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GAMMON PAKISTAN LIMITED
CORPORATE BRIEFING SESSION FY 2022-23
DATED: NOVEMBER 24, 2023
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Disclaimer
During the course of this presentation we may make forward-looking
statements regarding future events or the future performance of the
Company. By its very nature, forward looking statements involve
inherent risks and uncertainties, both general and specific and risks exist
that the predictions, forecasts, projections and other forward looking
statements may not be achieved.
Gammon Pakistan Ltd., does not undertake any obligation to update or
revise any of statement / forecast / projection, whether as a result of
new information, future events or otherwise.
When relying on forward looking statements you should carefully
consider the political, economic, social and legal environment in which
the Company operates.
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Flow of the Presentation
Economy and Construction Industry of Pakistan
Gammon Pakistan Ltd.
Brief History of the Company
Brief on Financial Results for the year 2022-2023
Future Outlook
Questions / Answers
Economy and Construction Industry 4
of Pakistan - Year 2022-2023
After nearly stagnating in FY 2023 (July 2022–June 2023), the economy
appears to be turning over a new leaf in FY 2024. A USD 3 billion IMF bailout
in July allowed the government to avoid an impending default and helped
rebuild international reserves and unlock further funding from other
creditors.
During the outgoing fiscal year 2022-23 Pakistan has faced unprecedented challenges
due to poor demand-driven policies of the previous government, devastating floods,
and political uncertainty. In addition, the Russia-Ukraine war severely disrupted the
global demand-supply balance which led to a commodity super-cycle resulting in slow
down of the global economic growth to 2.8 percent in the current year from 6.2
percent. Above all, the poor economic management of previous government led the
country to a near-default situation by the time the coalition government took charge.
Inconsistent policies, unsustainable fiscal deficit, the exponential rise in public debt,
economic uncertainties, and mounting circular debt have been the main ingredients of
previous government's tenure.
Economy and Construction Industry 5
of Pakistan - Year 2022-2023
The last fiscal year of the previous government alone witnessed an overall fiscal deficit of 7.9
percent, and a trade deficit of US$ 39.1 billion. In FY 2023, the government achieved
significant economic gains in terms of improved external and fiscal indicators. As a result, even
with a significant increase in debt servicing, the fiscal deficit reduced to 4.6 percent of GDP in
July-April FY2023 against 4.9 percent for the same period last year, while the primary balance
has been reverted from deficit to surplus. Furthermore, during the first eleven months of the
outgoing fiscal year, the trade deficit is down by 40 percent and the current account deficit by
76 percent during July-April FY2023.
The SBP weekly report released revealed that the country’s total liquid foreign
exchange reserves went down by $308 million (-2.1%) on September 23, 2022, to
$13.76 billion, compared to $14.07 billion one week earlier. The SBP reserves
decreased $8.005 billion, compared to $8.346 billion a week earlier. However, these
reserves increased earlier only when, the central bank received a $1.2 billion
tranche from the International Monetary Fund (IMF).
Economy and Construction Industry
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of Pakistan - Year 2022-2023
The tranches are not the solution for strengthening our fragile
economy. The government must undertake several drastic measures
to revive the country’s faltering economy. The last six months have
seen some of the highest prices of energy the world over. Coupled
with the political instability, the rolling blackouts and extremely high
prices of electricity has driven many of our export-oriented business
to closure.
The new taxes imposed by the government on the real estate sector
will badly affect the growth of the construction industry and largely
increase unemployment.
Economy and Construction Industry 7
of Pakistan - Year 2022-2023
The fiscal year (FY23) wraps with the price of a 50-kg cement bag standing tall at
an average Rs1145, highest average price ever recorded, with markets such as
Islamabad and Lahore leading the way at Rs1150 and Rs1170 per bag. The two
markets are also behind the largest hike in average prices, boosting the surge in
average weekly price during the year of about 40 percent compared to the
average weekly price last year.
The price of all items related to construction purposes have increased, including
cement, sand, crush, tiles, brick, concrete, paint as well as steel bars.
“The surge in the price of steel is not artificial, it is interlinked with various
factors including rapid currency devaluation. In a short span of just one year, the
price of scrap increased by 26%, electricity increased by 79%, gas increased by
187%, the PKR devalued by 37%, cargo charges increased 220% and the financial
charges have gone up by 107%,
SUMMARISE ECONOMY (Verbal)
Brief History of the Company 8
The Company was incorporated under the repealed
Companies Act, 1913 (now the Companies Act, 2017) on
August 12, 1947 as a Public Company Limited by shares. It's
shares are quoted on Pakistan Stock Exchange Limited
(Formerly Karachi Stock Exchange Limited, Lahore Stock
Exchange Limited and Islamabad Stock Exchange Limited).
The principal activity of the Company is execution of civil
construction works and Company intends to add up its
working model in future as developers as well.
The registered office of the Company is situated at Gammon
House, 400/2 Peshawar Road, Rawalpindi.
Financial Results of the Company
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for the year ended June 30, 2023
2023 2022
Particulars
Pak Rupees Pak Rupees
Contract income 6,677,706 24,331,831
Contract expenditure (16,804,360) (26,240,916)
Net contract Profit / (Loss) (10,126,654) (1,909,085)
Operating Profit / (Loss) 1,882,801 (7,941,578)
Finance cost (91,772) (26,702)
Fair value gain on investment property 2,321,301 8,998,562
Profit / (Loss) before taxation 4,112,329 1,030,282
Profit / (Loss) after taxation 7,547,369 (6,367,572)
Earning / (loss) per share 0.27 (0.23)
Highlights of Financial Results
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of the Company during the
year 2022-2023
Revenue from projects has declined by 23% this year, as
compared to last year, due to finishing works at ongoing
projects, main events during the year are as under:
The Project at Fateh Jang is complete and we are in process
of final bill and claims like escalation design change etc.
Project of Bridges on Old Bannu Road (dualization Project) is
also complete and processing for final bill is underway.
Despite financial constraints our efforts are in process to get
further business. It is expected that some more work will be
awarded to your company by some clients in the near future.
Highlights of Financial Results of 11
the Company during the year
2022-2023
We are striving hard to acquire some mega projects with available options
like JV with some financially strong company to pre-qualify for the project
bidding. It will improve the company’s financial position.
After the Management change your company is in restructuring mode and
our vigorous efforts are continued in favour of the Company.
Highlights of the Subsidiary of the 12
Company during the
FY 2022-2023
Gammon Pakistan Precast Private Limited-GPPL
We are pleased to inform that Gammon Pakistan Precast Private
Limited made progress during the year and its further improved
results are expected next year.
GPPL will not only share the open market but will play major role in
own development projects. I also feel amused to say that the
model we are going to introduce in the market for precast
products countywide for Clients, will bring good results. Preliminary
work flow and clients response is encouraging for future business
prospects.
Future Outlook 13
Events after the reporting date (June 30, 2023):
There is no significant event to report after June 30, 2023
except that contract revenue for the first quarter FY 2024 is NIL
due to closure of ongoing projects.
In view of the current economic and environmental
uncertainties, GPL remains vigilant of the market dynamics and
stands well-positioned to continue its existing growth
momentum, focusing on improved service standards and
expanding its footprint. The Company is poised to reap the
benefits for future growth, Insha’Allah.
Despite financial constraints our efforts are in process to get
further business. It is expected that some more work will be
awarded to our company by some clients in the near future.
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