101252 Kenya Power ANNUAL REPORT AND FINANCIAL STATEMENTS FINANCIAL YIAR INDID JO JUNI 2014 OUR VISION Providing world-class power that delights our customers By striving to provide world-class products and services, we can bring a sense of optimism and delight to our customers - working together towards a brighter future for Kenya. OUR MISSION Powering people for better lives By becoming the preferred energy solution for businesses and individuals, we can empower our customers to achieve more and reach their full potential. OUR CORE VALUES • We put our customers first • We work together as one team to achieve our goals • We are passionate about powering the nation • We believe in integrity and delivering on our promises • We strive for excellence in all that we do 2 3 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 CONTENTS PERFORMANCE HIGHLIGHTS PERFORMANCE HIGHLIGHTS 5 CORPORATE INFORMATION 6 BRANCH CONTACTS 7 MEMBERS OF THE BOARD OF DIRECTORS 8-9 DIRECTORS’ BIOGRAPHIES 10-11 SENIOR MANAGEMENT TEAM 12-13 NOTICE OF ANNUAL GENERAL MEETING 14 CHAIRMAN’S STATEMENT 16-17 REPORT OF THE MANAGING DIRECTOR & CEO 20-27 CORPORATE GOVERNANCE STATEMENT 37-42 CORPORATE SOCIAL RESPONSIBILITY 50 REPORT OF THE DIRECTORS FOR THE YEAR ENDED 30 JUNE 2014 52 STATEMENT OF DIRECTORS’ RESPONSIBILITIES 53 REPORT OF THE AUDITOR-GENERAL 54 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 55-56 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2014 57 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2014 58 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2014 59 NOTES TO THE FINANCIAL STATEMENTS 60-109 TEN YEAR FINANCIAL AND STATISTICAL RECORDS 110 STATISTICAL INFORMATION 111-119 PROXY FORM 121 4 5 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 CORPORATE INFORMATION BRANCH CONTACTS DIRECTORS Mr. Eliazar O Ochola - Chairman PERSONAL NAME STATION LOCATION EMAIL MOBILE NO. BRANCH TEL. ADDRESS & CODE Dr. Ben K Chumo - Managing Director & CEO Calvin Odhiambo Jagongo Bondo Bondo Plaza cjagongo@kplc.co.ke 021803159 0203530050/0202674285 343 - 40601 Bondo Eng. Joseph K Njoroge - Principal Secretary, Ministry of Energy and Petroleum Gilbert Ng’etich Bomet Bomet office - Opposite NCBD gngetich@kplc.co.ke 0723953585 202689671 578 - 20400  Bomet Dr. Kamau Thugge - Principal Secretary, The National Treasury Wesley Kerich Bungoma Victoria House wkerich@kplc.co.ke 0723664794 202674284/0552030516 467 - 50200 Bungoma Dr. Theodorah Malla-Kilukumi Evans Kesenwa Agesa Busia Ingonyera Plaza ekesenwa@kplc.co.ke 0711193093 055 - 22076/055 22093 526 - 50400 Busia Mr. Jacob Mwirigi Julius Murigi Chuka Nthiga Plaza jmurigi@kplc.co.ke 0722786979 064 - 630418 16 - 60400 Chuka Alex K. Amboko Eldama Ravine Baringo Teachers Sacco Bldg. aamboko@kplc.co.ke 0723091324 518005728 578 - 20103 Ravine Eng. Patrick Obath John Milgo Elwak Albaashir Bldg. jmilgo@kplc.co.ke 0724478936 0724478936 95 - 70301 Elwalk Mr. Macharia Kariuki Joshua Orodo Emali Ithumba Bldg. jorodo@kplc.co.ke 0711388289 020 - 2426501 290 - 90132 Emali Mrs. Jane Apetet Nashida Daniel Mukabi Okubi Embu Sparko House, Embu Town dokubi@kplc.co.ke 0722886636 6830216 197 - 60100 Embu Mrs. Fatuma Hirsi Mohamed - Left on 10th March 2014 Paul Gachuki Mbuthia Garissa Maendeleo Plaza pmbuthia@kplc.co.ke 0722606480 202368776 9 - 70100 Garissa Lucy Njoroge Gatundu Kanyanja Bldg. lnjoroge@kplc.co.ke 0722711911 202336980 176 - 01030 Gatundu Mr. Joseph Kariuki - Alternate to Dr. Kamau Thugge Roba Wario Habaswein Farah Haji Bldg. wroba@kplc.co.ke 0715344759 0715 344 759 86 - 70201 Habaswen Eng. Isaac N Kiva - Alternate to Eng. Joseph K Njoroge Paul Mulwa Mutunga Hola Said Habani Bldg. pmutunga2@kplc.co.ke 0722662912 0722662912 192 - 70101 Hola Clement Ochieng’ Homabay Sonyako Plaza cochieng@kplc.co.ke 0722740086 202674283 117 - 40300 Homabay COMPANY SECRETARY Beatrice Meso, CPS (Kenya) Hellen Mogire Isiolo Trends Bldg. hmogire@kplc.co.ke 0722380662 064 - 52013 112 - 60200 Isiolo James Onuko Orina Kamburu Kivaa Market jorina2@kplc.co.ke 0722801995 0722136351/0722136393 77 - 01031 Kindaruma Charles Apudo Awuondo Kapsabet KCB Bldg. cawuondo@kplc.co.ke 0720431062 053 - 52115 762 - 30300 Kapsabet REGISTERED OFFICE Stima Plaza Eng. Richard Okoth Kakamega KPLC Bldg. rokoth@kplc.co.ke 0737623223 0202442789/0562030023 440 - 50100 Kakamega Kolobot Road, Parklands James Gicheha Njuguna Kiserian Isalu Centre jgichehanjuguna@kplc.co.ke 0722763358 020 2060618 /0723963839 30099 - 00100 Nairobi P O Box 30099 – 00100, Nairobi Evans Uhuru Anangwe Kitale Ambwere Plaza euhuruanangwe@kplc.co.ke 0723056998 5337009 185 - 30200 Kitale Laban Njenga Kilifi Pwani Medical Centre lnjenga2@kplc.co.ke 0721296772 0710305252 1318 - 80108 Kilifi William Onyango Kisii Near Daraja Mbili, Kisii wonyango@kplc.co.ke 0789482888 0202657591/0737067778 5 - 4200 Kisii BANKERS Standard Chartered Bank Kenya Limited Citi Bank NA Edward Kabiru Kitengela MK Arcade, past Naivas ekabiru@kplc.co.ke 0733255743 208074514/5 330 - 00204 Athi River Harambee Avenue Upper Hill Road Gitonga Rugendo Kerugoya Proffessional Plaza - Opp Law Courts grugendo@kplc.co.ke 0721385856 060 - 2021359/0712565080 1079 - 10300 Kerugoya P O Box 20063 – 00200, Nairobi P O Box 30711 – 00100, Nairobi Daniel Mukabi Okubi Kericho Sansora Bldg. dokubi@kplc.co.ke 0722886636 202442798 296 - 20200 Kericho Daniel Tidongoluk Kabarnet KCB Bldg. dtidongoluk@kplc.co.ke 0724663471 0717154501/05352432 120 - 30400 Kabarnet Thomas Sambu Siaya Opposite Law Courts, Siaya tsambu@kplc.co.ke 0713023973 202442793/0713551960 541 - 40600 Siaya Kenya Commercial Bank Limited Equity Bank Hogla Wanjohi Kiambu Vam Plaza hwanjohi@kplc.co.ke 0722966717 20268776 30099 - 00100 Nairobi Moi Avenue Hospital Road Stephen Mwenesi Usagi Kitui Kitui Teachers Sacco susagi@kplc.co.ke 0721852753 444422051, 0202515009 476 - 90200 Kitui P O Box 30081 – 00100, Nairobi P O Box 75104 – 00200, Nairobi Charles Kalya Limuru K - Unity, Limuru ckalya@kplc.co.ke. 0722221508 020 - 2070006/7 103 - 00217 Limuru Mohammed Jamah Lamu Casuarina Rest Hse, Kenyatta Rd mjamah@kplc.co.ke 0723 363722 0424632068 72 - 80500 Lamu The Co-operative Bank of Kenya Limited Commercial Bank of Africa Joseph Ndegwa Likoni Mwinyibabu Rd, Likoni jndegwa@ kplc.co.ke 0722867011 412001933 598 - 80400 Ukunda Gideon Kogo Lodwar Kailong’koi gkogo@kplc.co.ke 0729289190 05421268 21 - 30500 Lodwar Stima Plaza Ragatti Road Alex Maina Loitokitok Osotua Plaza amaina@kplc.co.ke 0722810272 202100399 377 - 00209 Loitokitok P O Box 48231 – 00100, Nairobi P O Box 30437 – 00100, Nairobi Kennedy Kariuki Machakos Red Cross Bldg. kkariuki@kplc.co.ke 0733763668 4420139 155 - 90100 Machakos Ali Golicha Mandera Mandera Power Station agolicha@kplc.co.ke 0721751785 4652188 76 - 70300 Mandera CFC Stanbic Bank Limited Barclays Bank of Kenya Limited Geofrey Situngu Malindi Malindi Complex gsitungu@kplc.co.ke 0721307884 422130200/0422120025 294 - 80200 Malindi Jeremiah N Kariuki Marsabit Opposite Moi Girls,Marsabit jnkariuki@kplc.co.ke 0722308745 202419815 68 - 00500 Marsabit Kenyatta Avenue Barclays Plaza Vincent Ndwiga Maua Nyambene Lodge vndwiga@kplc.co.ke 0722433617 064 - 21358 265 - 60600 Maua P O Box 30550 – 00100, Nairobi P O Box 30120 – 00100, Nairobi Andrew Ouko Achora Migori Opposite Migori TTC aochora@kplc.coke 0722787086 202442797 530 - 40400 Suna Migori Musa Onyango Dudi Molo Maziwa House mdudi@kplc.co.ke 0787787791 202614321 914 - 20106 Molo PRINCIPAL AUDITOR The Auditor-General Mohammed I. Hussein Merti Along Merti Habasweni Rd mhussein@kplc.co.ke 0720493506 0716626381/2 102 - 10100 Nyeri Phineas Marete Meru Yusuf Plaza pmarete@kplc.co.ke 0722620800 064 - 32184 221 - 60200 Meru Anniversary Towers Alfred Lotimoya Emaye Maralal Surere Road aemaye@kplc.co.ke 0722744569 208010413 196 - 20600 Maralal P O Box 30084 – 00100, Nairobi Ahmed Shalleh Moyale Al Hannan Bldg. ashalleh@kplc.co.ke 0723295469 06952466 103 - 60700 Moyale Jacob Mikaya Ayub Mpeketoni Mpeketoni Town jayub@kplc.co.ke 0722231250 0714009969 105 - Mpeketoni DELEGATED AUDITORS Deloitte & Touche Nicholas Ambesa Ngeresa Muhoroni Next Kobil Petrol Station nngeresa@kplc.co.ke 0734892033 202691386/0736594902 320 - 40107 Muhoroni Certified Public Accountants (Kenya) Richard Muindi Murang’a AFC Bldg. rmuindi@kplc.co.ke 0722454140 6031480/0735611392/3 45 - 10200 Murang’a Samuel Maingi Mwingi Kanzanzu – Mwingi smaingi@kplc.co.ke 0722622417 0727016640/44822094 663 - 90400 Mwingi Deloitte Place Timothy Juma Waswa Narok Former Embassy Hotel twaswa@kplc.co.ke 0708384997 502222046 469 - 20500 Narok Waiyaki Way, Muthangari Gideon Githu Namanga Posta, Namanga ggithu@kpl.co.ke 0721483278 07208007175 145 - 00207 Namanga P O Box 40092 – 00100, Nairobi David Mugambi Naivasha Eagle Centre dmugambi@kplc.co.ke 0722739508 050 - 2020169/ 0208010407 180 - 20117 Naivasha Milimo Amusavi Nanyuki Next to Fina Bank mamusavi@kplc.co.ke 0725149500 06232558/9 80 - 10400 Nanyuki Eunice Wafula Nyahururu Electricity House eunicewafula@kplc.co.ke 0733427500 652022205 244 - 20300 Nyahururu LEGAL ADVISERS Hamilton Harrison & Mathews Advocates Hezron Kwanya Nyamira Legacy Plaza - Next to Guardian hkwanya@kplc.co.ke 0722794286 208064672 1242 - 40500 Nyamira ICEA Building Ranyondo Mboya Taveta Next to Tripple J mranyondo@kplc.co.ke 0721339547 0720347320 132 - 80302 Taveta P O Box 30333 – 00100, Nairobi Lucy Mwangi Tala Along Ngondu Road lmwangi@kplc.co.ke 0721239390 202527958/0714892553 783 - 90131 Tala Josephat Lango Vaya Voi Ekklesia Bldg. lvaya@kplc.co.ke 0722509630 043 2030660/043 2030755/ 144 - 80300 Voi 043 2031231 Wireless 041 2011311 George Samuel Mwabusa Ukunda Farna Bldg. gmwabusa@kplc.co.ke 0721707811 0735972112 598 - 80400 Ukunda Benson Nyaoga Ugunja Ramco Bldg. bnyaoga@kplc.co.ke 0722802252 202442796 390 - 40606 Ugunja Simon Gichanga Wajir Within Wajir Power Station sgichanga@kplc.co.ke 0734433595 N/A 127 - 70200 Wajir Richard Mutua King’oo Webuye Nice House Bldg. rmutua@kplc.co.ke 0722620807 202674280 329 - 50205 Webuye Lucas Huko Wundanyi Tatecoh Plaza lhuko@kplc.co.ke 0721338008 202397702 1250 - 80304 Wundanyi 6 7 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 MEMBERS OF THE BOARD OF DIRECTORS MEMBERS OF THE BOARD OF DIRECTORS Eng. Patrick E O Obath, MBS, OGW Dr. Ben K Chumo, OGW Director Mr. Eliazar O Ochola Managing Director & CEO Chairman Mr. Jacob K Mwirigi Director Mrs. Jane Apetet Nashida Director Dr. Kamau Thugge, EBS, MBS Principal Secretary, The National Treasury Mr. Joseph Kariuki Alternate Director, The National Treasury Mr. Macharia Kariuki Director Eng. Joseph K Njoroge, MBS Eng. Isaac N Kiva Principal Secretary, Ministry of Energy & Petroleum Dr. Theodorah Malla-Kilukumi Alternate Director, Ministry of Energy & Petroleum Director 8 9 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 DIRECTORS’ BIOGRAPHIES DIRECTORS’ BIOGRAPHIES Mr. Eliazar O Ochola – Chairman Dr. Ben Chumo (OGW) – Managing Director & CEO Dr. Theodorah Malla-Kilukumi Mr. Joseph Kariuki – (Alternate Director, B. Comm. (Hons.) BA, MBA, PhD MB, Ch.B The National Treasury) Mr. Eliazar Ochola (66 years), joined the Board of Directors BA (Econ.), MA (Econ.) Dr. Ben Chumo (58 years), joined the Company in July 1986 Dr. Theodorah Malla-Kilukumi (49 years), has wide of the Company in December 2006, and was appointed and was the Chief Manager in charge of Human Resources & experience in medical health practice and community Mr. Joseph Kariuki (51 years), has wide experience Chairman of the Board on 4th March 2010. He has over 40 years Administration since 2003. He was appointed Acting Managing leadership. She joined the Board of Directors of the in public sector management, having worked for experience in private sector management, having worked in Director and CEO of the Company in July 2013 following Company on 15th October 2007. Dr. Kilukumi is also more than 26 years in various senior positions in a multinational corporation – Kenya Swiss Chemical Limited the appointment of Eng. Joseph Njoroge to the position of a Director of Elasticity Properties Limited and Dee Government. He joined the Board of Directors for the (Ciba Geigy Group). He also serves as a Director of Wanyaka Principal Secretary. He was confirmed in his current position Properties Limited. Company in June 2009 as an Alternate Director of the General Supplies Company Limited. on 7th January 2014. Dr. Chumo has wide hands-on experience then Ministry of Finance, now The National Treasury. in the sector, having risen through the ranks in the Company to Mr. Macharia Kariuki Dr. Kamau Thugge (EBS, MBS) – Principal his current position. BA (Econ.) Eng. Isaac N Kiva – (Alternate Director, Secretary, The National Treasury Mr. Jacob K Mwirigi Mr. Macharia Kariuki (58 years), joined the Board of Ministry of Energy & Petroleum) BA (Econ.), MA (Econ.), PhD (Econ.) BSc (Math) Directors of the Company on 18th December 2009. He BSc (Eng.), R. Eng., MIEK Dr. Kamau Thugge (57 years), is currently the Principal has wide experience in private sector management Eng. Isaac Kiva (46 years),  is currently the Director Secretary at The National Treasury. He has previously worked in Mr. Jacob Mwirigi (69 years), has wide experience in the and is currently in horticulture business, prior to of Renewable Energy at the Ministry of Energy and the Ministry of Finance as Head of Fiscal and Monetary Affairs insurance and oil industries. Previously, he worked with the East which he worked as a sales manager with the United Petroleum. Eng. Kiva has wide experience in public Department, Economic Secretary and as Senior Economic African Community, The Kenya Power & Lighting Company Ltd., Distributing Company Ltd., and with Nation Media sector management, having worked in energy and Advisor. Before joining the Ministry of Finance he worked American Life Insurance Company Ltd., and was a Director of Group. senior Government positions for over 20 years. He is a with the International Monetary Fund (IMF) as Economist/ Kabage & Mwirigi Insurance Brokers. He is currently in private member of the Institution of Engineers of Kenya. He is Senior Economist and Deputy Division Chief. Dr. Thugge holds business and is also a Director of Orix Oil (Kenya), Meru Ginnery Mrs. Jane Apetet Nashida also a board member of the Electrical Technicians and a Bachelor of Arts (Economics) from Colorado College, USA; a (1994) Ltd., Apex Petroleum Ltd., and Remu DTM Limited. He BA (Development Studies) Contractors’ Licensing Board. Masters in Economics from Johns Hopkins University, USA; and joined the Board of Directors of the Company on 18th December a Doctor of Philosophy in Economics, also from Johns Hopkins. 2009. Mrs. Jane Apetet Nashida (42 years), has experience in Mrs. Fatuma Hirsi Mohamed (left in March 2014) projects management and community development, BA, PGD, MA Eng. Joseph K Njoroge (MBS) - Principal Secretary, Eng. Patrick E O Obath (MBS, OGW) having worked with Finnish Free Foreign Mission Ministry of Energy & Petroleum BSc (Eng.), R. Eng., MIE (UK), MIEK, MPIEA (FFFM), Parliamentary Service Commission and Mrs. Fatuma Hirsi Mohamed (51 years), is an integrated BSc (Eng.), MBA, R. Cons. Eng., C. Eng., MIET, FIEK Constituency Development Fund (CDF). She is also communications practitioner who has worked for 25 Eng. Patrick Obath (59 years), is a Managing Consultant a board member of Uhuru High School in Lokichar, years in the telecommunications, media and banking for Eduardo Associates, a private practice consultancy in Eng. Joseph K Njoroge (56 years), was the Managing Director Turkana County. industries. She has also served as a Board member energy, oil and gas, and engineering with special emphasis on of the Company since June 2007 until he was appointed to of Digital Opportunity Trust; Commissioner, Media leadership, governance and sustainability. He is a Member of his current position in May 2013. He has wide experience in Complaints Commission; Affiliate Advisor, East the Energy Institute (UK), the Petroleum Institute of East Africa power engineering and management of the power sector, Africa Centre for Ethics and Philanthropy; Trustee, and the Institution of Engineers in Kenya. Previously, he worked having joined the Company in 1980 and serving in various Computers for Schools Kenya; Board member, Action for Shell in different parts of the world; and at one time served senior positions prior to his appointment as Principal Secretary, Aid International Kenya General Assembly; Trustee, as Managing Director of Kenya Shell. Eng. Obath is faculty with Ministry of Energy & Petroleum. Northern Kenya Education Trust; Trustee, Ummah Duke Corporate Education, and is also the immediate past Foundation; and Director and founder, Gargaar Chairman of Kenya Private Sector Alliance (KEPSA). He is a International Network. member of the National Economic and Social Council of Kenya, Chairman of PZ Cussons EA Ltd., a director in Afren PLC, and a Fellow of the Aspen Global Leadership Network (AGLN) and the African Leadership Initiative (ALI). 10 11 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 SENIOR MANAGEMENT TEAM SENIOR MANAGEMENT TEAM 12 13 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTICE OF ANNUAL GENERAL MEETING ILANI YA MKUTANO MKUU WA KILA MWAKA NOTICE IS HEREBY GIVEN THAT THE NINETY-THIRD ANNUAL GENERAL MEETING of Shareholders of the Company will be held at Safari Park ILANI INATOLEWA HAPA KWAMBA MKUTANO MKUU WA KILA MWAKA WA TISINI NA TATU wa Wenyehisa wa Kampuni utaandaliwa katika Safari Hotel, Thika Road, Nairobi, on Friday 19th December 2014 at 11.00 a.m. to transact the following business: Park Hotel, Thika Road, Nairobi mnamo Desemba 19, 2014 saa tano asubuhi kuendesha shughuli zifuatazo: 1. To read the Notice convening the Meeting and note the presence of a quorum. 1. Kusoma Ilani ya kuandaa Mkutano na kutambua kuwepo kwa idadi ya kutosha ya wanachama. 2. To receive and consider the Company’s Audited Financial Statements for the year ended 30th June 2014, together with the Chairman’s, Directors’ 2. Kupokea na kuchunguza taarifa za kifedha zilizokaguliwa kwa mwaka uliomalizika Juni 30, 2014, pamoja na ripoti za Mwenyekiti, Wakurugenzi and Auditors’ reports thereon. na Wahasibu hapo baadaye. 3. To approve payment of a final dividend of Shs.0.30 per ordinary share, subject to withholding tax where applicable, in respect of the year ended 3. Kuidhinisha malipo ya mgao wa mwisho wa Sh0.30 kwa kila hisa ya kawaida, ikitegemea ushuru wa kushikilia inavyostahili, kuhusiana na mwaka 30th June 2014 and to ratify the interim dividend of Shs.0.20 per ordinary share already paid for the period. uliomalizika Juni 30, 2014 na kuidhinisha mgao wa muda wa Sh0.20 kwa kila hisa ya kawaida ambao tayari umelipwa kwa kipindi hicho. 4. To elect Directors: 4. Kuchagua Wakurugenzi: i. Mr. Jacob K. Mwirigi retires by rotation in accordance with Article 120 of the Memorandum and Articles of Association of the Company and, being eligible, offers himself for re-election. i. Bw. Jacob K. Mwirigi anastaafu kwa mzunguko kwa mujibu wa Kifungu 120 cha Katiba ya Kampuni na, kwa kuwa bado anahitimu, anajitokeza kuchaguliwa tena. ii. Eng. Patrick E. O. Obath retires by rotation in accordance with Article 120 of the Memorandum and Articles of Association of the Company and, being eligible, offers himself for re-election. ii. Mha. Patrick E. O. Obath anastaafu kwa mzunguko kwa mujibu wa Kifungu 120 cha Katiba ya Kampuni na, kwa kuwa bado anahitimu, anajitokeza kuchaguliwa tena. iii. Mr. Eliazar O. Ochola retires by rotation in accordance with Article 120 of the Memorandum and Articles of Association of the Company and, being eligible, offers himself for re-election. iii. Bw. Eliazar O. Ochola anastaafu kwa mzunguko kwa mujibu wa Kifungu 120 cha Katiba ya Kampuni na, kwa kuwa bado anahitimu, anajitokeza kuchaguliwa tena. 5. To approve payment of fees to non-executive Directors of Shs.600,000 per Director for the year ended 30th June 2014. 5. Kuidhinisha malipo ya Wakurugenzi wasio na mamlaka ya Sh600,000 kwa kila Mkurugenzi kwa mwaka uliomalizika Juni 30, 2014. 6. Auditors: 6. Wahasibu: To note that the audit of the Company’s books of accounts will continue to be undertaken by the Auditor-General or an audit firm appointed in accordance with Section 11 of the State Corporations Act (as amended by the Miscellaneous Law Amendment Act, 2002), and Sections 14 and Kutambua kuwa ukaguzi wa vitabu vya hesabu vya Kampuni utaendelea kufanywa na Mhasibu Mkuu wa Serikali au Kampuni ya Uhasibu 39 (i) of the Public Audit Act 2003. iliyoteuliwa kwa mujibu wa Sehemu ya 11 ya Sheria ya Mashirika ya Umma (kama ilivyobadilishwa na Mkusanyiko wa Sheria ya 2002) na Sehemu za 14 na 39 (i) ya Sheria ya Uhasibu wa Umma 2003. 7. To authorise the Directors to fix the Auditors’ remuneration. 7. Kuidhinisha Wakurugenzi kuamua malipo ya Wahasibu. 8. To consider any other business for which due notice has been given. 8. Kufanya shughuli yoyote ile ambayo ilani inayostahili imetolewa. By Order of the Board. Kwa Amri ya Bodi. Beatrice Meso Company Secretary Beatrice Meso Katibu wa Kampuni 22nd October 2014 22 Oktoba 2014 MAELEZO: NOTE: Mwanachama aliye na haki ya kuhudhuria na kupiga kura kwenye mkutano uliotajwa juu anaweza kuteua mwakilishi mmoja au zaidi kuhudhuria A member entitled to attend and vote at the above meeting may appoint one or more proxies to attend and, on a poll, to vote instead of her/him. na endapo kutakuwa na upigaji kura, kupiga kura kwa niaba yake. Si lazima mwakilishi awe mwanachama wa Kampuni. Fomu ya uwakilishi A proxy need not be a member of the Company. A Form of Proxy is enclosed with this report. To be valid, the Form of Proxy must be duly completed imeambatanishwa kwenye ripoti hii. Ili kuwa halali, Fomu ya Uwakilishi inapasa kujazwa kikamilifu na kupelekwa kwa Afisi za Katibu wa Kampuni, and lodged at the office of the Company Secretary, Stima Plaza, or posted in time to be received not later than 11.00 a.m. on 17th December 2014. Stima Plaza, au kutumwa mapema ili imfikie kabla ya Saa Tano asubuhi mnamo Desemba 17, 2014. 14 15 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 CHAIRMAN’S STATEMENT CHAIRMAN’S STATEMENT (Continued) Introduction Net Profit On behalf of the Board of Directors, I am pleased The Company recorded improved financial performance compared to the previous year, registering to present the Company’s Annual Report and a profit of Shs.10,198 million compared to Shs.6,570 million the previous year. This represents a 55% Financial Statements for the year ended 30th June growth, which is attributable to both the increase in sales and the tariff review. Profit after tax increased 2014. During the year under review, we registered to Shs.6,456 million compared to Shs.3,445 million the previous year, growth of 87% after taking into overall improvement in our performance due to our account a tax charge of Shs.3,742 million. stringent focus on management of operational costs, enhancement of system efficiency and reliability, and Dividend growth in sales. These strategies enabled us to post The Directors recommend that, in addition to the interim dividend of Shs.0.20 paid earlier, a final dividend improved financial performance, service delivery and of Shs.0.30 per ordinary share be paid for the year ended 30th June 2014, subject to withholding tax enhanced shareholder value. where applicable, to shareholders registered in the books of the Company at the close of business on 19th December 2014. This amounts to a total dividend of Shs.0.50 per share (previous year - nil). Operating Environment If approved, the dividend will be paid on or about 27th February 2015. The national economy continued to recover during the review period, with the Gross Domestic Product (GDP) Future Prospects recording a growth of 5.7% in 2013, up from 4.5% in 2012, With increasing investor confidence buoyed by a stable macroeconomic environment, the country has despite the uncertain environment created by the presidential tremendous prospects for economic growth in the medium term. The sector has invested enormous and other national elections held in March 2013, as well as the resources to enhance power generation, transmission and distribution systems; while in the counties, transition process to a devolved system of government thereafter. there is an increase in commercial investments and trade activities, giving rise to higher demand for The national growth, which has been attributed to favourable fiscal electricity. These factors provide immense opportunities for growth of our business, and the Company policies and growth in services, construction and the agricultural “The sector has has strategically positioned itself to expand its business in order to maximise shareholder value. sectors, had a positive effect on total electricity sales which increased invested enormous Gratitude by 10% from 6,581GWh the previous year to 7,244GWh. Specifically, the resources to On behalf of the Board of Directors, I wish to thank the Government, all our shareholders, development sales are mainly attributable to expanding commercial and industrial enhance power and business partners, customers, and staff for their support to the business during the year under activities and the ongoing accelerated national electrification. review. generation, During the same period, electricity generation rose to 8,839GWh from 8,087GWh the previous year, representing an increase of 9.3% compared transmission to 5.4% the previous year. Electricity system losses decreased from 18.6% and distribution Mr. Eliazar O. Ochola recorded in the previous financial year to 18.1%. systems.” Chairman Financial Performance Mr. Eliazar O. Ochola Electricity revenue, excluding foreign exchange and fuel cost recoveries, increased to Shs.62,597 million compared to Shs.47,916 million the previous 22 October 2014 year, an increase of Shs.14,681 million or 30.6%. This was as a result of growth in unit sales during the year, reduced load shedding and implementation of a “The national growth, new tariff which came into effect from 1st December 2013. which has been attributed Power purchase costs (excluding fuel costs and foreign exchange recoveries) to favourable fiscal increased from Shs.24,761 million to Shs.30,659 million during the year, representing a 23.8% growth attributable to an increase in the units purchased. policies and growth in Fuel cost, which is a pass-through component, rose from Shs.32,297 million to services, construction and Shs.38,973 million as a result of higher dispatch of thermal plants to meet the the agricultural sectors, increased demand and also due to the lower hydropower output in the year. Foreign exchange rate fluctuation recoveries decreased from Shs.4,102 million to Shs.1,414 had a positive effect on million due to a review of exchange base rates in the new retail tariff structure. electricity sales which Transmission and distribution costs increased to Shs.22,683 million, up from increased by 10% from Shs.20,984 million the previous year, which is attributable to higher costs incurred 6,581GWh the previous in serving the growing number of customers, as well as maintaining and expanding year to 7,244GWh.” the electricity network. During the year, the Company’s asset base grew by 16% from Shs.146,484 million to Shs.169,697 million as a result of new capital investments to improve system performance, enhance quality of power supply and expansion of the network. 16 17 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 TAARIFA YA MWENYEKITI Utangulizi Katika kipindi hicho, thamani ya vifaa vya Kampuni iliongezeka kwa Kwa niaba ya Bodi ya Wakurugenzi, nina furaha kuwasilisha Ripoti asilimia 16 kutoka Sh146,484 millioni hadi Sh169,484 milioni kutokana na Taarifa za Kifedha ya Kila Mwaka kwa kipindi kilichomalizika Juni na miradi mikubwa ya uwekezaji kuimarisha utendakazi wa mitambo, 30, 2014. Katika mwaka unaoangaziwa, matokeo yetu yaliimarika kuimarisha ubora wa usambazaji umeme na upanuzi wa mtandao wa kutokana na kupunguzwa kwa gharama za uendeshaji biashara, umeme. kuimarisha utendakazi wa mitambo yetu na uthabiti, pamoja na Faida Baada ya Ushuru ukuaji wa mauzo. Mikakati hii ilituwezesha kupata matokeo bora, Kampuni ilipata matokeo bora kifedha ikilinganishwa na mwaka kutoa huduma bora pamoja na thamani kubwa kwa wenyehisa. uliopita kwa kupata faida ya Sh10,198 milioni ikilinganishwa na Mazingira ya Kikazi Sh6,570 milioni za mwaka uliotangulia, ukuaji wa asilimia 55 ambao Uchumi wa nchi uliendelea kuimarika katika mwaka uliomalizika unatokana na nyongeza ya mauzo na kupandishwa kwa ada. huku Jumla ya Mapato ya Nchi (GDP) yakiongezeka kwa asilimia 5.7 Faida baada ya ushuru iliongezeka hadi Sh6,456 milioni ikilinganishwa mnamo 2013 kutoka asilimia 4.5 mwaka uliotangulia, licha ya hali ya na Sh3,445 milioni mwaka uliopita, nyongeza ya asilimia 47 baada ya kutatanisha iliyotokana na Uchaguzi Mkuu uliofanyika Machi 2013, kuondoa ushuru wa Sh3,742 milioni. pamoja na kipindi cha mpito kwa mfumo wa ugatuzi kilichofuata. Ukuaji wa uchumi ambao ulitokana na sera zifaazo za kifedha, ukuaji Mgao wa Faida katika sekta za huduma, ujenzi na kilimo ulikuwa na matokeo bora Wakurugenzi wanapendekeza pamoja na mgao wa muda wa faida kwa mauzo ya umeme ambayo yalipanda kwa asilimia 10 kutoka uliolipwa awali wa Sh0.20, mgao wa mwisho wa Sh0.30 kwa kila hisa GWh 6,581 mwaka uliopita hadi GWh 7,244. Haswa, mauzo hayo ya kawaida ulipwe kwa mwaka uliomalizika Juni 30, 2014, baada ya yaliyokana na kuongezeka kwa shughuli za kibiashara na kiviwanda kuondoa ushuru wa kushikilia inavyohitajika, kwa wenyehisa walio na usambazaji umeme unaoendelea kitaifa. kwenye sajili ya Kampuni kufikia mwisho wa shughuli za siku mnamo Desemba 19, 2014. Hii inafikisha jumla ya mgao wa faida wa Sh0.50 Katika kipindi hicho, uzalishaji wa umeme uliongezeka hadi GWh kwa hisa (mwaka uliopita-sufuri). Iwapo utaidhinishwa, mgao huo 8,839 kutoka GWh 8,087mwaka uliopita, na hivyo asilimia 9.3 utalipwa mnamo au karibu na Februari 27, 2015. ikilinganishwa na asilimia 5.4 mwaka uliotangulia. Hasara ya umeme kwenye mitambo ilipungua kutoka asilimia 18.6 iliyorekodiwa mwaka Matarajio ya Baadaye uliopita wa matumizi ya fedha hadi asilimia 18. Kutokana na imani ya wawekezaji inayozidi kuimarika kutokana na hali thabiti ya kiuchumi, nchi hii ina fursa kemkem ya kustawi kiuchumi Matokeo ya Kifedha hivi karibuni. Sekta hiyo imetumia raslimali nyingi kupanua uzalishaji Mapato ya umeme, ukiondoa kiwango cha ubadilishaji fedha za wa umeme, mifumo ya usafirishaji na usambazaji umeme baada ya kigeni na mapato kutokana na gharama ya mafuta, yaliongezeka kutambua kuwa umeme ni kiungo muhimu cha ustawi wa kiuchumi. hadi Sh62,597 milioni ikilinganishwa na Sh.47,916 milioni mwaka Katika kaunti zote, kuna shughuli nyingi za uwekezaji zinazoendelea uliotangulia, nyongeza ya Sh.14,681 milioni au asilimia 30.6. Hii na hivyo kuongeza mahitaji ya kawi. Mazingira hayo yanatoa fursa ilitokana na kuimarika kwa mauzo mwaka huo, na kupungua kwa visa nzuri ya ukuaji wa biashara yetu. Kampuni imo kwenye nafasi nzuri ya vya kuzima mitambo katika maeneo fulani na utekelezaji wa kiwango kupanua biashara zake ili kuongeza thamani kwa mwenyehisa. kipya cha malipo kilichoanza kutumika Desemba 1, 2013. Shukrani Gharama za ununuzi wa umeme (bila kujumuisha gharama za mafuta Kwa niaba ya Halmashauri ya Wakurugenzi, ningependa kushukuru na kiwango cha ubadilishaji pesa za kigeni) ziliongezeka kutoka Serikali, washikadau wetu wote na washirika wetu wa kibiashara na Sh.24,761 milioni hadi Sh30,659 milioni mwaka uliomalizika, na hivyo maendeleo, wateja na wafanyikazi kwa mchango wao kwa biashara kuwakilisha nyongeza ya asilimia 23.8 iliyotokana na kupanda kwa yetu katika mwaka uliomalizika. vipimo vilivyonunuliwa. Ada ya mafuta, ambayo ni gharama inayopitia tu kwa kampuni, iliongezeka kutoka Sh32,297 milioni hadi Sh38,973 milioni kutokana na uzalishaji mkubwa wa umeme kutoka viwanda vya dizeli kutosheleza mahitaji yaliyoongezeka na pia kupungua kwa umeme uliozalishwa kutokana na vyanzo vya maji katika kipindi hicho. Mapato kutokana na kudidimia kwa viwango vya ubadilishanaji wa fedha za kigeni yalipungua kutoka Sh4,102 milioni hadi Sh1,414 milioni kutokana na mabadiliko kwenye kiwango cha chini cha ubadilishanaji Bw. Eliazar O. Ochola wa fedha za kigeni katika muundo huo mpya wa ada. 22 Oktoba 2014 Gharama za usafirishaji na usambazaji ziliongezeka hadi Sh22,683 milioni, kutoka Sh20,984 milioni mwaka uliotangulia, hali iliyotokana The Cabinet Secretary for Energy and Petroleum, Mr. Davis Chirchir, inspects an na gharama za juu kufuatia kuongezeka kwa idadi ya wateja, kutunza electric cable during a Boresha Umeme programme in Nairobi na kupanua mtandao wa umeme. 18 19 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 REPORT OF THE MANAGING DIRECTOR & CEO REPORT OF THE MANAGING DIRECTOR & CEO (Continued) 1. 2013/2014 Highlights Business Performance Towards this, during the year under review, the Company successfully At the same time, the Company recorded a 54.5% increase in profit negotiated and concluded 12 new Power Purchase Agreements (PPAs) Introduction with KenGen (280MW) for Olkaria IV (140MW) and Olkaria 1 units 4 before tax, a 9.9% increase in sales and a 30.6% increase in electricity The electricity grid, which delivers power and 5 (140MW); Kenya Tea Development Agency (KTDA) for small revenue. The increase in sales was due to the increase in customers, countrywide from generating stations through the as well as rigorous system reinforcement and maintenance during hydropower plants (8.5MW); and 107MW from Quantum (37MW), transmission and distribution networks, is among Sosian (35MW), and Ormat (35MW). The last three are geothermal the year which greatly reduced the number and duration of outages. Kenya’s most important and critical infrastructure. power plants and will be developed in the Menengai area in Nakuru. Other factors that contributed to the sales growth were a favourable A robust electricity system that is efficient and business environment, and improved generation capacity to meet All these projects will complement the country’s generation mix and reliable is, therefore, essential for national development. demand. Electricity sales are expected to continue to grow rapidly capacity in the medium term, and are part of the transformative This is especially so at this time when the Government has in the short term, boosted by the projected additional generation programme through which the government aims to increase embarked on a journey to create an additional 5,000+MW of capacity. generating capacity from 1,664MW in 2013 to 6,762MW in 2017 generation capacity over a period of 40 months commencing through the addition of 5,098MW. This denotes an annual average September 2013. Boresha Umeme Initiative (‘Fixing the Network’) capacity growth rate of 42%, compared to the 6.2% annual average The Company embarked on a programme to rapidly refurbish the growth in recent years. Indeed, this programme calls for major refurbishment and power distribution network to enhance system reliability, customer expansion of the existing transmission and distribution grid; as service and electricity sales during the period under review. Apart from increasing capacity, another important aspect of the 5000+MW programme is to change the generation mix with a view well as developing and implementing strategies aimed at ensuring The strategy, dubbed Boresha Umeme Viwandani, entails to reducing over-reliance on hydro power that is often curtailed the uptake of the additional electricity generated. In order to comprehensive repair and upgrade of the Company’s electricity by periodic low water levels whenever there is inadequate rainfall. achieve these goals, in the 2013/2014 financial year the Company infrastructure across the entire country. This is made possible through Generation of thermal power, which is produced using fuel whose focused on tenaciously repairing and expanding the network; as well massive mobilisation of human and other resources to focus, for costs are passed on to customers, will also be greatly diminished, as on our core business of electricity retail. Our other key focus areas short durations, on carrying out wide-scale and major refurbishment thereby reducing the unit cost of electricity. Once all the new during the year were service improvement, particularly for large power of selected sections of the system. generating plants are in place, the generation capacity mix will customers; increasing electricity sales; and growing the customer base. change as follows: The programme has resulted in greatly reduced outages and improved Our Corporate Strategy & the 5000+MW Capacity Plan customer satisfaction in areas where it has been implemented. 2013 2017 The Boresha Umeme initiative commenced in March 2014 and by June Type % % In performing its role of transmitting, distributing and retailing electricity 2014, a total of Shs.610 million had been spent under the programme. throughout Kenya, the Company is guided by its strategic and business Hydro 46.3 11.7 Dr. Ben Chumo plans. These are in turn currently closely aligned with the Government’s Details of these, and other key performance areas and achievements Thermal (diesel and kerosene) 37.4 6.4 5,000+MW plan; as well as its other target of making electricity accessible to Geothermal 14.5 27.9 MANAGING DIRECTOR more than 70% of the population by 2020, compared to 35 percent currently. during the 2013/2014 financial year, are outlined in the rest of this Cogeneration 1.6 0.7 report. & CEO During the year under review, therefore, the Company worked in collaboration Wind 0.3 9.4 with its various partners and stakeholders, including the Government, towards 2. Adequate Power for the Nation Coal 0 28.4 attainment of these national goals. Natural gas 0 15.5 Kenya continues to experience a steady increase in electricity consumption and, during the year under review, the peak demand New Organisation Structure In accordance with the 5000+MW rollout plan, during the year under grew by 8.4% from 1,354MW the previous year, to 1,468MW. This trend “Our other key focus areas To support the overall corporate strategy and other efforts aimed at achieving review, 210.3MW new generation capacity was added. The cumulative is expected to be sustained due to accelerated customer connectivity capacity expected to be commisioned by end of December 2014 is during the year were targets, the Company developed and commenced with the establishment of a by the Company, increased economic activities in the counties, as detailed below: new organisation structure during the year under review. The structure, whose service improvement, and implementation of other mega-projects by the Government implementation will be completed by December 2014, will culminate in a flatter, countrywide. Plant Capacity (MW) Type particularly for large power more efficient organisation and improved service delivery. An important aspect Kindaruma (KenGen) 24 Hydro customers; increasing of the new structure is that the Company’s functions in each of the country’s 47 As the national off-taker of electricity generated by the Kenya Thika Power (IPP) 87 Thermal electricity sales; and counties will henceforth be headed by a manager, supported by adequate staff and Electricity Generating Company (KenGen) and Independent Orpower 4 (IPP) 16 Geothermal other resources. Power Producers (IPPs), the Company plays a major role in the Olkaria IV (KenGen) 140 Geothermal growing the customer development of new generating plant, mainly in power planning and Wellheads (KenGen) 32.8 Geothermal base.” Connecting More Kenyans in the negotiation and drawing up of Power Purchase Agreements Triumph Power (IPP) 83 Thermal Due to the hard work of staff and our heightened focus on the business, we connected (PPAS) prior to their approval by the Energy Regulatory Commission Gulf Power (IPP) 80 Thermal 443,254 new customers during the year under review. This is the highest number of (ERC). In this regard, therefore, the Company’s role in the 5000+MW Kwale Sugar (IPP) 18 Cogeneration customers ever connected within a single financial year, and was an increase of 52% initiative will be involvement in the procurement of power from new Olkaria I units 4 & 5 (KenGen) 140 Geothermal from 292,337 the previous year; bringing the total number of customers to 2,766,441 generating stations; as well as carrying out concerted marketing and Total 621 in June 2014. other activities that will lead to absorption of the additional capacity. 20 21 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 REPORT OF THE MANAGING DIRECTOR & CEO (Continued) REPORT OF THE MANAGING DIRECTOR & CEO (Continued) 3. Increasing Kenyans’ Access to Electricity extension of existing lines to new and viable potential sites in order to Treasury availed Shs.2.7 billion to subsidise connection costs for Kipevu-Makande-Mbaraki and Makande-Tononoka 33kV underground exploit the full potential of the distribution network; (ii) pre-investment customers who were within 600 meters of an existing transformer, cables in Coast Region at a cost of US$6.73 million, and the Lessos In order to absorb the additional 5000+MW capacity, peak demand in low voltage reticulation; (iii) clustering potential customers into and whose connection capacity did not exceed 8kVA. Under the plan, 1x2.5MVA 33/11kV Sub-station in North Rift at a cost of US$0.7 million. is expected to rise by 296% from 1,468MW as at June 2014, to viable groups to reduce the cost of connecting individuals; and (iv) 51,208 customers paid Shs.34,980 for single phase and Shs.49,080 approximately 5,359MW in 2017; and electricity consumption to electrification of informal settlements. for three phase connections, with the deficit between these amounts Government Funded Projects increase by 306% from 8,087GWh to 32,862GWh by the end of 2017. and the actual cost of connecting them being financed by the fund. Throughout the review period, the Company continued to carry out It is expected that most of the electricity will be taken up by projects Revision of New Connection Policy that will be located all over the country, and which are currently at 4. Strengthening the Network works amounting to US$23.38 million on behalf of the Government During the year under review, the Company revised parts of its various stages of planning and/or implementation. These include an connection policy of 2004 with a view to making it relevant to comprising construction of sub-stations and lines at various locations. A strong and stable network is crucial for our business, and each year ICT Park at Konza, new railway systems, new ports in Lamu and Dongo the changed business and operating environment. Under the These include a new 1X10MVA 66/33kV sub-station and lines at GSU the Company ensures adequate allocation of resources to operate Kundu, new pipeline pumping stations, resort cities and new iron revised policy, the Company will expand the low voltage network Magadi; a new 1X45MVA 220/66kV sub-station and lines at Kainuk; and maintain the system effectively. Indeed, the Company will invest and steel mills, among others. Domestic customers and commercial incrementally by pre-investing in shorter lengths of lines within a new 1X7.5MVA 33/11kV sub-station and lines in Lamu; and two new US$1.3 billion by 2017, particularly to support the evacuation and industrial customers, particularly in the counties, are expected to the network. With time, this strategy will cumulatively take the low distribution of the additional electricity that will be generated under 33kV distribution lines at Hindi, also in Lamu. take up the remainder. voltage system closer to potential customers, therefore making it the 5000+MW programme. possible to connect them at a lower cost. Rights Issue Projects As part of the exercise to create additional demand, the Company Towards this, during the year under review, the Company spent During the year, the Company implemented other projects financed by has embarked on concerted efforts to grow its customer base by an Further, the Government is in the process of sourcing for US$160 approximately Shs.11 billion on network refurbishment and million from the African Development Bank (ADB) to fund last the Shs.9.1 billion proceeds from the rights issue of 2010 by investing additional one million per annum starting in the 2014/2015 financial expansion, which included automation and upgrade of the system, year. This objective is aligned to the Company’s Corporate Mission mile connectivity, which will be implemented through this method. Shs.2.82 billion in several major distribution system reinforcement undergrounding of cables, replacement of wooden poles with of ‘powering people for better lives’; and also directly supports the ‘Last mile’ refers to the end link between electricity consumers and schemes. The projects that were completed and commissioned concrete ones, and creating adequate redundancy in the system. Government plan to rapidly raise the national electricity access rate connectivity and the technologies and processes used to connect This includes Shs.610 million spent during the review period on the include Thika Industrial, Nairobi City Square and Nairobi Eastleigh by more than 70% by 2020. them. In this respect, the Company is continually exploring new Boresha Umeme Viwandani initiative in Nairobi’s Industrial Area, 2X45MVA 66/11kV sub-stations; Embu East 1X7.5MVA 33/11kV connection techniques, including the single wire earth return (SWER) Busia, Bungoma, parts of Mombasa Island, Garissa, Meru, Namanga, Sub-station and lines; and Ruring’u 7.5MVA 33/11kV Sub-station and Some of the methods that the Company is using to increase the method, whereby a single-wire is used to supply single-phase power; Karatina and Kajiado. lines in Nyeri Town. customer base are (i) transformer maximisation, which entails rather than the current practice whereby two wires are used to supply the same amount of power and at a higher cost. Apart from general improvement of the quality of supply to various Projects Implemented with Internally Generated Funds areas, special emphasis was placed on improvement of supply to At the same time, a US$16 million project that aims to A total of Shs.2.4 billion generated internally by the Company was According to the Government, the other aim of the 5000+MW project is to bring industries and other large power and essential service customers. about a reduction in the unit cost of electricity in the long term. The following connect about 40,000 customers in informal settlements used on system upgrade and extension during the review period. Out During the year, therefore, the Company also embarked on the chart indicates the expected tariff trend as the programme is implemented: by May 2016, is ongoing. The project is funded through the design of alternative and dedicated lines for the largest 200 and of this, Shs.921 million was used to upgrade 10 sub-stations in Kisumu, Global Partnership on Output Based Assistance (GPOBA), essential service customers in order to reduce power interruptions to Rabai, Meru, Kenya Petroleum Refinery (KPRL), Kisii, and Kikuyu, which supports delivery of basic infrastructure and social this category of consumers; and 66 of the designs were completed. among others. services to the poor. More than 16,000 customers have Further, 78 auto-changeover units been connected under the project so far. were procured to facilitate switching The 5000+MW rollout is phased out over 40 months commencing September 2013. The following of these premier customers to Other Funding Initiatives for New Electricity Connections chart shows the implementation plan, and the capacity expected from the various sources of power: alternative supply feeders during Affordability of electricity connection is a major challenge power outages, and 12 of them were 40 MONTH GOVERNMENT 5000+MW STRATEGY for many Kenyans. To ease the burden of having to pay installed during the review period. for new connections upfront, the Company has partnered Time in Months 6 12 18 24 30 36 40 TOTAL (MW) with various financial institutions to avail long term credit The Energy Sector Recovery Project Hydro 24 - - - - - - 24 to potential customers under the StimaLoan funding (ESRP) programme. So far, 50,000 customers have benefited from Thermal 87 163 - - - - - 250 the programme, including through the Company’s own The US$225.8 million ESRP project, Geothermal 90 176 190 50 205 150 785 1,646 internally funded StimaLoan. Other partners providing which commenced in 2004, was Wind - - 20 60 300 250 - 630 the credit facilities are Equity, National and Jamii Bora concluded during the year under Coal - - - - 960 - 960 1,920 banks. Arrangements for disbursement of an additional review. The project targeted reinforcement and upgrade of the Natural Gas - - - 700 350 - - 1,050 €30 million from the Agence Française de Développement distribution system to improve Co-generation - - 18 - - - - 18 (AFD), which will benefit 300,000 customers through the KPLC StimaLoan, are at an advanced stage. This follows efficiency, reliability and quality of Total 201 339 228 810 1,815 400 1,745   the successful pilot of the project in 2011 with a revolving power supply; and also at increasing Cumulative fund of €4.5 million. access to electricity in the country. Additions (MW) 201 540 768 1,578 3,393 3,793 5,538   During the review period, two Government’s Shs.2.7 Billion Subsidy projects valued at US$7.43 million Between September and November 2013, the National were completed. These are the 33kV Source: MoEP 22 23 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 REPORT OF THE MANAGING DIRECTOR & CEO (Continued) REPORT OF THE MANAGING DIRECTOR & CEO (Continued) An additional Shs.1.062 billion was spent on upgrade of 27 the affected communities and local administration officials. Stiffer distribution lines projects countrywide. These include the Muthurwa penalties due to strengthening of various vandalism-associated laws 66kV in Nairobi, Malindi 33kV feedouts, reconductoring of 33kV lines Part of a 30 kilometer power line to Kadzandani in Magarini settlement scheme, in recent years, have also acted as a deterrent. to Obote Road Sub-station in Kisumu, construction of a new 33kV Malindi County, constructed by our employees in a record four days feeder in Eldoret, undergrounding of the 66kV cable from Parklands 5. Innovation Sub-station to Cathedral Sub-station in Nairobi, and construction of We continually aim to be innovative with our processes and services Denyenye-Likoni 33kV interconnector in Mombasa. in order to improve our performance; and by so doing create added value for our shareholders. Following are some of the products and Other projects implemented using internal funds were construction of processes whose modernisation and improvement was in progress 17,075km of new low and medium voltage power lines, and completion during the review period. of 38 major customer projects at a cost of Shs.406.3 million. Kenya Electricity Expansion Project (KEEP) World Bank Funded Projects SCADA Upgrade The $132 million World Bank-International Development Agency (IDA) The Company completed the extension and upgrade of the funded project commenced in 2010 with one of its main aims being the Supervisory Control and Data Acquisition System (Scada) during the expansion of electricity access in the country. Out of the total amount, year. The Scada system is the backbone of remote management of US$77.03 million was allocated for 24 Company projects including electricity grid operations and it links the primary National Control 2x23 MVA 66/11kV sub-stations and lines in Githunguri, Dagoretti, Centre with the secondary regional control centres. During the year, Lukenya, Banana, Rironi, Lower Kabete, Villa Franca and Uplands in 22 new and existing sub-stations were also integrated into the system, Nairobi Region; and a new 1x7.5MVA 33/11kV sub-station and lines in while 20 others will be integrated in the 2014/15 financial year. Magumu. Construction of a 2X23MVA 132/33kV sub-station at Jomvu Facilities Database and a 7.5MVA 33/11kV sub-station at Mishomoroni at the Coast, The Facilities Database (FDB) system roll-out was intensified in all is also in progress under the programme. At the same time, eight Company branches and 80% of the network had been mapped by the new 7.5MVA 33/11kV sub-stations are also being constructed in Kibos, end of the review period. The FDB system maps out the Company’s Ahero, Chepseon, Elgon View, Majengo, Maseno, Kabarak University power network using Geographical Information System (GIS), which and Kipsaraman in West Region. Five new sub-stations and lines helps to improve quotation time for new connections by minimising are under construction in Mount Kenya Region including 2x7.5MVA the need for designers to physically visit customer sites. Currently, 33/11kV sub-stations in Gatundu and Kangema, a 1x23 MVA 66/11kV all new power lines and sub-stations are updated in the FDB upon sub-station at JKUAT University, as well as sub-stations in Mwea commissioning. (7.5 MVA 33/11kV), and Tala (23MVA 66/11kV). Radio Systems for West Kenya and North Rift Regions The Kenya Electricity Transmission Company (KETRACO) is A trunking radio system for West Kenya and North Rift was successfully constructing new transmission lines and associated sub-stations installed and commissioned at a cost of Shs.250 million during the countrywide in conjunction with the Company, at a cost of US$41.2 review period. The system enhances efficiency of communication million, also under the KEEP programme. During the year under for field operations by interconnecting the National Control Centre review, there was continuing work on the Kisii-Awendo, Kindaruma- to the regions through the Company’s fibre optic network. The new Mwingi-Garissa and Eldoret-Kitale 132kV transmission lines. areas covered by the system in West Region are Kilgoris, Kehancha, and Coast Regions to stabilise system voltages and enhance quality over to the Company by the Rural Electrification Authority (REA), Other US$20.12 million projects funded by the World Bank’s Migori, Homabay, Mfangano Island, Nyamira, Gucha, Bondo/Siaya, of power supply. The reactive power compensation project will cost while 13 new stations were under construction. The Government is International Finance Corporation (IFC) were also in progress during Bungoma, Kitale, Kapenguria, Kericho, Bomet, Nandi Hills, Maragoli/ US$26.6 million. in the process of hybridising all off-grid thermal stations in order to the year. They include a 15 MVA 132/33kV sub-station at Maungu in Kakamega, Lessos, Kipkabus, Kabarnet and Marigat. reduce fuel costs by cumulatively adding 10.2MW solar and 600kW Coast Region; 2x23 MVA 66/11kV GIS Mamlaka Sub-station in Nairobi Off-grid Power Supply wind power capacities, at a total cost of Shs.3.44 billion. So far, nine Automation of Business Processes Region, and 7.5MVA 33/11kV Bahati Sub-station in Nakuru. Off-grid power stations operate independent of the inter-connected stations have been hybridised. During the year, 75 offices in West Kenya and North Rift were linked Other Projects electricity grid, providing electricity to hundreds of Kenyans in parts to the internal computer network using the Company’s radio system. Other projects in the pipeline and which are aimed at stabilising of the country that are far from the network. Currently, there are 16 Vandalism Reduced At the same time, we embarked on a project to integrate the voltages and enhancing quality of power supply include off-grid stations operated by the Company with a total capacity of Vandalism of infrastructure is a nationwide problem, and the Information Communication and Technology (ICT) systems to a refurbishment of the Juja Road 132/66kV Sub-station at the National 16.8MW. These are located in Wajir, Elwak, Takaba, Mandera, Marsabit, Company has made concerted efforts to curb theft of, and damage unified and information-rich Business Intelligence and Enterprise Control Centre. Others are construction of 220/66kV sub-stations Moyale, Habaswein, Rhamu, Lodwar, Lokichoggio, Baragoi, Merti, to, the distribution system. As a result of these mitigations, there was Data Warehouse. The project entails upgrade of the ICT infrastructure, in Nairobi’s Central Business District and Thika Road; a 66/11kV Mfangano, Mpeketoni, Hola and Eldas. a significant drop in the number of vandalism incidents, with 535 applications and services to improve employee performance sub-station in Thika North; and a 132/33kV sub-station in Kutus. cases recorded during the review period, compared to 989 cases in management by providing real-time data on measureable Key During the year, five additional diesel generators with a total capacity the previous financial year. Mitigation strategies used include welding Performance Indicators (KPIs). In addition, upgrade of the SAP These projects will be implemented by 2017 at a cost of US$208 million. of 4.75MVA were installed at Wajir, Hola and Habaswein power and hoisting transformers above the voltage conductors, relocating Enterprise Resource Planning System to effectively manage financial Installation of new reactors and capacitors in 15 critical transmission stations at a total cost of Shs.359 million. At the same time, the transformers from vandalism-prone areas to more secure locations, resources, human capital and supply chain processes in an efficient sub-stations also commenced during the year in West, Mount Kenya new Takaba, Eldas and Rhamu off-grid power stations were handed and enhancing security operations with the assistance of the police, manner, is in progress. 24 25 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 REPORT OF THE MANAGING DIRECTOR & CEO (Continued) REPORT OF THE MANAGING DIRECTOR & CEO (Continued) Fibre Optic Business customers. For this reason, we continuously seek metering solutions seeks to improve service delivery timelines for new connections, with programme by 2017 in particular, provides a singular opportunity for The Company owns more than 1,800km of optical fibre cable on its that enhance customer satisfaction, while at the same time protecting special focus on new commercial and industrial investors. Following greatly improved performance due to the accompanying exponential high voltage power lines across the country mainly to manage the the Company’s revenue base. In this regard, by the end of June, there such consultations, during the review period the connection process scaling up of customer connectivity and electricity sales, and national power grid, with the excess capacity being leased out to were 676,788 prepaid meters serving about 25% of all electricity was streamlined and service delivery timeliness reduced. In this therefore the bottom-line. telecommunication service providers Safaricom, Liquid Telecom, customer accounts. In future, the Company plans to install prepaid regard, customers requiring more than 25kVA supply are now being Jamii Telecommunications, Indigo Telecom, Wananchi Group and meters mainly for rural and other customers in remote locations; and connected within 30 days and those requiring below 25kVA are We take serious note of these immense opportunities, and also to adopt a hybrid system consisting of post-paid and smart metering connected within 43 days, compared to 151 days previously for both acknowledge that electricity is one of the most important catalysts Airtel Network. During the year under review, an additional 62.5km categories. In addition, marketing officers have been deployed to for national development. We are also aware of the challenges posed of fibre optic cable were installed in the network. The fibre optic in urban and semi-urban areas. The Company also has plans to install the National Investment Promotion Office to provide liaison services by the need to continually invest in improving the transmission and network now also interconnects Uganda at Malaba border point, two-way meters in large power premises. This will give customers for power supply to prospective investors. Further, all applications distribution system as well as customer service. We can however and the Company has signed a Memorandum of Understanding more flexibility in managing their electricity use, while at the same for requirements that are above 25kVA are now being handled by confidently state that we are well placed to meet the expectations with Uganda Electricity Transmission Company for a cross-border time intensifying the Company’s revenue protection. dedicated marketing officers in order to fast-track connection. of the Government, Kenyans in general, our customers and our fibre optic connectivity to facilitate backhaul of data extending to 6. Customer Service shareholders. This is because we have laid firm foundations to submarine cables in Mombasa. Further, the Company plans to extend 7. Our Employees improve the system, and to serve our customers diligently and with the fibre optic network to all counties served by the national grid as Enhancing Customer Relations integrity in line with our mission of ‘powering people for better lives’. part of its business diversification strategy. We are committed to the continuous improvement of our customer We rely on our team of highly qualified and skilled staff to deliver the service and the corporate reputation, and each year we carry out Company’s mandate and to meet its customer service and business Appreciation Enhancing Service Through Alternative Billing and Payment Systems measurement of our performance in these areas. Such research also targets. It is therefore vital for the Company to continually expose its On behalf of the Management of the Company, I thank all our With the fast growth and expansion of the customer base, it is pinpoints areas for improvement and enables us to develop strategies employees to modern and best practices of carrying out operations shareholders, the Government, our customers, and all other partners imperative for the Company to continue embracing modern, cost- to meet customer and stakeholder expectations. and doing business. In this regard, during the year under review, 4,902 and stakeholders for their continued support in the 2013/2014 effective and efficient ways of service delivery. Towards this, during staff attended various courses, workshops and conferences locally During the year under review, we conducted customer satisfaction financial year which culminated in our very good performance. I also the year under review, the Company initiated the issuance of and abroad, which assisted them to contribute to our enhanced and corporate reputation surveys to measure the extent to which the wish to thank the Board of Directors for its strategic support and customer bills through email and short messaging services (SMS). performance and to attainment of corporate goals. Company achieved targeted goals. We attained fairly good results guidance, and our employees for their dedicated service during the This move was informed by research findings which indicate that with a customer satisfaction index of 71.2% and corporate reputation year. I look forward to our continued cooperation and team work to many customers prefer to receive their bills through these channels. Indeed, we are determined to share our vast knowledge with other index of 74.7% for the year ended June 2014. The ongoing initiatives achieve even better results in the coming year. The service also enables customers to check the status of application stakeholders, and plans are at an advanced stage to revamp and to continually improve the network and other services are expected upgrade the Company’s Training School to turn it into a major for new connection; and the Company to disseminate customer to result in major improvements in these performance indices in the institution offering advanced technical training for Company staff, information even more efficiently. By adopting digital billing, the near future. Kenyans and other nationals. Company anticipates to save Shs.600 million per annum. To further enhance our relationships with major stakeholders, At the same time, there was an increase in electricity revenue received With such a heavy investment in its employees, the Company has we organised joint forums with members of Parliament’s House through third party collection services, with 80% of the total revenue put in place measures to ensure high staff retention including Committee on Energy, the media, Kenya Association of Hotelkeepers collected being paid through these avenues. The collection points, competitive pay with attractive benefits, promotions based on merit, and Caterers (KAHC) and other interest groups. Seven joint meetings Dr. Ben Chumo, OGW known as EasyPay, provide convenient alternative payment options and continuous improvement in the work environment. During the were held in partnership with the Kenya Association of Manufacturers Managing Director & CEO to our customers. EasyPay partners include mobile money transfer review period, a number of welfare activities were conducted to (KAM) in all the Company’s administrative regions, to which leading services such as Airtel Money and M-Pesa; the Postal Corporation of enhance staff motivation and engagement, including excellence and 22nd October 2014 industrialists and other stakeholders were invited. During such long service awards. Due to these and other ongoing activities aimed Kenya; Uchumi Supermarkets and banking institutions such as Post meetings, we shared information about our business and plans. Bank, National Bank, Barclays Bank, Standard Chartered Bank, Family at raising morale, the employee satisfaction index improved to 62.3% Bank, Cooperative Bank and Equity Bank. We also participated in exhibitions and trade fairs in various parts from 60.24% the previous year. of the country including 16 expos, four investor forums and over As at 30th June 2014, the Company had a total workforce of 10,590 Distribution System Automation 60 county outreach programmes to deepen our engagement Automation of the distribution system entails installation of remotely serving 2,766,441 customers, translating to a customer-staff ratio of with various stakeholders, and to identify additional business 261:1. This is an improvement from the previous year’s ratio of 223:1. controlled switches on the 11kV and 33kV networks, enabling more opportunities. Further, we participated in 15 Agricultural Society of efficient location of faults and facilitating isolation and restoration of Kenya (ASK) trade fairs countrywide and attained 12 first positions, 8. Future Prospects power lines. There has been a significant reduction in the time taken 10 second positions and seven third positions in various competition In view of the current national development agenda which includes “We are well placed to meet the expectations to locate and resolve faults in areas already covered by the system categories. These engagements helped create awareness about our automation since the project commenced in Mombasa and Nairobi heavy investment in infrastructure and other projects; as well as the of the Government, Kenyans in general, our products and services, and to promote safety and conservation as in 2010. During the year, the Company signed a contract with Lucy discovery of oil in the country, Kenya is on the verge of unprecedented customers and our shareholders. This is because well as highlighting pertinent issues like vandalism, among others. Switchgear of the United Kingdom for implementation of the next social and economic development. This heightened level of activity in we have laid firm foundations to improve the phase of the Mombasa automation project in the 2014-2015 financial A comprehensive connectivity marketing campaign branded ‘Switch’ the country generally, and in the energy sector specifically, offers a system, and to serve our customers diligently and year. The phase will cover Mariakani, Mackinnon, Ukunda, Msambweni, was carried out through the media, billboards and activations to unique opportunity for the Company to grow its business significantly in the short and medium terms. It also places a great responsibility with integrity in line with our mission of powering Vipingo and Kilifi areas. mobilise prospective customers to apply, pay and get connected. on the Company to deliver on its mandate in order to support the people for better lives.” Electricity Metering Ease of Doing Business implementation and sustainability of the Government’s ambitious The electricity meter is the interface between the Company and its The Company continually engages with relevant stakeholders as it national plans and projects. The implementation of the 5000+MW 26 27 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 RIPOTI YA MKURUGENZI MKUU NA AFISA MKUU MTENDAJI RIPOTI YA MKURUGENZI MKUU NA AFISA MKUU MTENDAJI (Kuendelea) 1. Vidokezo vya 2013/2014 Mkondo huu unatarajiwa kuendelea kutokana na kuongezeka kwa wateja wapya; kuongezeka kwa shughuli za kiuchumi; kuongezeka Utangulizi kwa shughuli za kibiashara katika kaunti; na utekelezaji wa miradi Mtandao ambao unasambaza umeme kote nchini kutoka vituo mikubwa na Serikali kote nchini. vya uzalishaji kupitia mifumo ya usafirishaji na ugavi, ni miongoni mwa miundomsingi muhimu zaidi nchini. Mitambo thabiti ya Kama mnunuzi mkuu wa umeme unaozalishwa na Kenya Electricity umeme ambayo ni salama na ya kutegemewa, hivyo basi, ni Generating Company (KenGen) na Kampuni Huru za Uzalishaji Umeme (IPPs), Kampuni inatekeleza wajibu muhimu katika ujenzi muhimu kwa maendeleo ya kitaifa. Hii hasa ni muhimu wakati huu wa viwanda vipya vya uzalishaji, katika mipango ya umeme na ambapo Serikali imeanza safari ya kuzalisha MW5,000 zaidi kwa mazungumzo na kuandaa mikataba ya ununuzi wa umeme (PPAs) kipindi cha miezi 40 kuanzia Septemba 2013. kabla ya kuidhinishwa na Tume ya Usimamizi wa Kawi (ERC). Ama kweli, mpango huu unahitaji ukarabati mkubwa na upanuzi wa Kufuatia hali hii, wajibu wa Kampuni katika mpango wa kuzalisha mtandao uliopo wa usafirishaji na usambazaji umeme, pamoja na MW 5000 utakuwa kununua umeme kutoka viwanda vipya vya uzalishaji; pamoja na shughuli zingine za kuvumisha uzalishaji huo kuanzisha na kutekeleza mikakati inayolenga kuhakikisha umeme ili wengi waweze kuutumia umeme huo wa ziada. wa ziada unatumika. Ili kufikia malengo haya, katika kipindi cha matumizi ya fedha cha 2013/2014, Kampuni ilijizatiti kukarabati Ili kufanikisha hili, katika mwaka uliomalizika, Kampuni ilifanya na kupanua mtandao wake; pamoja na shughuli zetu muhimu za mazungumzo na kufanikiwa kukamilisha Mikataba mipya 12 ya uuzaji wa umeme. Nyanja zingine muhimu tulizoangazia katika Ununuzi wa Umeme (PPAs) na KenGen (MW280) kutoka Olkaria kipindi hicho ni, kuboresha utoaji huduma, hasa kwa wateja wetu IV (MW140) na Olkaria I vitengo 4 na 5 (MW140); Kenya Tea wakuu; kuongeza mauzo ya umeme na kupanua idadi ya wateja. Development Agency (KTDA) kwa uzalishaji umeme kutoka viwanda vidogo vya maji (MW8.5); na MW107 kutoka Quantum Mkakati wetu wa Kampuni na mpango wa kuzalisha MW5000 (MW37), Sosian (MW35) na Ormat (MW35. Viwanda hivyo vitatu Katika kutekeleza wajibu wake wa kusafirisha, kugawa na kuuza ni vya umememvuke ambavyo vimepatikana katika eneo la umeme kote nchini, Kampuni inaongozwa na mikakati na mipango Menengai, Nakuru. yake ya biashara. Miradi hii yote itachangia kuongeza uzalishaji wa umeme kwa Hii pia inaambatanishwa na mpango wa Serikali wa kuzalisha MW muda, na ni sehemu ya mpango wa mabadiliko ambapo Serikali 5,000; pamoja na lengo lake lingine la kuhakikisha asilimia 70 au inalenga kuongeza uzalishaji kutoka MW1664 mnamo 2013 zaidi ya raia wana umeme kufikia 2020 ikilinganishwa na asilimia hadi MW6,726 kufikia 2017 kupitia kuongeza kwa MW5,098. Hii The CEO, Jamii Bora Bank Ltd., Mr. Samuel Kimani (left) shakes hands with the MD & CEO, Dr. Ben Chumo, after the signing of a power connection loan inaonyesha ukuaji wa wastani wa asilimia 42, ikilinganishwa na 6.2 35 wakati huu. Katika mwaka uliomalizika, hivyo basi, Kampuni agreement. Looking on are the General Manager, Corporate Affairs & Company Secretary, Beatrice Meso, and the CEO, Rapid Communications Ltd., katika miaka ya hivi karibuni. ilishirikiana na washirika na washikadau wengine, ikiwemo Serikali, Mr. Anwar Hussein. katika kufanikisha malengo haya ya kitaifa. Mbali na kuongeza uzalishaji, suala lingine muhimu katika mpango wa MW5000 ni mabadiliko katika uzalishaji ili usitegemee Muundo mpya wa Kampuni Matokeo ya kibiashara jeki miundomsingi yote ya Kampuni kote nchini. Hii itafanikishwa maji pekee, hali inayotatizwa wakati mwingine na viwango vya Ili kusaidia mkakati mkuu wa Kampuni na juhudi zingine zinazonuia Wakati huo huo, Kampuni ilipata nyongeza ya faida ya asilimia 54.5 kwa kuongeza wahudumu na raslimali nyingine kwa muda mfupi, chini vya maji nyakati za kiangazi. Uzalishaji wa umemejoto, kufanikisha malengo hayo, Kampuni ilibuni na kuanzisha muundo kabla ya ushuru, nyongeza ya asilimia 9.8 katika mauzo na asilimia kufanyia marekebisho kwa kiwango kikubwa, ukarabati kwenye ambao unatokana na matumizi ya dizeli ambayo gharama yake mpya wa kampuni katika mwaka uliomalizika. Muundo huo ambao, 30.6 katika mapato ya umeme. Nyongeza ya mauzo ilitokana na sehemu muhimu za mitambo hiyo. inasukumiwa wateja, utapungua maradufu, na hivyo kupunguza utekelezaji wake utakamilika Desemba 2014, utazalisha shirika kuongezeka kwa wateja pamoja na juhudi kabambe za kuimarisha gharama ya umeme. Pindi tu viwanda hivyo vyote vipya vitaanza lenye muundo mdogo, bora zaidi na kuimarisha utoaji huduma. Mpango huo umesaidia kupunguza kupotea kwa umeme na kufanya kazi, vyanzo vya uzalishaji vitakuwa kama ifuatavyo: na kutunza mitambo katika mwaka huo, hali ambayo ilipunguza Kipengee muhimu katika muundo huu mpya ni kuwa huduma kutosheleza matarajio ya wateja katika maeneo ambapo kampeni marudio na muda wa umeme kupotea. Masuala mengine hiyo imetekelezwa. Kampeni ya Boresha Umeme ilianzishwa Aina 2013 2017 zote za Kampuni katika kila mojawapo ya kaunti zote 47 nchini yaliyochangia katika kukua kwa mauzo ya umeme ni hali nzuri ya Machi 2014 na kufikia Juni 2014, jumla ya Sh610 milioni zilikuwa (%) (%) kwanzia sasa zitasimamiwa na meneja, pamoja na wahudumu wa kibiashara, kuongezeka kwa uwezo wetu wa usambazaji umeme zimetumika chini ya mpango huo. Maji 46.3 11.7 kutosha na raslimali nyingine. kutosheleza mahitaji ya wateja. Mauzo ya umeme yanatarajiwa kuendelea kukua haraka kwa muda, kutokana na uzalishaji zaidi Maelezo kamili kuhusiana na hayo na nyanja zingine za utendakazi Kusambazia umeme Wakenya zaidi unaotarajiwa. na mafanikio katika kipindi cha 2013/2014, yanaangaziwa kwenye Joto (Dizeli na mafuta taa) 37.4 6.4 Kutokana na jitihada za wafanyikazi wetu na uzingatiaji mkubwa ripoti hii. Umememvuke 14.5 27.9 wa kazi yetu, tulisambazia umeme wateja wapya 443,254 katika Kampeni ya Boresha Umeme Uzalishaji umeme na joto 1.6 0.7 kipindi kilichomalizika. Hii ndio idadi kubwa zaidi ya wateja kuwahi Kampuni ilianza mpango wa kukarabati kwa haraka mtandao 2. Umeme wa Kutosha Nchi Upepo 0.3 9.4 kusambaziwa umeme katika kipindi kimoja cha matumizi ya wa usambazaji umeme ili kuimarisha utendakazi wa mitambo, Makaa 0 28.4 Matumizi ya umeme Kenya yanaendelea kuongezeka maradufu, fedha, na ilikuwa nyongeza ya asilimia 52 kutoka 2766241 mwaka huduma kwa wateja na mauzo ya umeme katika kipindi na katika kipindi tunachoangazia, kilele cha matumizi kiliongezeka Gesi asilia 0 1 5.5 uliotangulia na hivyo kufikisha jumla ya wateja kuwa 2,774,216 kilichomalizika. Mkakati huo wenye kichwa ‘Boresha Umeme kwa asilimia 8.4 kutoka MW1,354 mwaka uliopita, hadi MW 1,468. mnamo Juni, 2014. Viwandani,’ unahusisha kufanya ukarabati mkubwa na kupiga 28 29 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 RIPOTI YA MKURUGENZI MKUU NA AFISA MKUU MTENDAJI (Kuendelea) RIPOTI YA MKURUGENZI MKUU NA AFISA MKUU MTENDAJI (Kuendelea) Kulingana na mpango wa utekelezaji, katika mwaka uliomalizika, utekelezaji. Hii ni pamoja na ICT Park katika Konza, vituo vipya Mipango mingine ya ufadhili kwa wateja wapya wa umeme kuimarisha umeme unaotolewa kwa viwanda pamoja na wateja MW210.3 za umeme zilizalishwa kama ifuatavyo: vya reli, bandari mpya katika Lamu na Dongo Kundu, vituo vipya Ni changamoto kubwa kwa Wakenya wengi kupokea umeme. wengine wanaotumia umeme mwingi na wateja muhimu. Mwaka vya kusafirisha mafuta, miji mikuu mipya na viwanda vipya vya Ili kupunguza mzigo wa kulipia kwanza ndipo wasambaziwe huo, hivyo basi, Kampuni pia ilianza kuweka nyaya mbadala na UZALISHAJI chuma miongoni mwa mingine. Wateja wa kawaida na viwanda umeme, Kampuni imeshirikiana na taasisi tofauti za kifedha kutoa maalumu kwa wateja 200 wanaotumia umeme mwingi na wale KIWANDA (MW) AINA katika maeneo ya kaunti vinatarajiwa kutumia nyingine. mikopo ya malipo ya pole pole kwa wateja chini ya Mpango wa maalum ili kupunguza visa vya wao kukatiziwa umeme; na asilimia Kindaruma (KenGen) 24 Hydro StimaLoan. Kufikia sasa, wateja 50,000 wamenufaika na mpango 66 ya nyaya hizo zilikamilika. Vile vile, mitambo 78 ya kujibadilisha Kama sehemu ya kuongeza mahitaji zaidi, Kampuni imeanzisha huo, ikiwemo kupitia fedha kutokana na mapato ya Kampuni. Thika (IPP) 87 Thermal yenyewe ilinunuliwa ili kuwezesha wateja hawa wakuu kuhamishwa harakati za kuongeza idadi ya wateja wake kwa milioni moja kila Washirika wengine wanaotoa mikopo ni Benki za Equity, National Orpower 4 (IPP) 16 Umememvuke hadi laini mbadala wakati umeme unapotea, na vifaa 12 viliwekwa mwaka kuanzia kipindi cha matumizi ya fedha cha 2014/2015. Bank na Jamii Bora. Mipango mingine ya kupokea €30 milioni zaidi Olkaria IV (KenGen) 140 Umememvuke katika kipindi husika. Lengo hili ni sambamba na azima ya Kampuni ya ‘kuwasambazia kutoka kwa Agence Française de Développement (AFD), ambapo Wellheads (KenGen) 32.8 Umememvuke watu umeme kwa maisha bora’; na pia inaunga mkono moja kwa wateja 300,000 watanufaika kupitia KPLC StimaLoan inaendelea. Mradi wa Kufufua Sekta ya Kawi (ESRP) Triumph Power Diesel (IPP) 83 Thermal moja mpango wa Serikali kuongeza idadi ya raia walio na umeme Hii inafuatia kukamilika vyema kwa mpango wa majaribio mnamo Mradi wa ESRP wa US$22.5 milioni, ulioanza 2004, ulikamilika Gulf Power Diesel (IPP) 80 Thermal hadi zaidi ya asilimia 70 kufikia 2020. 2011 na hazina ya €4.5 milioni. katika mwaka unaotathminiwa. Mradi huo ulilenga kuimarisha na Kwale Sugar Cogeneration (IPP) 18 Umememvuke Baadhi ya mbinu ambazo Kampuni imetumia kuongeza idadi ya kusitawisha mfumo wa kueneza umeme ili kuimarisha utendakazi, Olkaria I units 4 & 5 (KenGen) 140 Geothermal Ruzuku ya Serikali ya Sh.2.7 bilioni wateja wake ni (i) kutumia kwa njia bora zaidi transfoma, ambayo tegemeo na ubora wa huduma za umeme; na pia kuzidisha Jumla 621 Kati ya Septemba na Novemba 2013, Wizara ya Fedha ilitoa Sh2.7 idadi ya watu waliofikiwa na umeme nchini. Katika kipindi inahusisha upanuzi wa laini zilizopo hadi maeneo ambayo bilioni kupunguza gharama za usambazaji umeme kwa wateja 3. Kuongeza Idadi ya Wakenya Waliounganishwa na Umeme yanaweza kutumika kama makazi ili kutumia ipasavyo mtandao wa kinachotathminiwa, miradi miwili ya thamani ya US$7.43 milioni walio kwenye umbali wa mita 600 kutoka kwa transfoma, na usambazaji; (ii) kuunda mtandao wa nyaya za kusafirisha umeme ilikamilishwa. Hii ni mradi wa nyaya za kupita chini ya sakafu wa Ili kutumia MW5000 zaidi za umeme zitakazozalishwa, mahitaji ambayo haina zaidi ya KVA 8 za umeme. Chini ya mpango huo, wa chini ili kupunguza gharama ya kuwasambazia wateja binafsi; Kipevu-Makande-Mbaraki (33kV) na Makande-Tononoka (33kV) yatapanda kwa asilimia 296 kutoka MW1,468 kufikia Juni wateja 51,208 walilipa Sh34,980 kwa wanaotumia waya moja na (iii) kuwaweka wateja kwenye makundi ili kupunguza gharama ya katika eneo la Pwani kwa gharama ya US$6.73 milioni, na ujenzi 2014, hadi takribani MW5,359 mnamo 2017; na matumizi ya Sh49,080 kwa wale watumiao nyaya tatu, huku tofauti kati ya kusambazia watu binafsi umeme; (iv) usambazaji umeme katika wa kituo kidogo cha Lessos cha kiwango cha 1x2.5MVA 33/11kV umeme yataongezeka kwa asilimia 306 kutoka GWh8,087 hadi kiwango hicho na gharama halisi ya usambazaji ikilipwa na hazina mitaa ya mabanda. katika eneo la North Rift kwa gharama ya US$0.7 milioni. GWh32,862 kufikia mwisho wa 2017. Inatarajiwa kuwa sehemu hiyo. kubwa ya umeme huo itatumika kwenye miradi ambayo itakuwepo Marekebisho ya sera mpya ya uunganishaji 4. Kuimarisha Mtandao Miradi iliyofadhiliwa na Serikali kote nchini, na ambayo imo kwenye awamu tofauti za maandalizi/ Katika mwaka uliomalizika, Kampuni ilibadilisha sehemu za Katika mwaka unaotathminiwa, Kampuni iliendelea kutekeleza sera yake kuhusu usambazaji umeme ya 2004 kwa lengo la Mtandao imara na thabiti ni muhimu kwa biashara yetu, na kila miradi ya ujenzi ya thamani ya US$23.38 milioni kwa niaba ya kuiambatanisha na mabadiliko ya hali ya kibiashara. Chini mwaka, Kampuni inahakikisha raslimali za kutosha zinatengwa Serikali, hii ikijumuisha ujenzi wa vituo vidogo na uwekaji nyaya Kulingana na Serikali, lengo lingine la mradi wa MW5000 ni hatimaye kupunguza ya sera hiyo iliyobadilishwa, Kampuni itapanua mtandao kuendesha na kutunza ipasavyo mtandao wetu. Ama kweli, maeneo mbalimbali. Hii ni pamoja na kituo kipya kidogo cha gharama ya umeme. Chati ifuatayo inaonyesha mkondo wa ada unaotarajiwa wake wa kusafirisha umeme wa kiwango kidogo taratibu Kampuni itatumia US$1.3 bilioni kufikia 2017, hasa kusaidia katika pindi mpango huo utakapotekelezwa. kiwango cha 1X10MVA 66/33kV na nyaya eneo la GSU Magadi; kwa kutumia nyaya fupi kwenye mtandao huo. Hatimaye, usafirishaji na usambazaji wa umeme wa ziada utakaozalishwa kituo kipya kidogo cha kiwango cha 1X45MVA 220/66kV na nyaya mkakati huu utawezesha wale wanaopania kupokea umeme chini ya mpango wa MW5000. kufanya hivyo kwa gharama ya chini. Hivyo basi, katika mwaka Isitoshe, Serikali imo mbioni kutafuta ufadhili wa uliomalizika, Kampuni ilitumia US$160milioni kutoka African Development Bank (ADB) Mpango wa MW5000 utatekelezwa kwa muda wa miezi 40 kuanzia Septemba 2013. Chati ifuatayo takribani Sh11 bilioni katika inaonyesha utaratibu wa utekelezaji, kiwango cha umeme kinachotarajiwa kutokana na vyanzo kugharimia usambazaji umeme katika maili ya mwisho, marekebisho na upanuzi wa tofauti vya umeme. ambao utatekelezwa kupitia mbinu hii. ‘Maili ya mwisho’ mtandao, ambao ulihusisha inarejelea sehemu ya mwisho ya uunganishaji kati ya kuweka mitambo ya kujiendesha, MPANGO WA SERIKALI WA 5000+MW watumiaji umeme na mitambo na taratibu zinazotumika kebo za ardhini, mitambo mipya kuwaunganisha. Katika hali hiyo, Kampuni inaendelea Muda kwa Miezi 6 12 18 24 30 36 40 Jumla (MW) na kubadilisha fito za miti na kutafuta mbinu mpya, ikiwemo ile ya kutumia waya moja zile za mawe. Hii ni pamoja na Maji 24 - - - - - - 24 (SWER), ambapo waya moja inatumika kusambaza umeme Sh610milioni zilizotumika mwaka Joto (Dizeli ya kiwango kwa wale wanaotumia kiwango kidogo cha umeme badala uliomalizika kwenye mradi wa wastani) 87 163 - - - - - 250 ya kutumia nyaya mbili kwa gharama ya juu. Boresha Umeme Viwandani katika Umememvuke 90 176 190 50 205 150 785 1,646 Industrial Area Nairobi, Busia, Upepo - - 20 60 300 250 - 630 Wakati huo huo, mradi mwingine wa US$16milioni Bungoma, sehemu za Mombasa ambao unalenga kuwasambazia umeme wakazi 40,000 Makaa - - - - 960 - 960 1,920 Kisiwani, Garissa, Meru, Namanga, kwenye mitaa ya mabanda kufikia Mei 2016 unaendelea Gesi Asilia - - - 700 350 - - 1,050 Karatina na Kajiado. kutekelezwa. Mradi huo unafadhiliwa kupitia mpango wa Uzalishaji umeme na joto - - 18 - - - - 18 Global Partnership on Output Based Assistance (GPOBA), Kando na juhudi za kuimarisha Jumla 201 339 228 810 1,815 400 1,745   ambao unalenga kutoa miundomsingi na huduma za kijamii kwa ujumla ubora wa umeme Ongezeko jumla (MW) 201 540 768 1,578 3,393 3,793 5,538   kwa maskini. Zaidi ya wateja 16,000 tayari wamepokea tunaosambaza maeneo umeme kufikia sasa. mbalimbali, tulitia mkazo 30 31 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 RIPOTI YA MKURUGENZI MKUU NA AFISA MKUU MTENDAJI (Kuendelea) RIPOTI YA MKURUGENZI MKUU NA AFISA MKUU MTENDAJI (Kuendelea) eneo la Kainuk; na kituo kipya kidogo cha kiwango cha 1X7.5MVA View, Majengo, Maseno, Chuo Kikuu cha Kabarak na Kipsaraman milioni. Wakati huo huo, vituo vipya vilivyomo nje ya mtandao Mawasiliano ya Redio katika maeneo ya magharibi mwa Kenya na 33/11kV na nyaya eneo la Lamu; na nyaya mbili mpya za 33kV za katika kanda ya Magharibi. Vituo vipya vidogo vitano na nyaya vya Takaba, Eldas na Rhamu vilikabidhiwa Kampuni na Rural North Rift kusambaza umeme eneo la Hindi, Lamu. zinaendelea kujengwa kanda ya Mount Kenya ikiwemo vituo Electrification Authority (REA), ilhali vituo vingine 13 vipya Mitambo ya mawasiliano na Magharibi mwa Kenya na North Rift vidogo vya kiwango cha 2x7.5MVA 33/11kV Gatundu na Kangema, viliendelea kujengwa. Serikali ina mipango ya kubadilisha vituo iliwekwa na kuzinduliwa kwa gharama ya Sh250 milioni katika Miradi iliyofadhiliwa na uuzaji wa haki za hisa kituo kidogo cha kiwango cha 1x23 MVA 66/11kV Chuo Kikuu hivyo vyote huru ili vitumie vyanzo tofauti vya kawi ili kupunguza kipindi kilichomalizika. Mitambo hiyo inaimarisha mawasiliano Mwaka huo, Kampuni ilitekeleza miradi mingine iliyofadhiliwa cha Jomo Kenyatta cha Sayansi na Teknolojia (JKUAT), sawa na gharama za mafuta kwa kuongeza MW10.2 kutokana na jua na kwa huduma za nyanjani kwa kuunganisha National Control na Shs.9.1 bilioni zilizotokana na uuzaji wa haki za hisa 2010 vituo vidogo Mwea (7.5 MVA 33/11kV), Tala (23MVA 66/11kV) na kW600 kutokana na upepo, kwa gharama ya Sh.3.44 bilioni. Centre na mashinani kupitia mtandao wa Kampuni wa Kebo za kwa kuwekeza Shs.2.82 bilioni katika miradi kadha mikubwa ya Kangema (2x7.5MVA 33/11kV). Kufikia sasa, vituo tisa tayari vimefanyiwa mabadiliko hayo. Faiba. Maeneo mapya yaliyounganishwa na mitambo hiyo katika kuimarisha mfumo wa usambazaji umeme. Miradi hiyo iliyokamilika magharibi mwa Kenya ni Kilgoris, Kehancha, Migori, Homabay, na kuanza kutumika ni pamoja na kituo kidogo cha kiwango cha Kampuni ya Kenya Electricity Transmission Company (KETRACO) Kupungua kwa uharibifu wa vifaa vya Kampuni Mfangano Island, Nyamira, Gucha, Bondo/Siaya, Bungoma, Kitale, 2X45MVA 66/11kV kuhudumia maeneo ya Thika Industrial, Nairobi inajenga laini mpya za kusafirisha umeme na vituo vidogo husika Uharibifu wa miundomsingi ni tatizo kote nchini, na Kampuni Kapenguria, Kericho, Bomet, Nandi Hills, Maragoli/Kakamega, City Square na Nairobi Eastleigh; kituo kidogo cha kiwango cha kwa ushirikiano na Kampuni, kwa gharama ya US$.41.2 milioni, pia imefanya jitihada zote kuzuia wizi na uharibifu wa mitambo Lessos, Kipkabus, Kabarnet na Marigat. 1X7.5MVA 33/11kV na nyaya Embu East; na kituo kidogo cha chini ya mpango wa KEEP. Katika mwaka uliomalizika, kulikuwa na ya ugavi umeme. Kutokana na juhudi hizo, visa vya uharibifu kiwango cha 7.5MVA 33/11kV na nyaya eneo la Ruring’u mjini shughuli za ujenzi zilizoendelea katika Kisii-Awendo, Kindaruma- vilipungua maradufu, huku visa 535 vikiripotiwa mwaka Kutumia kompyuta katika shughuli za biashara Nyeri. Mwingi-Garissa na Eldoret-Kitale kwenye laini za kubeba kV132 na uliopita ikilinganishwa na 989 mwaka uliotangulia. Mbinu Katika mwaka uliomalizika, afisi 75 katika maeneo ya Magharibi vituo vidogo husika. zilizotumika kuleta ufanisi huu ni pamoja na kuchomelea na mwa Kenya na North Rift yaliunganishwa na mtandao wetu wa Miradi iliyotekelezwa kwa fedha zilizokusanywa na kampuni kompyuta kwa kutumia mitambo ya redio ya Kampuni. Wakati Miradi mingine ya US$20.12 milioni iliyofadhiliwa na Shirika la kupandisha transfoma juu, kuhamisha transfoma kutoka sehemu Jumla ya Shs.2.4 bilioni zilizokusanywa na Kampuni zilitumiwa huo huo, tulianzisha mradi wa kuunganisha mifumo yote ya Benki ya Dunia International Finance Corporation (IFC) pia ilikuwa zinazokumbwa na visa vingi vya uharibifu hadi maeneo salama, na kuimarisha na kusitawisha mfumo katika kipindi husika. Kati ya Teknolojia ya Mawasiliano (ICT) kwenye bohari moja la data yaani inaendelea mwaka uliomalizika. kuimarisha doria kwa ushirikiano na polisi, jamii husika na maafisa hizo, Shs.921 milioni zilitumika kuimarisha vituo 10 vidogo Kisumu, Business Intelligence and Enterprise Data Warehouse. Mradi wa utawala wa maeneo hayo. Adhabu kali kufuatia kupitishwa kwa Rabai, Meru, Kenya Petroleum Refinery (KPRL), Kisii, na Kikuyu, Hii ni pamoja na kituo kidogo cha 15 MVA 132/33kV Maungu eneo huu unahusisha ununuzi wa mitambo mipya ya ICT na huduma miongoni mwa maeneo mengine. sheria zinazohusiana na uharibifu katika miaka ya hivi karibuni, la Pwani; 2x23 MVA 66/11kV GIS kituo kidogo cha Mamlaka katika ili kuboresha utendakazi wa wasimamizi kwa kutoa data ya pia imesaidia kupunguza visa hivyo. eneo la Nairobi, na 7.5MVA 33/11kV kituo kidogo cha Bahati, moja kwa moja inayoweza kupimwa kwa kutumia vigezo vikuu Pesa zingine Shs.1.062 bilioni zilitumiwa katika miradi ya Nakuru. 5. Ubunifu vya utendakazi (KPIs). Pamoja na hayo, ununuzi wa mitambo kuimarisha nyaya 27 za usambazaji umeme kote nchini. Nyaya hizo ni pamoja na Muthurwa 66kV mjini Nairobi; Malindi 33kV Huwa tunajizatiti kuibua mbinu mpya katika taratibu na huduma mipya ya SAP Enterprise Resource Planning System kusimamia Miradi mingine fedha, masuala ya wafanyikazi na uagizaji bidhaa kwa njia bora za kuingia kwenye nyaya kuu; kuweka nyaya mpya za kiwango zetu ili kuboresha utendakazi wetu; na kwa kufanya hivyo Miradi mingine inayopangiwa kufanywa na ambayo itadhibiti unaendelea. cha 33kV za kupitisha umeme hadi kituo kidogo cha Obote Road tunaongeza thamani kwa wenyehisa wetu. Zifuatazo ni baadhi ya nguvu za umeme na kuboresha viwango vya usambazaji umeme mjini Kisumu; ujenzi wa nyaya za kiwango cha 33kV za kuingia huduma na taratibu ambazo uimarishaji wake ulikuwa unaendelea kwa wateja ni pamoja na kukarabati kwa kituo kidogo cha Juja Biashara ya faiba optic kwenye nyaya kuu mjini Eldoret; kupitisha nyaya za 66kV chini katika kipindi kilichomalizika. Road 132/66kV katika National Control Centre. Mingine ni ujenzi Kampuni inamiliki zaidi ya kilomita 1,800 za kebo ya Faiba Optic ya sakafu kutoka kituo kidogo cha Parklands hadi kituo kidogo wa kituo kidogo cha 220/66kV katikati mwa jiji la Nairobi, kituo za kusafirisha umeme wa kiwango cha juu kote nchini hasa cha Cathedral mjini Nairobi; na ujenzi wa kituo cha kuunganisha Mitambo mipya ya SCADA kidogo cha 66/11kV Thika North na 132/33kV Kutus na (220/66kV) kubeba umeme huku zile za ziada zikikodishwa kwa mashirika mifumo cha Denyenye-Likoni (33kV) mjini Mombasa. Kampuni ilikamilisha ununuzi na upanuzi wa mitambo ya Thika Road. Miradi hii itatekelezwa kufikia 2017 kwa gharama ya ya mawasiliano ya simu Safaricom, Liquid Telecom, Jamii US$208 milioni. Supervisory Control and Data Acquisition System (Scada) Miradi mingine iliyotekelezwa kwa kutumia pesa hizo ni ujenzi wa Telecommunications, Indigo Telecom, Wananchi Group na Airtel. mwaka uliomalizika. Mitambo hiyo ya Scada ndio nguzo kuu nyaya mpya za umbali wa kilomita 17,075 za volteji ya kiwango Ujenzi wa mitambo mipya katika vituo vidogo 15 muhimu vya Katika kipindi kilichomalizika, kilomita 62.5 zaidi za kebo ya katika usimamizi wa operesheni za usambazaji umeme kwa kuwa cha chini na kadri, na kukamilika kwa miradi 38 mikubwa ya wateja usambazaji umeme pia ulianza mwaka uliomalizika katika maeneo faiba optic ziliongezwa kwenye mtandao wetu. Mtandao huo wa inaunganisha kituo kikuu cha kusimamia usambazaji huo National kwa gharama ya Shs.406.3 milioni. ya Magharibi, Mlima Kenya na Pwani ili kudhibiti nguvu za umeme faiba optic sasa unaunganisha Uganda katika kituo cha mpakani Control Centre na vituo vingine vidogo vya mashinani. Katika na kuimarisha ubora wa usambazaji umeme. Mradi wa kufidia cha Malaba, na Kampuni imetia sahihi Mkataba wa Maelewano Mradi wa kuzidisha idadi ya watu wanaopata umeme kenya mwaka uliomalizika, vituo 22 vipya na vya zamani viliunganishwa umemetendaji utagharimu US$.26.6 milioni. na Kampuni ya Uganda Electricity Transmission kuunganisha (KEEP), katika miradi inayofadhiliwa na Benki ya Dunia na mitambo hiyo, ilihali vingine 20 vitaunganishwa katika kipindi mtandao wa faiba wa nchi hiyo na ule wa Kenya ili kuwezesha Mradi huo wa US$132 milioni unaofadhiliwa na Benki ya Dunia cha matumizi ya fedha cha 2014/15. Usambazaji umeme nje ya mtandao usafirishaji wa data kupitia kebo za chini ya maji Mombasa. pamoja na Shirika la Kimataifa la Maendeleo (IDA) ulianza 2010 Vituo vya umeme nje ya mtandao uhudumu bila kutegemea Isitoshe, Kampuni inapanga kupanua mtandao wake wa Faiba huku lengo lake moja likiwa kuzidisha idadi ya watu wanaopata Ghala la vifaa vyetu mtandao mkuu wa umeme, na hutoa umeme kwa maelfu ya Optic kwa kaunti zote zilizo kwenye mtandao wa umeme kama umeme nchini. Kati ya pesa hizo, US$.77.03 milioni zilitengewa Shughuli ya kuanzisha mitambo ya kuweka ghala la vifaa (FDB) Wakenya katika maeneo ambayo yako mbali na mtandao. sehemu ya mkakati wake kupanua biashara yake. miradi 24 ikiwemo vituo vidogo vya kiwango cha 66/11kV na nyaya ilishirikisha matawi yote ya Kampuni na asilimia 80 ya mtandao Kwa sasa, kuna vituo 16 vya umeme vilivyo nje ya mtandao Githunguri, Dagoretti, Lukenya, Banana, Rironi, Lower Kabete, Villa ilikuwa imeshughulikiwa kufikia mwisho wa mwaka uliomalizika. Kuimarisha huduma kupitia njia mbadala za kutuma bili na mifumo vinavyosimamiwa na Kampuni vyenye uwezo wa kuzalisha Franca na Uplands katika kanda ya Nairobi; na kituo kipya kidogo Mitambo ya FDB hufuatilia mtandao wa umeme wa Kampuni kwa ya malipo MW 16.8. Vituo hivyo vimo Wajir, Elwak, Takaba, Mandera, Marsabit, cha kiwango cha 1x7.5MVA 33/11kV na nyaya Magumu. Ujenzi kutumia mbinu ya kisayansi ya Geographical Information System Huku idadi ya wateja wetu ikiendelea kuongezeka, imekuwa Moyale, Habaswein, Rhamu, Lodwar, Lokichoggio, Baragoi, Merti, wa kituo kidogo cha kiwango cha 2X23MVA 132/33kV Jomvu (GIS), ambayo inaharakisha utaratibu wa kuwaelezea wateja muhimu kwa Kampuni kuendelea kukumbatia mbinu mpya, za Mfangano, Mpeketoni, Hola na Eldas. na kituo kidogo cha kiwango cha 7.5MVA 33/11kV Mishomoroni wapya gharama ya kuwasambazia umeme na kuondoa haja ya kisasa, nafuu na bora zaidi za utoaji huduma. Kuhusiana na hilo, katika kanda ya Pwani pia unaendelea chini ya mpango huo. Katika mwaka uliomalizika, jenereta tano zaidi za dizeli zenye wahudumu wetu kutembelea wateja kama hao kujionea wenyewe. katika mwaka uliomalizika, Kampuni ilianzisha utaratibu wa kutoa Wakati huo huo, vituo vipya vidogo vinane vya kiwango cha uwezo wa kuzalisha jumla ya MVA 4.75 ziliwekwa katika vituo Kwa sasa, laini zote mpya na vituo vidogo vipya vinaunganishwa bili za wateja kwa njia ya baruapepe na ujumbe mfupi (SMS). Hii 7.5MVA 33/11kV pia vinajengwa Kibos, Ahero, Chepseon, Elgon vya umeme vya Wajir, Hola na Habaswein kwa gharama ya Sh359 kwenye FDB vinapozinduliwa. ilitokana na matokeo ya uchunguzi kuhusiana na utoshelezaji wa 32 33 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 RIPOTI YA MKURUGENZI MKUU NA AFISA MKUU MTENDAJI (Kuendelea) RIPOTI YA MKURUGENZI MKUU NA AFISA MKUU MTENDAJI (Kuendelea) wateja ambayo yalionyesha kuwa wateja wengi wangependa ya Kampuni yetu, na kila mwaka huwa tunatathmini utendakazi kVA25 yanashughulikiwa na maafisa maalumu wa uuzaji ili Tunatilia maanani nafasi hizi tele, na kutambua kuwa umeme kupokea bili zao kupitia njia hizi. Huduma hii pia inawawezesha wetu katika nyanja hizi. Utafiti kama huo hutuonyesha sehemu kuharakisha usambazaji huo wa umeme. ni mojawapo ya viungo muhimu katika maendeleo ya kitaifa. wateja kubaini hali ya maombi yao ya umeme kwa wateja wapya; zinazohitaji kurekebishwa na kutuwezesha kuunda mikakati ya Tunatambua pia changamoto zinazotokana na haja ya kuendelea na Kampuni kutuma taarifa muhimu kwa wateja kwa njia ifaayo. kutosheleza matarajio ya wateja na washikadau. 7. Wafanyikazi Wetu kuwekeza katika kuboresha mifumo ya usambazaji na ugavi Kwa kutumia mfumo wa dijitali wa kutuma bili, Kampuni inatarajia Tunategemea wafanyikazi waliohitimu na wenye ujuzi wa hali pamoja na huduma kwa wateja. kuokoa Sh600 milioni kwa mwaka. Katika mwaka uliomalizika, tulifanya uchunguzi kuhusu kuridhika ya juu kutekeleza majukumu ya Kampuni na kutimiza malengo kwa wateja wetu na sifa za shirika hili ili kubaini ni kwa kiwango Tunaweza kusema kwa ujasiri kuwa tuko kwenye nafasi nzuri ya yake kwa wateja na ya kibiashara. Sambamba na mabadiliko Wakati huo huo, kulikuwa na nyongeza ya mapato ya umeme gani Kampuni imeafikia malengo yake katika nyanja hizi muhimu. kutosheleza matarajio ya Serikali, Wakenya kwa jumla, wateja ya kibiashara na mageuzi, ni muhimu kwa Kampuni kuendelea yaliyopokelewa kupitia huduma za ukusanyaji mapato kupitia Tulipokea matokeo mazuri huku asilimia 71.2 ya wateja wakielezea wetu na wenyehisa wetu. Hii ni kwa sababu tumeweka misingi kuwapa mafunzo wafanyikazi wetu kuhusu njia bora zaidi za maajenti, huku asilimia 80 ya jumla ya mapato yakitokana na njia kuridhika kwao na sifa ya Kampuni. Jitihada zinazoendelea thabiti kuboresha mitambo, na kuhudumia wateja wetu kwa bidii kuendesha operesheni na kuendesha biashara. Kwa mintaarafu hizi. kuimarisha mtandao na huduma nyingine zinatarajiwa kuimarisha na kwa uadilifu sambamba na azima yetu ya ‘kutoa umeme kwa hii, katika mwaka uliomalizika, wafanyikazi 4,902 walihudhuria matokeo hayo hivi karibuni. watu kwa maisha bora’. Vituo hivyo vya ukusanyaji, vinavyofahamika kama EasyPay, mafunzo tofauti, warsha na makongamano nchini na ng’ambo, hutoa njia bora zaidi za malipo kwa wateja wetu. Easypay ina Ili kuimarisha uhusiano wetu na washikadau wengine wakuu, yaliyowasaidia kuboresha utendakazi wao na kufanikisha malengo Shukrani ushirikiano na huduma za kutuma pesa kama vile Airtel Money tuliandaa vikao vya pamoja na Kamati ya Bunge kuhusu Kawi, ya Kampuni. Ama kweli, tunajitolea kushiriki na washikadau wote Kwa niaba ya Wasimamizi wa Kampuni, ninawashukuru na M-Pesa; Postal Corporation of Kenya; Uchumi Supermarkets Vyombo vya Habari, Kenya Association of Hotelkeepers and maarifa yetu mengi, na mipango imekamilika ya kufufua na wenyehisa wetu, Serikali, wateja wetu na washirika wengine na benki kama vile Post Bank, National Bank, Barclays Bank, Caterers (KAHC) na makundi mengine husika. Vikao saba kujenga upya Taasisi ya Mafunzo ya Kampuni ili kuifanya taasisi wote na washikadau kwa kutuunga mkono katika mwaka wa Standard Chartered Bank, Family Bank, Cooperative Bank na vya pamoja viliandaliwa katika maeneo yote ya usimamizi wa kubwa ya kutoa mafunzo ya kiufundi ya kiwango cha juu kwa 2013/2014 hali ambayo ilichangia matokeo bora. Ningependa pia Equity Bank. Kampuni ambapo viwanda vikuu na wahusika wengine walialikwa. Wafanyikazi wa Kampuni, Wakenya na raia wengine. kushuruku Bodi ya Wakurugenzi kwa kutuunga mkono na kutupa Wakati wa mikutano hiyo, tulielezea zaidi kuhusu biashara yetu na mwelekeo, na wafanyikazi wetu kwa kujitolea kazini katika mwaka Baada ya kutumia raslimali nyingi katika wafanyikazi wetu, Kugeuza mfumo wa usambazaji kuwa wa kujiendesha mipango yetu. uliomalizika. Ninatazamia ushirikiano na kufanya kazi pamoja ili Kampuni imeweka mikakati ya kuhakikisha tunahifadhi wengi wa Kugeuza mfumo wa usambazaji kuwa wa kujiendesha inahusisha kupata matokeo hata bora zaidi katika mwaka unaokuja. Pia tulishiriki katika maonyesho na shoo nyingine katika sehemu wafanyikazi wetu ikiwemo mishahara mizuri, kupandishwa ngazi kuweka kwa swichi kwenye mitandao ya kV11 na kV33, na hivyo tofauti za nchi yakiwemo maonyesho 16 ya bidhaa, mikutano minne kwa wale waliohitimu na kuendelea kuimarisha mazingira ya kuwezesha kutambua kwa urahisi maeneo ya hitilafu na kurejesha mikuu ya wawekezaji na zaidi ya mikutano 60 ya uhamasisho kikazi. umeme. Kumekuwa na upungufu wa muda unaochukuliwa katika kaunti ili kuzidisha ushirikiano wetu na washikadau tofauti, kurekebisha umeme katika maeneo ambayo yamehudumiwa na Katika mwaka uliomalizika, shughuli mbalimbali za ustawi wa na kutambua nafasi zaidi za kibiashara. Vile vile, tulishiriki katika mtambo wa kujiendesha tangu mradi huo uanzishwe Mombasa wafanyikazi zilifanywa kuwapa motisha wafanyikazi, zikiwemo Maonyesho ya Kilimo nchini (ASK) 15 kote nchini na kushikilia na Nairobi mnamo 2010. Katika mwaka huo, Kampuni ilitia sahihi tuzo za wahudumu bora zaidi na wale waliohudumu kwa muda nafasi 12 za kwanza, 10 za pili na saba katika nafasi ya tatu kwenye mkataba na Lucy Switchgear ya Uingereza kutekeleza awamu mrefu. Kutokana na haya na shughuli zingine zenye lengo vitengo tofauti vya mashindano. Dkt. Ben Chumo, OGW nyingine ya mradi huo wa mitambo kujiendesha katika kipindi la kuwatia shime wafanyikazi, ripoti kuhusu kuridhika kwa cha matumizi ya fedha cha 2014-2015. Awamu hiyo itashirikisha wafanyikazi iliimarika hadi asilimia 62.3 ikilinganishwa na asilimia Mkurugenzi Mkuu na Afisa Mkuu Mtendaji Ushiriki huo ulisaidia kutoa uhamasisho kuhusu bidhaa na huduma Mariakani, Mackinnon, Ukunda, Msambweni, Vipingo na Kilifi. zetu na kupigia debe usalama na utunzaji mazingira pamoja na 60.24 mwaka uliotangulia. 22 Oktoba 2014 kuangazia kuhusu masuala muhimu kama vile uharibifu wa vifaa Kuweka mita za stima Kufikia Juni 30, 2014, Kampuni ilikuwa na jumla ya wafanyikazi vyetu miongoni mwa mengine. Kampeni kubwa ya kuvumisha Mita ya umeme ndio kiunganishi cha Kampuni na wateja wake. 10,590 wanaohudumia wateja 2,757,983, na hivyo uwiano wa 261:1 usambazaji umeme kwa wateja wapya inayofahamika kama Kwa sababu hii, tunaendelea kuimarisha njia za kutoa bili ili wa wafanyikazi na wateja. Kiwango hicho ni bora kuliko mwaka “Switch” iliendeshwa kupitia vyombo vya habari, mabango na kutosheleza wateja na wakati huo huo kutunza mapato ya uliopita ambapo uwiano ulikuwa 223:1. uamilifu ili kuwavutia wale wanaohitaji umeme kutuma maombi, Kampuni. Kwa mintaarafu hii, kufikia mwishoni mwa Juni , kulikuwa kulipa na kusambaziwa umeme. 8. Hali ya Baadaye na mita 676,788 za kulipa kabla ya kutumia zilizohudumia asilimia 25 za akaunti za wateja wa umeme. Siku sijazo, Kampuni inapanga Kutokana na ajenda ya kitaifa ya maendeleo ambayo inashirikisha Kuendesha biashara kwa urahisi kuweka mita za kulipia kabla ya kutumia hasa katika maeneo uwekezaji mkubwa katika miundomsingi na miradi mingine; Kampuni inaendelea kila wakati kushauriana na washikadau ya mashambani na wateja walio katika sehemu zisizofikika kwa pamoja na kupatikana kwa mafuta nchini, Kenya imo kwenye muhimu huku inapojaribu kupunguza muda wa kusambaza urahisi; na pia kutumia mfumo mseto unaohusisha mita za kulipia hatihati ya maendeleo makubwa ya kijamii na kiuchumi. Shughuli umeme kwa wateja wapya, huku tukilenga zaidi wawekezaji wa baada ya matumizi na zile za kujikatia katika maeneo ya miji na hizi nyingi nchini kwa jumla na hasa sekta ya afya, zinatoa fursa kibiashara na viwanda. Kufuatia mashauriano hayo, katika mwaka viunguni mwa miji. ya kipekee kwa Kampuni kukuza biashara yake pakubwa. Pia uliomalizika, utaratibu wa uunganishaji umeme uliimarishwa na inaweka mabegani mwa Kampuni wajibu mkubwa kutekeleza muda wa kusambaza umeme kupunguzwa. Kufuatia hayo, wateja Kampuni pia imeanzisha mipango ya kuweka mita za njia mbili majukumu yake ili kusaidia kufanikisha utekelezaji na udumishaji wanaohitaji kVA25 wanapokea umeme katika muda wa siku 30 katika makazi yanayotumia umeme mwingi. Inakadiriwa kuwa wa mipango na miradi mikuu ya Serikali. Utekelezaji wa Mpango na wale wanaohitaji chini ya kVA25 wanaunganishwa na umeme hii itawapa wateja fursa ya kusimamia vyema matumizi yao ya wa MW5000 kufikia 2017 hasa unatoa fursa nzuri kwa Kampuni katika muda wa siku 43 ikilinganishwa na siku 151 za hapo awali umeme; wakati huo huo ikitunza mapato ya Kampuni hata zaidi. kuimarisha matokeo yake kutokana na kuongezeka maradufu kwa kwa vitengo vyote viwili. idadi ya wateja watakaosambaziwa umeme na mauzo ya umeme 6. Huduma kwa Wateja na hivyo basi, matokeo ya Kampuni. Isitoshe, maafisa wa mauzo wamepelekwa katika National Kuimarisha uhusiano na wateja Investment Promotion Office kuwasaidia wale wanaoazimia Tunajitolea kuendelea kuimarisha huduma zetu kwa wateja na sifa kuwekeza nchini. Mbali na hayo, maombi yote ya umeme unaozidi 34 35 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 CORPORATE GOVERNANCE STATEMENT Good corporate governance is critical in ensuring security and conflict of interest; maintain confidentiality of information about the growth of shareholder value, and sustainability of Company business. Company; show commitment to, and attend to, Company business; Corporate governance entails establishment of structures, procedures and to respect fellow Directors. In addition, all management and processes to direct and control an organisation for enhanced employees are required to commit and adhere to the Company’s efficiency and competitiveness. It defines relationships among a Code of Conduct and Ethics. Company’s Board, shareholders, management and other stakeholders to ensure that the business remains viable and sustainable. The CONSTITUTION OF THE BOARD OF DIRECTORS Company’s Directors and Management remain committed to adoption The current Board has nine Directors including the Managing of corporate governance best practices. Director & Chief Executive Officer. Eight of the Directors including the Chairman are non-executive. The constitution of the Board is This statement outlines corporate governance principles, structures based on diversity of skills, requirements of the sector, age, value and practices in the Company. addition, gender, academic qualifications and experience necessary to help achieve the Company’s goals and objectives. The Directors’ PRINCIPLES AND GUIDELINES GOVERNING THE BOARD biographies are shown on pages 8 to 11. Being listed at the Nairobi Securities Exchange (NSE), the Company complies with the Capital Markets Authority Guidelines on Corporate At least one third of the Board members retire by rotation every year Governance for publicly quoted companies. In addition, the Directors and are eligible for re-election during the Annual General Meeting. are guided by the Board Manual, Charter, and Code of Conduct. We Any Director appointed by the Board during the year to fill a casual also ascribe to the 2003 Public Officers Ethics Act applicable to all vacancy is also required to retire and seek election at the next Annual public officers. The Board is also vested with powers and authority by General Meeting. relevant laws of Kenya and the Company’s Memorandum and Articles of Association. ROLE OF THE BOARD The Chairman is responsible for providing leadership to the Board These documents describe individual powers, duties, obligations, and ensuring sufficient information is provided in a timely manner Our technicians responsibilities, corrective actions and liabilities of Directors. to enable the Directors to discharge their duties, while the Managing working on the The Board Manual seeks to ensure effectiveness of Directors’ Director and Chief Executive Officer is responsible for the day to day contribution in the governance of the Company by facilitating full and management of the Company. power system in free exercise of independent judgment and professional competencies. Garissa The Manual specifically outlines governance arrangements applied in The responsibilities of the Board include: (i) setting short and the Company in the following areas, among others: long-term goals of the Company and strategic plans to achieve those goals; (ii) ensuring preparation of the annual and half-year i. Appointment of Directors and requirements for skills/gender mix financial statements; (iii) reviewing and approving annual budgets; and balance of independent and other Directors; (iv) setting and reviewing key performance indicators and ii. Recognition of, and commitment to, rights of shareholders; management performance targets; (v) ensuring the Company has adequate risk management internal control and compliance iii. Respective roles and functions of the Board, the Chairman, monitoring systems for business continuity; and (vi) working with Managing Director and CEO, and Company Secretary; Management to maximise shareholders’ value. iv. Conduct of Board meetings; v. Directors’ induction and development; The Board of Directors has full access to advice and services of the Company Secretary as well as timely and relevant Company vi. Directors’ duties, liabilities and code of conduct; information to discharge its duties effectively. Directors are also vii. Terms of reference for all Board committees; and empowered to seek independent professional advice on Company viii. Disclosure of material information to the public. business at its expense where necessary. The Board operates under rules that govern the conduct of individual BOARD WORK-PLAN AND MEETINGS Directors spelt out in the Directors’ Code of Conduct to enable The Board work-plan and schedule of meetings is prepared before them operate effectively and in the best interests of the Company. the start of each calendar year. Board meetings are held once a Directors are required to declare in writing any transaction which month or more often depending on the requirements of the business. would constitute a conflict of interest and to abstain from voting Directors receive adequate notice and detailed papers on issues to when such matters are being considered. Business transactions with be discussed in good time to enable them prepare for the meetings. all parties, Directors or their related parties, are carried out at arms’ During the year under review, the Board held a total of 14 meetings length. which were well attended as detailed below: The Code of Conduct requires Directors to: act honestly and in good faith; exercise duty with care and diligence; avoid and disclose 36 37 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 CORPORATE GOVERNANCE STATEMENT (Continued) CORPORATE GOVERNANCE STATEMENT (Continued) Board Meetings Attendance The Committee held 5 meetings as follows: The Committee held 3 meetings during the year under review as Information Communication and Technology (ICT) Committee shown in the table below: The Committee is responsible for reviewing the Company’s ICT policy, Attendance Attendance addressing issues of ICT security and internal controls, ensuring Name (14 meetings) Name (5 meetings) Attendance procurement of suitable systems to support the business and to Name (3 meetings) minimise risks related to ICT. Mr. E. Ochola – Chairman 14 Mr. J. Mwirigi – Chairman 5 Dr. B. Chumo – MD & CEO 14 Dr. B. Chumo – MD & CEO (by invitation) 5 Dr. T. Kilukumi – Chairperson 3 The Committee held 3 meetings during the year as shown in the table Eng. J. Njoroge 3 Mr. M. Kariuki 5 Dr. B. Chumo – MD & CEO 3 below: Dr. T. Kilukumi 14 Eng. P. Obath 4 Mr. J. Kariuki 3 Mr. M. Kariuki 14 Mr. E. Ochola 5 Mr. J. Mwirigi 2 Attendance Mr. J. Mwirigi 13 Mrs. J. Nashida 3 Name (3 meetings) Mr. J. Kariuki (Alternate to the PS, The National Strategy and Customer Service Committee Eng. I. Kiva 2 Mrs. J. Nashida – Chairperson 3 Treasury) 14 The role of the Strategy and Customer Service Committee is to advise the Board on strategies to enhance the Company’s performance. Procurement Oversight Committee Dr. B. Chumo – MD & CEO 3 Eng. I. Kiva (Alternate to the PS, Ministry of Duties of the Committee include review of the Company’s Five Year The Procurement Oversight Committee provides oversight role on Mr. M. Kariuki 3 Energy & Petroleum) 11 Strategic Plan, Annual Corporate Strategic Plan and Annual Corporate procurement carried out by the Company. The Committee reviews Dr. T. Kilukumi 3 Eng. P. Obath 11 Budget. The committee also monitors major Company projects under and considers the annual procurement plan for recommendation Mr. E. Ochola (by invitation) 1 Mrs. J. Nashida 14 implementation and directs strategies to improve customer service. to the Board, monitors the procurement by Management to ensure Mrs. F. Hirsi Mohamed (left in March 2014) 6 compliance with the approved annual procurement plan and the law, ACCOUNTABILITY AND AUDIT During the year, the Committee held 3 meetings as shown in the table and approves procurement of goods and services with a value of The Companies Act requires Directors to prepare financial statements BOARD COMMITTEES below: Shs.50 million and above, and other strategic procurements. for each financial year that give a true and fair view of the state of affairs There are six standing committees of the Board which assist it to discharge various business functions and responsibilities effectively. of the Company as at the end of the period. Directors are responsible Attendance The Committee held 13 meetings during the year under review as Ad hoc committees are constituted to deal with pertinent issues for ensuring that suitable accounting policies are consistently applied, Name (3 meetings) shown in the table below: whenever the need arises. Operations of each committee are defined supported by reasonable and prudent judgments and estimates; and in the terms of reference assigned by the Board. The Company Eng. P. Obath – Chairman 3 that applicable accounting standards are followed as well as the duty Attendance to exercise care, skill and diligence. Secretary is the secretary to all Board Committees except the Staff Dr. B. Chumo – MD & CEO 3 Name (13 meetings) and Remuneration Committee where the Managing Director & CEO is Mr. J. Kariuki 3 Mr. M. Kariuki – Chairman 13 The Directors are also responsible for ensuring that the Company the secretary. Eng. I. Kiva 2 Dr. B. Chumo – MD & CEO 13 keeps proper accounting records, which disclose with reasonable Mr. E. Ochola (by invitation) 1 accuracy at any time the financial position of the Company and The Board had the following committees during the year: Dr. T. Kilukumi 13 Mrs. F. Hirsi Mohamed (left in March 2014) 1 enable them to ensure that the financial statements comply with the Mr. J. Mwirigi 13 Audit Committee Companies Act. They also have general responsibility for the systems Staff and Remuneration Committee Mrs. J. Nashida (joined the committee in July 2014) - The Audit Committee is composed of four non-executive Directors. of internal control for safeguarding the assets of the Company and to The mandate of the Staff and Remuneration Committee includes the Mrs. F. Hirsi Mohamed (left in March 2014) 9 The Committee is mandated to safeguard Company assets and to prevent and detect fraud and other irregularities. ensure that adequate operating and control processes are in place. following: Power Purchase Agreements (PPA) Committee CAPACITY BUILDING FOR THE BOARD The Committee regularly invites the Managing Director & CEO, General ii. i. appointment of, and setting terms and conditions of service for, This committee reviews proposed power purchase agreements (PPAs) Directors attend training to equip them with the necessary skills Manager in charge of Finance and the Internal Audit Manager to its the Managing Director and CEO; with bulk power producers with a view to safeguarding the interests of and for effective discharge of their duties. The identified training meetings. When necessary, external auditors are invited to attend the ii. appointment, promotion and disciplinary issues of senior staff; the Company. The committee ensures cost-effective power purchase programmes are designed to impart knowledge suitable for meetings. contracts for the benefit of customers and shareholders. conducting business. In addition, an induction programme for new iii. staff remuneration; The Audit Committee is charged with the following responsibilities: Directors is conducted to enhance understanding of the nature of the iv. performance bonus for the Managing Director and staff; The Committee held 4 meetings during the year under review as i. business and operations of the Company. i. examining quarterly, half-year and annual financial statements; v. human resources policies and corporate organisation structure to shown in the table below: ii. discussing the audit plan with the external auditors before support the Company’s business; In the year under review, Directors attended various training seminars Attendance commencement of the annual audit exercise; vi. succession plan for senior staff; and and conferences on procurement, regulation, strategic management Name (4 meetings) and corporate governance, among others. iii. consideration of audit findings by the external auditors; vii. reviewing the performance of the staff pension scheme. Mrs. F. Hirsi Mohamed – Chairperson (left in March 2014) 2 iv. recommending to the Board engagement of external auditors Dr. B. Chumo – MD & CEO 4 DIRECTORS’ REMUNERATION and their audit fees; Directors’ fees are payable annually upon approval by shareholders Mrs. J. Nashida 3 v. reviewing the function, independence, operations and findings in an Annual General Meeting in accordance and within the Eng. I. Kiva 2 of the Internal Audit Department; reviewing risks affecting the approved limits set in the guidelines by the Government for all state Eng. P. Obath 3 Company and management strategies in addressing them; and corporations. Details of Directors’ remuneration are shown on page 87. Mr. J. Kariuki 3 It is proposed that each non-executive Director be paid a fee of vi. ensuring adherence with the code of ethics and integrity in Mr. E. Ochola (by invitation) 4 Shs.600,000 for the financial year ended 30th June 2014, or pro financial transactions of the Company. 38 39 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 CORPORATE GOVERNANCE STATEMENT (Continued) CORPORATE GOVERNANCE STATEMENT (Continued) rata for any part served thereof. In addition, Directors are entitled ETHICAL STANDARDS Executive Management Committee SHAREHOLDING PROFILES to sitting allowance for every meeting attended, lunch allowance The Board and Management are committed to ensuring that ethics The Executive Management Committee is chaired by the Managing The Company complies with all statutory requirements prescribed (in lieu of lunch being provided), accommodation allowance and and integrity remain at the core of everything we do. We recognise Director & CEO. The committee comprises heads of divisions. under the Companies Act, Capital Markets Authority (CMA) and mileage reimbursement where applicable, within limits set by that ethics management is key to the Company’s sustainability and The Committee meets at least twice a month to review performance, listing requirements at the Nairobi Securities Exchange (NSE). Government for state corporations. In addition, the Chairman is paid we are therefore continuously putting in place practices, systems and to consider policy and business issues including corporate a monthly honorarium. and processes to integrate ethics and to leverage the same for strategy, and also reviews papers before they are tabled to the Board competitive advantage. The Code of Ethics, which helps us to align our for consideration and approval. There were no Directors’ loans at any time during the year. conduct and practices with our values, has been revised in line with INTERNAL CONTROLS the Constitution and international benchmarks. Sustained training The Board is obligated to maintain a sound system of internal on the provisions of the Code of Ethics is conducted and integrity The top 20 major shareholders as at 31st August 2014 were as follows: controls to safeguard shareholders’ investments. These include programmes have been incorporated in all courses conducted at taking reasonable steps to ensure that the control and regulatory the Company’s Training School. All new staff undergo mandatory Ordinary 4% Pref. 7% Pref. systems are continuously maintained and monitored. Internal control induction training that includes ethical conduct. All management No. Name of Shareholder (Shs.2.50 each) (Shs.20 each) (Shs.20 each) Total Percentage systems are designed to meet the particular needs of the Company staff are required to sign the Code of Ethics and to adhere to its 1 Permanent Secretary, The National Treasury 977,641,695 656,808 193,531 978,492,034 50.086 and the risks to which it is exposed, with procedures to provide principles and provisions. effective internal financial control. It is desired that the systems in 2 Standard Chartered Nominees Ltd. 343,304,359 - - 343,304,359 17.573 place provide reasonable controls, but absolute assurance cannot be The Company’s whistle blowing facility, which is an anonymous 3 NSSF Board of Trustees 80,361,153 3,550 750 80,365,453 4.114 guaranteed. mechanism for receiving complaints and making follow-ups, was 4 CFC Stanbic Nominees Ltd. 73,214,711 48,308 - 73,263,019 3.750 DIRECTORS’ SHAREHOLDING active in the year under review. All reported cases are objectively 5 KCB Nominees Ltd. 48,002,152 69,584 800 48,072,536 2.461 None of the Directors owns more than one percent of the Company’s analysed, investigated and appropriate action taken. total issued shares in their individual capacity. 6 NIC Custodial Services Ltd. 41,687,543 - - 41,687,543 2.134 In the year under review, the Company’s ethics index improved 7 Equity Nominees Ltd. 27,041,184 - - 27,041,184 1.384 ENTERPRISE RISK MANAGEMENT from 4.0 to 3.84. This can be attributed to sustained training, risk 8 Co-op Bank Custody 21,618,536 -  -  21,618,536 1.107 Enterprise Risk Management (ERM) is a key component of the assessment and enforcement of corruption prevention. Company’s governance framework. During the review period, the 9 Jubilee Insurance Company Ltd. 20,215,387 59,828 17,160 20,292,375 1.039 convergence of governance risk and compliance continued in earnest RELATIONS WITH SHAREHOLDERS 10 Old Mutual Life Assurance Co. Ltd. 10,261,291 - - 10,261,291 0.525 globally, with more organisations embracing a combined framework The Company places great importance on maintaining cordial relations 11 Chase Bank Nominees Ltd. 8,646,856 - - 8,646,856 0.443 to manage governance, risk and compliance. with its shareholders and open communication is maintained through various channels. These include the Annual General Meeting (AGM). 12 Kenindia Assurance Co. Ltd. 7,278,349 - - 7,278,349 0.373 We continued to implement the ERM programme with update and All shareholders are entitled to attend and vote at the AGM whose 13 ICEA Lion Life Assurance Ltd. 6,508,952 221,386 19,272 6,749,610 0.345 tracking of key risks by both the Management and the Board, and notice is published at least 21 clear days before the meeting. We also we also reviewed and validated the efficiency of all the mitigations 14 CFC Life Assurance Company Ltd. 6,584,477 - - 6,584,477 0.337 publish our half-year and annual financial statements in the print in place. Emerging risks were captured to ensure alignment of the 15 Bai Co. (Mtius) Ltd. 5,276,800 -  -  5,276,800 0.270 media and through the Company website www.kplc.co.ke. The Annual corporate risks with the Company’s strategic direction. 16 Alimohamed Adam 4,762,521 277,264 57,617 5,097,402 0.261 Report and Financial Statements are also available for distribution In summary, the risk issues likely to affect the Company can be to shareholders on request. During the AGM, shareholders are given 17 Kenya Reinsurance Corporation Ltd. 4,957,385 16,156 - 4,973,541 0.255 grouped into three major categories: an opportunity to ask questions or seek clarification on any matter 18 Beechwood Overseas Ltd. 4,000,000 - - 4,000,000 0.205 iii. relating to the Company. In addition, the Company maintains an open i. Macro-economic risk issues: These are the issues likely to affect 19 Phoenix of East Africa Assurance Co. Ltd. 3,851,295 - - 3,851,295 0.197 door policy and shareholders have direct access to the Company growth opportunities in the next 12 months. Secretary and the Shares Registrar, who respond to queries and 20 Natbank Trustee & Investment Services Ltd. 2,391,262 - - 2,391,262 0.122 ii. Strategic issues: These are issues surrounding the Company’s correspondence on a wide range of issues. Sub-totals 1,697,605,908 1,352,884 289,130 1,699,247,922 86.980 strategy in pursuit of the objectives and business growth Other Shareholders 253,861,137 447,116 60,870 254,369,123 13.020 opportunities in the next 12 months. EXECUTIVE MANAGEMENT Under the new organisation structure, the Company’s business is Total Issued Shares 1,951,467,045 1,800,000 350,000 1,953,617,045 100 iii. Operational issues: Issues that may affect key operations of the Company as it seeks to execute its business strategy. structured under 10 functional divisions and nine administrative regions for efficient operation and management. The nine business Going forward, the Company is in the final stages of procuring a consultant through a World Bank facilitated process, to review the regions are: Nairobi North, Nairobi South, Nairobi West, Coast, West ERM framework and strengthen the risk management uptake within Kenya, Central Rift, North Rift, Mt. Kenya North and Mt. Kenya South. the Company. This project will be funded under the Kenya Electricity The divisions are Business Strategy; Infrastructure Development; Expansion Project (KEEP). Once on Board, the consultant will review Network Management; Customer Services; Supply Chain; Information all ERM activities and provide tools for setting the risk appetite, risk Communication Technology; Corporate Affairs and Company reporting, advise on ways of dealing with residual risks and build Secretary; Human Resource and Administration; Finance; and internal capacity for business continuity and sustainability. Regional Coordination. 40 41 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 CORPORATE GOVERNANCE STATEMENT (Continued) Shares distribution of Ordinary Shareholders as at 31st August 2014 No. of Range Shareholders Shares <1,000 11,649 3,949,679 1001–10,000 11,316 35,094,922 10,001–50,000 2,566 53,633,620 50,001–100,000 489 34,322,407 Over 100,000 803 1,824,466,417 Totals 26,823 1,951,467,045 Shares distribution of 4% Preference Shareholders as at 31st August 2014 No. of Range Shareholders Shares <1,000 364 66,295 1001–10,000 55 152,792 10,001–50,000 15 325,098 50,001–100,000 2 133,564 Over 100,000 3 1,122,251 Totals 439 1,800,000 Shares distribution of 7% Preference Shareholders as at 31st August 2014 No. of Range Shareholders Shares <1,000 82 22,019 1001–10,000 15 43,984 10,001–50,000 3 86,432 50,001–100,000 1 57,617 Over 100,000 1 139,948 Totals 102 350,000 Mr. Eliazar Ochola 22 October 2014 Laying the underground cable that takes power to Nairobi’s Central Business District from Parklands Sub-station 42 43 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 USIMAMIZI WA KAMPUNI USIMAMIZI WA KAMPUNI (Kuendelea) Uongozi bora wa kampuni ni muhimu katika kuhakikisha usalama na mgongano wa maslahi; kudumisha siri ya taarifa kuhusu Kampuni; Katika mwaka uliomalizika, Bodi iliandaa jumla ya mikutano 14 ambayo vii. Kuhakikisha uzingatiaji wa mwongozo wa maadili na uadilifu ukuaji wa faida kwa wenyehisa, na uendelevu wa biashara ya Kampuni. kuonyesha kujitolea kwao, na kuhudhuria shughuli za Kampuni; ilihudhuriwa vyema kama inavyoonyeshwa hapa chini: katika shughuli za kifedha za Kampuni. Usimamizi wa Kampuni unahusisha kuweka mipangilio, taratibu na na kuheshimu Wakurugenzi wenzake. Vile vile, wafanyikazi wote Kamati iliandaa mikutano mitano kama ifuatavyo: michakato kuongoza na kudhibiti shirika kuimarisha utendakazi na wanahitajika kufanya na kuzingatia Kanuni za Maadili za Kampuni. Mikutano ushindani. Unaelezea bayana uhusiano baina ya Bodi ya Kampuni, ya Bodi wenyehisa, wasimamizi na washikadau wengine kuhakikisha biashara UJUMUISHAJI WA BODI YA WAKURUGENZI Mahudhurio Jina (Mikutano 14) inashamiri na inaendelea. Wakurugenzi wa Kampuni na Wasimamizi Bodi kwa sasa inajumuisha Wakurugenzi 9 akiwemo Mkurugenzi Mkuu Jina (Mikutano 5) na Afisa Mkuu Mtendaji. Wanane kati ya wakurugenzi hao akiwemo Bw. E. Ochola – Chairman 14 hujitolea kutumia taratibu bora zaidi za usimamizi. Bw. J. Mwirigi – Mwenyekiti 5 Mwenyekiti hawana mamlaka. Ujumuishaji wa Bodi umetokana na Dkt. B. Chumo - MD&CEO 14 Dkt. B. Chumo - MD&CEO (kwa mwaliko) 5 Taarifa hii inafafanua kanuni za uongozi wa Kampuni, mipangilio na vipawa tofauti, mahitaji ya sekta hii, umri, kuongeza thamani, jinsia, Mha. J. Njoroge 3 Bw. M. Kariuki 5 taratibu katika Kampuni. mafunzo na tajiriba inayohitajika kufanikisha malengo ya Kampuni. Dkt. T. Kilukumi 14 Mha. P. Obath 4 Wasifu wa wakurugenzi unaonyeshwa kwenye ukurasa 8 - 11. Bw. M. Kariuki 14 KANUNI NA MWONGOZO UNAOSIMAMIA BODI Bw. J. Mwirigi 13 Bw. E. Ochola 5 Kwa kuwa imeorodheshwa kwenye Nairobi Securities Exchange Angalau theluthi moja ya wanachama wa Bodi hustaafu kwa mzunguko Bw. J. Kariuki (anabadilishana na Katibu, Hazina Kuu) 14 (NSE), Kampuni inazingatia mwongozo wa Capital Markets Authority kila mwaka lakini wanaweza kujitokeza kuchaguliwa tena kwenye Mha. I. Kiva (anabadilisha na Kaibu, MoEP) 11 Kamati ya Mkakati na Huduma kwa Wateja (CMA) kuhusu maongozi ya Kampuni kwa mashirika ya umma. Mkutano Mkuu wa Kila Mwaka. Mkurugenzi yeyote anayeteuliwa na Mha. P. Obath 11 Jukumu la Kamati ya Mkakati na Huduma kwa Wateja ni kushauri Bodi Isitoshe, Wakurugenzi wanaelekezwa na Mwongozo wa Bodi, Mkataba Bodi katikati ya mwaka kujaza nafasi iliyo wazi pia anahitajika kustaafu na Kanuni ya Maadili. Pia tunazingatia Sheria ya Maadili ya Maafisa wa na kupigiwa kura katika Mkutano Mkuu wa Kila Mwaka ujao. Bi. J. Nashida 14 kuhusu mikakati ya kuimarisha utendakazi wa Kampuni. Majukumu Umma 2003. Bodi pia imepewa nguvu na mamlaka na sheria tofauti Bi. F. Hirsi Mohamed (aliondoka Machi 2014) 6 ya Kamati hiyo ni pamoja na kutathmini Mkakati wa Kampuni wa za nchi na Katiba ya Kampuni. WAJIBU WA BODI Miaka Mitano, Mkakati wa Kampuni wa Kila Mwaka na Bajeti ya Mwenyekiti anawajibika kusimamia Bodi na kuhakikisha taarifa kamili Stakabadhi hizi huelezea mamlaka ya kila mmoja, majukumu, na inatolewa kwa wakati ufaao kuwezesha Wakurugenzi kutekeleza KAMATI ZA BODI Kampuni ya Kila Mwaka. Kamati hiyo pia inafuatilia miradi ya Kampuni wajibu na dhima ya Wakurugenzi. majukumu yao, ilhali Mkurugenzi Mkuu na Afisa Mkuu Mtendaji Kuna kamati sita za kudumu za Bodi ambazo huisaidia kutekeleza inayoendelea na kutoa mapendekezo kuhusu namna ya kuboresha anawajibika kuongoza shughuli za kila siku za Kampuni. majukumu yake na shughuli za kibiashara kikamilifu. Kamati za huduma kwa wateja. Mkataba wa Bodi unanuia kuhakikisha mchango ufaao wa Wakurugenzi muda zinabuniwa ili kushughulikia masuala muhimu kunapokuwa katika usimamizi wa Kampuni kwa kuwezesha kufanyika kwa maamuzi Majukumu ya Bodi ni pamoja na: (i) kuweka malengo ya muda mfupi na haja. Majukumu ya kila kamati yanafafanuliwa kwenye maelezo Katika mwaka uliomalizika, Kamati iliandaa mikutano mitatu kama huru na kutumia umahiri wa kila mmoja. na ya baadaye ya Kampuni na mikakati ya kufanikisha malengo hayo; ya utendakazi kama yanavyotolewa na Bodi. Katibu wa Kampuni inavyoonyeshwa kwenye jedwali iliyopo chini: (ii) kuhakikisha utayarishaji wa taarifa za kifedha za kila mwaka na ndiye karani wa Kamati zote za Bodi isipokuwa ile ya Wafanyikazi na Mkataba huo hasa unaelezea mipangilio ya Usimamizi inayotumika nusu mwaka; (iii) kutathmini na kuidhinisha bajeti za kila mwaka; Mishahara ambapo Mkurugenzi Mkuu na Afisa Mkuu Mtendaji ndiye Mahudhurio katika Kampuni katika nyanja zifuatazo, miongoni mwao: (iv) kutayarisha na kutathmini vigezo vikuu vya utendakazi na katibu. Jina (Mikutano 3) kuwawekea wasimamizi malengo; (v) kuhakikisha Kampuni ina i. Uteuzi wa Wakurugenzi na mahitaji ya vipawa/ mchanganyiko Mha. P. Obath – Mwenyekiti 3 mifumo ya kutosha ya kudhibiti hatari zozote na uzingatiaji wa Bodi ilikuwa na kamati zifuatazo mwaka uliomalizika: na usawa wa kijinsia na usawa wa Wakurugenzi wasio na Dkt. B. Chumo - MD&CEO 3 mbinu za uchunguzi kwa biashara kuendelea; na (vi) kushirikiana na mamlaka na Wakurugenzi wengine; Kamati ya Uhasibu Wasimamizi ili kuongeza thamani kwa wenyehisa. Bw. J. Kariuki 3 ii. Kutambua na kuheshimu haki za wenyehisa; Kamati ya Uhasibu inajumuisha Wakurugenzi wanne wasio na Mha. I. Kiva 2 iii. Majukumu tofauti na kazi za Bodi, Mwenyekiti, Mkurugenzi Bodi ya Wakurugenzi inapata wakati wowote ushauri na huduma za mamlaka. Kamati hiyo ina wajibu wa kulinda mali ya Kampuni na Bw. E. Ochola (kwa mwaliko) 1 Mkuu na Afisa Mkuu Mtendaji na Katibu wa Kampuni; Katibu wa Kampuni pamoja na taarifa zozote kuhusu Kampuni kwa kuhakikisha taratibu zifaazo za kuendesha na kusimamia mali hiyo Bi. F. Hirsi Mohamed (aliondoka Machi 2014) 1 wakati ufaao ili kutekeleza majukumu yake ipasavyo. Wakurugenzi zipo. Kamati hiyo mara kwa mara hualika Mkurugenzi Mkuu na iv. Kuendesha mikutano ya Bodi; pia wana mamlaka ya kutafuta ushauri wa kitaalamu kuhusiana na Afisa Mkuu Mtendaji, Meneja Mkuu anayesimamia Fedha na Meneja v. Mafunzo na ustawi wa Wakurugenzi; Kamati ya Wafanyikazi na Mishahara shughuli za Kampuni kwa gharama ya Kampuni. wa Uhasibu wa Ndani kwenye vikao vyake. Inapohitajika, wahasibu Majukumu ya Kamati ya Wafanyikazi na Mishahara ni pamoja na: vi. Majukumu, dhima na maadili ya Wakurugenzi; kutoka nje hualikwa kwenye mikutano hiyo. MPANGILIO WA KAZI WA BODI NA MIKUTANO ii. vii. Masharti ya Utendakazi kwa kamati zote za Bodi; na i. Uteuzi, utoaji wa masharti na kanuni za utendakazi kwa Mkurugenzi Mpangilio wa kazi ya Bodi na Ratiba ya Mikutano hutayarishwa kabla Kamati ya Uhasibu ina majukumu yafuatayo: viii. Ufichuzi wa taarifa zote muhimu kwa umma. ya mwaka kuanza. Mikutano ya Bodi inaandaliwa mara moja kwa i. Mkuu na Afisa Mkuu Mtendaji; Bodi inahudumu chini ya sheria zinazoongoza Wakurugenzi binafsi mwezi au zaidi ikitegemea mahitaji ya biashara. Wakurugenzi hupokea i. Kuchunguza kila baada ya miezi mitatu, taarifa za kifedha za nusu ii. Uteuzi, kupandisha cheo na kuadhibu wafanyikazi wa ngazi za juu; zilizofafanuliwa kwenye Kanuni za Maadili kuwawezesha kufanya kazi ilani ya kutosha na maelezo kamili kuhusu masuala yatakayojadiliwa mwaka na zile za kila mwaka; ipasavyo na kwa manufaa ya Kampuni. Wakurugenzi wanahitajika iii. mishahara ya wafanyikazi; mapema ili kuwawezesha kujiandaa ipasavyo kwa mikutano hiyo. ii. Kujadili mpango wa uhasibu na wahasibu kutoka nje kabla ya kutangaza kwa maandishi shughuli yoyote inayoweza kuleta kuanza kwa shughuli ya kila mwaka ya uhasibu; iv. Malipo ya bonasi kwa Mkurugenzi Mkuu na wafanyikazi; mgongano wa maslahi na kukoma kupiga kura wakati masuala kama iii. Kuchunguza matokeo ya wahasibu kutoka nje; v. Sera kuhusu wafanyikazi na muundo wa kampuni ili kufanikisha hayo yanajadiliwa. iv. Kupendekeza kwa Bodi uajiri wa wahasibu kutoka nje na malipo yao; biashara za Kampuni; Shughuli za kibiashara na wahusika wote, Wakurugenzi au wahusika vi. Mpango wa urithi kwa maafisa wakuu; na kufuatilia matokeo ya v. Kuchunguza utendakazi, uhuru, operesheni na matokeo ya Idara kama hao zinapasa kuepukwa. mpango wa malipo ya uzeeni wa wafanyikazi. ya Uhasibu wa Ndani; Kanuni za Maadili zinahitaji Wakurugenzi: kuhudumu kwa uaminifu vi. Kutathmini hatari zinazokumba Kampuni na mikakati ya vii. Kuchunguza matokeo ya mpango wa malipo ya uzeeni ya na kwa imani nzuri; kufanya kazi kwa uangalifu na bidii; na kutangaza wasimamizi kuzikabili; na wafanyikazi. 44 45 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 USIMAMIZI WA KAMPUNI (Kuendelea) USIMAMIZI WA KAMPUNI (Kuendelea) Kamati iliandaa vikao vitatu katika mwaka uliomalizika kama Kamati ya Teknolojia ya Mawasiliano (ICT) kikao walichohudhuria, marupurupu ya chakula cha mchana (badala zana za kutambua hatari, na kuripoti hatari hizo na kushauri njia za inavyoonyeshwa kwenye jedwali inayofuata: Kamati hii inawajibika kutathmini Sera ya Kampuni kuhusu ICT, ya chakula hicho kutolewa) marupurupu ya malazi na kurejeshewa kukabiliana na hatari zinazosalia na kutoa mafunzo kwa wahudumu kushughulikia masuala ya usalama wa ICT na vidhibiti vya ndani, pesa za usafiri inavyostahili kwa mujibu wa viwango vilivyowekwa na wetu ili kuendeleza na kudumisha biashara. Mahudhurio Jina (Mikutano 3) kuhakikisha ununuzi wa mitambo ifaayo kusaidia biashara na Serikali kwa mashirika ya umma. Pamoja na hayo, Mwenyekiti hulipwa kupunguza hatari zinazohusiana na ICT. honoraria kila mwisho wa mwezi. VIWANGO VYA MAADILI Dkt. T. Kilukumi – Mwenyekiti 3 Bodi na Wasimamizi wanajitolea kuhakikisha maadili na uadilifu Dkt. B. Chumo - MD&CEO 3 Kamati iliandaa mikutano mitatu mwaka uliomalizika kama ifuatavyo: Wakurugenzi hawakuwa na mikopo wakati wowote mwaka uliopita. zinaongoza kila tunachofanya. Tunatambua kuwa uzingatiaji wa Bw. J. Kariuki 3 maadili ni muhimu kwa uendelezaji wa Kampuni na hivyo tunaendelea Bw. J. Mwirigi 2 Mahudhurio VIDHIBITI VYA NDANI kuweka taratibu, mifumo na michakato ili kushirikisha maadili na Jina (Mikutano 3) Bodi inahitajika kuweka mfumo imara wa vidhibiti vya ndani kulinda mali kuitumia kwa manufaa yetu. Bi. J. Nashida 3 Mha. I. Kiva 2 Bi. J. Nashida – Mwenyekiti 3 ya wawekezaji. Hii ni pamoja na kuchukua hatua zifaazo kuhakikisha mifumo ya usimamizi na sheria zote zinadumishwa kila wakati na Kanuni za Maadili, ambazo zinatuwezesha kuambatanisha taratibu na Dkt. B. Chumo - MD&CEO 3 kufuatiliwa kwa karibu. Mifumo ya udhibiti wa ndani imeundwa kwa utendakazi wetu na maadili, zimebadilishwa kuambatana na Katiba na Kamati Inayosimamia Ununuzi Bw. M. Kariuki 3 namna ambayo inatosheleza mahitaji maalumu ya Kampuni na hatari vigezo bora zaidi vya kimataifa. Mafunzo ya mara kwa mara kuhusu Kamati inayosimamia ununuzi inatekeleza wajibu wa kusimamia Dkt. T. Kilukumi 3 vipengee vya Mwongozo wa Maadili hutolewa na mafunzo ya uadilifu ununuzi unaofanywa na Kampuni. Kamati inatathmini na kuchunguza zinazoweza kuikumba, pamoja na taratibu kuwezesha usimamizi bora Bw. E. Ochola (kwa mwaliko) 1 yameshirikishwa katika kozi zote zinazoendeshwa katika chuo cha mpango wa kila mwaka wa ununuzi ili kutoa mapendekezo kwa wa fedha. Inatarajiwa kuwa mifumo iliyowekwa itatoa udhibiti ufaao, lakini hakuna hakikisho kamili kuhusu ufanisi wake. mafunzo cha Kampuni. Wafanyikazi wote wapya hupokea mafunzo ya Bodi, hufuatilia ununuzi unaofanywa na Wasimamizi kuhakikisha UWAJIBIKAJI NA UHASIBU lazima ya kujifahamisha yanayoshirikisha maadili bora. Wasimamizi Wasimamizi wanazingatia sheria na mpango wa ununuzi wa kila Sheria ya Kampuni huwataka Wakurugenzi kuandaa taarifa za kifedha UMILIKI WA HISA WA WAKURUGENZI wote wanahitajika kutia sahihi Mwongozo wa Maadili na kuzingatia mwaka ulioidhinishwa, huidhinisha ununuzi wa bidhaa na huduma za kila kipindi cha matumizi ya fedha ambazo zinatoa taswira na hali Hakuna mkurugenzi yeyote binafsi aliye na zaidi ya asilimia moja ya kanuni na masharti yake. za thamani ya zaidi ya Sh50 milioni na zaidi na ununuzi mwingine kamili ya Kampuni kufikia mwisho wa kipindi hicho. Wakurugenzi muhimu. wanawajibika kuhakikisha sera zifaazo za uhasibu zinatumika kila jumla ya hisa zote za Kampuni. Mbinu ya Kampuni ya kuripoti ukiukaji wa maadili, ambayo ni njia ya wakati, pamoja na maamuzi yanayofaa pamoja na makadirio; na kupokea kisiri malalamishi na kufuatilia malalamishi hayo, ilifanya kazi Kamati iliandaa vikao 13 katika mwaka uliomalizika kama UDHIBITI WA HATARI ZA KIBIASHARA kwamba viwango vinavyostahili vya uhasibu vinazingatiwa pamoja katika mwaka uliomalizika. Kesi zote zilichunguzwa bila mapendeleo inavyoonyeshwa hapa chini: na wajibu wa kuwa waangalifu na makinifu. Udhibiti wa Hatari za Kibiashara (ERM) ni kiungo muhimu kwenye na hatua zifaazo kuchukuliwa. mfumo wa kiutawala wa Kampuni. Mahudhurio Wakurugenzi pia wanawajibika kuhakikisha Kampuni inaweka rekodi Katika mwaka uliomalizika, kipimo kuhusu maadili katika Kampuni Jina (Mikutano 13) Katika mwaka uliomalizika, ushirikishi wa udhibiti wa hatari na bora za uhasibu, ambazo zinaonyesha kila wakati hali halisi ya kifedha kiliimarika kutoka 4.0 hadi 3.84. Hii inatokana na mafunzo Bw. M. Kariuki – Mwenyekiti 13 ya Kampuni kuwawezesha kuhakikisha taarifa za kifedha zinazingatia uzingatiaji uliendelea kote duniani, huku mashirika zaidi yakikumbatia yanayoendelea, kukadiria hatari na kupambana na ufisadi. Dkt. B. Chumo - MD&CEO 13 Sheria ya Kampuni. Wanawajibika pia kuhakikisha mifumo na taratibu mfumo wa pamoja kusimamia uongozi, hatari na uzingatiaji. Dkt. T. Kilukumi 13 zinahifadhi vifaa vya Kampuni na kuzuia na kugundua ulaghai na UHUSIANO NA WENYEHISA Tuliendelea kutekeleza mpango wa ERM kwa kuimarisha na kufuatilia Bw. J. Mwirigi 13 makosa mengine. Kampuni inatilia umuhimu mkubwa katika kudumisha uhusiano hatari kuu na wasimamizi na Bodi, na pia tukatathmini na kukadiria Bi. J. Nashida (alijiunga na kamati Julai 2014) - mwema na wenyehisa wake na mawasiliano ya wazi yanadumishwa MAFUNZO KATIKA BODI ubora wa mikakati iliyopo ya kukabiliana na hatari hizo. Hatari Bi. F. Hirsi Mohamed (aliondoka Machi 2014) 9 kupitia njia tofauti. Hii ni pamoja na Mkutano Mkuu wa Kila Mwaka Wakurugenzi uhudhuria mafunzo kuwapa ujuzi unaohitajika na zinazoibuka zilitambuliwa ili kuambatanishwa na hatari zinazokumba (AGM). Wenyehisa wote wana haki ya kuhudhuria na kupiga kura kuwawezesha kutekeleza majukumu yao. Mipango ya mafunzo shirika pamoja na mwelekeo muhimu wa Kampuni. kwenye Mkutano Mkuu wa Kila Mwaka (AGM) ambao ilani yake Kamati ya Mikataba na Wazalishaji Huru wa Umeme (PPA) iliyotambuliwa inalenga kuwapa maarifa yanayohitajika kuendesha huchapishwa angalau siku 21 kabla ya mkutano huo. Pia huwa Kwa mukhtasari hatari zinazoweza kuathiri Kampuni zinaweza Kamati hii inachunguza mikataba inayopendekezwa ya ununuzi wa shughuli zao. Isitoshe, mpango wa mafunzo kwa Wakurugenzi tunachapisha Taarifa zetu za Kifedha na Ripoti ya Kila Mwaka kwenye umeme na wazalishaji wakubwa wa umeme kwa lengo la kulinda kuunganishwa kwenye makundi matatu makuu: wapya unaendeshwa kuimarisha ufahamu wao kuhusu biashara na vyombo vya habari na kupitia mtandao wa Kampuni www.kplc.co.ke. maslahi ya Kampuni. Kamati hii inahakikisha kuna kandarasi nafuu za operesheni za Kampuni. i. Hatari za kiuchumi: Haya ni masuala ambayo yanaweza kuathiri Ripoti ya Kila Mwaka na Taarifa za Kifedha pia zimo tayari kusambazwa ununuzi wa kawi kwa manufaa ya wateja na wenyehisa. ukuaji katika muda wa miezi 12. kwa wenyehisa wakizihitaji. Wakati wa Mkutano Mkuu wa Kila Mwaka, Kamati iliandaa mikutano 4 katika mwaka uliomalizika kama Katika mwaka uliomalizika, Wakurugenzi walihudhuria seminaa wenyehisa wanapewa fursa ya kuuliza maswali au kutafuta ufafanuzi inavyoonyeshwa kwenye jedwali ifuatayo: tofauti za mafunzo na makongamano kuhusu ununuzi bidhaa, sheria, ii. Masuala ya kimkakati: Haya ni masuala yanayohusiana na mkakati kuhusiana na suala lolote linalohusiana na Kampuni. Vile vile, Kampuni usimamizi na uongozi wa Kampuni miongoni mwa mengine. wa Kampuni wa kutekeleza malengo na ukuaji wa biashara katika inadumisha sera ya uwazi na wenyehisa wana uhuru wa kuwasiliana na Mahudhurio muda wa miezi 12 ijayo. Katibu wa Kampuni na Msajili wa Hisa ambao hujibu maswali yoyote Jina (Mikutano 4) MALIPO YA WAKURUGENZI iii. Masuala ya uendeshaji: Masuala yanayoweza kuathiri operesheni kuhusiana na masuala tofauti. Mshahara wa wakurugenzi hulipwa kila mwaka baada ya kupokea Bi. F. Hirsi Mohamed – Mwenyekiti (aliondoka muhimu za Kampuni huku inapotekeleza mkakati wake wa kibi- idhini ya wenyehisa kwenye Mkutano Mkuu wa kila Mwaka kwa Machi 2014) 2 WASIMAMIZI WAKUU mujibu wa viwango vinavyokubalika na kanuni zilizowekwa na ashara. Dkt. B. Chumo - MD&CEO 4 Chini ya mpangilio mpya wa Kampuni, biashara ya Kampuni Serikali kwa mashirika yote ya umma. Maelezo zaidi kuhusiana Kwenda mbele, Kampuni imo kwenye hatua za mwisho za kuteua imepangwa chini ya vitengo 10 na maeneo tisa ya usimamizi kwa Bi. J. Nashida 3 na mshahara wa Wakurugenzi yamo kwenye ukurasa 87. mshauri kupitia utaratibu unaofadhiliwa na Benki ya Dunia, ili utendakazi na usimamizi bora. Mha. I. Kiva 2 Inapendekezwa kuwa kila Mkurugenzi asiye na mamlaka alipewe kuchunguza upya mfumo wa ERM na kuimarisha uwezo wa Kampuni Mha. P. Obath 3 ujira wa Sh600,000 kwa Mwaka wa Kifedha uliomalizika Juni 30, wa kudhibiti Hatari katika Kampuni. Mradi huu utafadhiliwa chini ya Maeneo hayo tisa ya kibiashara ni: Nairobi North, Nairobi South, Bw. J. Kariuki 3 2014 au kwa usawa malipo yoyote yatakayotolewa. Pamoja na hayo, mpango wa upanuzi wa umeme nchini (KEEP). Pindi atakapoteuliwa, Nairobi West, Pwani, West Kenya, Central Rift, North Rift, Mt. Kenya Bw E. Ochola (kwa mwaliko) 4 Wakurugenzi wanastahili kulipwa marupurupu ya mikutano kwa kila mshauri huyo atachunguza upya shughuli zote za ERM na kutoa North na Mt. Kenya South. Vitengo hivyo ni Mkakati wa Biashara; 46 47 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 USIMAMIZI WA KAMPUNI (Kuendelea) USIMAMIZI WA KAMPUNI (Kuendelea) Miundomsingi; Usimamizi wa Mtandao; Huduma kwa Wateja; Ununuzi kutathmini utendakazi, na kuchunguza masuala ya sera na biashara Mgao wa wenyehisa wa kawaida kufikia Agosti 31, 2014 na Usafirishaji; Teknolojia ya Mawasiliano; Masuala ya Kampuni na ukiwemo mkakati wa Kampuni, na pia kuchunguza stakabadhi kabla Katibu wa Kampuni; Masuala ya Wafanyikazi na Usimamizi; Uratibu ya kuwasilishwa kwa Bodi kuangaliwa na kuidhinishwa. Kati ya Idadi ya wenyehisa Hisa wa Kanda; na Fedha. MAELEZO MAFUPI KUHUSU WENYEHISA <1,000 11,649 3,949,679 Kamati kuu ya Wasimamizi Kampuni inatimiza mahitaji yote ya kisheria yaliyoagizwa chini ya 1001–10,000 11,316 35,094,922 Kamati kuu ya Wasimamizi inaongozwa na Mkurugenzi Mkuu na Sheria ya Kampuni, Mamlaka ya Kusimamia Masoko ya Hisa (CMA) na Afisa Mkuu Mtendaji. Kamati hiyo inajumuisha wakuu wa vitengo mahitaji yote ya kuorodheshwa katika Nairobi Securities Exchange. 10,001–50,000 2,566 53,633,620 mbalimbali. Kamati hiyo hukutana angalau mara mbili kwa mwezi 50,001–100,000 489 34,322,407 Zaidi ya 100,000 803 1,824,466,417 Wenyehisa 20 wakuu kufikia Agosti 31, 2014 walikuwa kama ifuatavyo: Jumla 26,823 1,951,467,045 Asilimia 4 ya Asilimia 7 ya Mgao wa asilimia 4 ya wenyehisa za upendeleo kufikia Agosti 31, Kawaida upendeleo upendeleo 2014 (Sh. 2.50 (Sh. 20 (Sh. 20 Nambari Jina la Mwenyehisa kila moja) kila moja) kila moja) JUMLA Asilimia Idadi ya Kati ya Wenyehisa Hisa 1 Permanent Secretary, The National Treasury 977,641,695 656,808 193,531 978,492,034 50.086 <1,000 364 66,295 2 Standard Chartered Nominees Ltd. 343,304,359 - - 343,304,359 17.573 1001–10,000 55 152,792 3 NSSF Board of Trustees 80,361,153 3,550 750 80,365,453 4.114 10,001–50,000 15 325,098 4 CFC Stanbic Nominees Ltd. 73,214,711 48,308 - 73,263,019 3.750 50,001–100,000 2 133,564 5 KCB Nominees Ltd. 48,002,152 69,584 800 48,072,536 2.461 Zaidi ya 100,000 3 1,122,251 6 NIC Custodial Services Ltd. 41,687,543 - - 41,687,543 2.134 Jumla 439 1,800,000 7 Equity Nominees Ltd. 27,041,184 - - 27,041,184 1.384 8 Co-op Bank Custody 21,618,536 -  -  21,618,536 1.107 Ugavi wa asilimia 7 ya Wenyehisa za upendeleo kufikia Agosti 31, 2014 9 Jubilee Insurance Company Ltd. 20,215,387 59,828 17,160 20,292,375 1.039 Kati ya Idadi ya wenyehisa Hisa 10 Old Mutual Life Assurance Co. Ltd. 10,261,291 - - 10,261,291 0.525 <1,000 82 22,019 11 Chase Bank Nominees Ltd. 8,646,856 - - 8,646,856 0.443 1001–10,000 15 43,984 12 Kenindia Assurance Co. Ltd. 7,278,349 - - 7,278,349 0.373 10,001–50,000 3 86,432 13 ICEA Lion Life Assurance Ltd. 6,508,952 221,386 19,272 6,749,610 0.345 50,001–100,000 1 57,617 14 CFC Life Assurance Company Ltd. 6,584,477 - - 6,584,477 0.337 Zaidi ya 100,000 1 139,948 15 Bai Co. (Mtius) Ltd. 5,276,800 -  -  5,276,800 0.270 Jumla 102 350,000 16 Alimohamed Adam 4,762,521 277,264 57,617 5,097,402 0.261 17 Kenya Reinsurance Corporation Ltd. 4,957,385 16,156 - 4,973,541 0.255 18 Beechwood Overseas Ltd. 4,000,000 - - 4,000,000 0.205 19 Phoenix of East Africa Assurance Co. Ltd. 3,851,295 - - 3,851,295 0.197 20 Natbank Trustee & Investment Services Ltd. 2,391,262 - - 2,391,262 0.122 Bw. Eliazar Ochola JUMLA NDOGO 1,697,605,908 1,352,884 289,130 1,699,247,922 86.980 Oktoba 22 2014 Wenyehisa wengine 253,861,137 447,116 60,870 254,369,123 13.020 Jumla ya hisa zilizotolewa 1,951,467,045 1,800,000 350,000 1,953,617,045 100 48 49 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 CORP0RATE SOCIAL RESPONSIBILITY (CSR) SOCIAL RESPONSIBILITY AND SUSTAINABILITY We take our social and environmental Corporate Philanthropy responsibility seriously and support the The Company also supported various social From Top communities and the environment within welfare initiatives across the country with which we do our business. The Board and • Sofapaka FC players Shs.4.1 million. They include Shs.150,000 Management believe that Corporate Social celebrate after emerging towards the Day of the African Child; a winners of the 2014 Kenya Responsibility (CSR) programmes should sponsorship of Shs.500,000 to the Nairobi Power Charity Cup. be relevant, impactful, and sustainable. The County Christmas Season Decoration Board takes overall responsibility for the and Lighting; Shs.970,000 towards the • Staff participating in the continued development and implementation annual KWS Wheelbarrow County Governor’s Tree Fund appeal; of appropriate social and environmental Race in Naivasha during Shs.1 million to the Westgate Attack Victims the year. policies of the Company. Fund; and a sponsorship of Shs.1.5 million Belgut Women Empowerment Organisation. • The Company installed During the year under review, the Company new floodlights worth was involved in various CSR activities, some Shs.2.2 million at Nairobi’s The Company co-sponsored the first edition of which are outlined below. City Stadium with funds of the Energy Journalism Excellence Awards generated from the 2013 Environmental Conservation (EJEA) with a donation of Shs.3 million Charity Cup. The Company relies on the environment to promote media reporting standards on extensively for its business, including energy particularly on electricity matters. • Staff participating in water for electricity generation, since our The Company also contributed Shs.500,000 Kengen’s Great Dams transmission and distribution systems Race. to the annual Social Media and Advertising traverse the land. Since 2009, the Company (SOMA) Awards. • Models display the names has been involved in tree-planting of football teams which programmes in Kenya Forest Services (KFS) At the same time, the Company contributed participated in the 2014 sites in partnership with KFS and ActionAid Shs.1 million towards Joyful Women Charity Cup. Kenya. The forest sites include Ngong Hills, Organisation, an NGO that supports • On-going rehabilitation Mau Narok, Kuresoi, Cherangany, Cheptais in financial empowerment of women, and of Kawangware Sports Mount Elgon, Aberdares, Mount Kenya, Buda Shs.200,000 for social welfare activities in Ground sponsored by in Kwale, and Marsabit. During the year under Kasarani slums, Naivasha. the Company using review, we planted an additional 42,500 trees. funds raised in last year’s Health Charity Cup. Our employees also participated in a Beyond Zero Campaign, a maternal wheelbarrow race organised by Kenya • Young women in a fitness healthcare project targeting improvement Wildlife Service (KWS) at Hells Gate exercise at Dandora Social of mother and child health in all the Hall in Nairobi. The hall National Park towards which we donated counties, received a contribution of Sh.2 was rehabilitated during Shs.150,000 for environmental conservation million from the Company. We also donated the year with proceeds activities around geothermal generation Shs.824,500 to other charitable causes generated from the 2013 sites in Naivasha. Further, we participated Charity Cup. for creation of cancer and autism awareness, in the KenGen Great Dams Race to which as well as sponsorship of the 2014 Mater Heart we contributed Shs.2.2 million to support Run. environmental conservation initiatives around the Seven Forks Dams. Education In the education sector, the Company Kenya Power Charity Cup spent Shs.203,000 to purchase flags for During the year, the Company sponsored the second edition of the Kenya Power Charity 50 primary schools in various parts of the Cup which raised a total of Shs.9.5 million. country; Shs.205,590 to purchase text The money will be invested in community books for Moonlight Centre School in Kibera projects in various parts of the country. slums; Shs.100,000 to support children with In addition, the Company donated Shs.1.4 special needs at Zabibu Centre in Nairobi; million to support three other sporting and Shs.250,000 towards a regional youth events including the Special Olympics conference organised by Change Mind, Kenya, GDC’s Menengai Geothermal Half Change Future to promote entrepreneurship Marathon, and Kass Marathon. among youth. 50 51 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 REPORT OF THE DIRECTORS FOR THE YEAR ENDED 30 JUNE 2014 STATEMENT OF DIRECTORS’ RESPONSIBILITIES The Directors present their report together with the audited Financial Capital expenditure The Kenyan Companies Act requires the Directors to prepare Financial Statements for each financial year which give a true and fair view of the Statements of The Kenya Power & Lighting Company Limited During the year, a total of KShs.27,208 million (2013 – KShs.40,578 state of the Company as at the end of the financial year and of its operating results for that year. It also requires the Directors to ensure that the (the “Company”) for the year ended 30 June 2014 which show the million) was spent on property and equipment. The capital work- Company keeps proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company. They are state of the Company’s affairs. in-progress as at 30  June  2014 amounted to KShs.43,686 million also responsible for safeguarding the assets of the Company. (2013 - KShs.40,402 million). Principal activities The Directors are responsible for the preparation of Financial Statements that give a true and fair view in accordance with International Financial The core business of the Company continues to be the transmission, Directors Reporting Standards and the requirements of the Kenyan Companies Act, and for such internal controls as the Directors determine are necessary distribution and retail of electricity purchased in bulk from Kenya The current Board of Directors are as shown on pages 8–9. to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error. Electricity Generating Company Limited (KenGen), Independent Dr. Ben Chumo was confirmed as the Managing Director and CEO on Power Producers (IPPs), Uganda Electricity Transmission Company 7th January 2014. Eng. Joseph K Njoroge, Principal Secretary, Ministry The Directors accept responsibility for the annual Financial Statements, which have been prepared using appropriate accounting policies Limited (UETCL) and Tanzania Electric Supply Company Limited of Energy and Petroleum was appointed a Director on 2nd August supported by reasonable and prudent judgements and estimates, in conformity with International Financial Reporting Standards and in the (TANESCO). 2013. Dr. Kamau Thugge was appointed a Director on 2nd August 2013. manner required by the Kenyan Companies Act. The Directors are of the opinion that the Financial Statements give a true and fair view of the Mrs. Fatuma H. Mohamed resigned as a Director on 10th March 2014. state of the financial affairs of the Company and of its operating results. The Directors further accept responsibility for the maintenance of Results for the year accounting records which may be relied upon in the preparation of Financial Statements, as well as adequate systems of internal financial control. Auditors 30 June 2013 Nothing has come to the attention of the Directors to indicate that the Company will not remain a going concern for at least the next 12 months The Auditor-General is responsible for the statutory audit of the 30 June 2014 (Restated) from the date of this statement. KShs’000 KShs’000 Company’s books of account in accordance with Section 14 of the Public Audit Act, 2003. Section 39(1) of the Act empowers the Profit before taxation 10,198,427 6,570,497 Auditor-General to appoint other auditors to carry out the audit on his behalf. Taxation charge (3,742,193) (3,124,780) Accordingly, Deloitte & Touche were appointed to carry out the audit for the year ended 30 June 2014 and report to the Auditor-General. Profit for the year transferred to retained By order of the Board. Director Director Director earnings 6,456,234 3,445,717 22 October 2014 Dividends A dividend of KShs.1.93 million (2013 – KShs.1.93 million) is payable on the cumulative preference shares and has been recognised Beatrice Meso in the statement of profit or loss and comprehensive income under Company Secretary finance costs. 22 October 2014 Subject to the approval of the shareholders, the Directors recommend to members that in addition to the interim dividend of KShs.0.20 (2013 - KShs.Nil) per ordinary share, a final dividend of KShs.0.30 (2013 – KShs.Nil) per ordinary share be paid for the year ended 30 June 2014. 52 53 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 REPORT OF THE AUDITOR-GENERAL ON THE FINANCIAL STATEMENTS OF THE KENYA POWER AND LIGHTING COMPANY LIMITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2014 Report of the Financial Statements The accompanying financial statements of Kenya Power and Lighting Company Limited set out on pages 55 to 109 which comprise the statement 2014 2013 (Restated) of financial position as at 30th June 2014, the statement of Profit or Loss and other comprehensive income, statement of changes in equity and Note KShs’000 KShs’000 statement cash flows for the year then ended and a summary of significant accounting policies and other explanatory information have been audited on my behalf by Deloitte and Touché auditors appointed under Section 39 of the Public Audit Act, 2003. The auditors have duly reported REVENUE to me the results of their audit and on the basis of the report, I am satisfied that all the information and explanations which, to the best of my knowledge and belief, were necessary for the purpose of the audit were obtained. Electricity sales 7(a) 62,597,035 47,916,237 Foreign exchange adjustment - power purchase 7(b) 3,008,290 5,119,619 Directors’ Responsibility for the Financial Statements - Company operations 7(b) 1,413,910 4,102,470 The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Fuel costs adjustment 8(b) 38,376,479 31,771,300 Reporting Standards and for such internal control as Directors determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. 105,395,714 88,909,626 The Directors are also responsible for the submission of the financial statements to the Auditor-General in accordance with the provisions of Section 13 of the Public Audit Act, 2003. POWER PURCHASE COSTS Auditor-General’s Responsibility Non-fuel costs 8(a) 30,658,932 24,760,873 My responsibility is to express and an opinion on the financial statements based on the audit and report in accordance with the provisions Foreign exchange cost 7(b) 3,008,290 5,119,619 of Section of 15 of the Public Audit Act, 2003. The audit was conducted in accordance with the International Standards on Auditing. Those Fuel costs 8(b) 38,973,183 32,297,132 standards require compliance with ethical requirements and that the audit be planned and performed to obtain reasonable assurance about the financial statements are free from materials misstatement. 72,640,405 62,177,624 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether GROSS PROFIT due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair 32,755,309 26,732,002 presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting OPERATING EXPENSES policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements. Distribution 9(a) 6,538,057 5,633,960 Commercial services 9(b) 3,491,220 3,368,531 I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my audit opinion. Energy transmission 9(c) 2,254,303 2,133,110 Opinion Administration 9(d) 10,399,148 9,848,876 In my opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at 30th June 2014 and of its financial performance and its cash flows of the year then ended in accordance with International Financial Reporting Standards and comply 9(e) 22,682,728 20,984,477 with the Companies Act, Cap 486 of the Laws of Kenya. Report on Other Legal and Regulatory Requirements Operating income 10,072,581 5,747,525 As required by the Kenyan Companies Act, I report based on the audit, that; (i) I have obtained all the information and explanations, which, to the best of my knowledge and belief, were necessary for the purpose of the OTHER OPERATING INCOME 7(c) 4,914,486 3,192,085 audit; and (ii) In my opinion, proper books have been kept by the Company, so far as appears from the examination of those books; and OPERATING PROFIT 14,987,067 8,939,610 (iii) The Company’s statement of financial position and statement of comprehensive income are in agreement with the books of account. Interest income 11(a) 104,208 111,546 Finance costs 11(b) (4,008,832) (2,495,362) Net foreign exchange (losses)/gains 11(c) (884,016) 14,703 Edward R. O. Ouko Auditor-General PROFIT BEFORE TAX 12 10,198,427 6,570,497 22 October 2014 Income tax expense 13(a) (3,742,193) (3,124,780) PROFIT FOR THE YEAR 6,456,234 3,445,717 54 55 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2014 (Continued) STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2014 2014 2013 2014 2013 2012 (Restated) (Restated) (Restated) Note KShs’000 KShs’000 Note KShs’000 KShs’000 Kshs’000 ASSETS PROFIT FOR THE YEAR 6,456,234 3,445,717 NON-CURRENT ASSETS Property and equipment 16 162,713,968 142,443,465 105,671,370 Prepaid leases on land 17 131,598 131,653 131,709 OTHER COMPREHENSIVE INCOME: Intangible assets 18 1,410,044 258,716 169,520 Net retirement benefit asset 31 5,441,883 3,650,719 1,876,904 Items that will not be reclassified subsequently to profit or loss 169,697,493 146,484,553 107,849,503 Re-measurement of net defined benefit asset 31 1,414,030 1,627,658 CURRENT ASSETS Deferred tax relating to re-measurement of net Inventories 20 14,968,210 14,915,622 10,286,376 defined benefit asset 26 (424,209) (488,297) Trade and other receivables 21(a) 25,256,561 18,131,454 14,211,800 Tax recoverable 13(c) 11,156 20,486 - Investment in government securities - - 1,171,109 Short term deposits 22(a) 915,862 991,496 506,168 989,821 1,139,361 Bank and cash balances 22(b) 9,260,070 3,668,924 1,983,931 Items that may be reclassified subsequently to profit or loss: 50,411,859 37,727,982 28,159,384 Cumulative fair value loss reclassified to equity on disposal TOTAL ASSETS 220,109,352 184,212,535 136,008,887 of available for sale treasury bonds 19(a) - 127,397 EQUITY AND LIABILITIES CAPITAL AND RESERVES Ordinary share capital 23 4,878,667 4,878,667 4,878,667 OTHER COMPREHENSIVE INCOME 989,821 1,266,758 Share premium 24 22,021,219 22,021,219 22,021,219 Reserves 25 27,305,683 20,249,921 16,122,886 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 7,446,055 4,712,475 TOTAL EQUITY 54,205,569 47,149,807 43,022,772 DEFERRED INCOME 28 18,680,714 16,087,747 12,362,327 Basic earnings per share (KShs) 14 3.31 1.76 NON–CURRENT LIABILITIES Deferred tax 26 19,569,327 15,442,569 11,862,140 Trade and other payables 27(a) 25,621,572 23,727,961 15,823,485 Borrowings 29(a) 53,141,442 42,886,311 21,512,025 Diluted earnings per share (Kshs) 14 3.31 1.76 Preference shares 30 43,000 43,000 43,000 98,375,341 82,099,841 49,240,650 CURRENT LIABILITIES Trade and other payables 27(b) 26,648,209 22,464,988 21,990,795 Tax payable - - 37,886 Leave pay provision 32 1,090,955 1,070,460 989,378 Borrowings due within one year 29(a) 16,968,279 8,193,054 6,250,288 Dividends payable 33 573,541 388,826 425,184 Bank overdraft 22(b) 3,566,744 6,757,812 1,689,607 48,847,728 38,875,140 31,383,138 TOTAL EQUITY AND LIABILITIES 220,109,352 184,212,535 136,008,887 The Financial Statements on pages 55 to 109 were approved and authorised for issue by the Board of Directors on 22 October 2014 and were signed on its behalf by: Chairman Director Managing Director and CEO 56 57 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2014 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2014 Investments 2014 2013 Ordinary share Share revaluation Retained Note KShs’000 KShs’000 capital premium reserve earnings CASH FLOWS FROM OPERATING ACTIVITIES KShs’000 KShs’000 KShs’000 KShs’000 Total Cash generated from operations 34(a) 23,208,118 18,454,228 (Note 23(a)) (Note 24) (Note 19) (Note 25) KShs’000 Interest received 34(e) 104,893 165,852 Interest paid 34(d) (3,943,574) (2,623,356) At 1 July 2012 – as previously reported 4,878,667 22,021,219 (127,397) 16,739,064 43,511,553 Tax paid 13(d) (30,314) (91,020) Prior year adjustments: - Net retirement benefit asset* (note 41 (a)) - - - 1,313,833 1,313,833 - Deferred tax effect on capital contribution ** (note 41 (d)) - - - (1,802,614) (1,802,614) Cash generated from operating activities 19,339,123 15,905,704 At 1 July 2012 – as restated 4,878,667 22,021,219 (127,397) 16,250,283 43,022,772 CASH FLOWS FROM INVESTING ACTIVITIES Profit for the year - - - 3,445,717 3,445,717 Other comprehensive income for the year 127,397 1,139,361 1,266,758 Purchase of property and equipment 34(f) (26,650,847) (42,630,824) Purchase of intangible assets 18 (1,320,180) (131,095) Total comprehensive income for the year - - 127,397 4,585,078 4,712,475 Proceeds from disposal of property and equipment 20,201 77,137 Dividends paid – 2012 - - - (585,440) (585,440) Net cash used in investing activities (27,950,826) (42,684,782) At 30 June 2013 – as restated 4,878,667 22,021,219 - 20,249,921 47,149,807 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of treasury bond 19(a) - 1,244,821 At 1 July 2013 – as previously reported 4,878,667 22,021,219 - 20,505,789 47,405,675 Dividends paid 34(d) (207,508) (623,728) Prior year adjustments: Loan proceeds received 34(b) 25,100,876 29,923,542 - Net retirement benefit asset* (note 41 (a)) - - - 2,555,503 2,555,503 Repayment of amounts borrowed 34(b) (7,575,085) (6,663,441) - Deferred tax effect on capital contributions** (note 41 (d)) - - - (2,811,371) (2,811,371) At 1 July 2013 – as restated 4,878,667 22,021,219 - 20,249,921 47,149,807 Net cash generated from financing activities 17,318,283 23,881,194 Profit for the year - - - 6,456,234 6,456,234 Other comprehensive income for the year - - - 989,821 989,821 Increase/(decrease) in cash and cash equivalents 8,706,580 (2,897,884) Total comprehensive income for the year - - - 7,446,055 7,446,055 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR (2,097,392) 800,492 Interim dividends paid – 2014 - - - (390,293) (390,293) At 30 June 2014 4,878,667 22,021,219 - 27,305,683 54,205,569 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 34(c) 6,609,188 (2,097,392) *Prior year restatement relates to tax effect on the net retirement benefit asset as a result of implementation of IAS 19 (as revised in 2011) effective for annual periods beginning on or after 1 January 2014. The standard (IAS 19) changed the accounting for defined benefit plans and termination benefits. All actuarial gains and losses are recognised immediately through other comprehensive income in order for the net pension asset or liability recognised in the statement of financial position to reflect the full value of the plan deficit or surplus. See note 41(a). ** Prior year restatement relates to correction of errors in computing the tax effect on capital contribution as a result of the adoption of IFRIC 18 – Transfer of Assets from customers effective for periods beginning on or after 1 July 2009. See note 41(d) for additional details. 58 59 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS (Continued) 1. Reporting entity 2. Application of new and revised International Financial Reporting Standards (IFRS) (Continued) The Kenya Power and Lighting Company Limited, a public company domiciled in the Republic of Kenya, was incorporated on 6 January i. Relevant new standards and amendments to published standards effective for the year ended 30 June 2014 (Continued) 1922, as East Africa Power & Lighting Limited. The Company changed its name on 11 October 1983. The core business of the Company continues to be the transmission, distribution and retail of electricity purchased in bulk from Kenya Electricity Generating Company IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an Limited (KenGen), Independent Power Producers (IPPs), Uganda Electricity Transmission Company Limited (UETCL) and Tanzania Electric orderly transaction in the principal (or most advantageous) market at the measurement date under current market Supply Company Limited (TANESCO). The shares of the Company are listed on the Nairobi Securities Exchange. The Government of Kenya conditions. Fair value under IFRS 13 is an exit price regardless of whether that price is directly observable or estimated is the principal shareholder in the Company, holding a 50.1% equity interest. using another valuation technique. Also, IFRS 13 includes extensive disclosure requirements. IFRS 13 The address of the Company’s registered office is as follows:- Fair Value IFRS 13 requires prospective application from 1 January 2013. In addition, specific transitional provisions were Stima Plaza Measurement given to entities such that they need not apply the disclosure requirements set out in the Standard in comparative (Continued) information provided for periods before the initial application of the Standard. In accordance with these transitional Kolobot Road, Parklands P O Box 30099 – 00100, Nairobi provisions, the Company has not made any new disclosures required by IFRS 13 for the 2012 comparative period. 2. Application of new and revised International Financial Reporting Standards (IFRS) Other than the additional disclosures, the application of IFRS 13 has not had any material impact on the amounts recognised in the Financial Statements. i. Relevant new standards and amendments to published standards effective for the year ended 30 June 2014 The following new and revised IFRSs were effective in the current year and had no material impact on the amounts reported in these The Annual Improvements to IFRSs 2009 – 2011 have made a number of amendments to IFRSs. The amendments Financial Statements. that are relevant to the Company are the amendments to IAS 1 regarding when a statement of financial position as at the beginning of the preceding period (third statement of financial position) and the related notes are required to be presented. The amendments specify that a third statement of financial position is required when a) an entity Amendments Amendments applies an accounting policy retrospectively, or makes a retrospective restatement or reclassification of items in to IFRS 7 The amendments to IFRS 7 require entities to disclose information about rights of offset and related arrangements to IAS 1 its Financial Statements, and b) the retrospective application, restatement or reclassification has a material effect Disclosures (such as collateral posting requirements) for financial instruments under an enforceable master netting agreement Presentation on the information in the third statement of financial position. The amendments specify that related notes are not - Offsetting or similar arrangement. of Financial required to accompany the third statement of financial position. Financial Statements Assets and The application of the amendment had no effect on the Company’s Financial Statements as the Company did not (as part of In the current year, the Company has restated the financial statement position with the following;- Financial have any offsetting arrangements in place. the Annual Liabilities Improvements i. Retirement benefit asset as it adopted the revised IAS 19 standard, which has resulted in material effects on the to IFRSs 2009 information in the statement of financial position as at 1 July 2012. – 2011 Cycle New and issued in May ii. Restatement of prior year balances in connection to the correction of an error in the computation of tax effect In May 2011, a package of five standards in consolidation and joint arrangements, associates and disclosures was revised 2012) on the capital contribution as a result of the implementation of IFRIC 18 – Transfer of Assets from Customers in issued comprising IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of standards on the year 2010. Interests in Other Entities, IAS 27 (as revised in 2011) Separate Financial Statements and IAS 28 (as revised in 2011) consolidation Investments in Associates and Joint Ventures. Subsequent to the issue of these standards, amendment to IFRS 10, In accordance with the amendments to IAS 1, the Company has presented a third statement of financial position as at and joint IFRS 11 and IFRS 12 were issued to clarify certain guidance on first application of the standards. 1 July 2012 without the related notes except for the disclosure requirements relating to the impact on the application arrangements, associates and of the new standard. disclosures The application of these new standards has not had any impact on the disclosures or the amounts recognised in these Financial Statements as the Company does not have any joint arrangements or associates. IAS 19 (as revised in 2011) changes the accounting for defined benefit plans and termination benefits. The most significant change relates to the accounting for changes in defined benefit obligations and plan assets. The scope of IFRS 13 is broad; the fair value measurement requirements of IFRS 13 apply to both financial instrument The amendments require the recognition of changes in defined benefit obligations and in the fair value of plan assets items and non-financial instrument items for which other IFRSs require or permit fair value measurements and when they occur, and hence eliminate the ‘corridor approach’ permitted under the previous version of IAS 19 and IFRS 13 accelerate the recognition of past service costs. All actuarial gains and losses are recognised immediately through disclosures about fair value measurements, except for share-based payment transactions that are within the scope Fair Value of IFRS 2 Share-based Payment, leasing transactions that are within the scope of IAS 17 Leases, and measurements IAS 19 other comprehensive income in order for the net pension asset or liability recognised in the statement of financial Measurement that have some similarities to fair value but are not fair value (e.g. net realisable value for the purposes of measuring Employee position to reflect the full value of the plan deficit or surplus. Furthermore, the interest cost and expected return on inventories or value in use for impairment assessment purposes). Benefits (as plan assets used in the previous version of IAS 19 are replaced with a ‘net interest’ amount under IAS 19 (as revised revised in in 2011), which is calculated by applying the discount rate to the net defined benefit liability or asset. 2011) The above amendments are generally effective for annual periods beginning on or after 1 January 2013. Specific transitional provisions are applicable to first-time application of IAS 19 (as revised in 2011). The Company has applied the relevant transitional provisions and restated the comparative amounts on a retrospective basis. The impact of the changes on the total comprehensive income for the year, assets, liabilities and equity is analysed in note 41(a). 60 61 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 2. Application of new and revised International Financial Reporting IFRS 9 is effective for accounting periods beginning on 2. Application of new and revised International Financial Reporting measure certain short-term receivables and payables Standards (IFRS) (Continued) or after 1 January 2018. Standards (IFRS) (Continued) on an undiscounted basis (amends basis for iii. Impact of relevant new and amended standards and inter- conclusions only). ii. New and amended standards and interpretations in issue but The Directors of the Company do not anticipate that the pretations on the Financial Statements for the year ended 30 • IAS 16 and IAS 38 — Clarify that the gross amount of not yet effective in the year ended 30 June 2014 investment entities amendments will have any effect on June 2014 and future annual periods (Continued) property, plant and equipment is adjusted in a manner the Company’s Financial Statements as the Company is • IFRS 15, Revenue from Contracts with Customers (Continued) consistent with a revaluation of the carrying amount. New and Amendments to Effective for annual periods not an investment entity. Standards beginning on or after • IAS 24 — Clarify how payments to entities providing Guidance is provided on topics such as the point in management services are to be disclosed. IFRS 9 1 January 2018 • Amendments to IFRS 7 and IAS 32 Offsetting Financial which revenue is recognised, accounting for variable Amendments to IFRS 9 and Assets and Financial Liabilities and the related consideration, costs of fulfilling and obtaining a contract • Annual Improvements to IFRSs 2011 – 2013 Cycle IFRS 7 1 January 2015 disclosures and various related matters. New disclosures about Makes amendments to the following standards: Amendments to IFRS 10, IFRS The amendments to IAS 32 clarify existing application 12 and IAS 27 1 January 2014 revenue are also introduced. issues relating to the offset of financial assets • IFRS 1 — Clarify which versions of IFRSs can be used Amendments to IAS 32 1 January 2014 The Directors of the Company do not anticipate that the on initial adoption (amends basis for conclusions and financial liabilities requirements. Specifically, Amendments to IAS 36 1 January 2014 application of the standard will have a significant impact only). the amendments clarify the meaning of ‘currently has 1 January 2014 on the Company’s Financial Statements. • IFRS 3 — Clarify that IFRS 3 excludes from its a legally enforceable right of set-off’ and ‘simultaneous Amendments to IAS 39 1 January 2017 scope the accounting for the formation of a joint IFRS 15 realisation and settlement’. • Recoverable Amount Disclosures for Non-Financial arrangement in the Financial Statements of the joint iii. Impact of relevant new and amended standards and The amendments to IFRS 7 require entities to disclose Assets (Amendments to IAS 36) arrangement itself. interpretations on the Financial Statements for the year information about rights of offset and related Amends IAS 36 Impairment of Assets to reduce the • IFRS 13 — Clarify the scope of the portfolio exception ended 30 June 2014 and future annual periods arrangements (such as collateral posting requirements) circumstances in which the recoverable amount of assets in paragraph 52. for financial instruments under an enforceable master or cash-generating units is required to be disclosed, • IAS 40 — Clarifying the inter-relationship of IFRS 3 • IFRS 9, Financial Instruments (2014) netting agreement or similar arrangement. clarify the disclosures required, and to introduce an and IAS 40 when classifying property as investment IFRS 9 Financial Instruments (2014) is the finalised explicit requirement to disclose the discount rate used in property or owner-occupied property. The amendments to IFRS 7 are effective for annual version of IFRS 9 which contains accounting determining impairment (or reversals) where recoverable periods beginning on or after 1 January 2013 and interim These IFRS improvements are effective for accounting requirements for financial instruments, replacing IAS 39 amount (based on fair value less costs of disposal) is periods within those annual periods. The disclosures periods beginning on or after 1 January 2014. The Financial Instruments: Recognition and Measurement. determined using a present value technique. should be provided retrospectively for all comparative Directors of the Company do not anticipate that The standard contains requirements in the following areas: The Directors of the Company do not anticipate that the application of these improvements to IFRSs will periods. However, the amendments to IAS 32 are not • Classification and measurement. Financial assets are effective until annual periods beginning on or after the application of these amendments to IAS 36 will have a significant impact on the Company’s Financial classified by reference to the business model within 1 January 2014, with retrospective application required. have a significant impact on the Company’s Financial Statements. which they are held and their contractual cash flow Statements as the company does not have any significant The Directors anticipate that the application of these iv. Early adoption of standards characteristics. The 2014 version of IFRS 9 introduces financial assets and financial liabilities that qualify for the amendments to IAS 32 and IFRS 7 may result in more offset. The Company did not early-adopt new or amended a ‘fair value through other comprehensive income’ category for certain debt instruments. Financial disclosures being made with regard to offsetting financial standards. liabilities are classified in a similar manner to under IAS assets and financial liabilities in the future. • Annual Improvements to IFRSs 2010 – 2012 Cycle 39, however there are differences in the requirements The annual improvements 2010-2012 cycle makes applying to the measurement of an entity’s own • IFRS 15, Revenue from Contracts with Customers amendments to the following standards: credit risk. IFRS 15 provides a single, principles based five-step • IFRS 2 — Amends the definitions of ‘vesting condition’ • Impairment. The 2014 version of IFRS 9 introduces an model to be applied to all contracts with customers. and ‘market condition’ and adds definitions for ‘expected credit loss’ model for the measurement of The five steps in the model are as follows: ‘performance condition’ and ‘service condition’. the impairment of financial assets, so it is no longer • Identify the contract with the customer; • IFRS 3 — Require contingent consideration that is necessary for a credit event to have occurred before classified as an asset or a liability to be measured at a credit loss is recognised • Identify the performance obligations in the contract; fair value at each reporting date. • Hedge accounting. Introduces a new hedge • Determine the transaction price; • IFRS 8 — Requires disclosure of the judgements accounting model that is designed to be more closely • Allocate the transaction price to the performance made by management in applying the aggregation aligned with how entities undertake risk management obligations in the contracts; criteria to operating segments, clarify reconciliations activities when hedging financial and non-financial of segment assets only required if segment assets are • Recognise revenue when (or as) the entity satisfies a risk exposures reported regularly. performance obligation. • De-recognition. The requirements for the • IFRS 13 — Clarify that issuing IFRS 13 and amending de-recognition of financial assets and liabilities are IFRS 9 and IAS 39 did not remove the ability to carried forward from IAS 39. 62 63 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 3. Accounting policies bank deposits and investment in securities. Finance 3. Accounting policies (Continued) ii. Capital work in progress revenue is recognised as it accrues in profit or loss, 3.3 Summary of significant accounting policies (Continued) Capital work-in-progress is included under property 3.1 Statement of compliance using the effective yield method. (d) Tangible assets (Continued) and equipment and comprises costs incurred on The Financial Statements have been prepared in accordance ii. Dividends (i) Property and equipment (continued) ongoing capital works relating to both customer and with International Financial Reporting Standards (IFRS). Dividend income is recognised when the Company’s internal works. These costs include material, transport For the Kenyan Companies Act reporting purposes, in these right to receive dividend as a shareholder is No depreciation is charged on freehold land. and labour cost incurred. Financial Statements, the balance sheet is represented by/is established. Depreciation on other assets is calculated to equivalent to the statement of financial position and the profit write down their cost to their residual values, on a (e) Intangible assets iii. Rental income and loss account is equivalent to the statement of profit or loss. straight-line basis, over their expected useful lives. Intangible assets acquired separately are measured on Rental income is recognised on a straight line basis initial recognition at cost. Following initial recognition, The depreciation rates used are as follows: 3.2 Basis of preparation over the lease term. intangible assets are carried at cost less any accumulated The Financial Statements have been prepared on a historical iv. Deferred income The greater of 2% and the amortisation and any accumulated impairment losses. cost basis, except for the measurement at revaluation amounts Buildings unexpired period of the lease Intangible assets with finite lives are amortised over This represents capital contributions received of marketable securities and financial instruments at fair the useful economic life and assessed for impairment from customers. Contributions paid by electricity Transmission and value, impaired assets at their recoverable amounts and any whenever there is an indication that the intangible customers relating to the construction of regular distribution lines 2.5 – 20% actuarially determined assets/liabilities at their present value. asset may be impaired. The amortisation period and distribution assets and funding for electrification are Machinery 2.85 – 6.66% The principal accounting policies are set out below:- the amortisation method for an intangible asset with a credited to profit or loss as part of other income on Motor vehicles 25% a straight-line basis over the expected useful lives of Furniture, equipment finite useful life is reviewed at least at each financial year 3.3 Summary of significant accounting policies end. Changes in the expected useful life or the expected the related assets. and fittings 6.66 – 20% (a) Revenue Computers and pattern of consumption of future economic benefits v. Fibre optic income photocopiers 30% embodied in the asset is accounted for by changing Revenue is recognised to the extent that it is probable This represents income from the lease of Company the amortisation period or method, as appropriate, that the economic benefits will flow to the Company fibre optic cable lines to third parties. The revenue and are treated as changes in accounting estimates. and the revenue can be reliably measured. Revenue is from leasing the transmission lines is recognised on a The amortisation expense on intangible assets with finite recognised at the fair value of consideration received The asset’s residual values, estimated useful lives and straight line basis over the lease term. lives is recognised in the profit or loss in the expense or receivable taking into account contractually methods of depreciation are reviewed at the end of defined terms of payment and excluding taxes or duty. vi. Other operating income each reporting period with the effect of any changes category consistent with the function of the intangible The following specific recognition criteria must be met asset. Other income is recognised when significant risks and in estimate accounted for prospectively. before revenue is recognised:- rewards of ownership are transferred to the recipient An intangible asset is derecognised on disposal, or when An item of property and equipment is derecognised i. Electricity sales and the amounts of revenue can be measured reliably. no future economic benefits are expected from use or upon disposal or when no future economic benefits disposal. Gains or losses arising from unforeseeable of Electricity revenue is recognised when electricity (c) Inventories are expected from its use or disposal. Any gain or loss such intangible assets are measured as the difference is consumed by the user and is stated net of Value arising from the recognition of an item of property Inventories are stated at the lower of cost and net between the net disposal proceeds and the carrying Added Tax and other Government levies. and equipment (calculated as the difference between realisable value after due regard for obsolete and amount of the asset and are recognised in profit or loss ii. Fuel cost recoveries slow moving stocks. The cost of inventories comprises the net disposal proceeds and the carrying amount when the asset is derecognised. Fuel costs are recognized at the actual amounts purchase price, import duties, transport and handling of the asset at the disposal date) is included in profit Currently, intangible assets comprise software and have charged to the Company by the suppliers of power. charges and is determined on a weighted average price. or loss for the year. This does not apply to assets an estimated useful life of eight years. Correspondingly, fuel costs recoveries are recognized acquired by the Company on sale and leaseback as the actual amounts consumed by the customers (d) Tangible assets transactions. (f) Taxation and billable to recover the fuel cost. i. Property and equipment Properties in the course of construction for production, Income tax expense represents the sum of the tax iii. Foreign exchange recoveries All property and equipment is stated at cost supply or administrative purposes are carried at cost currently payable and deferred tax. less accumulated depreciation and accumulated Foreign exchange payments, arising from exchange less any recognised impairment loss. Cost includes i. Current tax impairment losses. Such cost includes the cost of rate differences not factored in the retail tariffs, are professional fees and for qualifying assets, borrowing replacing part of the property and equipment when The tax currently payable is based on taxable profit for recognized and charged to the consumers of power costs capitalised in accordance with the Company’s that cost is incurred, if the recognition criteria are the year. Taxable profit differs from profit as reported to recover the fluctuations in the foreign exchange accounting policy. Such properties are classified met. Likewise, when a major inspection is performed, in the profit or loss because of items of income or rates. to the appropriate categories of property and its cost is recognised in the carrying amount of the expense that are taxable or deductible in other property and equipment as a replacement if the equipment when completed and ready for intended years and items that are never taxable or deductible. (b) Other income recognition criteria are satisfied. All other repair and use. Depreciation of these assets, on the same basis The Company’s liability for current tax is calculated i. Finance revenue maintenance costs are recognised in profit or loss as other property assets, commences when the assets using tax rates that have been enacted or substantively Finance revenue comprises interest receivable from as incurred. are ready for their intended use. enacted by the end of the reporting period. 64 65 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 3. Accounting policies (Continued) (g) Leases 3. Accounting policies (Continued) intent and ability to hold to maturity. Subsequent to 3.3 Summary of significant accounting policies (Continued) The determination of whether an arrangement is, 3.3 Summary of significant accounting policies (Continued) initial recognition, held-to-maturity investments are or contains a lease is based on the substance of the measured at amortised cost using the effective interest (e) Taxation (Continued) (h) Foreign currencies (Continued) arrangement at inception date on whether the fulfilment method less any impairment. ii. Deferred tax of the arrangement is dependent on the use of a specific Gains and losses on exchange are dealt with in the profit (iii) Available-for-sale financial assets asset or assets or the arrangement conveys a right to use or loss. Deferred tax is recognised on temporary differences Available-for-sale (AFS) financial assets are non- between the carrying amounts of assets and liabilities the asset. Non-monetary items that are measured in terms of derivatives that are either designated as available-for- in the Financial Statements and the corresponding For arrangements entered into prior to 1 January 2005, historical cost in a foreign currency are translated sale financial assets or are not classified as (a) loans tax bases used in the computation of taxable profit. the date of inception is deemed to be 1 January 2005 using the exchange rates as at the dates of the initial and receivables, (b) held-to-maturity investments or (c) Deferred tax liabilities are generally recognised for all in accordance with the transitional requirements of transactions. Non-monetary items measured at fair value financial assets at fair value through profit or loss. taxable temporary differences. Deferred tax assets IFRIC 4. in a foreign currency are translated using the exchange rates at the date when the fair value is determined. Investments in debt securities that are traded in an are generally recognised for all deductible temporary active market are stated at fair value at the end of each Company as a lessee differences to the extent that it is probable that Finance leases, which transfer to the Company (i) Financial Instruments reporting period. The fair value of available-for-sale debt taxable profits will be available against which those substantially all the risks and benefits incidental to securities is determined by reference to published price Financial assets and financial liabilities are recognised deductible temporary differences can be utilised. ownership of the leased item, are capitalised at the quotations in an active market. Interest income calculated when the Company becomes a party to the contractual Such deferred tax assets and liabilities are not inception of the lease at the fair value of the leased provisions of the instrument. using the effective interest method is recognised in recognised if the temporary difference arises from property or, if lower, at the present value of the minimum profit or loss except for interest income earned on the lease payments. Lease payments are apportioned Financial assets and financial liabilities are initially temporary investment of specific borrowings pending goodwill or from the initial recognition (other than in between the finance charges and reduction of the lease measured at fair value. Transaction costs that are directly their expenditure on qualifying assets which is deducted a business combination) of other assets and liabilities liability so as to achieve a constant rate of interest on the attributable to the acquisition or issue of financial assets from the borrowing costs eligible for capitalisation. in a transaction that affects neither the taxable profit remaining balance of the liability. Finance charges are and financial liabilities (other than financial assets and nor the accounting profit. Other changes in the carrying amount of available- reflected in profit or loss. financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial for-sale financial assets are recognised in other The carrying amount of deferred tax assets is reviewed Capitalised leased assets are depreciated over the assets or financial liabilities, as appropriate, on initial comprehensive income and accumulated under the at the end of each reporting period and reduced to shorter of the estimated useful life of the asset and the recognition. Transaction costs directly attributable to the heading of investments revaluation reserve. Where the the extent that it is no longer probable that sufficient lease term, if there is no reasonable certainty that the acquisition of financial assets or financial liabilities at fair investment is disposed of or is determined to be impaired, taxable profits will be available to allow all or part of Company will obtain ownership by the end of the lease term. value through profit or loss are recognised immediately the cumulative gain or loss previously accumulated in the asset to be recovered. the investments revaluation reserve is reclassified to Operating lease payments are recognised as an expense in profit or loss. Deferred tax assets and liabilities are measured at profit or loss. in profit or loss on a straight line basis over the lease term. Financial assets the tax rates that are expected to apply in the period Dividends on AFS equity instruments are recognised in Company as a lessor Financial assets are classified into the following specified in which the liability is settled or the asset realised, profit or loss when the Company’s right to receive the Leases where the Company does not transfer categories: financial assets at fair value through profit or based on tax rates (and tax laws) that have been dividends is established substantially all the risks and benefits of ownership of the loss, ‘held-to-maturity’ investments, ‘available-for-sale’ enacted or substantively enacted by the end of the asset are classified as operating leases. Initial direct costs (AFS) financial assets and ‘loans and receivables’. The The fair value of AFS monetary financial assets reporting period. The measurement of deferred tax classification depends on the nature and purpose of the denominated in a foreign currency is determined in incurred in negotiating an operating lease are added to liabilities and assets reflects the tax consequences financial assets and is determined at the time of initial that foreign currency and translated at the spot rate the carrying amount of the leased asset and recognised that would follow from the manner in which the over the lease term on the same basis as rental income. recognition. prevailing at the end of the reporting period. The foreign Company expects, at the end of the reporting period, Contingent rents are recognised as revenue in the period exchange gains and losses that are recognised in profit (i) Financial assets at fair value through profit or loss (FVTPL) to recover or settle the carrying amount of its assets in which they are earned. or loss are determined based on the amortised cost of This category has two sub-categories: Financial assets and liabilities. the monetary asset. Other foreign exchange gains and held for trading and those designated at fair value (h) Foreign currencies losses are recognised in other comprehensive income. Current and deferred tax are recognised in profit through profit or loss at inception. A financial asset is The Financial Statements are presented in Kenya shillings, AFS equity investments that do not have a quoted market or loss, except when they relate to items that are classified in this category if acquired principally for the which is the Company’s functional and presentation price in an active market and whose fair value cannot recognised in other comprehensive income or directly purpose of selling in the short term or if so designated currency. Transactions in foreign currencies are initially be reliably measured and derivatives that are linked to in equity, in which case, the current and deferred tax by management. Gains and losses arising from changes recorded at the functional currency rate ruling at the and must be settled by delivery of such unquoted equity are also recognised in other comprehensive income in fair value are recognised in the profit or loss. date of the transaction. Monetary assets and liabilities investments are measured at cost less any identified or directly in equity respectively. Where current tax denominated in foreign currencies are retranslated at (ii) Held-to-maturity investments impairment losses at the end of each reporting period. or deferred tax arises from the initial accounting for a the functional currency rate of exchange ruling at the Held-to-maturity investments are non-derivative business combination, the tax effect is included in the reporting date. Transactions during the year are translated financial assets with fixed or determinable payments and (iv) Loans and receivables accounting for the business combination. at the rates ruling at the dates of the transactions. fixed maturity dates that the company has the positive Loans and receivables are non-derivative financial assets 66 67 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 3. Accounting policies (Continued) • the disappearance of an active market for that 3. Accounting policies (Continued) Classification as debt or equity 3.3 Summary of significant accounting policies (Continued) financial asset because of financial difficulties. 3.3 Summary of significant accounting policies (Continued) Debt and equity instruments issued by the Company For certain categories of financial assets, such as trade are classified as either financial liabilities or as equity (i) Financial Instruments (Continued) (i) Financial Instruments (Continued) receivables, assets that are assessed not to be impaired in accordance with the substance of the contractual Financial assets (Continued) Financial assets (Continued) individually are, in addition, assessed for impairment on arrangements and the definitions of a financial liability Impairment of financial assets (Continued) and an equity instrument. with fixed or determinable payments that are not quoted a collective basis. Objective evidence of impairment for in an active market. Loans and receivables (including a portfolio of receivables could include the Company’s be objectively related to an event occurring after the Equity instruments trade and other receivables, bank balances and cash) are past experience of collecting payments, an increase in recognition of the impairment loss. An equity instrument is any contract that evidences a measured at amortised cost using the effective interest the number of delayed payments in the portfolio past the De-recognition of financial assets residual interest in the assets of an entity after deducting method, less any impairment. average credit period of 30 days, as well as observable changes in national or local economic conditions that The Company derecognises a financial asset only when all of its liabilities. Equity instruments issued by the Effective interest method correlate with default on receivables. the contractual rights to the cash flows from the asset Company are recognised at the proceeds received, net The effective interest method is a method of calculating expire, or when it transfers the financial asset and of direct issue costs. the amortised cost of a debt instrument and of allocating For financial assets carried at amortised cost, the amount substantially all the risks and rewards of ownership of the of the impairment loss recognised is the difference Repurchase of the Company’s own equity instruments interest income over the relevant period. The effective asset to another entity. If the Company neither transfers between the asset’s carrying amount and the present is recognised and deducted directly in equity. No gain interest rate is the rate that exactly discounts estimated nor retains substantially all the risks and rewards of value of estimated future cash flows, discounted at the or loss is recognised in profit or loss on the purchase, future cash receipts (including all fees and points paid ownership and continues to control the transferred financial asset’s original effective interest rate. sale, issue or cancellation of the Company’s own equity or received that form an integral part of the effective asset, the Company recognises its retained interest in instruments. interest rate, transaction costs and other premiums For financial assets carried at cost, the amount of the the asset and an associated liability for amounts it may or discounts) through the expected life of the debt impairment loss is measured as the difference between have to pay. If the Company retains substantially all the Financial liabilities instrument, or, where appropriate, a shorter period, to the asset’s carrying amount and the present value of the risks and rewards of ownership of a transferred financial Financial liabilities are classified as either financial the net carrying amount on initial recognition. estimated future cash flows discounted at the current asset, the Company continues to recognise the financial liabilities ‘at fair value through profit or loss’ or ‘other Income is recognised on an effective interest basis market rate of return for a similar financial asset. Such asset and also recognises a collateralised borrowing for financial liabilities’. for debt instruments other than those financial assets impairment loss will not be reversed in subsequent the proceeds received. periods. The carrying amount of the financial asset is Other financial liabilities classified as at FVTPL. reduced by the impairment loss directly for all financial On de-recognition of a financial asset in its entirety, the Other financial liabilities (including borrowings) are Interest income is recognised by applying the effective assets with the exception of trade receivables, where difference between the asset’s carrying amount and the subsequently measured at amortised cost using the interest rate, except for short-term receivables when the the carrying amount is reduced through the use of an sum of the consideration received and receivable and effective interest method. recognition of interest would be immaterial. allowance account. When a trade receivable is considered the cumulative gain or loss that had been recognised in De-recognition of financial liabilities uncollectible, it is written off against the allowance other comprehensive income and accumulated in equity Impairment of financial assets The Company derecognises financial liabilities when, and account. Subsequent recoveries of amounts previously is recognised in profit or loss. Financial assets are assessed for indicators of impairment only when, the Company’s obligations are discharged, written off are credited against the allowance account. at the end of each reporting period. Financial assets On de-recognition of a financial asset other than in cancelled or they expire. The difference between the Changes in the carrying amount of the allowance account are considered to be impaired when there is objective its entirety (e.g. when the Company retains an option carrying amount of the financial liability derecognised are recognised in profit or loss. evidence that, as a result of one or more events that to repurchase part of a transferred asset or retains a and the consideration paid and payable is recognised in occurred after the initial recognition of the financial When an available-for-sale financial asset is considered residual interest that does not result in the retention of profit or loss. asset, the estimated future cash flows of the investment to be impaired, cumulative gains or losses previously substantially all the risks and rewards of ownership and have been affected. recognised in other comprehensive income are Onerous contracts the company retains control), the Company allocates the reclassified to profit or loss in the period. Present obligations arising under onerous contracts are For available-for-sale debt securities, a significant previous carrying amount of the financial asset between recognised and measured as provisions. An onerous or prolonged decline in the fair value of the security For financial assets measured at amortised cost, if, in a the part it continues to recognise under continuing contract is considered to exist where the Company has a below its cost is considered to be objective evidence of subsequent period, the amount of the impairment loss involvement, and the part it no longer recognises on contract under which the unavoidable costs of meeting impairment. decreases and the decrease can be related objectively to the basis of the relative fair values of those parts on the obligations under the contract exceed the economic an event occurring after the impairment was recognised, the date of the transfer. The difference between the For all other financial assets, objective evidence of benefits expected to be received from the contract. the previously recognised impairment loss is reversed carrying amount allocated to the part that is no longer impairment could include: through profit or loss to the extent that the carrying recognised and the sum of the consideration received Offsetting of financial instruments • significant financial difficulty of the issuer or amount of the investment at the date the impairment is for the part no longer recognised and any cumulative Financial assets and financial liabilities are offset and counterparty; or reversed does not exceed what the amortised cost would gain or loss allocated to it that had been recognised in the net amount reported in the statement of financial • breach of contract, such as a default or delinquency have been had the impairment not been recognised. other comprehensive income is recognised in profit or position if, and only if, there is a currently enforceable in interest or principal payments; or In respect of available-for-sale debt securities, impairment loss. A cumulative gain or loss that had been recognised legal right to offset the recognised amounts and there • it becoming probable that the borrower will enter losses are subsequently reversed through profit or loss in other comprehensive income is allocated between the is an intention to settle on a net basis, or to realise the bankruptcy or financial re-organisation; or if an increase in the fair value of the investment can part that continues to be recognised. assets and settle the liabilities simultaneously. 68 69 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 3. Accounting policies (Continued) Impairment of transmission and distribution lines 3. Accounting policies (Continued) There are no inter-region sales. 3.3 Summary of significant accounting policies (Continued) A decline in the value of the transmission and distribution 3.3 Summary of significant accounting policies (Continued) Region results include revenue and expenses directly lines could have a significant effect on the amounts (m) Retirement benefits obligations (Continued) attributable to each region. Region assets and liabilities (j) Borrowing costs recognised in the Financial Statements. Management comprise those operating assets and liabilities that are Borrowing costs directly attributable to the acquisition, assesses the impairment of the lines whenever events or unit credit method, with actuarial valuations being directly attributable to the region or can be allocated to construction or production of qualifying assets, which changes in circumstances indicate that the carrying value carried out at the end of each annual reporting period. the region on a reasonable basis. are assets that necessarily take a substantial period may not be recoverable. Factors that are considered Re-measurement, comprising actuarial gains and losses, of time to get ready for their intended use or sale, are important which could make an impairment review the effect of the changes to the asset ceiling (if applicable) Capital expenditure represents the total cost incurred added to the cost of those assets, until such time as the necessary include the following: and the return on plan assets (excluding interest), is during the year to acquire assets for the regions that assets are substantially ready for their intended use or reflected immediately in the statement of financial are expected to be used during more than one period (i) Significant decline in the market value beyond that sale. position with a charge or credit recognised in other (property and equipment). which would be expected from the passage of time comprehensive income in the period in which they occur. Investment income earned on the temporary investment and normal use. Re-measurement recognised in other comprehensive (o) Earnings per share of specific borrowings pending their expenditure on (ii) Evidence from internal reporting which indicates income is reflected immediately in retained earnings Basic and diluted earnings per share (EPS) data qualifying assets is deducted from the borrowing costs that the performance of the asset is, or will be, worse and will not be reclassified to profit or loss. Past service for ordinary shares are presented in the Financial eligible for capitalisation. than expected. cost is recognised in profit or loss in the period of a plan Statements. Basic EPS is calculated by dividing the profit (iii) Significant changes with adverse effect on the amendment. Net interest is calculated by applying the for the year attributable to ordinary shareholders of the Capitalised costs include interest charges and foreign Company have taken place during the period, or will discount rate at the beginning of the period to the net Company by the weighted average number of ordinary currency exchange differences on borrowings for take place in the near future, in the technology or defined benefit liability or asset. Defined benefit costs shares outstanding during the period. Diluted EPS is projects under construction to the extent that they are market environment in which the Company operates, are categorised as service costs (including current regarded as adjustments to interest rates. determined by adjusting the profit or loss attributable or in the market to which an asset is dedicated. service cost, past service cost, as well as gains and losses to ordinary shareholders and the weighted average All other borrowing costs are recognised in profit or loss (iv) The carrying amount of the net assets of the on curtailments and settlements), net interest expense number of ordinary shares outstanding for the effects of in the period in which they are incurred. Company is more than its market capitalisation. or income and re-measurement. all dilutive potential ordinary shares, if any. (v) Evidence is available of the obsolescence or physical The Company presents the first two components of (k) Leave accrual damage of an asset. (p) Dividends defined benefit costs in profit or loss in the line item of Employees’ entitlements to annual leave are recognised (vi) Significant changes with an adverse effect on the pension cost-defined benefit scheme (included in staff Dividends on ordinary shares are charged to reserves when they accrue to employees. A provision is made for Company have taken place during the period, or costs). Curtailment gains and losses are accounted for in the period in which they are declared. Proposed the estimated liability for annual leave at the reporting are expected to take place in the near future, which as past service costs. dividends are not accrued for until ratified in an Annual date. impact the manner or the extent to which an asset is General Meeting. The net retirement benefit asset/(obligation) recognised used. These changes include plans to discontinue or (l) Impairment of tangible assets in the Company’s statement of financial position restructure the operation to which an asset belongs (q) Government grants represents the actual surplus or deficit in the Company’s The Company reviews the carrying amounts of its or to dispose of an asset before the previously Government grants are not recognised until there is defined benefit plans. Any surplus resulting from this tangible assets, to determine whether there is any expected date. calculation is limited to the present value of any economic reasonable assurance that the Company will comply with indication that those assets have suffered an impairment In management’s judgment, the impaired carrying values the conditions attaching to them and that the grants will benefits available in the form of refunds from the plans loss at reporting date, or when there are indications of of the lines and substations are reinforced, replaced or be received. or reductions in future contributions to the plans. impairment. If any such indication exists, the recoverable upgraded under the Energy Sector Recovery Project, amount of the asset is estimated and an impairment A liability for a termination benefit is recognised at the Government grants are recognised in profit or loss on a after considering the above key indicators of impairment. loss is recognised in profit or loss whenever the carrying earlier of when the entity can no longer withdraw the systematic basis over the periods in which the Company amount of the asset exceeds its recoverable amount. An (m) Retirement benefits obligations offer of the termination benefit and when the entity recognises as expenses the related costs for which asset’s recoverable amount is the higher of the asset’s recognises any related restructuring costs. the grants are intended to compensate. Specifically, The Company employees are eligible for retirement government grants whose primary condition is that or cash-generating unit’s (CGU) fair value less costs to benefits under a defined contribution scheme from 1 July The employees and the Company also contribute to the Company should purchase, construct or otherwise sell and its value in use. In assessing value in use, the 2006. Payments to the defined contribution scheme are the National Social Security Fund, a national defined acquire non-current assets are recognised as deferred estimated future cash flows are discounted to their charged to profit or loss as incurred. contributions retirement benefits scheme. Contributions revenue in the statement of financial position and present value using a pre-tax discount rate that reflects are determined by the country’s statutes and the Company’s Pensioners and deferred pensioners (those who have left transferred to profit or loss on a systematic and rational current market assessments of the time value of money contributions are charged to profit or loss as incurred. the employment of the Company but have not attained basis over the useful lives of the related assets. and the risks specific to the asset. In determining fair retirement age to qualify as pensioners) existing at 30 (n) Operating segments value less costs to sell, an appropriate valuation model is Government grants that are receivable as compensation June 2006 are eligible for retirement benefits under a used. Where it is not possible to estimate the recoverable The Company’s business is organised by regions for expenses or losses already incurred or for the purpose defined benefit scheme. amount of an individual asset, the Directors estimate the (reporting segments), comprising Nairobi, Mount Kenya, of giving immediate financial support to the Company recoverable amount of the cash-generating unit to which For defined retirement benefit plans, the cost of Coast and West Kenya. Business administration is by with no future related costs are recognised in profit or the asset belongs. providing benefits is determined using the projected region as the Company deals in only supply of electricity. loss in the period in which they become receivable. 70 71 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 3. Accounting policies (Continued) 4. Critical accounting judgements and key sources of estimation 4. Critical accounting judgements and key sources of estimation Pensions 3.3 Summary of significant accounting policies (Continued) uncertainty uncertainty (Continued) Actuarial assumptions are made in valuing future defined (q) Government grants (Continued) In the application of the Company’s accounting policies, which 4.1 Critical judgements in applying accounting policies (Continued) benefit obligation and are updated periodically. The principal are described in note 3 above, the Directors are required to assumption relates to the discount rate, the expected rates of The benefit of a government loan at a below market rate make judgements, estimates and assumptions about the Electricity deposits return on assets, future salary increases, mortality rates and of interest is treated as a government grant, measured carrying amounts of assets and liabilities that are not readily Money received from electricity customers as deposit is held future pension increase. Due to the long term nature of these as the difference between proceeds received and the fair apparent from other sources. The estimates and associated as a non-current liability because the Company will continue plans, such estimates are subject to significant uncertainty. See value of the loan based on prevailing market rates. assumptions are based on historical experience and other to offer services to the customers for the foreseeable future note 31 for further details. factors that are considered to be relevant. Actual results may and the customers are not expected to discontinue their use of Provision for doubtful debts (r) Recharge of costs to Rural Electrification Scheme differ from these estimates. electricity in the short run. In addition, the customer deposits are a security for the electric meters supplied to the customer The estimated provision for doubtful debts is based on the Recharge of costs to the Rural Electrification Scheme (RES) The estimates and underlying assumptions are reviewed for long term electricity supply. period for which the debt was outstanding combined with is based on a formula determined by the Government of on an ongoing basis. Revisions to accounting estimates are some knowledge of the financial position of the debtor and/ Kenya following an agreement between it and East African recognised in the period in which the estimates are revised if Revenue recognition or the circumstances surrounding the underlying transaction. Power & Lighting Company Limited, the predecessor to the revision affects only that period or in the periods of the Electricity revenue includes an assessment of electricity The Kenya Power & Lighting Company Limited in 1973. This policy is to ensure that the Company regularly evaluates revision and future periods if the revision affects both current supplied to customers between the date of the last meter and future periods. debts and their recoverability, maintains timely and appropriate The power purchase costs recharge is calculated as a reading and the year end. The electricity sales is estimated provisions account in order to accurately reflect the condition proportion of RES electricity unit sales (excluding off- using historical consumption patterns taking into account the of the statement of financial position. It is also intended grid sales) to gross electricity unit sales. 4.1 Critical judgements in applying accounting policies total electricity usage by the customer. to promote well-reasoned, effective work plans for non- In the process of applying the Company’s accounting policies, The distribution costs recharge is calculated based on performing debts and effective internal controls to manage the management has made the following judgments, apart from 4.2 Key sources of estimation uncertainty 2% and 4% of the total high voltage and low voltage level of such debts. Provisions for impairment are maintained at those involving estimations, which have the most significant The following are the key assumptions concerning the future, assets respectively in the books of RES at the close of an amount adequate to cover anticipated credit related losses. effect on the amounts recognised in the Financial Statements: and other key sources of estimation uncertainty at the end the financial year. of the reporting period, that have significant risk of causing Specific provisions are established where full recovery of the Operating lease commitments–Company as lessor Customer service costs recharge is calculated as a a material adjustment to the carrying amounts of assets and principal is considered doubtful. Specific provisions are made The Company has entered into commercial property leases on proportion of RES metered customers to total number liabilities within the next financial year: against finalised customer accounts net of deposits. Provisions some of its properties. The Company has determined, based on of metered customers. are determined primarily by reference to historical ratios of an evaluation of the terms and conditions of the arrangements, Property and equipment write offs to balances in default. Administration costs recharge are calculated based on that it retains all the significant risks and rewards of ownership Property and equipment is depreciated over its useful life the proportion of RES electricity unit sales to gross of these properties and so accounts for the contracts as General (portfolio) provisions for bad and doubtful debts are taking into account residual values, where appropriate. The electricity unit sales. operating leases. maintained to cover non identified probable losses and latent actual lives of the assets and residual values are assessed at the reporting date and may vary depending on a number of risks inherent in the overall debt portfolio. The provisions are (s) Cash and cash equivalents Deferred tax assets factors. In reassessing asset lives, factors such as technological determined having regard to the general risk profile of the Deferred tax assets are recognised for all unused tax losses Cash and cash equivalents comprises of bank and cash innovation, product life cycles and maintenance programmes credit portfolio, historical loss experience, economic conditions to the extent that it is probable that taxable profit will be balances and short term deposits maturing within 3 are taken into account. Residual value assessments consider and a range of other criteria including status of the pending available against which the losses can be utilised. Significant months from the date of issue issues such as future market conditions, the remaining life of court cases. management judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the asset and projected disposal values. (t) Comparatives the likely timing and level of future taxable profits together Impairment of assets Where necessary, comparative figures have been with future tax planning strategies. The carrying value of reclassified to conform to changes in presentation in recognised tax losses at 30 June 2014 was KShs.33,288 million Property and equipment are assessed for impairment if there is the current year. See note 41(f) for the details of the (2013: KShs.30,409 million). Further details are contained in a reason to believe that impairment may be necessary. Factors reclassifications in the Financial Statements for the Note 26. taken into consideration in reaching such a decision include the economic viability of the asset itself and where it is a component current year. Pension and other post-employment benefits of a larger economic unit, the viability of that unit itself. The cost of defined benefit pension plans and other post- employment medical benefits is determined using actuarial Future cash flows expected to be generated by the assets valuations. The actuarial valuation involves making assumptions are projected, taking into account market conditions and the about discount rates, expected rates of return on assets, future expected useful lives of the assets. The present value of these salary increases, mortality rates and future pension increases. cash flows, determined using an appropriate discount rate, Due to the long term nature of these plans, such estimates is compared to the current net asset value and, if lower, the are subject to significant uncertainty. The net defined benefit assets are impaired to the present value. asset at 30 June 2014 was KShs.5,442 million (2013: KShs.3,651 million). Further details are given in Note 31. 72 73 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 5. 5. (a) OPERATING SEGMENTS (Continued) (a) OPERATING SEGMENTS For management purposes, the Company is currently organised into four administrative regions (reporting segments). These regions are the basis on which the Company reports its primary information. The four regions comprise Nairobi, Coast, West Kenya and Mount Kenya. Nairobi West Kenya Coast Mount Kenya Region Region Region Region Total The table below shows the Company’s revenue, expenses, assets and liabilities per region. The table also shows capital expenditure and (Restated) (Restated) (Restated) (Restated) (Restated) depreciation by region for the year. There are no inter-segment sales and all revenue is from external customers. Energy purchase and Head 2013 KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 Office expenses are apportioned to various regions based on percentage unit sales. Revenue 49,868,644 15,124,973 16,057,544 7,858,465 88,909,626 Nairobi West Kenya Coast Mount Kenya Other income 1,796,961 664,221 325,640 405,263 3,192,085 Region Region Region Region Total Energy purchases (34,197,694) (11,191,972) (11,191,972) (5,595,986) (62,177,624) 2014 KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 Operating expenses (10,590,652) (4,194,516) (3,241,599) (2,957,710) (20,984,477) Operating profit 6,877,259 402,706 1,949,613 (289,968) 8,939,610 Revenue 58,548,859 18,399,353 19,125,539 9,321,963 105,395,714 Other income 2,433,550 1,159,808 591,059 730,069 4,914,486 Energy purchases (39,952,223) (13,075,273) (13,075,273) (6,537,636) (72,640,405) Interest income 111,546 Operating expenses (11,347,808) (4,861,030) (3,136,202) (3,337,688) (22,682,728) Net finance income (2,480,659) Operating profit 9,682,378 1,622,858 3,505,123 176,708 14,987,067 Income tax expense (3,124,780) Interest income 104,208 Profit for the year 3,445,717 Net finance costs (4,892,848) Income tax expense (3,742,193) Other information Profit for the year 6,456,234 Assets 82,882,721 52,689,294 21,255,301 27,385,219 184,212,535 Other information Assets 96,208,138 64,917,819 26,204,316 32,779,079 220,109,352 Liabilities 66,039,543 22,557,387 20,876,927 11,501,124 120,974,981 Liabilities 81,073,729 26,533,220 25,821,009 13,795,111 147,223,069 Capital expenditure (including intangible assets) 15,595,839 14,034,285 3,667,423 7,411,885 40,709,432 Capital expenditure (including intangible assets) 8,205,290 11,809,717 2,631,199 5,882,042 28,528,248 Depreciation/amortisation 2,670,382 1,388,417 656,071 917,772 5,632,642 Depreciation/amortisation 3,187,941 1,773,082 762,255 1,074,467 6,797,745 There were no revenues deriving from transactions with a single external customer that amounted to 10% or more of the Company’s revenue. The finance revenue, finance costs and tax expenses are not segment specific and are largely Head Office items and therefore have not been apportioned to the operating segments. There were no revenues deriving from transactions with a single external customer that amounted to 10% or more of the Company’s revenue. The finance revenue, finance costs and tax expenses are not segment specific and are largely head office items and therefore have not been apportioned to the operating segments. 74 75 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 5. 6. FINANCIAL RISK & CAPITAL MANAGEMENT (a) Credit risk (a) OPERATING SEGMENTS (Continued) Information about the Company’s exposure to risks, its The Company has exposure to credit risk, which is the risk that objectives, policies and processes for measuring and managing a counter party will be unable to pay amounts in full when The Company’s core business in the four regions (reporting segments) continues to be the transmission, distribution and retail of electricity. due. Credit risk mainly arises from electricity receivables, short such risks, as well as quantitative disclosure, is discussed in this There is no distinguishable component of the Company that is engaged in providing an individual service that is subject to risks and returns that term deposits, bank balances and investments in government note. The management of capital is also discussed. are different from those of other business segments. securities. The Company has an integrated risk management framework. The information on property and equipment details at net book values is shown below: Counterparty risk is the risk that a counterparty is unable The Company’s approach to risk management is based on risk governance structures, risk management policies, risk to meet its financial and/or contractual obligations during Furniture identification, measurement and reporting. Three types of risks the period of a transaction. Delivery or settlement risk is the Land and Motor equipment Intangible are reported as part of the risk profile, namely operational, risk that counterparty does not deliver on its contractual buildings* Lines Machinery vehicles and other assets Total commitment on maturity date (including the settlement of strategic and business continuity risks. 2014 KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 money and delivery of securities). For The Kenya Power and Lighting Company, a strategic risk is Transmission 483,819 5,830,611 30,453 - 175,315 - 6,520,198 a significant unexpected or unpredictable change or outcome Credit risk arising from short term deposits and bank balances beyond what was factored into the organisation’s strategy and are low because the counter parties are financial institutions Distribution 1,692,748 102,699,522 442,454 1,939,256 5,865,627 1,410,044 114,049,651 business model which could have an impact on the Company’s with high credit ratings. Credit risk from Government securities performance. is low because of a low default record. Total 2,176,567 108,530,133 472,907 1,939,256 6,040,942 1,410,044 120,569,849 Business continuity risks are those events, hazards, variances and opportunities which could influence the continuity of the Company. Furniture One of the key risks for The Kenya Power and Lighting Land and Motor equipment Intangible Company, identified both under the operational and strategic buildings* Lines Machinery vehicles and other assets Total risk categories, is financial sustainability of the Company. The 2013 KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 financial risks, as defined by IFRS 7, and the management thereof, form part of this key risk area. Transmission 495,118 8,734,511 75,224 - 195,779 - 9,500,632 Distribution 1,695,869 84,529,191 55,639 1,842,012 4,549,998 258,716 92,931,425 The Board of Directors has delegated the management of the Companywide risk to the Audit Committee. One of the committee’s responsibilities is to review risk management strategies in order to ensure business continuity and survival. Total 2,190,987 93,263,702 130,863 1,842,012 4,745,777 258,716 102,432,057 Most of the financial risks arising from financial instruments are managed in the centralised finance function of the Company. * Includes freehold land and buildings and prepaid leases on leasehold land. The Company’s exposure to risk, its objectives, policies and processes for managing the risk and the methods used to measure it have been consistently applied in the years presented, unless otherwise stated. The Company has exposure to the following risks as a result of its financial instruments: a. Credit risk b. Liquidity risk c. Market risk 76 77 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 6. FINANCIAL RISK & CAPITAL MANAGEMENT 6. FINANCIAL RISK & CAPITAL MANAGEMENT demand. Non-payment will result in disconnection of supply (a) Credit risk (Continued) (a) Credit risk (Continued) and the account’s closure if the disconnection is done and there is no payment within three months. The legal collection The carrying amount of financial assets recorded in the Financial Statements representing the Company’s maximum exposure to credit risk The customers under the fully performing category are paying process is pursued thereafter. The decision to impair overdue without taking account of the value of any collateral obtained is made up as follows: their debts as they fall due. amounts is assessed on the probability of recovery based on the customer’s credit risk profile. Past due amounts are those beyond the maximum established Past due but not impaired credit period and represents slow but paying customers. The Progress on the collection process is reviewed on a regular Neither past due Impaired receivable balance continues to be serviced even though this basis and if it is evident that the amount will not be recovered, nor impaired Over 60 days Over 365 days Over 365 days Total is not done on the contractual dates. Treasury and finance it is recommended for write-off in line with Company policy. KShs ‘000 KShs ‘000 KShs ‘000 KShs ‘000 KShs ‘000 departments are actively following up on these receivables. The process of recovery continues unless it is confirmed that At 30 June 2014 In addition, the Company holds deposits or a bank guarantee, there is no prospect of recovery or the costs of such action depending on the electricity load supplied which acts as will exceed the benefits to be derived. Amounts written off are Trade and other receivables 23,958,901 3,383,106 64,919 3,994,687 31,401,613 collateral. determined after taking into account the value of the security held. Less: impairment allowance - - - (3,994,687) (3,994,687) Short term deposits 915,862 - - - 915,862 The fair value of the collateral held by the Company as security The Company rates the concentration of risk with respect to and other credit enhancements amounted to KShs.7,182 million electricity receivables as low, as its customers are located Bank balances 9,236,684 - - - 9,236,684 (2013 – KShs.6,763 million). in all regions in Kenya and electricity is supplied to different categories of customers including individual households, 34,111,447 3,383,106 64,919 - 37,559,472 Management of credit risk private industries, companies and Government institutions. Financial instruments are managed by the Finance and Commercial services functions. The total cumulative provision for impairment of electricity Past due but not impaired Neither past due Impaired receivables at 30 June 2014 was KShs.3,622 million (2013: nor impaired Over 60 days Over 365 days Over 365 days Total Management of electricity receivables KShs.3,720 million). Refer to note 21(c). At 30 June 2013 KShs ‘000 KShs ‘000 KShs ‘000 KShs ‘000 KShs ‘000 The Company supplies electricity to customers in its licensed The Company is currently installing prepaid and automatic areas of supply. A large proportion is small commercial and meters as strategies to minimise the risk of non-collection. In Trade and other receivables 12,518,583 1,714,119 448,139 4,087,079 18,767,920 domestic customers who settle their accounts within 21 days addition, the following strategies are currently in operation and Less: impairment allowance - - - (4,087,079) (4,087,079) after receipt of the bill. The Company’s exposure to credit risk are largely successful in other high risk areas of non-paying Short term deposits 991,496 - - - 991,496 is influenced by the individual characteristics of each customer. customers. These include: Bank balances 3,645,029 - - - 3,645,029 In monitoring credit risk, customers are grouped according to • disconnections, their credit characteristics, including whether they are large, 17,155,108 1,714,119 448,139 - 19,317,366 small or domestic electricity users, profile, security (deposits • increased internal debt management capacity, and guarantees) held and payment history. • use of debt collectors, • focus on early identification and letters of demand, The main classes of electricity receivables are industrial, government ministries, local authorities, parastatals, • higher security deposits. commercial and domestic customers. Electricity supply The following table represents an analysis of the maximum agreements are entered into with all customers. All customers exposure to credit risk for electricity receivables: are required to deposit an amount equivalent to two times their monthly consumption being security in the form of a cash 2014 2013 deposit depending on the load supplied, subject to a minimum KShs’000 KShs’000 of KShs.2,500. Industrial and large commercial customers Electricity receivables have the option of providing a bank guarantee in lieu of a Large power users 7,788,322 4,678,945 cash deposit. Payment is enforced by way of disconnection of Ministries 267,537 131,697 the supply if bills are not paid within 21 days after billing. No Local authorities 43,189 35,866 interest is charged on balances in arrears. Parastatals 1,542,145 1,274,614 The Company has well-established credit control procedures Ordinary customers 4,415,059 2,869,654 that monitor activity on customer accounts and allow for Exports 83,656 175,041 remedial action should the customer not comply with payment terms. These procedures include the issue of a notice for Total electricity receivables 14,139,908 9,165,817 disconnection of supply, an internal collection process; follow up of the customer by telephone or in person, negotiations of mutually acceptable payment arrangements and letters of 78 79 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 6. FINANCIAL RISK & CAPITAL MANAGEMENT (Continued) 6. FINANCIAL RISK & CAPITAL MANAGEMENT (Continued) ii. Commodity or price risk The Company is exposed to price risk on the fuel that (b) Liquidity risk (c) Market risk is used for the generation of electricity to the extent Liquidity risk is the risk that the Company will not have sufficient financial resources to meet its obligations when they fall due, Market risk is the risk that the fair value or future cash that the customers are not able to pay for the additional or will have to do so at excessive cost. This risk can arise from mismatches in the timing of cash flows from revenue and capital and flow of financial instruments will fluctuate because of costs passed on to them or if efficiency declines below operational outflows. changes in foreign exchange rates, commodity prices and the rate factored in the tariff. interest rates. The objective of market risk management The objective of the Company’s liquidity management is to ensure that all foreseeable operational, capital expansion and loan policy is to protect and enhance the statement of financial Management of commodity risk commitment expenditure can be met under both normal and stressed conditions. The Company has adopted an overall balance sheet position and statement of comprehensive income by Exposure due to commodity risk is managed by passing approach, which consolidates all sources and uses of liquidity, while aiming to maintain a balance between liquidity, profitability and managing and controlling market risk exposures within the cost of fuel used in generation to customers. interest rate considerations. The Company’s liquidity management process includes: acceptable parameters and to optimise the funding of In addition the Company has well-established • projecting cash flows and considering the cash required by the Company and optimising the short-term requirements as well as business operations and facilitate capital expansion. The credit control procedures that monitor activity on the long-term funding, Company is exposed to the following risks: customer accounts and allow for remedial action • monitoring statement of financial position liquidity ratios, should the customer not comply with payment terms. i. Currency risk These procedures include the issue of a notice of • maintaining a diverse range of funding sources with adequate back-up facilities, Currency risk arises primarily from purchasing imported disconnection of supply, an internal collection process; • managing the concentration and profile of debt maturities, goods and services directly from overseas or indirectly follow up of the customer telephonically or in person, • maintaining liquidity contingency plans. via local suppliers and foreign borrowings. The Company negations of mutually acceptable payment arrangements The table below summarises the maturity profile of the Company’s financial liabilities based on the remaining period using is exposed to foreign exchange risk arising from future and letters of demand. Non-payment will result in 30 June 2014 as a base period to the contractual maturity date: commercial transactions and recognised assets and disconnection of supply and the customer’s account liabilities that are denominated in a currency other than being closed. The legal collection process is pursued Less than 3 3 to 12 the functional currency of the Company: thereafter. On demand months months 1 to 5 years > 5 years Total The following table demonstrates the sensitivity to a The decision to impair overdue amounts is assessed At 30 June 2014 KShs’ 000 KShs’ 000 KShs’ 000 KShs’ 000 KShs’ 000 KShs’ 000 reasonably possible change in the respective foreign on the probability of recovery based on the customer’s Interest bearing loans and borrowings - 535,180 19,078,895 36,837,556 20,745,289 77,196,920 currency/KShs. exchange rate, with all other variables credit risk profile. Trade and other payables 573,541 28,062,735 3,196,476 3,235,438 22,377,236 57,445,426 held constant, on the Company’s profit before tax iii. Interest rate risk (due to changes in the fair value of monetary assets 573,541 28,597,915 22,275,371 40,072,994 43,122,525 134,642,346 and liabilities). Interest rate risk is the risk that the Company’s financial condition may be adversely affected as a result of Effect on profit changes in interest rate levels. The Company’s interest Less than 3 3 to 12 Appreciation/ before tax and rate risk arises from short-term borrowings. Borrowings On demand months months 1 to 5 years > 5 years Total (depreciation) of equity KShs issued at variable rates expose the Company to cash flow At 30 June 2013 KShs’ 000 KShs’ 000 KShs’ 000 KShs’ 000 KShs’ 000 KShs’ 000 Currency type Exchange rate million interest rate risk. Long-term borrowings issued at fixed Interest bearing loans and borrowings - - 10,524,326 30,707,830 18,201,971 59,434,127 rates expose the Company to fair value interest rate risk. Year 2014 Trade and other payables 2,275,557 26,965,477 3,117,071 1,497,068 14,453,566 48,308,739 US$ 5 %/(5%) +/-2,245 The interest rate risk exposure arises mainly from interest Euro 5 %/(5%) +/- 441 rate movements on the Company’s borrowings. 2,275,557 26,965,477 13,641,397 32,204,898 32,655,537 107,742,866 JPY 5 %/(5%) +/- 57 Chinese ¥ 5 %/(5%) +/-112 Management of interest rate risk To manage the interest rate risk, management has endeavoured to only sign and obtain borrowings from The Company has an established corporate governance structure and process for managing the risks regarding guarantees and Year 2013 institutions that offer contracts with fixed interest rates. contingent liabilities. All significant guarantees issued by the Company are approved by the Board of Directors and are administratively US$ 5 %/(5%) +/-1,550 Based on the various scenarios, the Company also managed by the Treasury Department. Updated guarantee schedules are compiled every month. Euro 5 %/(5%) +/- 470 manages its fair value interest rate risk by using floating- JPY 5 %/(5%) +/- 57 to-fixed interest rate swaps, where applicable. Chinese ¥ 5 %/(5%) +/-112 Sensitivity analysis Management of currency risk The Company analyses its interest rate exposure on a Exposure due to foreign currency risk is managed by dynamic basis by conducting a sensitivity analysis. recovering from customers the realised fluctuations in This involves determining the impact on profit or loss of the exchange rates not factored in the retail tariffs. defined rate shifts. The sensitivity analysis for interest rate risk assumes that all other variables, in particular 80 81 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 6. FINANCIAL RISK & CAPITAL MANAGEMENT (Continued) 6. FINANCIAL RISK & CAPITAL MANAGEMENT (Continued) 2014 2013 (c) Market risk (Continued) KShs’ million’ KShs’ million’ Sensitivity analysis (Continued) (e) Fair values of financial assets and liabilities Interest-bearing loans and bor- rowings (Note 29) 70,110 51,079 i. Comparison by class of the carrying amounts and fair values of the financial instruments is as set out below. foreign exchange rates, remain constant. The calculation (Less)/add cash and cash Carrying amount Fair value excludes borrowing costs capitalised in terms of the equivalents (Note 34(c)) (6,609) 2,097 2014 2013 2014 2013 Company’s accounting policy. The analysis has been (Restated) (Restated) performed on the same basis as the prior year. Net debt 63,501 53,176 KShs’000 KShs’000 KShs’000 KShs’000 Using the end of the year figures, the sensitivity analysis Financial assets indicates the impact on the statement of profit or loss and Equity 54,205 47,149 other comprehensive income if current floating interest Trade and other receivables 24,807,771 14,680,841 24,807,771 14,680,841 rates increase/decrease by one percentage point as a Gearing ratio 117% 113% Short term deposits 915,862 991,496 915,862 991,496 decrease/increase of KShs.523 million (2013 – KShs.551 Bank and cash balances 9,260,070 3,668,924 9,260,070 3,668,924 million). A rate increase/decrease of 5% would result in a decrease/increase in profit before tax of KShs.2,615 The major factors that impact on the equity of the Company million (2013 – KShs.2,755 million): include the following: Financial liabilities Effect on profit • revenue received from electricity sales (which is a before tax function of price and sales volume) Borrowings 70,109,721 51,079,365 70,109,721 51,079,365 Change in and equity • power purchase cost Trade and other payables 52,269,781 46,192,949 52,269,781 46,192,949 currency rate KShs’ 000 • cost of funding the business Bank overdraft 3,566,744 6,757,812 3,566,744 6,757,812 2014 • cost of operating the electricity business • cost of expanding the business to ensure that capacity Trade and other receivables are evaluated regularly to assess the likelihood of impairment. Based on this evaluation, allowances 1% 523,000 growth is in line with electricity sales demand (funding are taken to account for the expected losses on these receivables. As at 30 June 2014, the carrying amounts of such receivables, 5% 2,615,000 and additional depreciation) net of allowances, approximates their fair value. • taxation 2013 The fair values of term deposits, bank and cash balances and trade and other payables approximates their carrying amounts • dividends largely due to the short term maturities of these instruments. 1% 551,000 5% 2,755,000 The Company uses least cost Power System Development ii. Fair value hierarchy Planning process, which forecasts long-term growth in electricity demand; evaluates the alternative means to meet The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation and manage that demand and comes up with a Least Cost technique: (d) Capital management Power Development Plan. The planning process determines a Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities; Capital managed by the Company is the equity forward electricity cost curve (the Long Run Marginal Cost), attributable to the equity holders. The primary objective which will give an indication of the size of the price increases Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either of the Company’s capital management is to ensure that that the Company requires in order to be sustainable over directly or indirectly; it maintains healthy capital ratios in order to support its the medium and long term. Adjustment of the tariffs for the Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable business and maximise shareholder value. electricity business is regulated and is subject to the process market data. laid down by the Energy Regulatory Commission (ERC). The Company manages its capital structure and makes adjustments to it, in light of changes in economic The electricity business is currently in a major expansion phase conditions. To maintain or adjust the capital structure, driven by a rise in demand and Government policy. The funding the Company may adjust the dividend payment to of additional transmitting and other distribution capacity is to shareholders or issue new shares. No changes were be obtained from cash generated by the business, Government made in the objectives, policies or processes during the support and funds borrowed from local and international years ended 30 June 2014 and 30 June 2013. lending institutions. The adequacy of electricity tariffs allowed by ERC and the level of Government support are key factors in The Company monitors capital using a gearing ratio. This the sustainability of the Company. The debt to equity ratio plays ratio is calculated as net debt divided by capital. Net an important role in the credit ratings given to the Company debt is calculated as total of interest bearing loans and which in turn influence the cost of funding. The Company’s borrowings, less cash and cash equivalents. policy is to fund capital expansion programme jointly through its own resources and long-term borrowings. 82 83 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 7. 8. POWER PURCHASE COSTS 8. POWER PURCHASE COSTS (Continued) The Company transmits excess units generated by Aggreko Limited (a) ELECTRICITY SALES to Uganda Electricity Transmission Company Limited (UETCL) and (a) Basic power purchase costs (c) Units purchased Tanzania Electricity Supply Company Limited (TANESCO), whereas 2014 2013 The basic power purchase costs according to source were as Analysis of interconnected power purchases by utility source in UETCL and TANESCO transmit back their excess power to the KShs’000 KShs’000 follows:- Company at the same charge rate as that billed to them. The two gigawatt-hours (GWh) is as follows: Large commercial and industrial transactions have been effected in the accounts to give net quantity. customers 33,720,332 24,661,040 2014 2013 2014 2013 GWh GWh 9. OTHER OPERATING COSTS Small commercial customers 12,224,483 9,396,197 KShs’000 KShs’000 Domestic customers 15,833,508 12,980,859 (a) Distribution KenGen 5,931 5,968 Export and others 818,712 878,141 KenGen 17,620,150 18,227,794 Aggreko 94 261 2014 2013 Aggreko 705,570 1,125,013 KShs’000 KShs’000 Uganda Electricity Transmission Company 62,597,035 47,916,237 Uganda Electricity Transmission Company Limited 83 41 Limited 487,308 238,284 Tsavo Power Company Limited 152 178 Salaries and wages 3,429,977 3,406,048 Tsavo Power Company Limited 1,889,831 1,879,637 Iberafrica Power (E.A.) Company Limited 550 593 Staff welfare 25,676 4,108 (b) FOREIGN EXCHANGE COSTS ADJUSTMENTS Iberafrica Power (E.A.) Company Limited 3,090,640 3,118,337 OrPower 4 Inc. 851 503 Other consumable goods 679,207 408,759 OrPower 4 Inc. 6,868,006 3,893,915 Total foreign exchange costs Mumias Sugar Company Limited 57 71 Depreciation 3,595,995 2,904,965 Mumias Sugar Company Limited 231,890 303,734 on-charged to customers:- 4,422,200 9,222,089 Tanzania Electric Supply Company Limited 1 1 Transport and travelling 752,578 636,604 Tanzania Electric Supply Company Limited 12,919 10,591 Less amounts attributed to power Imenti Tea Factory* - 1 Office expenses 11,272 10,950 purchases (3,008,290) (5,119,619) Rabai Power Limited 3,001,752 2,590,175 Rabai Power Limited 633 443 Advertising and public relations 43,833 34,553 Imenti Tea Factory 803 3,599 Thika Power 454 - Loss on disposal of fixed assets* 288,526 392,483 Amounts attributable to Company’s Ethiopia Electricity Power Company 7,667 7,038 Off-grid power stations 33 27 Other costs 98,466 104,942 operations 1,413,910 4,102,470 Thika Power Limited 1,934,073 - 8,839 8,087 Recharge of recurrent expenditure to capital jobs (1,072,848) (1,179,434) 35,850,609 31,398,117 Less recharged to Rural Electrification Company operations here refer to payments to suppliers for Net recharge of distribution and Less foreign exchange surcharge (Note Scheme (585) (525) purchase of materials, loan repayments and other activities customer service costs to Rural 7(b)) (3,008,290) (5,119,619) Electrification Scheme (1,314,625) (1,090,018) requiring payment in foreign currencies. 8,254 7,562 Less recharged to Rural Electrification Scheme (2,183,387) (1,517,625) (c) OTHER OPERATING INCOME 6,538,057 5,633,960 *Imenti Tea Factory Co. Ltd. supplied KWh 149,280 during the period Other income is recognised when significant risks and rewards of 30,658,932 24,760,873 (2013 - KWh 696,680). ownership are transferred to the buyer and the amount of revenue *Loss on disposal of fixed assets mainly relates to vandalised can be measured reliably. (d) Type of interconnected power sources transformers sold as scrap. (b) Fuel costs KenGen 12,379,564 8,452,982 Analysis of interconnected power purchases by utility source in (b) Commercial services 2014 2013 Aggreko 2,629,643 6,755,718 gigawatt-hours (GWh) is as follows: KShs’000 KShs’000 2014 2013 Uganda Electricity Transmission Company 2014 2013 KShs’000 KShs’000 Limited 1,378,377 683,767 GWh GWh Reconnection charges 188,721 200,709 Tsavo Power Company Limited 2,328,642 2,836,412 Salaries and wages 2,914,145 2,193,374 Hydro 3,944 4,298 Stock excess adjustment 385,766 265,961 Iberafrica Power (E.A.) Company Limited 8,704,180 9,737,735 Staff welfare 20,787 19,144 Geothermal 2,008 1,599 Fibre optic leases 250,658 159,010 Rabai Power Limited 8,145,034 5,810,049 Electrical materials 43,402 43,221 Thermal 2,786 2,134 Deferred income amortised to profit Thika Power Limited 6,183,232 - Other consumable goods 31,641 37,507 or loss for the year (note 28) 2,682,821 1,648,791 Imports 84 42 Off-grid power stations 1,107,647 818,175 Depreciation 705,342 614,232 Miscellaneous sales 1,406,520 971,299 Others 17 14 Transport and travelling 412,373 482,852 Net loss on disposal of available for Office expenses 629,277 610,814 42,856,319 35,094,838 8,839 8,087 sale Treasury Bonds (note 19(a)) - (53,685) Less: recharged to Rural Electrification Less recharged to Rural Electrification Advertising and public relations 209,368 584,111 Scheme (3,883,136) (2,797,706) Scheme (585) (525) Repairs and maintenance 36,952 15,679 4,914,486 3,192,085 Other costs 49,510 138,495 8,254 7,562 38,973,183 32,297,132 Net recharge of distribution and customer service costs to Rural Electrification Scheme (1,561,577) (1,370,898) The Company incurred KShs.38,973,183 as fuel cost during the year (2013 - KShs.32,297,132), which was passed to the customers and a recovery of KShs.38,376,479 (2013: KShs.31,771,300) was made. 3,491,220 3,368,531 84 85 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 9. OTHER OPERATING COSTS 10. STAFF COSTS (c) Net foreign exchange gains/(losses) 2014 2013 (Restated) 2014 2013 2014 2013 KShs’000 KShs’000 2014 2013 KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 (e) Total operating expenses (c) Energy transmission Salaries and wages excluding retirement Exchange losses on loans (1,120,272) (1,856) Salaries and wages (note 10) 11,726,355 10,788,332 Salaries and wages 1,539,196 1,247,129 benefit costs 11,463,936 10,355,500 Exchange gains on loans for on-going Staff welfare 1,142,089 1,012,512 NSSF employer contributions 25,289 24,990 projects capitalised 205,094 33,129 Depreciation 629,510 649,322 Insurance 332,799 265,953 Transport and travelling 202,592 266,153 Pension costs – Company contributions 614,264 553,999 Other consumable goods 1,010,093 806,506 Wheeling charges-Ketraco (net) 50,000 161,474 Net retirement benefit expenses* Training expenses and consumer (note 31) (377,134) (146,157) Exchange (losses)/gains on loans for Other costs 179,882 240,699 services 340,896 371,821 completed projects (915,178) 31,273 Recharge of recurrent expenditure to Depreciation 6,628,838 5,590,686 Exchange gains/(losses) on deposits 31,162 (16,570) capital jobs (346,877) (431,667) Electricity expenses 181,642 188,521 Salaries and wages 11,726,355 10,788,332 Office expenses 1,120,888 935,381 2,254,303 2,133,110 Provision for leave pay (note 32) 20,495 81,082 Repairs and maintenance 1,264,448 932,584 Net foreign exchange (losses)/gains (884,016) 14,703 Licenses 41,597 237,209 (d) Administration Consultancy fees 247,538 138,361 11,746,850 10,869,414 Salaries and wages 4,220,171 4,087,938 Security and surveillance 415,979 394,767 Total finance costs (4,892,848) (2,480,659) Staff welfare 1,095,626 989,260 Auditors’ remuneration 13,970 13,000 Insurance 332,799 265,953 Directors’ emoluments 67,335 40,924 Other consumable goods 299,245 360,240 Amortisation 168,907 41,955 Pension write-back of provisions - (900) *Relates to recognition of Retirement benefit plan expenses as a result 12. PROFIT BEFORE TAX Training expenses and consumer services 340,896 371,821 of implementation of IAS 19 (as revised in 2011) effective for annual Leave provision 20,495 81,082 2014 2013 periods beginning on or after 1 January 2013. See detailed note on Depreciation 1,697,991 1,422,167 Bank charges 206,618 378,159 (Restated) note 31. Electricity expenses 181,642 188,521 Transport and travelling 1,367,543 1,385,609 KShs’000 KShs’000 Office expenses 480,339 313,617 Advertising and public relations 539,796 1,090,225 11. FINANCE (COSTS)/INCOME The profit before tax is arrived at after Licenses 41,597 237,209 Electrical materials 43,402 43,221 charging/(crediting):- (a) Interest income Security and surveillance 415,979 394,767 Wheeling charges-Ketraco (net) 50,000 161,474 Repairs and maintenance 1,227,496 916,905 Loss on disposal of property and Interest income on bank and other Staff costs (note 10) 12,123,984 11,015,571 Consultancy fees 247,538 138,361 equipment 288,526 392,483 deposits 104,208 111,546 Depreciation 6,628,838 5,590,687 Auditors’ remuneration 13,970 13,000 Other costs 1,431,488 1,256,786 Amortisation of intangible assets 168,852 41,899 Public relations 286,595 471,561 Recharges to Rural Electrification Amortisation of prepaid leases on land 55 56 Directors’ emoluments 67,335 40,924 Scheme * (3,783,844) (3,071,262) (b) Finance costs Directors’ emoluments: Amortisation 168,907 41,955 Recharges of recurrent expenditure to (2,184,670) (2,490,912) Interest incurred on: - Fees 5,644 6,745 capital jobs** Pension write back of provisions - (900) - Other 67,335 40,924 Loans (2,338,316) (1,383,401) Leave pay obligation provision 20,495 81,082 Auditors’ remuneration 13,970 13,000 22,682,728 20,984,477 Bank overdrafts (1,668,586) (1,110,031) Bank charges 206,618 378,159 Loss on disposal of property and Dividends on cumulative preference Net retirement benefit expenses (377,134) (146,157) shares (1,930) (1,930) equipment 288,526 392,483 Other costs 1,103,630 772,650 Rent payable 294,250 146,087 Recharge of administration costs to *Recharges to RES relate to operating costs apportioned to RES Net foreign exchange losses/(gains) 884,016 (14,703) Rural Electrification Scheme (907,642) (610,346) based on the predetermined formula developed by GOK. Net retirement benefit expenses (377,134) (146,157) **Recharge of recurrent expenditure to capital jobs relates to the (4,008,832) (2,495,362) Recharge of recurrent expenditure to Interest payable 4,008,832 2,495,362 capital jobs (764,945) (879,811) labour and transport costs incurred by staff on capital jobs. Interest receivable (104,208) (111,546) Rent receivable (53,227) (61,606) 10,399,148 9,848,876 86 87 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 13. TAXATION (d) Analysis of tax paid 15. DIVIDEND PER SHARE (a) Statement of profit or loss – income tax expense Proposed dividends are accrued after they have been ratified at an Annual General Meeting. At the Annual General Meeting to be held before the 2014 2013 end of 2014, a final dividend in respect of the year ended 30 June 2014 of KShs.0.30 (2013 – KShs.Nil) for every ordinary share of KShs.2.50 par KShs’000 KShs’000 2014 2013 value is to be proposed. An interim dividend of KShs.0.20 (2013 – KShs.Nil) for every ordinary share of KShs.2.50 was declared and paid during (Restated) Paid during the year 22,717 68,505 the year. This will bring the total dividend for the year to KShs.0.50 (2013 – KShs. Nil). KShs’000 KShs’000 Corporation tax on separate sources paid 7,597 22,515 Current taxation based on the adjusted 16. PROPERTY AND EQUIPMENT profit for the year at 30% - - Deferred tax charge current year 30,314 91,020 Freehold Furniture (note 26) 3,702,549 3,023,973 2014 land and Transmission Distribution Motor equipment Work in Deferred tax prior year – under provision - 68,159 14. EARNINGS PER SHARE buildings lines lines Machinery vehicles and other Progress Total Corporation tax on separate sources – COST KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 KShs’ 000 KShs’000 prior year 7,597 - The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share are as At 1 July 2013 – as Corporation tax on separate sources of follows: previously stated 2,838,395 15,661,234 95,011,342 185,856 4,990,463 14,614,086 38,147,712 171,449,088 income – current year 32,047 32,648 Prior year 2014 2013 adjustment for 3,742,193 3,124,780 (Restated) work in progress* KShs’000 KShs’000 (note 41(c)) - - - - - - 2,254,065 2,254,065 (b) Reconciliation of tax expense to the expected tax based on Profit for the year attributable to owners profit before tax:- of the Company 6,456,234 3,445,717 At 1 July 2013 – as Profit before tax 10,198,427 6,570,497 restated 2,838,395 15,661,234 95,011,342 185,856 4,990,463 14,614,086 40,401,777 173,703,153 The calculation of basic and diluted earnings per share is based on Work in progress continuing operations attributable to the ordinary equity holders Tax at the applicable tax rate of 30% 3,059,528 1,971,150 additions - - - - - - 27,208,068 27,208,068 of the Company. There were no discontinued operations during the Tax effect of expenses not deductible Transfers to fixed year. for tax purposes 31,784 44,066 assets 42,524 161,525 19,631,973 355,438 713,617 3,019,007 (23,924,084) - Tax effect on excess allowance over The total number of shares and the weighted average number of Disposals - - (484,723) - - - - (484,723) depreciation 611,237 1,008,757 shares for the purpose of calculating the basic and diluted earnings Deferred tax prior year – under provision - 68,159 are as follows: Corporation tax on separate sources – At 30 June 2014 2,880,919 15,822,759 114,158,592 541,294 5,704,080 17,633,093 43,685,761 200,426,498 prior year 7,597 - 2014 2013 Corporation tax separate sources – DEPRECIATION Weighted average number of ordinary current year 32,047 32,648 At 1 July 2013 779,061 6,926,723 10,482,151 54,993 3,148,451 9,868,309 - 31,259,688 shares for the purpose of basic and diluted earnings per share 1,951,467,045 1,951,467,045 Charge for the Tax charge 3,742,193 3,124,780 year 56,889 477,784 3,740,556 13,394 616,373 1,723,842 - 6,628,838 Disposals - - (175,996) - - - - (175,996) Earnings per share is calculated by dividing the profit attributable to owners of the Company by the number of ordinary shares. (c) Statement of Financial Position – Tax recoverable 2014 2013 At 30 June 2014 835,950 7,404,507 14,046,711 68,387 3,764,824 11,592,151 - 37,712,530 (Restated) At the beginning of the year 20,486 (37,886) Paid during the year 30,314 68,505 Basic earnings per share (KShs) 3.31 1.76 Corporation tax on separate sources – NET BOOK VALUE prior year (7,597) 22,515 At 30 June 2014 2,044,969 8,418,252 100,111,881 472,907 1,939,256 6,040,942 43,685,761 162,713,968 Corporation tax separate sources – Diluted earnings per share (KShs) 3.31 1.76 current year (32,047) (32,648) 11,156 20,486 There were no potentially dilutive ordinary shares as at 30 June 2014. Diluted earnings per share is therefore the same as basic earnings per share. 88 89 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 16. PROPERTY AND EQUIPMENT (Continued) 17. PREPAID LEASES ON LAND 19. INVESTMENTS IN GOVERNMENT SECURITIES (a) he investments in government securities relate to two treasury T Capital work-in-progress relates mainly to construction works of electricity distribution lines and installations spread across the country. 2014 2013 KShs’000 KShs’000 bonds classified as available for sale investments. The details are as follows:- Freehold Furniture COST 2013 land and Transmission Distribution Motor equipment Work in At 30 June 133,693 133,693 2013 2013 buildings lines lines Machinery vehicles and other Progress Total Carrying 2013 Fair value COST KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 KShs’ 000 KShs’000 2014 value Proceeds gain AMORTISATION KShs ‘000 KShs ‘000 KShs ‘000 Kshs ‘000 At 1 July 2012 – as previously At 1 July 2,040 1,984 stated 2,519,667 15,538,340 75,031,048 177,674 4,317,065 12,755,310 21,359,044 131,698,148 Amortisation for the year 55 56 Prior year adjustment for Available for sale invest- work in progress* (note 41(c)) - - - - - - 2,254,065 2,254,065 ments - 1,171,109 1,244,821 73,712 At 30 June 2,095 2,040 At 1 July 2012 – as restated 2,519,667 15,538,340 75,031,048 177,674 4,317,065 12,755,310 23,613,109 133,952,213 NET BOOK VALUE The two bonds were disposed of in year 2012/2013 and the realized At 30 June 131,598 131,653 net loss on disposal was as follows: Work in progress additions - - - - - - 40,578,337 40,578,337 This relates to leases on land that is under use by the Company 2014 2013 Transfers to fixed assets 318,728 122,894 20,555,016 8,182 926,073 1,858,776 (23,789,669) - countrywide mainly hosting substations. The leases carry different KShs’000 KShs’000 Disposals - - (574,722) - (252,675) - - (827,397) lease periods and lease amounts, depending on when the land was leased. Cumulative fair value loss reclassified There were 160 leases during the year (2013 – 160). All the land is to equity on disposal on disposal - (127,397) At 30 June 2013 – as restated 2,838,395 15,661,234 95,011,342 185,856 4,990,463 14,614,086 40,401,777 173,703,153 leased from the Government of Kenya under renewable leases. The lease periods range from between 50 years to 99 years in the counties Fair value gain during the year - 73,712 and up to 999 years for some plots in the Coastal City of Mombasa. DEPRECIATION Leases are renewed as they expire. Where leases have expired in At 1 July 2012 724,960 6,451,747 7,567,405 45,229 2,897,878 8,339,559 - 26,026,778 the past, all have been renewed without any complications and no Realised net loss on disposal (note Charge for the year 54,101 474,976 3,045,117 9,764 477,979 1,528,750 - 5,590,687 renewal complications are expected in the foreseeable future. 7(c)) - (53,685) Disposals - - (130,371) - (227,406) - - (357,777) 18. INTANGIBLE ASSETS-COMPUTER SOFTWARE (b) Unquoted investment At 30 June 2013 779,061 6,926,723 10,482,151 54,993 3,148,451 9,868,309 - 31,259,688 2014 2013 Cost 4,300 4,300 KShs’000 KShs’000 Impairment (4,300) (4,300) COST NET BOOK VALUE At 1 July 319,896 188,801 - - At 30 June 2013 2,059,334 8,734,511 84,529,191 130,863 1,842,012 4,745,777 40,401,777 142,443,465 Additions 1,320,180 131,095 Capital work-in-progress relates mainly to construction works of electricity distribution lines and installations spread across the country. The unquoted investment represents equity shares held in At 30 June 1,640,076 319,896 Consolidated Bank of Kenya Limited. The shares were acquired in *Restatement of work in progress is in relation to capital works for Kisii-Chemosit and Kamburu-Meru transmission lines together with the return for deposits previously held with Jimba Credit Finance Limited, related loan obligation which were omitted from the Company’s books as a result of the Government directive to transfer these assets to Kenya AMORTISATION one of the finance houses under rehabilitation from insolvency. Jimba Electricity Transmission Company Limited (Ketraco). However, the transfer was not effected as the legal agreements to facilitate the transfer At 1 July (61,180) (19,281) Credit Finance Limited is under statutory management and the had not been signed. These work in progress/lines will be transferred to Ketraco after the agreement to transfer the assets and related loans to Charge for the year (168,852) (41,899) investment was fully impaired and fully provided for in 2007/2008. Ketraco is executed between the relevant parties. (230,032) (61,180) At 30 June 1,410,044 258,716 90 91 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 20. INVENTORIES Trade and other receivables are non-interest bearing and are generally 21. (Continued) due within 30 days. 2014 2013 (c) ELECTRICITY RECEIVABLES KShs’000 KShs’000 * Recoverable fuel costs relate to fuel costs for the month of June passed on to customers to be recovered in July. As at 30 June the ageing analysis of electricity receivables was as follows: General stores 5,427,022 5,868,076 Conductors and cables 4,946,816 5,607,923 ** Due from Ketraco are amounts due from Ketraco relating to the Total <30 days 30-60 days 60-90 days 90-120 days >120 days Transformers 2,733,228 2,201,633 0.75% Japan Bank for International Cooperation reinstated debt for 2014 KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 KShs’000 the construction of Sondu Miriu transmission and distribution line Poles 790,490 674,975 which is to be transferred to Ketraco after the agreement to transfer Gross 17,761,699 14,256,463 1,050,891 608,050 494,651 1,351,644 Meters and accessories 97,122 94,799 the loan to Ketraco is executed between the relevant parties. Impairment (3,621,791) (116,555) (1,050,891) (608,050) (494,651) (1,351,644) Engineering spares 16,226 17,355 Fuel and oil 190,238 179,000 Net electricity Motor vehicle spares 670,183 159,824 (b) PROVISIONS FOR CREDIT LOSSES receivable 14,139,908 14,139,908 - - - - Goods in transit 96,885 112,037 As at 30 June 2014, trade and other receivables amounting to KShs.3,994,687,000 (2013 – KShs.4,087,079,000) were fully impaired 2013 14,968,210 14,915,622 and provided for. Movements in the provisions for credit losses were Gross 12,885,322 9,558,396 999,260 443,820 362,186 1,521,660 as follows: Impairment (3,719,505) (392,579) (999,260) (443,820) (362,186) (1,521,660) General stores, engineering spares, fuel and oil, transformers and 2014 2013 motor vehicle spares are stated at weighted average cost and KShs’000 KShs’000 adjusted with the provision for obsolete and slow moving stocks of Net electricity KShs.527,529,000 (2013 – KShs.458,502,000) while goods in transit receivable 9,165,817 9,165,817 - - - - At 1 July (4,087,079) (4,227,544) are at cost. A total of KShs.45,905,000 (2013 – KShs.53,291,000) has Bad debts write-off 97,715 140,465 been expensed as an increase in the provision for obsolete and slow moving stocks. Additional provision (5,323) - (d) OTHER RECEIVABLES ANALYSIS 21. (a) TRADE AND OTHER RECEIVABLES At 30 June (Note 21(a)) (3,994,687) (4,087,079) Other receivables comprise debtors which have been impaired as follows: 2014 2013 2014 2013 (Restated) Provisions for credit losses comprise: (Restated) KShs’000 KShs’000 Electricity receivables 3,621,791 3,719,505 KShs’000 KShs’000 Electricity receivables (note 21(c)) 17,761,699 12,885,322 Staff receivables 86,677 86,677 Prepayments 144,633 73,670 Other receivables 286,219 280,897 i. Staff receivables (note 21(a)) 545,532 559,937 Recoverable fuel costs* 5,816,440 2,202,770 Impairment (86,677) (86,677) VAT recoverable 1,154,157 3,376,943 3,994,687 4,087,079 Staff receivables (note 21(d)(i)) 545,532 559,937 Deferred payment customers 458,297 483,750 Net other receivables 458,855 473,260 Due from Ketraco** 2,376,810 1,822,022 Other receivables (note 21(d)(ii)) 993,680 814,119 ii. Other receivables (note 21(a)) 993,680 814,119 Gross trade and other receivables 29,251,248 22,218,533 Impairment (286,219) (280,897) Provision for credit losses (Note 21(b)) (3,994,687) (4,087,079) Net trade and other receivables 25,256,561 18,131,454 Net other receivables 707,461 533,222 All provisions for credit losses are specific. 92 93 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 22. SHORT TERM DEPOSITS, BANK AND CASH BALANCES 23. SHARE CAPITAL 26. DEFERRED TAX As at 30 June 2014 the Company had accumulated tax losses amounting to KShs.33,288 million (2013 — KShs.30,409 million) 2014 2013 Ordinary share capital Deferred tax is calculated on all temporary differences under the available for future relief. Under the new Kenyan legislation with KShs’000 KShs’000 liability method using the enacted rate, currently at 30%. The net 2014 2013 effect from January 2010, tax losses can only be carried forward to a deferred tax liability at year-end is attributable to the following items: KShs’000 KShs’000 maximum of four years. (a) Short term deposits-maturing within 3 months Authorised: 2014 2013 27. TRADE AND OTHER PAYABLES Housing Finance Company of Kenya (Restated) Limited 340,712 322,739 2,592,812,000 ordinary shares of KShs’000 KShs’000 2014 2013 KShs.2.50 each 6,482,030 6,482,030 Standard Chartered Bank Kenya (Restated) Limited 259,796 113,679 Deferred tax liabilities: KShs’000 KShs’000 CfC Stanbic Bank Limited 217,452 161,913 Accelerated capital allowance 29,346,462 24,634,533 Issued and fully paid: (a) Non-current liabilities The Co-operative Bank of Kenya Unrealised exchange gains 36,194 321,533 Limited 97,902 393,165 1,951,467,045 ordinary shares of Customer deposits* 7,182,095 6,763,227 Net retirement benefit asset 1,632,565 1,095,216 KShs.2.50 each 4,878,667 4,878,667 Capital contributions 2,474,775 2,209,848 915,862 991,496 Capital contribution – on-going projects 9,845,564 6,176,612 31,015,221 26,051,282 Rural Electrification Scheme Levy 122,685 750,717 The average effective interest rate on the short-term deposits as at 24. SHARE PREMIUM Deferred creditor (Fibre Optic) 775,622 863,402 30 June 2014 was 5.59% (2013 – 5.84%). The share premium arose from the redemption of the 7.85% Deferred tax assets: Donor Funded Revolving Fund 1,694,613 957,158 (b) Bank and cash balances redeemable non-cumulative preference shares and the rights issue Rural Electrification Schemes 1,066,421 3,313,077 in the year 2011. Tax losses (9,986,474) (9,122,753) Ministry of Finance 984,421 984,421 2014 2013 Provisions (1,459,420) (1,485,960) KShs’000 KShs’000 Other payables and accruals 1,475,376 1,709,499 2014 2013 (Restated) Cash at bank 9,236,684 3,645,029 25,621,572 23,727,961 KShs’000 KShs’000 (11,445,894) (10,608,713) Cash on hand 23,386 23,895 25. RESERVES *Customers’ deposit is held as a non-current liability because the Net deferred tax liability 19,569,327 15,442,569 Retained earnings 27,305,683 20,249,921 Company will continue to offer services to the customers for the 9,260,070 3,668,924 foreseeable future and the customers are not expected to discontinue Movement on the deferred tax account is as follows: their use of electricity in the short run. In addition, the customer Bank overdraft* (3,566,744) (6,757,812) deposits are a security for the electricity meters supplied to the Retained earnings At 1 July - as previously reported 11,535,982 9,496,455 customer for long term electricity supply. 5,693,326 (3,088,888) The retained earnings balance represents the amount available for (b) Current liabilities Prior year adjustments: distribution to the shareholders of the Company. - Net retirement benefit assets (note 2014 2013 41(a)) 1,095,216 563,071 (Restated) *The bank overdraft was obtained from Kenya Commercial Bank - Tax effect on capital contributions KShs’000 KShs’000 Limited, Commercial Bank of Africa and CfC Stanbic bank during (note 41(d)) 2,811,371 1,802,614 the year. KenGen 7,731,871 5,953,651 Aggreko 728,226 1,650,104 The interest rates were as follows:- At 1 July - as restated 15,442,569 11,862,140 Other electricity suppliers 10,557,831 5,879,527 Customer refunds (foreign exchange Bank Interest rates adjustment) - 902,310 Tax effect on net retirement benefit Other suppliers’ accounts 2,949,789 4,345,366 Kenya Commercial Bank Base rate minus 2% (base rate at 30 asset - dealt with through other com- Limited June 2014 was 17%) Rural Electrification Scheme’s current prehensive income in equity 424,209 488,297 Base rate minus 1.5% (base rate at account 1,444,819 1,341,014 Charge to profit or loss (note 13 (a)) 3,702,549 3,023,973 CfC Stanbic Bank Limited 30June 2014 was 13.5%) Rural Electrification Scheme Levy 569,212 341,257 Deferred tax prior year under provi- Commercial Bank of Base rate minus 4% (Base rate at 30 Nuclear Electricity Project 10,251 25,526 sion - 68,159 Africa Limited June 2014 was 17%) Energy Regulatory Commission Levy 81,238 78,097 Other payables and accruals 2,574,972 1,948,136 At 30 June 19,569,327 15,442,569 26,648,209 22,464,988 94 95 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 27. TRADE AND OTHER PAYABLES (Continued) 29. BORROWINGS 29. BORROWINGS (Continued) (a) Balances (Continued) The Rural Electrification Scheme Levy under current liabilities 2014 2013 relates to levy charge for May and June 2014 to be remitted to Rural (Restated) Standard Chartered Bank, Equity Bank, First Rand Bank, Barclays Bank, Commercial Bank of Africa, Co-operative Bank and International Finance Electrification Authority on collection. Capital contributions for on- KShs’000 KShs’000 Corporation loans are secured by letter of negative pledge. All other loans are guaranteed by the Government of Kenya. going jobs relate to customer contributions for capital works not (a) Balances completed. Trade payables under current liabilities are non-interest 4% Kenya Government/European Under the terms of the Kenya Government/Swiss mixed credit, the balance of this loan, upon full payment of 50% of the amount lent, was to bearing and are normally settled within 60 days. Investment Bank – Olkaria loan (Euro become a grant to the GoK. The last instalment on this loan was paid in December 2007. Modalities on how the grant will be remitted to the GoK 10,359,618) 2005-2020 1,238,492 1,376,109 had not been worked out as at 30 June 2014. 28. DEFERRED INCOME 7.7% Kenya Government/IDA 2966 KE loan 1997-2017 188,349 188,349 2014 2013 KShs’000 KShs’000 4.5% GOK/IDA 3958& 4572 KE ESRP (b) Analysis of borrowings by currency (USD 116,369,315) 2004-2024 10,197,082 7,772,673 Balance at beginning of the year 16,087,747 12,362,327 4.5 % GOK/ Nordic Development Fund Borrowings Additions 5,275,788 5,374,211 435 ESRP (Euro 7,812,500) 2006 – Borrowings Borrowings in Chinese Borrowings Borrowings Total 2024 933,985 948,358 in KShs in US$ Yuan in JPY in Euros borrowings Recognised as income (note 7(c)) (2,682,821) (1,648,791) 4.5% GOK/Agence Francaise de 2014 KShs’ 000 KShs’ 000 KShs’ 000 KShs’ 000 KShs’ 000 KShs’ 000 Development 3008 ESRP (Euro Balance at end of the year 18,680,714 16,087,747 20,179,773) 2006 – 2024 2,412,492 2,505,931 Loans 12,952,409 44,908,622 2,273,260 1,148,565 8,826,865 70,109,721 3.97% GOK/EIB 23324 KE ESRP (Euro 35,482,193) 2006 – 2025 4,241,896 4,229,548 Deferred income relates to capital contributions received from Kenya Electricity Expansion Project 2013 electricity customers for the construction of electricity assets. Loan (USD 28,678,612) 2,513,018 1,661,911 Loans 7,300,000 30,995,923 2,254,065 1,149,996 9,379,381 51,079,365 The amounts are amortised through profit or loss on a straight line Standard Chartered Medium Term basis over the useful life of the related asset, used to provide the Loan (USD 23,437,500) 2,053,756 3,359,375 on-going service. Equity Bank USD Medium Term Loan 2014 2013 (USD 39,345,690) 3,447,740 4,404,096 Included in the additions for the current year is an amount of KShs.2.7 KShs’000 KShs’000 Equity Bank Short Term Loan 4,000,000 4,000,000 billion (2013: none) disbursed by the Government of Kenya as a grant First Rand Bank Medium Term Loan (c) Maturity of borrowings to the Company to enhance universal access to electricity through (USD 54,545,454) 4,779,649 5,160,000 Due within 1 year 16,968,279 8,193,054 connectivity to the national grid. International Finance Corporation Loan Due between 1 and 2 years 9,460,445 10,638,192 (USD 27,000,000) 2,365,926 2,322,000 A separate classification for deferred income has been adopted as, Due between 2 and 5 years 23,844,226 17,956,389 Standard Chartered Loan (USD in the view of the Directors, the amounts included in the deferred Due after 5 years 19,836,771 14,291,730 52,500,000) 4,600,412 5,160,000 income are not refundable in cash to the customers, but instead, Co-operative Bank Short Term Loan 4,500,000 - the asset is used to provide an ongoing service to the customer and 70,109,721 51,079,365 hence there is no clear liability arising. Barclays Bank Loan 6,000,000 - First Rand Bank Long Term Loan (USD 100,000,000) 8,762,690 - 30. PREFERENCE SHARES 0.75% Japan Bank for International Authorised, issued and fully paid: Cooperation (JPY 1,325,904,871) 1,148,565 1,149,996 2.5% GOK/EXIMBANK Loan 2014 2013 (¥161,028,810) 2,273,260 2,254,065 KShs’000 KShs’000 CBA Medium Term Loan 2,750,000 - 350,000 - 7% cumulative preference shares of KShs.20 each 7,000 7,000 Citi Bank Short Term Loan - 2,500,000 1,800,000 - 4% cumulative preference shares of KShs.20 each 36,000 36,000 Standard Chartered Bank Short Term Loan - 800,000 43,000 43,000 Accrued interest 1,702,409 1,286,954 The preference shares are treated as financial liabilities because the Company has a contractual obligation to pay preference dividends on the 70,109,721 51,079,365 shares. Less: amounts repayable within 12 months (note 29(c)) (16,968,279) (8,193,054) Non-current 53,141,442 42,886,311 96 97 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 31. RETIREMENT BENEFITS OBLIGATION 31. RETIREMENT BENEFITS OBLIGATION (Continued) 32. PROVISION FOR LEAVE PAY 2014 2013 The Company operates a defined contributions scheme for all full time (Restated) 2014 2013 Shs’000 Shs’000 Movement in the present value of defined benefit funded obligations permanent employees from 1 July 2006. It also operates a defined Shs’000 Shs’000 in the current year were as follows: benefit scheme for pensioners and deferred pensioners (those who At 1 July 1,070,460 989,378 Current service cost 74,547 83,253 have left the employment of the Company or are still serving but have Additional provisions (note 10) 20,495 81,082 Interest cost on defined benefit 2014 2013 not attained retirement age to qualify as pensioners), who existed as obligation 1,390,307 1,292,216 (Restated) at 30 June 2006. The defined contributions scheme is administered by At 30 June 1,090,955 1,070,460 Interest income on plan assets (1,841,988) (1,521,626) Shs’000 Shs’000 an in-house team and is funded by contributions from the Company and its employees. Recognised in profit or loss in respect Defined benefit obligations – 1 July 11,356,723 10,610,949 Provision for annual leave is based on services rendered by employees The defined benefit scheme is closed and the members ceased of the plan (note 10) (377,134) (146,157) up to the end of the year. Current service cost 74,547 83,253 contributing to the scheme with effect from 1 July 2006. The benefits Interest cost on obligation 1,390,307 1,292,216 33. DIVIDENDS PAYABLE provided by defined benefit scheme are based on a formula taking Actuarial gain (1,472,867) - Actuarial gain (1,472,867) - into account years and complete months of service with the employer Return on plan assets (excluding 2014 2013 Benefits paid (543,079) (629,695) Shs’000 Shs’000 since joining the scheme to the closing date. The benefits provided amount in interest cost) 58,837 (1,627,658) by the defined contribution scheme are determined by accumulated Dividends payable on ordinary shares 573,541 388,826 contributions from the employer and employees and the returns on Recognised in other comprehensive Defined benefit obligations – 30 June 10,805,631 11,356,723 investments. income (1,414,030) (1,627,658) These relate to unclaimed dividends payable to different ordinary shareholders. CfC Stanbic Financial Services Limited and Co-opTrust Investment Movement in the present value of The movement in the dividend payable account is as follows:- Total (1,791,164) (1,773,815) Services Limited jointly manage the defined benefit scheme’s funds. defined benefit scheme assets: 2014 2013 Under the defined benefit scheme, the employees are entitled Shs’000 Shs’000 to retirement benefits varying between 3 and 5 percent of final Fair value of scheme assets – 1 July (15,007,442) (12,487,853) The amount included in the statement of financial position arising At 1 July 388,826 425,184 pensionable emoluments on attainment of the retirement age. Interest income on plan assets (1,841,988) (1,521,626) Declared during the year 392,223 587,370 from the Company’s obligation in respect of its defined benefit Both schemes are governed by the Retirement Benefits Act, 1997. retirement plan is as follows: Return on plan assets 58,837 (1,627,658) Paid during the year (207,508) (623,728 This requires that an actuarial valuation be carried out at least Benefits paid 543,079 629,695 every three years for the defined benefit scheme. The most recent At 30 June 573,541 388,826 2014 2013 actuarial valuation of the defined benefit scheme was carried out (Restated) Fair value of scheme assets – 30 June (16,247,514) (15,007,442) as at 31 December 2013, using the Projected Credit Method, by an Shs’000 Shs’000 34. NOTES TO THE STATEMENT OF CASH FLOWS independent qualified actuary, Alexander Forbes Financial Services Present value of funded defined (a) RECONCILATION OF OPERATING PROFIT TO CASH (East Africa) Limited. The actuary carried out a high level actuarial benefit obligation 10,805,631 11,356,723 GENERATED FROM OPERATIONS estimate of the scheme’s financial position as at 31 December 2013. The fair value of the plan assets at the end of the reporting period for Fair value of plan assets (16,247,514) (15,007,442) 2014 2013 Management has updated the results of the 31 December 2013 each category are as follows: valuation to reflect the changes as at 30 June 2014. (Restated) KShs’000 KShs’000 The principal assumptions used for the purposes of the actuarial Present value of unfunded defined 2014 2013 Operating profit 14,987,067 8,939,610 benefit asset (5,441,883) (3,650,719) Shs’000 Shs’000 valuations were as follows: Depreciation 6,628,838 5,590,687 Amortisation of intangible assets 168,852 41,899 2014 2013 The reconciliation of the amount included in the statement of Equity instruments 3,151,150 2,654,910 Amortisation of prepaid leases on land 55 56 financial position is as follows: Debt instruments 6,102,760 6,673,810 Loss on disposal of property and Property 6,694,160 5,235,450 equipment 288,526 392,483 - discount rate of interest 13.0% 12.5% 2014 2013 Others 299,444 443,272 Loss on disposal of treasury bond - 53,685 - expected rate of return on assets 13.0% 12.5% (Restated) Shs’000 Shs’000 Increase in deferred income 2,592,967 3,725,420 - future salary increases 5.0% 5.0% Increase in provision for leave pay ob- Total scheme (assets) 16,247,514 15,007,442 Net asset at the start of the period (3,650,719) (1,876,904) ligation 20,495 81,082 Net income recognised in profit or Movement in retirement benefits ex- Retirement age 60 Years 60 Years loss (377,134) (146,157) penses (377,134) (146,157) Fair value of plan assets (1,414,030) (1,627,658) The Company also contributes to the statutory National Social Security Working capital adjustments The updated position arising from the Company’s obligation in Fund (NSSF). This is a defined contribution scheme registered under Increase in inventories (52,588) (4,629,246) respect of its defined benefits plan is as follows: the National Social Security Act. The Company’s obligations under Increase in trade and other receivables (7,125,792) (3,973,960) Present value of unfunded defined the scheme are limited to specific contributions legislated from time Increase in trade and other payables 6,076,832 8,378,669 The amounts recognised in the profit and loss and other comprehensive benefit asset (5,441,883) (3,650,719) to time and are currently at KShs.200 per employee per month. income in respect of the defined benefit plan are as follows: Cash generated from operations 23,208,118 18,454,228 98 99 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 34. NOTES TO THE STATEMENT OF CASH FLOWS (Continued) 35. RELATED PARTY DISCLOSURES The tariffs applicable to Government institutions are the same as those 2014 2013 charged to other ordinary customers. (b) ANALYSIS OF CHANGES IN LOANS Note KShs’000 KShs’000 The Government of Kenya is the principal shareholder in The Kenya DIVIDENDS PAID Power and Lighting Company Limited (KPLC) holding a 50.1% equity (c) Staff 2014 2013 interest. The Government also holds 70% of the equity interest (Restated) in Kenya Electricity Generating Company Limited (KenGen). The 2014 2013 Dividends payable – 1 July 388,826 425,184 KShs’000 KShs’000 KShs’000 KShs’000 Company is related to KenGen throuh common control. During the Preference dividends - 4% (i) Sales and 7% cumulative year, the following transactions were carried out with related parties: At the beginning of the year 51,079,365 27,762,313 Electricity sales to staff 137,297 131,576 Receipts 25,100,876 29,923,542 preference shares 1,930 1,930 (a) T he Company had no individually significant transactions Repayments (7,575,085) (6,663,441) 2013 dividends declared - 585,440 carried out on non-market terms. Outstanding balances included in Repayment of previous year’s accrued 2014 interim dividends electricity receivables 2,777 3,125 declared 390,293 - (b) Other transactions that are collectively significant are detailed interest (1,286,954) (1,248,429) Dividends payable - 30 June (573,541) (388,826) as follows:- The tariff applicable to staff is the same as that charged to other Foreign exchange loss 1,089,110 18,426 Government of Kenya ordinary customers with effect from 1 July 2008. Accrued interest 1,702,409 1,286,954 2014 2013 2014 2013 At the end of the year 70,109,721 51,079,365 Dividends paid 207,508 623,728 KShs’000 KShs’000 KShs’000 KShs’000 i. Ministries: (ii) Advances to staff included in (e) ANALYSIS OF INTEREST RECEIVED Electricity sales to Government trade and other receivables 458,855 473,260 (c) ANALYSIS OF CASH AND CASH EQUIVALENTS Ministries 3,163,359 2,701,254 Interest received on bank (iii) Key management compensation Short term deposits 915,862 991,496 and other deposits 11 104,208 111,546 Electricity sales to strategic Short-term employee benefits 14,882 23,755 Bank and cash balances 9,260,070 3,668,924 Accrued interest brought parastatals 3,573,423 3,247,304 Bank overdraft (3,566,744) (6,757,812) forward 3,299 57,605 Accrued interest carried Termination benefits 15,608 19,364 forward (2,614) (3,299) ii. Outstanding balances at the year end included in trade and 6,609,188 (2,097,392) other receivables: Short-term employee benefits include those relating to the 2014 2013 Managing Director and Chief Executive Officer who is also a Interest received 104,893 165,852 KShs’000 KShs’000 Director which are disclosed in note 12 and also below: For the purpose of the cash flow statement, cash and cash equivalents include short term liquid investments which are readily convertible Ministries 746,798 546,140 (iv) Fees for services as director to known amounts of cash and which were within three months to Strategic parastatals 1,799,015 1,173,810 (f) PURCHASE OF PROPERTY AND EQUIPMENT 2014 2013 maturity when acquired; less advances from banks repayable within VAT recoverable 1,154,157 3,376,943 KShs’000 KShs’000 three months from date of disbursement or date of confirmation of 2014 2013 the advance. 3,699,970 5,096,893 Non-executive Directors 5,644 6,745 (Restated) Note KShs’000 KShs’000 (d) ANALYSIS OF INTEREST AND DIVIDEND PAID Other emoluments Additions to property and iii. Outstanding balances at the year end included in trade and 2014 2013 Salaries and other short term equipment 16 23,924,084 23,789,669 other payables: Note KShs’000 KShs’000 employment benefits: Additions to work in 2014 2013 INTEREST PAID - Executive Directors and key progress 16 3,283,984 19,042,733 KShs’000 KShs’000 management staff 30,490 43,119 Exchange losses on loans Rural Electrification Scheme levy 691,897 1,091,974 - Non-executive Directors 67,335 40,924 Interest on loans 11 2,338,316 1,383,401 for on-going projects Overdraft interest 11 1,668,586 1,110,031 Electricity Regulatory capitalised 11(c) (205,094) (33,129) Commission levy 81,238 78,097 Total other emoluments 97,825 84,043 Interest expense on loans Rural Electrification Scheme – capitalised 34(d) (352,127) (168,449) recurrent 1,444,819 1,341,014 Total 103,469 90,788 4,006,902 2,493,432 Ministry of Finance 984,421 984,421 Interest on loans capitalised 352,127 168,449 Property and equipment Rural Electrification Schemes 1,066,421 3,313,077 Accrued interest brought purchased 26,650,847 42,630,824 (d) Rural Electrification Schemes forward 29(a) 1,286,954 1,248,429 During the year, the Company continued to manage the Rural 4,268,796 6,808,583 Accrued interest carried Electrification Scheme (RES) under the Rural Electrification forward 29(a) (1,702,409) (1,286,954) Programme (REP), on behalf of the Government of Kenya. Net amount owed to Government Interest paid 3,943,574 2,623,356 of Kenya (568,826) (1,711,690) The Rural Electrification Programme (REP) was established in 1973 by the Government of Kenya following an agreement between the 100 101 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 35. RELATED PARTY DISCLOSURES (Continued) * These are advance payments received from Ketraco to cater for 37. CONTINGENT LIABILITIES (Continued) AS LESSOR: (d) Rural Electrification Schemes (Continued) costs incurred by KPLC in the construction of Kisii-Chemosit and The future minimum lease payments Kamburu-Meru lines. TARDA which then instituted a suit against KPLC in 1998 receivable under non-cancellable Government and East African Power & Lighting Company Limited, to recover those amounts remitted to Treasury. From the (g) KPLC Staff Retirement Benefits Scheme operating leases are as follows: the predecessor to The Kenya Power & Lighting Company Limited. interest claimed in court this sum is now estimated to be The programme was established with the specific objective to extend over KShs.1.3 billion. 2014 2013 electricity to the sub-economic rural areas. In order to intensify the The Company rents property owned by the staff retirement benefits KShs’000 KShs’000 scheme for office accommodation. The Board and management is following up on the issue expansion of these sub-economic regions, the Government has Not later than 1 year 36,183 57,144 with the relevant ministries to ensure resolution of the established the Rural Electrification Authority (REA). However, KPLC Later than 1 year but not later than 5 Rent paid to the scheme in the year amounted to KShs.94,109,342 case and based on the correspondence with relevant continues to operate and maintain the whole network, in addition to years 46,172 112,744 (2012 – KShs.88,154,358). The company had no outstanding balance ministries and the legal advice for the Company’s legal implementing projects for the Authority on contract basis. to the retirement benefit scheme as at 30 June 2014 (2013 – none). advisors, the resolution of the case is not expected to 82,355 169,888 The Company has entered into a Mutual Co-operation and Provision result into a material effect on the Financial Statements. The year end outstanding balances with related parties are interest of Services Agreement with REA to operate and maintain lines owned free and settlement occurs in cash. (ii) C hristopher Lebo & 331 Others vs KPLC (2003). This case Operating leases relate to premises with lease terms of up to 10 years by REA. In return the Company will retain revenues generated from relates to termination of services by KPLC amounting and are subject to rent escalations. The Company does not have an RES customers to cover maintenance costs incurred by the Company. 36. CAPITAL COMMITMENTS to KShs.3.9 billion, the case is yet to be scheduled for option to purchase the leased asset at the expiry of the lease period. However, the Company continues to invoice the Government for the hearing. Similarly, as a lessor, the Company has entered into commercial expenditure incurred to complete on-going projects. 2014 2013 (iii) David Miraa Gathii & Other vs KPLC. This is a claim by the property leases on its property and it retains all the significant risks KShs’000 KShs’000 The REP is funded by the Government of Kenya. Any property plaintiff for wayleaves amounting to KShs.175 million. and rewards of ownership of these properties and therefore accounts acquired by REP remains the property of the Government of Kenya. (iv) Other claims on the Company relate to civil suits lodged for the contracts as operating leases. KPLC only acts as a management agent on behalf of the Government. Authorised and contracted for 137,489,072 100,866,557 against the Company by various parties in the normal The balances due to RES are disclosed in note 35(b)(iii). Less: amount incurred and included in course of business. The estimated amount of these cases 39. WORLD BANK FINANCING work-in-progress (40,502,355) (33,405,460) is KShs.588 million. (e) KenGen (a) World Bank Credits No. 3958 and 4752-KE The likely outcome of these suits cannot be determined at the 96,986,717 67,461,097 (i) The Company received financial support from the World 2014 2013 date of signing these Financial Statements. Bank through Credit No. 3958 and 4572-KE dated 4 August (Restated) 2004 to support implementation of the Energy Sector KShs’000 KShs’000 Based on the information currently available and legal advice by the Company’s legal advisors, the Directors believe that the Recovery Project. Summary information on transactions 37. CONTINGENT LIABILITIES Electricity purchases 29,999,714 34,548,517 during the year are as follows: ultimate resolution of these legal proceedings is not expected 2014 2013 to result into a material effect on the results of the Company’s 2014 2013 Amounts due to KenGen on account of KShs’000 KShs’000 operations, financial position or liquidity. KShs’000 KShs’000 electricity purchases 7,731,871 5,953,651 38. FUTURE RENTAL COMMITMENTS UNDER OPERATING LEASES Balance at the beginning Electricity sales 311,556 93,605 Bank guarantees 1,699,444 1,559,597 of the year 566,570 140,319 AS LESSEE: Amounts received during Claims on the Company 7,993,759 9,891,215 Loan due to KenGen - 0.75% JICA loan 1,148,565 1,149,996 the year 35,261 825,811 The total future minimum lease payments due to third parties under Net interest income 3,596 155 9,693,203 11,450,812 non-cancellable operating leases are as follows: Amounts due from KenGen on account Expenditure during the of electricity sales 1,765 2,213 year (605,039) (399,715) 2014 2013 Included in the claims on the Company are: - KShs’000 KShs’000 Balance at the end of the (f) Kenya Electricity Transmission Company Limited (Ketraco) year 388 566,570 (i) T he TARDA case concerns a dispute amount of KShs.1.3 Not later than 1 year 314,198 235,961 Funding for assets billion allegedly owed to TARDA by KPLC. By agreements Later than 1 year and not later than 5 years 787,246 567,532 (ii) The closing balances shown above are included in cash KEEP/KETRACO 132KV Transmission entered into in 1978, KPLC agreed to purchase power lines* 912,053 359,649 More than 5 years 347,808 38,960 and cash equivalents and represent balances on the World from hydo-electric power schemes owned by TARDA. By Bank funded Special Account No. 024/00/800521/01 held further agreements in 1981 and 1983, TARDA agreed to at CfC Stanbic Bank of Kenya Limited. Included in the long KEEP/KETRACO 132/33KV substations* 541,578 312,377 lease Masinga and Kiambere hydro-electric power assets 1,449,252 842,453 term liabilities is also an amount of KShs.10,197,082,356 to KPLC. It was a condition of the said agreements that (US$ 116,369,315) in respect of the amounts disbursed Amount due to Ketraco on account of KPLC would pay all amounts payable by TARDA in respect under the loan to date. local costs 762,382 762,382 of all the external loans contracted by TARDA directly or through the Government of Kenya (GoK). However, a 1988 (iii) The proceeds of the World Bank loan have been expended Amounts due from Ketraco for 0.75% government circular directed that KPLC remit the said in accordance with the intended purpose as specified in JICA loan 1,148,565 1,149,996 amounts directly to Treasury. In implementing the said the loan agreement. directive, KPLC consequently stopped its payments to 102 103 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 39. WORLD BANK FINANCING (Continued) 40. EUROPEAN INVESTMENT BANK (EIB) FINANCING 41. PRIOR YEAR ADJUSTMENTS/ RECLASSIFICATION (ii) Impact on assets, liabilities and equity as at 30 June 2013 of the application of the amendments to IAS 19 (as revised in 2011) (b) KEEP LOAN (IDA Credit No. 4743-KE) The Company received financial support from EIB for Grid (a) Net retirement benefit asset development. The Company has set aside KShs.72,945,894 In compiling the financial information included herein, the As at 1 July The Company received funding from the World Bank Revolving Credit Fund (RCF) as per clause 6.14 of the finance Company adopted the specific transitional provisions applicable 2013 As at 1 July through Credit No.4743-KE to support electricity contract. The proceeds of this fund will be used to facilitate to the first time application of IAS 19 (as revised in 2011). The (as previously IAS 19 2013 expansion projects. Summary information on transactions new connections to the electricity network for low income Company has applied the relevant transitional provisions and stated) adjustments (as restated) under KEEP Loan during the two years ended 30 June customers. KShs’000 KShs’000 KShs’000 restated the comparative amounts on a retrospective basis. 2014 and 2013 were as follows: The impact of the changes on the total comprehensive income Summary information on special account transactions during for the year, assets and liabilities and equity is shown below: Increase in net 2014 2013 the year are as follows: retirement benefit KShs’000 KShs’000 (i) Impact on assets, liabilities and equity as at 1 July 2012 of the asset - (3,650,719) (3,650,719) 2014 2013 application of the amendments to IAS 19 (as revised in 2011) Decrease in deferred Balance at the beginning of the KShs’000 KShs’000 tax credit - 1,095,216 1,095,216 year 114,192 219,736 As at 1 July Balance at the beginning of the Amounts received during the 2012 As at 1 July year 639,039 2,767 year 194,482 1,068 (as previously IAS 19 2012 Amounts received during the stated) adjustments (as restated) Increase in net assets - 2,555,503 2,555,503 Expenditure during the year (305,354) (106,612) year 5,685 1,200,383 KShs’000 KShs’000 KShs’000 Net interest income 9,953 15,891 Increase in retained Increase in net Balance at the end of the year 3,320 114,192 Expenditure during the year (409,109) (580,002) earnings - 2,555,503 2,555,503 retirement benefit asset - (1,876,904) (1,876,904) Balance at the end of the year 245,568 639,039 Decrease in deferred tax credit - 563,071 563,071 (i) The closing balances shown above are included in cash and cash equivalents and represent balances on the (iii) Impact on assets, liabilities and equity as at 30 June 2014 of balances in the World Bank funded Special Account No. the application of the amendments to IAS 19 (as revised in 2011) (i) The closing balances shown above are included in cash Increase in net 0550297294000 held at Equity Bank Limited. Included in and cash equivalents and represent balances on the assets - 1,313,833 1,313,833 30 June the long term liabilities were amounts of KShs.2,513,017,850 European Investment Bank funded Special Account 2014 (US$ 28,678,612) in respect of the amounts disbursed KShs’000 No.0100000443683 held at CfC Stanbic Bank of Kenya Increase in under the loan to date. Limited. Included in the long term liabilities is also an retained earnings - 1,313,833 1,313,833 Increase in retirement benefit assets 1,414,030 (ii) The proceeds of the World Bank through Credit No.4743- amount of KShs.4,241,896,183 (Euro 35,482,193) in respect Decrease in deferred tax credit (424,209) KE have been expended in accordance with the intended of the amounts disbursed under the loan to date. purpose as specified in the loan agreement. (ii) The proceeds of the European Investment Bank loan have The scheme had a net asset position which was not recognized in been expended in accordance with the intended purpose the statement of financial position prior to the adoption of IAS 19 (as Increase in net assets 989,821 as specified in the loan agreement. revised in 2011). Increase in retained earnings 989,821 104 105 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 41. PRIOR YEAR ADJUSTMENTS/ RECLASSIFICATION (Continued) 41. PRIOR YEAR ADJUSTMENTS/ RECLASSIFICATION (Continued) As at 1 July (a) Net retirement benefit asset (Continued) 2013 (as previously Prior year 30 June 2013 (d) Deferred tax (iv) Impact on total comprehensive income for the year on the stated) adjustments (as restated) Prior year adjustments on deferred tax relates to the following: application of IAS 19 (as revised in 2011) KShs’000 KShs’000 KShs’000 i. Retirement benefit asset Year ended Year ended Prior year adjustment relates to tax effect on the net retirement benefit asset as a result of implementation of IAS 19 (revised 30 June 30 June Impact on balances at 30 June 2013 in 2011) which was effective for annual periods beginning on or after 1 January 2013. The standard changed the accounting 2014 2013 Shs’000 Shs’000 for defined benefit plans and termination benefits. The net pension asset or liability is recognised in the statement of financial Borrowings – position to reflect the full value of the plan surplus or deficit. 0.75% Japan Bank ii. Capital contribution Decrease in expenses 377,134 146,157 for International Increase in income tax credit (113,140) (43,848) Corporation (JPY Prior year adjustment relates to the correction of an error in computing the tax effect on the amortisation of capital contributions 1,325,904,871) - 1,149,996 1,149,996 as a result of the implementation of IFRIC 18 – Transfer of assets from customers in the year 2010. Prior to that, the capital contribution received from customers was netted off from the assets capitalized and therefore reducing the investment Increase in profit 263,994 102,309 Trade and other deduction claimed in the respective year. The investment deduction claimed between 2011 and 2013 was overstated by the receivables – (due amount of capital contribution in each of these years. Deferred income is now amortized in the Financial Statements while for from Ketraco) - 1,149,996 1,149,996 tax purposes the capital contribution is netted of from the investment deduction in its entirety. Impact on other comprehensive income for the year The prior year adjustments are analysed as follows: Increase in re-measurement of defined benefit asset 1,414,030 1,627,658 (c) GOK/EXIMBANK Loan 2014 2013 2012 Increase in income tax relating to In 2014, management determined that the 2.5% GOK/EXIMBANK (Restated) (Restated) items of other comprehensive income (424,209) (488,297) loan for the construction of Kisii-Chemosit and Kamburu–Meru KShs’000 KShs’000 KShs’000 transmission lines and the related work in progress had not been The movement on the net deferred tax liability is as follows: captured in the company’s books. A prior year adjustment has been Beginning balance – as previously reported 11,535,982 9,496,455 6,500,449 Increase in other comprehensive recorded to capture the work in progress costs relating to the capital income for the year 989,821 1,139,361 works together with the loan obligation in the Company’s books. Prior year adjustments: The loan and related assets will be transferred to Ketraco as per the Government of Kenya directive once the legal agreements to effect - Retirement benefit assets 1,095,216 563,071 563,071 the transfer of the loan and assets are executed between the relevant - Tax effect on capital contributions 2,811,371 1,802,614 1,802,614 parties. The restated loan amounted to KShs.2,273,260,000 (2013: (b) Sondu–Kisumu transmission line loan KShs: 2,254,065,000). In 2009, under the Government of Kenya power sector restructuring Beginning balance - as restated 15,442,569 11,862,140 8,866,134 The 2012 and 2013 presentation of the loan and work in progress as programme, the Company transferred certain transmission assets and previously reported and as restated is reported and as restated is their associated liabilities to Kenya Electricity Transmission Company analysed as below: (Ketraco) including the Sondu-Kisumu transmission line. The Sondu – Tax effect on retirement benefit assets – dealt with through other Kisumu transmission line had an associated loan of KShs.1,148 billion comprehensive income in equity 424,209 488,297 - advanced by the Japan Bank for International Cooperation and the As at 1 July Charge to profit or loss (note 13 (a)) 3,702,549 3,023,973 2,732,235 construction of the line was managed by Kengen. The carrying value 2013 Deferred tax prior year under provision - 68,159 263,771 of the transmission lines and related loans were then removed from (as previously Prior year 30 June 2013 stated) adjustment (as restated) KPLC books. KShs’000 KShs’000 KShs’000 In 2014 the Directors determined that the loan was incorrectly Ending balance (2013, 2012 restated) 19,569,327 15,442,569 11,862,140 Impact on balances at removed from KPLC’s books as there was no legal extinguishment 30 June 2013 of KPLC’s liability. As a result, the loan has now been reinstated in KPLC books and a due from Ketraco balance recorded amounting to Borrowings – 2.5% Other reclassification:
This relates to the reclassification of 6.125% of Kenya Government/Swiss grant from borrowings to other KShs.1,148,565,000 (2013: KShs.1,149,996,000) pending execution of GOK/EXIMBANK loan payables to reflect the portion relating to the grant after the loan was fully repaid. the legal agreement to transfer the loan to Ketraco. (¥ 161,028,810) - 2,254,065 2,254,065 The 2012 and 2013 presentation of the borrowings and trade and Work in progress other receivables relating to this transmission line as previously (note 16) - 2,254,065 2,254,065 reported and as restated is analysed as below: 106 107 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 NOTES TO THE FINANCIAL STATEMENTS (Continued) NOTES TO THE FINANCIAL STATEMENTS (Continued) 41. PRIOR YEAR ADJUSTMENTS/ RECLASSIFICATION (Continued) 42. INCORPORATION (e) Comparative information The Company is incorporated in Kenya under the Kenyan Companies Act and is domiciled in Kenya. Following the above prior year adjustments and reclassifications the effect of these on the Financial Statements and comparative 43. FUNCTIONAL AND PRESENTATION CURRENCY information reported on the Financial Statements for the years ended 30 June 2013 and 1 July 2012 is summarised as follows: These Financial Statements are presented in Kenya Shillings thousands (KShs’000), the Company’s functional currency. 30 June 2013 44. EVENTS AFTER THE REPORTING PERIOD As previously There are no significant events after the reporting period which have been reported in these Financial Statements. reported Prior year As restated at 30 June 2013 adjustments at 30 June 2013 45. APPROVAL OF FINANCIAL STATEMENTS KShs’000 KShs’000 KShs’000 The Financial Statements were approved by the Board of Directors and authorised for issue on 22 October 2014. Profit or loss Net retirement benefit expenses - (146,157) (146,157) Tax charge 2,072,175 1,052,605 3,124,780 2,072,175 906,448 2,978,623 Other comprehensive income Re-measurement of defined benefit Obligation (net) - 1,139,361 1,139,361 - 1,139,361 1,139,361 Assets Property and equipment 140,189,400 2,254,065 142,443,465 Retirement benefit asset - 3,650,719 3,650,719 Trade and other receivables 16,981,458 1,149,996 18,131,454 157,170,858 7,054,780 164,225,638 Liabilities Deferred tax liability 11,535,982 3,906,587 15,442,569 Borrowings 47,887,734 3,191,631 51,079,365 Other payables 45,980,519 212,430 46,192,949 105,404,235 7,310,648 112,714,883 Capital and reserves Retained earnings 20,505,789 (255,868) 20,249,921 Cash flows Cash generated from operations 19,391,794 (937,566) 18,454,228 Purchase of property and equipment 40,376,759 2,254,065 42,630,824 Loan proceeds received 26,731,911 3,191,631 29,923,542 86,500,464 4,508,130 91,008,594 108 109 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 TEN YEAR FINANCIAL AND STATISTICAL RECORDS STATISTICAL INFORMATION 30th June 30th June 30th June 30th June 30th June 30th June 30th June 30th June 30th June 2012 2013 30th June TABLE 1: POWER SYSTEM OPERATION STATISTICS FOR 6 YEARS For year ended 2005 2006 2007 2008 2009 2010 2011 (Restated) (Restated) 2014 UNITS SOLD (GWh) 4,215 4,444 4,818 5,082 5,182 5,345 5,816 6,001 6,175 6,790 Capacity (MW) Company as at 30.06.2014 Energy Purchased in GWh Average yield of units sold (cents) 672.39 764.33 787.55 802.85 1,258.37 1,368.88 1,257.81 1,596.77 1,437.74 1,552.45 Shs ‘000 Shs ‘000 Shs ‘000 Shs ‘000 Shs ‘000 Shs ‘000 Shs ‘000 Shs ‘000 Shs ‘000 Shs ‘000 Installed Effective1 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 Revenue from sale of electricity 28,341,356 33,966,730 37,944,286 40,801,040 65,208,529 73,166,794 73,154,021 95,662,427 88,909,626 105,395,714 Profit for the Year before taxation 1,843,233 2,207,674 2,384,264 3,523,970 5,676,542 5,951,392 7,084,377 7,810,450 8,941,540 14,988,997 KenGen Hydro: TAXATION (CHARGE)/ CREDIT (709,003) (853,752) (930,214) (973,439) (1,557,339) (1,916,587) (2,035,185) (3,889,577) (3,124,780) (3,742,193) Tana 20.0 20.0 44 29 50 86 108 69 NET PROFIT AFTER TAXATION BEFORE FINANCE INCOME/COSTS 1,134,230 1,353,922 1,454,050 2,550,531 4,119,203 4,034,805 5,049,192 3,920,873 5,816,760 11,246,804 Kamburu 94.2 90.0 348 244 408 410 520 421 Finance Income 190,778 485,238 390,291 88,929 153,343 177,380 171,477 489,182 111,546 104,208 Gitaru 225.0 216.0 655 457 802 793 1,036 830 Finance Costs (52,805) (192,999) (123,934) (872,660) (1,045,522) (493,885) (999,173) 208,991 (2,480,659) (4,892,848) Preference dividends (gross) (1,930) (1,930) (1,930) (1,930) (1,930) (1,930) (1,930) (1,930) (1,930) (1,930) Kindaruma 72.0 70.5 157 111 191 185 252 201 NET PROFIT ATTRIBUTABLE TO Masinga 40.0 40.0 128 61 201 137 148 206 ORDINARY SHAREHOLDERS 1,270,273 1,644,231 1,718,477 1,764,870 3,225,094 3,716,370 4,219,566 4,617,116 3,445,717 6,456,234 Kiambere 164.0 164.0 614 546 899 886 1,129 979 ORDINARY DIVIDENDS (gross) (118,692) (118,692) (237,384) (316,512) (633,024) (633,024) (1,002,763) (563,757) - Turkwel 106.0 105.0 524 335 455 473 545 719 OTHER COMPREHENSIVE INCOME - - - - - - - (127,397) 1,266,758 989,821 Sondu Miriu 60.0 60.0 333 340 364 409 393 351 RETAINED PROFIT FOR THE YEAR 1,151,581 1,525,539 1,481,093 1,448,358 2,592,070 3,083,346 3,216,803 3,925,962 4,712,475 7,446,055 Sangóro 21.2 20.0 0 0 0 7 110 109 FUNDS GENERATED FROM OPERATIONS Small Hydros 14.7 11.2 46 46 57 66 57 59 Profit/(Loss) for the year after dividends 1,151,581 1,525,539 1,481,093 1,448,358 2,592,070 3,083,346 3,216,803 3,925,962 4,712,475 7,446,055 Hydro Total 817 797 2,849 2,170 3,427 3,450 4,298 3,944 Depreciation 1,436,716 1,382,910 1,513,506 1,749,764 2,154,357 2,807,111 3,847,007 4,563,658 5,632,642 6,797,745 Thermal: 2,588,297 2,908,449 2,994,599 3,198,122 4,746,427 5,890,457 7,063,810 8,489,620 10,345,117 14,243,800 Kipevu I Diesel 75.0 51.0 376 316 223 256 185 220 CAPITAL EMPLOYED Kipevu III Diesel 120.0 115.0 0 0 268 525 321 524 Fixed Assets less depreciation 20,856,199 22,416,459 28,147,019 38,925,317 49,974,859 64,310,486 84,590,569 107,548,274 146,094,184 168,155,851 Fiat - Nairobi South 0.0 0.0 9 0 0 0 0 0 Intangible assets - - - - - - - 169,520 258,716 1,410,044 Prepaid leases on land 132,092 132,037 131,981 131,926 131,874 131,819 131,764 131,709 131,653 131,598 Embakasi Gas Turbines 60.0 54.0 184 145 1 33 27 41 Garissa & Lamu 8.6 8.4 17 19 23 25 27 28 Investment 4,300 4,300 4,300 - 200,000 - 1,298,506 1,171,109 - - Thermal Total 264 228 587 481 514 839 560 813 Other non current assets 340,684 - - - - - - - - Net current assets/(Liabilities) 2,969,063 3,816,718 1,192,560 2,237,136 2,702,009 1,736,355 7,020,165 (3,223,754) (1,147,158) 1,564,131 Geothermal: Olkaria I 45.0 44.0 368 366 235 279 369 352 24,302,338 26,369,514 29,475,860 41,294,379 53,008,742 66,178,660 93,041,004 105,796,858 145,337,395 171,261,624 Olkaria II 105.0 90.62 535 573 846 819 696 712 Eburru Hill 2.4 2.2 - - - 5 9 7 FINANCED BY: Ordinary shareholders’ equity 2,998,929 4,661,155 6,350,150 7,982,672 9,700,722 11,593,536 39,606,376 43,022,772 47,149,807 54,205,569 OW37 Olkaria Wellhead 5.4 5.4 - - - 3 23 17 Non cumulative preference shares 15,899,250 15,899,250 15,899,250 15,899,250 17,147,341 17,147,341 - - - - OW43 Olkaria Wellhead 12.8 12.8 - - - - - 29 Cumulative preference shares 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 43,000 OW914 Olkaria Wellhead 12.8 12.8 - - - - - 7 Deferred Income - - - - - - 7,472,912 12,362,327 16,087,747 18,680,714 Loan capital 3,248,936 2,701,722 2,683,117 11,368,208 11,545,014 13,113,434 19,757,132 21,512,025 42,886,311 53,141,442 Olkaria IV 70.0 70.0 - - - - - 32 Deferred taxation (951,518) (234,442) 559,085 1,395,837 2,701,965 4,481,865 6,500,449 11,862,140 15,442,569 19,569,327 Geothermal Total 253 238 903 939 1,081 1,106 1,096 1,156 Non current liability 3,063,741 3,298,829 3,941,258 4,605,412 11,870,700 19,799,484 19,661,135 15,823,485 23,727,961 25,621,572 24,302,338 26,369,514 29,475,860 41,294,379 53,008,742 66,178,660 93,041,004 104,625,749 145,337,395 171,261,624 Wind Ngong 5.3 5.1 0.3 16.3 17.7 14.6 13.9 17.6 CAPITAL EXPENDITURE 1,846,965 2,979,564 7,463,425 12,642,311 12,734,937 17,526,909 20,839,330 20,839,330 40,709,432 28,528,248 KenGen Total 1,339 1,268 4,339 3,606 5,040 5,409 5,968 5,931 Average cost of units sold (cents) 644.64 736.95 748.50 754.88 1,171.13 1,287.63 1,160.33 1,496.28 1,429.93 1,450.92 Government of Kenya (Rural Electrification Programme) Profit for the year before taxation as a percentage of average capital employed 7.58% 8.37% 8.09% 8.53% 10.71% 8.99% 7.61% 7.38% 6.40% 8.75% Thermal 18 14 16 19 21 23.0 26.0 29.8 ORDINARY DIVIDENDS RATES 7.50% 7.50% 10% 20% 40% 40% 18% 20% 0% 20% Solar 0.7 0.6 - - - 0.3 0.6 0.8 Earnings per share 16.05 20.78 21.72 22.30 40.76 3.00 2.16 2.36 1.76 3.31 Customers/employees ratio 119.93 129.00 144.00 159.03 180.64 201.08 205.24 198.85 223.00 260.00 Wind 0.6 0.2 - - - 0.1 0.7 0.4 Sales (KWh) per employee 687,602.00 716,543 752,930 762,148 738,703 734,300 680,774 584,374 590,922 641,076 Total Offgrid 19 15 16 19 21 23 27 31 110 111 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 STATISTICAL INFORMATION (Continued) STATISTICAL INFORMATION (Continued) TABLE 1: POWER SYSTEM OPERATION STATISTICS FOR 6 YEARS TABLE 2: REGIONAL MAXIMUM DEMAND(MW)   Capacity (MW) Company as at 30.06.2014 Energy Purchased in GWh REGION 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14                 Installed Effective1 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 Nairobi   568 588 623 662 716 768 Independent Power Producers (IPP) - Thermal & Geothermal Coast   199 195 220 271 261 267 Iberafrica I&II Power 108.5 108.5 344 621 722 705 592 550 West   217 246 233 259 273 298 Tsavo Power 74.0 74.0 566 495 368 283 178 152 Mt. Kenya 118 113 114 120 125 159 Thika Power 87.0 87.0 0 454 TOTAL SYSTEM           Mumias – Cogeneration 26.0 21.5 4 99 87 100 71 57 (SIMULTANEOUS) 1,072 1,107 1,194 1,236 1,354 1,468 OrPower 4 – Geothermal I, II & III 110.0 110.0 276 400 372 392 503 851 % INCREASE P.A. 2.7% 3.2% 7.9% 3.5% 9.5% 8.4% Rabai Power 90.0 90.0 0 318 394 338 443 633   Imenti Tea Factory hydro 0.3 0.3 0 0.3 0.4 0.8 0.7 0.1   Gikira hydro 0.514 0.514 0 0.4 TABLE 3: KPLC SALES IN GWh BY CUSTOMER CATEGORY   IPP Total 497 492 1,189 1,933 1,945 1,820 1,788 2,698   TYPES OF CUSTOMERS             Emergency Power Producers(EPP) TARIFF COVERED BY THIS TARIFF 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 Aggreko energy to Kenyan Market 30 30 885 1,096 267 381 261 93.8                 Aggreko energy to Uganda 29 - - - - - DC Domestic 1,254 1,290 1,424 1,531 1,670 1,777 EPP Total 30 30 914 1,096 267 381 261 93.8 SC Small Commercial 823 823 904 993 998 1,107 Imports CI Commercial and Industrial 3,020 3,153 3,401 3,419 3,440 3,819 UETCL 29 37 30 36 41 83 IT Off-peak 43 36 38 31 18 28 SL Street lighting 15 16 18 16 18 20 TANESCO 1.2 1.1 1 1.1 1.2 1.3   TOTAL 5,155 5,318 5,785 5,990 6,144 6,751 EEPCO 2.1   % INCREASE P.A. 2.4% 3.2% 8.8% 3.5% 2.6% 9.9% Total Imports 30 38 31 37 42 87   SYSTEM TOTAL 1,885 1,805 6,489 6,692 7,303 7,670 8,087 8,840   SUMMARY OF KEY STATISTICS TABLE 4: TOTAL UNIT SALES BY REGION IN GWh   SALES – KPLC System (GWh) 5,155 5,318 5,785 5,991 6,144 6,751               - REP System (GWh) 250 279 307 308 406 454 REGION 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 - Export to Uganda (GWh) 27 26 30 41 30 37 Nairobi   2,898 3,014 3,268 3,315 3,507 3,776 - Export to Tanesco (GWh) 1 1 1 1 2 Coast   979 1,027 1,118 1,147 1,134 1,256 TOTAL SALES (GWh) 5,432 5,624 6,123 6,341 6,581 7,244 West   867 853 932 1,003 1,056 1,121 System Losses (GWh)2 1,057 1,068 1,180 1,330 1,507 1,596 Mt. Kenya 411 424 467 494 539 598 System Peak Demand (MW)3 1,072 1,107 1,194 1,236 1,354 1,468 KPLC Sales 5,155 5,318 5,785 5,959 6,236 6,751 System Load Factor 69.1% 68.8% 69.8% 70.8% 68.2% 68.7% R.E.P. Schemes 250 279 307 340 313 454 Sales % of Energy Purchased 83.7% 84.0% 83.8% 82.7% 81.4% 81.9% Export Sales 27 27 31 42 32 39 Losses as % of Energy Purchased 16.3% 16.0% 16.2% 17.3% 18.6% 18.1% TOTAL 5,432 5,624 6,123 6,341 6,581 7,244 Annual Growth: Energy Purchased 1.6% 3.1% 9.1% 5.0% 5.4% 9.3% %INCREASE P.A.   2.1% 3.5% 8.9% 3.6% 3.8% 10.1% - KPLC Sales 2.4% 3.2% 8.8% 3.6% 4.1% 9.9% - REP Sales 4.2% 11.6% 10.1% 0.3% 1.6% 12.0% Notes: 1) Contracted output from the station under normal operating conditions. 2) System losses comprise of technical and non-technical losses. 3) The Demand shown includes the export demand. 112 113 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 STATISTICAL INFORMATION (Continued) STATISTICAL INFORMATION (Continued) TABLE 5: REGIONAL SALE OF ELECTRICITY IN GWh FOR CATEGORY “DC” DOMESTIC LOAD TABLE 9: REGIONAL SALE OF ELECTRICITY IN GWh FOR CATEGORY “CI3” LARGE COMMERCIAL AND INDUSTRIAL LOAD (33kV)                             REGION 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 REGION 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14                             Nairobi 800 804 888 847 997 1,151 Nairobi 0 3 4 3 5 5 Coast 214 227 246 263 269 301 Coast 149 147 170 171 176 168 West 156 167 184 268 236 359 West 64 65 84 93 85 93 Mt. Kenya 84 92 105 154 144 220 Mt. Kenya 3 1 0 0 0 0 TOTAL 1,254 1,290 1,424 1,532 1,645 2,031 TOTAL 216 215 258 267 266 266 % INCREASE P.A. -0.1% 2.9% 10.4% 7.6% 7.4% 23.5% % INCREASE P.A. 100.0% -0.4% 19.9% 3.5% -0.3% -0.1%   TABLE 6: REGIONAL SALE OF ELECTRICITY IN GWh FOR CATEGORY “SC” SMALL COMMERCIAL LOAD TABLE 10: REGIONAL SALE OF ELECTRICITY IN GWh FOR CATEGORY “CI4” LARGE COMMERCIAL AND INDUSTRIAL LOAD (66kV)                             REGION 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 REGION 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14                             Nairobi 400 402 435 426 501 566 Nairobi 272 326 368 384 408 453 Coast 127 132 139 140 145 164 Coast 0 0 0 0 0 0 West 187 183 209 277 270 373 West 0 0 0 0 0 2 Mt. Kenya 109 106 122 150 142 191 Mt. Kenya 0 0 0 0 0 5 TOTAL 823 823 904 993 1,059 1,294 TOTAL 272 326 368 384 408 460 % INCREASE P.A. 39.5% -0.1% 9.9% 9.8% 6.6% 22.2% % INCREASE P.A. 100.0% 19.7% 12.9% 4.5% 6.2% 12.7%       TABLE 7: REGIONAL SALE OF ELECTRICITY IN GWh FOR CATEGORY “CI1” LARGE COMMERCIAL AND INDUSTRIAL LOAD (415V) TABLE 11: REGIONAL SALE OF ELECTRICITY IN GWh FOR CATEGORY “CI5” LARGE COMMERCIAL AND INDUSTRIAL LOAD (132kV)               REGION 2007/08 2008/09 2009/10 2010/11 2012/13 2013/14 REGION 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14               Nairobi 20 31 30 34 43 60 Nairobi 293 757 752 760 727 790 Coast 90 106 139 121 134 217 Coast 105 214 218 223 211 214 West 48 2 10 9 1 9 West 143 312 333 334 367 393 Mt. Kenya 0 0 0 0 0 5 Mt. Kenya 102 160 166 174 188 202 TOTAL 158 140 179 164 178 291 TOTAL 643 1,443 1,469 1,492 1,492 1,599 % INCREASE P.A. 100.0% -11.5% 28.1% -8.5% 8.4% 63.7% % INCREASE P.A. 0.0% 124.5% 1.8% 1.6% 0.0% 7.1% TABLE 12: REGIONAL SALE OF ELECTRICITY IN GWh FOR CATEGORY “IT” OFF- PEAK LOAD TABLE 8: REGIONAL SALE OF ELECTRICITY IN GWh FOR CATEGORY “CI2” LARGE COMMERCIAL AND INDUSTRIAL LOAD (11kV)                             REGION 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 REGION 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14                           Nairobi 40 34 36 29 21 27.0 Nairobi 598 652 736 727 764 819 Coast 0 1 1 0 0.3 0.4 Coast 182 192 197 195 209 212 West 1 1 1 1 0.5 0.6 West 99 102 108 107 103 107 Mt. Kenya 1 1 1 1 0.4 0.5 Mt. Kenya 52 58 63 63 66 78 TOTAL 42 36 38 31 22.3 29 TOTAL 931 1,003 1,104 1,092 1,142 1,216 % INCREASE P.A. -43.2% -14.5% 6.2% -18.7% -28.1% 27.8% % INCREASE P.A. 100.0% 7.8% 10.0% -1.1% 4.5% 6.5% 114 115 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 STATISTICAL INFORMATION (Continued) STATISTICAL INFORMATION (Continued) TABLE 13: REGIONAL SALE OF ELECTRICITY IN GWh FOR CATEGORY “SL” STREET LIGHTING TABLE 16: NUMBER OF CUSTOMERS BY TARIFF CATEGORY               AS AT 30th JUNE 2014 REGION 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 TARIFF MAIN TYPE               Nairobi 11.2 11.4 12.2 10.9 15 13 OF CUSTOMERS Coast 2.2 2.8 3.1 2.8 5 4 COVERED BY 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 West 1.0 1.3 1.3 1.0 1 1 THIS TARIFF Mt. Kenya 1.0 1.1 1.2 1.4 2 2 DC only Domestic TOTAL 15.4 16.6 17.7 16.0 24 20 KPLC 873,764 1,017,266 1,239,873 1,428,363 1,633,773 1,987,330 % Increase P.A. 18.5% 7.8% 6.6% -9.6% 49.6% -16.5% REP 150,964 189,850 237,602 304,298 367,017 435,749 DC & IT Domestic TABLE 14: REGIONAL SALES OF ELECTRICITY IN GWh FOR R.E.P. SCHEMES KPLC 57,678 54,076 46,437 43,482 57,709 57,958               REP 1,002 949 872 830 841 819 REGION 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14               SC only Small Commercial Nairobi 52.0 55.3 62.6 63.0 66 109 KPLC 124,251 134,601 150,687 163,117 177,664 185,529 Coast 16.0 18.3 20.9 21.2 22 24 REP 53,185 60,008 70,552 77,242 85,399 91,647 West 125.0 134.8 153.1 151.9 152 216 SC & IT Small Commercial Mt. Kenya 57.1 70.5 70.4 71.9 73 105 KPLC 1,167 1,248 1,266 1,280 1,431 1,542 TOTAL 250 279 307 308 313 454 REP 72 178 171 178 118 211 % Increase P.A. 4.2% 11.5% 10.1% 0.3% 1.5% 45.2% CI1 Large Commercial KPLC 2,250 2,373 2,457 2,478 2,550 2,695 TABEL 15: NUMBER OF CUSTOMERS BY REGION REP 37 43 41 28 22 33   AS AT 30th JUNE 2014 Large Commercial and REGION 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 CI2 Industrial               KPLC 233 255 277 290 320 333 Nairobi 595,010 669,128 814,251 921,548 1,042,216 1,257,013 Large Commercial and               CI3 Industrial Coast 139,245 157,731 178,095 201,425 221,410 248,058 KPLC 23 26 29 31 33 36               Large Commercial and West 200,266 235,291 275,033 322,885 368,800 438,998 CI4 Industrial               KPLC 14 16 19 22 23 24 Mt. Kenya 127,390 150,433 176,682 210,136 244,992 293,820 Large Commercial and               CI5 Industrial KPLC Customers 1,061,911 1,212,583 1,444,061 1,655,994 1,877,418 2,237,889 KPLC 13 15 21 21 22 27               IT only Off-peak R.E.P. Customers 205,287 251,056 309,287 382,631 453,544 528,552 KPLC 631 622 566 13,984 826 785               REP 9 8 8 7 7 4 TOTAL 1,267,198 1,463,639 1,753,348 2,038,625 2,330,962 2,766,441 SL Street lighting % Increase P.A. 19.5% 15.5% 19.8% 16.3% 14.3% 18.7% KPLC 1,887 2,085 2,429 2,926 3,067 3,172 REP 18 20 41 48 61 89 TOTAL (KPLC) 1,061,911 1,212,583 1,444,061 1,655,994 1,877,418 2,237,889 TOTAL (R.E.P.) 205,287 251,056 309,287 382,631 453,465 528,552 GROSS TOTAL 1,267,198 1,463,639 1,753,348 2,038,625 2,330,883 2,766,441 % INCREASE P.A. 19.5% 15.5% 19.8% 16.3% 14.3% 18.7% 116 117 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 STATISTICAL INFORMATION (Continued) STATISTICAL INFORMATION (Continued) TABLE 17: REVENUE (Kshs ‘Mllion) BY CUSTOMER CATEGORY TABLE 19: TRANSMISSION AND DISTRIBUTION LINES, CIRCUIT LENGTH IN KILOMETERS TARIFF MAIN TYPE OF CUSTOMERS             AS AT 30th JUNE 2014   COVERED BY THIS TARIFF 2008/09   2009/10   2010/11   2011/12  2012/13   2013/14  VOLTAGE 2009 2010 2011 2012 2013 2014 220 kV 1,331 1,331 1,331 1,331 1,331 1,434 DC Domestic 16,493 21,109 18,998 26,960 27,771 31,029 132 kV 2,112 2,211 2,343 2,343 2,436 2,513     66 kV 649 655 655 758 1,097 1,212 SC Small commercial 12,078 17,974 15,228 22,007 21,582 23,864 40 kV 29 0 0 0 0 0   small industrial 33 kV 13,031 13,812 15,271 15,384 16,136 20,778 11 kV 24,334 25,485 26,250 27,219 28,818 30,860     TOTAL 41,486 43,494 45,850 47,035 49,818 56,797 CI Commercial Industrial 36,014 36,603 34,573 46,717 39,627 49,269 % INCREASE P.A. 3.0% 4.8% 5.4% 2.6% 5.9% 14.0%     IT Off-peak 314 263 9 15 6 23 TABLE 20: TRANSFORMERS IN SERVICE, TOTAL INSTALLED CAPACITY IN MVA     AS AT 30th JUNE 2014 SL Street Lighting 271 415 331 155 412 392 2009 2010 2011 2012 2013 2014       TOTAL Generation Sub-stations 65,170 76,364 69,139 95,854 89,398 104,577 11/220kV 544 544 544 544 544 844   Export 38 216 590 947 687 819 11/132kV 694 694 889 889 889 889   TOTAL KPLC 65,208 76,580 69,729 96,801 90,085 105,396 11/66kV 121 121 171 171 171 171   R.E.P. 4,337 4,277 4,324 5,841 6,012 7,229 11/33kV 238 238 238 238 238 238   TOTAL REVENUE 69,545 80,857 74,053 102,642 96,097 112,625 11/40kV 0 0 0 0 0 0   %INCREASE P.A. 62.2% 16.3% -8.4% 38.6% -6.4% 17.2% 3.3/11/40kV 0 0 0 0 0 0 3.3/40kV 0 0 0 0 0 0 3.3/33kV 4 4 4 4 4 4 AS AT 30 JUNE 2014  th TOTAL 1,601 1,601 1,846 1,846 1,846 2,146 TABLE 18: STAFF ANALYSIS 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 Transmission Sub-stations Number of Staff in Each Region 132/220kV 620 620 620 620 620 620 220/132kV 730 730 730 730 730 835 Central Office 1,131 1,205 1,203 1,453 1,495 1,563 220/66kV 360 360 450 450 450 450 Nairobi 2,329 2,378 2,742 3,307 3,355 3,396 132/66kV 375 375 375 375 360 360 Coast 808 839 996 1,098 1,114 1,088 132/33kV 687 756 779 801 916 916 TOTAL 2,772 2,841 2,954 2,976 3,076 3,181 West 1,803 1,871 2,303 2,834 2,914 2,927 Mt Kenya 944 986 1,299 1,560 1,587 1,616 Distribution Sub-stations 66/11kV 1,206 1,206 1,206 1,288 1,608 1,332 Total Number of Staff 7,015 7,279 8,543 10,252 10,465 10,590 66/33kV 77 90 90 90 113 138 % INCREASE P.A. 5.2% 3.8% 17.4% 20.0% 2.1% 1.2% 40/11kV 11 11 11 11 11 0 Gender: 33/11kV 823 934 937 1,053 1068 1841 TOTAL 2,117 2,241 2,244 2,442 2,800 3,311 Male 5,565 5,774 6,856 8,303 8,410 8,532 Female 1,450 1,505 1,687 1,949 2,055 2,058 Distribution Transformers Ratio – Male/Female 3.8 3.8 4.1 4.3 4.1 4.1 11/0.415kV and 33/0.415kV 4,307 4,688 5,069 5,784 6,195 6,317 118 119 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 PROXY FORM THE KENYA POWER AND LIGHTING COMPANY LIMITED P.O. BOX 30099-00100, NAIROBI FORM OF PROXY FOR ANNUAL GENERAL MEETING OF THE COMPANY TO BE HELD ON FRIDAY 19TH DECEMBER 2014 (BLOCK LETTERS PLEASE) 1/We CDSC/Mem. No. of P.O. Box being (a) Member(s) of the above-named Company, HEREBY APPOINT of P.O. Box or failing him/her the Chairman of the Meeting as my/our proxy to vote for me/us and on my/our behalf at the ANNUAL GENERAL MEETING of the Company to be held on Friday, 19th December 2014 and at any adjournment thereof. My/our proxy is to vote in favour of/against the Resolutions as indicated here below: Item Business For Against 1 Adoption of audited financial statements for the year ended 30 June 2014 th 2 Approve payment of dividend 3 Election of Directors: i) Mr. Jacob K. Mwirigi ii) Eng. Patrick E. O. Obath iii) Mr. Eliazar O. Ochola 4 Approve payment of fees to non-executive Directors 5 Remuneration of Auditors Signature ___________________________________________________ Dated this ______________ day of __________________________ 2014 NOTE: 1. A member entitled to attend and vote at the above meeting may appoint one or more proxies to attend and, on a poll, to vote instead of him/her. A tree-planting exercise in A proxy need not be a member of the Company. To be valid, the Form of Proxy must be duly completed and lodged at the office of the Company Secretary, Stima Plaza, or posted in time to be received not later than 11.00 a.m. on 17th December 2014. Cheptais, Bungoma County, sponsored by the Company. 2. If the appointer is a corporation or a Government office, the Proxy must be executed under its common seal or under the hand of an Officer or Attorney duly authorised in writing. Unless otherwise indicated the proxy will vote as he/she deems fit. FOR OFFICIAL USE ONLY 7% 4% ORDINARY TOTAL 120 121 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 FOMU YA UWAKILISHI NATIONAL ELECTRICITY TRANSMISSION GRID NETWORK (SHOWING EXISTING AND PROPOSED LINES) THE KENYA POWER AND LIGHTING COMPANY LIMITED S.LP 30099-00100, NAIROBI FOMU YA UWAKILISHI KATIKA MKUTANO MKUU WA KILA MWAKA WA KAMPUNI UTAKAOFANYIKA IJUMAA DESEMBA 19, 2014 (HERUFI KUBWA TAFADHALI) Mimi/Sisi CDSC/Nambari Wa S.L.P. nikiwa/tukiwa mwanachama wa Kampuni iliyotajwa hapa juu NAMTEUA/TUNAMTEUA wa S.L.P. au endapo atashindwa kufika huko, Mwenyekiti wa Mkutano kama mwakilishi wangu/wetu kupiga kura kwa niaba yangu katika MKUTANO MKUU WA KILA MWAKA wa Kampuni utakaofanyika Ijumaa Desemba 19, 2014 na tarehe nyingine ijapo endapo utaahirishwa. Mwakilishi wangu/wetu atapiga kura kuunga au kupinga maazimio yafuatayo: Kifungu Shughuli Kuunga Kupinga 1 Kupitishwa kwa taarifa za kifedha zilizokaguliwa kwa mwaka uliomalizika Juni 30, 2014 2 Kuidhinisha malipo ya mgao wa faida 3 Uchaguzi wa Wakurugenzi: i) Bw. Jacob K. Mwirigi ii) Mha. Patrick E. O. Obath iii) Bw. Eliazar O. Ochola 4 Kuidhinisha malipo ya wakurugenzi wasio na mamlaka 5 Malipo ya Wahasibu Sahihi ___________________________________________________ Tarehe hii ya _____________ siku ya _____________________ 2014 Maelezo: 1. Mwanachama ana haki ya kuhudhuria na kupiga kura kwenye mkutano uliotajwa juu na endapo kutakuwa na upigaji kura, kupiga kwa niaba yake. Mwakilishi si lazima awe mwanachama wa Kampuni. Ili kuwa halali, Fomu ya Uwakilishi lazima ijazwe kikamilifu na kuwasilishwa kwa afisi za Katibu wa Kampuni, Stima Plaza, au kutumwa kwa wakati ufaao ili kumfikia kabla ya Saa 5.00 asubuhi mnamo Desemba 17, 2014. 2. Iwapo anayeteua ni shirika au Afisi ya Serikali, uwakilishi huo nilazima uidhinishwe na kuwa na muhuri wa serikali au kutolewa chini ya kiapo mbele ya wakili au afisa anayeidhinishwa kwa maandishi. Isipokuwa ifafanuliwe vinginevyo, mwakilishi atapiga kura namna apendavyo. KWA MATUMIZI RASMI PEKEE 7% 4% KAWAIDA JUMLA 122 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014 124 THE KENYA POWER AND LIGHTING COMPANY LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2013/2014