PREAMBLE

Management presents to Shareholders unaudited results for the quarter, October � December 2007, for the Kenya Oil Company Group, as well as for the newly acquired subsidiary, Kobil Petroleum Ltd.

In addition Management presents to its Shareholders 12 months, January � December 2007 for Kenya Oil Company and Kobil Petroleum Ltd, separately and combined.

Kenya Oil Company and its Subsidiaries have already filed an application with relevant authorities to have its financial Year changed from September to December. Once approved, the financial year will be reported henceforth on a full Calendar year basis, with the next unaudited report announcement, to be for 6 months ending June 2008.

Results

During the 4th Quarter October � December 2007, the Oil Industry continued to experience volatile and new high record oil price of over USD 100/Bbl.

Kenol/Kobil combined performance delivered exceptional results for this quarter. Net Sales increased by 47.4% as a result of increase in sales volume and increased oil prices over the same period of 2006, while Gross Profit increased by 288%, essentially attributable to stock revaluations resulting from applicable international prices on stock holding. The quarter for 2007 delivered a Net profit after Tax of Ksh 549 million compared to a 2006 loss of Ksh 228 million for the quarter, resulting in a 341% improvement over 2006.

The combined results for full Calendar year, January to December 2007 are strong as well. Net Sales was up 15.3% while Gross Profit increased by 43.7% over 2006, and Profit after Tax was up by 35.4%. This strong result is mainly due to strong Quarter, October - December 2007 profitability Vis-a-Vis big loss in same Quarter of 2006 as mentioned above, and better performance of certain segments among them Export, Aviation, Retail & Subsidiaries at large.

During the Calendar year 2007, the companies continued to experience operational constraints due to the Kenyan Pipeline and Storage system inability to cope with Demand. In addition, disruptions and low quality products at the Kenyan Refinery affected product supply locally as well as to Subsidiaries, especially to Uganda & Rwanda, forcing them to procure products at higher prices locally and from Independent importers, thus affecting margins.

The Group had to put in place alternative Distribution system, utilizing mainly Road Transport all the way from Mombasa Terminals for both Exports and Local use, causing Distribution costs to go up by over 49%, much above the growth in sales volume.

Indirect Tax increases and up-front payment system introduced by Kenya Revenue Authority and Tanzania Revenue Authority especially the high non-recoverable VAT in Tanzania, affected margins and financing costs. Financing cost for the 2007 year was 35.6% above 2006.

The Retail, Consumers, Non Fuel and LPG sectors performed very well, whilst Aviation and Export margins were still under pressure during the better part of the year, but performed much better than 2006. Administrative expenses were up by over 25% due to increase in Marketing activities, staff remuneration and benefits, increase in Non recoverable V.A.T. and Rents for newly leased acquired service Stations during the year.

Shareholders attention is drawn to the newly acquired, Kobil Petroleum Ltd, Full year 2007 performance Vis-a-Vis its performance in 2006, which was the basis of Company valuation used for the acquisition. Kobil Petroleum Ltd. strong 2007 over 2006 Performance is evidence of great value added to Kenol Shareholders.

Prospects

The recent post election Political situation in Kenya is expected to present a challenging Business environment to Management. Being an African Company operating in markets across Central, Eastern and Southern Africa, having strong understanding and great experience in different and changing Political and Economical environments, over the years, this new situation in Kenya is expected to be a tall order but Management believes it will be able to weather the negative effect, on its profitability.

Management expects the Kenyan Market�s total demand to contract. The extend of the market contraction depends entirely on how fast the Political dispute is resolved.

Management believes that with quick action and flexibility to adapt to this changing demand and margins environment, coupled with creative strategies in respect of its Group sales pattern, the Group might not lose much sales volume and will be able to maintain strong profitability, for the whole Group.

In Rwanda & Zambia, Management expects margins environment to continue being favourable to the Group, while in Ethiopia price regulation with low margins, will continue well into 2008. In Uganda & Tanzania, we project improvement in margins per unit sold, coupled with higher sales volume in Tanzania but flat or lower in Uganda.

High level and maybe new records of oil prices is expected to continue to prevail and shall be part of our Oil Industry environment. For Downstream player as Kenol Group that would mean high financing cost but at the same time, it is expected to continue pressurizing players as Independent sector and other small scale Importers.

The Group will continue to focus on expansion and growth opportunities, while setting new targets in the area of cost saving, among them is to substantially reduce Financing and other Over-Head costs.

ANNUAL GENERAL MEETING.

The forthcoming Annual General Meeting is to be held on 07 March 2008 at 10.00 a.m. at The Sarova Stanley Hotel, Ballroom.

Jacob I. Segman

Acting Chairman & Group Managing Director

29th January 2008