KenGen reported a spectacular rise in profits in 2005-6 over 2004-5.
Year End: 30 June 2006
Sales: KES 14.3 Billion (+30%)
PBT: KES 3.7 Billion (+42%)
PAT:KES 3.8 Billion (+115%)
Taxation: KES 48 Million (-106%) - Apparently, there were huge "tax benefits" that accrued from the listing (tax rate will drop to 25% from 30% in 2006-7) & subsequently the PAT is higher than PBT in 2005-6!
EPS: KES 1.71 (+115%)
Dividend: KES 0.55/share
KenGen sold 4,538 kilowatt hours compared to 4,280 last year.(+6%)
"As a newly listed company on the Nairobi Stock Exchange with 30% private shareholding our Corporation tax will reduce from 30 to 25 per cent with effect from the next financial year. This new rate has impacted on the deferred tax liability computation in compliance with International Financial Reporting Standards resulting in very low tax levels this year." per the announcement.
The growth in the economy (+5.8%) seems to be a major contributor to the increased sales (+6%). The rains also benefitted KenGen since hydroelectric production is much cheaper than thermal production.KenGen indicated it would invest in an additional capacity of 500 megawatts over the next five years to meet rising demand.
KenGen plans their maiden AGM at the Kasarani Gymnasium - I wonder how many shareholders will attend - on November 30 2006.
The Government may sell more shares to the public but there is no timetable but it will probably be AFTER Mumias, KenRe & Telkom/Safaricom.
Don't go gaga over KenGen's profits, yet, until the Annual Report is released. There may be various "non-recurring" items included in the profit.
Nevertheless, there is a strong possibility of ample growth if KPLC can increase its customer base by 500,000 users over the next 5 years. KenGen plans to spend KES 70 Billion over the next 5 years to increase their capacity by 500MW.
- How will they finance the expansion?
- Will KPLC be able to market & sell the additional production?
- The profits will have to rise substantially to enable debt service of an additional 70 Billion!
- The tax effect will be substantial in 2006-7
- Will the 60 cent rate hike be effected in 2006-7?