Corporate News
A KenolKobil petrol station. Photo/FILE
NATION MEDIA GROUP
By MUGAMBI MUTEGI
In Summary
- The lower financing expenses made up for a decline in revenue as lower unit prices of product in the period saw the oil marketer post Sh2 billion drop in sales to Sh36.9 billion volumes jumping 23 per cent in volumes.
- The two parties reached an out-of-court settlement in 2013 but Mr Ohana says there has been “no progress from government and we do not want to go the legal route”, hence the board’s decision to write off the disputed debt.
KenolKobil has
started writing off a multi-million shilling debt owed by Kenya
Petroleum Refineries Ltd (KPRL) even as the oil marketer posted a record
Sh1.2 billion half-year net profit.
The Nairobi Securities Exchange-listed firm has booked an
impairment of Sh400 million relating to a longstanding dispute with the
defunct refinery due to inefficiencies at the facility.
KenolKobil, despite incurring the charge, managed
to post a 30 per cent growth in net earnings on the back of lower
financing costs which stood at Sh97.9 million in the six months to June
compared to last year’s Sh379.4 million.
The lower financing expenses made up for a decline
in revenue as lower unit prices of product in the period saw the oil
marketer post Sh2 billion drop in sales to Sh36.9 billion volumes
jumping 23 per cent in volumes.
“We had an agreement with KPRL on how they would
share the barrels of product but because of their old machines, they
were unable to meet their contractual obligations,” said chief executive
David Ohana in an interview.
“This issued goes back about 15 years. The board
has now decided to act, clean the books and impair the amount down to
zero. What we have booked is a significant amount of the total.”
KPRL has been demanding Sh1.2 billion from the oil
marketer, money it says it owes as a result of default on payment for
petroleum products collected from the Mombasa-based refinery.
Out-of-court settlement
KenolKobil disputed this amount and made a
counterclaim of Sh3.1 billion, saying it incurred product losses due to
inefficiencies at the Mombasa-based facility.
The two parties reached an out-of-court settlement
in 2013 but Mr Ohana says there has been “no progress from government
and we do not want to go the legal route”, hence the board’s decision to
write off the disputed debt.
KenolKobil, which last year disposed of its
loss-making businesses in Tanzania and the Democratic Republic of Congo,
says its subsidiaries in Rwanda, Burundi, Ethiopia, Uganda and Zambia,
are now contributing about 40 per cent of the company’s profit.
The firm closed the half-year with borrowings of
Sh4.62 billion (compared to last year’s Sh4.66 billion), despite
management’s promise to be debt free by June.
Mr Ohana explained that a jump in international
prices of some oil products, coupled with a decision to increase their
stocks, necessitated them to maintain their borrowings. The oil
marketer’s inventory increased 39 per cent to Sh4.94 billion in a period
when the firm opened 20 new services stations. It targets to open 15
more by year-end.
KenolKobil’s bottom line was positively impacted by a forex gain
of Sh39.3 million, reversing a Sh155.09 million loss it booked in a
similar period last year.
The oil marketer’s board of directors has declared an
interim dividend of 15 cents per share (an increase from last year’s 10
cents per share) and the payment will be made on or around September 30
to investors on the register as of August 26.
pmutegi@ke.nationmedia.com
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