Tororo Cement Industries Expansion

Umeme Limited H1 2018 Investor Presentation Contents

 Umeme & Electricity Sector Introduction  Macro Economic Update  Electricity Supply Industry Overview  Operational Review  Regulatory Update  Financial Performance  Safety Update  H2 2018 Priorities

2 Umeme - powering Uganda • 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 targets set through 2018 • Secure cash flow: over 70% revenues from industrial, commercial and government customers • Diversified investor base with listing on Uganda & Nairobi Securities Exchanges • 98% Distribution market share • Incentivised management and staff

3 Umeme Value Drivers

Investment Return •20% USD Net ROI •Capital Recovery •Tax Recovery

Regulatory Incentives •Loss reduction •Cash collections •Operating Financial Expenses 20% USD Return earned on Performance capex completed and subsequently verified by ERA. (EBITDA) Investment costs: 20% ROI, Tax and Capital recovery plus 7-year Regulatory targets set up to operating expenses (DOMC) form 2018. Performance against targets Umeme revenue requirement can enhance or dilute 20% USD ROI

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

5 Macro Economic Update

• Quarterly CIEA data Composite Index of Economic Activity points to improved 220 2.5 economic activity

210 2.0 • Expansion in Private Sector Credit supporting growth 200 1.5 • Manufacturing sector YTD credit growth highest at 190 1.0 9.4%

180 0.5 • GDP growth expected to reach 6% in 2018/19 compared to 5.8% of 170 0.0 2017/18 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 CIEA Monthly Changes % • Headline Inflation – July 3.1%

• CBR – 9% Source: Bank of Uganda 6 State of Electricity Supply

GWh MW Max System Demand +5.9% Sales (GWh) 650 3,000 Full year 2,760 596 2,567 600 Half year 2,458 563 2,500 2,277 534 550 521 2,118 508 +8.6% 492 500 2,000 1,461 450 1,500 1,345 1,220 1,260 400 1,045 1,114 1,000 350

300 500 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 Source: UETCL . Effective Generation – 688 MW . Peak Demand excluding exports - +5.9% . System Demand include exports – 637MW . Generation Load Factor – 74% . 5-Year Max Demand CAGR – 4.9% . H1 2018 GWh sales up 8.6% (FY17: 7.5%)

7 Electricity Demand: +8.6%

Customer numbers Sales (GWh) Growth

Up 7.3% from FY 2017 Category GWh Growth (y/y) FY 2017 (%) ('000) 76.3% on pre-paid 1,400 Post-paid 1,208 Domestic 317.5 +1.6% +6.9% 1,200 Pre-paid 1,125 Commercial 178.3 +7.9% +5.7% 1,000 951 794 922 800 Street Lighting 0.5 -32.9% -0.7% 651 574 600 Industrial - Medium 224.3 +6.3% +3.0% 400 Industrial - Large 740.0 +12.9% +9.7% 200 286

- Total 1,460.7 +8.6% +7.5% 2013 2014 2015 2016 2017 2018 Prepaid Revenue Share Sales (GWh) by Customer Category

% 28% Prepaid Revenues % of Total 24% 24% 21% 20% 16% 16% 12% 12%

8% 6% 4% 2%

0% 2013 2014 2015 2016 2017 H1 2018 8 Operational Performance Energy Losses Revenue collections

% % 26 105 24.3 102.8 24 102.5

22 21.3 100.2 100 100.3 99.1 19.5 20 19.0 98.2 98.4 97.5 18 17.2 16.7

16 95 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018

Operating costs Regulatory targets*

US$m Full year Half year 80 Opex up 21.9% y/y Tariff 70 parameter ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 60 55 55 Energy losses 19.6 21.0 18.9 17.4 16.1 15.1 53 51 48 (%) 50 81.1 97.5 97.7 97.9 98.2 98.5 40 Collection rate (%) 29 28 30 26 27 22 22 Operating 36.5 44.4 45.7 47.2 48.7 50.2 20 allowance 10 (US$m) ** - 2013 2014 2015 2016 2017 2018 * Umeme financial year (Jan-Dec). Tariff year runs from 1st March ** Allowance is adjusted annually for international and local inflation 9 Capital Investments Cumulative Capital investment

US$ 31m invested in H1 2018 US$m 700 Total Unrecovered

600 566 596 500 Network & 500 substations, 93% 407 Systems & 434 449 400 321 IT, 3% 383 300 224 316 Operation al assets, 200 166 250 130 3% 102 172 100 127 Land & 84 110 buildings, - 1% 2010 2011 2012 2013 2014 2015 2016 2017 2018

Sample projects in 2018

Load Growth Pre-payment Metering • Kampala Industrial Business • Government of Uganda Time of Use Park/Namanve 33kv Industrial Ring • New connections • Upgrade of Gulu sub-station Quality of Supply • Nyakesi substation, Tororo • Namanve Industrial Park • Kawanda-Kapeeka Load Transfer

10 Regulatory Updates

• Recovery of UShs 103.7 billion lifeline tariff revenue was included in Q2 and Q3 2018 tariffs • Bujagali Energy Limited refinancing was completed – effect of 15% reduction in large industrial tariffs • Offsets of USD 8.5m effected for arrears government installations (post-paid accounts) • 331 out of 469 government installations converted to pre- paid metering • Pending unrecognized Capex by ERA – US$ 93m • Engagement on tariff parameters for 2019-25 ongoing

11 Electricity Tariff Developments

End User Tariff (UShs) Umeme Distribution Margin (%) 600

500 46% 46% 400 35% 35% 300 29% 200

100

0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2016A 2017A 2018Q1 2018Q2 2018Q3A 2016 2017 2017 2017 2017 2018 2018 2018

Weighted Average EUT Bulk Supply Tariff • Weighted Average End User Tariff up 1.5% YTD

• Bulk Supply Tariff reduced by 21.4% in Q2 2018 Tariff 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 revenue started in Q2 2018 300

200 Street Domestic Commercial Medium Large Extra-large • Distribution Margin increased as a result of Lighting Industrial Industrial Industrial lifeline revenue recovery Q1 2018 Q2 2018 Q3 2018 12 Financial Performance (US$)

Financials Summary (US$m) EBITDA (US$)

US$ m Full year Half year 100 Income Statement H1 2018 H1 2017 %ch 90 90 90 Revenue 198.8 195.2 +1.9% 80 76 2017 EBITDA 68 excl. Amendment 5 Cost of Sales (128.2) (134.8) -4.9% 70 58 effects Gross Profit 70.6 60.4 +16.9% 60 50 Operating Expenses 28.4 22.2 +9.8% 40 45 EBITDA (ex Amendment 5) 44.7 35.9* 24.5% 30 38 39 36 31 33 Finance Costs (ex. lease) 8.0 8.2 -0.3% 20 10 PBT (Adjusted) 23.2 16.2* 43.2% - Tax Rate 29.2% 30%* - 2013 2014 2015 2016 2017 2018 Profit After Tax 16.3 11.3* +44.2% Profit after tax (US$) US$ m 45 40 40 * Adjustments for effects of Amendment 5 36 34 ** Assuming 30% tax rate on adjusted PBT. 35 31 31 30 2017 PAT excl. Amendment 5 25 effects Financial Position at H1 2018 FY 2017 %ch 20 15 18 19 Total Assets 651.1 645.0 +0.9% 17 16 16 10 Shareholders Equity 181.7 169.6 +7.1% 11 5 Net Debt 174.0 187.0 -7.0% - 2013 2014 2015 2016 2017 2018 13 Financial Performance (UShs)

Financials Summary (UShs bn) EBITDA (UShs) Figures are rounded. Ushs bn 2017 EBITDA excl. Income Statement H1 2018 H1 2017 %ch 350 Full year Half year 325 308 Amendment 5 effects Revenue 735.8 704.4 +4.5% 300 H1 2018 EBITA up 28% 248 Cost of Sales (474.4) (486.4) -2.5% 250

Gross Profit 261.5 218.0 +20.0% 200 178 149 Operating Expenses 105.6 93.3 +13.1% 150 165 EBITDA 165.0 129.0* +27.9% 100 113 133 129 Finance Costs (ex.lease) 29.6 29.1 1.6% 84 50 82 Profit Before Tax 87.3 58.6* 49.0% - Tax Rate (%) 30.1* 30** 2013 2014 2015 2016 2017 2018 Profit After Tax 61.0 41.0* +48.9% Profit after tax (Ushs)

EPS 38.0 25.3* +48.9 Ushs bn Full year Half year 140 132 2017 PAT excl. DPS (Interim) 12.7 0.0 - Amendment 5 effects 120 112 *Figures adjusted for effects of Amendment 106 **Assuming 30% tax rate. 100 H1 2018 PAT up 49% 84 80 70 57 60 68 Financial Position at H1 2018 FY 2017 %ch 54 61 40 47 38 Total Assets 2,529.2 2,349.4 +7.7% 41 20 31 Shareholders Equity 706.0 617.7 +14.3% - Net Debt 676.0 681.2 -0.8% 2012 2013 2014 2015 2016 2017 2018 14 Trading Update Market cap US$153m at UShs 346 share price

Dec-17 (1) At IPO 850 850 P/E 5.0x 10.8x Share price (Ushs) EV/EBITDA (2) 3.5x 3.9x 750 750 P/(Buyout amount less net debt) (3) 0.5x 1.2x 650 650 Dividend Yield (H1 2018 Annualized) 7.3% - (4) USE Return on unrecovered investments (US$) 8% 16% 550 550 Notes NSE 450 450 (1) Actual 12 months to 31st December 2017. Multiples calculated on adjusted EBITDA & 350 350 PAT excluding Amendment 5 (2) EBITDA excludes finance income/cost & FX gain/loss. Includes interest on bank deposits 250 250 (3) Indicative assuming GoU termination premium of 20% of unrecovered investment (4) Prior year unrecovered investment base

 Market cap US$153m at UShs 346 share price 60 Volume (m) 60  Year to Date daily value traded at

40 40 US$ 27.5k

20 20

0 0 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18

15 Shareholder Update Shareholder Summary

No. Top 20 Shareholders (Jun 2018) % Held Umeme Shareholder Distribution 1 National Social Security Fund Uganda 23.2% 2 Allan Gray* 10.0% Uganda Retail, 7% Directors & 3 Kimberlite Frontier Africa Master Fund 8.6% Employees, 1% 4 Utilico Emerging Markets Limited 4.5% Other, 1% 5 Investec Asset Management Africa Fund 4.3% Uganda 6 Imara SP Reid 4.1% Institutional, 7 The Africa Emerging Markets Fund 3.9% 26% 8 International Finance Corporation 2.8% International East Africa Funds, 27% 9 Coronation Global Opportunities Fund 2.6% Institutional, 10 Duet Fund 2.5% 14% 11 Vanderbilt University 1.2% Africa (excl. 12 Conrad N Hilton Foundation 1.1% East Africa), 24% 13 Boutique Collective Investments 1.1% 14 Kuwait Investment Authority 1.0% 15 Central Bank Of Kenya Pension Fund 0.9% 16 William Byaruhanga 0.8% 17 National Social Security Fund Kenya 0.6% 18 Sudhir Ruparelia 0.6% 19 Frontier Market Opportunities Master Fund 0.6% 20 Stanchart Nominees NR A/C 9318 0.5% Other 25.1% *Aggregated accounts

16 Safety of Staff & the Public No network related fatality in H1 2018

No.

50 47 Network related fatalities

Non-network related fatalities (illegal)39 40 36 35 32 30 30 28

21 19 20 18 16 17 16

15 10 10 7

3 2 1 1 1 1 0 0 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Full Year

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

17 Priorities for H2 2018

 Conclude negotiation of 2019-2025 tariff parameters with ERA  Continue the concession extension work stream  Evaluate medium term capex financing options  Engage ERA on outstanding income recoveries, including capital investments  Delivery of core financial performance drivers (costs, collections, energy losses and growth)  Implementation of ICT Systems (SAP & HRIS)  Organizational readiness for growth

18 Generation Pipeline Generation Pipeline +1000MW

Large-hydro:  Karuma - 600 MW (71% completed) MWMW Generation Outlook – Installed Capacity  Isimba - 183 MW (76% completed) 2,000  Agago-Achwa – 83 MW  Ayago - 600MW 1,800 Karuma  Orianga - 400MW  Kiba - 290MW 1,600  Agago-Achwa – 83 MW  Muzizi - 44MW 1,400

1,200 Isimba Mini-hydros (GET-FIT): 156.5 MW 1,000 inc.  Siti I – 5 MW Bujagali 800  Waki – 4.8 MW  Lubilia – 5.4 MW 600 Namanve &  Rwimi – 5.5 MW Kakira hydro  Muvumbe – 6.5 MW 400  Nyagak 3 – 5.4 MW Kiira 200 Nalubale Other -  Soroti Solar – 10 MW Pre-2000 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20  Tororo Solar – 10 MW  Siti II - 16.5 MW  Kikagati – 16 MW  Kabale Peat plant 33 MW  Kabale geothermal 30MW

Source: Umeme, UETCL, MEMD 19 Isimba Hydro Power Project

Isimba Hydro Power Project (183 MW) Status: 87%

Source: Uganda Electricity Generation Company Limited 20 Karuma Hydro Power Project

Karuma Hydro Power Project (600 MW) Status: 75%

Source: Uganda Electricity Generation Company Limited 21 Transmission Grid Status

22 Thank You

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