Geregu Power Plc lost one-half of the preceding year’s after-tax profit to close at N10.2 billion for the 2022 financial year. The closing profit figure is virtually unchanged from the N10 billion the company reported at the end of the third quarter.
The audited accounts of the power generation company for the year ended December 2022 show a bad outing in the final quarter, in which close to $N9 billion in revenue generated in the quarter added nothing significant to profit.
The second half presented a lull season for the company, adding only about N1 billion to the half-year profit figure of roughly N9 billion.
The loss of profit stemmed from the loss of revenue, with turnover dropping by 33 percent to N47.6 billion at the end of the year.
The problem is that gas supply constraints led to a drop in capacity delivered and energy sent out. Revenue from energy sales dropped from N45.7 billion in 2021 to N30.2 billion at the end of 2022.
Also, revenue from capacity charges went down from N25.3 billion to N17.4 billion over the same period.
These are the effects of the company’s loss of its primary gas supplies to its power generating plant between mid-July and the end of November 2022, following a nation-wide force majeure declared by Shell Petroleum Development Company Limited on the Forcados oil terminal pipeline.
The company reports that maintenance work on the pipelines has been completed and normal operations will resume in December 2022.
The company’s management applied cost-saving measures to stem the full weight of huge revenue losses during the year. The cost of sales went down slightly ahead of revenue, at about 35 percent, to N24.5 billion.
Gross profit closed 30.5 percent lower at N23 billion, a slower rate of decline than sales revenue.
Adverse pressures however came from a drop of 90.5 percent in other income to N157 million as well as a 5-times jump in impairment loss on financial assets to N3.7 billion over the review period.
A slight moderating factor is management’s ability to keep administrative expenses flat at N4.7 billion at the end of the year. That was however insufficient to prevent a sharp drop of 48 percent in operating profit to N14.8 billion in the year.
Another helpful development is an apparent windfall from finance income that scurried all the way up from $ 948 million in 2021 to $ 7.7 billion in 2022.
Finance expenses equally swelled from N959 million to N7.3 billion over the same period, resulting in a net finance income of N348 million—better than net finance costs of N11 million at the end of 2021.
The company closed the year with a pre-tax profit of N15 billion, which is a drop of 48.6 percent from the N29.5 billion figure it posted in 2021.
A drop of 44 percent in tax expenses to less than N5 billion enabled the company to realize an after-tax profit of N10 billion at the end of the year.
The company closed its 2022 operations with earnings per share of N4.07, a drop from N8.22 per share in 2021. It has paid a cash dividend of N8 per share to shareholders from its robust retained earnings in the region of N48 billion.
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