Kenya Power has posted a 63.7 percent decline in net profit to Sh1.92 billion in the financial year ended June 2018 on higher costs.
Despite revenue rising by 4.23 per cent to Sh125.8 billion on increased customer base, increased power purchase and higher finance costs depressed its bottom-line.
The board, which last month issued a profit warning sending the share tumbling to a 15-year low, further say that transmission and distribution costs went up as a result of maintenance activities on expanded network.
Power purchase costs, excluding fuel and foreign exchange costs, increased by Sh2.59 billion to Sh52.79 billion.
‘This is attributable to an increase in units purchased from geothermal sources in the year by 602 GWh or 13.5 per cent from 4,451 GWh the previous year to 5,053 GWh,” said Kenya Power.
This trimmed its operating profits by 20.9 per cent to Sh10.79 billion.
Finance costs rose by Sh1.7 billion or 29.3 per cent to Sh7.8 billion partly due to increased use of short term loans for a firm that is in negative working capital.
“Finance costs increased by 29.3 per cent from Sh6 billion to Sh7.8 billion. This was caused by use of short term borrowings to bridge cash flow shortfalls,” said the firm.
Its books show that it is in negative working capital, with current liabilities having exceeded current liabilities by Sh51.67 billion or 48.5 per cent.
This puts it in a precarious situation in meeting obligations that will mature in the next 12 months.
Its supplier, Kenya Electricity Generating Company (KenGen) has already slapped it with a Sh1 billion penalty for flouting the 40-day window credit terms.
Cash and cash equivalents as shown in the cash flow statement is a negative Sh7.6 billion, having widened six times.