KARACHI, Feb 14: The Hub Power Company Limited (Hubco) announced on Thursday, interim cash dividend at 40 per cent or Rs4 per share, which was almost twice as good as most market players had expected.

“Seasoned analysts’ forecast was Rs3 per share, while rest of the market, including punters, were hoping for no more than Rs2”, commented Mohammad Sohail, head of research at brokerage, InvestCap. Hubco announced dividend and the results for the half year ended December 31, 2001, at the conclusion of the board meeting, on Thursday.

Analysts said that net earnings of Rs2,875 million for the six months to end-December 2001, posted by the company were quite in line with expectations, but the Board’s decision to pay interim cash at Rs4 per share, caught the market by (pleasant) surprise. Parish the thought that most of the sum appropriated out of profit for dividend would be repatriated to the parent of this largest independent power producer (IPP) in the country, the market received the announcement in good cheer. The Hubco stock rallied up to Rs27.15 — reflecting the maximum 7.5 per cent jump, to its circuit barrier for the day. That helped the KSE-100 index to close at gain of more than 50 points, reflecting a sharp recovery from the minus territory, where it was prior to the company’s announcement at around mid-day.

To add icing to the cake, the interim dividend this time was stated to have “already been approved by the company’s lenders”. That could have been to forestall the sort of fiasco caused in November last after a forged fax message was received and announced by the KSE, regarding lenders’ approval of last year’s final dividend. The bourse never made public the results of investigations launched to identify the perpetrators of that crime. But it did the next best thing: Tightened announcement regulations to prevent a repeat of the incident. Hubco announced that the interim dividend would be paid in April to the shareholders whose names appear on the company’s register on Thursday, March 14, 2002. Book closure from March 15 to 26 (both days included) had already been announced by the company and approved by the KSE.

For the six months to end-December 2001, Hubco reported gross profit amounting to Rs4,264 million on turnover of Rs8,395 million. The figures released by the company were accompanied by the directors report for the half year, signed by the company chief executive, Vince R. Harris. It said that the amounts (of turnover and gross profit) were lower than previous figures, mainly due to the revised tariff charged under the Settlement Agreement. During the period under review, an amendment to the Power Purchase Agreement (PPA) had been signed between the company and Wapda, which incorporated the terms of the Settlement Agreement including reduction in the Capacity Purchase Price. Turnover in the corresponding six months of 2000 stood at Rs14,188 million and gross profit at Rs5,861 million.

For the three months (second quarter) ended December 31, 2001, the company posted gross profit of Rs2,140 million on turnover of Rs3,685 million. Operating profit for the second quarter amounted to Rs2,259 million and for the half year to end-December 2001, it stood at Rs4,570 million. Including the previous surplus, Rs18,989 million were available for appropriation. Interim dividend would absorb Rs4,629 million.

Balance sheet showed trade debts at Rs5,773 million at end-December 2001, down from Rs7,504 million at June 30, 2001. Total assets of the company were at the book value of Rs64 billion at December 31, 2001.

Directors stated that following the settlement of tariff dispute with Wapda, the company’s working relationship with Wapda had “improved considerably” and all outstanding matters had been resolved amicably. Directors acknowledged that Wapda had paid all the billed invoices “in a timely fashion” and also paid the first installment of previously unpaid CPP according to the terms of the Settlement Agreement. “This resulted in improved cash flow position and consequently the company is distributing dividend in line with the previous projections”, directors said.