Altern Energy : Transmission of Quarterly Report for the Period Ende 2024-03-31

(UN-AUDITED)

FOR THE THREE-MONTH AND NINE-MONTH PERIOD ENDED MARCH 31, 2024

ALTERN ENERGY LIMITED

CONDENSED INTERIM FINANCIAL

STATEMENTS

(UN-AUDITED)

FOR THE THREE-MONTH AND NINE-MONTH

PERIOD ENDED MARCH 31, 2024

ALTERN ENERGY LIMITED

ALTERN ENERGY LIMITED

COMPANY INFORMATION

BOARD OF DIRECTORS
Mr. Faisal Dawood	Chairman
Mrs. Mehreen Dawood	Director
Mr. Farooq Nazir	Director
Mr. Shah Muhammad Chaudhry	Director
Mr. Salih Merghani	Director
Mrs. Aliya Saeeda Khan	Independent Director
Syed Rizwan Ali Shah	Independent Director
Mr . Umer Shehzad Sheikh	Chief Executive (Deemed Director)
AUDIT COMMITTEE
Syed Rizwan Ali Shah	Chairman
Mr. Farooq Nazir
Mr. Shah Muhammad Chaudhry
HUMAN RESOURCE & REMUNERATION COMMITTEE
Mr. Farooq Nazir	Chairman
Mr. Shah Muhammad Chaudhry
Syed Rizwan Ali Shah

CHIEF FINANCIAL OFFICER

Mrs. Noor Shuja

COMPANY SECRETARY

Mr. Salman Ali

HEAD INTERNAL AUDIT

Mrs. Rabia Shoaib

EXTERNAL AUDITORS

Grant Thornton Anjum Rahman - Chartered Accountants

BANKERS

MCB Bank Limited

The Bank of Punjab

Habib Bank Limited

Habib Metropolitan Bank Limited

REGISTERED OFFICE

DESCON HEADQUARTERS, 18-km Ferozpur Road, Lahore.

REGISTRAR SHARES

M/s. Corplink (Pvt.) Limited

Wings Arcade, 1-k Commercial Model Town, Lahore.

Tel: [phone] Fax: [phone]

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ALTERN ENERGY LIMITED

DIRECTORS' REVIEW

We, the undersigned, on behalf of the Board of Directors of Altern Energy Limited ('the Company') present the un-audited consolidated and unconsolidated condensed interim financial statements of the Company for the nine-month period ended March 31, 2024.

GENERAL

The principal activities of the Company continue to be sale of electricity, ownership, operation, and maintenance of a 32 Mega Watts gas-fired thermal power plant located near Fateh Jang, District Attock, Punjab. The electricity produced is sold to its sole customer Central Power Purchasing Agency (Guarantee) Limited ('CPPA') through the transmission network of National Transmission and Dispatch Company ('NTDC').

The Company's Generation License issued by the National Electric Power Regulatory Authority ('NEPRA') expired on September 21, 2021. On August 31, 2021, it applied for its renewal/extension from NEPRA , in line with the term of its Power Purchase Agreement ('PPA') and Implementation Agreement ('IA') . On April 01, 2024, NEPRA has granted the renewal of the generation license to the Company for another term of ten (10) years from the date of expiry. Now, the term of the generation license is extended till June 05, 2031, making it consistent with the terms of the PPA and the IA.

The Company owns 100% shares of Power Management Company (Private) Limited ('PMCL') (a special purpose vehicle) which in turn holds 59.98% shares of Rousch (Pakistan) Power Limited ('RPPL'). RPPL is an unlisted public company and an independent power producer having a gross capacity of 450 Mega Watts.

Furthermore, although the power generation operations are in losses for the past few years, the Company's viability is unaffected due to the dividend income that it earns on its long term investment in subsidiary as stated above and detailed in note 10 of these condensed interim unconsolidated financial statements.

FINANCE

Revenue for the period under review was nil due to no dispatch to the off-taker because of reduced dispatch demand from National Power Control Centre ('NPCC') and pending renewal of the Generation License. Revenue for the corresponding period of the last year represents delayed payment mark-up on receivables. The Company incurred gross loss of Rs. 67 million as compared to gross loss of Rs. 71 million in corresponding period of 2023. The Company posted net profit of Rs. 3,883 million resulting in earnings per share ('EPS') of Rs. 10.69, as compared to net loss of Rs. 83 million and loss per share of Rs. 0.23 in corresponding period of 2023. Net profit for the current period included dividend income amounting to Rs. 3,910 million (2023: Rs. Nil) from the subsidiary, PMCL.

Your Company's consolidated earnings attributable to the equity holders of Altern Energy Limited for the period under review were Rs. 2,196 million resulting in EPS of Rs. 6.04 per share, as compared to consolidated earnings of Rs.2,225 million and EPS of Rs. 8.29 in the corresponding period of the last year.

In view of the foregoing and based on the Company's income from its subsidiary, your Board contends that the Company will continue as a Going Concern in the foreseeable future.

DIVIDEND DISTRIBUTION

• On August 15, 2023, the Board of Directors of the Company declared and subsequently distributed first interim cash dividend @47% (Rs. 4.70 per ordinary share) amounting to Rs. 1,707.89 million to the shareholders of the Company.
• On November 07, 2023, the Board of Directors of the Company declared and subsequently distributed second interim cash dividend @47.5% (Rs. 4.75 per ordinary share) amounting to Rs. 1,726.06 million to the shareholders of the Company.
• On March 22, 2024, the Board of Directors of the Company declared and subsequently distributed third interim cash dividend @15% (Rs. 1.50 per ordinary share) amounting to Rs. 545.07 million to the shareholders of the Company.

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OPERATIONS

During the period under review, the plant did not dispatch electric power to the off-taker similar to no dispatch during the corresponding period of the previous financial year, on account of pending renewal of Generation License from NEPRA. Furthermore, the Company is facing diminishing dispatch demand from the off-taker in the past few years due to its plant being low on economic dispatch merit order of CPPA. The new power generation plants added into the national grid during the last few years being more efficient rank above your plant in CPPA's economic dispatch merit order.

During the period under review, all other scheduled and preventive maintenance activities were conducted in accordance with the Original Equipment Manufacturer ('OEM')'s recommendations. We are pleased to report that all the engines and their auxiliary equipment are in sound mechanical condition for smooth and reliable operations.

QUALITY, ENVIRONMENT, HEALTH & SAFETY (QEHS)

The Company adheres to a set of QEHS Principles implemented to achieve optimal standards of health and safety for its employees. Overall, the health, safety and environment performance of the plant remained satisfactory during the period under review.

SUBSIDIARY'S REVIEW

During the period under review, your Company's subsidiary Rousch (Pakistan) Power Limited ('RPPL') posted turnover of Rs. 6,927 million (corresponding period in 2023: Rs. 9,499 million) with the cost of sales of Rs. 2,419 million (2023: Rs. 3,398 million). The decline in turnover and cost of sales was due to no generation during the period as compared to net generation of 44 GWh during the corresponding period last year. Net profit for the period was Rs. 4,774 million (2023: Rs. 5,560 million) delivering earnings per share ('EPS') of Rs. 5.54 per share of Rs 10 each (2023: Rs. 6.45).

Delay in payments from RPPL's sole customer, CPPA continues. At the end of the reporting period, out of the total receivable of Rs. 14,098 million (June 30, 2023: Rs. 15,248 million), Rs. 11,255 million were overdue as compared to overdue receivables of Rs. 12,951 million at the end of June 30, 2023. This includes disputed amount of Rs 6,952 million (June 30, 2023: Rs. 6,300 million) on account of Other Force Majeure Event ('OFME') dispute with CPPA.

During the period under review, net generation delivered to the off-taker was zero GWh against 44 GWh delivered to the off-taker during the same period last year. The plant dispatch factor during the period remained 0% as compared to 2.02 % during the corresponding period of last year. Zero generation is mainly due to curtailment of RLNG as well as reduced demand from the off taker.

On the issue of OFME, a meeting was held on July 6, 2023, between the counter parties in which it was agreed that RPPL plant will only be dispatched if it is required under the Economic Merit Order (EMO), and it will be considered on OFME if it is required to be dispatched as per EMO and RLNG is not available, as per the terms of its PPA with CPPA. During the period under review, there were 101.87 OFME days as agreed between CPPA and RPPL, as compared to 161.39 OFME days claimed by CPPA during the corresponding period of the last year.

RISK MANAGEMENT

There has been no change in the risk management profile and risk manager policies of the Company as disclosed in Note 31 of the last annual financial statements of the Company for the year ended June 30, 2023.

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MATERIAL INFORMATION

There have been no material changes since 1st July 2023 and the Company has not entered into any commitment which would affect its financial position at the reporting date, except for those mentioned in annual audited financial statements of the Company for the year ended June 30, 2023.

FUTURE OUTLOOK

Your Company and the power sector are expected to face challenges in near future. Some of these continue to be macro-economic challenges such as shortage and extremely high prices of imported RLNG due to supply chain issues and Pak Rupee devaluation. Other challenges are Company specific such as low despatch demand from the off-taker, and its loss of capacity revenue due to the Company being on take and-pay arrangement under the PPA with CPPA. However, it is managing its operational costs from receipt of overdue receivables from CPPA. We expect that the Company will be able to generate some income from dispatch of power following the renewal of its power generation license by NEPRA. Furthermore, the Company will continue to be a Going Concern due to income from its investment in its subsidiary.

CORPORATE GOVERNANCE

Composition of the Board of Directors

The total numbers of directors are eight including Chief Executive (Deemed Director) with the following composition:

Sr.	Category	Names
No.
1		Mr. Faisal Dawood (Chairman)
2		Mr. Farooq Nazir
3	Non-Executive Directors	Mrs. Mehreen Dawood
4		Mr. Salih Merghani
5		Mr. Shah Muhammad Chaudhary
6	Independent Directors	Mrs. Aliya Saeeda Khan
7	Syed Rizwan Ali Shah
8	Chief Executive (Deemed Director)	Mr. Umer Shehzad Sheikh

Committees of the Board

The Board has established two committees which are chaired by Independent or non-executive directors. These committees are as follows:

Audit Committee

The Audit Committee comprises of three (3) members as follows:

Syed Rizwan Ali Shah	(Independent Director) - Chairman
Mr. Farooq Nazir	(Non-executive Director)
Mr. Shah Muhammad Chaudhary	(Non-executive Director)

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Human Resource & Remuneration Committee

The Committee comprises of three (3) members as follows:

Mr. Farooq Nazir	(Non-executive Director) - Chairman
Mr. Shah Muhammad Chaudhary	(Non-executive Director)
Syed Rizwan Ali Shah	(Independent Director)

Internal Audit and Control

The Board of Directors has set up an independent audit function headed by a qualified person reporting to the Audit Committee. The scope of the internal audit function within the Company is clearly defined by the Audit Committee which involves regular review of internal financial controls.

Directors' Remuneration

The remuneration of Board members is fixed by the Board itself. A formal directors' remuneration policy approved by the Board is in place. The policy states procedure for remuneration to Directors in accordance with requirements of the Act and the Regulations. As per the Policy, the nominee directors are not entitled to receive Board / Committee meetings fee or any other remuneration. Only the Independent Directors are paid for the meeting participation.

RELATED PARTY TRANSACTIONS

All transactions with related parties are conducted in ordinary course of business on an arm's length basis. Further, in accordance with the requirements of the Act and the Regulations, the Board of Directors have approved the policy for related party transactions. The Company has made appropriate disclosure of the related party transactions in the financial statements annexed with this report.

CORPORATE SOCIAL RESPONSIBILITY

The Company is committed to act responsibly towards the community and environment for mutual benefit. The Company recognizes the importance of being a good corporate citizen in conducting its business as well as delivering its obligations in social welfare of its staff and community in general. Particular attention is given to protect environment of the local community by planting trees. Additionally, local community benefits from our strategy of employing more staff at our plant site from surrounding areas.

ACKNOWLEDGEMENT

The Company remains grateful to its shareholders, employees, Government functionaries and all other stakeholders for placing their confidence and trust to steer the Company in these challenging times.

For and on behalf of the Board

Umer Shehzad Sheikh

Shah Muhammad Chaudhry

Chief Executive

Director

Date: April 26, 2024

Place: Lahore.

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