Analyst Briefing: K-Electric blames non-issuance of MYT for untimely release of financial reports

November 7, 2019 (MLN): K-Electric Limited held its analyst briefing on Wednesday, to discuss the financial performance of the company for the year ended on June 30, 2018.

To recall, the company had posted net earnings of Rs. 311.8 million (EPS: Rs. 0.45) during the aforesaid period, marking a growth of 18% over the period prior to it.

The company observed around 18% growth in revenue, which is mainly attributable to increased tariff adjustments. On the other hand, the cost of sales surged by 19.4% owing to increase in the cost of electricity.

Some of the setbacks that the company endured during the period were absence of tax credit and increase in non-core expenses by 38%. On the contrary, decline in finance cost by 10.3% provided some solace to the financial wellbeing of the company.

According to a research note by Pearl Securities, the management of the company during the briefing apprised that load shedding areas improved to 72% during the above stated period, as opposed to 64% in the previous period due to a number of reasons including process improvement, capacity enhancement and loss reduction initiatives.

Shedding some light on its investment endeavors over the last three years, the management informed that the company has invested around $181 million in generation, $401 million in transmission and $338 million in improving distribution network.

Regarding its capacity enhancement and expansion strategies, the management told that the company has successfully added four new grid stations, over 2,500 PMTs and 270 feeders over the past three years.

It is prudent to mention that K-Electric has various other investment initiatives in process, some of which include $3 billion investment in its supply chain, the development of 900MW RLNG plant, 700MW coal IPP as well as 1,000MW via external IPPs.

The management also briefed the onlookers about why the company was facing constant delay issues with regards to release of annual reports. It informed that the non-issuance of Multi Year Tariff was to be blamed for the non-issuance / untimely release of annual reports.

‘The company continues to have reservations over the current MYT and has filed an appeal for consideration at the appellate tribunal. However, the appellate tribunal is yet to be constituted’, the report by Pearl Securities said.

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