Statements

NON CURRENT LIABILITIES

Decommissioning cost 10.79 6.59 5.97 3.91
Long term liability for gas development
surcharge 0.17 5.95 2.57 0.51
Liabilities against assets subject to finance lease 2.12 0.25 0.19 0.19
Deferred taxation 1.89 1.72 1.57
13.10 14.70 10.47 6.19
CURRENT LIABILITIES
Current maturity of liability for gas
development surcharge 0.051 1.98 2.22 1.719
Current maturity of liabilities against assets 6.11 0.10 0.11 0.10
Trade debts 18.74 17.67 12.13 11.94
Taxation 0.13 2.18 8.229 6.52
Proposed dividend 6.70 - - -
34.05 21.95 22.70 20.28
TOTAL LIABILITIES 100 100 100 100

- 37 - AINI
 Analysis of Financial Statements

SCHLUMBERGER LIMITED AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEET
At 31 December

- 38 - AINI
 2003 2004 2005 2006
ASSETS
Analysis of Financial Statements
Current Assets
Cash 1.2 1.4 1.1 0.73
Short term Investment 14.3 17.34 18.28 12.4
Receivables less allowance for doubtful a/c 12.82 16.7 18.7 18.58
Inventories 3.97 5.1 5.6 5.46
Deferred Taxes 1.57 1.49 1.29 0.713
Other Current Assets 1.71 1.72 2.38 2.34
Assets held for sale 6.16 0.41 - -
Total Current Assets 51.74 44.12 47.32 40.23
Fixed Income Investments, held to 1.11 1.27 2 0.670
maturity
Investment in Affiliated Companies 3.88 5.5 5.47 5.29
Multi cliental Seismic Data 2.5 2.17 1.23 1
Goodwill 16.9 17.4 16.17 21.9
Intangible Assets 2.01 2.17 1.8 4
Deferred Taxes 1.58 2.15 1.83 1.8
27.98 30.66 28.5 34.66
Fixed Asset less acc. Depreciation 18.96 23.51 23.24 24.42
Other Assets 1.34 1.7 1 0.76
TOTAL ASSET 100 100 100 100

LIABILTIES&STOCKHOLDER’
EQUITY
Current Liabilities
Account payable and accrued liabilities 16.2 18.63 19.72 16.85
Estimated liability for taxes on income 4.03 5.4 5.3 4.98
Dividend payable 0.55 0.69 0.69 0.65
Long term debt-current portion 4.44 0.896 1.5 2.6
Bank & short term loans 2.6 3.6 3 3.15
Liabilities held for Sale 6.07 0.216 - -
Total Current Liabilities 33.9 29.38 30.05 28.97
Convertible Debentures - - 8 6.24
Other Long term Debt 30.42 24.7 12 14.19
Postretirement Benefits 3.1 4.2 4 4.5
Other Liabilities 1.27 0.95 1.4 1.13
Minority Interest - 39 - 1.99 2.6 2.79 AINI
-
36.78 32.45 28.19 26.06
 Analysis of Financial Statements

SCHLUMBERGER LIMITED AND SUBSIDIARY COMPANIES

Common size Income statement

- 40 - AINI
 Analysis of Financial Statements

Year ended December 31,

2003 2004 2005 2006

Operating Revenue 100 118.9 148.17 199.126
Interest and other income 100 92.54 293.215 206.17
Expenses
Cost of goods sold 100 114.13 134.1 166.5
Research and engineering 100 103.5 112 149.044
Marketing 100 62 76.1 106.75
General and administration 100 103.2 110.8 134.817
Interest 100 74.01 53.6 63.84
Income from continuing operations before 100 202.7 453.7 755.42
taxes and minority interest
Taxes on income 100 110.06 271 472.74
Income from continuing operations 100 260.4 567.6 931.76
Minority interest 100 42.63 106.24 57.02
Income from continuing operations 100 207.4 450 758.9
Income from discontinued operations 100 7.46 0.28 -
Net income 100 52.7 95.12 159.9

Pakistan Petroleum limited

Common size Income Statement
Year ended 30 June,

2003 Base
Year 2004 2005 2006
Sales - net 100 145 191.2 260.7
Field expenditure 100 105.3 116.9 130.5
Royalties 100 150.5 205.9 288.5

- 41 - AINI
 Analysis of Financial Statements

Amortization of past prospecting

expenditure 100 - - -
Operating profit 100 191.4 276.8 401.8
Share of profit in Bolan Mining
Enterprise 100 89.9 95.3 68.5
Other operating income 100 55.8 180.1 489.1
Other operating expenses 100 159.4 211.3 317.1
Profit before interest and tax 100 184.7 274.5 411.3
Interest expense 100 23.9 25.2 39.5
Profit before tax 100 187.2 278.4 417.2
Taxation 100 376.9 747.6 1046.1
Net Income 100 157.9 205.7 319.7

Pakistan Petroleum Limited

Reformulated Balance sheet
As on 30 June, 2006

OPERATING ASSETS
Property plant and equipment 12763021
Intangible assets 106562
Deferred taxation 610272
Stores and spares 1273261
Trade debts 6941736
Currency maturity of long term receivable 706309

- 42 - AINI
 Analysis of Financial Statements

Cash and balances 17326903

Receivables from SNGPL for sui field services 2395
Receivables from joint venture partners 156890
Advances to suppliers and others 38843
Trade deposits and prepayments 137799
Sales tax refundable 6700
Other receivables 9922
40080613
FINANCIAL ASSETS
Long term investment 308396
Long term receivable 211858
Long term loans staff 12691
Current maturity of long term investments 341131
Loans and advances to staff 16795
Current maturity of ling term staff 5086
Accrued financial income 89527
985484
TOTAL ASSETS 41066097

OPERATING LIABILITIES
Decommissioning cost 1608707
Long term liability for gas development surcharge 211858
Deferred liabilities 645431
Current maturity of long term liability 706309
Trade and others payables 4903960
Taxation 2677700
10753965

FINANCIAL LIABILITIES
Liabilities against assets subject to finance leases 79349
Current maturity of liabilities against assets 44236
123585
COMMON STAKEHOLDERS EQUITY
Share capital 6858376
Reserves 23330171
30188547
TOTAL LIABILITIES 41066097

NOA = Operating assets – Operating Liabilities

= 40080613 - 10753965
= 29326648

- 43 - AINI
 Analysis of Financial Statements

NFA = Financial assets – Financial liabilities

= 985484 - 123585
= 861899
RNOA
1. Return on net operating assets(ROA) = Operating income / Avg. NOA
= 188404401 / 24461845
= 0.768

Avg. NOA= (NOAt - NOAt-1) /2

= (29326648 - 19597043) / 2
= 24461845
ROCE
2. ROCE = PM x ATO – [FLEV x (RNOA – RNFA)]
= 0.592 x 1.0828 – [0.0285 x (0.768 - 0.706)]
= 0.64101 – [0.0285 x 0.62]
= 0.64101 – 0.1767
= 0.6392
= 63.92%

PM = Operating income / Sales

= 184404401 / 31756712
= 0.592

ATO = Sales / NOA

= 31756712 / 29326648
= 1.0828

FLEV = NFA /CSE

= 861899 / 30188547
= 0.0285

- 44 - AINI
 Analysis of Financial Statements

RNFA = NFI / Avg. Financial assets

= 886655 / 1255150
= 0.706

Avg. Financial assets = (NFA t – NFA t-1) / 2

= (861899 – 1648401) / 2
= 1255150

ROCE = Operating income / Avg. CSE

= 184404401 / 25716995
= 0.717

Free cash flow

( C-I ) = Operating income – Change in net operating assets
= 184404401 – (29326648 – 19597043)
= 184404401 – 9729605
= 174674796

Dividend
d = (C-I) – Change in net financial assets + NFI
= 174674796 – (985484 – 123585) + 886655
= 174674796 – 861899 + 886655
=174699552

Growth in net operating assets

Growth in net operating assets = Change in net operating assets / Beginning NOA
= (29326648 – 19597043) / 19597043
= 9729605 / 19597043
= 0.496
= 49.6%

- 45 - AINI
 Analysis of Financial Statements

Growth in CSE

Growth in CSE = Change in CSE / Beginning CSE

= (30188547 – 21245444) / 21245444
= 8943103 / 21245444
= 0.420
= 42%

Schlumberger Limited
Reformulated Balance Sheet
As on December 2006
Assets (000’s)
Operating Assets 18461078
Cash 165817
Receivables 4242000
Inventories 1246887
Deferred Taxes 162884
Current Assets (other) 585018

- 46 - AINI
 Analysis of Financial Statements

Fixed Assets less Depreciation 5576041

Goodwill 4988558
Intangible Assets 907874
Deferred Taxes (other) 412802
Other Assets 173197
Financial Assets 4244879
Short Term Investments 2883056
Fixed Income Investments 153000
Investments Affiliated Companies 1208823
Total Assets 22882138

Liabilities (000’s)
Operating Liabilities 2805498
Estimated Liabilities for Tax on Income 1186529
Dividend Payable 148720
Long Term debt 602919
Dividend Payable 148720
Bank and Short term Loans 718610
Financing Liabilities 11007960
Convertible Debentures 1424990
Other Long Term Debt 8288952
Post Retirement Benefits 1036169
Other liabilities 257849
Stock Holders Equity 15919883
Common Stock 8881946
Income Retained 11118479
Treasury Stock At Cost (2911793)
Comprehensive Loss (1168749)
Total Liabilities 22882138

NOA = Operating assets – Operating Liabilities

= 18461078 - 2805498
= 15655580

NFO = Financial assets – Financial liabilities

= 4244879-11007960
= 6763081

- 47 - AINI
 Analysis of Financial Statements

RNOA
Return on net operating assets(ROA) = Operating income / Avg. NOA
=4948158 / 1209491
= 4.091

Avg. NOA= (NOAt - NOAt-1) /2

= (15655580 -13236598) / 2
= 1209491
ROCE
ROCE = PM x ATO – [FLEV x (RNOA – RNFA)]
= 0.3744x0.8440– [0.2667x (0.4091- 0.254)]
=22.44%

PM = Operating income / Sales

= 4948158 / 13214048
= 0.3744

ATO = Sales / NOA

= 13214048 / 15655580
= 0.8440

FLEV = NFA /CSE

= 4244879/ 15919883
= 0.2667

Avg. Financial assets = (NFA t – NFA t-1) / 2

= (4244879 – 3589646) / 2
= 327616

- 48 - AINI
 Analysis of Financial Statements

ROCE = Operating income / Avg. CSE

= 4948158 / 15397776
= 0.3213

Free cash flow

(C-I) = Operating income – Change in net operating assets

= 4948158 – 2418982
= 2529176

Dividend

d = (C-I) – Change in net financial assets + NFI

= 2529176 – 655233+ 3709801
= 5583744

Growth in net operating assets

Growth in net operating assets = Change in net operating assets / Beginning NOA
=2418982 / 13236598
=0.182
= 18%

Growth in CSE

Growth in CSE = Change in CSE / Beginning CSE

= (15919883-7591585)/7591585
=10.97%

- 49 - AINI
 Analysis of Financial Statements

Pakistan Petroleum Limited

Reformulate Income Statement
for year ended 30 June, 2006
Sales 31756712
Field expenditure 8171060
Royalties 3744822
19840830
Other operating income(expenses)
Other operating income 90766

- 50 - AINI
 Analysis of Financial Statements

Other operating expenses 1127195

Operating income 18804401
less: Taxes
678853
Tax as reported 2
Tax on financial income 477429 6311103
Operating income after tax 12493298
plus: Financial income(expenses)
139418
Interest income 0
Interest expense 30096
136408
4
Tax on financial income 477429 886655
Operating income after tax 13379953
plus: Share of profit in Bolan Mining Enterprises 21048
Comprehensive income 13401001

PROFIT MARGIN RATIOS

Financial income contribution ratio = Net financial income / Sales

= 886655 / 31756712
= 0.0279
= 2.79%

Net income profit margin ratio = Comprehensive income / Sales

= 13401001 / 31756712
= 0.421
= 42%

Schlumberger Limited
Reformulated Income Statement
For the year ended 2006
Particulars (000’s)

- 51 - AINI
 Analysis of Financial Statements

Sales (cost of goods sold) 13214048

Operating Income 19230478
Interest and other Income 286716
Expenses:
Maturity 75704
Research & Engineering 619316
General & Administration 4275057
Interests 234916
Income Before Taxes & Interest 4948158
Tax on Income 1189568
Income After Tax Before Interest 3758590
Interest (48789)
Comprehensive Income 3709851

PROFIT MARGIN RATIOS

Financial income contribution ratio = Net financial income / Sales

=375859 / 13214048
= 0.30
= 30%

Net income profit margin ratio = Comprehensive income / Sales

= 3709851 / 13214048
= 0.280
= 28%

- 52 - AINI