Umeme’s revenue grew 20.3% to Shs658.7 billion ($195.5m) in the first half of 2016 on higher power sales but net profit fell from Shs67.6bn to Shs54.5bn ($16.2m) on increased financing costs and a normalised tax rate, half-year results released today show.
Gross profit was up 5.9% to Shs212.4bn despite cost of sales rising 28.6% on higher power costs, pushing EBITDA up 17.2% to Shs132.7bn compared to the same period last year. However, EBITDA was flat in US Dollars at $39.2m as a result of pending investments not currently included in the tariff, the company said.
After reversing unrealised foreign currency losses, the company booked an effective tax rate of 32% in June 2016 (June 2015: 9.1%), and together with a Shs6.6bn rise in financing costs earnings per share fell from Shs41.7 to Shs33.6 year-on-year. The Uganda Shilling depreciated 13.5% against the dollar over the reporting period.
The company, which paid a final dividend of Shs39.6bn for 2015 in July 2016, announced an interim dividend of Shs11.0 per share for HY2016. Umeme was down 0.19% to Shs530 on the Uganda Securities Exchange in the morning session after the announcement. The stock was flat at KShs16.50 on the Nairobi Stock Exchange where it is cross-listed.
Umeme’s customer numbers grew 20.6% to 860,563 in the reporting period, driven by grid extensions, connection subsidies and improvements in the connection process. Pre-paid customers grew from 52.2% to 59% of the total, although revenue collections dipped slightly from 100.4% to 98.4%, the unaudited results show. The company has previously said it targets to hit a million customers by the end of 2016.
Energy losses were flat at 19.2% and a long-running disagreement with authorities over funding of an escrow account remains unresolved.
Umeme announced that it plans to borrow another $50m to fund capital investments in the grid after drawing down $25m in the reporting period, the last tranche of a $170m facility extended by the International Finance Corporation (IFC), Stanbic Bank Uganda Limited (SBU) and Standard Chartered Bank.
“Our next investment cycle of 2017 – 2021 prioritises network growth related capital investments on the back of the expected increase in power supply and the country’s industrialisation drive,” Umeme Board Chairman Patrick Bitature said in a statement.
Net cash generated from operating activities fell from Shs114.4bn to Shs39.9bn in HY2016 compared to the previous period. The company attributed this to an increase in inventory for capital projects as well as payments to suppliers and settling of staff rewards.
Umeme said it had invested $32.6mn during the reporting period on network expansion and restoration, new connections and rollout of pre-paid metering, bringing its total investment in the network since the start of the concession to $440m.
Key projects under implementation include Moniko substation, Namugongo integration lines, GetFit mini hydro project integration lines, upgrade of Lugogo to Kibuli lines, refurbishment of lines in Kabale, Mukono and Pallisa, roll out of pre-paid metering, upgrading Namanve Industrial Park, conversion of Government of Uganda accounts to prepaid metering and the upgrade of power transformers, the company said.
Top stock holders in Umeme by the end of 2015 included: Umeme Holdings (14.30%), National Social Security Fund Uganda (14.27%), Investec Funds (10.78%) and Kimberlite Frontier Africa – Nastar Fund (5.14%).
