Kenya Power has posted a profit before tax of KShs.332 million following a lost before tax of Shs.7 billion for the year ended June 2020.
The full year performance was largely impacted by the effects of the COVID-19 on the operating environment and a one off increase in impairment for inventories amounting to Shs.3.65 billion following a business decision to take a more prudent approach in accounting estimation for slow moving and obsolete stock.
Due to the pandemic, electricity sales remained largely unchanged at 8,171 GWh for the period under review compared to 8,174 GWh the previous year while total revenue grew marginally from Kshs.133,141 million to Kshs.133,258 million, representing a 0.09% increase.
During the period, the Company also incurred unrealised foreign exchange losses of KShs.3.53 billion resulting from depreciation of the shilling against the world’s major currencies.
On the other hand, the half-year trading results for the company registered significant improvement compared to the full year posting a profit before tax of Kshs.332 million.
During the half year period, electricity sales during the half year period increased to KShs.61.49 billion from KShs.61.24 billion recorded during a similar period in 2019.
At the same time, net operating expenses reduced by KShs.4.3 billion to KShs.23.43 billion while finance costs went up by KShs.4.22 billion to KShs.8.05 billion, mainly as a result of unrealized foreign exchange losses occasioned by the depreciation of the shilling against major foreign currencies, occasioned by the negative impacts of the Covid-19 pandemic on the macroeconomic environment.
The Company’s financial performance was impacted by the measures that were put in place to contain the spread of the corona virus. The effect of these restrictions was reflected in suppressed demand for electricity and revenue collection.
“We experienced the challenges that every business has faced since the onset of the Covid-19 pandemic which presented unprecedented effects to the economy. For our case, the pandemic had a primary impact on our sales and revenue collection as companies scaled down operations and customers were unable to meet their bill obligations on time due to suppressed incomes,” said Kenya Power’s Managing Director & CEO, Bernard Ngugi.
He added that the situation was aggravated by the Company’s inability to exercise strict revenue collection measures on hospitals and water companies being critical services providers during the height of the pandemic.
The Company has embarked on a turnaround strategy that is aimed at improving the financial and operational aspects of the business while balancing social responsibilities to enhance business sustainability.