Credit & Risk analysis of Hubco power company Pakistan

Credit & Risk Evaluation

Hubco Pakistan

Irfan AhmedHassan Bin Munawar

Azam Ahmed

HUBCOIn 1991, Hubco was incorporated in

Pakistan . As a limited liability companyThe Government requested the sponsors led

by Xenel Industries of Saudi Arabia to present proposals for a 1292 MW plant.

Purpose of the CompanyTo generate additional power to fill the gap

between supply and demand.Aim to help the nation in reducing its costs of

energy by converting our oil fired boilers at Hub plant to coal fired boiler.

Continuing to be major player in Pakistan power sector

Key performance indicatorsFiscal year ending June (RS in millions)

2013 2012 2011 2010 2009 2008

TURN OVERPROFIT ASSTES DIVIDEND GENERATION (GWh)

165,8629,38899,3137,5228,493

174,7128,910207,8126,9439,091

123,3105,425146,2405,7868,352

99,6945,556122,6965,2078,337

82,7843,78190,1862,7198,257

62,4352,60162,6973,1877,205

Fiscal Year endIn June

Electricity Generation(GWh)

Company’s share(GWh)

% age

2006-072007-082008-092009-102010-112011-122012-13(est.)

97,81497,45194,66399,856102,48491,85088,270

7,2147,2058,2578,3378,3529,0918,493

7.77.48.78.48.29.99.6

Market Share

Financial Performance

2 0 1 3 2 0 1 2(Rs. '000s) (Rs. '000s)

Subordinated loan to subsidiary – unsecured 80,395 -Deposits 5,629 5,629Trade debts 24,799,191 151,161,169Other receivables 769,053 567,929Bank balances 16,852,745 496,872

Total 42,507,013 152,231,599

Credit Risk

Liquidity Risk2012-2013 Less than 6

months between 6 to 12 months

between 1 to 5 years

between 5 to 10 years

Total

Long term loans

Trade and other payables

Short term loans

Total

2,805,266

33,311,632

5,018,395

41,135,293

3,010,935

__

__

3,010,935

24,455,219 __

__

24,455,219

,971,192 ____

10,971,192

433,311,632

1,242,612

5,018,395

79,572,639

Liquidity Risk2011-2012 Less than 6

months between 6 to 12 months

between 1 to 5 years

between 5 to 10 years

Total

Long term loans

Trade and other payables

Short term loans

Total

3,178,732

126,301,387

20,141,883

149,622,002

3,149,689

__

__

3,149,689

25,611,183 __

__

25,611,183

16,264,330 ____

_____

16,264,330

48,203,934

126,301,387

20,141,883

194,647,204

Interest Rate Risk 2012- 2013 2011- 2012

RUPEES IN000

RUPEES IN 000

FIXED RATE INSTRUMENT

Financial Assets 16,852,745 496,872

Financial Liabilities 2,489,861 3,211,967

VARIABLE RATE INSTRUMENT

Financial assets 12,754,790 129,632,359

Financial liabilities 50,744,956 152,973,821

Foreign Exchange risk Financial assets of the company include

Rs.271.383 mn (2012: Rs 87.315 mn) in

foreign currencies are subjected to

currency risk exposure

Financial liability of the company

include

Rs 820.040 mn (2012: Rs 145.148 mn) in

foreign currency are subjected to risk

exposure

Credit RatingThe Pakistan Credit Rating Agency (PACRA)

has assigned a long-term entity rating of ‘AA+’ (double A plus)

Short-term rating of ‘A1+’ (A one plus) to Hub Power Company Limited.

FindingsThe current year net profit has gone up by 14.63%

The return on equity also increased from 27% to 30%.

Because of increased earnings this year, the dividend

per share is also higher over previous years i.e. Rs 8

per share

Because of better working capital management &

circular debt settlement at year end the operating

cycle is also shortened from 15 days 1 day.

RecommendationTo continue generation in coal for cheap

electricity

Build a sustainable future with energy sufficiency

Generate energy for thousands of households across Pakistan

Strengthening system for Health, Safety and Environment (HSE)