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SSGC’s losses soar 4.78x YoY in 1HFY23

SSGC’s losses soar 4.78x YoY in 1HFY23
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March 11, 2024 (MLN): Sui Southern Gas Company Limited (PSX: SSGC) recorded a staggering 4.78x YoY increase in its losses in the first half of fiscal year 2023. The company’s loss after tax ballooned to Rs9.57 billion [LPS: Rs10.87], a substantial rise from the loss of Rs2bn [LPS: Rs2.27] in the same period last year (SPLY).

This comes despite an increase of 10.3% YoY in the revenue, worth Rs208.72bn, up from Rs189.16bn in the same period last year.

The top-line growth was overshadowed by a surge in the cost of sales, which climbed to Rs210.92bn in the first half of the fiscal year 2023, up from Rs187.1bn in SPLY.

This escalation in costs eroded the company’s gross margins, which deteriorated to -1.05%, a stark contrast to the 1.09% margin reported in the same period last year.

During the period under review, other income marked a decline of 8.3% YoY to stand at Rs7.2bn in 1HFY23 as compared to Rs7.86bn in SPLY.

On the expense side, the company observed a rise in administrative and selling expenses by 14.6% YoY and other expenses by 17.6% YoY to clock in at Rs2.63bn and Rs6.26bn respectively during the review period.

The company’s finance cost increased by 31.1% YoY and stood at Rs2.91bn as compared to Rs2.22bn in SPLY, mainly due to higher interest rates.

On the tax front, the company paid a higher tax worth Rs1.63bn against the Rs1.42bn paid in the corresponding period of last year, depicting an increase of 14.9% YoY.

To note, in the unconsolidated condensed interim financial statements, trade debts include receivables of Rs29.97bn and Rs25.17bn which includes an overdue balance of Rs29.65bn and Rs25.1bn from KElectric (KE) and Pakistan Steel Mills Coryoration (Pivate) Limited (PSML) respectively.

These have been considered good by management and classified as current assets in the unconsolidated condensed interim financial statements.

Further, KE and PSML have disputed Late Payment Surcharge (LPS) on their respective balances due to which management has decided to recognize LPS on a receipt basis from the aforesaid entities effective from July 01, 2012.

Due to the adverse operational and financial conditions of PSML, disputes by KE and PSML with the Company on LPS, and large accumulation of their respective overdue amounts, SSGC was unable to determine the extent to which the total amounts due from KE and PSML were likely to be recovered and the time frame over which such recovery will be made.

In the unconsolidated condensed interim financial statements, interest accrued includes interest receivable of Rs11.53bn and Rs5.38bn from Sui Northern Gas Pipeline Limited (SNGPL) and Water and Power Development Authority (WAPDA), respectively.

These have been accounted for in line with the company's policy of charging LPS on overdue amounts, but have not been acknowledged by the counter-party.

Due to disputes of the company with WAPDA and SNGPL, and the large accumulation of their respective overdue amounts of interest, the company was unable to determine the extent to which the interest accrued amounts due from SNGPL and WAPDA.

Unconsolidated (un-audited) Financial Results for half year ended December 31, 2022 (Rupees in '000)
  Dec 22 Dec 21 % Change
Sales – Net 208,723,461 189,156,195 10.34%
Cost of sales (210,921,120) (187,095,182) 12.73%
Gross Profit / (Loss) (2,197,659) 2,061,013
Administrative and selling expenses (2,630,888) (2,295,019) 14.63%
Impairment loss against financial assets (1,147,268) (661,551) 73.42%
Other Income 7,202,997 7,858,077 -8.34%
Other Expenses (6,257,177) (5,322,316) 17.56%
Finance Cost (2,909,012) (2,219,323) 31.08%
Profit before taxation (7,939,007) (579,119) 1270.88%
Taxation (1,634,746) (1,422,335) 14.93%
Net profit / (loss) for the period (9,573,753) (2,001,454) 378.34%
Basic earnings/ (loss) per share (10.87) (2.27)

Amount in thousand except for EPS

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Posted on: 2024-03-11T09:50:13+05:00