Isimba Hydro Power Dam Isimba Hydropower Station Umeme Limited FY 2018 Results Presentation
Contents ❑ Macro Economic Update ❑ Electricity Supply Industry Overview ❑ Umeme Capex Plan ❑ Concession & Regulatory Updates ❑ Operational Review ❑ Financial Highlights ❑ Strategic Priorities 2
Macro Economic Update GDP Growth Trend % • Real GDP up 6.1% 7.0% 6.4% 6.4% 6.3% 6.1% supported by rise in 6.0% 5.6% private sector credit, 5.2% 5.1% 4.8% 5.0% favourable weather 3.9% 3.8% 4.0% 3.6% • Gov’t focus on 3.0% infrastructure supported further recovery in 2.0% construction 1.0% 0.0% • Rebound in services 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 sector – growth in Source: UBOS, Bank of Uganda telecom, financials and insurance 2018 Headline Inflation average – 2.6% (from 5.6%) ▪ ▪ 2018 Currency performance – 2% vs 1% weakening in • Bank of Uganda 2017 Composite Index of Economic Activity points FY 2018/19 growth projected at 6.3% supported by ▪ to improved business accommodative monetary policy, infrastructure spending, sentiments stronger credit growth and improved agriculture performance 3
Installed Generation (MW) Karuma +600 MW 1,767 1,800 Installed Capacity 1,600 Source MW % Hydro 927.3 79.5 1,400 Isimba +183 Thermal 101.6 8.7 1,167 1,200 (HFO) Solar 40.8 3.5 984 1,000 932 905 895 Cogeneration 96.2 8.2 872 872 863 800 Diesel 1.0 0.1 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Umeme, UETCL, MEMD Isimba Dam Commissioned on 21 st Mar 2019 4
State of Electricity Supply +9.1% GWh Electricity Sales (GWh) MW +5.9% Max System Demand 650 3,011 596 3,000 600 563 534 2,760 550 521 508 492 500 2,567 2,458 2,500 450 2,277 400 350 300 2,000 2013 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Source: UETCL Effective Generation – 700 MW ▪ ▪ Peak Demand excluding exports - +5.9% ▪ System Demand include exports – 645MW ▪ Generation Load Factor – 74% ▪ 5-Year Max Demand CAGR – 4.9% ▪ 2018 GWh sales up 8.6% (FY17: 7.5%) 5
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
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
Transmission System Update Transmission grid system availability maintained at average 98% in 2018 Transmission switch yard at Isimba Dam 8
Transmission Grid 9
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 Growth and Access 33.3 34.8 31.6 34.2 27.8 28.4 28.3 10
❑ 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 substations and Focus: new transformer zones in high growth areas 2019 - ❑ Support the Government agenda for accelerated access. T arget is to connect 2M+ customers in the next – 2025 6 yrs Improve efficiency of the distribution network by ❑ leveraging on new technologies
Concession Extension Government supportive of contract resolution 12
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 (post-paid accounts) 331 out of 469 government installations • Updates converted to pre-paid metering Pending unrecognized Capex by ERA – US$ • 93m Ongoing engagement on 2019 – 2025 tariff • parameters
Electricity Tariff Developments Umeme Distribution Margin Tariffs (Ushs) 50% 550 45% 500 40% 450 35% 400 30% 350 25% 300 250 20% 2016 2017 Q1 18 Q2 18 Q3 18 Q4 18 200 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 • Weighted Average End User Tariff up 4.4% in 2016 2017 2017 2017 2017 2018 2018 2018 2018 2018 Weighted End User Tariff Bulk Supply Tariff • Bulk Supply Tariff reduced by 21.4% in Q2 2018 Tariffs per Consumer Category (Ushs) 800 Bujagali Refinancing benefits (generation tariff • 700 down from 11 cents from 8 cents) passed onto extra-large industrial category to drive 600 consumption 500 400 Recovery of UShs 103.7 billion lifeline tariff • 300 revenue started in Q2 2018 200 Street Lighting Domestic Commercial Medium Large Extra-large • Distribution Margin increased as a result of Industrial Industrial Industrial lifeline revenue recovery Q1 2018 Q2 2018 Q3 2018 Q4 2018 14
Electricity Demand: +9.1% Sales (GWh) Growth Customer numbers Category Up 15% from FY 2017 GWh Growth (y/y) FY 2017 (%) ('000) 79% on pre-paid 1,400 1,292 Post-paid Domestic 640.4 +2.4% +6.9% Pre-paid 1,200 1,125 Commercial 366.9 +7.5% +5.7% 951 1,000 Street Lighting 1.1 -32.9% -0.7% 794 800 651 1,015 Industrial – Med 477.2 +10.4% +3.0% 600 400 Industrial – Large 1525.4 +12.2% +9.7% 200 277 T otal 3,011.0 +9.1 % +7.5 % - 2014 2015 2016 2017 2018 Prepaid Revenue Share Sales (GWh) by Customer Category % Prepaid Revenues % of Total 28% 24% 24% 21% 20% 16% 16% 12% 12% 8% 6% 4% 0% 15 2014 2015 2016 2017 2018
Operational Performance Energy Losses Revenue collections % % 22 21.3 105 102.5 19.5 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 Regulatory targets * Operating costs US$m Tariff 65 parameter ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 60 Energy losses 19.6 21.0 18.9 17.4 16.1 15.1 60 (%) 55 Collection rate 81.1 97.5 97.7 97.9 98.2 98.5 55 (%) 53 51 Operating 36.5 44.4 45.7 47.2 48.7 50.2 allowance 50 48 (US$m) ** 45 * Umeme financial year (Jan-Dec). Tariff year runs from 1 st March 2014 2015 2016 2017 2018 ** Allowance is adjusted annually for international and local inflation 16
Financial Performance (US$ ) Financials Summary (US$m) EBITDA (US$) 2017 EBITDA US$ m Income Statement 2018 2017 %ch excl. Amendment 5 100 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% 68 70 EBITDA 94.9 89.9* 5.6% Finance Costs (ex. lease) 16.1 19.0 -15% 60 PBT 52.3 44.0* 18.9% 50 Tax Rate 31.6% 30%* - 2014 2015 2016 2017 2018 Profit after tax (US$) Profit After Tax 35.8 30.8* +16.3% US$ m 2017 PAT excl. 45 * Adjustments for effects of Amendment 5 40 Amendment 5 ** Assuming 30% tax rate on adjusted PBT. 40 36 effects 36 34 35 31 30 25 Financial Position at FY 2018 FY 2017 %ch 20 Total Assets 662.8 645.0 +2.8% 15 Shareholders Equity 194.3 169.6 +14.6% 10 5 Net Debt 147.0 187.0 -21.4% - 2014 2015 2016 2017 2018 17
Financial Highlights Net Debt (US$m) Cumulative Capital investment US$ 62m invested in 2018 US$m US$m 700 Total Unrecovered 220 627 566 201 600 200 500 187 500 407 180 460 434 400 321 160 147 383 142 300 224 316 140 166 250 200 120 102 130 172 100 127 95 100 110 84 - 80 2010 2011 2012 2013 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Dividend Pay-out Ratio Sample projects in 2018 % 60% 50% Load Growth 50% • Kampala Industrial Business 40% 35% Park/Namanve 33kv Industrial Ring 30% • Upgrade of Gulu sub-station 23% • Nyakesi substation, Tororo 20% • Kawanda-Kapeeka Load Transfer 10% 0% 2016 2017 2018 18
Financial Performance (UShs) Financials Summary (UShs bn) Gross Profit & EBITDA (UShs) Figures are rounded. Ushs bn 2017 EBITDA excl. 700 Income Statement 2018 2017 %ch Amendment 5 effects 581 600 Gross profit Revenue 1,493.2 1,485.2 +0.5% 525 476 EBITDA 500 Cost of Sales (912.0) (960.5) -5.0% 418 Gross Profit 581.2 524.7 +10.8% 400 354 325 318 308 Operating Expenses 225.6 199.3 +13.2% 300 248 178 EBITDA 354.1 325.9* +8.6% 200 Finance Costs (ex.lease) 60.1 68.6 -12.3% 100 Profit Before Tax 195.1 159.8* +22.1% - 2014 2015 2016 2017 2018 Tax Rate (%) 31.9 30** Profit after tax (Ushs) Profit After Tax 132.8 111.9* +18.7% EPS 82.0 68.9* 2017 PAT excl. Ushs bn Ushs bn Amendment 5 effects DPS (Total) 40.9 7.6 140 133 132 *Figures adjusted for effects of Amendment **Assuming 30% tax rate. 120 112 106 100 Financial Position at FY2018 FY 2017 %ch 80 70 Total Assets 2,463.6 2,349.4 +4.8% 60 Shareholders Equity 722.2 617.7 +16.9% Net Debt 546.5 681.2 -19.8% 40 2014 2015 2016 2017 2018 19
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