Kengen Ina Nia Ya Kutekeleza Bomba La Miradi Iliyopangwa LOLNX¼NLDPDKLWDML\D Umeme Ya Baadaye Kwa Taifa, Huku Ikiboresha Thamani Kwa Wanahisa Wetu

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Kengen Ina Nia Ya Kutekeleza Bomba La Miradi Iliyopangwa LOLNX¼NLDPDKLWDML\D Umeme Ya Baadaye Kwa Taifa, Huku Ikiboresha Thamani Kwa Wanahisa Wetu Public Disclosure Authorized Sustaina g in ble tin E es ne v r n g I y Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized INTEGRATED ANNUAL REPORT & FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Our Vision Our Core Values To be the market leader in the provision of reliable, safe, quality and competitively priced electric energy in the Eastern Africa region. Team Spirit Integrity Our Mission 8SIJ½GMIRXP]KIRIVEXIGSQTIXMXMZIP]TVMGIHIPIGXVMG energy using state of the art technology as well as skilled and motivated human resources to ensure ½RERGMEPWYGGIWW;IWLEPPEGLMIZIQEVOIXPIEHIVWLMT Safety Culture Professionalism by undertaking least cost and environmentally friendly capacity expansion. Consistent with our corporate culture, core values will be adhered to in all our operations. Our Corporate Theme Be present in our engagements Build relationship, resources, Brings out the best in KenGen with both internal capacity, leadership and health. a reputation worth greatness. and external stakeholders. Inside this Report OUR BUSINESS FINANCIALS About this Report 2 7XEXIQIRXSJ(MVIGXSVW´6IWTSRWMFMPMXMIW 2018 Performance Highlights 3 Directors’ Remuneration Report 117 About KenGen 4 Independent Auditor’s Report 120 7MKRM½GERX7XVMHIW 7XEXIQIRXSJ4VS½XSV0SWW 3XLIV'SQTVILIRWMZI-RGSQI Awards 7 Statement of Financial Position 129 Corporate Information 8 Statement of Changes in Equity - Restated* 130 Report of the Directors 12 Statement of Cash Flows 132 'LEMVQER´W7XEXIQIRX Notes to the Financial Statements 133 Managing Director & CEO’s Statement 22 STATISTICS CORPORATE GOVERNANCE Historical Financial Performance (Restated) 214 Who Governs Us 32 Installed vs Effective Capacity (MW) 219 Who Leads Us 38 Units Sent Out (Gwh) 220 2018 Corporate Governance Statement 43 Weighted Factors (%) 221 SUSTAINABILITY SHAREHOLDERS CALENDAR )GSRSQMG7YWXEMREFMPMX] Notice of the Annual General Meeting 224 Social Sustainability 80 7LEVILSPHIV2SXM½GEXMSRW Environmental Sustainability 100 Proxy Form 229 Bank Details 231 GOK PERFORMANCE REPORT Unclaimed Dividends 231 Business Performance Report 2018 110 Declaration of Dormancy on Inactive CDS Accounts 231 Notes 232 This report is also available online. For greater insight into the Company, visit our corporate website: www.kengen.co.ke KENYA ELECTRICITY GENERATING COMPANY PLC INTEGRATED ANNUAL REPORT & FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 1 OUR BUSINESS About this Report This integrated report is KenGen’s primary communication to shareholders and stakeholders on our performance and prospects. The report provides a review of the material issues encountered by the organization, addressed based on OI]STIVEXMSREP½RERGMEPIGSRSQMGWSGMEPERHIRZMVSRQIRXEPEWTIGXW8LIVITSVXEPWSHIXEMPWLS[XLIWIMWWYIWEVIFIMRK managed through our governance, our engagements as well as the application of our risks and opportunities matrix. This is our value creation story. Scope and Boundary 3YVWXVEXIK]EW[IPPEWQEXIVMEPMWWYIWMHIRXM½IHJSVQXLIERGLSVSJXLIVITSVXERHHIXIVQMRIMXWGSRXIRX8LIVITSVX covers the period 1 July 2017 to 30 June 2018 and provides commentary, performance measures and prospects for strategic operations. The structure and layout of this report draws on the International Integrated Reporting Framework. 1EXIVMEPIZIRXWYTXSXLIHEXISJETTVSZEPLEZIFIIRMRGPYHIH*SVEGSQTVILIRWMZISZIVZMI[SJSYV½RERGMEP TIVJSVQERGIXLIMRXIKVEXIHVITSVXWLSYPHFIVIEHMRGSRNYRGXMSR[MXLSYVERRYEP½RERGMEPWXEXIQIRXW Assurance and Audit Approach The Company has put in place a robust governance oversight and risk management framework. Our combined assurance model takes a three-pronged approach comprising a review by management, supplemented by internal and external auditors. The Audit, Risk & Compliance Committee, as delegated by the Board, relies on the combined assurance in JSVQMRKXLIMVZMI[SJXLIEHIUYEG]SJSYVVMWOQEREKIQIRXERHMRXIVREPGSRXVSPW8LIERRYEP½RERGMEPWXEXIQIRXWEVI EYHMXIHF]XLI%YHMXSV+IRIVEP[LSLEWMWWYIHERYRUYEPM½IHSTMRMSR Financial and Non-Financial Information We apply International Financial Reporting Standards (IFRS) and comply with the listing requirements of the Capital Markets Authority (CMA), the Nairobi Securities Exchange (NSE), the Companies Act 2015 and the Code of Corporate Governance Practices for Issuers of Securities to the Public 2015. Board Responsibility and Approval The Board is accountable for the integrity and completeness of the integrated report and any additional Information. The Audit, Risk & Compliance Committee of the Board ensures the integrity of the report and has applied its collective mind to its preparation and presentation. Having considered the completeness of the material items dealt with and the reliability of information presented, based on the combined assurance process followed, the Board approved the annual ½RERGMEPWXEXIQIRXWSR3GXSFIV KENYA ELECTRICITY GENERATING COMPANY PLC 2 INTEGRATED ANNUAL REPORT & FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 2018 Performance Highlights Energy Sold Revenue 7,989 GWhs KShs 45,290 Mn Ÿ6% Ÿ4.2% EBITDA PBT KShs 21,590 Mn KShs 11,746 Mn 5.3%Ÿ Ÿ2.5% Total Assets CAPEX KShs 379,353Mn KShs 15,311Mn Ÿ1% Ÿ13.3% Proposed PAT Dividend KShs 7,891 Mn KShs 2,638 Mn Ÿ 33% pay-out 12.4% EBITDA - Earnings before interest, tax, depreciation and amortization PBT - Profit before tax PAT - Profit after tax CAPEX - Capital expenditure KENYA ELECTRICITY GENERATING COMPANY PLC INTEGRATED ANNUAL REPORT & FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 3 OUR BUSINESS About KenGen In 1954, Kenya Electricity Generating Company (KenGen) was incorporated under the Kenyan Companies Act as Kenya Power Company (KPC) with the mandate to generate electricity through the development, management and operation of power plants. The shareholders of the Company later contracted East Africa Power & Lighting Company (EAP&L) to manage KPC. EAP&L changed to Kenya Power & Lighting Company (KPLC) in 1983. -RXLI+SZIVRQIRXSJ/IR]EGSQQIRGIHVIWXVYGXYVMRKSJXLIIRIVK]WIGXSV[MXLXLIEMQSJEGLMIZMRKIJ½GMIRX use of resources dedicated towards generation, transmission and distribution of electricity. The management of KPC was SJ½GMEPP]WITEVEXIHJVSQ/40'ERHVIREQIH/IR+IRMR.ERYEV] -RXLIKSZIVRQIRXWSPH SJMXWWXEOIMRXLI'SQTER]XLVSYKLEWYGGIWWJYP-RMXMEP4YFPMG3JJIV -43 ERH/IR+IR was listed on the Nairobi Securities Exchange (NSE). The Company continues to maximize shareholder value through TVS½XEFMPMX]ERHQEMRXEMRMRKEWYWXEMREFPIKVS[XLTEXL-RTYVWYMXSJSYVWXVEXIKMGSFNIGXMZIWWLEVILSPHIVW[IVIKMZIR ERSXLIVSTTSVXYRMX]XSI\IVGMWIXLIMVVMKLXWMREWYGGIWWJYPVMKLXWMWWYIMR Our business is to deliver affordable clean energy and create wealth for shareholders while building a resilient and sustainable business through investment in various energy sources and revenue streams. With an installed capacity of 1;ERHEQEVOIXWLEVISJ SJREXMSREPIRIVK]GSRWYQTXMSR[ILEZI½VQP]GIQIRXIHSYVTSWMXMSREWXLI largest power producer in the country. We have strengths of scale and expertise, proven by an exceptional record of accomplishment and service. In pursuit of our vision, we are transforming the way we manage our operations to propel or business in the right direction. OUR GENERATION CAPACITY OUR FOOTPRINT NGONG 25.5MW WESTERN GEOTHERMAL WIND OLKARIA & 533.9MW 25.5MW EBURRU 249.4MW 533.9MWW KIPEVU UPPER TANAA 193.5MW19 HYDRO THERMAL 818.2MW 253.5MW 29.6MW 7 FORKS 599.2MW KENYA ELECTRICITY GENERATING COMPANY PLC 4 INTEGRATED ANNUAL REPORT & FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 Geothermal Plant,Olkaria KenGen’s footprint spans across six lower Tana River has been harnessed capacity at 32% of our installed operational areas: The geothermal to provide 599.2MW of electric capacity. Ngong wind plants are in the area consists of power plants & power to Kenya. The plants comprise 'IRXVEP3J½GIVIKMSR[MXLERMRWXEPPIH wellheads running as baseload energy Masinga. Gitaru, Kindaruma, Kiambere capacity of 25.5MW. During the year, sources in Olkaria and Eburru in the and Kamburu power stations. The the Gas Turbine was successfully Rift Valley. The area has an installed upper Tana River has been developed relocated to Muhoroni to provide capacity of 533.9MW. The Western XSTVSHYGI1;GSQTVMWMRK grid stability support to the western region consists of four hydro stations four power plants namely, Tana, region. and a thermal plant: Turkwel, Sondu Wanjii, Sagana and Mesco. Hydro is Miriu, Sangoro, Gogo and Muhoroni. the leading source, with an installed The Company has focused on renewable The area has a total installed capacity capacity of about 818.2MW, which energy development and has a target to of 249.4MW. Kipevu area has two is 50% of the Company’s installed install an additional capacity of 721MW thermal plants located in Mombasa capacity. Geothermal comes second of clean green and renewable energy by County with an installed capacity of [MXL1;SYXSJ[LMGL1; 8LMW[MPP½VQP]GVS[R/IR]EEWXLI 1;8LI7IZIR*SVOWLEW½ZI comes from the innovative wellheads only African country in the Geothermal power plants along the Tana River. The technology. This places geothermal Gigawatt Club. KENYA ELECTRICITY GENERATING COMPANY PLC INTEGRATED ANNUAL REPORT & FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 5 OUR BUSINESS 7MKRM½GERX7XVMHIW Landmark Achievements Power Generation • Largest Power Generation Company in East Africa • Pioneered Geothermal Wellhead Technology • Largest Geothermal Producer in Africa and 9th in the World • Drilled the largest Geothermal Well in Africa, 30MW Sustainability • First Kenyan Company to earn Carbon Asset Funds under
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