K-Electric says finalization of financial statements for FY17 & F18 facing delays

The power utility cited the absence of valid power tariff for the year starting 1st July 2016, ongoing litigation and stay order issued by the Sindh High Court and change of auditors as reasons for not being able to hold AGM for FY17 and FY18

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LAHORE: K-Electric on Monday told the Pakistan Stock Exchange (PSX) that it cannot prepare its financial statements based on estimation and absence of basic topline revenue number and will be delayed due to a multitude of reasons.

In a notification sent to the PSX, K-Electric stated that it had been regularly communicating and updating the Securities and Exchange Commission of Pakistan (SECP), PSX and its shareholders that due to non-availability of valid tariff for the year starting 1st July 2016, it couldn’t prepare its financial statements confounded on projections in the absence of basic topline revenue number.

It added that holding an annual general meeting for the financial year 2016-17 (FY17) wasn’t possible in such circumstances.

Moreover, the power utility explained the reasons for the delays in the finalization and audit of financial statements of the company for the year ended 30th June 2017 besides the holding of AGM for FY17 citing the matter was subjudice before the Sindh High Court (SHC).

K-Electric clarified due to a stay order issued by the SHC, it could only hold the AGM for FY17 upon the directives of SECP, after the setting aside of the aforementioned stay order.

Due to continuous delays in holding of AGM for FY17 and finalization of the financial statement for FY17, K-Electric said it wasn’t in a position to finalize the statement for the year ended 30th June 2018, commence audit process and hold AGM for FY18 within the specified time limit.

It pointed out to a certificate issued by the company’s statutory auditors which confirmed the matter was subjudice before SHC, the audit of FY17 accounts would be further delayed and no time for finalization of financial statements can be given at this juncture.

Consequently, this would also affect the preparation of financial statements and audit for the year ended 30th June 2018, said K-Electric.

It informed the stock exchange that its previous statutory auditor for FY2017 KPMG had resigned and the company’s board had appointed A.F Ferguson & Co and BDO Ebrahim & Co as joint statutory auditors for FY 2017.

As a result, the bourse was told that the audit process of the financial statement will face further delays due to the appointment of new auditors.

“New auditors have been engaged immediately after their appointment, audit process of financial statements for FY 2017 is in full swing and concerted efforts are underway to hold AGM for FY 2017 by the quarter ending 31 March 2019,” said K-Electric.

The power utility provided assurance to the PSX and SECP that it was taking all required measures to resolve the matter prudently and expeditiously to hold overdue AGMs for FY 2017 as well as for FY 2018 as early as possible.

For a second day running, K-Electric was the volume leader at the PSX with K-Electric with 10.12 million shares exchanging hands.

K-Electric Limited (KEL) on Monday was the volume leader at the Pakistan Stock Exchange with 22.85 million shares, gaining Rs0.47 to close at Rs6.29.

The increased trading activity on the script was attributed to a news item published on Sunday in which it was revealed that Abraaj is reportedly close to reaching an agreement with the government to sell its 66pc stake in Karachi-based electricity company to a Chinese group.

The UK’s Financial Times quoted senior people at Abraaj as saying that the deal, which was previously held up due to regulatory approvals, is being renegotiated at a lower price.

K-Electric shares closed trading at Rs6.22, down Rs.0.09 (-1.43%). KSE-100 index ended  trading at 39,052.50 points, up 490.10 points (+1.27%) on Tuesday.

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