Slide 1: Umeme Limited H1 2018 Investor Presentation
Tororo Cement Industries Expansion Umeme Limited H1 2018 Investor Presentation
Slide 2: Contents
Contents Umeme & Electricity Sector Introduction Macro Economic Update Electricity Supply Industry Overview Operational Review Regulatory Update Financial Performance Safety Update H2 2018 Priorities 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 targets set thro
Slide 4: 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 5: 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 5
Slide 6: Macro Economic Update
Macro Economic Update • Quarterly CIEA data Composite Index of Economic Activity points to improved 220 2.5 economic activity 210 2.0 • Expansion in Private Sector Credit supporting growth 200 1.5 • Manufacturing sector YTD credit growth highest at 190 1.0 9.4% 180 0.5 • GDP growth expected to reach
Slide 7: State of Electricity Supply
State of Electricity Supply GWh MW 650 Max System Demand +5.9% 3,000 Full year Sales (GWh) 2,760 596 Half year 2,567 600 2,458 563 2,500 2,277 550 534 2,118 521 +8.6% 508 492 2,000 500 450 1,461 1,500 1,345 1,220 1,260 400 1,045 1,114 1,000 350 300 500 2013 2014 2015 2016 2017 2018 2013 2014 2015 20
Slide 8: Electricity Demand: +8.6%
Electricity Demand: +8.6% Customer numbers Sales (GWh) Growth ('000) Up 7.3% from FY 2017 Category GWh Growth (y/y) FY 2017 (%) 76.3% on pre-paid 1,400 Post-paid 1,208 Domestic 317.5 +1.6% +6.9% 1,200 Pre-paid 1,125 951 Commercial 178.3 +7.9% +5.7% 1,000 794 922 800 Street Lighting 0.5 -32.9% -0.7%
Slide 9: Operational Performance
Operational Performance Energy Losses Revenue collections % % 26 105 24.3 102.8 24 102.5 22 21.3 100.2 100 100.3 99.1 20 19.5 98.4 19.0 98.2 17.2 97.5 18 16.7 16 95 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Operating costs Regulatory targets* US$m Full year Half year 80 Opex up 21.
Slide 10: Capital Investments
Capital Investments Cumulative Capital investment US$ 31m invested in H1 2018 US$m 700 Total Unrecovered 600 566 596 500 Network & 500 substations, 93% 407 Systems & 400 434 449 IT, 3% 321 383 300 224 316 Operation 166 250 al assets, 200 102 130 3% 172 100 127 Land & 84 110 buildings, - 1% 2010 2011
Slide 11: Regulatory Updates
Regulatory Updates • Recovery of UShs 103.7 billion lifeline tariff revenue was included in Q2 and Q3 2018 tariffs • Bujagali Energy Limited refinancing was completed – effect of 15% reduction in large industrial tariffs • Offsets of USD 8.5m effected for arrears government installations (post-paid
Slide 12: Electricity Tariff Developments
Electricity Tariff Developments End User Tariff (UShs) 600 Umeme Distribution Margin (%) 500 46% 46% 400 35% 35% 300 29% 200 100 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016A 2017A 2018Q1 2018Q2 2018Q3A 2016 2017 2017 2017 2017 2018 2018 2018 Weighted Average EUT Bulk Supply Tariff • Weighted Average End User Tar
Slide 13: Financial Performance (US$)
Financial Performance (US$) Financials Summary (US$m) EBITDA (US$) US$ m Full year Half year Income Statement H1 2018 H1 2017 %ch 100 90 90 90 Revenue 198.8 195.2 +1.9% 76 2017 EBITDA 80 68 excl. Amendment 5 Cost of Sales (128.2) (134.8) -4.9% 70 effects 58 Gross Profit 70.6 60.4 +16.9% 60 50 Operat
Slide 14: Financial Performance (UShs)
Financial Performance (UShs) Financials Summary (UShs bn) EBITDA (UShs) Figures are rounded. Ushs bn 2017 EBITDA excl. Income Statement H1 2018 H1 2017 %ch 350 Full year Half year 325 308 Amendment 5 effects Revenue 735.8 704.4 +4.5% 300 H1 2018 EBITA up 28% 248 Cost of Sales (474.4) (486.4) -2.5% 2
Slide 15: Trading Update
Trading Update Market cap US$153m at UShs 346 share price Dec-17 (1) At IPO 850 850 P/E 5.0x 10.8x Share price (Ushs) EV/EBITDA (2) 3.5x 3.9x 750 750 P/(Buyout amount less net debt) (3) 0.5x 1.2x 650 650 Dividend Yield (H1 2018 Annualized) 7.3% - USE Return on unrecovered investments (US$) (4) 8% 16
Slide 16: Shareholder Update
Shareholder Update Shareholder Summary No. Top 20 Shareholders (Jun 2018) % Held Umeme Shareholder Distribution 1 National Social Security Fund Uganda 23.2% 2 Allan Gray* 10.0% Uganda Retail, 7% Directors & 3 Kimberlite Frontier Africa Master Fund 8.6% Employees, 1% 4 Utilico Emerging Markets Limite
Slide 17: Safety of Staff & the Public
Safety of Staff & the Public No network related fatality in H1 2018 No. 50 47 Network related fatalities Non-network related fatalities (illegal) 39 40 36 35 32 30 30 28 21 19 20 16 18 17 16 15 10 10 7 3 2 1 1 1 1 0 0 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Full Year Non
Slide 18: Priorities for H2 2018
Priorities for H2 2018 Conclude negotiation of 2019-2025 tariff parameters with ERA Continue the concession extension work stream Evaluate medium term capex financing options Engage ERA on outstanding income recoveries, including capital investments Delivery of core financial performance d
Slide 19: Generation Pipeline
Generation Pipeline Generation Pipeline +1000MW Large-hydro: MW MW Generation Outlook – Installed Capacity Karuma - 600 MW (71% completed) 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 20: Isimba Hydro Power Project
Isimba Hydro Power Project Isimba Hydro Power Project (183 MW) Status: 87% Source: Uganda Electricity Generation Company Limited 20
Slide 21: Karuma Hydro Power Project
Karuma Hydro Power Project Karuma Hydro Power Project (600 MW) Status: 75% Source: Uganda Electricity Generation Company Limited 21
Slide 22: Transmission Grid Status
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Slide 23: Thank You
Thank You 23 uMemMe