Leading electricity distribution company in Uganda, Umeme Limited, issued a profit warning on Tuesday, informing its shareholders that its net profit for the year 2023 is expected to decline by more than 25% compared to the previous year.
The company attributed the projected drop in net profit to the increased amortisation charge for the year, which resulted from aligning its non-current assets to the shorter of the remaining duration of its Electricity Distribution Concession or the underlying useful life of the assets.
The company said that this alignment was necessary to comply with International Financial Reporting Standards (IFRS), as communicated in its Interim Financial Statements for the six months ended 30th June 2023.
“The projected reduction in net profits is attributed to the increased amortisation charge for the year,” the company said in a statement issued by its Board of Directors and signed by its Company Secretary, Shonubi, Musoke & Co Advocates.
Despite the profit warning, the company assured its shareholders that its underlying economic and operating fundamentals remain strong, with growth registered in electricity demand, new customer connections, reduction in energy losses, operating costs efficiencies, investments in the distribution system and strong cash collections.
“The Company’s operating profits before amortisation are projected to grow in 2023 when compared to 2022,” the company said.
The company also said that its dividend policy remains unchanged from the previous communication and shall, for future reporting periods, be dependent on available free cash flows and retained earnings.
The company said that further details of its performance will be disclosed in the annual report and audited financial statements for the year ended 31st December 2023, which will be published and circulated to shareholders.
