Oil & Gas Marketing Companies: SUI NORTHERN GAS PIPELINES LIMITED - Year Ended June 30 2004

The company is the largest integrated gas company in Pakistan serving more than two million customers through an extensive network in Punjab and NWFP. SNGPL has over 41 years of experience in operation and maintenance of high pressure gas transmission and distribution systems. During the year under review its financial, operational and technical performances has remained quite impressive.
Its sales both in terms of value and volume figures reached record highs. The company posted profit after taxation at Rs 2.297 billion as compared to Rs 2.014 billion booked in the preceding financial year 2002-03.
This works out to earning per share at Rs 4.60 which is 57 paisas higher than previous year. At the current market value of its share Price to Earning Ratio (PER) is a multiple of 13 which shows incensed confidence of investors at the stock market.
Its operational efficiency has substantially improved which can be seen from the decrease in UFG loss to 6.65% from 8.19% in the previous year. In the field of technology it is using MIS and SCADA system.
Sui Northern Gas Pipelines Ltd (SNGPL) was incorporated as a private limited company in 1963 and converted into a public limited company in January 1964 and is listed on all three stock exchanges in the country.
The registered office of the company is situated at 21-Kashmir Road Lahore. The principal activity of the company is the purchase, transmission, distribution and supply of natural gas. SNGPL claims that it is the largest gas company serving more than two million consumers in Northern Central Pakistan through an extensive network in Punjab and NWFP.
The company serves a variety of customers ranging from individual homes, restaurants, hotels, schools and hospitals to large industrial facilities, manufacturers, fertiliser units and power plants.
The company lays great emphasis on gas and other technologies. With a focus on achieving high levels of operational efficiency, Management Information Systems are being developed. During the financial year 2003-04, Telecoms department has successfully installed and commissioned 176 remotely operated mainline valves on is gas pipeline system.
During the same period, 71 remote controlled pressure control valves have also been commissioned at important Sales Meter Stations. Now gas control centre of SNGPL can remotely isolate any effected main line segment during an emergency, using SCADA system.
The market value of the share of Sui Northern Gas Pipelines Ltd gained 86.3% during the last year from Rs 40.55 to Rs 75.45 per share. On 28th December 2004, the closing rate of the share was quoted at Rs 59 per share which is nearly six times of the par value. The share carries very high premium and exhibits investors' confidence in this enterprise.
The company has excellent track record of profit distribution as it has never skipped dividend (cash/stock) during the last 10 years. During the last three years the dividend payouts ranged between 20% to 25% which is very attractive.
SNGPL is a public sector enterprise although its shares are also held by private individuals and entities which enables it to ascertain its viability and services in the midst of market forces.
The government of Pakistan (President of Pakistan) owns 36% of its total 499.19 million shares of Rs 10 each. After that a private sector entity Dawood Hercules Ltd owns 22.44% of SNGPL's stock.
Its associate under taking MCBL holds 5.97% stock, other banks, insurance companies financial institutions etc aggregate holding of its stock works out to 29.17. In the general public (local) it has 15,311 investors and they hold 5.34% of the company's stock.
During the financial year July 2003 to June 2004, the period under review the company's net sales in terms of value reached Rs 64.206 billion (FY 2002-03: Rs 42.460 billion) showing 51% growth over the preceding year's figure. This is an impressive growth as well as the record highest figure in the history of this company.
The company has maintained upward trend each year and the 10 year financial summary shows that the company sales are 7.08% time of 1995 net sales of Rs 9.069 billion.
The composition of revenue earned shows 97.08% gas sales; 0.97% rental and service income, 0.80% surcharge and interest on gas sales arrears and remaining has been accounted for amortisation of deferred credit and other income.
Sales in terms of volume grew by 32.4% over the preceding year's. The sector wise break-up of sales indicate that 37.75% gas was sold to power, 9.68% fertiliser, 2.80% CNG, 0.86% cement, 22.94% general industries and 25.97% domestic and commercial sectors.
The company has successfully implemented its gas infrastructure development (Project VII) by its own resources and by company's project development without involving foreign consultancy or help.

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Performance Statistics                (Million Rupees)

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Balance sheet                                  -As At-

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                                  June 30

                                     2004         2003

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Share Capital-Paid-up:           4,991.87     4,991.87

Reserves & Profit:               4,614.00     3,564.49

Shareholders Equity:             9,605.87     8,556.36

L T Debts:                      12,252.22    12,596.95

Deferred Credit:                 6,910.31     4,328.30

Deferred Taxation:               5,546.78     4,986.30

Employee Benefits:               1,989.20     1,560.20

Security Deposits:               4,441.95     3,744.46

Current Liabilities:            16,178.44    11,528.02

Fixed Capital Expenditure:      36,935.45    33,547.74

L T Investments:                     4.90        46.13

L T Loans:                         227.18       175.88

L T Prepayments:                     3.50         5.16

Current Assets:                 19,753.74    13,525.68

Total Assets:                   36,924.77    47,300.59

Sales Profit & Pay Out

Net Gas Sales:                  64,206.08    42,460.08

Gross Profit:                   11,578.54    11,110.72

Rental Income & Service Income:    638.65       635.26

Surcharge & Interest on

 Gas Sales Arrears:                526.73       491.89

Amortisation of Deferred Credit:   359.14       333.94

Other Income:                      406.28       422.83

Financial (Charges):              (968.92)  (1,531.47)

Profit Before Taxation:          3,664.38     3,207.07

Profit After Taxation:           2,297.48     2,013.77

Earning Per Share (Rs):              4.60         4.03

Proposed Cash (Dividend) @ Rs 2.50/Share

(2003: @ Rs 2.20/Share):        (1,247.97)  (1,098.21)

Share Price (Rs) Dated 28-12-04:    59.00            -

Financial Ratios:

Price/Earning Ratio:                12.82            -

Book Value Per Share:               19.24        17.14

Price/Book Value Ratio:              3.07            -

Debt/Equity Ratio:                  56:44        59:41

Current Ratio:                       1.22         1.17

Assets Turn Over Ratio:              1.13         0.90

Gross Profit Margin (%)             18.03        26.17

Net Profit Margin (%):               3.58         4.74

R O A (%):                           4.04         4.26

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