Annual profits

Umeme announces 69% drop in annual profits

Power company Umeme Ltd reported a net profit of 41.1 billion shillings from its 2020 operations, down 69% from the 139.2 billion shillings recorded in 2019.

The huge drop in profits is largely attributed to the effects of covid 19 over most of the year, which saw the government shutting down most economic activities for three months from April to June, before starting to gradually ease the market. locking.

According to the financial results for 2020, there was a drop in total revenues of 7%, with a drop in electricity sales of 3%, in addition to the government’s suspension of the electricity connection policy in December.

By June, Umeme had already stopped implementing the policy in June because the government had stopped disbursing funds to the distribution companies that implemented it, and these had accumulated to around 100 billion shillings.

Revenue under the ECP fell by nearly three-quarters to 54 billion shillings, from 190 billion the company collected in 2019.

Free connections resumed this month after the government secured funding from various lenders for a phased implementation.

On Monday, Umeme, via the Uganda Securities Exchange, informed the market of the likelihood of a profit decline of more than 60%, attributing it to the effects of the pandemic, the suspension of the ECP as well as this. which they called the regulatory lag.

“Shareholders and potential investors are urged to exercise caution when trading in the shares of the Company. The company is optimistic that the recovery of the business environment as the government’s response to the pandemic will support stronger operational and financial performance over the coming year, ”said the press release from the Secretary of the United Nations. company, Shonubi, Musoke & Co. Advocates.

Other companies implementing the ECP are Uganda Electricity Distribution Co Ltd, Kilembe Investments, Pader Abim Community Multipurpose Electricity Cooperative Society, West Nile Rural Electrification Company Limited and Kalangala Infrastructure Services.

The decline in other income is mainly due to the shutdown of industries during containment, while others have reduced the number of working hours, resulting in a drop in demand for electricity.

According to Umeme general manager Celestino Babungi, Umeme general manager Celestino Babungi said that the consumption of a few large industrial customers increased by 16%, which would have increased production due to the demand for their products.

The financial statements also show a 6% increase in the cost of operations, mainly driven by repairs to equipment and networks, as well as the implementation of standard operating procedures against covid 19.

The company says it is accelerating the migration of operations from manual platforms to ICT platforms, which will further reduce costs.

During the year, the company generated 277 billion shillings in cash, compared to 94 billion shillings in 2019 through operating activities.

This was used to partially fund new investments, dividends, and other financial obligations.

“We have invested 279 billion shillings in investment projects, construction and modernization of seven substations, construction of distribution integration lines with transmission infrastructure, expansion of distribution transformer areas “, indicates the press release signed by the chairman of the board of directors Patrick Bitature.

He adds that they have also converted 168,000 customers to prepaid meters, bringing the total to over 96% of total consumers in Yaka.

The company has set aside 12.2 shillings per share for distribution to shareholders as dividends, subject to shareholder approval at the next annual general meeting and subject to tax. In 2019, shareholders obtained 41 Ush per share.

The company also hopes that the government’s response to the pandemic and the deployment of the vaccine will lead to further economic recovery and improve the operating environment.

They are also praying for the conclusion of the license renewal process in favor of the company.

“The resolution of the extension of the concession beyond 2025 is fundamental to unlock long-term capital to invest in the distribution network in order to evacuate new loads, increase access, improve quality of supply and reduce technical losses “, explains Bitature.

On Monday, Umeme and the police relaunched a nationwide operation against theft of electricity and illegal connections, which they say have an economic cost to the company of 100 billion shillings per year.

These acts also resulted in losses of 17.5% of the total electricity supplied.

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By: URN

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