DEFERRAL

Kenya Power, KenGen to delay full-year financial results

This is pegged on pending audits at the Auditor General's office

In Summary

•They will publish their results between December and January next year, a move approved by the Capital Markets Authority.

•The two firms are among close to 150 state corporations facing delays in the signing off of their financial audit and results. 

Kenya Power offices/FILE
Kenya Power offices/FILE

Kenya Power and Kenya Electricity Generating Company (KenGen) have announced they will delay releasing their financial results for the year ended June 30, amid expected profit drops in wake of Covid-19.

The two listed companies are required to publish their financial statements by October 31, as required by the Capital Markets-securities, public offers, listing and disclosure regulations.

However, Kenya Power now says it will publish its audited full-year results on or before end of January next year, following an extension granted by the Capital Markets Authority (CMA).

The regulator has also granted approval to delay publication of KenGen’s financials for a period up to December 15, 2020.

Kenya Power Company Secretary Imelda Bore said in a notice, on Friday, that the delay in publishing the financial statements has been occasioned by the “delayed appointment of the Auditor-General and subsequently the delegated auditors.”

“Consequently, the audited financial statements will now be published on or before January 31, 2021,” Bore said.

KenGen Company Secretary and Legal Affairs Director, Paul Ndungi, on the other hand said the extension would allow the office of the Auditor-General to complete the annual audit for the year ended June 30, 2020.

In addition, KenGen will not be in a position to convene the company’s 68th Annual General Meeting for the year ended June 30, 2020 by December 31, 2020 as required by the Companies Act, Ndungi noted.

“The Annual General Meeting for the year ended 30th June 2020 will be postponed to a date to be communicated in due course,” he said in a notice through the Nairobi Securities Exchange (NSE).

Instead, the company will hold its AGM for the year ended June 30, 2019 next week (November 3).

 
 

The two firms are among close to 150 state corporations that faced delays in the signing off of their financial audit and results, following a vacuum in the auditor general’s office between August last year and June this year.

President Uhuru Kenyatta's nominee-Janet Gathungu took over the office in July, almost one year since her predecessor Edward Ouko left in August 2019, after completing his eight-year term.

Last month, KenGen announced dividend payout for the year ended June 30, 2019 which had dropped 37.5 per cent from the previous year, blamed on a challenging business environment.

This came amid a decline in after-tax profit to Sh7.88 billion from Sh7.89 billion. 

The Nairobi Securities Exchange-listed firm will pay a total Sh1.65 billion, where the board has recommended a final dividend of Sh0.25 for every ordinary share of Sh2.50.

Last year it paid out Sh2.64 billion dividends which translated to Sh0.40 for every ordinary share.

Managing Director and Chief Executive Officer Rebecca Miano said during the period ending June 2019, business remained resilient despite challenging economic conditions in the country and globally.

The KenGen MD who has been handed a fresh three-year term, pegged on her performance, said projections indicate that the medium-term macro-economic environment will be tough.

This is on among others, economic shocks brought about by the Covid-19 pandemic.

“KenGen recognises that the ongoing Covid-19 pandemic may have an impact on its business. The short-term impact on the company’s performance is likely to be reflected in the 2019-2020 earnings,” she said.

Kenya Power on the other hand expects its full-year earnings to drop by at least 25 percent, a sixteen year low performance.

It attributes this to the impact of the Covid-19 restrictions which has led to a major drop in industrial and commercial power demand.

This means shareholders will for the third year in a  row go without dividends.

The power distribution monopoly's net profits is expected to go below the Sh262 million it posted in the year ended June 2019, after a 92 per cent drop from Sh3.3 billion the previous year.

The listed firm’s profit after tax is likely to drop to Sh196.5 million or below.

It will be the lowest since it returned to profitability in 2004, after a Sh2.89 billion loss the previous year.

“The Covid-19 pandemic has adversely affected our business operations leading to slow growth in electricity sales and an increase in financing costs resulting in reduced earnings,” Bore had said in a notice in June.

The industrial sector accounts for about 70 per cent of Kenya Power unit sales.

The drop in profit comes even as Kenya remains with one of the highest, electricity tariffs in the region, where main grid tariffs range between Sh10 to Sh21 per kilowatt-hour, depending on the utility.

Kenya Power has been pushing for a further increase on tariffs to boost its revenues, a move likely to increase pressure on households and industries.