The 2016 Financial Year Results Outlook for KenGen

Kenya Electricity Generating Company Limited (KenGen), released their 2016 Financial Year results for the period ended 30th June 2016 witnessing a 29 percent incline in total revenues, 30 percent increase in profit before Tax.

The Electricity generator registered a 15 percent increase in electricity revenues, with significant gains in capacity revenue of more than eleven percent, energy revenue by 24 percent and forex recovery 107 percent.

The increase in electricity revenue is attributable to growth in sales through their geothermal, which benefitted from completion of projects, and hydro segment, which realized a 14% increase due to favorable hydrological conditions.

Non-electricity income rallied by 231.83 percent to a record 2.21 billion shillings, emphasizing the company’s drive towards diverse revenues streams such as steam revenues which increased by 86 percent and other income which witnessed an increase of 232 percent; with the latter including drilling services, insurance compensation and miscellaneous income.

The company also witnessed a reduction in steam costs by 14 percent managed to offset an increase in operating expenses; which rose by 501 million shillings being the same as 5.93 percent. Profits before tax for the power generator still increased by 30 percent to 11.26 billion shillings, despite a 4 percent spur in finance costs and a 57.80 percent increase in depreciation and amortization – mostly attributable to its 280MW Olkaria plant.

The compensation tax proved to significantly cap top-line gains, as the company faced a 2.43 billion shillings’ tax levy, for dividends paid to Treasury (KES 5.7Bn) in the last year; slashing the company’s profits by nearly half. The company’s profit after tax slumped to 6.74 billion shillings, this being a drop of 41.45 percent.

The financial ratios show East Africa’s geothermal powerhouse is improving in performance, as EBIT and EBITDA margins record significant increases – of 11 and 15 percent respectively. On the other hand, KenGen’s current ratio -however- increased by 27 percent, attributable to a 19 percent decline in current liabilities. The listed power producer has increased its cash flow from operations by 133.58 percent, showing strong growth in its core business.

Shareholders in the company will, however not receive their dividends for the year due to the slumping in profits.

The table below shows a comprehensive income statement of KenGen:

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