Sui Northern Gas Pipelines Limited - Management

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Night view of head office SNGPL Lahore

SNGPL Posts a Massive Growth in Profits in FY2018
Sui Northern Company Ltd (SNGP) has announced its much delayed financial statement for the year that ended on June 30, 2018, posting a profit of Rs. 11.21 billion, showing a growth of 29.15% from a profit of Rs 8.61 billion in 2017.
The overall gas sales of the company rose to Rs 446 billion in FY2018, up by 40% from Rs 319 billion in FY 2017. The cost of sales also increased to Rs 476 billion from Rs 326 billion.
The other income of the company played an important role in bringing up the profits as it was stated at Rs 14.15 billion against Rs 11 billion. Overall the expenses were posted at Rs 14.87 billion in FY18 as compared with Rs 12.08 billion in FY17.
Higher profits were triggered by retrospective adjustment of Unaccounted for Gas losses. A higher capitalization of fixed assets during the period was also a key reason in improving profits.
However, the company received a major blow in the form of an increase in finance costs by 101.87% to Rs. 10.80 billion from Rs. 5.35 billion.
The company announced a final Cash Dividend for the year at Rs. 5.55 per share i.e. 55.5%. This is in addition to interim Cash Dividend already paid at Rs. 1.5 per share, i.e. 15% for the 1st Quarter that ended September 31, 2017.
Earnings per share of the company increased from Rs 13.58 to Rs 17.54 in the period under review.
Furthermore, SNGPL has also mentioned that the company’s auditors have recognized net revenue of Rs 17.17 billion on account of ‘Take or Pay’ arrangements with certain consumers. These amounts have been disagreed and disputed by said consumers.
Moreover, this matter has been referred to an expert for determination under dispute resolution mechanism specified in the respective Gas Sales Agreements.
It is not possible to determine at this stage, the associated economic benefits that may flow to the entity.
1st Quarter FY19 (September 2018)
Sui Northern also announced its financial results for the quarter that ended on September 30, 2018. It reported a profit of Rs. 2.59 billion, up by 35% as compared with Rs. 1.9 billion in 2017 due to an increase in the asset base.
The gas sales of the company saw a rise of 75% to Rs 158 billion as compared with Rs 90 billion in 2017. However, the cost of sales also increased to Rs 152 billion during the period under review.
The financial costs of the company surged massively to Rs. 4.5 billion due to an increase in the company’s debt borrowings and higher interest rates. Nevertheless, the overall impact on net profits was way better than what the market participants were expecting.
The company has also announced an interim cash dividend for the quarter ended September 31, 2018 at Rs. 1.5 per share i.e. 15%. Earnings per share of the company for the quarter were posted at Rs. 4.09 against Rs. 3.03.
At the time of filing this report, SNGP’s shares at the bourse were trading at Rs. 78.60, up by Rs. 1.31 with a turnover of 7.09 million shares on Monday.

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