Overall performance was hindered by a jump in tax expenses
Kampala, Uganda | ISAAC KHISA | A nearly double growth in income tax expense bullied Uganda’s electricity distributor, Umeme, to record a merely 0.3% growth in net profit to Shs 61.2bn for the past six months ending June.30.
The company’s tax expense to the Uganda Revenue Authority increased from Shs26.2bn to Shs51.8bn during the same period under review.
Total revenue increased by 10.1% to Shs816bn, driven by a 7% increase in electricity consumption. Gross profit increased by 11.1% to Shs296bn on the account of increased electricity sales.
Electricity sales recorded a 7% growth to 1,563GWh compared with the same period last year owed to increased industrial and grid connections.
Electricity sales to industrial customers – who account for 68% of the total electricity demand annually – increased by 10% to 1,057GWh.
As a result, the power distributor has not recommended half year interim dividends for the shareholders.
Meanwhile, the company continued to implement the government’s Electricity Connections Policy that took effect on November 2018, with the total grid connections increasing by approx. 7.2% over the last six months.
Slightly more than 93,580 new connections were recorded during the period under review leading to the total connection base of 1.4million.
“The roll out of prepaid metering stands at 82% of the domestic customers, contributing 26% of revenues from electricity sales,” the company’s Board of Directors said.
Umeme started rolling out prepaid metering system in 2013 to increase efficiency in revenue collection and reduce operational costs.
However, energy losses increased from 16.7% to 16.9%, with the company saying that continued reduction in energy losses requires enhanced operational resources, strengthening of the legal frameworks against power theft to reduce commercial losses, and continuous capital investments in the distribution network to address inherent technical losses.
“We are engaging ERA to continue supporting our loss reduction strategy and initiatives through provision of adequate operational resources and approval of urgently required capital,” the company said.
The revenue collection decreased from 102% for the first half of 2018 to 98.7% for the first half of this year.
On the other hand, its total assets increased from Shs2.46trillion to Shs 2.56trillion. Shareholders equity too increased from Shs722bn to Shs779bn during the same period under review.
Debts and investments
The listed firm also repaid Shs64bn as part of its long term debt, bringing its net debt as at June.30 to Shs469bn compared with Shs536bn at June.30, 2018.
With regard to future financing, the company said, it is in advanced discussions with its lenders to secure funds to support its medium term capital expenditure. However securing this financial facility will depend on how fast the government and the company go about the process of renewing its [Umeme’s] concession which expires in 2025.
“If approved, the extension will enable Umeme to mobilise and deploy the long term capital that is necessary to expand the distribution grid, to increase uptake of new generation capacity and to ensure safe and reliable supply to our customers,” company officials said. They added that shareholders and the public will be notified at an appropriate time soon.
Summary of results
Total revenue grew 10.1% to Shs 815.7bn
Energy sales grew 7% to 1,563 GWh
Cash generated was Shs106.6bn during the period under review
Net profit grew 0.3% to Shs61.2bn