Slide 1: Umeme Limited FY 2018 Results Presentation
Isimba Hydro Power Dam Isimba Hydropower Station Umeme Limited FY 2018 Results Presentation
Slide 2: Contents
Contents ❑ Macro Economic Update ❑ Electricity Supply Industry Overview ❑ Umeme Capex Plan ❑ Concession & Regulatory Updates ❑ Operational Review ❑ Financial Highlights ❑ Strategic Priorities 2
Slide 3: Macro Economic Update
Macro Economic Update % GDP Growth Trend 7.0% 6.4% 6.3% 6.4% • Real GDP up 6.1% 6.1% 6.0% 5.6% supported by rise in 5.2% 5.1% 4.8% private sector credit, 5.0% favourable weather 3.8% 3.9% 4.0% 3.6% 3.0% • Gov’t focus on infrastructure supported 2.0% further recovery in 1.0% construction 0.0% 2010 20
Slide 4: Installed Generation (MW)
Installed Generation (MW) Karuma +600 MW 1,800 1,767 Installed Capacity 1,600 Source MW % 1,400 Hydro 927.3 79.5 Isimba +183 Thermal 101.6 8.7 1,200 1,167 (HFO) 984 Solar 40.8 3.5 1,000 932 872 872 895 905 Cogeneration 96.2 8.2 863 800 Diesel 1.0 0.1 2012 2013 2014 2015 2016 2017 2018 2019 2020 Sour
Slide 5: State of Electricity Supply
State of Electricity Supply GWh +9.1% Electricity Sales (GWh) MW 650 Max System Demand +5.9% 3,011 596 3,000 600 563 550 534 2,760 521 508 492 500 2,567 2,500 2,458 450 400 2,277 350 300 2,000 2013 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Source: UETCL ▪ Effective Generation – 700 MW ▪ Peak
Slide 6: Isimba & Karuma Hydropower Plants
Isimba & Karuma Hydropower Plants Isimba HPP – Complete Commissioned – 21 Mar 2019 Karuma HPP – 93% Status Source: Uganda Electricity Generation Company Limited Commissioning – Dec 2019 6
Slide 7: Electricity Demand Outlook
Electricity Demand Outlook Strong Industrial Electricity Demand Pipeline Connections Policy – 655MW by 2023 – 500MW additional Cement, Steel, Mining, demand in 5 years Agro-processing… - 2m connections National Cement Company Osukuru Industrial Complex, Tororo 7
Slide 8: Transmission System Update
Transmission System Update Transmission grid system availability maintained at average 98% in 2018 Transmission switch yard at Isimba Dam 8
Slide 9: Transmission Grid
Transmission Grid GULU BSTATION on LIRASPIN MILL u ‘SUBSTATI it i i a Z ¥ MASINDI KINYARA”~~t} . A SUBSTATION |i _ Substations MASINDI SOROT KUMI SUBSTATIONS, SUBSTATION @ Umeme Substation Y (AaIGALO SussTaTion BALE ~ aa P ROMA ea tehion SUBSTATION, / KAPCHORWA ® UETCL Substation ri r ’ rw i B@MBO e
Slide 10: Umeme Capex Plan: 2019 - 2025
Umeme Umeme Capex Plan (USDm) Capex Plan: 80 70 2019 - 2025 60 50 40 30 20 10 0 2019 2020 2021 2022 2023 2024 2025 Asset Mgt Systems 5.5 3.6 2.8 2.2 1.5 Asset Performance and 15.3 24.6 23.4 29.9 32.8 37.3 30.3 Reliability Asset Replacement 16.8 8 9.8 8.2 12.9 8.6 10.1 Technical Losses 4.1 3.6 7.2 Gr
Slide 11: Umeme Capex Focus: 2019 - 2025
❑ Network Adequacy to meet forecast growth driven by need to absorb the anticipated generation; – Priority in industrial parks and industrial zones Umeme of Namanve, Mukono, Iganga, Kapeeka, Luzira and Mbale Capex ❑ Improvement of reliability and Quality of supply; – Priority will be to inject new s
Slide 12: Concession Extension
Concession Extension Government supportive of contract resolution 12
Slide 13: 2018 Regulatory Updates
13 • Revenue Recovery: UShs 103.7 billion lifeline tariff revenue was recovered in Q2 – Q4 2018 tariffs • Bujagali Energy Limited refinancing was completed – directed towards reducing large- 2018 • industrial tariffs Offsets of USD 8.5m effected for arrears Regulatory • government installations (pos
Slide 14: Electricity Tariff Developments
Electricity Tariff Developments Umeme Distribution Margin Tariffs (Ushs) 50% 550 45% 500 40% 450 35% 400 350 30% 300 25% 250 20% 2016 2017 Q1 18 Q2 18 Q3 18 Q4 18 200 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2017 2017 2017 2018 2018 2018 2018 • Weighted Average End User Tariff up 4.4% in Weighted End Us
Slide 15: Electricity Demand: +9.1%
Electricity Demand: +9.1% Customer numbers Sales (GWh) Growth ('000) Up 15% from FY 2017 Category GWh Growth (y/y) FY 2017 (%) 79% on pre-paid 1,400 Post-paid 1,292 Domestic 640.4 +2.4% +6.9% 1,200 Pre-paid 1,125 Commercial 366.9 +7.5% +5.7% 1,000 951 800 794 Street Lighting 1.1 -32.9% -0.7% 651 600
Slide 16: Operational Performance
Operational Performance Energy Losses Revenue collections % % 22 21.3 105 19.5 102.5 20 19.0 100.2 18 17.2 100 99.1 16.6 98.4 98.2 16 14 95 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Operating costs Regulatory targets* US$m 65 Tariff parameter ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 60 60 Energy losses 19.6
Slide 17: Financial Performance (US$)
Financial Performance (US$) Financials Summary (US$m) EBITDA (US$) US$ m 2017 EBITDA Income Statement 2018 2017 %ch 100 excl. Amendment 5 95 effects Revenue 400.3 410.7 -2.5% 90 90 90 Cost of Sales (244.6) (265.7) -7.9% Gross Profit 155.7 145.0 +7.3% 80 76 Operating Expenses 60.4 55.3 +9.2% 70 68 EB
Slide 18: Financial Highlights
Financial Highlights Cumulative Capital investment Net Debt (US$m) US$ 62m invested in 2018 US$m US$m 700 Total Unrecovered 220 566 627 201 600 200 500 187 500 180 407 460 400 434 321 160 147 383 142 300 224 316 140 200 166 250 102 130 120 172 100 127 95 110 100 84 - 80 2010 2011 2012 2013 2014 2015
Slide 19: Financial Performance (UShs)
Financial Performance (UShs) Financials Summary (UShs bn) Gross Profit & EBITDA (UShs) Figures are rounded. Ushs bn 700 2017 EBITDA excl. Income Statement 2018 2017 %ch Amendment 5 effects 581 600 Gross profit Revenue 1,493.2 1,485.2 +0.5% 525 500 EBITDA 476 Cost of Sales (912.0) (960.5) -5.0% 418 G
Slide 20: Trading Update
Trading Update Market cap US$129m at UShs 296 share price ❑ Buy-Out amount less net Umeme Share Price (UShs) debt at $396m 530 ❑ Share trading at Buy-Out 480 amount less net 430 debt/Market Cap multiple 380 of 3x 330 ❑ Dividend yield at 13.8% 280 relative to 364-day Treasury Bill at 12.5% 230 ❑ 2019
Slide 21: Shareholder Update
Shareholder Update Shareholder Summary No. Top 20 Shareholders % Held 1 National Social Security Fund Uganda 23.2% Umeme Shareholder Distribution 2 Allan Gray* 10.0% 3 Kimberlite Frontier Africa Master Fund 8.9% Uganda Retail, 7% 4 Utilico Emerging Markets Limited 5.0% Directors & Employees, 5 Inves
Slide 22: Company Priorities
Company Priorities Concession Negotiation • Resolve outstanding $93m Complete negotiation unverified Capex Protect existing of 2019-2025 tariff • Regulatory Approval for multi-year Concession parameters with ERA capex plan agreements • Independent Verification Firm to secure capex Deliver Capex Fund
Slide 23: Thank You
Thank You 23 uMemMe