PROGRESSING TOWARDS PROSPERITY

PROGRESSING TOWARDS PROSPERITY Cogizat of our resposibility to fulfill the eergy demads of the atio i a timely ad resposible maer, PSO ad its workforce cotiuously strive to esure availability of fuel products across the coutry at all times. As the coutry s leadig oil marketig compay, PSO is playig a defiig role i the ecoomy of Pakista. From the waters of Karachi to the moutais of Karakorum, PSO is proud to be the catalyst for a progressive Pakista. This year, PSO pays tribute to its true asset, its people who work day ad ight to keep the wheels of the atio turig towards progress ad prosperity.

CONTENTS Foreword: Message from the Maagig Director 04 Our Visio 06 Our Missio 07 Our Values 09 ORGANIZATIONAL OVERVIEW Compay Profile 10 Oil Ifrastructure of PSO 11 PSO s Areas of Operatio 13 Busiess Lies 28 Group Structure 29 Major Evets 30 Award ad Recogitio 32 STRATEGY AND RISKS Strategic Objectives 34 Maagemet Objectives & Strategies 35 Critical Performace Idicators 35 Sigificat Chages Over Previous Period 35 Relatioship Betwee Results & Objective 35 Busiess Cotiuity Plaig ad Safety Procedures for Data Protectio 37 IT Goverace 37 Risk ad Opportuity Report 38 Approach to Materiality 39 NOTICE OF THE MEETING 40 CORPORATE GOVERNANCE Compay Iformatio 44 Board Committees 46 Role of Chairma ad Maagig Director 49 Maagemet Committees 49 Commitmet to HSE 50 Commitmet to Ethical Busiess Coduct 50 Stakeholders Relatios ad Procedures 51 Report of Audit Committee 52 REPORT TO SHAREHOLDERS 54 Global ad Domestic Ecoomic Overview 56 Petroleum Idustry Overview 56 PSO Sales Performace 58 Performace of Busiess uits 60 Corporate Sustaiability 80 Fiacial Performace 91 FINANCIALS Fiacial Aalysis 102 Statemet of Compliace 118 Review Report 124 Auditor s Report 126 Balace Sheet 128 Profit ad Loss Accout 129 Statemet of Comprehesive Icome 130 Statemet of Chages i Equity 131 Statemet of Cash Flow 132 Notes to the Fiacial Statemets 133 Attedace at BoM meetigs 196 Shareholders Categories 198 Patter of Shareholdigs 200 APPENDIX Glossary 205 Proxy Form

Foreword by Sheikh Imra ul Haque Maagig Director & CEO PSO is a icoic istitutio of Pakista, the umber of people we touch every day is extraordiary. With the taleted people i the orgaizatio, a well-established storage ad supply ifrastructure ad a wide-spread retail etwork, PSO has supported ad esured that the wheels of our atio s ecoomy cotiue to move. Durig FY 2015, we cotiued to domiate the market with our share of 66.6% i the Black Oil ad 49.8% i the White Oil resultig i a overall market share of 56.8 %. This is extraordiary give the challeges of the circular debt ad the iheret cotiued expectatio of PSO to be the facilitator that has to esure readily ad timely availability of fuel to the power, aviatio, marie ad trasport sectors. This combied with Our targets are ambitious, ad the busiess coditios for us are extremely challegig but udoubtedly PSO has the ability, cofidece, courage ad the platform to deliver results ad higher returs to it s shareholders i comig years. limited maoeuvrability to compete i the market armed with tools available to ay busiess today, restricts ad hampers the atio's largest eergy compay to sustai its market leadership ad strive to improve its market share. While focus o our core busiess of eergy is to be itesified by fosterig a culture of etrepreeurship ad accoutability, our ext urget objective will be to build o diversificatio iitiatives i the cards, o-fuel retail ad gaseous fuels to further deliver value to our shareholders. year ad maaged the challeges that it was cofroted with through active support of MPNR ad GOP. With that cotiued facilitatio, the PSO team will deliver o its strategy ad plas as we move forward. Sheikh Imra ul Haque Maagig Director & CEO Our targets are ambitious, ad the busiess coditios for us are extremely challegig but udoubtedly PSO has the ability, cofidece, courage ad the platform to deliver results ad higher returs to it s shareholders i comig years. I joied the orgaisatio o September 01, 2015 ad with reistatemet of key committees ad forums, the maagemet team is determied to make cocetrated efforts i esurig that processes at PSO are implemeted i spirit ad decisios take o merit. I coclusio, I would like to thak our customers ad stakeholders for their cotiuig support ad loyalty ad to the maagemet ad etire PSO team that has operated PSO i the past 05

OUR MISSION We are committed to leadership i the eergy market through competitive advatage i providig the highest quality petroleum products ad services to our customers, based o: Professioally traied, high-quality, motivated workforce that works as a team i a eviromet which recogizes ad rewards performace, iovatio ad creativity ad provides for persoal growth ad developmet. Lowest-cost operatios ad assured access to log-term ad cost-effective supply sources. Sustaied growth i earigs i real terms. Highly ethical, safe, eviromet-friedly ad socially resposible busiess practices. OUR VISION To excel i deliverig value to customers as a iovative ad dyamic eergy compay that gets to the future first. 07

OUR VALUES EXCELLENCE We believe that excellece i our core activities emerges from a passio for satisfyig our customers' eeds i terms of total quality maagemet. Our foremost goal is to retai our corporate leadership. COHESIVENESS We edeavor to achieve higher collective ad idividual goals through team. This is iculcated i the orgaizatio through effective commuicatio. RESPECT We are a Equal Opportuity Employer attractig ad recruitig the fiest people from aroud the coutry. We value cotributio of idividuals ad teams. Idividual cotributios are recogized through our reward ad recogitio program. INTEGRITY We uphold our values ad Busiess Ethics priciples i every actio ad decisio. Professioal ad persoal hoesty, dedicatio ad commitmet are the ladmarks of our success. Ope ad trasparet busiess practices are based o ethical values ad respect for employees, commuities ad the eviromet. INNOVATION We are committed to cotiuous improvemet, both i New Product ad Processes as well as those existig already. We ecourage Creative Ideas from all stakeholders. CORPORATE RESPONSIBILITY We promote Health, Safety ad Eviromet culture both iterally ad exterally. We emphasize o Commuity Developmet ad aspire to make society a better place to live i. Cotiually smilig a fillig operator performs his duties at Keamari Termial. 09

COMPANY PROFILE Pakista State Oil (PSO) is oe of the importat strategic assets of Pakista. The largest Oil Marketig Compay of Pakista, PSO serves aroud 3 millio customers every day across the etire ecoomic value chai with over 3500 retail outlets ad cotrols 74% of the coutry s oil storage capacity. It is ivolved i import, storage, distributio ad marketig of a rage petroleum products icludig gasolie, diesel, fuel oil, jet fuel, LNG, LPG, CNG ad petrochemicals. Oil market leader i Pakista Overall share 56.8% Black Oil 66.6% White Oil 49.8% Over 1 millio tos of oil storage capacity (74% of total OMC storage) Largest Fuel Oil Supplier to the Eergy Sector across Pakista icludig IPPs ad Gecos Retail etwork of 3,565 outlets 1,786 New Visio Retail Outlets (NVROs) 155 coveiece stores Shop Stops 253 CNG facilities i more tha 34 cities 24 Mobile Quality Testig Uits Refuelig facilities at 9 airports & 2 sea ports 11

ACQUISITION OF PRODUCTS Traditioally there has bee a fuel supply deficit i the coutry ad i order to meet this shortfall, OMCs import both black ad white oil products as per eed. Out of the total atioal fuel import, PSO imports the lio s share of the POL products i order to meet the atioal fuel demad. These imports arrive i Pakista at the FOTCO ad Keamari where oil vessels are berthed ad the product is offloaded ad moved to storage facilities at ZOT ad Keamari via pipelies. Durig FY15, PSO sourced a total of 12.627 Millio Metric Toes (MMT) of refied oil products with 9.8 MMT beig imported while 2.83 MMT was uplifted from refieries. Deficit fuel products are imported via sea vessels which berth at FOTCO or Keamari. 13

STORAGE With a storage etwork comprisig of 9 istallatios ad 23 depots, PSO s storage ifrastructure spreads from Karachi to Gilgit. Capable of holdig over a Oe (01) Millio Metric Tos, PSO s storage system is the largest amogst all OMCs i Pakista ad represets approximately 74% of the total atioal oil storage capacity. Here the products which are imported or uplifted from local refieries are stored ad the loaded for movemet to various customers across the coutry. Products are stored at Keamari ad Zulfiqarabad termials before trasshipmet to ed customers. 15

A dip check is carried out to ascertai the quatity of fuel preset i a tak lorry prior to dispatch. 17

PRODUCT MOVEMENT Trasportatio of fuel from PSO s istallatios ad depots to ed cosumers is carried out through a umber of differet modes of trasport. PSO uses three mechaisms for the movemet of POL products amely, tak lorries (road), tak wagos (railways) ad pipelies. Fillig ad movemet of tak lorries is moitored from the cotrol room at Keamari Termial to esure efficiecy 19

Curretly PSO employs a fleet of over 8,000 tak lorries out of which over 2,000 tak lorries are New Visio tak lorries which are complyig with the latest ADR stadards ad are equipped with pilferage proof tracker systems. I additio to this, the supply for white oil from Karachi has switched from tak lorries to pipelies with the commecemet of operatios of the White Oil Pipelie Project (WOPP) from Karachi to Mehmood Kot via Shikarpur ad the MFM (Mehmood Kot/Faisalabad/Machikey) pipelie. A PSO oil lorry prepares to move out with fuel for delivery across Pakista. 21

MARKETING AND DISTRIBUTION PSO has the largest retail etwork of ay Oil Marketig Compay (OMC) i the coutry. The Compay curretly has over 3,500 retail outlets out of which 1,786 outlets have bee upgraded uder the New Visio Retail program with the most moder ad up-to-date facilities. Moreover, the Compay operates a umber of flagship sites called compay operated ad compay operated (Co-CO) statios to provide the highest levels of efficiecy, service ad customer care. PSO has itroduced a array of fuel cards for the coveiece of its customers ad reward them for their loyalty ad patroage. These cards iclude corporate, fleet ad idividual fuel cards ad have bee well received by both the corporate world ad the geeral public. Goig beyod fuel for its retail customers, PSO has itroduced a umber of No-Fuel Retail Iitiatives icludig ATMs, quick service restaurat, PSO s coveiece stores called the Shop Stop ad various i-store alliaces to establish PSO as a compay that goes beyod expectatios. These iitiatives offer flexibility ad coveiece to the customers at PSO s forecourt ad are the reaso millios of Customers cotiue to perceive PSO as the brad of preferece. 23

To cater to all kids of lubricats customers icludig automotive, hi-street ad idustrial cosumers, PSO is operatig a state-of-art Lubricats Maufacturig Termial. The plat produces three major categories of lubricats automotive, fuel ad idustrial oils. The automotive oils category etails, automotive greases, brake fluids, diesel egie oils, gear fluids, motorcycle ad passeger car oils. Lie worker overseeig lubricat fillig at the Lubricat Maufacturig Termial 25

PSO has bee i the LPG busiess sice 1981 ad the past 25 years have see the compay evolve ito a importat player i the LPG market. The Compay has established four LPG Storage ad Bottlig Plats, oe each i Karachi, Lahore, Dhural ad Akora Khattak to efficietly supply fuel to the geeral public uder the brad ame PakGas. At these plats, LPG is filled ito gas cyliders for distributio i the market ad trasported via bowsers to bulk cosumers as well. Driver of a PSO LPG Bowser ready to move gaseous fuels across Pakista 27

PSO STRATEGIC INVESTMENTS BUSINESS LINES 62 % Joit Istallatio of Marketig Compaies RETAIL CONSUMER BUSINESS AVIATION, MARINE & EXPORT LUBRICANTS SALES & AGENCY TRADE (LS&AT) 12 GASEOUS FUEL BUSINESS (GFB) CHEMICALS % PARCO White Oil Pipelie Project PSO STRATEGIC INVESTMENTS KEY PRODUCTS SOLD THROUGH BUSINESS LINES MOGAS HSD LUBRICANTS MOGAS HSD LUBRICANTS CNG HSD LDO SKO LPG SKO FO LDO LNG LDO JP-1 Asia Petroleum Limited CHEMICALS FO LUBRICANTS 22.5 % Pakista Refiery Limited PSO s broad product portfolio ad atiowide etwork provides the compay a large ad diverse customer base 49 % 22 % Pak Grease Maufacturig Compay Ltd 29

MAJOR EVENTS

Wo first prize for the Best Aual Report i Fuel ad Eergy at the Best Corporate Report Award ceremoy 2014 Received KSE-Top Performig Compaies Award 33

STRATEGIC OBJECTIVES Compliace with regulatory ad legal requiremets ad assure ethical operatios i all spheres of busiess Focus o HR capital skill developmet ad icreased employee egagemet for a effective ad motivated etrepreeurial team Optimize ad esure efficiet supply chai ad pursue log term supply arragemets. Effective HSE compliace with steps take to ecourage use of fuels that reduce carbo footprit. Cotiue to create upstream syergy ad evaluate diversificatio opportuities for growth. Focus o resposible corporate citizeship with active CSR iitiatives i health, educatio, commuity developmet ad support for special persos. Icrease market leadership ad strategise measures to improve the bottom lie. Employees carryig out a braistormig sessio 35

MANAGEMENT OBJECTIVES & STRATEGIES SIGNIFICANT CHANGES OVER PREVIOUS PERIOD PSO is committed to retaiig its corporate leadership by attaiig strategic objectives ad upholdig values ad busiess ethics priciples i every actio ad decisio. PSO maitais cohesiveess amog all stakeholders ad esures effective commuicatio withi the orgaizatio to promote team work ad recogize idividual cotributios at every level. PSO is focused o attaiig its strategic objectives i aligmet with the corporate visio ad missio of the compay based o its values. PSO ecourages creative ideas from all stakeholders ad cotiuously improves it s products ad processes. PSO promotes a culture of health, safety ad eviromet with emphasis o commuity developmet for the bettermet of society. I a chage of strategy, based o detailed due diligece, PSO devised ad implemeted a strategy to pursue profitable growth i petroleum products. Accordigly, the Compay merged the critical aspects of both the iteral fiacial review ad exteral market recoaissace to strike a effective balace betwee volumetric sales ad profitability, whereby offers of sales icetives viz-a-viz discouts were limited ad focused o robustess of the busiess case. CRITICAL PERFORMANCE INDICATORS PSO has a performace moitorig ad review mechaism which is itegrated with the Compay s objectives ad strategies. This mechaism serves as a watchdog to esure that implemetatio of the corporate pla viz-a- viz the objectives is o track ad o time. The broader thrust of the performace objectives is to excel i deliverig value to customers i terms of quality ad timeliess i provisio of products ad services. The critical performace bechmarks iclude resposible ad safe operatios, meetig the highest professioal stadards, ad commitmet to the Compay s values. Iovatio ad creativity is highly valued ad so are operatioal ad cost efficiecies. Highly ethical, safe, eviromet friedly ad socially resposible busiess practices receive due weightage i the aual performace appraisal of the employees, which form the basis for their professioal advacemet ad reward. These idicators are expected to be maitaied i the future with further improvemets keepig i view chages i busiess dyamics. PSO is cotiously strivig to make improvemets i its operatioal processes i order to meet busiess eeds ad be the first i takig iitiatives i the eergy sector. The Compay's commitmet to the eergy security of Pakista has bee ehaced by diversificatio ito LNG as a fuel for power geeratio ad other sectors. PSO is curretly i egotiatios for eterig ito a medium / log term Sales Purchase Agreemet with Qatargas for the import of LNG ito Pakista. Other aveues for additioal supplies of LNG are beig explored as well by the Compay. This process chage, is a defiig momet for PSO's future growth resultig i savig valuable foreig exchage for Pakista. RELATIONSHIP BETWEEN RESULTS & OBJECTIVES I FY15, PSO s bottom lie decreased to Rs 6.9 billio maily due to ivetory losses o accout of sharp fall i crude oil prices, icrease i fiace cost due to prevailig circular debt ad less receipt of iterest from the power sector. At the close of FY15, PSO achieved a market share of 56.8% i total liquid fuels, with 66.8% share i Black Oil market & 49.8% share i White Oil market. Hece PSO retaied its leadership positio ad remaied a brad of choice for customers. Durig the year, PSO reiforced its committmet to quality assurace by carryig out quality ad quatity tests at umerous locatios through its MQTU etwork. The Compay esured strict HSE compliace i operatios though effective system developmet, traiig, ispectios ad audit. Safety of people, equipmet ad eviromet has always bee a core strategic objective at PSO. This is achieved through Safety & Evirometal audits, customized traiigs to iteral ad exteral stakeholders ad implemetatio of comprehesive Stadard Operatig Procedures (SOPs) i critical activities ad processes. Focused o cotiuous improvemets i busiess processes through techological advacemets, the Compay successfully upgraded to the latest release versio of ERP system, etwork structure, ICT ifrastructure with latest geeratio servers ad storage. Durig the year, costructio, rehabilitatio ad up gradatio of retail outlets, provisio of SMS & Email alert services to fuel cards customers ad expasio i o-fuel retail activities, show cotiuous committemet to provisio of quality customer services through improvemet, iovatio ad techological advacemet. The objectives of market developmet, market peetratio ad strategic partership iitiatives were esured through icrease i umber of retail outlets ad expasio of ATM etwork. Additioally, PSO facilitated Pakista Railways for its revival by providig maximum fuel trasportatio volumes at Rail head destiatios. PSO as a resposible corporate citize fulfills its resposibilities towards iteral ad exteral stakeholders by supportig deprived segmets of society. PSO actively participated i relief ad rehabilitatio activities for IDPs ad provided relief items to meet the utritioal ad shelter eeds of flood victims. PSO also pledged its support for the social welfare, cotributig sigificatly to several social welfare orgaizatios, hospitals ad educatioal istitutios. BUSINESS CONTINUITY PLANNING AND SAFETY PROCEDURES FOR DATA PROTECTION PSO has a comprehesive disaster recovery pla i place which etails backup facilities at Lube Maufacturig Termial Karachi ad Kotlakhpat (Lahore). This system is also subject to regular drills ad system checks to esure cotiued effectiveess ad uptime i case of ay emergecy. Detailed Stadard Operatig Procedures (SOPs) ad ready referece checklists have also bee developed wherei situatios/areas of high risk that could hamper compay operatios have bee idetified ad explored i detail. Accordigly actio plas have bee prepared to maage strategic busiess risks of the compay cosiderig the geeral ecoomic coditios, competitive realities ad possible scearios ad esurig that risk maagemet process ad culture are embedded throughout the compay. IT GOVERNANCE I lie with its objective of esurig trasparecy ad oversight across the orgaizatio, PSO has developed a IT Goverace policy. This policy defies the scope of goverace ad outlies the chai of resposibility, authority ad commuicatio across the Compay. For this purpose, a Iformatio System (IS) Steerig Committee has bee formed to esure that all IS strategies are aliged with the compay's visio, review recommedatios for improvemets i busiess processes ad to evaluate the impact of improvemets o the compay's busiess ad cotrol eviromet. 37

RISK & OPPORTUNITY REPORT Busiess iheretly ivolves opportuities ad risks. Effective maagemet of opportuities ad risks is therefore a key factor i sustaiably safeguardig a compay s value. Busiess success depeds o the priciple that the risks take are maaged ad that they are outweighed by the opportuities offered. At PSO, effective maagemet forms a itegral part of the goverace system for timely idetificatio, evaluatio ad hadlig of risks through plaig, recordig ad audit systems. Risks by ature cotai a certai level of ucertaity which require us to be vigilat i idetificatio of these risks for timely formulatio of mitigatig strategies. Major risks ad their mitigatig strategies/opportuities for PSO are categorized below: Risk Potetial Impact Mitigatig Strategies/Opportuities Strategic Circular Debt/Moutig receivables from Power Sector ad Gas Compaies Iability to settle iteratioal ad local paymet commitmets. Cotiuous follow-up with the Govermet ad Power Producers for the release of fuds. High fiacig cost to PSO. Restricted supplies to Power Sector. Disruptio i smooth supply chai of white oil fuel busiess. Shift i eergy mix Shift i eergy mix may cause reductio i demad for Furace Oil by Power Producers. Follow-up with Govermet ad regulatory authorities for streamliig of LNG processes. Potetial Impact Breakdow of commuicatio through atural calamities or disasters Disruptio of busiess activities ad breakdow i whole supply chai. The compay has Disaster Recovery Pla i place. Reputatio Maagemet Uverified media reports may affect compay s reputatio. Effective moitorig of media reports ad their timely clarificatios. Attritio of traied ad potetial resource. The compay is i the process of developig structured job rotatios ad employee developmet policies. Chages i regulatory requiremets Regulatory requiremets such as procuremet of goods ad services, pricig ad IFEM may affect compay s profitability ad sales. The compay maitais close liaiso with regulatory authorities to safeguard its iterest. Striget regulatory requiremets for procuremet of products through tederig process may result i higher premiums ad create competitive disadvatage to PSO. Flexibility i tederig terms ad coditios as per market practices to eable cost effective procuremet i order to remai competitive i the market. The compay has olie replicatio of data i the hot DRP site at Karachi which ca be coected with other PSO sites ad allow operatios to be executed temporarily i case of ay disaster. Further, PSO has a warm DRP site i cetral regio to mitigate the geographical risk. Esurig provisio of high quality products ad services. Cotributio to the atio s developmet through CSR iitiatives. Fiacial Exchage rate risk The compay carries exchage rate risk i white oil products, where i ay devaluatio of Pak Rupee may sigificatly impact its profitability ad cash flows. As regulatory framework does ot allow obtaiig exchage rate risk cover agaist oil imports, the compay is followig up the matter with Govermet to allow recoverability of exchage rate differeces through pricig mechaism of white oil fuel products. Fluctuatio i iteratioal oil prices Chages i iteratioal oil prices may affect compay s profitability. The loss of risk ca be miimized by udertakig effective ivetory maagemet. Credit risk Risk of default i paymets by credit customers, leadig to adverse fiacial impact o the compay. Credit exposures are regular reviewed to alig them with chagig coditios ad credit worthiess of the customers. Diversificatio i alterate fuel products like LNG ad bio fuels. Employee retetio ad developmet Mitigatig Strategies/Opportuities Risk Operatioal Higher imports cost APPROACH TO MATERIALITY I geeral, matters are cosidered to be material if, idividually or i aggregate, they are expected to sigificatly affect the performace ad profitability of the Compay. 39

NOTICE OF THE MEETING Notice is hereby give that the Thirty Nith Aual Geeral Meetig of the Compay will be held at Pearl Cotietal Hotel, Ball Room, Club Road, Karachi o October 14, 2015 at 11:30 a.m. to trasact the followig busiess: I. Ordiary Busiess 1. To cofirm the miutes of the Thirty Eighth Aual Geeral Meetig held o October 14, 2014. 2. To receive, approve ad adopt the audited accouts for the year eded Jue 30, 2015 together with the Report to the Shareholders ad Auditors Report thereo 3. To appoit ad lay iformatio before the members of the Compay of the appoitmet of Messrs A.F. Ferguso & Co. ad Messrs Erst & Youg Ford Rhodes Sidat Hyder Chartered Accoutats, as auditors of the Compay for the year edig Jue 30, 2016. 4. To approve fial cash divided of 40% i additio to the iterim cash divided of 60% already paid, thereby makig a total cash divided of 100% for the year eded Jue 30, 2015. Notes: a. A member etitled to atted ad vote at this meetig may appoit ay other member as his/ her proxy to atted ad vote. A proxy from is eclosed. b. The Share Trasfer books of the compay will remai closed from October 08, 2015 to October 14, 2015(both days iclusive). Trasfers received i order at the office of Compay s Share Registrar, M/s THK Associates (Pvt) Limited, State Life Buildig-3, Dr. Ziauddi Ahmed Road, Karachi up to the close of busiess o October 07, 2015 will be cosidered i time to be eligible for paymet of Fial divided. c. The istrumet appoitig a proxy ad the power of attorey or other authority uder which it is siged or a otarially attested copy of power of attorey must be deposited at the registered office of the compay situated at address at least 48 hours before the time of the meetig. d. Members are requested to otify chages immediately, if ay, i their registered addresses to our Share Registrar, M/s THK Associates (Pvt) Limited. A. For attedig the meetig: i) I case of Idividuals, the accout holder or sub-accout holder shall autheticate his/her idetity by showig his/her origial Computerized Natioal Idetity Card (CNIC) or origial passport alogwith Participats ID umber ad their accout umber at the time of attedig the meetig. ii) I case of corporate etity, the Board of Directors resolutio/power of attorey with specime sigature of omiee shall be produced (uless it has provided earlier) at the time of the meetig. B. For appoitig proxies: i) I case of idividuals, the accout holder or sub-accout holder shall submit the proxy form as per the above requiremet. ii) The proxy form shall be witessed by two persos whose ames, addresses ad CNIC umber shall be metioed o the form. iii) Attested copies of CNIC or the passport of the beeficial owers ad of the proxy shall be furished with the proxy form. iv) The Proxy shall produce his/her origial CNIC or origial passport at the time of the meetig. RESOLUTION OF AGM CONCERNS Safeguardig ad maximizig the shareholders value is a importat goal of the compay. Our Aual Geeral Meetig (AGM) is oe of the most effective ways to egage our shareholders, wherei all queries ad cocers of our shareholders our addressed o priority. I the last AGM meetig the cocers ad queries of the shareholders were duly addressed ad their advice for future relevat actios was received. INVESTOR GRIEVANCE POLICY PSO cotiuously egages with its ivestors through Compay s secretariat ad respods to their queries ad request for iformatio ad their cocers / grievaces. PSO s registrar also timely addresses ivestors grievaces. III. Other Busiess 5. To trasact ay other Ordiary Busiess of the Compay with the permissio of the Chairma. e. CDC Accout Holders will further have to follow the uder metioed guidelies as laid dow i Circular 1 dated Jauary, 26, 2000 issued by the Securities ad Exchage Commissio of Pakista. v) I case of a corporate etity, the Board of Directors resolutio/power of attorey with specime sigature shall be submitted (uless it has bee provided earlier) alog with proxy form to the compay. Karachi: September 01, 2015 By Order of the Maagig Director AYESHA AFZAL Compay Secretary 41

ANNUAL GENERAL MEETING 2014 43

COMPANY INFORMATION Pakista State Oil Compay Limited (PSO) has bee formed uder the provisios of Marketig of Petroleum Products (Federal Cotrol) Act, 1974 ( the 1974 Act ). PSO received otificatio from the Miistry of Petroleum & Natural Resources (MPNR), dated 12-02-2015 whereby PSO was iformed by the MPNR that the Federal Govermet i exercise of the powers uder Sectio 7 of the Marketig of Petroleum Products (Federal Cotrol) Act, 1974 the Act has dissolved/de-otified the BoM with immediate effect. The above referred otificatio also stated that the Maagig Director, PSO shall exercise ad perform all the powers ad fuctios of the Board uder Sectio 6(4) of the Act till a ew BoM is appoited by the Govermet of Pakista. I view of the above, the Maagig Director, PSO has bee exercisig ad performig powers ad fuctios of the Board sice 12-02-2015. MANAGING DIRECTOR & CEO Mr. Sheikh Imra ul Haque COMPANY SECRETARY Ms. Ayesha Afzal AUDITORS A. F. Ferguso & Co. Erst & Youg Ford Rhodes Sidat Hyder REGISTRAR OFFICE THK Associates (Pvt.) Ltd. Groud Floor, State Life Buildig No. 3 Dr. Ziauddi Ahmed Road, Karachi. Phoe: 021-35689021 Fax: 021-35655595 REGISTERED OFFICE Pakista State Oil Compay Limited PSO House Khayaba-e-Iqbal, Clifto, Karachi - 75600, Pakista. UAN: (92-21) 111-111-PSO (776) Fax: (92-21) 9920-3721 Website: www.psopk.com BANKERS Allied Bak Limited Askari Bak Limited Bak Al-Falah Limited Bak Al-Habib Limited Bak Islami Pakista Limited Citibak N.A Deutsche Bak AG Faysal Bak Limited Habib Metropolita Bak Limited Habib Bak Limited JS Bak Limited Meeza Bak Limited MCB Bak Limited Natioal Bak of Pakista NIB Bak Limited Samba Bak Limited Stadard Chartered Bak (Pakista) Limited Uited Bak Limited 45

BOARD COMMITTEES PSO was iformed by the Miistry of Petroleum & Natural Resources (MNPR) via the otificatio, dated 12-02-2015 that the Federal Govermet i exercise of the powers uder Sectio 7 of the Marketig of Petroleum Products (Federal Cotrol) Act, 1974 "the Act" has dissolved/de-otified the BOM with immediate effect. However, prior to this otificatio the followig committees of the Board existed durig the fiscal year 2015. Board Audit ad Compliace Committee Board Fiace ad Risk Maagemet Committee Board Huma Resource ad Remueratio Committee BOARD FINANCE AND RISK MANAGEMENT COMMITTEE Board Fiace & Risk Maagemet Committee costituted of three Board members icludig a Chairma with Compay Secretary as the Secretary to this Committee. TERMS OF REFERENCE The Board Fiace ad Risk Maagemet Committee primarily reviews the fiacial ad operatig plas of the Compay ad is resposible for overseeig the risk maagemet activities, recommedig appropriate risk maagemet procedures ad measuremet methodologies across the Compay. The Fiace ad Risk Maagemet Committee's scope of work etails carryig out followig activities ad duties ad recommedig their fidigs to the Board of Maagemet for approval: 1. Reviewig Corporate Strategy, Operatioal Plas ad Log term Projectios of the Compay. 2. Reviewig Proposals / Feasibility Studies prepared by the maagemet of all major projects. 3. Review the proposed aual Busiess Pla ad Budget ad edorsig the same for approval of Board of Maagemet. 4. Idetificatio ad maagemet of strategic busiess risks of the Compay cosiderig the geeral ecoomic coditios of the coutry, competitive realities ad scearios ad esurig that risk maagemet processes ad cultures are embedded throughout the Compay. 5. Providig regular update to the Board of Maagemet o key risk maagemet issues ad its proposed mitigatig factors. 6. Cosiderig ivestmets ad disivestmets of fuds outside ormal coduct of busiess ad reviewig cash ad fud maagemet policies ad procedures. 7. Cosideratio of ay other issue or matter as may be assiged by the Board of Maagemet. BOARD AUDIT AND COMPLIANCE COMMITTEE Board Audit & Compliace Committee costituted of three Board members icludig a Chairma with Compay Secretary as the Secretary to this Committee. TERMS OF REFERENCE The Committee shall, amog other thigs, be resposible for recommedig to the Board of Maagemet the appoitmet of exteral auditors by the compay s shareholders ad shall cosider ay questios of resigatio or removal of exteral auditors, audit fees ad provisio by exteral auditors of ay service to the compay i additio to audit of its fiacial statemets. I the absece of strog grouds to proceed otherwise, the Board of Maagemet shall act i accordace with the recommedatios of the Board Audit & Compliace Committee i all these matters. The committee will also assist the Board i overseeig the Compay's compliace program with respect to: (i) compliace with the laws; ad (ii) compliace with the Compay's Code of Coduct ad related policies by employees, officers, directors ad other agets ad associates of the Compay. The terms of referece of the Audit & Compliace Committee shall also iclude the followig: AUDIT 1. Determiatio of appropriate measures to safeguard the compay s assets; 2. Review of prelimiary aoucemets of results prior to publicatio; 3. Review of quarterly, half-yearly ad aual fiacial statemets of the compay, prior to their approval by the Board of Maagemet, focusig o: Major judgmetal areas; Sigificat adjustmets resultig from the audit; The goig-cocer assumptio; Ay chages i accoutig policies ad practices; Compliace with applicable accoutig stadards; ad Compliace with listig regulatios ad other statutory ad regulatory requiremets. 4. Facilitatig the exteral audit ad discussio with exteral auditors o major observatios arisig from iterim ad fial audits ad ay matter that the auditors may wish to highlight (i the absece of maagemet, where ecessary) 5. Review of maagemet letter issued by exteral auditors ad maagemet s respose thereto; 6. Esurig coordiatio betwee the iteral ad exteral auditors of the compay; 7. Review of the scope ad extet of iteral audit ad esurig that the iteral audit fuctio has adequate resources ad is appropriately placed withi the Compay; 8. Cosideratio of major fidigs of iteral ivestigatios ad maagemet's respose thereto; 9. Ascertaiig that the iteral cotrol system icludig fiacial ad operatioal cotrols, accoutig system ad reportig structure are adequate ad effective; 10. Review of the compay s statemet o iteral cotrol systems prior to edorsemet by the Board of Maagemet; 11. Istitutig special projects, value for moey studies or other ivestigatios o ay matter specified by the Board of Maagemet, i cosultatio with the Chief Executive ad to cosider remittace of ay matter to the exteral auditors or to ay other exteral body; 12. Determiatio of compliace with relevat statutory requiremets; 13. Moitorig compliace with the best practices of corporate goverace ad idetificatio of sigificat violatios thereof; 14. Recommedig or approvig the hirig or removal of the chief iteral auditor; 15. Overseeig whistle-blowig policy ad protectio mechaism ad 16. Cosideratio of ay other issue or matter as may be assiged by the Board of Maagemet. COMPLIANCE 1. Review Code of Coduct ad related policies applicable to employees, officers, ad directors ad other agets ad associates of the Compay at least aually ad make recommedatios to the Board as appropriate. 2. Provide oversight as eeded to esure that the Compliace program effectively prevets ad/or detects violatios by Compay employees, officers, directors ad other agets ad associates of the Compay law, regulatio, Compay policy, special coditios imposed o the Compay by ay licesig authorities, ad the Code of Coduct. 3. The Whistle blowig uit will report to the Audit & Compliace Committee. 4. Review ad evaluate, at least aually, the performace of the Committee, icludig compliace by the Committee with this Charter. 5. Review ad assess, at least aually, the adequacy of this Charter ad submit ay proposed chages to the Board for approval. 6. Review resources assiged to the Compliace program to assess their adequacy relative to the program's effectiveess. 7. Receive such reports of relevat coduct, miscoduct, ad other issues as appropriate to the Committee. 8. Perform ay other activities cosistet with this Charter, ad the Compay's Bylaws ad Certified of Icorporatio, as the Committee may deem ecessary or appropriate for the fulfillmet of its resposibilities uder this Charter or as required by applicable law or regulatio, or as may be determied by the Board. 9. Do every other act icidetal to, arisig out of or i coectio with, or otherwise related to the authority grated to the Committee hereby or the carryig out of the Committee's duties ad resposibilities hereuder. 10. Notwithstadig ay of the foregoig, the legal liability of ay of the Committee members shall ot be greater tha that of other members of the Board. 47

BOARD HUMAN RESOURCE AND REMUNERATION COMMITTEE The Board Huma Resource & Remueratio Committee costituted of four Board members icludig a Chairma with Compay Secretary as the Secretary to this Committee. TERMS OF REFERENCE The committee will be resposible for makig recommedatios to the Board for maitaiig: A soud pla of orgaizatio for the compay. A effective employees developmet programme. Soud compesatio ad beefits plas, policies ad practices desiged to attract ad retai the caliber of persoel eeded to maage the busiess effectively. The terms of referece of the Committee shall also iclude the followig: 1. Review orgaizatio structure periodically to: a. Evaluate ad recommed for approval of chages i the orgaizatio, fuctios ad relatioships affectig maagemet positios equivalet i importace to those o the maagemet positio schedule. b. Establish plas ad procedures that provide a effective basis for maagemet cotrol over compay mapower. c. Determie appropriate limits of authority ad approval procedures for persoel matters requirig decisios at differet levels of maagemet. 2. Review the employees developmet system to esure that it: a. Foresees the compay s seior maagemet requiremets. b. Provides for early idetificatio ad developmet of key persoel. c. Brigs forward specific successio plas for seior maagemet positios. d. Traiig ad developmet plas. 3. Compesatio ad Beefits: a. Review data of competitive compesatio practices ad review ad evaluate policies ad programmes through which the compay compesates its employees. b. Recommed for approval salary rages, salaries ad other compesatio for the CEO ad Seior Maagemet/Seior Geeral Maagers reportig to the CEO. ROLE OF CHAIRMAN AND MANAGING DIRECTOR MANAGEMENT COMMITTEE (MAN-COM) Chairma of the Board is resposible to esure that the Board is workig properly ad all matters relevat to the goverace of the Compay are placed o the ageda of Board Meetigs. The Chairma coducts the Board meetig ad has the resposibility to lead the Board ad esure its effective fuctioig ad cotiuous developmet. The Chairma has o ivolvemet i day-to-day operatios of the compay. CHAIRMAN MD The Maagig Director ad Chief Executive of the Compay is resposible for the maagemet of the Compay ad for its fiacial ad other matters, subject to the oversight ad directios of the Board. His resposibilities iclude implemetatio of strategies ad polices approved by the Board, makig appropriate arragemets to esure that fuds ad resources are properly safeguarded ad used ecoomically, efficietly ad effectively i accordace with all statutory obligatios. MD s performace is moitored ad evaluated by the Board agaist the objectives ad performace targets set by the Board. However, pursuat to the Notificatio from the MPNR dated 12-02-2015, the Maagig Director is exercisig ad performig the powers ad fuctios of the Board uder Sectio 6(4) of the Act till a ew BOM is appoited by the Govermet of Pakista. EXECUTIVE COMMITTEE (EX-COM) CHAIRMAN MD MEMBERS GMs, DGMs (Fuctioal heads/ Sectio heads) MEMBERS GM(F), GM(CP), GM(CB), GM(Ops), GM(RB/LS&AT/ Chemicals/LMT&LT) SECRETARY DGM(CP) Ma-Com is a busiess strategy committee, which meets primarily to steer ad review all key projects from coceptualizatio to implemetatio. Ma-Com also reviews budgetary proposals ad weeds out o-essetial oes. Upo its approval, a fial busiess pla is prepared ad set out for Board approval. It also reviews major busiess issues ad takes decisios accordigly. COMPENSATION, ORGANIZATION & EMPLOYEE DEVELOPMENT COMMITTEE (COED) CHAIRMAN MD MEMBERS GM (CP) GM (CB) GM (Ops) GM (F) SECRETARY DGM (HR) The COED reviews matters pertaiig to huma resources such as recruitmet, trasfers, discipliary actios, promotios ad employee beefits SECRETARY DGM (CP) The Ex-Com is a high-level committee that meets to review the day-to-day compay affairs. The Ex-Com members also share key accomplishmets at this forum. 49

COMMITMENT TO HSE COMMITMENT TO As Pakista s leadig Oil Marketig Compay, ETHICAL BUSINESS PSO is well aware of its commitmet to the broader stakeholder commuity. PSO esures CONDUCT that its policies & procedures are eco-friedly ad over the years we have demostrated our focus o the eviromet by decreasig our evirometal footprit year o year. Similarly the health ad safety of each idividual who iteracts with our busiess remais a paramout cosideratio. HSE at PSO Our HSE policy is a importat igrediet of our overall code of busiess coduct. It states that PSO will esure: The health of its employees, cotractors, customers ad public is protected. All activities are carried out safely. Eviromet is protected. To implemet the HSE policy, Pakista State Oil Compay Limited will: Comply with Pakista s relevat laws ad regulatios. Esure that all its activities are carried out i accordace with the Compay s Health, Safety ad Evirometal Stadards ad Procedures. Esure that evirometal performace meets legislative requiremets. Require every employee to exercise persoal resposibility i prevetig harm to self or others ad to the eviromet. Maitai public cofidece i the itegrity of its operatios by opely reportig its performace to all stakeholders who work with the Compay. Provide appropriate Health, Safety ad Eviromet traiig/iformatio to employees, cotractors ad other stakeholders who work with the Compay. Itegrate Risk Assessmet with all busiess processes. Promote prevetio of pollutio ad proper hadlig ad disposal of solid, liquid wastes ad gaseous emissios. Cotiuously improve our performace by improvig the leadership, capability ad capacity of our orgaizatio. Committed to maitaiig the highest stadards of accoutability, goverace ad service quality, PSO esures adherece to the ethical guidelies laid out i the Compay s code of coduct. With a strog belief that it is fudametal to the Compay s professioal itegrity to eable idividuals to voice their cocers regardig ay istace of malpractice or impropriety, PSO has implemeted a Whistle Blowig Policy. Through this iitiative a Whistle Blowig Uit reportig directly to Board Audit Committee has bee established. This policy lays out the procedures for lodgig ad hadlig of cocers, reportig requiremets while also esurig the idetity protectio of whistle blowers. A reportig mechaism has also bee placed o compay s website for easy accessibility to all parties. By implemetig this policy, PSO has ecouraged both iteral ad exteral parties to itimate the Compay regardig ay istace of improper coduct without fear. Moitorig of the effectiveess ad compliace of the Whistle Blowig Program is carried out by the Board Audit Committee. STAKEHOLDER RELATIONS AND PROCEDURES ADOPTED FOR THEIR ENGAGEMENT PSO recogizes the value of trasparet ad ope commuicatios with all its stakeholders i lie with regulatory cosideratios ad esurig corporate cofidetiality. We ackowledge that cosistet, coheret ad clear commuicatios help to establish soud reputatio of the Compay ad its maagemet. Accordigly, PSO aims to promote dialogue with ivestors, aalysts ad other stakeholders. The wide stakeholder commuity icludes but ot limited to followig: c) Govermet ad Regulatig bodies PSO cotiually egages with Govermet of Pakista ad regulatory bodies at local, provicial ad federal levels. PSO s seior maagemet is i close liaiso with govermet officials o various issues with respect to the Compay ad oil idustry. d) Other Stakeholders Other stakeholders iclude bakers, suppliers, customers ad employees. PSO egages with these stakeholders o a regular basis through effective use of iteral ad exteral commuicatio. a) Istitutioal Ivestors ad other shareholders The Compay follows best practices ad guidelies with respect to maitaiig ivestor relatios ad coducts security aalyst briefigs. The purpose of the briefigs is to share details pertaiig to results aouced ad to respod to ay aalyst queries relatig to results ad future prospects. Furthermore, PSO egages with a wide group of shareholders through the Aual Geeral Meetig ad dispatch of Aual Reports, which iclude comprehesive updates o fiacial ad operatioal footprits of the Compay. WEBSITE The Compay's web site www.psopk.com offers a detailed overview ad iformatio of the followig aspects of your compay: b) Media We egage with prit ad visual media through regular press releases o key achievemets, periodical results ad other corporate evets. Busiess lies, its operatioal aspects ad curret activities Maagemet team Procuremet activities Periodical fiacial results ad other fiacial iformatio Huma Resource recruitmet Media egagemet It is also highlighted here that the PSO s website fulfills the madatory requiremets as laid dow by the SECP for all listed compaies. 51

REPORT OF AUDIT COMMITTEE PSO was iformed by the Miistry of Petroleum & Natural Resources (MPNR) via the Notificatio dated 12-02-2015 that the Federal Govermet i exercise of the powers uder Sectio 7 of the Marketig of Petroleum Products (Federal Cotrol) Act, 1974 the Act has dissolved / de-otified the BOM with immediate effect. The Board Audit & Compliace Committee of the deotified BOM comprised of three o-executive members icludig its Chairma. The Chairma of the committee had relevat fiacial ad accoutig backgroud. The Committee met four times durig the year eded Jue 30, 2015 pre deotified period. The meetigs of the committee were held prior to approval of aual results for FY 2014 ad iterim results for 1st Quarter FY 2015 as required by the Code of Corporate Goverace (CCG). Meetigs were also held to review other matters as per the Terms of Referece (TOR) of the Committee. Regular attedees at Committee meetigs, o the ivitatio of the Committee, icluded the Head of Iteral Audit / Chief Audit Executive (CAE) ad Chief Fiacial Officer (CFO). The Head of Iteral Audit had direct access to the Committee. Audit observatios alog with the compliace status were regularly preseted to the Committee. The fuctios performed by the Committee durig the pre-deotified period are give below: FINANCIAL REPORTING: The Committee reviewed ad recommeded for approval of BOM, the draft aual ad iterim results of the Compay as metioed above. The Committee discussed with the CFO, CAE ad the exteral auditors the appoitmet of exteral auditors ad their remueratio for the year eded Jue 2015. sigificat accoutig policies, estimates ad judgmets applied i preparig the fi acial iformatio. ASSESSMENT OF INTERNAL AUDIT FUNCTION AND THE REVIEW OF MAJOR AUDIT OBSERVATIONS: The Committee as per its established process to review the effectiveess of the Iteral Cotrol system ad the Iteral Audit fuctio reviewed ad approved the risk based iteral audit pla of FY2015 coverig all the busiess activities. Furthermore, the Committee also reviewed the status of plaed versus actual audit activities. REVIEW OF EXTERNAL AUDITORS MANAGEMENT LETTER: The Committee also reviewed the Maagemet Letter issued by the exteral auditors for FY2014 wherei cotrol weakesses are highlighted. Compliace status of previously highlighted observatios by the exteral auditors were also reviewed ad corrective measures are discussed to improve overall cotrol eviromet. The Committee reviewed the major iteral audit observatios ad the status of decisios made i the previous Committee meetigs. The Committee recommeded improvemets i iteral cotrols ad advised for corrective actios where required. WHISTLE BLOWING: As per the Whistle Blowig Policy approved by BOM, the Committee is etrusted with the resposibility to moitor the effectiveess of the whistle blowig uit. Report o the Complaits received vis-a-vis the actio take were preseted i the Committee meetigs durig the said period. REVIEW OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE: The Committee places great importace o esurig compliace with the best practices of the CCG. I this respect, the Committee reviewed the Compay s Compliace with the CCG for FY2014. APPOINTMENT OF EXTERNAL AUDITORS: As per the requiremets of the CCG ad the TOR approved by the BOM, the Committee recommeded, for BOM approval, the Employees coduct a iteractive discussio o Compay matters 53