Balance sheet restructuring boosts KPLC profits by 7pc

By James Anyanzwa

Kenya Power and Lighting Company (KPLC) has posted a seven per cent growth in half-year pre-tax profits and proposed an interim dividend of Sh0.35 for each ordinary share payable on May 31.

This comes on the back of a successful balance sheet restructuring process crafted to raise the corporation’s credit rating to procure cheap funds for expansion.

KPLC’s profit before tax between June and December 31, last year rose to Sh3.07 billion from Sh2.86 billion in a similar period the previous year, buoyed by increased revenues from the sale of electricity and sound business strategy that the company has adopted.

Joseph Njoroge, the company’s managing director and chief executive officer, said the sound business strategy would be sustained.

The company’s un-audited financial statements released on Friday, show electricity sales grew by eight per cent to Sh20.62 billion from Sh19.09 billion in a similar period.

Non-fuel power purchase costs plunged by 0.56 per cent from Sh10.66 billion to Sh10.6 billion owing to partial withdrawal of emergency power plants.

Fuel cost, which is a pass-through cost, declined by 45 per cent to Sh.9.57 billion mainly because of reduced purchase of fuel-based thermal power.

Transmission and distribution costs, however, increased by 23 per cent to Sh7.66 billion from Sh.6.22 billion.

The increase in transmission and distribution costs is explained by higher maintenance costs of the company’s installations and facilities, depreciation due to increased investment and staff expenses in line with the general growth of the company’s business.

Net financing costs reduced by 12 per cent from Sh266 million to Sh233 million owing to reduced loan balances and lower interest rates.

KPLC’s complex restructuring of its capital base which was designed to attract cheap funding for the company’s growth and expansion programmes also involved the conversion of 795 million redeemable non-cumulative preference shares held by the Government in KPLC into new ordinary shares followed by a share split.

The Government, however, renounced its rights setting its shareholding in KPLC at 50.1 per cent.