According to a Asiaweek report, Pakistan State Oil Company (PSO) is the only Pakistani company to be listed among the top 1000 companies in Asia. PSO has been ranked 520th position during the year 2001. It was ranked 896 during the year 2000. However, it is worth mentioning that the company remains the only one from Pakistan to be included in the 1000 list which contained 20 companies from India.

Sustained rallies were witnessed in PTCL and HUBCO but did not help in improving the KSE-100 index during the week. The other factors which helped in maintaining interest in equities markets were: better prospects for Pakistan for qualifying for PRGF assistance and outlook for textile sector.

However, in the coming weeks active trading in scrips from fertilizer, chemicals, gas distribution, oil marketing and banking sectors is expected.

In the coming days, Pakistan's improved rating, higher dividend yields and attractive prices are expected to attract the foreign fund managers. Stable exchange rate will also have a positive impact.

HUBCO has announced a final dividend of 22 per cent (subject to the approval of lenders) for the year ending June 30, 2001. Payment of 17 per cent was approved by the lenders recently. If the lenders approve this, total payout for year would be 39 per cent. The results indicate 13.6 per cent increase in revenue from Rs 25,601 million to Rs 29,086 million due to the cumulative effect of a number of factors. These include: a) the revised tariff, b) continuous rise in the price of furnace oil, c) higher electricity dispatch to WAPDA and d) the retirement of debt. Other income hiked from Rs 223 million to Rs 1,079 million on the basis of interest being paid by WAPDA on its outstanding amount to the company. HUBCO also reversed Rs 5,326 million provisions made last year resulting in a massive and above expected net profit of Rs 10,585 million for year 2001 as compared to a net loss of Rs 6,985 million for the previous year.

The company managed to improve its dividend payout for the year ending June 30, 2001 over the previous years. The Board of Directors approved 24 per cent dividend for the year 2001. Profit rose by 36 per cent because of increase in monthly line rent, installation charges and earnings through mobile phones services. The company has posted lower than anticipated operating expenses, due to lower financial charges and exchange gains. The effective tax rate came down and earnings per share improved from Rs 2.61 for the pervious year to Rs 3.56 for the year 2001.

The company has witnessed a tremendous recovery during the year ending June 30, 2001 by posting Rs 87 million profit after tax as opposed to Rs 26.6 million loss for the previous year. Net sales improved from Rs 6,889 million to Rs 7,976 million and selling and administrative expenses came down from Rs 234.8 million to Rs 201.7 million. Operating profit improved from Rs 75 million to around Rs 175 million. Financial and other charges posted decline from Rs 147.7 million to Rs 78 million during this period. All these factors enabled the company to post Rs 124.6 million profit before tax for the year 2001 as compared to a meager Rs 1.9 million profit for the previous year. However, only 8 per cent dividend was approved by the Board of Directors and remaining amount was transferred to general reserve.

The company has posted Rs 39 million profit before tax for the year ending June 30, 2001 as compared to Rs 47 million for the previous year. The factors responsible for this decline were: decrease in revenue and increase in expenses which brought operating profit before provisions to around Rs 29 million for the year 2001 as compared to Rs 62 million for the previous year. Write back of Rs 11 million of provisions for potential lease losses (net) helped the company to improve its profit before tax. However, the Board of Directors approved 12.5 per cent dividend payout, same as previous year. A point worth mentioning is that while there was a decline in income from finance lease operations, income from operating lease operations increased significantly.

The company seems to suffer from two serious problems, huge accumulated losses and high financial charges. These two factors will not allow the company to pay any dividend for many years. The company posted Rs 27 million operating profit for the year ending June 30, 2001 out of this Rs 18.6 million was eaten up by financial charges. Out of Rs 8 million profit before tax, Rs 2 million was appropriated for tax liability. Accumulated losses at the end of the year were Rs 48.9 million. This clearly indicates that unless additional equity is injected by the sponsors financial charges cannot be curtailed.