Slide 1: H1 2017 Investor Presentation - Powering Uganda
Vad H1 2017 - Investor Presentation Powering Uganda Hy ae. | pa — ee y cy — , ofa — a “ 4 Z, vt — 5
Slide 2: Overview
Overview Umeme and Sector Introduction Safety performance Electricity demand & macro update Regulatory developments H1 2017 Investments Operational & financial update Electricity generation update Summary & Outlook 2
Slide 3: Umeme - powering Uganda
Umeme - powering Uganda • Twenty year concession to distribute electricity in Uganda (running to 2025) • Contracted net US$ return of 20% p.a. on investment • Regulated by the Electricity Regulatory Authority with energy losses target, collections target and operating cost allowance agreed through t
Slide 4: Uganda's power sector
Uganda’s power sector • Uganda’s electricity sector was liberalised in 1999, supported by World Bank • Sector unbundled into generation, transmission and distribution to foster transparency & investment • Single buyer model L L L Other IPPs (hydro / thermal) Generation Transmission Distribution 4
Slide 5: Safety
Safety No network related fatality in H1 2017 No. 50 47 Network related fatalities Non-network related fatalities (illegal) 39 40 36 35 32 30 30 28 21 20 16 17 18 10 15 10 7 7 3 2 1 1 0 0 1 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Full Year Non-network fatalities incl. power t
Slide 6: Umeme Value Drivers
Umeme Value Drivers Investment Return •20% USD Net ROI •Capital Recovery •Tax Recovery Regulatory Incentives •Loss reduction •Cash collections •Operating Financial 20% USD Return earned on Expenses Performance capex completed and subsequently verified by ERA. (EBITDA) Investment costs: 20% ROI, Tax
Slide 7: Growing electricity demand
Growing electricity demand MW H1 GWh Max System Demand Full year Half year 600 2,567 561 2,458 2,500 539 2,277 550 2,118 515 1,937 500 488 2,000 472 469 450 1,500 1,345 1,220 1,260 400 1,114 1,045 1,000 935 350 300 500 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 Peak demand in H1 201
Slide 8: Regulatory Developments
Regulatory Developments Amendment 5 issued in May 2017 • Accrued growth factor and tax receivables amounting to Ushs 115.3 billion impairment provisions • No further reconciliations of growth factor revenues • Recovery of prior growth factor amounts ongoing Power Supply Price Reconciliation • Actual
Slide 9: Capital Investments
Capital Investments Cumulative Capital investment US$ 27.5m invested in H1 2017 600 US$m 527.7 500 500 400 407 321 300 224 200 166 100 2012 2013 2014 2015 2016 2017 Sample projects in H1 2017 Load Growth Pre-payment Metering • Moniko Substation Interconnection lines (US$ 8.0m) • New Connections (+69
Slide 10: Customers & Revenue Split
Customers & Revenue Split Customer numbers Prepaid Revenue Share Up 7.3% from FY2016 70% on pre-paid % ('000) 24% Prepaid % of Total Revenue H1 1,200 Post-paid 1,019 20.0% Pre-paid 20% 1,000 951 16% 800 794 16% 651 12% 574 715 600 12% 513 400 8% 6% 200 4% 2% 304 - 0% 2012 2013 2014 2015 2016 2017 20
Slide 11: Operational performance
Operational performance Energy losses Revenue collection % % 28 105 26.1 26 Energy losses down 1.5% 100.3 99.9 24.3 99.1 98.4 from FY16 100 98.2 24 22 21.3 95 19.5 94.0 20 19.0 17.5 90 18 16 85 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 Operating costs Regulatory targets* US$m 80 Fu
Slide 12: Financial performance (US$)
Financial performance (US$) Financials Summary (US$m) EBITDA (US$) US$ m Full year Half year 90 Income Statement H1 2017 H1 2016 %ch 80 76 77 Revenue 195.2 194.6 +0.3% 68 H1 2017 70 EBITDA excl. Cost of Sales (134.8) (131.8) +2.2% 60 58 Amendment 5 Gross Profit 60.4 62.7 -3.7% 46 effects 50 38 39 Op
Slide 13: Financial performance (Ushs)
Financial performance (Ushs) Financials Summary (Ushs bn) EBITDA (Ushs) UShs bn Full year Half year Income Statement H1 2017 H1 2016 %ch 300 262 248 Revenue 704.4 658.7 +6.9% 250 H1 2017 PAT excl. Amendment Cost of Sales (486.4) (446.3) +9.0% 5 effects 200 178 Gross Profit 218.0 212.4 +2.6% 149 150
Slide 14: Trading update
Trading update Market cap US$205m at Ushs 455 share price 850 850 350 Market capitalisation (US$m) 350 Share price (Ushs) 750 750 300 300 650 650 USE 550 NSE 550 250 250 450 450 200 200 350 350 150 150 250 250 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-13 Jul-13 Jan-14
Slide 15: Umeme Shareholders
Umeme Shareholders Shareholder Summary No. Top 20 Shareholders (Sep 2017) % Held Umeme Shareholder Distribution (Sep 2017) 1 National Social Security Fund Uganda 23.2% 2 Allan Gray* 9.1% Uganda 3 Kimberlite Frontier Africa Master Fund 7.6% Institutional 4 Investec Asset Management Africa Fund 4.8% 2
Slide 16: Generation Pipeline
Generation Pipeline Generation Pipeline +1000MW Large-hydro: MW Karuma - 600 MW (71% completed) MW Generation Outlook – Installed Capacity Isimba - 183 MW (76% completed) 2,000 Agago-Achwa – 83 MW Ayago - 600MW 1,800 Orianga - 400MW Karuma Kiba - 290MW 1,600 Agago-Achwa – 83 MW Muziz
Slide 17: Sector Medium Term Priorities
Sector Medium Term Priorities Upcoming Generation Investments Industrialization to drive demand Uganda’s Electricity Sub- Sector Competitive Power Prices Increased Access 2025 target: 40% (c.22% current) 17
Slide 18: Recent Director Appointments
Recent Director Appointments Anthony Marsh was Andrew Buglass was appointed as a non-executive director of the appointed as a non-executive director of the Company with effect from the 20th day of June, Company with effect from the 20th day of June, 2017. 2017. Mr. Marsh has over 30 years’ experienc
Slide 19: Summary & Outlook
Summary & Outlook H2 Tariff recoveries Recognition of investments & Recovery of regulatory income Negotiation of 2019-2025 regulatory targets Investments in line with upcoming generation Staff development in line with sector needs Strategic financial advisor mandate Concession Tenure R
Slide 20: Appendices
Appendices • Appendix 1: Generation overview • Appendix 2: Karuma & Isimba Hydro Power Projects • Appendix 3: Tariff analysis • Appendix 4: Distribution Tariff Margin 20
Slide 21: Appendix 1: Generation overview H1 2017
Appendix 1: Generation overview H1 2017 Energy supply mix (Effective Generation) Average Monthly Dispatch Large-hydro, 542MW, 85% Large-hydro 82% Mini-hydro, 54MW, 8% Mini-hydro 10% Cogeneration Cogeneration, 3% 32MW, 5% Thermal Thermal, Solar 4% Solar, 5MW, 7MW, 1% 1% 1% Source: Umeme, UETCL, MEMD
Slide 22: Appendix 2: Karuma & Isimba Projects
Appendix 2: Karuma & Isimba Projects Karuma Hydro Power Project (600 MW) Status: 71% Commissioning: 2019 Isimba Hydro Power Project (183 MW) Source: UEGCL Status: 76% Commissioning: 2018 22
Slide 23: Appendix 3: Tariff analysis
Appendix 3: Tariff analysis USD/KWh 30 Regional End-user Tariffs (Jan 2017) 6.0 Real Distribution price 24 25 5.5 5.4 5.2 5.2 20 5.0 20 18 18 Uganda 5.0 18 16 16 US$ Cents 4.5 15 15 15 Kenya 15 14 4.5 4.2 Tanzania 11 10 9 10 Rwanda 4.0 10 8 3.5 5 3.0 2012 2013 2014 2015 2016 2017 - Domestic Commerci
Slide 24: Appendix 4: Distribution Tariff Margin
Appendix 4: Distribution Tariff Margin Distribution Margin (Q1 – Q4 2017) 45% 40% Distribution Margin (%) 35% 30% 25% 20% 15% 10% 5% 0% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Distribution Margin 33% 34% 35% 40% Distribution margin improvement in Q3 and Q4 forecast attributed to tariff recoveries for $11m a