KARACHI, Feb 21: During the current bull run, some stocks have quietly outperformed the market by an exceedingly wide margin. The share of the par value of Rs10 in Pakistan National Shipping Corporation (PNSC) has galvanized by an incredible 309 per cent in a year , from Rs10.50 in February 2003, to be currently quoted at Rs42.95. The shipping company no longer looks like a lame duck.

But, financial figures for the first half of the year 2004 (July-Dec 2003) released by the corporation on Thursday could be discomforting to the shareholders who might wonder if the shipping company has again entered troubled waters. PNSC posted an after tax profit of Rs454.3 million for the half year, which represented growth of 51 per cent from after tax profit amounting to Rs301.3 million earned in the corresponding period of the previous year.

But the improvement in bottom line had nothing to do with the company's operating performance, which was seen to have faltered in the half term under review. The profit stemmed mainly from Rs291.0 million that was reported as "share of profit from subsidiaries and associates". In the same time last year, PNSC had made a loss of Rs39.3 million. Since the item made a significant impact on the financial results, the management could have come up with an explanation alongside the announcement of results on February 19.

Another item that made significant mark on the company's earnings for the period under review was the 25.5 per cent decline in "other expenses and charges, etc.", which stood at Rs107.8 million for the period under review as compared to Rs144.7 million during the same period in the financial year 2003.

"Other income" for the period under review experienced a steep drop of 63 per cent to Rs44.6 million, from Rs120.6 million in the similar six months last year. Had there been no contribution from subsidiaries and associates as share of profit, the corporation's bottom line would have looked much too poor.

At the annual general meeting on October 30 last year, shareholders had approved cash dividend at 7.5 per cent. The dividend for the financial year 2003 had materialized after a series of blank years. No dividend had been paid for 2002, but shareholders, nonetheless, were comforted by the corporation's return to profitability that year. For 2002, PNSC had posted after tax profit of Rs457 million, which replaced loss of Rs299 million of the earlier year; the bottom line having emerged in the black after several years.

Operating revenue for the first half of the current year fell 23.5 per cent to Rs1,371.7 million, from Rs1,793.3 million in the same period of FY2003. Operating expenses also were proportionately down to Rs967.4 million, from Rs1,266.5 million, which resulted in 23.5 per cent slip in operating profit to Rs403.3 million, from Rs526.8 million, and the operating margin remained static at 29.4 per cent.

In the latest half term accounts, the company had also posted a sum of Rs2.4 million in respect of "insurance claims". This appears to be an interesting item and until the directors' half term report is received, investors are likely to wonder if any of that relates to the case of the ill-fated oil tanker, M.T. Tasman Spirit.

In the previous directors' report to the shareholders, the chairman had mentioned that in accordance with the established routine, the corporation chartered for a single voyage, an oil tanker, M.T. Tasman Spirit, to transport a consignment of 67,532 tons of crude oil from Kharg Island to Karachi. The chairman went on to recount the unfortunate events that while shifting from anchorage on July 27, 2003, with pilot onboard, and reportedly caught by strong winds and current, the vessel ran aground and ultimately broke up that resulted in oil pollution and environmental damage.

He assured the shareholders that the corporation, on its part, as the charterer of the vessel, was adequately insured under the Protection & Indemnity Cover, and no material financial impact on the corporation was expected to result from the casualty. From the bare figures released on February 19, it can not be concluded if the company had to recognize or book any part of the loss in the case of "Tasman Spirit".