Geregu Power Plc has reported 50.5 per cent decline in profit as revenue dropped and earnings impaired negatively.
The company, listed on the NGX last year reported N10.17billion profit in 2022 as against N20.55billion in 2021, while profit before tax stood at N15.17 billion in 2022, representing a decline of 49per cent from N29.5 billion reported in 2021.
In its profit & loss figures, Geregu Power reported N47.62billion revenue in 2022 from N70.96billion in 2021 as Impairment loss on financial assets rose significantly by 401.4 per cent to N3.7billion in 2022 from N743.37million in 2021
Energy sold in the period under review dropped by 34 per cent to N30.25billion as against N45.7billion reported in the corresponding period as capacity charged closed the year under review at N17.37billion, representing a decline of 34 per cent from N445.7billion reported in prior year.
Further breakdown revealed that the company announced N24.5billion cost of sales in 2022 from N37.61billion in 2021
With the drop in revenue and cost of sales, gross profit stood at N23.14billion in 2022, a decline of 31 per cent from N33.3billion in 2021.
In the period under review, the company announced N7.3billion finance cost, representing an increase of 663.82 per cent from N959.08million in 2021.
The breakdown of finance cost showed N4.84billion as total amount paid on Interest expense on borrowings in 2022 as against N959.08million in 2021, while Interest expense on bond stood at N2.48billion in 2022.
Geregu Power total borrowing reached N32.99billion in 2022, representing an increase of 256per cent from N9.28billion borrowed in 2021.
Explaining further, the company said: “Term loans represent the N36billion facility types 1 to 3 from Fidelity Bank Plc to augment working capital, finance major overhaul as well as pay down the Amperion acquisition facilities from First Bank of Nigeria Limited.
“The reported amount is the principal plus the accrued interest less payments during the year. The collateral for the loan from Fidelity Bank are: all assets debenture of the Group Parent Company; Corporate Guarantee of Calvados Global Services Limited, Personal Guarantee of the Chairman and domiciliation of all the Company`s receivables account to Fidelity Bank while the facilities subsist,”.
The company in 2022 successfully raised N40 billion in unsecured corporate bonds at an interest rate of 14.5per cent.
The bond issue is part of the company’s N100 billion multi-instrument issuance programme meant to finance capital expansion and working capital requirements.
The bond opened on July 1 2022 and closed on the 14th of July and was reportedly oversubscribed. This is also the largest corporate bond raised by a Power Company in Nigeria.
Proceed of the bond is to be utilized to augment funding for the planned acquisition of the 434MW Geregu Power Plant as well as to support its working capital requirements.
The Chief Executive Officer of Geregu Power, Mr. Akin Akinfemiwa said the success of the bond confirms the confidence the debt market has in Nigeria’s power sector.
“The resounding success of our debut bond offer demonstrates implicit confidence in our business by the investment community in our quest to increase capacity and contribute our own quota to the Nigerian Electricity Supply Industry (NESI). It would help us in the attainment of our long-term corporate goals; market leadership, innovation, and commitment to the highest standards of environmental, social, and corporate governance,” Akinfemiwa added.
However, its administrative expenses stood at N4.75billion in 2022, a drop of 0.5 per cent from N4.73billion reposted in 2021.
Despite the poor performance in 2022 financial year, Geregu power declared N8 per share dividend to shareholders.
The declared dividend, thus, translated into N20billion and it implies an annualized yield of 24per cent for shareholders who bought the company’s share when it was listed at N100 per share.