Doubled profits raise Uganda’s power distributor share price

A nearly 100 per cent rise in revenues helped lift the share price of Umeme, Uganda’s power distributor, after a month of stagnation.

Data from the Uganda Securities Exchange (USE) shows that the share rose to Ush305 ($0.118) after the company announced its results on Monday, closing at Ush303 ($0.117) at the end of the week.

Umeme’s share had held steady at Ush300 ($0.114) from Ush275 ($0.10) — its initial public offering price — for about one month.

“Umeme trading had been subdued since February but profits have prompted a rise in price,” said Henry Kakande, a research analyst with Crested Stocks and Securities in Kampala.

Umeme said it posted Ush57.11 billion ($21.26 million) in profit after tax for the period ended December 2012 almost two and a half times the Ush23 billion ($9.22 million) posted for the period ended December 2011.

Revenues jumped 88.06 per cent to Ush859.55 billion ($320.01 million) from Ush457.06 billion ($183.31 million) while income tax expense dropped 82.36 per cent to Ush3.81 billion ($1.41 million) from Ush21.6 billion ($8.66 million) respectively.

Umeme’s shares started trading at the USE at the beginning of December last year after the company sold a total of 622.37 million shares through the IPO, of which 272.37 million were issued by the power distributor.

The other 350 million shares were issued by Umeme Holdings which is owned by London-based private equity fund, Actis to pay off a shareholder loan so that Umeme could free up cash for capital.

Patrick Bitature, chairman of Umeme said that after the IPO, the company repaid the entire Umeme Holdings loan of Ush75 billion ($28 million).

“The IFC loan of $20 million is the only debt on the company’s books. With the improved balance sheet the company can source additional low cost funds to finance its forthcoming capital programme,” said Mr Bitature.

Umeme, which listed its shares on the Nairobi Securities Exchange (NSE) at the end of December last year, said it is recommending a dividend of Ush15 ($0.006) per share.

The power distributor said that in 2012 it spend $36 million on capital investments taking the total cumulative investment to $166 million and the asset base to $125 million.

It said projects completed during the year include the Lira–Gulu Feeder refurbishment, the Lira-Apac-Masindi line refurbishment the pre-payment metering system and the Jinja–Kamuli line refurbishment.

“Institutional investors are likely to increase their shareholding in Umeme in order to benefit more from investments made last year. Upon completion, mini hydropower stations will boost electricity supply and increase Umeme’s revenues,” said Paul Bwiso, general manager at Dyer and Blair Uganda Ltd.

Flexible payment solutions offered by telecommunications firms and banks have also boosted the company’s collections over the past six months.

“About 30-40 per cent of our customers have migrated from traditional payment channels to electronic means out of a total base of 513,000 client,” said Selestino Babungi, Umeme’s chief financial officer. “We intend to invest more in automated monitoring systems for tracking technical faults at sub-stations in real time.”

By Bernard Busuulwa and Isaac Khisa
The East African Newspaper
13-March-2013