USE Trading Improves

Activity at the Uganda Securities Exchange (USE) last week increased as the turnover and the number of shares traded on the bourse more than doubled the previous week’s session. The total turnover during the week was Ush1,039,409,320 greater than the Ush482,069,530 recorded the previous week.

The number of shares traded stood at 32,193,730 greater than 2,749,567 that were traded the previous week. The week’s session closed with the All Share Index at 1499.72 up by 75.31 basis points while the Local Share Index closed at 270.22 up by 155.59 basis points.

This was as a result of four Stocks aancing while six declined an aance to decline ratio of 4 to 6. The most active counters by volume were Stanbic Bank Uganda, power firm UMEME, National Insurance Corporation and Uganda Clays Limited with East African Breweries Limited, British-American Tobacco Uganda and Equity Bank Limited among those aancing.

The decliners included the cross listed companies Jubilee Holdings Limited, Kenya Airways and Kenya Commercial Bank.

Meanwhile, following the release of DFCU Bank’s annual results, the directors have recommended a bonus issue in the ratio of 1:1. (one new bonus share for every ordinary share). On top of that they also recommended a final dividend of Ush17.84 per share including the bonus issue. The dividend will be paid on July 25, 2014 to shareholders on the register on May 30, 2014.

Power firm, Umeme also released its FY13 financial results last week. Earnings Per Share went up 47% to Ush51.54. A final dividend of Ush16.8 was declared. Together with interim Dividend Per Share of Ush8 gives a total dividend of Ush24.8.

The firm’s Gross profit increased by 30% to Ush290bn, beating the 26% growth estimate. As a result profit before tax went up 89% to Ush115bn.During the year, Umeme concluded a debt financing package of $190m composed of term loans of $170m and working capital facilities of $20m. The financing package was a syndicate between International Finance Corporation (IFC), Standard Chartered Bank and Stanbic Bank Uganda Limited. The funds will be used to support the projected capital investments.

Relatedely, Ugandan legislators last week resolved that concessions to power distribution and generation firms Umemeand Eskom, respectively, be terminated immediately. In their place, the House recommended that the government should open up the power distribution sector to competition.

Under present rules, House resolutions are, however, not binding on the government but generally considered as aice, which can be taken or ignored, albeit with certain political ramifications.

Under the agreement, Umeme’s concession runs out in 2025. The Eskom 20-year generation concession is to end in 2022. Parliament also said the option of a Public-Private Partnership in the distribution sector, with the government having a 51% stake, be adopted.

Parliament sanctioned the termination on the basis of a statement by an official from the Attorney General’s Chambers in 2011 that stated that the AG did not draft the concession agreements between Umeme and the government as is required by the Constitution.

Should the government implement the resolution which follows a recommendation of the Ad Hoc Committee on Energy, Uganda would have to pay Umeme Ush526.3bn in compensation. The Ush526.3bn is 120% of the ($172m) Ush438.6bn, which, according to Umeme’s 2013 audited accounts, is its unrecovered investment base. Analysts are predicting some trying times ahead as the continued depreciation of the Ugandan currency pushes up the pump price of fuel, something that according to then will see the cost of living go up. Towards the close of the week, Bank of Uganda quoted the local unit at 25602570 against the US Dollar, indicating a more than Ush70 increase compared to what it traded at the beginning of the previous week.

At the close of business on Thursday last week, a litre of petrol hovered at around Ush3,750-UGX 3,800 up from Ush3,600-3,700.

Source : East African Business Week

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