Kenya Power and Lighting Company Ltd (NSE: KPLC) FY18 Earnings Note
Kenya Power Ltd (NSE: KPLC) released disappointing FY18 bottom-line results, an EPS drop of 63.8% against restated FY17 financials. Total revenue and gross profit rose marginally by 4.2% y/y and 3.7% y/y respectively. However, dampening operating profitability and bottom-line was a 714% y/y increase in provisions relating to receivables that are past 30 days to KES 6.1Bn (under new accounting standard, IFRS 9, from Jan 2018) and 29.3% y/y increase in finance costs. The higher finance costs relate to the extended use of short-term borrowings which stood at KES 16.1Bn from KES 10.9Bn in FY17. Management is in discussion with the lenders to restructure the short-term debts to prolong maturities and ease pressure on working capital and finance costs on the P&L. Notably, the company’s auditor have qualified the financial results and we are seeking more specifics about the issues raised by the auditors. We are reviewing our previous assumptions and estimates in an upcoming research note.
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