Geregu Power Plc ability to generate more cash from its core business activity fell by 70.43 percent to N7.82 billion in 2022 compared to N26.45 billion in 2021, findings by BusinessDay showed.
The development was on the back of an increase in the trade receivables and other current assets which impacted its working capital during the period, data sourced from Nigerian Exchange Group showed.
The power company reported an N5.57 billion and N6.32 billion increase in trade receivables and other current assets respectively in 2022.
BusinessDay analysis showed the power company reported impairment loss on financial assets during the 12-month period of 2022 amounting to N3.73 billion, up 402.2 percent from N743 million in 2021, of which impairment loss of trade receivables accounted for 95 percent.
Total impairment loss of trade receivables grew by 379 percent in 2022, amounting to N3.56 billion from N743 million in 2021, while impairment of due from related parties stood at N169 million in 2022.
This implies that the percentage of accounts receivables (money owed to the company) that Geregu Power Plc expects to be uncollectible has increased, which eventually lowers profit for the period. With total impairment loss on financial assets soaring, Geregu’s profit for the period declined by 50.51 percent to N10.17 billion from N20.55 billion in 2021.
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Furthermore, rising inflation and a high-interest rate environment in 2022 impacted the cost of sales and finance costs, thereby contributing to the overall decline in profit.
Due to increased gas supply and transportation costs, the cost of sales grew by 35 percent to N24.48 billion in 2022 from N37.61 billion in 2021 and accounted for 51 percent of the firm’s total revenue.
Geregu’s total revenue during the period declined by 32.89 percent to N47.62 billion from N70.96 billion in 2021, due to the decline in energy sold and capacity charged for the period.
Administrative expenses grew slowly by 0.42 percent to N4.75 billion in 2022 from N4.73 billion in 2021.
However, the power company generated extra income from finance income, which grew by 709 percent to N7.67 billion in 2022 from N948 million in 2021, while finance costs grew by 664 percent to N7.33 billion in 2022 from N959 million in 2021.
Consequently, the profit margin declined by 13,221 basis points to 21.36 percent in 2022 from 153.57 percent in 2021.
Geregu’s total assets in 2022 grew to N174.03 billion, up 51.57 percent from N114.82 billion in 2021, while total shareholders’ equity declined by 18 percent to N49.1 billion in 2022 from N59.94 billion in 2021.
Total cash and cash equivalents grew on the back of net cash flow from financing activities to N51.63 percent, a 1,207 percent surge from N3.95 billion in 2021.
Net cash flow from financing activities for the 12-month period of 2022 stood at N40.34 billion, a marked increase from N-28.3 billion in 2021. This was due to N36 billion received from borrowings, and N40 billion received from bonds.
Total long-term and short-term borrowings by Geregu increased to N32.99 billion in 2022, up 255 percent from N9.28 billion in 2021.
Furthermore, in August 2022, Geregu Power Plc. issued an N40.085 billion Senior Unsecured Notes due 2029, and in October 2022, the company’s shares increased by 10 percent (N10) on its first trading day on the NGX to close at N110 per share from N100 per share it was listed by introduction. The gain pushed its market capitalisation to N275 billion from N250 billion as of the date of listing.
The power company reported negative net cash used in investing activities for the period to N636 million from N634 million in 2021, due to the purchase of property, plant, and equipment, funding of defined benefit assets, and reinvestment of interest on defined benefit assets.
Ultimately, Geregu Power Plc reported earnings per share of N4.07 per share in 2022, down 50 percent from N8.22 per share in 2021
