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Umeme profits slide

Umeme engineers install equipment as part of the network expansion project. Courtesy Photo
Umeme engineers install equipment as part of the network expansion project. Courtesy Photo

UMEME: NSSF to reap Shs 2.5 billion in dividend payment for first half of 2016

Utility company Umeme has released their 2016 half year results, which indicate that there was a significant revenue growth but an attendant rise in cost of sales means that there will be less profits for shareholders to share. T

otal revenue grew by 20.3% to Shs 658.7 bn compared to the same period in 2015 when revenue increased by 13.4% to Shs 547.6bn.

Revenue collections rate for the six months to 30 June 2016 also slid to 98.4% compared to 100.4% in 2015 indicating less efficiency. The revenue growth was attributed to investments in the network and a 3.3% increase in Giga watt hours sold.

The company said in a statement that the strong revenue growth rate was driven by the rollout of pre-paid metering, customer payments convenience through multiple options as well as payments by government entities and industrial customers. The company invested Shs 110 bn over the period with a focus on network expansion and restoration, new connections and rollout of pre-paid metering.

In the period under review, gross profit increased by 5.9% to Shs 212.4 bn compared to Shs 200.5bn over the same period in 2015.

Customer numbers also shot up during the period under review, increasing by 20.6% to reach a record 860,563 as of June 30, 2016 compared to 713,756 as of June 30 last year – an addition of 146,809 new customer connections. Most of the new customers resulted from the World Bank – funded Output Based Aid (OBA) project through the government of Uganda and improvements in the connection process. Some 52.2% of the customers were on yaka.

Consequently, the company has announced a net profit of Shs 54.5 bn compared to Shs 67.6 billion in the same period in 2015. The decline in profitability was attributed to increased financing costs and a “normalized tax rate.” The effective tax rate at June 30, 2016 was said to be 32% compared to 9.1% in 2015, according to the statement. The low tax rate in the June 2015 adapted accounts is explained by the reversal of unrealized foreign currency losses.

At their meeting on September 1, 2016, the board of directors of the company resolved to pay an interim dividend of Shs 11 per share, slightly more than the interim dividend of Shs10.8 per share issued to shareholders in August 2015.

The 2016 interim dividend, which is subject to withholding tax where applicable, shall be paid on or about Dec. 19 to shareholders on the company’s share register at close of business on Dec.02. With its 231.7 million shares in Umeme, it means the National Social Security Fund (NSSF) will reap Shs 2.54 billion in interim dividends.

On its outlook, the company said it is focusing on the investment cycle of 2017 – 2021, which prioritizes network growth-related capital investments on the back of the expected increase in power supply and the country’s industrialization drive.

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