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The electricity distributor recorded 1.61% decline in profit after tax to Shs 12.99 billion for H1, 2024
Kampala, Uganda | THE INDEPENDENT | Uganda’s electricity distributor, Umeme Limited, has reported a slight decline in profit after tax for the first half of 2024, with earnings down by 1.61% to Shs 12.99 billion.
This decline occurred despite increases in both gross profit and revenue, primarily driven by rising operating costs and higher amortization expenses.
The company’s Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) demonstrated positive momentum, rising by 10.24% to Shs 268.47 billion. However, Earnings Before Interest and Tax (EBIT) decreased by 9.56% to Shs 30.16 billion largely due to increased amortization costs.
Umeme’s total revenues grew by 7.08%, reaching Shs 1.15 trillion, buoyed by higher electricity sales. This revenue growth reflects the company’s resilience in a challenging economic environment.
However, the bottom line was pressured by a 25.6% increase in operating costs, significantly impacted by higher expenses related to repairs and maintenance.
In response to the financial performance, Umeme’s Board of Directors has recommended an interim dividend of Shs 42.23 billion for the period ending June 30, 2024. This recommendation comes as the company prepares for the natural termination of its concession in March 2025.
The company’s total assets declined by 6.98%, influenced by increased amortization and reduced capital investments. Liabilities also decreased, indicating prudent management of financial obligations. However, shareholder equity dropped by 11.17%, driven by a significant reduction in retained earnings.
Looking ahead, Umeme has confirmed that its concession with the government will officially conclude on February 28, 2025, followed by a 30-day transition period.
In compliance with the concession agreement, Umeme is required to provide a certified report, at its own expense, verifying that the distribution network is in good repair. Any discrepancies identified must be rectified before the network is handed back to the Uganda Electricity Distribution Company Limited (UEDCL). Additionally, Umeme must ensure the network is free of hazardous materials.
The government, meanwhile, is obligated to pay the Buy Out Amount within 30 days after the concession’s end, facilitating the final transfer of the distribution network to UEDCL.
