Umeme Investor Presentation

June 2017

Moniko Substation, completed in 2016

Umeme – powering Uganda

2

Blue chip customer base

• 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 agreed through to 2018

• 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

Uganda’s power sector

3

Other IPPs(hydro / thermal)

Generation Transmission Distribution

LL

L

• 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

Umeme – Footprint & Customer Mix

4

25 district offices across 4 regions Customer Breakdown (%)

Domestic

92%

Commercial /

Industrial

8%

Revenue Contribution (%)

Domestic

27%

Commercial

15%

Street Lighting

0%

Industrial -

Medium

20%

Industrial -

Large

38%

Macroeconomic Environment

16%

6.6%

11.6%

9.3%

7.5%7.9%

4.4%

-5%

0%

5%

10%

15%

20%

2010 2011 2012 2013 2014 2015 2016

Uganda Manufacturing Sales (GWh)

• High interest rates & election period slowed down

economic activity during Q1 and Q2 2016

• Manufacturing sector grew 0.4%

• Slowest annual GWh sales growth in recent years

• Ferdsult Engineering Services exits electricity

distribution business

%

5

Sales growth weakens

System Demand Analysis

6

409424

472 469

488

515

539

300

350

400

450

500

550

600

2010 2011 2012 2013 2014 2015 2016

Max System DemandMW

System demand CAGR at 4.7% during the period

Industrialization drive to support demand going

forward

+4.7%

Investing Ahead

102 130 166

224

321

407.4

500

-

100

200

300

400

500

600

2010 2011 2012 2013 2014 2015 2016

US$m

Load Growth

• Moniko Substation (US$ 6.8m)

• Tororo Industrial Park (US $ 1.1m)

• Luzira Portbell substation (US $ 0.6m)

Automated Metering

• 2,500 Connections by end of 2016 Kampala

industrial users)

• Improved metering and revenue cycle efficiency

Pre-payment Metering

• Government of Uganda conversions

• New Connections (+157k)

• Post-paid customer conversions (+39k)

• Loss reduction & improved revenue collection

Loss Reduction

• Medium voltage distribution (Kibuli feeder)

Cumulative Capital investment

Sample completed projects in 2016

US$ 93m invested in 2016

7

Investing Ahead

Project implemented in line with government policy to prudently manage fiscal resources

while deterring government ministries, departments and agencies from accumulating

arrears. The technology is the first of its kind in the world.

8

Government of Uganda Pre-Payment Project

Safety

Non-network fatalities incl. power theft, domestic electrics, network interference, way-leaves encroachment and unauthorized operations

16

10

17

3

7

1 1 02

0 1

39

47

36 35

28

18

15

21

17

3230

39

0

10

20

30

40

50

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Network related fatalities

Non-network related fatalities (illegal)

No.No.

9

One network related fatality in 2016

Investing in service & growth

157k in 201665% on pre-paid

Customers Sales

Category No. Share Growth GWh Share Growth

Domestic 867,671 91.3% +19.9% 585 22.8% +2.6%

Commercial 79,476 8.4% +19.4% 323 12.6% +4.3%

Street Lighting 306 0.0% +0.3% 2 0.1% +3.0%

Industrial - Medium 2,564 0.3% +5.5% 420 16.3% +3.3%

Industrial - Large 527 0.1% +3.1% 1,239 48.2% +5.9%

Total 950,814 100% +19.8% 2,567 100% +4.4%

+4.4%

Sales (GWh)

333

618

-

200

400

600

800

1,000

2010 2011 2012 2013 2014 2015 2016

Post-paid

Pre-paid

('000)

651

794

574513

951

458405

1,627 1,735

1,937

2,118 2,277

2,458 2,567

500

1,000

1,500

2,000

2,500

2010 2011 2012 2013 2014 2015 2016

GWh

Customer numbers +19.8% Prepaid Revenue Share

2%

6%

12%

16%

0%

4%

8%

12%

16%

20%

2013 2014 2015 2016

Prepaid Revenues % of Total%

Customers & Sales Growth

10

Regulatory performance

Revenue collection Energy losses

Regulatory targets*Operating costs

* Umeme financial year (Jan-Dec). Tariff year runs from 1st March

** Allowance is adjusted annually for international and local inflation

Energy losses at 19.0%

Tariff

parameter ‘13 ‘14 ‘15 ‘16 ‘17 ‘18

Energy losses

(%)

23.5 20.5 18.6 17.1 15.9 14.9

Collection rate

(%)

97.3 97.5 97.7 97.9 98.2 98.5

Operating

allowance

(US$m) **

43.8 44.5 45.9 47.4 48.9 50.4

30.0

27.3 26.1

24.3

21.3

19.5 19.0

16

18

20

22

24

26

28

30

32

2010 2011 2012 2013 2014 2015 2016

%

95.1

98.9

94.0

100.3 99.1

98.2 98.4

80

85

90

95

100

105

2010 2011 2012 2013 2014 2015 2016

%%%

39

45 46

55 55 53

48

20

25

30

35

40

45

50

55

60

2010 2011 2012 2013 2014 2015 2016

US$m-10.2%

11

Financial performance

Financials Summary EBITDA (US$)

US$ m, Ushs bn 2016 2015 %ch

Income Statement iFigures rounded

Revenue US$ 383 358 +7%

Ushs 1,312 1,161 +13%

Cost of Sales US$ (258) (229) +12%

Ushs (882) (743) +19%

Gross Profit US$ 126 129 -2%

Ushs 430 418 +3%

Operating Costs US$ (48) (53) -10%

Ushs (164) (172) -5%

EBITDA US$ 77 76 +0.3%

Ushs 262 248 +6%

Finance Costs (ex lease) US$ (13) (9) +36%

Profit Before Tax US$ 45 50 -10%

Tax Rate % 34% 34%

Profit After Tax US$ 31 34 -9%

Ushs 100 106 -6%

Financial position at 2016 2015

Total Assets US$ 606 526 +15%

Shareholders Equity US$ 153 149 +10%

Net Debt US$ 201 142 +41%

Per share data (Ushs) Ushs Ushs

Earnings 61.0 65.0 -6%

Total Dividend 18.8 35.2 -47%

Payout Ratio 31% 54%

Profit after tax (US$)

FY10-14 adjusted for unrealized FX losses

26

35

46

58

68

76 76.6

-

10

20

30

40

50

60

70

80

90

2010 2011 2012 2013 2014 2015 2016

US$ m

16 16

26

31

36 34

31

-

5

10

15

20

25

30

35

40

2010 2011 2012 2013 2014 2015 2016

US$ m

EBITDA flat y/y

PAT down 9%

12

Trading update

Market cap US$180m at Ushs 400 share price

Dec-16 (1) At IPO

P/E 5.7x 10.8x

EV/EBITDA (2) 5.0x 3.9x

P/(Buyout amount less net debt) (3) 0.7x 1.2x

Dividend Yield 4.7% -

Return on unrecovered investments (US$) (4) 10% 16%

Notes(1) Actual 12 months to 31st December 2016(2) EBITDA excludes finance income/cost & FX gain/loss. Includes interest on bank deposits(3) Indicative assuming GoU termination premium of 20% of unrecovered investment (4) Prior year unrecovered investment base. Net of financing costs

13

250

350

450

550

650

750

850

250

350

450

550

650

750

850

Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17

Share price (Ushs)

USE

NSE

150

200

250

300

350

150

200

250

300

350

Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17

Market capitalisation (US$m)

0

20

40

60

0

20

40

60

Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17

Volume (m)

Trading updateShareholder Summary

No. Top 20 Shareholders (May 2017) % Held

1 National Social Security Fund Uganda 23.2%

2 Allan Gray* 7.1%

3 Kimberlite Frontier Africa Master Fund 7.1%

4 Investec Asset Management Africa Fund 4.7%

5 Utilico Emerging Markets Limited 4.3%

6 The Africa Emerging Markets Fund 3.5%

7 International Finance Corporation 2.8%

8 Coronation Global Opportunities Fund 2.6%

9 Duet Fund 2.5%

10 Kattegat Trust 1.8%

11 Boutique Collective Investments 1.6%

12 Imara SP Reid 1.4%

13 Conrad N Hilton Foundation 1.1%

14 Vanderbilt University 1.1%

15 T.Rowe Price 1.1%

16 Kuwait Investment Authority 1.0%

17 Central Bank of Kenya Pension Fund 0.9%

18 William Byaruhanga 0.8%

19 Old Mutual 0.8%

20 Frontier Market Opportunities Master Fund 0.7%

Other 30%

*Aggregated accounts

0.6%

2.0%

6.8%

14.7%

20.3%

26.0%

29.4%

0% 10% 20% 30% 40%

Other

Directors & Employees

Uganda Retail

EA Inst.

Africa Inst. (excl. EA)

Uganda Inst.

International

Shareholder Distribution (May 2017)

Actis divestiture completed Dec 2016

NSSF Uganda largest shareholder

Employee holdings supported by Long

Term Incentive Plan

14

Summary & Outlook

Focus on technical & commercial losses reduction

Recognition of investments

Resolution of Amendment 2&4

Concession Renewal

15

Appendices

• Appendix 1: Uganda’s macroeconomic outlook

• Appendix 2: Generation Pipeline

• Appendix 3: Generation overview

• Appendix 4: Tariff analysis

• Appendix 5: Karuma & Isimba Projects

• Appendix 6: UETCL Transmission Backbone

16

Appendix 1: Uganda’s macroeconomic

outlook

Source: Economist Intelligence Unit (March 2017)

“High commercial lending rates and

election-driven uncertainty during

Q1 dragged down growth in 2016.

Real GDP growth is projected to

average 5.1% within 2017-2021.

Public investments in infrastructure

projects in the power and

transport sectors will be key

drivers on growth in 2017-18.

Government expects the oil sector

to drive growth in the medium

term with production targets of

200k bpd. by 2020”

4.7% 4.8%5.1%

4.8% 4.9%5.1%

4.7%

1.9%

2.3% 2.4%2.2%

2.6% 2.7%2.4%

0%

1%

2%

3%

4%

5%

6%

2013 2014 2015 2016 2017 2018 2019

Real GDP growth forecast

Uganda

World

17

Appendix 2: Generation Pipeline

Source: Umeme, UETCL, MEMD

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

MW

Namanve & Kakira hydro

Karuma

MW

Nalubale

Pre-2000

Kiira

Bujagali

Isimba

Generation Outlook – Installed Capacity

Large-hydro:

Karuma - 600 MW (52% completed)

Isimba - 183 MW (65% completed)

Agago-Achwa – 83 MW

Ayago - 600MW

Orianga - 400MW

Kiba - 290MW

Agago-Achwa – 83 MW

Muzizi - 44MW

Mini-hydros (GET-FIT): 156.5 MW

inc.

Siti I – 5 MW

Waki – 4.8 MW

Lubilia – 5.4 MW

Rwimi – 5.5 MW

Muvumbe – 6.5 MW

Nyagak 3 – 5.4 MW

Other

Soroti Solar – 10 MW

Tororo Solar – 10 MW

Siti II - 16.5 MW

Kikagati – 16 MW

Kabale Peat plant 33 MW

Kabale geothermal 30MW

18

Generation Pipeline +1000MW

Appendix 3: Generation overview

Source: Umeme, UETCL, MEMD

Energy supply mix (Effective Generation) Average Monthly Dispatch

Large-hydro,

542MW, 85% Mini-hydro,

54MW, 9%

Cogeneration,

32MW, 5%

Thermal,

7MW, 1%

Large Hydro

87%

Thermal

1%Co-

Generation

5%

Mini-Hydro

7%

19

Appendix 4: Tariff analysis

Umeme distribution price is approx. 30% of end-user tariff

Uganda’s tariffs in line with Kenya’s at Large Industrial category

Sources: Electricity Regulatory Authority Uganda, Electricity & Water Utilities Regulatory Authority Tanzania, Electricity Regulatory Commission Kenya, EWSA Rwanda. Data

collected as at January 2017 and converted using using Bank of Uganda official COMESA exchange rates to US$

5.25.1

4.5

4.2

5.25.4

5.2

3.0

3.5

4.0

4.5

5.0

5.5

6.0

2010 2011 2012 2013 2014 2015 2016

Real Distribution price

USD/KWh

19 17

16

10

20

13

8 7

16

13

9

7

13 15

11 10

-

5

10

15

20

25

Domestic Commercial Medium

Industrial

Largest

Industrial

Regional End-user Tariffs - Jan 2017

Uganda

Kenya

Tanzania

Rwanda

US$ cents

20

Appendix 5: Karuma & Isimba Projects

21

Isimba Hydropower projectStatus: 65%Commissioning: Q3 2018

Karuma Hydropower projectStatus: 52%Commissioning: Q1 2019

Appendix 6: UETCL Transmission Backbone

22