New Namugongo Substation -US$6m Completed in 2015

Transcription

1 New Namugongo Substation -US$6m Completed in 15 Umeme Investor Presentation May 16

2 Umeme - powering Uganda Twenty year concession to distribute electricity in Uganda (running to 25) Contracted net US$ return of % p.a. on investment Regulated by the Electricity Regulatory Authority with energy losses target, collections target and operating cost allowance agreed through to 18 Single buyer model with Government of Uganda Support Agreement Secure cash flow: over 70% revenues from industrial, commercial and government customers Diversified investor base with listing on Uganda & Nairobi Securities Exchanges Incentivised management team 50% dividend payout policy Blue chip customer base 2

3 Umeme Footprint & Customer Mix 25 district offices across 4 regions Customer Breakdown (%) Commercial/In dustrial 9% Domestic 91% Revenue Contribution (%) Industrial - Large 37% Industrial - Medium 21% Domestic 27% Commercial 15% Street Lighting 0% 3

4 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

5 Umeme Value Drivers Capex & performance against regulatory targets drive EBITDA growth Investment Return % Net ROI Tax Recovery Capital Recovery Regulatory Incentives T& C Losses Collections Opex Growth Financial Performance (EBITDA) 5

6 Safety: Zero network related fatalities in 15 No Network related fatalities Non-network related fatalities (illegal)

7 Capital investment (cumulative) US$m Sample completed projects in 15 Investing in service & growth US$87m invested in Load Growth Namugongo Substation (US$ 6.4m) Ntinda, Mukono, Jinja Industrial (US$ 1.8m) Namunkenkera Industrial Zone (US$ 2.8m) Loss reduction Mukono, Seeta Zones 1-4 (US$6m) Network Restoration Several parts of the country (US$ 11.2 million) Pre-payment Metering (US$ 12.7m) Post-paid customer conversions (+87k) New Connections (+143k) Loss reduction & improved revenue collection Automated Metering (US$ 7.6m) 1,600 Connections by end of 15 (Kampala industrial users) Has supported loss reduction & enhanced operational efficiencies 7

8 Customer & sales growth Customer numbers +22% Sales (GWh) ('000) k new customers in 15 Pre-paid > post-paid Post-paid Pre-paid Customer Satisfaction Index GWh 2,600 2,400 2,0 2,000 1,800 1,600 1,400 1,0 1,000 +8% 2,458 2,277 2,118 1,937 1,735 1, Index Source: Ipsos, Milward Brown Customers Sales Category No. Share Growth GWh Share Growth Domestic 723, % +22.5% % +5.5% Commercial 66, % +17.4% % +9.2% Street Lighting % -0.7% 2 0.1% -17.0% Industrial - Medium 2, % +8.8% % +4.1% Industrial - Large % +10.1% 1, % +10.3% Total 793, % +22.0% 2, % +8.0% 8

9 Energy losses % Operating costs Regulatory targets Energy losses by 1.8 percentage points Revenue collection % Agreed regulatory targets * US$m Tariff parameter Energy losses (%) Collection rate (%) Operating allowance (US$m) ** Nominal * Umeme financial year (Jan-Dec) ** Allowance is adjusted annually for international and local inflation 9

10 Financial performance Financial statement summary Ushs bn, US$ m 15 14* Growth Summary income statement Revenue Ushs 1, % US$ % Cost of Sales Ushs (743) (659) +13% US$ (229) (252) -9% Gross Profit Ushs % US$ % Operating Costs Ushs (181) (153) +18% US$ (53) (55) -4% EBITDA Ushs % US$ % Finance Costs (ex lease) Ushs (31) (6) +434% Profit Before Tax Ushs % Tax Ushs (55) (31) +77% Profit After Tax Ushs % US$ % Financial position at FY Total Assets Ushs 1,775 1, % Shareholder's Equity Ushs % Net Debt Ushs % US$ % Profit lines (Ushs) Ushs bn Gross profit EBITDA PAT Profit after tax (US$) US$ m Per share data Ushs Ushs Earnings % Proposed Dividend (Total) % * 14 figures are conformed to the USD functional currency but are unaudited FY10-14 adjusted for unrealized FX losses 10

11 Trading update Market cap US$265m at Ushs 550 share price USE NSE Share price (Ushs) 350 Market capitalisation (US$m) Volume (m) 0 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Dec-15 (1) At IPO P/E 7.7x 10.8x EV/EBITDA (2) 5.3x 3.9x P/(Buyout amount less net debt) (3) 1.1x 1.2x Dividend Yield 6.4% - Return on unrecovered investments (US$) (4) 15% 16% Notes (1) Actual 12 months to 31st December 15 (2) EBITDA excludes finance income/cost & FX gain/loss. Includes interest on bank deposits (3) Indicative assuming GoU termination premium of % of unrecovered investment (4) Prior year unrecovered investment base TOP SHAREHOLDERS (MAR 16) % 1 NATIONAL SOCIAL SECURITY FUND 15.7% 2 UMEME HOLDINGS LIMITED & NOMINEES 14.3% 3 INVESTEC FUNDS 8.4% 4 KIMBERLITE FRONTIER AFRICA FUND 5.7% 5 ALLAN GRAY AFRICA FUNDS 4.3% 6 ASHMORE FUNDS 3.4% 7 DUET FUNDS 3.3% 8 INTERNATIONAL FINANCE CORPORATION 2.8% 9 UTILICO EMERGING MARKETS LIMITED 2.0% 10 KATTAGAT TRUST 2.0% 11 BOUTIQUE COLLECTIVE INVESTMENTS 1.6% 12 T.ROWE PRICE 1.4% 13 IMARA 1.0% 14 CENTRAL BANK OF KENYA PENSION FUND 0.9% 15 POHJOLA BANK 0.9% 16 OLD MUTUAL 0.8% 17 VANDERBILT UNIVERSITY 0.8% 18 METSI MASTER FUND 0.8% 19 KUWAIT INVESTMENT AUTHORITY 0.8% BYARUHANGA WILLIAM 0.8% CATEGORY ( 16) % INTERNATIONAL FUNDS 41.3% AFRICA FUNDS (EX. EAST AFRICA) 19.4% UGANDA INSTITUTIONAL 18.3% EAST AFRICA INSTITUTIONAL 12.4% UGANDA RETAIL 5.9% DIRECTORS & EMPLOYEES 2.1% OTHER 0.6% 100.0% 11

12 16 Capex Projects Ushs 270 billion Focus for FY 16 New Moniko substation & integrating lines GETFiT Generation Projects Automated Meter Reading Prepayment Metering Conversion of 80k postpaid customers 150k new connections Prepayment for Gov t 3 Phase Installations Supply reliability & load growth Industrial zones, Tororo, Kampala, Mbale New Namugongo substation completed in 15 (US$6m) 12

13 Generation Pipeline Strong Generation Pipeline MW MW 2,000 1,800 1,600 1,400 1,0 1, Generation outlook Installed Capacity Bujagali hydro Karuma hydro Isimba hydro Nalubale Kiira Namanve & Kakira hydro - Pre Source: Umeme, UETCL, MEMD 13

14 Summary Growth in Generation (+1000MW by ) Investments in line with sector growth Concession extension Capital raising Regulatory environment Organizational development Technology driving customer service 14

15 Appendices Appendix 1: Uganda s macroeconomic outlook Appendix 2: Generation overview Appendix 3: Tariff analysis 15

16 Appendix 1: Uganda s macroeconomic outlook Positive outlook for economic growth 7% 6% 5% 4% 3% 2% 1% 0% 6.2% 4.1% 6.4% 2.7% 3.6% 2.2% Real GDP growth forecast 4.7% 4.8% 1.9% 5.1% 4.6% 2.3% 2.4% 2.3% 5.0% Uganda World 2.7% 5.5% 2.9% Real GDP growth is forecast at 4.6% in 16, supported by high government spending but held back by tight lending conditions and sluggish private sector activity. Real GDP growth is expected to rise to 5.6% in 17-. Economic growth will be relatively broad-based, with telecommunications, financial services and transport continuing to perform well. Substantial public investment in infrastructure, funded largely by Chinese credit, will also have a strong bearing on economic growth throughout the forecast period. Source: Economist Intelligence Unit (March 15) 16

17 Appendix 3: Generation overview Peak demand c.530mw Energy supply mix (Effective Generation) Average Monthly Dispatch Large-hydro, 450MW, 71% Mini-hydro, 52MW, 8% Cogeneration, 33MW, 5% Thermal, 100MW, 16% Large Hydro 84% Thermal 2% Co-Generation 6% Mini-Hydro 8% Source: Umeme, UETCL, MEMD 17

18 US$ Cents Appendix 4: Tariff analysis USD/KWh 6 Real Distribution price Umeme distribution price is <30% of end-user tariff Regional end-user tariffs (Jan 16) Uganda s tariffs are competitive regionally and cheaper than Kenya across domestic, commercial and large industrial customers Uganda Kenya Tanzania Rwanda 5 - Domestic Commercial Medium Ind. Large Ind. Sources: Electricity Regulatory Authority Uganda, Electricity & Water Utilities Regulatory Authority Tanzania, Electricity Regulatory Commission Kenya, EWSA Rwanda. Data collected as at January 16 and converted using using Bank of Uganda official COMESA exchange rates to US$ 18