KenGen, Kenya’s biggest electricity producer, has posted a 98 percent increase in Profit After Tax to KSh8.17 billion due to a tax credit after project completion in its unaudited financial results for the six months ended 31 Dec. 2019 and Full Year ended 30 June 2019.
“Profit after Tax increased by 89% from Ksh 4,124 million to Ksh 8,170 billion for the six months to 31 Dec. 2019. The increase is as a result of capital allowances arising from the completion of Olkaria V 165MW.
This resulted in a tax credit of Ksh 1,892 million compared to a tax expense of Ksh 1898 million in the previous period,” said Rebecca Miano, Managing Director, and Chief Executive.
Miano said the growth was buoyed up by a 6.4 percent increase in electricity revenue – from Ksh 15.04 billion in 2018 to Ksh 16 billion for the six months period ended December 31st, 2019 – following the completion of the Olkaria V geothermal power plant.
The company, she added, realized a 127 percent growth in other income, from Ksh 211 million in 2018 to Ksh 479 million for the six months ended December 31st, 2019.
“We can attribute this growth to the roll-out of our business diversification strategy, which has seen the company clinch two drilling contracts in Ethiopia,” she said.
Geothermal energy was the top company earner, bringing in Ksh 9.3 billion, up from Ksh 8.6 billion in the half-year period ending December 31st, 2019.
Miano said their future outlook is in line with their revamped Good to Great (G2G) strategy.
“We are also driving our business diversification strategy. We have ongoing geothermal drilling and consultancy services projects in Ethiopia and Kenya. These initiatives are expected to have p[ositive contribution to our future performance.”
The Board of Directors did not recommend any interim dividend for the period ended 31 Dec. 2019. They shall make a recommendation regarding ‘any final dividend for the year ended 30 June 2019 once te Auditor of the financial statements for the said period is completed following the appointment of the Auditor General.”
“At current market prices, the business remains a value pick for long term investors. We maintain our BUY rating at a fair value of Ksh 8.58,” said Genghis Capital in their commentary. “Ksh 1.9 billion tax credit, the possibility of dividend boost in FY20. However, cash flow will be a key factor given the 64.1% y/y drop in operating cash flow in 1H20.”