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Auditor-General vacancy to delay KenGen dividend

Rebecca Miano
KenGen Managing Director Rebecca Miano during a past annual general meeting in Nairobi. PHOTO | DIANA NGILA  

Kenya Electricity Generating Company (KenGen) #ticker:KEGN is expected to delay its dividend payment for the year ended June after the company was unable to publish results for the period on a bureaucratic holdup.

The Nairobi Securities Exchange-listed firm could not release its financials because of a vacancy at the office of the Auditor-General, which audits books of State-controlled firms.

Former office holder, Edward Ouko, exited on August 27 and the process of appointing his successor is expected to drag until March.

KenGen paid a dividend of Sh0.4 per share on February 7, 2019, being the payout for the year ended June 2018.

The delay in publishing its results for the subsequent financial year and the annual general meeting means that the dividend for the review period, if any, will be paid much later than usual.

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Analysts say this is likely to result in dumping of the company’s shares, especially by investors who bought the stock in anticipation of a dividend around the normal payout dates.

“The development is likely to commence a wave of selling pressure at the bourse as investors had mainly bought in KenGen for the short-term return of an anticipated dividend per share of Sh0.4,” brokerage firm ApexAfrica Capital said in a research note.

KenGen’s share price currently trades at Sh5.8, having dropped more than 20 percent in the past 12 months. The stock has traded at a range of between Sh5.4 and Sh7.5 over the 12 months, according to market data.

ApexAfrica said the results delay would confuse investors since the energy producer’s financial statements for the half-year ending this month will also be due for publication by March.

“This presents a conundrum as their 2020 half-year ends in December this year, with the firm anticipated to have released unaudited half-year numbers by the end of March 2020,” the stockbroker said.

Kenya Power #ticker:KPLC is also likely to suffer the same fate given that it has been equally affected by the vacancy at the Auditor General’s office.

The electricity distributor, however, is not expected to declare a dividend for the year ended June. It has warned investors that its net earnings for the period will be lower by at least 25 percent compared to the year before when it made Sh1.9 billion and failed to declare a dividend.

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