Geregu Power reports 51% drop in annual profit, proposes N20 billion dividend

Femi Otedola’s Geregu Power recorded a drop in post-tax profit of 50.5 per cent for 2022 as revenue tumbled steeply and finance costs soared almost seven times, eating away at earnings, the audited financial statements of the power-generating firm showed Wednesday.

At N47.6 billion, the company posted one-third less revenue than it reported one year prior as gas supplies to the firm stopped mid-July on account of a nationwide force majeure declared by Shell Petroleum Development Company Limited, its major supplier, on Trans-Forcados pipeline, shrinking the income earned from energy sold and capacity charge.

The company earned N157.3 million from other income as foreign exchange gain realised relative to N1.7 billion a year earlier but saw finance income rise more than seven times to N7.7 billion, helped by a surge in interest income on bank deposits and related party receivables.

Geregu Power debuted on the stock exchange in Lagos in early October, listing 2.5 billion ordinary shares, 95.6 per cent of them held by the billionaire mogul, Femi Otedola.

The firm incurred N3.7 billion in impairment loss on financial assets, 401.4 per cent higher than the figure a year ago.

Administrative expenses modestly jumped to N4.8 billion from N4.7 billion.

In December, Afreximbank initiated talks with Geregu Power to purchase a stake in it ultimately making it a strategic investor.

Pre-tax profit shrank 48.6 per cent to N15.2 billion; profit after tax slumped to N10.2 billion, from N20.6 billion, signalling a slide of more than a half.

Net profit margin, the metric that measures how much of revenue has turned to profit, stood at 21.4 per cent.

Meanwhile, the electricity company said in a separate document on Wednesday it will pay shareholders a dividend of N8 per share translating to a payout of N20 billion for the year under review.

That implies it will dip into its reserves to complement the dividend payment shortfall.

Mr Otedola will earn N19.1 billion from the dividend payment if the proposal goes through.

On Wednesday, shares in Geregu Power gained 8.5 per cent in Lagos, bringing the share price to its all-time high of N201 per unit.

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