Ugandan electricity distributor Umeme has announced an interim dividend of Sh0.90 (Ush26) per share for the six months ended June 2024, marking a marginal increase from the payout of Sh0.83 (Ush24) in the corresponding period in 2023.
The company, which has been cross-listed on the Nairobi Securities Exchange since December 2012, raised the payout despite recording a 1.5 percent dip in net profit to Ush12.99 billion (Sh459.2 million in the period.
Its revenue rose 7.1 percent to Ush1.15 trillion (Sh40.73 billion), with its operating profit going up by 10.2 percent to Ush268.5 billion (Sh9.5 billion).
Its bottom line was however impacted negatively by an amortisation or write off of assets as it gears towards the end of its 20-year electricity distribution concession from the government of Uganda.
Given that the amortisation does not represent an actual cost or outflow, the company was able to raise the dividend to reflect the higher operating profit before the amortisation charge.
“As the concession is coming to the end of its natural term in 2025, the International Financial Reporting Standards (IFRS) require alignment of asset amortisation to the remaining period of the contract term.
“Consequently, the amortisation charge for the period increased to Ush238 billion (Sh8.43 billion) compared to Ush210 billion (Sh7.4 billion) for 2023,” said Umeme in a statement.
The assets and operations of Umeme will be handed back to the Ugandan government after the expiry of the concession in March 2025, with private shareholders getting compensated at the value of unrecovered capital investments plus a premium of five percent.
Umeme’s main shareholders include the International Finance Corporation, which retains a 2.8 percent stake acquired during the firm’s 2012 Initial Public Offering. Kenyan investors also bought into the company courtesy of its cross listing at the NSE.
