Increased economic activity thus increased power demand, translating into increased customer connections combined to spur a 19.9% growth in Umeme Limited’s gross revenues for H1 2023, the energy distribution company has reported.
In results published today, 21st August 2023, Umeme said during the first 6 months of 2023, it connected an additional 72,411 customers to its network, compared to 56,547 in 2022 representing a 28% growth. This increased the company’s customer base to 1.8 million. The company also said it witnessed an 8%, 9%, 9% and 11% growth in electricity sales to its domestic households, and commercial, medium industrial and large industrial customers, respectively.
Overall, electricity demand grew by 8.3%.
Subsequently, increased demand as well as distribution efficiencies, saw the company’s revenues soar.
“Revenues increased by 19.9% to UGX 1,076 billion compared to UGX 897 billion in 2022. The growth in revenues is attributable to an 8.3% growth in electricity sales, underlying pricing and provision of construction services,” the company said in a statement.
The company also said that it reduced costs, slightly by 2.6% to UGX 112 billion compared to UGX 115 billion in H1 2022.
“The reduction is attributed to operating efficiencies, technology uptake and optimised supply chains. The reduction in global and country inflation contained cost escalations during the period,” the company explained.
“The distribution efficiency for the period increased to 83%, compared to 81% achieved in 2022 on account of a reduction in distribution losses to 16.7% from 17.1% for the same period in 2022 and a revenue collection rate of 98.9%,” the company added.
During the period, Umeme said that it also invested UGX 41.9 billion in the distribution network for projects aimed at improving the quality of electricity supply, enabling growth in demand, reduction in energy losses, network reconfiguration and the digitisation and continued rollout of prepaid metering.
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Some of the projects being implemented include dedicated lines to improve supply reliability to selected referral hospitals; substations in Matugga, Hoima, Jinja, Kisugu, Mbarara and Mbale as well as UETCL integration and evacuation lines in Kasana, Luzira and Hoima. The company also invested in various transformer injections across the country, new prepaid connections and prepayment retrofits as well as a Geospatial Network Information System.
Amortisation affects net profit
The company said that its Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) increased by 49.7% to UGX 244 billion due to the 28% increase in gross profit and 2.6% reduction in operating costs.
However, as the natural term of the Umeme concession approaches⏤ March 2025, the company said it had to align amortisation to fit the remaining contract duration or underlying useful life of the assets in the generation of economic benefits to the company and “consequently, the amortisation charge for the period increased to UGX 210 billion compared to UGX 79 billion of 2022”.
“The resultant profit for the period reduced to UGX 13.2 billion compared to UGX 64.4 billion in H1 2022,” the company reported.
The company also reported a significant 72% reduction in its term debts to “UGX 74 billion (US$ 20.4 million) from UGX 268 billion (US$ 71.2 million) on 30th June 2022 following the scheduled repayment of the term loans over the period”.
The final scheduled repayment of term loans is in December 2023.
Based on the performance during the period, the directors recommend an interim dividend of UGX 24.0 per share payable on or about 29th February 2024. The book closure date for entitlement to the dividend shall be 9th February 2024.