• Friday, December 08, 2023
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Geregu Power sees 13% profit jump despite soaring impairment losses

Geregu Power sees 13% profit jump despite soaring impairment losses

Geregu Power Plc, one of Nigeria’s leading power generation companies, has reported a 13.3 percent increase in post-tax profit for the first nine months of 2023, despite a significant increase in impairment losses.

The company’s revenue for the period grew by 42.9 percent to N55.7 billion, driven by higher proceeds from both energy sold and capacity charge.

However, impairment losses on trade receivables also increased significantly to N3.1 billion from N161.7 million in the corresponding period of 2022.

Impairment loss on trade receivables is a non-operating expense that is recorded when a company expects to receive less cash than the carrying value of its trade receivables.

Trade receivables are amounts owed to a company by its customers for goods or services that have been sold on credit.

Administrative expenses amounted to N5.87 billion in the period under review from N2.77 billion recorded in the same period of 2022.

Read also: FG approves $3.45bn World Bank loan to boost power, other sectors

Of the administrative expenses, repair and maintenance of machinery and plant gulped N1.6 billion compared to only N89 million a year ago.

Foreign exchange loss, the latest nightmare of manufacturers and import-dependent businesses in Africa’s largest economy, took N670.5 million of revenue.

By the end of the nine months, profit for the period rose to N11.4 billion from N10 billion a year prior.

Revenue recorded a 42.9 percent increase to N55.7 billion from N39 billion recorded in 2022.

It recorded no other income for the period compared to N11.4 million recorded in the same period of 2022.

Finance income recorded a 182.7 percent growth to N6.08 billion in the period under review from N2.15 billion recorded in the same period of 2022.

The interest expense on the bond issued to secure the power plant and the money it spent to service bank loans together more than doubled to N8.5 billion from N4.2 billion recorded in 2022.

Read also: Geregu Power sits on cash pile

It was also noted in the financial statement that the company is in the queue of companies aspiring to buy one of the state-owned power assets at the Bureau of Public Enterprises, where the bidding process is at its last lap.

“In July 2022, the company issued N40.085 billion unsecured corporate bond for a 7-year tenor and at a coupon and effective interest rate of 14.5 percent and 14.70 percent respectively. The net proceeds would be used to finance the acquisition of one of the power generation companies which are currently in the final stage of bidding processes by the Bureau of Public Enterprises (BPE),” the statement reads.

The company’s cash flows for the 9 months of 2023 were as follows: Net cash from operating activities amounted to N37.57 billion from 4.36 billion recorded in 2022; net cash generated from investing activities amounted to N5.15 billion from 1.86 billion recorded in 2022 as a result of an increase in interest received.

Net cash used in financing activities recorded amounted to N44.37 billion from N38.92 billion generated in 2022.

Cash and cash equivalent for the period increased marginally to N49.31 billion from N49.12 billion recorded in the same period of 2022.