Corporate News
KenGen managing director Albert Mugo. Despite the good results, no dividend was recommended. PHOTO | FILE
By GEORGE NGIGI
In Summary
- KenGen has reported a profit after tax of Sh4.9 billion in the six months to December compared to Sh1 billion a year earlier.
- Profit increase was propelled by capacity growth, improved performance and tax credit from capital allowances.
- The tax credit had a net impact of Sh2 billion on KenGen’s bottom line as it had a Sh800 million liability in December the previous year.
Electricity producer KenGen has recorded a five-fold growth in half-year profits after tax on the back of increased sales and a Sh1.1 billion tax credit.
The company reported a profit after tax of Sh4.9 billion in the six months to December compared to Sh1 billion a year earlier.
Revenue from electricity sales jumped by a third to Sh11.6 billion from Sh8.4 billion in December 2013.
The company, which sells its units to Kenya Power, increased its installed capacity by 344 megawatts following commissioning of new plants such as the Olkaria geothermal plants.
“Profit increase was propelled by capacity growth,
improved performance and tax credit from capital allowances,” said the
company’s managing director Albert Mugo.
The tax credit had a net impact of Sh2 billion on
KenGen’s bottom line as it had a Sh800 million liability in December the
previous year.
“The numbers are decent especially with the coming
rights issue,” said Eric Musau, a research analyst with Standard
Investment Bank. KenGen is expected to make a Sh15 billion rights issue
by end of March.
The rights issue has been postponed severally due to the government’s failure to commit to take up its share of the cash call.
KenGen is owned 70 per cent by the State. The
Treasury has however said that it did not need to set aside any cash for
the deal as it would be pursuing a debt-to-equity swap.
Mr Musau noted that the company’s financing costs
were expected to rise as it sourced for funds to pursue its target of
increasing its installed capacity by 560 megawatts this year.
On Monday the company told Business Daily
that it was seeking a Sh8.2 billion debt to complement its Sh10 billion
holding to construct an additional geothermal unit at Olkaria.
KenGen’s share price has in the last month
recovered from previous drop to record a 12.1 per cent rise at the
Nairobi Securities Exchange.
The drop had been attributed to investors’ fears of
dilution from the pending rights issue. Positive news have been flowing
from the counter including the recent launch of 280 MW geothermal plant at Olkaria.
KenGen recorded a one-off insurance compensation of
Sh191 million which helped it record a 109 per cent growth in other
income to Sh352 million.
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