Kohinoor Energy Limited (KEL) was incorporated in 1994. It is listed on all the three stock exchanges of the country. KEL is one of the Independent Power Producers (IPP) operating in Pakistan. The principal activity of the company is to operate, generate and maintain a furnace oil power station with net capacity of 124 megawatts, whereas the gross capacity is around 131.44 MW.
The main buyer of KEL's electricity is Wapda; KEL's plant is situated at the Link Manga Raiwind Road Lahore.
RECENT RESULTS 3Q10
The revenue earned in 3Q10 was Rs 7.02 billion as compared to Rs 6.74 billion earned in 3Q09. The slight increase in revenue earned was due to an increase in tariffs as well as increase in the number of units generated. Gross profit declined to Rs 690 million as compared to Rs 862 million due to higher cost of production due to higher fuel prices. PAT of Rs 581 million was recorded as compared to Rs 715 million earned in 3Q09. Financial charges have reduced drastically to Rs 4.7 million as compared to Rs 45.9 million in the previous year.
In FY09, the company earned overall revenue of Rs 8.33 billion as against Rs 7.38 billion recorded in the same period of FY08. The net profits after tax also registered a growth of 38% from the previous year to stand at Rs 905.05 million in 2009. The reasons for higher profitability in FY09 included high dispatch levels of 80.33%, saving in fuel consumption, reduction in administrative and general expenses and gain on exchange rate parity. The profit margin on sales stood at 11% as compared to 8.86% in FY08. Similarly the return on assets for the period is 13%. In short, the profitability ratios have displayed a stable trend in FY09.
The operating cycle for the 1Q09 was 354.35 days as against the operating cycle of 118.94 days during FY08. This huge increase in the operating cycle during the quarter under discussion was simply because the sales levels are lower as compared to the sales level of the whole year. The inventory turnover was 84.75 days for the quarter under discussion. Sales-equity ratio was 0.44 for the 1Q09. Total assets increased by around 5.24% during 1Q09 this was because since the end of FY08 there was an increase of 12.96% in trade debts. Inventory levels also increased to Rs 688 million from Rs 468 million at the end of FY08.
The liquidity position of the company had declined slightly from 3.5 in the end of FY08 to 3.37 at the end of 1Q09. This was because short term borrowings increased by 57.14% during the 1Q09 from Rs 470.6 million at the end of FY08 to Rs 739.5 million at the end of 1Q09. in FY09, the liquidity position improved significantly, with a current ratio of 12.22. This improvement in the liquidity position is mainly on the back of the huge dip of 73% in the current liabilities which stood at Rs 208.9 million. This is mainly because of the sudden dip in current maturity of long-term loans and other trade-related liabilities. This enabled the profitability ratio to rise despite a dip of 7% in the current assets in the same period.
Total debt to total asset ratio in FY09 stood at 3.15%, down from 10.78% at the end of FY08 to 12.16% at the end of 1Q09 which was mainly because of an increase in short-term borrowing. Long-term debt to assets registered a minor increment and stood at 0.14 from 0.12% in FY08 to 0.04% because staff retirement benefits and related obligations which rose in comparison to FY 08. The overall Finance cost declined by 43% in the FY09 to stand at Rs 47.7 million. This was due to a decline in short-term borrowings from banks which are offering higher interest rates to borrowers due to the current economic conditions (persistent inflationary pressures). Equity position was higher because of the increase in unappropriated profits during the period under discussion.
In FY09, the earnings per share showed a recovery and stood at PKR 5.34/share as compared to PKR 3.86/share. This is due to higher after tax income due to reasons discussed earlier. The book value per share also showed consistency over the period, indicating that there are prudent steps taken by the company management to ensure the best interests of the shareholders.
FUTURE OUTLOOK
The future outlook of the power generation sector looks slightly better as the global meltdown will hit its bottom in 2009. The meltdown will ensure that there is downward pressure on international oil prices causing the prices of other oil-grade products such as furnace oil to be on a downward slide. This along with depressed local industrial demand the prices of furnace oil are expected to remain low at least during the next two quarter in Pakistan.
In the present circumstances where the country is facing severe shortage of power supply, the company is constantly performing at high dispatch levels. The power plant responding to load demand of Wapda, in overall dispatched 872,630 MWH of electricity as compared to 881,894 MWH dispatched during the previous financial year. The overall capacity factor of the power complex remained at 80.33% as against 81.19% of the last financial year.
During the financial year under review seven engines reaching at 52,000 running hours have been overhauled under major maintenance program. All of the engines are in good condition and fully contributing to the power complex.
The company has recently successfully qualified the Annual Dependable Capacity Test conducted in October 2008. The complex had demonstrated the net capacity of 129.44 MW as against the contractual net capacity of 124 MW.
Recently, the company has entered into a new agreement with Wartsila Pakistan for major maintenance of the power plant. Besides the company is also striving to constantly cut costs and raise profits in order to fulfil its obligations.
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KOHINOOR ENERGY FINANCIALS
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INCOME STATEMENT
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2002 2003 2004 2005 2006 2007 2008 2009
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Sales 2,129,375 2,397,091 2,335,476 2,918,583 4,984,208 5,333,106 7,387,857 8,334,341
Cost of sales 967,771 1,358,062 1,264,170 1,879,009 3,749,585 4,180,586 -6,432,159 7,239,966
Gross profit 1,161,604 1,039,029 1,071,306 1,039,574 1,234,623 1,152,520 955,698 1,094,375
Administration & general expenses 68,166 110,952 108,484 107,120 128,497 230,159 232,198 182,523
Operating profit/other income 1,093,438 928,077 962,822 42,331 45,195 21,405 20,500 54,185
Operating profit & other income 1,178,147 967,313 1,009,171 974,785 1,151,321 943,766 744,000 966,037
Finance costs 330,766 253,964 181,150 161,476 128,262 99,984 -84,307 47,796
Profit before taxation 847,381 713,349 828,021 813,309 1,023,059 843,782 659,693 918,241
Taxation / provision for taxation 18,442 12,650 6,292 7,900 9,800 7,100 -5,000 13,185
Profit after taxation 828,939 700,699 821,729 805,409 1,013,259 836,682 654,693 905,056
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BALANCE SHEET
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2002 2003 2004 2005 2006 2007 2008 2008
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ASSETS
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NON-CURRENT ASSETS
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property, plant, & equipment 5,489,886 5,164,693 4,971,587 4,799,639 4,666,324 4,722,146 4,537,937 4,363,430
Intangible assets - - - 5,661 4,331 6,041 4,545 3,658
capital work-in-progress 1,305 9,105 20,898 18,328 11,330 67,959 55,210 -
Long term loans & deposits 4,780 5,084 4,476 4,350 4,898 4,831 10,360 9,209
Total fixed assets 5,495,971 5,178,882 4,996,961 4,827,978 4,686,883 4,800,977 4,608,052 4,376,297
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CURRENT ASSETS
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Stores, spares, & loose tools 187,199 177,551 203,822 285,179 319,578 307,228 382,892 366,072
Stock in trade 87,752 120,045 121,076 130,725 144,637 209,416 85,560 311,234
inventory 274,951 297,596 324,898 415,904 464,215 516,644 468,452 -
Current assets-Inventory* 2,108,596 1,665,523 1,532,684 1,527,618 1,581,662 1,875,343 - -
Trade debt 725,284 211,589 280,563 394,102 561,530 1,155,394 1,939,815 963,309
Advances, deposits & other receivables 174,351 220,769 185,357 260,150 391,218 321,997 197,757 240,122
Cash & check balances 1,208,961 1,233,165 1,066,764 873,366 628,914 397,952 139,298 664,074
Total current assets 2,383,547 1,963,119 1,857,582 1,943,522 2,045,877 2,391,987 2,745,322 2,544,811
Total Assets 7,879,518 7,142,001 6,854,543 6,771,500 6,732,760 7,192,964 7,353,374 6,921,108
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EQUITY & LIABILITIES
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CAPITAL & RESERVES
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Authorized ordinary shares/Rs 10 1,700,000 1,700,000 1,700,000 1,700,000 1,700,000 1,700,000 1,700,000 1,700,000
Issued, paid-up/ordinary shares: Rs 10 1,694,586 1,694,586 1,694,586 1,694,586 1,694,586 1,694,586 1,694,586 1,694,586
Unappropriated profits 2,152,026 2,344,349 2,742,431 3,124,194 3,798,535 4,635,217 4,866,263 5,008,754
Reserve for bonus shares - - - - - - - -
Total equity 3,846,612 4,038,935 4,437,017 4,818,780 5,493,121 6,329,803 6,560,849 6,703,340
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NON-CURRENT LIABILITIES
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Long term loans (secured/unsecured) 2,758,367 2,023,242 1,411,778 805,885 286,965 96,051 - -
Staff retirement benefit/Deferred liabilities 7,770 14,639 21,678 3,519 2,986 4,030 8,795 9,672
Total non-current liabilities 2,766,137 2,037,881 1,433,456 809,404 289,951 100,081 8,795 9,672
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CURRENT LIABILITIES
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Finances under mark up arrangements-secured 0 0 0 0 0 360,000 470,608 0
Current portion of long term loans 790,133 621,867 626,485 642,912 525,246 192,102 108,097 0
Creditors, accrued & other liabilities 411,580 113,866 107,944 413,402 329,314 113,728 107,755 107,167
Provision for taxation 65,056 75,264 80,182 87,002 95,128 97,250 97,270 100,929
Proposed dividend - 254,188 169,459 - - - - -
Total current liability 1,266,769 1,065,185 984,070 1,143,316 949,688 763,080 783,730 208,096
Total liabilities 4,032,906 3,103,066 2,417,526 1,952,720 1,239,639 863,161 792,525 217,768
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