Kenya Power has returned the worst performance in a decade as profits fell 63.7 per cent to Sh1.92 billion, denying investors any dividend amid another poor run on the Nairobi bourse.
The firm blamed the performance for the financial year ended June 2018 on higher power purchase and finance costs as well as the increased level of debt provisioning due to delayed payments.
This was the case despite customer numbers rising by 578,808 to 6.76 million.
Acting CEO Jared Othieno said that the impact of drought, lengthy election period and negative brand perception after 19 managers were charged over graft took a toll on the firm.
“This negative perception impacted on our ability to do business…. We also had to do more provisioning to reflect requirements of the new accounting standard that dictated that any 30-day debt be provisioned,” he said.
Kenya Power increased debt provisioning about nine times from Sh700 million to Sh6.1 billion.
This was attributed to Sh12 billion outstanding bills that were beyond 30-day window.
The board, which last month issued a profit warning, sending the share tumbling to a 15-year low, further says that transmission and distribution costs went up as a result of maintenance activities on expanded network.
Shareholders will not earn any dividend for this performance, which was last seen in 2008 when the firm returned a profit of Sh1.76 billion.
At the Nairobi Securities Exchange, the share touched 15-year low.
By midday yesterday, the share took a further beating, losing 2.78 per cent to Sh3.50 per share as investors priced in the results. Year-to-date, it has shed more than half the value.
“We know we have not been doing well in the stock market but investors won’t regret in the long-term,” said chairman Mahboub Mohamed.
During the year, Kenya Power’s finance costs rose by Sh1.7 billion or 29.3 per cent to Sh7.8 billion partly due to increased use of short term loans to bridge cash flow shortfalls since the firm is in negative working capital.
Current liabilities have exceeded current assets by Sh51.67 billion or 48.5 per cent. This puts it in a precarious situation in meeting obligations that will mature in the next 12 months.
Its supplier, Kenya Electricity Generating Company (KenGen), has already slapped it with a Sh1 billion penalty for flouting the 40-day window credit terms.
On the customer complaints case that led to Nairobi lawyer Apollo Mboya suing the power distributor, the acting CEO said that about 2,600 customers had presented their grievances during the 30-day disconnection moratorium that was announced by the two parties as an out-ofcourt settlement bargain.
Electricity Consumer Society CEO Joshua Gwara said that the number is too small, considering that about 900,000 consumers had been estimated to have been erroneously billed.
However, Mr Othieno said customers who still have issues with their bills can still be served at any of their offices countrywide.
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