By Jeff Winters
If there was anything meant to surprise shareholders, it was going to be the half-year financial statement of the quasi-monopoly power distributor, Umeme. The distributor revealed that in the first half of 2017, it incurred losses of Ushs 47.5 billion, the highest half-year loss it has incurred ever since it went public in 2012. The loss comes as a surprise because the power distributor did not issue a profit-warning to the investors since it is listed on the Uganda Securities Exchange (USE). The USE rules require listed firms to issue profit warnings prior to announcing of results, especially if the results are going to show a significant change in the financial status of the company.
In 2016, Umeme’s half-year profit was Ushs 54.5 billion, but this plunged, leading to a loss of Ushs 47.5 billion. This loss is however not as a result of the core operational features of Umeme declining.
In its core business, which is selling and distributing power, Umeme was able to grow that amount by 6.7% to 1,345.2 GWh (Gigawatt hour). The increased power sales meant that revenues would also grow. In the half-year financial statements, Umeme indicated that revenues had grown from Ushs 658.7 billion in the first half of 2016, to Ushs 704.4 billion over the same period in 2017, mostly as a factor that can be attributed to the increased electricity sales. This made for some positive reading. However, the increased revenue did not translate into a rise in after-tax profit. Umeme blames this on the regulatory environment.
“From the regulatory perspective, the environment remains challenging as non-recurring, accounting effects arising from the issuance of Amendment 5 to the company’s electricity supply license number 48 adversely impacted the interim financial results,
