In a half-year report that reads like a financial thriller, Umeme, the power distribution wizard, revealed that its profits took an adventurous nosedive from Shs64.4b to Shs13.2b. The plot twist? A whopping Shs51.2b plummet, courtesy of a debt repayment saga that demanded the spotlight in the company’s performance statement.
The drama, hailed as the most daring in the history of Umeme, unfolded due to the ironclad international reporting standards. These regulations compelled the power juggler to pay off debts before the curtain drops on its two-decade-long show in March 2025. Yes, even businesses have their expiration dates, and it seems Umeme’s countdown has begun.
A crucial chapter in Umeme’s narrative is its 20-year power distribution agreement, set to close curtains in March 2025. The surprise twist? The financial script demands Umeme to match its debt repayment schedule to the ever-shortening time left on its contract. It’s like paying off a loan before the popcorn gets cold during a movie intermission.
The challenging scene unfolds with a special appearance by the International Financial Reporting Standards (IFRS). These standards, akin to the scriptwriter, insist that Umeme settle its debts, interests, and principal included, within the contract’s timeframe. Talk about adhering to financial deadlines with style!
As if the plot wasn’t thrilling enough, the government chimed in to reveal that Umeme won’t be getting a sequel once its contract bows out in 2025. The franchise seems to be ending, but not without a flurry of financial fireworks.
During the reported period leading up to June, Umeme’s debt repayment ballooned from Shs79b to a staggering Shs210b. The result? Profits caught the memo and staged a disappearing act from Shs64.4b to Shs13.2b. The story may be less about magic and more about accounting tricks, but the effect is no less astonishing.
But hold onto your seats; there’s an unexpected twist in this electrifying tale. Amidst the financial thunderclouds, a silver lining emerged in the form of earnings before interest, tax, depreciation, and amortisation (EBITDA). This hero surged by 49.7 percent to Shs244b, proving that every story has its upswings.
Electricity sales, the unsung heroes of this narrative, also took the stage. With a growth rate that would make a gardener proud, domestic, commercial, medium industrial, and large industrial customers contributed to an 8 percent, 9 percent, 9 percent, and 11 percent increase respectively. Perhaps the power of connection isn’t just an abstract concept after all.
As Umeme’s story unfolds, it’s clear that growth owes its gratitude to a supporting act: an increase in connections. This surge was propelled by lowered connection charges and the dazzling introduction of Uganda Development Bank’s hybrid loan financing scheme. Talk about a star-studded ensemble.
In this tale of numbers, efficiency found its spotlight, with distribution efficiency climbing from 81 to 83 percent. The secret ingredient? A dash of reduced distribution losses, which fell from 17.1 percent to 16.7 percent. If only losing a few pounds were as easy for us as it is for distribution systems.
Through the twists and turns, Umeme’s investments played their part. With Shs41.9b on the table, aimed at sprucing up the quality of electricity and embracing digitization, it’s evident that even amidst challenges, Umeme is preparing for its next act.
A bright spot shines in the form of revenue, with a 19.9 percent increase from Shs897b to Shs1.076 trillion. The hero here is an 8.3 percent growth in electricity sales and a 2.6 percent reduction in operating costs, proving that even the most complex financial plots can have satisfying resolutions.
Amidst all the financial theater, Umeme’s operating cash flow takes the lead, dancing its way to an 18 percent increase to Shs221b. It seems that a mixture of cash collections, operating profits, and efficient financial maneuvers can truly steal the show.
As the plot unfolds, debts take a bow, reducing by 72 percent to Shs74b from Shs268b, all thanks to timely scheduled repayments. And the grand finale? Umeme’s promise to have all loan repayment schedules neatly wrapped up by December 2023.
In a final footnote to this financial masterpiece, Umeme’s directors drop the hint of an upcoming dividend. After all, what’s a blockbuster without a little something for the investors? An interim dividend of Shs24 per share is slated for February 29, 2024, proving that even in the world of business, the story must go on.