United Power’s annual profit drops, jumps in Q1 FY21

United Power Generation and Distribution Company Ltd has posted less annual earnings per share (EPS) for the last fiscal year as compared to the previous year owing to disrupted revenue.

Also, a one-off income in the previous year has resulted in the year-on-year decline.

However, a post-shutdown demand recovery coupled with an added income from increased capacity helped the listed power producer post a significant raise in the company's EPS for the first quarter (July-September) of the current fiscal year.

The board of directors of United Power has recommended 145% cash and 10% stock dividends for the fiscal year that ended on 30 June 2020.

Its EPS for that fiscal year was Tk11.26, which was Tk14.62 in the previous year.

Mojibul Islam Patoary, the company's assistant general manager for finance and accounts, told The Business Standard, "Three factors have played role in the year-on-year decline in EPS."

The company had a one-off gain of around Tk80 crore in the fiscal year 2018-19, when it acquired some profit-making power plants, which were its sister concerns, at a nominal price, said Patoary.

"The added plants helped the company grow its consolidated revenue and profit. But the one-off income from consolidation gains was not present in this year's account, which contributed to a year-on-year decline in profit this year," he added.

In the months of April and June this year, the company's power sale to the private clients dropped around 80% due to nationwide shutdown. But, thanks to the government which purchased some additional power from the company at a cheaper price, they recovered some losses.

Still the company suffered 60% and 40% revenue losses in the months of April and May respectively, which had eaten away nearly Tk30 crore from its profits.

On top of that, a 53MW plant was off operation over the last fiscal year, and the company missed nearly Tk48 crore of profits. However, the company is in talks with the government for a contract renewal.

"As the economy is recovering and industries are in need of power, revenue over the July-September period has seen a rebound," said Patoary.

Additionally, acquisition of a 300MW heavy fuel oil-based plant at Chattogram's Anwara and 115MW plant at Jamalpur at the beginning of the new fiscal year helped the company post a consolidated EPS of Tk5.5 for the first quarter this year, which was Tk3.06 over the same period a year ago.

United Power's consolidated net asset value per share, which includes that of its subsidiaries too, stood at Tk62.4 on 30 September this year.

United Power, listed in 2015, had begun its two main power plants at Dhaka and Chattogram export processing zones around a decade ago.

Its unique business model –selling power directly to private clients like the EPZ authority and nearby factories – has helped the company attain an attractive profitability.

In the years following the listing, the cash rich company has been in a trend to increase its power generation capacity through merging profitable ventures by its entrepreneur – The United Group.

Sponsors and directors collectively own 90% shares of the company.

United power shares gained 5.57% at the Dhaka Stock Exchange and closed at Tk305 on Thursday.