Directors' Review

for the Quarter ended September 30, 2008

The Directors of Shell Pakistan Limited (SPL) present their review of the affairs of the Company for
the quarter ended September 30, 2008. During this quarter the Company incurred a loss after tax
of Rs 1,196 million as compared to a profit of Rs 533 million last year. This was primarily due to
lower gross margin resulting from declining international oil prices and a corresponding write down
of inventory to its net realizable value. This was coupled with high operating expenses on account
of significant exchange losses of over Rs 800 million during this period.

This quarter witnessed one of the most difficult and challenging times for the Country as well as for
the oil industry. We saw marked economic slowdown, worsening macro economic indicators,
deteriorating law and order situation, rising inflation and an unprecedented depreciation of the
Rupee; all of which impacted our growth and profitability.

During the period your Company's profitability remained under tremendous pressure on account of
rising cost of doing business and increasing interest rates in the market due to a severe liquidity
crunch. In this connection, it is encouraging to note that despite the difficult circumstances, the
Government has made payments to us to reduce the outstandings. Nonetheless, the total public sector
debt receivable by us is around Rs 10 billion and the timely
settlement of these dues is paramount to sustaining the
viability of this Company.

Your Company's fundamentals remain

strong to deliver growth and
profitability once the volatility in
international oil prices and the
turmoil in the economic
environment settles down.

We thank our shareholders,

customers and staff for their
sustained support in ensuring the
continued success of the
Company and making Shell
their brand of first choice.

1
Shell
Quartely
Pakistan
Report

Zaiviji Ismail bin Abdullah

Limited
2OO8

October 28, 2008 Chairman & Chief Executive

 Condensed Interim Balance Sheet
as at September 30, 2008
Note Unaudited Audited
September 30, June 30,
ASSETS 2008 2008
(Rupees `000)
Non-current assets
Fixed Assets 4 6,884,094 6,826,848
Long-term investments 1,890,317 2,134,783
Long-term loans and advances 138,759 146,381
Long-term deposits and prepayments 197,689 201,718
Long-term debtors 98,055 134,920
9,208,914 9,444,650
Current assets
Stores and spares 17,094 13,328
Stock-in-trade 18,892,327 18,095,523
Trade debts 4,960,841 4,904,940
Loans and advances 49,966 47,029
Trade deposits and short-term prepayments 222,763 207,864
Other receivables 9,931,960 6,079,111
Taxation 240,277 -
Cash and bank balances 1,792,364 872,414
36,107,592 30,220,209
Total assets 45,316,506 39,664,859

EQUITY AND LIABILITIES

EQUITY
Share capital 684,880 547,904
Reserves 2,096,050 2,233,026
Unappropriated profit 7,443,325 10,830,708
10,224,255 13,611,638
LIABILITIES
Non-current liabilities
Deferred taxation -net 50,721 51,574
Long-term liabilities against assets subject to finance lease 2,216 2,216
Long-term loans 2,500,000 2,500,000
Asset retirement obligation 194,885 191,620
2,747,822 2,745,410
Current liabilities
Current maturity of liabilities against assets subject to finance lease 48,755 56,742
Short-term running finances utilised under mark-up arrangements 5,531,830 4,338,339
Short-term loans 1,000,000 1,500,000
Shell Pakistan Limited

Trade and other payables 25,495,463 16,483,008

Mark-up accrued 268,381 157,268
Taxation - 772,454
32,344,429 23,307,811
35,092,251 26,053,221
2 Total equity and liabilities 45,316,506 39,664,859
Quartely Report 2OO8

Contingencies and Commitments 5

The annexed notes 1 to 10 form an integral part of these condensed interim financial statements.

Zaiviji Ismail bin Abdullah Badaruddin F. Vellani

Chairman & Chief Executive Director
 Condensed Interim Profit and Loss Account (Unaudited)
for the Quarter ended September 30, 2008

2008 2007
(Rupees `000)

Sales 25 52,355,593 32,711,501

Non-fuel retail
- Sales 25,730 35,956
- Others 4,699 4,255
Other revenue 26 185,820 93,414

52,571,842 32,845,126
Less: Sales tax 6,275,022 3,884,034

Net revenue 46,296,820 28,961,092

Cost of products sold 27 45,515,019 26,810,403

Gross profit 781,801 2,150,689

Distribution expenses 28 814,963 767,308
Administrative and marketing expenses 29 878,862 434,664

(912,024) 948,717
Other operating income 30 144,504 58,424

(767,520) 1,007,141
Other operating expenses 31 902,837 142,625

Operating (loss) / profit (1,670,357) 864,516

Finance cost 32 339,029 258,743

(2,009,386) 605,773
Share of (loss) / profit of associate - net of tax 4.1 (121,351) 56,630

(Loss) / Profit before taxation (2,130,737) 662,403

Taxation 33 (934,967) 129,665

(Loss) / Profit after taxation (1,195,770) 532,738

Rupees Rupees

(Loss) / Earnings per share 34 (17.46) 7.78

Shell Pakistan Limited

Appropriations have been reflected in the statement of changes in equity.

The annexed notes 1 to 10 form an integral part of these condensed interim financial statements.
3
Quartely Report 2OO8

Zaiviji Ismail bin Abdullah Badaruddin F. Vellani

Chairman & Chief Executive Director
 Condensed Interim Cash Flow Statement (Unaudited)
for the Quarter ended September 30, 2008

Note 2008 2007

(Rupees `000)
CASH FLOW FROM OPERATING ACTIVITIES

Cash generated from operations 6 2,256,764 (3,009,563)

Mark-up on short-term finances and short-term loans paid (188,602) (185,042)
Taxes paid (78,616) (201,702)
Long-term loans and advances (net) 7,622) (886)
Long-term deposits and prepayments (net) 4,029 (3,111)
Mark-up received on short-term deposits 11,180 2,600)
Long-term debtors (net) 36,864) -
Net cash generated from / (used in) operating activities 2,049,241 (3,397,704))

)
CASH FLOW FROM INVESTING ACTIVITIES

Fixed capital expenditure (246,880) (258,216)

Proceeds from sale of property, plant and equipment 16,604) 26,745)
Dividend received from associate 123,114) 93,001)
Net cash used in investing activities (107,162) (138,470)

CASH FLOW FROM FINANCING ACTIVITIES

Dividends paid ) (1,707,633) (11,304)

Repayment of liability under finance lease (7,987) 1,685
Net cash used in financing activities (1,715,620) (9,619)

Net increase / (decrease) in cash and cash equivalents 226,459 (3,545,793)

Cash and cash equivalents at July 1 (4,965,925) (6,721,306)

Cash and cash equivalents at September 30 (4,739,466) (10,267,099)

The annexed notes 1 to 10 form an integral part of these condensed interim financial statements.
Shell Pakistan Limited

4
Quartely Report 2OO8

Zaiviji Ismail bin Abdullah Badaruddin F. Vellani

Chairman & Chief Executive Director
 Condensed Interim Statement of Changes in Equity (Unaudited)
for the Quarter ended September 30, 2008

Issued, Reserve Capital General Unappro- Total

subscribed for issue reserves- revenue priated
and paid-up of bonus share reserves profit
capital shares premium
(Rupees ‘000)

Balance as at June 30, 2007 547,904 – 2,026,024 207,002 6,679,841) 9,460,771)

Final dividend for the year ended June 30, 2007

declared subsequent to the year end – – – – (438,323) (438,323)

Profit after taxation for the quarter

ended September 30, 2007 – – – – 532,738) 532,738)

Balance as at September 30, 2007 547,904 – 2,026,024 207,002 6,774,256) 9,555,186)

Balance as at June 30, 2008 547,904 – 2,026,024 207,002 10,830,708) 13,611,638)

Final dividend for the year ended June 30, 2008

declared subsequent to the year end – – – – (2,191,613) (2,191,613)

Transfer to reserve for issue of bonus

shares in respect of stock dividend )
for the year ended June 30, 2008
declared subsequent to the year end – 136,976 (136,976) – – –

Issue of Bonus shares 136,976 (136,976) – – – –

(Loss) after taxation for the quarter

ended September 30, 2008 – – – – (1,195,770) (1,195,770)

Balance as at September 30, 2008 684,880 – 1,889,048 207,002 7,443,325 ) 10,224,255)

The annexed notes 1 to 10 form an integral part of these condensed interim financial statements.
Shell Pakistan Limited

5
Quartely Report 2OO8

Zaiviji Ismail bin Abdullah Badaruddin F. Vellani

Chairman & Chief Executive Director
 Notes to the Condensed Interim Financial Statements (Unaudited)
for the Quarter ended September 30, 2008

1. THE COMPANY AND ITS OPERATIONS

The Company is a limited liability company incorporated in Pakistan and is listed on the Karachi and Lahore
Stock Exchanges. The address of its registered office is Shell House, 6, Ch. Khaliquzzaman Road, Karachi -
75530, Pakistan. The Company markets petroleum products and compressed natural gas. It also blends and
markets various kinds of lubricating oils.
2. STATEMENT OF COMPLIANCE
These condensed interim financial statements have been prepared in accordance with the approved accounting
standards as applicable in Pakistan and the requirements of the Companies Ordinance, 1984. Approved
accounting standards comprise of such International Financial Reporting Standards as notified under the provisions
of the Companies Ordinance, 1984. Wherever the requirements of the Companies Ordinance, 1984 or directives
issued by the Securities and Exchange Commission of Pakistan differ with the requirements of these standards,
the requirements of the Companies Ordinance, 1984 or the requirements of the said directives take precedence.
The disclosures made in these condensed interim financial statements have, however, been limited based on the
requirements of the International Accounting Standard 34, Interim Financial Reporting. The condensed interim
financial statements should be read in conjunction with the annual financial statements for the year ended June
30, 2008.
3. ACCOUNTING POLICIES
The accounting policies adopted in the preparation of these condensed interim financial statements are the same
as those applied in the preparation of the annual published financial statements of the Company for the year
ended June 30, 2008.
2008 2007
(Rupees '000)
4. ADDITIONS AND DELETIONS TO FIXED ASSETS
Property, plant and equipment - owned
Additions 177,575 284,237
Deletions (cost) 45,930 37,984
Property, plant and equipment - leased
Additions 58,104 8,773
Deletions (cost) 27,554 30,580
5. CONTINGENCIES AND COMMITMENTS
5.1 Contingencies
a) Infrastructure fee
The Sindh Finance Act 1994, prescribed the imposition of an infrastructure fee at the rate of 0.5% of the
C&F value of all goods entering or leaving the province of Sindh via sea or air.
Shell Pakistan Limited (the Company) and several others challenged the levy in constitutional petitions before
the High Court of Sindh. These petitions were dismissed by the High Court as, during their pendency, the
Shell Pakistan Limited

nature of the levy was changed by the Government of Sindh. The Company and others therefore filled civil
suits in the High Court of Sindh challenging the amending Ordinance. However, these suits were also dismissed
by the High Court in October 2003. The Company and other plaintiffs had preferred appeals against this
judgment.
The High Court of Sindh passed judgment on these appeals on 15-09-2008 whereby it has been held that
6 the levy was not valid up to 28-12-2006 but thereafter, on account of an amendment in the Sindh Finance
(Amendment) Ordinance 2006, it had become a valid levy and is payable by the Appellants.
Quartely Report 2OO8

The Company is now in the process of filling an appeal against the said judgment before the Honorable
Supreme Court of Pakistan.
The accumulated levy up to September 30, 2008 comes to Rs 1,097.897 million (June 30, 2008: Rs 988.031
million). No provision has been made in these financial statements against the levy as SPL management
expects a favourable outcome.
 Notes to the Condensed Interim Financial Statements (Unaudited)
for the Quarter ended September 30, 2008

b) PARCO pipeline fill

The Ministry of Petroleum and Natural Resources (MOPNR) has made a claim relating to the loan arranged
by the Government of Pakistan (GoP) to the Company to finance the initial fill of the PARCO Pipeline. MOPNR
has calculated the Company's liability by applying the price prevailing on August 11, 2000 to the quantity
of fuel supplied at the time of inital fill.

The Company maintains that its liability is limited only to the extent of Rs 78.164 million (June 30 2008:
Rs 78.164 million) which has been fully paid in March 2007.

The claim if calculated on the August 11, 2000 price as indicated by MOPNR would amount to Rs 294
million. Based on legal advice obtained, the management is confident that its exposure in this respect
amounted to Rs 78.164 million and consequently no provision has been made for the additional demand
raised by MOPNR.

c) Others

The aggregate amount of other claims against the Company not acknowledged as debt as at September
30, 2008 amounted to approximately Rs 1,290.756 million (June 30, 2008: Rs 848.115 million).This
includes claims by refineries, amounting to Rs 372.740 million (June 30, 2008:Rs 355.613 million)
in respect of delayed payment charges.

5.2 Commitments

a) Capital expenditure contracted for but not incurred as at September 30, 2008 amounted to approximately
Rs 1,101.375 million (June 30, 2008: Rs 828.745 million).

b) Commitments for rentals of assets under operating lease agreements as at September 30, 2008 amounted
to Rs 2,438.385 million ( June 30, 2008: Rs 2,463.357 million) payable as follows:

September 30, June 30,

2008 2008
(Rupees '000)

Not later than one year 124,725 119,608

Later than one year and not later than five years 463,965 465,367
Later than five years 1,849,695 1,878,382
2,438,385 2,463,357

2008 2007
(Rupees '000)

6. CASH GENERATED FROM OPERATIONS

Shell Pakistan Limited

(Loss) / Profit before taxation (2,130,737) 662,403

Adjustment for non-cash charges and other items:

Depreciation / amortisation expenses charged to the profit

and loss account 168,762 154,480
(Profit) / loss on disposal of property, plant & equipment 7,534 (18,117) 7
Share of loss / (profit) of associates 121,351 (56,630)
Quartely Report 2OO8

Mark-up on short-term deposits (17,223) (5,384)

Mark-up expense on short-term running finances and loans 299,715 238,003

Working capital changes 6.1 3,807,362 (3,984,318)

2,256,764 (3,009,563)
 Notes to the Condensed Interim Financial Statements (Unaudited)
for the Quarter ended September 30, 2008

2008 2007
(Rupees '000)

6.1 Working capital changes

(Increase) / Decrease in current assets

Stores and spares (3,775) 1,943
Stock-in-trade (net) (796,804) (1,346,998)
Trade debts (55,901) (92,163)
Loans and advances (net) (2,937) (962)
Trade deposits and short-term prepayments (net) (14,898) (49,053)
Other receivables (net) (3,846,798) (1,718,014)
(4,721,113) (3,205,247)
(Decrease) / increase in current liabilities
Trade and others payables
(excluding unclaimed dividends) 8,528,475 (779,071)
3,807,362 (3,984,318)

Parent company Other related parties

7. RELATED PARTY TRANSACTIONS
2008 2007 2008 2007
(Rupees ‘000)

(i) Purchases – – 32,638,639 14,668,468

(ii) Sales – – 647,359 1,170,197
(iii) Other Items
-Technical service fee charged 400,326 131,005 – –

-Trade marks and manifestations

licence fee charged – – 40,145 39,375

-Computer expenses charged

(Global Infrasructure Desktop charges) – – 34,304 17,209

-Expenses recovered from Related Parties 38,206 39,898 13,423 11,704

-Other expenses charged by Related Parties – – 39,823 10,720

-Key Management Personnel remurenation – – 7,954 7,865

- PAPCO pipeline transportation charges – – 283,504 243,784

Shell Pakistan Limited

8. CORRESPONDING FIGURES

Corresponding figures have been rearranged and reclassified, wherever necessary, for the purpose of comparison.

9. GENERAL

8 Figures have been rounded off to the nearest thousand.

Quartely Report 2OO8

10. DATE OF AUTHORISATION

These condensed interim financial statements were authorised for issue on October 28, 2008 by the Board of
Directors of the Company.

Zaiviji Ismail bin Abdullah Badaruddin F. Vellani

Chairman & Chief Executive Director