Umeme Limited FY 2012 financial results presentation

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Information about Umeme Limited FY 2012 financial results presentation
Investor Relations

Published on March 19, 2014

Author: AfricanisCool

Source: slideshare.net

Description

Umeme Limited FY 2012 financial results presentation

Umeme: powering Uganda • Twenty year concession to distribute electricity in Uganda (running to 2025) • Regulated by the Ugandan Electricity Regulatory Authority with agreed  targets for energy losses and collections • Contracted net USD return of 20% p a on investments• Contracted net USD return of 20% p.a. on investments • Diversified investor base with listing on Uganda Securities Exchange Blue chip customer base

Overview of Uganda power sector • Uganda’s electricity sector was liberalised in 1999, supported by World Bank • Sector unbundled into generation, transmission and distribution to foster  transparency and investment L LL L L Other IPPs (hydro /  thermal) Generation Transmission Distribution

Operational and Financial highlights for 2012 • Investment of US$36m in the distribution network (forecast US$30m)• Investment of US$36m in the distribution network (forecast US$30m)  bringing undepreciated investment base up to US$127m • Customer numbers up 12% to 513,000 S l th 12% (B j li)i l • Sales growth 12% (Bujagali) • Energy losses from 27.3% down to 26.1% • Tariff increase 52% Operational • Revenue collection rate from 98.9% to 94.0% Actual (Ushs bn) vs 2011 Forecast (Ushs bn) Financial Revenue  860 +88% 860 Gross profit  235 +26% 226 EBITDA 130 +25% 125 d f l d d d f h h ( h b ) Financial Profit before tax 61 +37% 59 Profit after tax 57 +148% 41 • Approved final dividend of Ushs 15 per share (Ushs 24.4bn) 4

Cumulative investment Undepreciated investment base USD127mUndepreciated investment base USD127m 180 US$m 130  166  140 160  180  102 120  140  52 80  80  100  Network 29  52  40  60  Network  and  substations  80% 6  11  ‐ 20  2005 2006 2007 2008 2009 2010 2011 2012 5

Public fatalities One public (non‐illegal) fatality during 2012One public (non‐illegal) fatality during 2012 1718 No. 16 17 14 16 18 10 10 12 14 7 6 8 10 3 1 12 4 6 3 0 2006 2007 2008 2009 2010 2011 2012 6

Total customers up 12%  55,000 new connections in 201255,000 new connections in 2012 550 ('000) 458 513  500  550  405  458  450  355  350 400  292  298  303  305  300  350  250  2005 2006 2007 2008 2009 2010 2011 2012 7

Energy sales up 12% Bujagali hydroelectric power plant added 250MW in 2012Bujagali hydroelectric power plant added 250MW in 2012 1 9372 000 GWh 1,735  1,937  1,800  2,000  1,401 1,627  1,600  1,138  1,278  1,401  1 200 1,400  1,015  990  , 1,000  1,200  800  2005 2006 2007 2008 2009 2010 2011 2012 8

Revenue up 88% 72% of revenues from industrial, commercial & GoU consumers72% of revenues from industrial, commercial & GoU consumers 860 900 Ushs bn 700 800  900  463 457 600  700  340  378  423  463  457  400  500  52% tariff  increase  on 15th 145  195  200  300  January  2012 100  2005 2006 2007 2008 2009 2010 2011 2012 9

Revenue collection rate at 94.0% Collection rate impacted by tariff increaseCollection rate impacted by tariff increase 99  100  % 90 90 94  95  94  95  84 90  90  90  80  84  80  85  75  70  2005 2006 2007 2008 2009 2010 2011 2012 10

Energy losses down to 26.1% Technical and commercial losses remain key focus for 2013Technical and commercial losses remain key focus for 2013 3840 % 38  34 35  34 35 36 38  40  34  34  3032  34  36  30  27  2628  30  26  24  26  20  22  11 2005 2006 2007 2008 2009 2010 2011 2012

Operating costs fully recovered Full recovery of direct operating and maintenance costsFull recovery of direct operating and maintenance costs 50 US$m 44  45  46  45  50  36  39  39  40  31  30 35  26  25  30  20  2005 2006 2007 2008 2009 2010 2011 2012 12 2005 2006 2007 2008 2009 2010 2011 2012

Summary of Income Statement 2012  2011  Ushs bn Ushs bn Growth Revenue 860  457  88% El i i S l 834 491 70%Electricity Sales 834  491  70% Other Sales 25  (34) Cost of Sales (624) (271) 131%Cost of Sales (624) (271) 131% Electricity Purchases (599) (262) 128% Other Costs (25) (8) Gross Profit 235  186  26% Operating Costs (126) (114) 10% Operating Profit 94  76  23% Finance Costs (33) (32) 5% Profit Before Tax 61  45  37% 13 Profit After Tax 57  23  148%

Summary of Financial Position & Cash Flow 2012  2011  Ushs bn Ushs bn Growth At year‐end Total Assets  756 559 35% Shareholder's Equity 239 107 123%Shareholder s Equity  239 107 123% Outstanding Interest Bearing Debt  55 128 ‐57% Cash flow dataCash flow data Net cash flows from operating activities  107  58  85% Net cash flows used in investing activities  (98) (83) 18% Net cash flows (used in)/from financing activities (9) 18 152%Net cash flows (used in)/from financing activities  (9) 18  ‐152% Per share Ushs Ushs Basic and diluted Earnings Per Share 42 17Basic and diluted Earnings Per Share  42 17 Proposed Dividend per Share  15 ‐ 14

Profit after tax Ushs 57bn Strong profit growth across the income statementStrong profit growth across the income statement 235 250  Gross profit Ushs bn 200  p EBITDA PAT 130 150  57  50 100  ‐ 50  ‐50  2005 2006 2007 2008 2009 2010 2011 2012 15 2005 2006 2007 2008 2009 2010 2011 2012

Dividend • Approved final dividend Ushs 15 per share (Ushs 24.4bn) • Total distribution for 2012 is approximately 50% of Profit after pp y % Tax (adjusted for interim distribution), in line with IPO  prospectusp p • Payment date 24th June 2013 (books close 24th May 2013)• Payment date 24 June 2013 (books close 24 May 2013) 16

Outlook for 2013 • Tariff update • Return on investment for 2013 based on approved undepreciatedpp p investment base • Strong sales growth expected in line with trendg g p • Agreed regulatory targets: 2013 tariff targetg Energy losses 23% Collection rate 97% DOMC US$44m • Operational focus on: – Network strengthening and expansion (industrial & domestic)Network strengthening and expansion (industrial & domestic) – Technology and systems including pre‐payment  – Customer  service and safety • Long‐term debt financing to part fund investment programme 17

Summary • EBITDA growth of 25% compound 2009‐2012 • Transparent regulatory environment with contracted              US$ return of 20% on undepreciated investment baseUS$ return of 20% on undepreciated investment base   (US$127m end 2012) • Large growth opportunity – low electricity penetration in  U d ( 10%)Uganda (approx 10%) • High yield 18

Appendices • Appendix 1: Uganda’s macroeconomic outlook • Appendix 2: Concession overview• Appendix 2: Concession overview • Appendix 3: Generation overview d h h ld• Appendix 4: Top 10 shareholders • Appendix 5: Management team 19

Appendix 1: Uganda’s macroeconomic outlook Positive outlook for economic growthPositive outlook for economic growth Uganda’s economy is  d b 12.9%14% Real GDP growth* expected to grow at a robust  pace over the next several  years driven by construction,  transport10% 12% g Uganda Impact of  oil  d ti transport,  telecommunications,  financial services and the  burgeoning oil industry 6.2% 5.9% 6.9% 7.4%8% 10% World production burgeoning oil industry  (anticipated 100k barrels per  day by 2016)* 5.9% 5.3% 5.0% 4.1% 2.7% 2 3% 2.9% 2.9% 2.9%4% 6% 2.7% 2.1% 2.3% 2% 0% 2010 2011 2012 2013 2014 2015 2016 20 * Source: Economist Intelligence Unit

Appendix 2: Concession overview Concession established in 2005 following the Government of Uganda led unbundling of the electricity sector separating Distribution,  Transmission and Generation functions. This initiative, supported by World Bank, created a more transparent and accountable sector  and encouraged significant investment  Umeme is incentivised to invest in and improve the electricity distribution network through (i) contracted USD return of 20% and (ii)  outperforming energy loss & collection targets agreed with the Electricity Regulatory Authority (“ERA”) The concession is for 20 years after which Umeme is entitled to a significant buy‐out amount equivalent to 105% of the value of the  un‐depreciated investments at that time Alternatively the concession can be extended for up to 20 years Initial investment and  new connections  Initial investment and  new connections Concession Concession  Initial collections Initial collections  un depreciated investments at that time. Alternatively the concession can be extended for up to 20 years Umeme milestones Initial Public  Off Initial Public  Off 2005 2006 2007 2008 2009 2010 2011 2012 targets reachedtargets reachedstartstart target reachedtarget reached OfferOffer USD 25m loan  from IFC USD 25m loan  from IFC Tariff review  completed Tariff review  completed Initial energy  loss target  h d Initial energy  loss target  h d Actis increases its  ownership from  56% t 100% Actis increases its  ownership from  56% t 100% reachedreached56% to 100%56% to 100% Umeme is incentivised to outperform targets agreed with ERA

Appendix 3: Generation overview Generation pipeline K H d l 600 MW Energy supply mix (Installed capacity) Karuma Hydro plant 600 MW Electromaxx expansion HFO  90 MW Kabaale HFO plant 53 MW Mini‐hydro 52MW Kabaale HFO plant 53 MW‐ using local oil reserves  Kabale Peat plant 33 MW  Kinyara (30 MW) and Kakira 52MW 9% Cogeneration Kinyara (30 MW) and Kakira (20 MW) cogeneration  expansions Mini‐hydros Large‐hydro 16MW 2% Mini hydros  Buseruka – 9 MW Kikagati – 16 MW Nyamwamba – 14 MW 430MW 72% Thermal 100MW 17% Muzizi – 26 MW Nyagak 1 – 4.4 MW Nyagak 3 – 3.5 MW 22 Source: UETCL

Appendix 4: Top 10 shareholders 23

Appendix 5: Management team...                      Charles Chapman Sam Zimbe Selestino Babungi Florence Nsubuga Phil Ball Managing director Charles joined Umeme in 2009 as Chief Operating Officer and was appointed GM: Regulatory Affairs Sam is a qualified professional accountant Chief Financial Officer Selestino has over a decade of experience Chief Operations Officer Florence took up her role as COO in January Chief Safety Manager Phil is responsible for Umeme’s public safety programs across the as Managing Director in the same year. Prior to joining Umeme, Mr. Chapman worked for Ireland's leading utility, Electricity Supply with a Master’s degree in Finance and Investment and has more than 20 years experience in strategic in financial management, accounting, external audits and credit management. 2012 after several years of operational experience as a Regional and District Manager. Florence country. Phil has over 25 years experience in construction engineering and electrical distribution Board, as the head of Customer Supply. Mr. Chapman has extensive international experience in previous roles as managing senior management roles in Uganda, UK and Caribbean, mostly in the electricity sector. Prior to joining Umeme, Selestino is responsible for treasury management, financial reporting and holds a Masters degree in Economic Policy and Planning. safety and quality management. Management incentive scheme director of Toyota Hellas, regional director of Inchcape plc, Middle East and previously working for Boots Company plc and Sam managed the Ugandan Electricity Distribution Company Limited (UEDCL) for two years following the procurement at Umeme. Selestino was appointed as CFO after serving as Regional Manager Share Grant Scheme • Shares to all employees at IPO • Cash bonus after three years subject to EBITDA  performance and employees holding shares  D f d B S hGlaxoSmithKline plc. Mr. Chapman is a BSc (mgmt) honours graduate of Trinity College, Dublin. unbundling of the sector. g g responsible for operations. Deferred Bonus Scheme • Management scheme • 3 year vesting • Linked to EBITDA performance

management team cont...management team cont.                           Simbiso Chimbima Eamonn Furniss Aidan Byrne Henry Rugamba David Alderton Chief Technical Officer Simbiso is an electrical engineer and an MBA holder. Simbiso brings to Chief Information Officer Eamonn is an accomplished Business Head of Customer Service Aidan is responsible for Customer Relationship Head of Comms A seasoned Public Relations practitioner, Henry spent 10 years Corporate Development Manager David joined Umeme from Actis in 2010 tog Umeme twenty years’ experience in the electricity supply industry across Southern Africa including overseeing the and ICT professional with significant international experience with leading consultancy firms in Europe, the Management and business process optimization at Umeme Prior to joining Umeme, Aidan spent 38 years with with British American Tobacco Uganda in Marketing and corporate Affairs roles before going into work on several priority strategic initiatives for Umeme. As an executive with Actis, David was involved in ag g pre payment metering installation project in Zimbabwe as General Manager of Zimbabwe Electricity Distribution Middle East and Africa, including IBM, EDS and Accenture. Eamonn brings with him a proven track record in People Electricity Supply Board Ireland in a variety of roles focused on: Customer Billing & Payments, Customer private PR consultancy operating in Rwanda and Uganda where he consulted for MTN Uganda, MTN Rwanda, number of corporate transactions and programs for portfolio companies across Africa. Prior to joiningy Company. Management, Account Management, revenue cycle, service delivery, procurement tender evaluation, portfolio Relationship Management and Business Process Optimization. PWC, IFC, The World Bank and the United Nations Economic Commission for Africa. Actis, David worked with HSBC investment bank in London and has a Masters in Development Economics. management, system implementation and project planning.

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