Kenya Power saw its full year net profit plunge 63.7 percent from 5.28 billion shillings to 1.92 billion shillings attributed to an increase in provision for debts and a 14.1 percent rise in transmission and distribution costs.
This is despite total revenue increasing by five billion shillings to 125.85 billion shillings driven by a 2 percent growth in electricity sales.
The company’s cash flow shortfalls worsened from a negative position of 1.1 billion to 7.6 billion shillings as at June this year.
About two weeks ago, Kenya Power issued a warning that its profit was likely to reduce by at least 25 percent, citing depressed economic environment, poor hydrological condition, prolonged presidential election and delayed review of retail electricity tariffs.
This has come to pass as the listed utility firm saw its net profit plunge 63.7 percent to 1.92 billion shillings in the year to June this year attributed to making more provisions for debt that was more than 30 days old to meet the industry financial standards as well as an increase in transmission and distribution costs.
“In the period under review, the Company made more provisions for debt to meet the industry financial standards. This means that we had to make provision for any debt that is more than 30 days old. This coupled with the rise in transmission and distribution costs drastically reduced our profit before tax,” said Kenya Power’s Ag. Managing Director & CEO Eng. Jared Othieno.
The gloomy data is further highlighted in the cash flow statement that shows Kenya Power is further in the red with cash and its equivalent worsening from a negative position of 1.15 billion shillings to 7.6 billion shillings.
Short term borrowing to bridge cash flow shortfalls powered up finance costs 29.3 percent to 7.8 billion shillings.
The dip in profit prompted Kenya Power not to recommend any dividend payout to shareholders.