Umeme To Pay Shareholder Ksh 1.5 Billion In Dividends

Umeme has declared an interim dividend in the half year to June equivalent to Sh1.5 billion or Sh0.92 per share as the company accelerated debt payments ahead of the conclusion of its concession in March 2025.

The company reported a 79.5% y-o-y decline in PAT to USH 13.2 BN (USD 3.5 MN). The decline in profitability was largely attributable to a 167.7% y-o-y surge in amortization and write-off of intangible assets to USH 210.2 BN (USD 56.2 MN).

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EPS for the period stands at USH 8.10 (1H22: USH 39.60). The directors recommend an interim dividend of USH 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.

Revenue from contracts with customers rose by 19.9% y-o-y to USH 1.1 TN (USD 287.6 MN), supported by an 8.3% y-o-y growth in electricity sales.

Electricity sales to domestic households, commercial, medium industrial, and large industrial customers, increased by 8.0%, 9.0%, 9.0%, and 11.0% y-o-y respectively.

The distribution efficiency for the period increased to 83.0%, compared to 81.0% achieved in 1H22 on account of a reduction in distribution losses to 16.7% from 17.1% in 1H22.

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Cost of sales rose by 16.4% y-o-y to USH 719.8 BN (USD 192.5 MN) and due to the faster growth realized in revenues from contracts with customers, the company’s gross profit rose by 27.8% y-o-y to USH 335.9 BN (USD 95.2 MN). This saw the gross profit margin advance by 205 bps y-o-y to 33.1% (1H22: 31.0%).

Total expenses went up by 12.4% y-o-y to USH 112.4 BN (USD 30.0 MN) largely weighed down by the reversal of a foreign exchange gain of USH 15.6 BN (USD 4.2 MN) in 1H22 to a foreign exchange loss of USH 0.5 BN (USD 0.1 MN) in 1H23.

Operating expenses declined by 2.8% y-o-y to USH 111.9 BN (USD 29.9 MN) — which the company attributed to efficiency gains from investment in technology and optimized supply chains.

Amortization and write-off of intangible assets surged by 167.7% y-o-y to USH 210.2 BN (USD 56.2 MN) as the company aligned the amortization of the assets to the shorter period of the contract duration (the natural term of concession ends in 2025). Consequently, operating profit eased by 66.6% y-o-y to USH 33.3 BN (USD 8.9 MN).

Finance costs increased by 45.3% y-o-y to USH 25.6 BN (USD 6.8 MN) as a result of continued repayment of the term loan facilities — total borrowings reduced by 72.3% y-o-y to USH 74.3 BN (USD 19.9 MN). The final scheduled repayment of term loans is in December 2023.

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Net operating cash flow went up by 18.1% y-o-y to USH 221.3 BN (USD 59.2 MN) supported by cash collections, operating profits, optimized working capital, and financing costs during the period. Net investing cash flow decreased by 25.1% y-o-y to USH 41.9 BN (USD 11.2 MN) while net financing cash flow rose by 12.4% y-o-y to USH 101.5 BN (USD 27.2 MN).

Total assets decreased by 8.8% y-o-y to USH 2.4 TN (USD 644.9 MN) on the back of a 10.4% y-o-y decline in non-current assets to USH 1.9 TN (USD 518.0 BN) and a 1.5% y-o-y dip in current assets to USH 474.6 BN (USD 126.9 MN). Total liabilities sank by 11.5% y-o-y to USH 1.5 TN (USD 403.3 MN) while total equity eased by 4.0% y-o-y to USH 903.6 BN (USD 241.6 MN).

On a trailing basis, Umeme is trading at a P/E multiple of 6.2x against a sector median of 2.3x and a P/B multiple of 0.7x against a sector median of 0.1x. Its ROE stands at 10.7% while its ROA stands at 4.0%.

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