On June 30, 2005 JPGLS had 3,517 shareholders, of which 3,387 individuals held 53% of the total capital of Rs 1.332 billion. The sponsors and family members held 20% of the share capital while the rest of the shares were distributed among a large number of corporate entities.
The company's power plant is built in the vicinity of Jia Bagga Railway Station, off Raiwind Road, District Lahore. It has an installed capacity of 135.6 MW (dependable capacity of 107 MW), comprising of 24 medium speed-four stroke Mitsubishi diesel power generator sets of 5.65 MW each and are designed for operation using heavy furnace oil while startup, low load operation and shutdown operations are on high speed diesel oil.
Major milestones in the life of the company include: Obtaining of Letter of Interest from the GOP on March 14, 1994; gaining Letter of Support on July 27, 1994; receiving the Certificate of Commencement of Business on February 14, 1995; achieving Financial Close on January 24, 1996; ground breaking on September 26, 1995; and commencing commercial operations on March 14, 2000.
Since then the company has been experiencing net loss every year. The accumulated losses have eaten up major portion of shareholders equity and the company's financial position is also on the decline. As on June 30, 2005, equity has been reduced to only 5 % of total assets. Debt/ Equity Ratio on June 30, 2005 was 94:6.
The demand of dispatch from Wapda during the year under review was lower than the last year. The load factor for FY05 stood at 41% as compared with 43% for FY04. During the year 381,320 MWH of electricity was dispatched to Wapda while in the previous year the company could dispatch 404,001 MWH. JPGL plant has been operated and maintained by Siemens Pakistan Engineering Co Ltd under an O&M contract with the company.
In terms of the Power Policy, the IPPs including JPGL enjoy a number of incentives, some of which include: (i) Profit derived from electric power generation are exempt from income tax.
The IPPs are also exempt from minimum tax on turnover; (ii) Energy Fee or Energy Purchase Price is recognised on transmission of electricity to Wapda, whereas Capacity Fee or Capacity Purchase Price (CPP) is billed and recognised on monthly basis. CPP is linked to plant availability and the contractual net capacity of the power plant and mostly covers all fixed charges including return on equity as well as debt servicing in respect of the debt raised for implementation of the power generation facility. CPP is payable in full as per contract even tough demand for electricity is low from Wapda. From investors' point of view, these features are the main attraction of the IPPs.
Unlike many IPPs, JPGL has been suffering losses since inception. Major reasons for continued losses as mentioned in the Directors' Report are: (1) lowest levelled tariff among the IPPs' located in the same vicinity with the same capacity; (2) the company is paid by Wapda for consumption of furnace oil @211gm per KWH in fuel component to energy payment against actual average consumption approximately of 222-226 gm at average per KWH; and (3) other factors contributing to the loss inter alia include charge of liquidated damages (LDs) levied by Wapda.
Without qualifying their opinion, the statutory auditors have draw a attention of the members to note 9.1(a) to the financial statements, according to which the company is continently liable for the liquidated damages claimed by Wapda for the period from July 1, 2001 to June 30, 2005 to the tune of Rs 458.691 million The company is reportedly in the process of reconciliation with Wapda for the settlement and withdrawal of the liquidated damages. The ultimate outcome of this matter cannot presently be determined; and therefore no provision for any liability that may result has been made in these financial statements.
JPGL is a public limited company and lot of money has been invested into it by both the sponsors and the general public. The syndicate of banks also has large exposure in the company. Wapda receiving energy supply from JPGL has long term relationship with the company as per the terms of the Power Purchase Agreement. The stakeholders are urged to jointly consider steps to bring the company to sound health. Performance statistics are given below.
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Performance Statistics
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Balance Sheet (Rs in Million) (Audited) (Audited)
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As on June 30, 2005 2004
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Capital-Paid-up: 1,332 1,332
Reserves: -995 -906
Equity: 337 426
Surplus on Revalue of FA: 0 0
Shareholders Equity: 337 426
L.T. and deferred liabilities: 5,230 5,542
Capitalisation: 5,567 5,968
Current Liabilities: 667 430
Total Liabilities and Equity: 6,234 6,398
Tangible Fixed Assets: 5,703 5,928
L.T. Advances and deferred: 10 20
Current Assets: 521 450
Total Assets: 6,234 6,398
Conting. & Commitments: 459 472
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Ratios:
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Current Ratio: 0.78:1 1.05:1
Debt-Equity Ratio: 94:6 93:7
Book Value per share - Rs: 2.53 3.20
Price per Share (16-12-05)-Rs: 6.95 -
Price/Book Value Ratio: 2.75 -
Conting. & Commit/Equity: 1.36 1.11
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Income Statement (Rs MM)
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Year Ended June 30, 2005 2004
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Sales (net of sales tax): 2,195 2,020
Gross Profit: 376 384
Operating Profit: 323 327
Profit/(Loss) Before Taxation: -90 -91
Profit/(Loss) After Taxation: -89 -93
Cash Dividends %: 0% 0%
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Ratios:
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Gross Profit/Sales: 17% 19%
Operating Profit/Sales: 15% 16%
Profit (Loss) after Tax/Sales: -4% -5%
Net profit (Loss)/Equity: -26% -22%
ROA (Loss): -1% -1%
ROCE (Loss): -2% -2%
Dividend Payout Ratio: 0% 0%
Earnings (Loss) Per Share - (Rs) -0.67 -0.70
Inventory Turnover (times): 31.36 36.07
Receivable Turnover (times): 23.60 8.86
Price/Earning (Loss) Ratio: -10.40 -
Asset Turnover (times): 0.35 0.32
Days Inventory: 12 10
Days Receivable: 15 41
Debt Service Cover (times): 1.02 0.86
Cash flow Summary (Rs MM) 2005 2004
Net Cash flow, Operations: 139 39
Net Cash flow, Investing: -11 -115
Net Cash flow, Financing: -129 -3
Change in net Liquidity: -1 -79
Net Liquidity at beginning: 6 85
Net Liquidity at end of period 5 6
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Capacity (GWh)
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Installed Capacity- GWh: 937 937
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Actual Production-(GWh)
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Actual energy delivered- GWh: 381 401
Load Factor*: 41% 43%
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* Generation is dependent on the load demanded by WAPDA.
COMPANY INFORMATION: Chairman: Sheikh Nazaz Ali; Chief Executive: Liaqat Khan; Director: Zafar Mahmood; Chief Financial Officer: Abdul Rashid; Company Secretary: Syed Zafar Haider; Auditors: 1-Hyder Bhimji & Co, Chartered Accountants; 2- Javaid Jalal Amjad & Co, Chartered Accountants; Legal Advisors: Walker Martineau Saleem; Registered Office & Plant: Off Raiwind Road, Near Jia Bagga Railway Station, District Lahore; Web Address: www.jpglpk.com