NAIROBI, Kenya, Feb 26 – Kenya Power has posted a 92pc drop of its after-tax profit from Sh3.27 billion to Sh262 million for the year ending June 2019.
The results were worsened by a fast rise in power purchase costs at 34.3 percent on account of additional capacity from Lake Turkana Wind Power Plant and the Garissa Solar Power Project.
During the period under review, finance costs rose significantly to Sh3.3 Billion due to high reliance on overdraft and short-term funding to plug cash flow deficits as the business struggled to balance its cash collection against payments.
Interest costs also rose by 46.8 percent due to increasing reliance on short term funding and overdrafts to finance working capital and capital expenditure.
Electricity revenue grew 17.8 percent from a mix of tariff review earlier in the financial year and 3.4 percent growth in unit sales.
“Fundamentals of the business have weakened significantly with the business grappling with cash flow challenges, rising debt levels (and interest costs) and excess power supply,” analysts from Genghis capital said of the listed company.
As per the last audited accounts, the Auditor General cited inadequate provisioning, negative working capital, default of debt covenants and significant amounts of undeclared financial assets with possibilities of large penalties. According to the analysts, these could be the basis of restatements of prior accounts.