KOT ADDU POWER COMPANY'S FINANCIAL STATEMENT

Analyzing Financial Statement of Kot Addu Power Company



Analyzing Financial Statement of Kot Addu Power Company

Overview

Power sector in Pakistan has been in the limelight for a couple of years. The gap between the demand and supply increasing day by day, the companies also facing the problem of acute liquidity shortage because of circular debt. To exacerbate the situation, losses in the transportation of electricity go up to around 40%. Surging fuel prices also worsened the situation of the sector.

The question that most investors ask is regarding the reason this crisis happened and the answer is simple: power projects were not planned according to the increment in demand. Following table issued by Private Power and Infrastructure Board of Government of Pakistan shows the inflated deficits in the sector that have been projected:

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SUPPLY AND DEMAND POSITION: 2008-2020 (MW)

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              2008  2009  2010  2011  2012  2013  2014  2015  2016  2017  2018  2019  2020

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Existing Generation          15,903 15,903 15,903 15,903 15,903 15,903 15,903 15,903 15,903 15,903 15,903 15,903 15,903

Proposal / Committed Generation     530  4,235  7,226 10,115 10,556 13,307 13,520 14,607 16,134 18,448 18,448 18,448 18,448

Total Existing/Committed Generation  16,484 20,138 23,129 26,018 26,459 29,210 29,423 30,510 32,037 34,351 34,351 34,351 34,351

Expected Available Generation     13,146 16,110 18,503 20,814 21,167 23,368 23,538 24,408 25,630 27,481 27,481 27,481 27,481

Demand (Summer Peak)         16,484 17,868 19,352 20,874 22,460 24,126 25,919 28,029 30,223 35,504 34,918 37,907 41,132

Surplus/Deficit Generation      -3,338 -1,758  -849   -60 -1,293  -758 -2,381 -3,621 -4,593 -8,023 -7,437 -10,426 -13,651

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Source: Private Power and Infrastructure Board - Govt. of Pakistan

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Recent Results 1Q10

Turnover for the review period was Rs 20,325 million and cost of sales was Rs 17,728 million. Profit after tax for the period was Rs 1,336 million (compared to Rs 1,536 million in the corresponding period in 2008), resulting in an earnings per share (EPS) of Rs 1.52 per share (EPS Rs 1.75 in corresponding period in 2008). Finance cost has increased by 7.7% in 1Q10, while the administrative expenses have been in line with the inflationary pressures. Due to some settlement of the circular debt, the trade payables and receivables both have declined.

During the period under review the power plant generated net output of 2,028 GWh of electricity, resulting in a load factor of 68.3% with an overall commercial availability of 98.4%. The fuel mix for the dispatched output being 82.2% on low sulphur furnace oil; 10% on high speed diesel; and 7.2% on gas.

Recent Developments in the Industry

As Pakistan has taken loan from the International Monetary Fund, Pakistan government had to pay-off the circular debt (Hey-Cunningham, 2006). Hence, payments from Wapda have been given to power generation companies and therefore further paid to the refineries. Hubco also received payments of 35 billion rupees, which they eventually paid off 30 billion to refineries.

Introduction

Kot Addu Power Company Limited (Kapco) was incorporated in Pakistan on April 25, 1996 as a public limited company. It is listed on all the three stock exchanges of the country. The principal activities of the company are to own, operate and ...