The East African | Umeme Posts $21.26 Millon Dollar Net Profit As Revenues Jump 88 Percent

Posted March 25, 2013 by Ugandan Diaspora News Team in Business ~ 3,517 views


Uganda’s power distributor Umeme’s profit after tax last year rose by almost two and a half times, helped by a sharp increase in revenues following tariff hikes at the beginning of 2012, higher sales and an increased its number of customers. Umeme said on Monday that it posted Ush57.11 billion ($21.26 million) in profit after tax for the period ended December 2012 compared to Ush23 billion ($9.22 million) for the period ended December 2011.

Its revenues jumped 88.06 per cent to Ush859.55 billion ($320.01 million) for the period ended December last year compared to Ush457.06 billion ($183.31 million) the previous period while income tax expense dropped 82.36 per cent to Ush3.81 billion ($1.41 million) from Ush21.6 billion ($8.66 million).

Umeme, which listed its shares at the Uganda Securities Exchange (USE) at the beginning of December last year and at the Nairobi Securities Exchange (NSE) at the end of December after an initial public offer (IPO), said that it is recommending a dividend of Ush15 ($0.006) per share.

“The directors have resolved to recommend to members a final dividend of Ush24.4 billion ($9.26 million) or Ush15 ($0.006) per share to be paid on or about June 24, 2013, to shareholders registered at close of business on May 24, 2013,” said Umeme in a statement to shareholders. Patrick Bitature, chairman of Umeme said that the company’s customer base now stands at over 513,000 after the addition of 55,000 new connections last year.

He said that energy losses dropped to 26.1 per cent from 27.3 per cent last year through investment in its networks to address technical losses, use of automated meter reading systems for industrial consumers, prepayment meters for domestic consumers, the improvement in the revenue management cycle, increased patrols and public sensitisation.

“Total revenues grew by 88 per cent in 2012. This is attributed to increase in end user tariffs by an average of 52 per cent on January 15, 2012, increased supply, reduction in energy losses and an increase in the customer base,” said Mr Bitature.

Almost three quarters of Umeme’s sales, accounting to 72 per cent of revenues come from government, commercial and industrial consumers, while 28 per cent come from domestic consumers. At the beginning of last year, Uganda’s Electricity Regulatory Authority allowed a 36.02 per cent increase in the cost of every unit of electricity used to Ush524.50 ($0.21) from Ush385.60 ($0.16) for domestic consumers and a 35.97 per cent increase to Ush487.60 ($0.20) from Ush358.60 ($0.15) for commercial consumers.

Large industries saw the cost of a unit of electricity go up by 69.26 per cent to Ush312.80 ($0.13) from Ush184.80 ($0.08) while medium industries saw their power costs go up by 37.73 per cent to Ush458.9 ($0.19) from Ush333.2 ($0.14) per unit.

Umeme said that in 2012 it spent $36 million on capital investments taking the total cumulative investment to $166 million and the underappreciated asset base to $125 million. It said projects completed during the year include the Lira–Gulu Feeder refurbishment, the Lira-Apac-Masindi line refurbishment the pre-payment metering system and the Jinja–Kamuli line refurbishment.

“After the IPO, the company repaid the entire Umeme Holdings Limited loan of Ush75 billion ($28 million). The IFC loan of $20 million is the only debt on the company’s books. With the improved balance sheet the company can now source additional low cost funds to finance its forthcoming capital programme,” said Mr Bitature.

Henry Kakande, research analyst at Crested Stocks and Securities said that power tariffs increased dramatically after the government of Uganda through the Electricity Regulatory Authority removed subsidies in early 2012.

He said that subsidies offered by the government could not be sustained due to extensive drought back then hence use of expensive diesel, oil prices were high making thermal power generation expensive and the Uganda Shilling was depreciating against the dollar making purchase of equipment and loan repayment more costly.

“The profit growth was driven by an increase in electricity supplied from the Bujagali dam commissioned at the start of 2012. The Bujagali dam moved the country out of a power rationing environment. There was an increase in electricity tariffs, leading to a growth in revenues,” said Mr Kakande.

Umeme’s shares started trading at the USE at the beginning of December last year after selling a total of 622.37 million shares through the IPO of which 272.37 million subscription shares were issued by the power distributor. The other 350 million shares were issued by Umeme Holdings which is owned by London-based private equity fund, Actis to pay off the shareholder loan so that Umeme could free up cash to make capital investments.

The shares started trading at Ush275 ($0.10) at the USE and its last traded price was Ush300 ($0.11) giving the power distributor a value of Ush487.16 billion ($184.92 million) but they have never traded at the NSE since listing.

Source — The East African

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