Hub Power Company Limited

Hub Power Company Limited (HUBCO) was established in August 1991, as a public limited company under the Companies Ordinance, 1984. It is listed on all three stock exchanges of the country. In addition to this, HUBCO's Global Depository Receipts (GDRs) are also listed on Luxembourg Stock Exchange.
The Company is primarily involved in developing, owning, operating and maintaining power stations. HUBCO runs an oil-fired power station with an installed net capacity of 1,200 MW at Mouza Kund, Hub- Baluchistan and an oil-fired power station with an installed net capacity of 214 MW at Mouza Poong, Narowal in Punjab. The company is a major shareholder in one of its subsidiary companies, Laraib Energy Limited that is developing an 84 MW hydro-power plant near the New Bong Escape, 8km downstream of Mangla Dam in Azad Kashmir.
FINANCIAL ANALYSIS OF HUB POWER COMPANY LIMITED
Profitability 2010: HUBCO's turnover for FY10 rose to Rs 99 billion compared with Rs 82 billion in FY08; exhibiting an increase of 20.4 percent. This value increased further to Rs 123 billion in FY11. At the same time, the company incurred increasing operating costs, which went up from Rs 76 billion in FY09 to Rs 114 billion for the FY11.
This upward trend in the turn over and costs is primarily because of higher fuel oil prices during the period under consideration. HUBCO has been remaining profitable since 2009. Net profit increased from Rs 3 billion in FY09 to Rs 5 billion in FY10. This increase is due to several reasons including currency devaluation, higher tariff profile and higher generation bonus.
In FY11, factors such as the net effect of efficiency gains, lower repair and maintenance expenses, higher financing costs, slashed net profits fell by 2.3 percent. The company's EBIT ratio remained around 7 percent with very minor fluctuations from 2009. The ROE ratio, on the other hand, jumped from 12.8 percent in FY09 to 18.6 percent in FY10, and later fell to 18.37 percent in FY11.
Liquidity HUBCO's customer, WAPDA has been unsuccessful in resolving its liquidity problems due to which the former is facing financial pressures. As a result of this, in FY10 the company owed Rs 63 billion to Pakistan State Oil for the supply of refined furnace oil to the power plant, which has risen to Rs 75 billion at the end of FY11.
Debt Management Due to WAPDA's unpaid amount, HUBCO has continued to run its finance facilities. During FY10, the company paid two tranches of long-term loan and paid up its debt obligation due during the year. Long-term loan of the company continued to increase over the years. From Rs 11 billion in FY09, this figure amounted to Rs 27 billion in FY11.
Operational Efficiency During the year 2010, the plant operated at optimal efficiency and dispatched record output of 8,337 GWh of electricity. This electricity output fell to 8,115 GWh in FY11. This Company has been able to turn its assets into revenue, effectively as its fixed asset turnover ratio, which fell to 2.01 in FY10 from 2.18 in FY09; increased to 2.52 in FY11. Since achieving commercial operations, HUBCO's Narowal plant has been able to make 237 GWh of electricity in ten weeks of operations during the FY11.
Market Value Earnings per share of the Company increased from Rs 3.27 in FY09 to Rs 4.80 in FY10. With a marginal decline in profitability in FY11, HUBCOs EPS fell by 2.3 percent to Rs 4.69 per share.
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