20000217

Brief recordings

BY SCANNER

Fuel & Energy

Mari Gas Company Limited

Year Ended June 30, 1999

Overview

The company is principally engaged in drilling, production and sale of natural gas. The major customers of the company include Wapda, Engro Chemical, Fauji Fertilizer, Pak Saudi Fertilizers. It has development and production leases of 363.98 square miles and ultimate recovery of proved reserves are 6.309 BSCF gas. It has 64 producing wells. During the year the production of gas increased to 140 BSCF of gas from 137 BSCF in the previous year. The company has been giving uninterrupted gas supply to its customers. The share in the Company is trading at Rs 22.70 at substantial premium but it is under-valued relative to the break-up value and has suffered diminution in the market value relative to its peak price recorded in 1994. The company has generated pre-tax profit at Rs 229.35 million and posted net profit at Rs 160.23 million which increased by 40.6% and 4.4% respectively over preceding year's and paid cash dividend at 22.5%. The company has discovered combustible gas with probable reserves of 2 trillion cubic feet.

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It is a public limited company incorporated in Pakistan under the Companies Ordinance, 1984 and its shares are listed on all stock exchanges of the country. It is principally engaged in drilling, production and sale of natural gas. The gas price mechanism is governed by Mari Gas Well Head Price Agreement dated December 22, 1985 between The President of Islamic Republic of Pakistan and the Company.

In the categories of shareholders there were 3,391 individual shareholders in the Company out of total 3,428 shareholders. These individual investors' aggregate holding of the company's stock was to the extent of 9.7% of the total 36.75 million paid-up shares in the Company. Among the institutional investors, 4 financial institutions, three insurance companies and 22 investment companies had 10.13% stake in the company's equity. Modaraba companies owned 0.17% of the company's stock.

Fauji Foundation owned 40%, Government of Pakistan had 20% and Oil & Gas Development Company (OGDC) Limited had 20% of the stock of the Company.

Paid-up capital of the company at Rs 367.50 million has not changed since 1967. However shareholders equity has beefed up to Rs 0.904 billion mainly because of reserves and retained earnings. Therefore the corresponding break-up value of the share has gone-up to 24.59 which carries 145.9% premium over the share's par value of Rs 10.

The share in the Company was listed at Karachi Stock Exchange in 1994. At present it is trading at Rs 22.70 at 127% premium over its par value. However it remained under valued relative to its par value.

Despite subdued share market sentiment, the price of its share never went below Rs 15. However, it has suffered diminution in market value if compared to its highest price recorded at Rs 62 in 1994.

The Company has excellent track record of the regular pay-out of yearly dividends. Since 1994 the Company paid cash dividend every year at 22.5%. For the year ended June 30, 1999, the Company had declared interim dividend at 15% followed by another interim dividend at 7.5% which works out to total pay-out at 22.5% for the financial year 1998-99 which is in line with the last financial year's pay-out.

During FY 1998-99, which is the period under review, the Company's actual production of gas increased by 2.2% to 140 BSCF over previous year's 137 BSCF (Billion Standard Cubic Feet). The daily average gas production for the year was 383.26 MMSCF as compared to 374.73 MMSCF last year.

"The Company continued un-interrupted gas supply throughout the year under review to all its customers namely Fauji Fertilizer Company Ltd., Engro Chemical Pakistan Ltd. Pak Saudi Fertilizers Company Ltd. and Water and Power Development Authority (WAPDA). --- The gas allocation to fertilizer companies for producing fertilizer and to WAPDA for power generation remained the same during the year at 336 MMSCF/day and 66 MMSCF/day respectively." Ñ as stated in the Directors Report under review.

The company's net sales at Rs 694.19 million (FY 1997-98: Rs 612.45 million), operating profit at Rs 247.08 million (FY 1997-98: Rs 216.44 million) and other income at Rs 83.39 million (FY 1997-98: Rs 70.77 million) registered 13.3%, 14.2% and 17.8% increase respectively over the preceding year's.

Pre-tax profit at Rs 229.35 million and after tax profit at Rs 160.23 million increased by 40.6% and 4.4% respectively over the preceding year's. The earning per share (EPS) increased to Rs 4.36 from EPS of Rs 4.18 in the preceding year. At the current price of its share the PER is placed at 5.21x.

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Performance Statistics (Million Rupees)

June 30 1999 1998

Capital & LiabilitiesÉÉÉ

Paid-up Capital: 367.50 367.50

Reserves & Profit: 536.21 458.66

Equity: 903.71 826.16

L.T. Debts: 262.82 421.28

Other Non Current Liabilities: 38.83 28.22

Current Liabilities: 1,626.37 2,942.49

AssetsÉÉÉ

Tangible Fixed Assets: 1,023.70 1,030.78

Leasing and Exploration Cost: 2.71 2.80

Other Non Current Assets: 6.95 4.84

Current Assets: 1,798.37 3,179.73

Total Assets: 2,831.73 4,218.15

Sales, Profit & PayoutÉÉÉ

Sales Net: 694.19 612.45

Operating Profit: 247.08 216.44

Other Income: 83.39 70.77

Depreciation & Amortisation: 127.57 121.02

Financial & Other Charges: 84.56 114.90

Profit Before Taxation: 229.35 163.10

Profit After Taxation: 160.23 153.49

Dividend Cash 22.5%: 82.69 82.69

Financial RatiosÉÉÉ

Share Price (Rs) 14/2/2000: 22.70 Ñ

Book Value Per Share (Rs): 24.59 22.48

Price/Book Value Ratio: 0.92 Ñ

Debt/Equity Ratio: 23:77 34:66

Current Ratio: 1.11 1.08

Asset Turnover Ratio: 0.25 0.15

Operating Margin (%): 35.59 35.34

Net Profit Margin (%): 33.04 26.63

EPS (Rs): 4.36 4.18

Price/Earning Ratio: 5.21 Ñ

R.O.E. (%): 17.73 18.58

R.O.A. (%): 5.66 3.64

R.O.C.E. (%): 13.29 12.03

Capacity & Actual ProductionÉÉÉ

"Considering the nature of the Company's business, information regarding capacity has no relevance. The actual production for the year ended June 30, 1999 was 140 BSCF (1998: 137 BSCF)."

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Company information: Chairman: Lt. Gen. Mohammad Maqbool (Retd) (MD. Fauji Foundation). Chief Executive: Lt. Gen. Khalid Nawaz Malik (Retd) (MD. Mari Gas Company Ltd.). Director: Abdus Sattar (Financial Advisor P&NR Govt. of Pakistan), Zaka-ud-Din Malik (MD. OGDCL), Nasim Beg (Deputy Chief Executive NIT). Company Secretary: Khurram Khan. Registered Office: 21-Mauf Area, 3rd Road, Sector G-10/4, Islamabad.