•Shareholders on Friday raised concerns over years of non-payment of dividends.
•The company’s leadership is banking on the ongoing reforms to turn around the firm, which this year bounced back to profitability.
Kenya Power is likely to resume dividend payouts next year after a four-year flat run occasioned by financial woes at the utility firm.
The company’s leadership is banking on the ongoing reforms to turn around the firm, which this year bounced back to profitability.
It posted an Sh 1.5 billion net profit for the year ended June 30 compared to a Sh939 million loss last year.
The firm's profit before tax stood at Sh8.2 billion for the period under review, representing a 216 per cent year-on-year growth, compared to a loss before tax of Sh7.04 billion.
The power provider has attributed the strong performance to growth in sales and revenue, as well as a double-digit reduction in costs and expenses.
However, the board did not recommend the payment of dividends, saying there was a need to strengthen the company’s financial position and improve growth prospects.
The last dividend was paid on January 31, 2018, with shareholders raising concerns during the company’s 100th Annual General Meeting held virtually on Friday.
The company may also consider bonus shares in the future, where no dividend pay-out will be made, but this will come once there is an improvement in business performance, it said on Friday.
This will in turn lead to the improvement of the share price in the stock exchange and therefore, investors can realise value should they consider trading.
According to chairman Vivienne Yeda, the financial and economic costs of over-procurement of overpriced and poor quality goods, works and services, are some of the challenges the company has been facing, leading to non-payment of dividends.
A turnaround strategy is however being implemented, including a forensic audit, which will identify gaps and help improve the company’s fortunes.
Last week, it sent on compulsory leave five senior managers to pave way for investigations into allegations of graft.
“The five managers will proceed on sixty days leave with immediate effect to pave way for various forensic audits and the review of the supply chain function to be completed,” acting managing director Rosemary Oduor said.
Last month, the utility firm suspended all 59 procurement and supply chain heads to pave way for a forensic audit to identify areas of possible revenue leakages.
“The ongoing reforms, spearheaded by the board, are geared towards delivering sustainable profitability for the business and ultimately guaranteeing a steady growth in shareholder value in the short term,” Yeda notes.
The company is also keen to grow revenues from electricity sales, cut system wastages and expand its business module, which includes scaling its lit fibre business.
This, Yeda says will increase the penetration of internet connectivity across the country, with a particular focus on the rural areas.
The company’s extensive fibre network presently offers dark fiber services to the country’s major internet service providers, to facilitate the provision of internet services to the end buyer in the retail and enterprise segments across the country and in neighboring countries.
Expanding its customer base is expected to increase revenues from power sales.
“We will grow sales by connecting more customers, accelerating the pace of connectivity, and increasing usage among existing customers. We will continue to deploy prudent cost management practices without compromising the quality of service we offer our customers,” Oduor said.
In the financial year ended June 30, Kenya Power reduced operating costs by 17 per cent to Sh39.9 billion and increased revenues by 8.4 per cent to Sh144.1 billion.
It added 716,206 new customers taking the total to about 8.4 million.
Revenue from electricity sales increased by 8.4 per cent from Sh9.8 billion to Sh125.9 billion.
The increase was mainly driven by a 400 GWh growth in unit sales from 8,171 GWh the previous year to 8,571 GWh.
“This was as a result of increased connectivity, and the rebound of economic activity following the gradual easing of restrictions put in place to contain the spread of the pandemic,” it notes in its financials.