BAKU, Azerbaijan, November 1
By Tamilla Mammadova – Trend:
Georgian income from equity investments plummeted to $0.3 million in 1H2019 versus $0.9 million a year before as Kartli Wind Power Station’s equity was reduced, Trend reports referring to the Georgian Oil and Gas Corporation (GOGC).
Net profit dragged down mostly by non-cash Foreign Exchange (FX) costs. Lari’s depreciation against dollar during 1H2019 led to a non-cash FX loss of $16.7 million in 1H2019, compared to $11.2 million gain in 1H2018 (when lari strengthened). As a result, the bottom line plummeted 68.5 percent year-on-year to $11.9 million in 1H2019.
Cash balance pressured by significant capital expenditures related to Gardabani II HPP construction. Investments stood at $62.3 million in 1H2019, one of the highest capital investments made by the company. Construction of Gardabani II HPP reached the final stage with 90 percent construction works already finalized by October 2019.
Test-regime is planned to start in November, with the launch of the HPP expected in December 2019. Cash flows from operating activities stood at $2.6 million in 1H2019, compared to $26.6 million in 1H2018. GOGC made higher cash payments (+16.1 percent year-on-year) to suppliers in 1H2019 mostly related to the increased gas sales volumes.
At the same time, cash receipts from customers remained mostly flat (+0.2 percent in USD), causing the fall in operating cash flows. In addition, earnings on deposits plunged as high capex (related to Gardabani II HPP) reduced cash balance at banks from $182.8 million as of 1H2018 to $68.4 million by June 2019.
Lari's depreciation against dollar as of end June 2019 compared to end June 2018, was the main reason behind the decreased balance sheet items. GOGC’s asset structure has undergone significant transformation in 1H2019 as Gardabani II construction reached the final stage.
On the back of large investments related to this construction, GOGC’s cash balance decreased significantly (down 62.6 percent year-on-year to $68.4 million), while Property, Plant, & Equipment (PPE) balance increased (+10.1 percent year-on-year to $395.1 million).
Lari’s depreciation reduced overall asset balance by 11.4 percent year-on-year (to $623.6 million), while in lari terms the balance increased (+3.7 percent year-on-year).
JSC Georgian Oil and Gas Corporation is a diversified company with business activities in various segments of energy. It has the status of the National Oil Company and protects state interests in the Production Sharing Agreements signed with investors.
GOGC is actively engaged in international projects and business relations, it plays the decisive role in implementation of the governmental economic policy of integration into Euro-Atlantic structures. Its strategic and major business partners include SOCAR, Shah-Deniz Consortium, BP, BOTAS, ROMGAZ, MVM, PERN, UkrTransnafta, ArmGazprom, GAZPROM, TCC, GEOSTOCK, RAMBOLL, USAID, MCC, KfW, ADB, EBRD, SINOSURE etc. Securities of GOGC are placed and successfully traded at London Stock Exchange.