Annual Report 2010 1 Annual Report 2010 2 Contents

ii Map showing PML Branch Network 1 Corporate Profile 6 Chairman’s Statement 9 Board of Directors 10 Senior Management 11 Employees of the Year 12 What customers say 13 PML’s Risk Management Statement 16 Report of the Directors 19 Statement of Directors Responsibilities 21 Financial Highlights 24 Report of the Independent Auditors 27 Financial Statements 31 General Information 33 PML Branch Network addresses

Abbreviations / Acronyms

RALCO Risk Asset And Liability Committee CSR Corporate Social Responsibility ICT Information Communication Technology GOU Government Of MDI Microfinance Deposit-taking Institution PML Pride Microfinance Limited (MDI) URA Uganda Revenue Authority PPDA Public Procurement And Disposal of Public Assets Authority NORAD Norwegian Agency for Development Cooperation ILO International Labour Organization GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit (German International Development Cooperation)

Annual Report 2010 i PML Branch Network

Sudan

Yumbe Moyo N Adjumani Kitgum

Kotido Pader

Gulu Moroto Nebbi Pakwach Lira Apac Katakwi

Kaberamaido Nakapiripirit DRC Masindi Soroti Kumi Hoima Nakasongola Kamuli Pallisa Buwenge Kenya Kiboga Luweero Iganga Tororo FortPortal Mubende Jinja Wakiso Bugiri Malaba Busia Kyenjojo Lugazi Mayuge Mukono Mityana Kasese Sembabule Mpigi Ibanda Kabwohe Bushenyi Ishaka Lyantonde Kyotera Lake Victoria Key Rukungiri Rakai Kalangala PML Branch Kihihi Kisoro Tanzania Rwanda

Annual Report 2010 ii General Information

Principal Place Of Business: Metropole House Plot 8 -10 Entebbe Road Kampala.

Registered Office: Metropole House Plot 8-10 Entebbe Road P. O. Box 7566, Kampala.

Solicitors And Company Secretary: Sebalu & Lule Advocates and Legal Consultants EADB Building Plot 4 Nile Avenue P. O. Box 2255, Kampala.

Auditors: KPMG 3rd Floor, Rwenzori Courts Plot 2 & 4A, Road P. O. Box 3509, Kampala.

Annual Report 2010 iii Corporate Profile

About PRIDE Pride Microfinance Ltd (PML) (MDI) is a Microfinance Deposit-taking Institution regulated and supervised by Bank of Uganda. Since 1995, PML continues to be a major player in the financial services sector, providing innovative financial products and services to a multitude of Ugandans. PML serves its customers through 29 networked branches spread across the country.

Our Vision “To lead in the provision of financial and microfinance services for the social and economic growth of entrepreneurs in Uganda”

Our Mission “To provide financial services to micro, small, medium and upscale entrepreneurs in rural and urban areas through sustainable operations that promote social and economic growth of our customers”

Our Core Values To enable it achieve its vision, mission and strategic objectives, PML observes a set of core values essential for its operations. Our core values can be summarized with the acronym BE-THERE as follows;

Best Customer service Excellency and Transparency Teamwork Honesty, Integrity & Accountability Efficiency & Effectiveness Responsive & Responsible Governance Equal Opportunity Employer

To attach meaning to the acronym, PML pledges to BE THERE for its customers, staff, stakeholders and the country at large.

Ownership PML is wholly owned by the Government of Uganda.

Products and Services PML delivers innovative and customer friendly products and services in a simple way. Our list of products & services can be categorized under three classes; • Savings products • Loan products • Money Transfer and other services

Annual Report 2010 1 Corporate Profile

Savings Products

Pride Akiba Savings Account Achieve your long term projects with savings

This is a semi-liquid account for target savers who need to build long term savings for a planned project or any emergencies

“Pride Smart Savings Account” Unlimited access to your savings

It is a fully liquid account where transactions can either be daily or weekly

Fixed Deposit Account Invest for the future This is an Account where a customer invests an amount of money for an agreed period of time and interest.

Annual Report 2010 2 Corporate Profile

Pride Minor’s Account Save for Their future

It’s an account for children under 18 years of age with very attractive interest rates. The account is opened and operated by parents/guardians in trust of the children.

Save As You Earn (SAYE) Save with a Vision

This account is designed to suit the needs of clients who are target savers for a specific period of time.

Loan Products

Individual Lending Scheme (ILS) Give your business a boost

This loan offers a fast and secured means of boosting an individual’s income. It is ideal for all entrepreneurs engaged in income generating activities and would like to grow their businesses

Annual Report 2010 3 Corporate Profile

Group Guaranteed Loan Scheme (GGLS) Grow together

This loan product is designed for those clients who come together, are trained, guarantee each other so as to be able to access credit facilities as individuals.

Salary Guaranteed Loan (SGL) Your Golden Path to Success

This product is designed for salary earners who intend to access funding for self development using their monthly salaries to pay back the loan.

Mortgage & Asset Financing Loan (MAFL) Access your Assets without paying at once

This loan enables the customers to acquire their desired assets without paying for them all at once. PML finances assets that generate income and the assets financed are part of the securities.

Annual Report 2010 4 Corporate Profile

School Fees Loan (SFL) Build a career with Pride

This loan enables a parent, guardian or student to access funds to pay school fees at once and repay later in manageable installments.

Proposed Loan product. 1. The agricultural loan: This loan will target those involved in the agricultural sector.

Money Transfer and other Services. 1. Western Union Money Transfer. This is a fast and reliable worldwide money transfer service. 2. Loan Insurance Fund (LIF): This is a compulsory savings for Group clients which acts as security for their loans and earns interest. 3. Loan Insurance: All loans accessed by clients in Pride are insured against death, accident, permanent and partial incapacity and catastrophes.

Our Brand promise. PML is committed to working tirelessly to meet and exceed customer expectations each time they engage with us at all levels. To achieve this, PML has developed a culture that encourages all staff to live and feel the institution’s core values.

Annual Report 2010 5 Enoch Rukidi Board Chairman

Annual Report 2010 6 Chairman’s Statement

n behalf of the Board, I’m delighted to be presenting yet another report highlighting PML’s performance and achievements. PML has registered stable growth over the past years and 2010 was not an exception. 2010 was a year when the world and O Uganda in particular began to recover from the global economic down turn that had affected its economic landscape. Despite increased competition in the Microfinance sub sector, PML continued to increase its market share. I’m therefore privileged to present PML’s annual report for the year ended 31st December 2010. Financial achievements.

In 2010, profit after tax increased by 21% from UGX 2.35bn in 2009 to UGX 2.84 bn. Net loans and advances increased by 23% from UGX 47.8bn to UGX 58.6bn. Total Assets increased by 20% from UGX 66.08bn to UGX 79.61bn. Outstanding customer deposits (voluntary savings) increased by 80% from UGX 13.77bn in 2009 to UGX 24.79bn in 2010. Total equity increased by 19% from UGX 15.10bn to UGX17.95bn. Our depositors stood at 231,076, out of which 66,179 were active loan borrowers, registering an increase of 24% and 9.7% respectively from the 2009 status.

This consistent growth is attributed to the following factors: effective governance, strong management, a motivated skilled workforce, improved technology, diversified product offerings and above all, good customer service.

Risk Management.

Our credit risk has remained moderate with portfolio at risk 30 days late fluctuating between 1.6 to 3%. We have improved our Risk Management Framework and every staff has embraced risk management in their day today work. Corporate Social Responsibility.

PML has a clear intent on social performance and has continued to enhance financial inclusion by targeting the underserved clientele through its products and services. In 2010, we extended charitable support to the following organizations and institutions: National ICT Efficiency Campaign (NICTEC), market traders, Bishop Barham University-Kabale, Nature Uganda and Seguku Worship Centre. PML regularly sensitizes its customers on their rights and is an Equal Opportunity Employer. 2011 Outlook.

As the market continues to be more competitive, PML will also continue to invest in its people through training. We pledge to introduce more market led products aimed at meeting the growing financial needs of our varied clientele. With a strong oversight from the Board, committed Management and staff, enhanced systems and structures, PML’s performance in 2011 is expected to be even brighter as we utilize the technological platforms that will facilitate the introduction of branchless banking to enhance financial inclusion.

Annual Report 2010 7 Chairman’s Statement

Conclusion.

My special thanks go out to fellow Board members, Management, Staff and most importantly our customers for their support. In the same breath, I would like to appreciate our development partners who have supported us with technical assistance over the years. These include and not limited to:- NORAD, ILO, GIZ, Oikocredit and aBi. All have contributed to the consistent growth registered by PML over the years. PML will remain committed to its customers and will always ensure that their interests guide its operations and strategic direction. We look forward to maintaining our relevancy in the microfinance service sector in the years to come.

“Your Growth is Our Pride”

Enoch Rukidi Board Chairman

Annual Report 2010 8 Board of Directors

Enoch Rukidi Peter Gachuba Board Chairman Chairman Strategy Committee

Constance Makosya Steven Ddungu Kabugu Chairperson Risk & ALCO Committee Chairperson Board Audit Committee

Maris Wanyera Veronicah Gladys Namagembe Chairperson Human Resource & Managing Director Administration Committee

Annual Report 2010 9 Senior Management

Veronicah Gladys Namagembe Managing Director

Deo Kateizi Dan Ivan Nambwira Irene Mwoyogwona Head of Corporate Affairs Ag. Head of Audit Head of Finance

Samuel Baguma ApolloTaremwa Rehema N . S Mutazindwa Head of ICT Ag. Head of Operations Head of Human Capital Management

Annual Report 2010 10 Employees of the year

Every year, PML recognizes its people who stand out as Employees of the Year. This is therefore to show case our seven employees who stood out in the year 2010 for outstanding performance. These include:-

Mathias Mulumba Kakande John Madiinah Nampombe Office Assistant Credit Officer Nakulabye Cashier Masaka western I Region Central II Eastern II

Bernard Muwanga CCO-Buwenge Branch Eastern I Region

Dhizaala Cissy Kizibu Daniel Richard M Miiro HCA Learning & Growth Cashier-Fortportal Cashier City Centre Head Office Western II region Central I

Annual Report 2010 11 What Customers Say

WHAT OUR CUSTOMERS SAY. PML regulary interacts with its customers to find out their views, progress or challenges they face as they go about their businesses and forge appropriate solutions with them. In this report, we relay to you real life experiences of some of PML’s customers based in Buwenge Town Council, Jinja District.

MR. TUSUBIRA CHRISTOPHER I am a resident of Buwenge Town Council, Jinja district, a customer of PML Buwenge branch. I started business by selling sweet bananas and greens but later started dealing in maize and coffee. The proceeds from the businesses were used to establish a poultry farm but the capital was not enough so I got credit facilities from PML to boost my poultry business.

I currently have over 6,000 layers at home in addition to six poultry joints each having an average of 1,000 birds. I harvest over 120 trays of eggs daily which are supplied to Buwenge Town Council, Jinja, Busia, Mbale and Juba. I have also been able to open up a shop of chicken feeds in Buwenge. This business is currently servicing a UGX 30,000,000 (Thirty million shillings) loan from PML. I’m so grateful to PML.

MR. SAKWA STEPHEN. I started business in 1999 but my capital was inadequate so I approached PML at their Jinja branch for aloan which was provided. I was later transferred to Buwenge branch.

I operate a stationery shop in Buwenge Town Council which has grown and has made me able to acquire two photocopying machines, educated my kids (4 graduates, two currently at university and one about to join) and a big piece of land.

So am very thankful to Pride since most of my social and economic wealth has been achieved through the credit facilities I have acquired. I started with a loan of UGX 150,000 but am currently servicing a loan of UGX 8,000,000.

As PML, we applaud Mr. Tusubira Christopher and Mr. Sakwa Stephen for their entrepreneurial spirit and being good clients. We pledge to always provide them financial support as and when they need it. Congratulations!

Annual Report 2010 12 PML’s Risk Management Statement

1. Introduction. Given the day to day business activities, PML is exposed to a wide range of risks. The core activities include, lending, deposit mobilization and money transfer services. A company is exposed to various categories depending on its chosen strategies. The Key Risk Categories thus include; Strategic Risk, Credit Risk, Reputational Risk, Operational Risk, Liquidity Risk, Compliance Risk, Market Risk ( risk and some minimal exposures to foreign exchange risks).

Overtime, PML has enhanced the Risk Management framework that started from the control environment change through cross wide sensitization. This has enhanced Risk Management accountability and self assessment which is manifested in the business growth (28% in 2010) and better portfolio quality (1.61% in 2010).

2. Risk Governance. The Board bears the ultimate responsibility for Risk Management at PML through defining and approving all business strategies. Implementation however is delegated to the Senior Management Team in a way that minimizes loss related exposures and maximizes the opportunities. The Risk Management processes are co-ordinated by the Risk Section. Internal Audit plays a critical role in evaluating effectiveness of the risk management strategies. Below is a detailed structure of the Institutional risk governance structure.

PRIDE MICROFINANCE Board Oversight Board

Board Audit Board RALCO Committee Committee Management Responsibility Managing Director/ Senior Management Internal Audit Tea m

Management Management Credit Assurance RALCO Committee

Annual Report 2010 13 PML’s Risk Management Statement

3. Risk Management and Monitoring. The Board has implemented a combination of internal policies and procedures and use of external audits to monitor risk management and its effectiveness.

3.1 Internal Policies and Procedures. To standardize risk management practices, the Board has defined a set of internal policies and procedures ranging from loan processing policy manuals, operational manuals (HR Manual, IT Security manual, fraud policy, Audit Manual), Corporate Governance manual to ethical code of conduct. All these include mechanisms to ensure compliance, identification and regular reporting to the Board and Management from business functions of significant business risks and the management of those risks.

3.2 Internal Audit. PML’s risk management processes are subjected to Internal Audit review who subsequently form an objective assessment of the adequacy of policies and procedures for information of the Board.

3.3 External Reviews. To complement the internal audit reviews, regular reviews are conducted by other external stakeholders including External Auditors, Bank of Uganda Examiners, statutory bodies like PPDA ,URA and Rating Agencies.

Annual Report 2010 14 PML Social Events

Marketers’ Night Out Team Pride Strategists at Marketers’ Night Out during a quiz session.

CSR activity Nakawa Market vendors display market cleaning tools donated by Pride in a CSR drive. These included Wheel barrows, Slashers, Overalls, Spades and Rakes.

Annual Report 2010 15 Report of the Directors

REPORT OF THE DIRECTORS.

The Directors submit their report and the audited financial statements for the year ended 31 December 2010, which shows the state of the company’s affairs.

1. PRINCIPAL ACTIVITIES.

The Company takes deposits from the public and various Institutions and provides loans and advances to customers.

2. MARKET RISK.

Market risk exists wherever the Company has taken trading, banking and investment positions. Trading and investment limits are set by the Board to contain the risk of losses within a prescribed amount in the event of adverse price movements.

3. CAPITAL ADEQUACY.

The company monitors the adequacy of its capital using ratios advised by Bank of Uganda. These ratios measure capital adequacy by comparing the company’s eligible capital with its Statement of Financial Position assets, off-Statement of Financial Position commitments and market and other risk positions at a weighted amount to reflect their relative risk.

Capital Requirement Basis.

Core capital required is 15% of the total risk weighted assets including the risk weighted contingent claims.

Total capital required is 20% of the total risk weighted assets including the risk weighted contingent claims.

Based on the above ratios and definitions of capital, the company’s capital adequacy position is as follows:

Annual Report 2010 16 Report of the Directors

Statement Statement of Financial of Financial Position Risk Weighted Position Risk Weighted Nominal Amount Amount Nominal Amount Amount 2010 2010 2009 2009 Ushs’000 Ushs’000 Ushs’000 Ushs’000 Assets (net of provisions): Notes, coins and other cash 16,132,658 2,930,986 6,487,474 1,039,219 assets Investment in treasury bills - - 7,536,765 - Loans and advances to 58,615,019 58,615,019 47,805,118 47,805,118 customers Other assets 1,336,671 1,336,671 1,449,303 1,449,303 Current tax asset - - 29,460 29,460 Deferred tax asset 45,772 45,772 Property and equipment 2,854,414 2,854,414 2,669,159 2,669,159 Intangible asset 376,939 376,939 60,223 60,223 Total Risk Weighted Assets 79,315,701 66,114,029 66,083,273 53,098,254

Capital ratios Capital Ratio Capital Ratio

2010 2010 2009 2009 Tier 1 capital 17,206,892 26% 14,225,248 27% Tier 1+ Tier 2 capital 22,062,223 34% 18,998,438 36%

The above computation indicates that the company complies with the capital adequacy requirements under Sections 15 and 16 of the Micro Finance Deposit Taking Institutions Act, 2003. The minimum core capital required is 15% of total risk weighted assets and total capital required is 20% of total risk weighted assets.

Annual Report 2010 17 Directors 2010

Directors.

The Directors who served during the year and to the date of this report were: -

Mr. Enoch Rukidi Chairman Mrs. Constance Makosya Member Mr. Peter Gachuba Member Ms. Maris Wanyera Member Mrs. Monica Mugenyi Member (Resigned effective 31st December 2010) Mr. Steven Dungu Kabugu Member effective 1st March 2011 Ms. Veronicah G. Namagembe Managing Director

8. AUDITORS.

KPMG will not continue in office in accordance with Section 34 of the MDI Act, 2003

9. APPROVAL OF THE FINANCIAL STATEMENTS.

The financial statements were approved by the Directors at a meeting held on 24th March 2011.

By order of the Board

Signed…………………………………

SECRETARY TO THE BOARD

Annual Report 2010 18 Statement Of Directors’ Responsibilities

he company’s Directors are responsible for the preparation and fair presentation of the financial statements, comprising the statement of financial position as at 31 December 2010, the statement of comprehensive income, the statement of changes in equity and statement of cash flows for the year then ended, and the T notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of Uganda and for such internal controls as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

The Directors’ responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. They are also responsible for safeguarding the assets of the company.

Under the Ugandan Companies Act, the Directors are required to prepare financial statements for each year that give a true and fair view of the state of affairs of the company as at the end of the financial year and of the operating results of the company for that year. It also requires the Directors to ensure the company keeps proper accounting records that disclose with reasonable accuracy the financial position of the company.

The Directors accept responsibility for the financial statements which have been prepared using appropriate accounting policies supported by reasonable and prudent judgments and estimates, in conformity with International Financial Reporting Standards, the reporting requirements of the MDI Act, 2003 and Ugandan Companies Act. The Directors are of the opinion that the financial statements give a true and fair view of the state of the financial affairs and the profit for the year ended 31 December 2010. The Directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of financial statements, as well as adequate systems of internal financial control

The Directors have made an assessment of the company’s ability to continue as a going concern and have no reason to believe the business will not be a going concern for the next twelve months or more from the date of this statement.

Approval of the Financial Statements. The financial statements, were approved by the Board of Directors on 24th March 2011 and were signed on its behalf by:

Mr. Enoch Rukidi Ms. Veronicah G. Namagembe Maris Wanyera Director (Chairman) Managing Director Director

Annual Report 2010 19 Find a reason to LOVE them with PRIDE

Annual Report 2010 20 Financial Highlights

Graphs

Total Assets

90,000 79,614 80,000

70,000 66,083 62,753 60,000 51,518 50,000 46,518

40,000 35,274 Find a reason to LOVE 30,000 Amount (Shs. Millions) (Shs. Amount 20,000 them with PRIDE 10,000

- 2005 2006 2007 2008 2009 2010 Year

Total Assets increased by 20% from UGX 66.08bn to UGX 79.61bn

Loans and Advances 70,000

58,615 60,000

50,000 47,805 43,447

40,000 34,892

30,000 26,469 20,369 20,000 Amount (Shs. Millions)

10,000

- 2005 2006 2007 2008 2009 2010 Year

Net loans and advances increased by 23%from UGX 47.8bn to 58.6bn.

Annual Report 2010 21 Financial Highlights

Deposits

30000

24790 25000

20000

13772 15000

11385.599

10000 8505.482257 Amount (Shs. Millions)

5319.036249 5000 1432.429539

0 2005 2006 2007 2008 2009 2010 Year

Saving Deposits increased by 80% from UGX 13.7bn in 2009 to UGX 24.79bn in 2010.

Net Profit after Tax

3,500 3,073 3,000 2845 2,585 2,500 2,353

2,000

1,500

1,000

Amount (Shs. Millions) (Shs. Amount 830

500 300

- 2005 2006 2007 2008 2009 2010 Year

In 2010, net profit increased by 21% from UGX 2.35bn in 2009 to UGX 2.84 bn.

Annual Report 2010 22 Financial Highlights

Number of Savers and Loan Clients

250000 235,582

200000 186,346

150000 148,634 Number of customers loan clients of Clients of 107,716 100000

Number 64,098 65,928 56,297 60,589 60,276 50000 51,002 51,717

0 0 2005 2006 2007 2008 2009 2010 Year

The savers increased by 26% in 2010 from 186,346 in 2009 to 235,582 in 2010. The Active Loan Clients increased by 9.4% from 60,276 in 2009 to 65,928 in 2010.

Annual Report 2010 23 Report Of The Independent Auditors

REPORT OF THE INDEPENDENT AUDITORS Report on the Financial Statements.

We have audited the financial statements of Pride Microfinance Limited (MDI) which comprise the Statement of financial position as at 31st December 2010, the Statement of Comprehensive income, the statement of changes in equity and Statement of Cashflows for the year then ended and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes.

Directors’ responsibility for the Financial Statements.

The company’s Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of Uganda, and for such internal controls as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility.

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Annual Report 2010 24 Report Of The Independent Auditors

Opinion.

In our opinion, the financial statements give a true and fair view of the state of affairs of Pride Microfinance Limited (MDI) as at 31 December 2010 and of its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and the Ugandan Companies Act.

Report on Other Legal and Regulatory Requirements.

As required by the Ugandan Companies Act, we report to you based on our audit, that: i. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; ii. In our opinion, proper books of account have been kept by the company so far as appears from our examination of those books; and iii. The financial statements are in agreement with the books of account.

KPMG Certified Public Accountants P O Box 3509 Kampala, Uganda

Date: 24th March 2011.

Annual Report 2010 25 Builds a Career With Pride

Annual Report 2010 26 Builds a Career With Pride Financial Statements

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2010

2010 2009 Note UShs’000 UShs’000 Interest income 2 25,352,801 23,332,586 Interest expense 3 (3,040,386) (3,549,040) Net interest income 22,312,415 19,783,546 Fee and commission income 4 2,194,053 2,462,948 Fee and commission expense (34,342) (33,964) Net fee and commission 2,159,711 2,428,984 Other operating income 5 1,084,453 762,166 Net operating income 25,556,579 22,974,696 Impairment losses on loans and advances 12 ( c ) (481,777) ( 423,501) Personnel costs 6 (12,203,974) ( 11,314,786) Depreciation and amortisation 14 & 15 (1,138,675) ( 954,561) Other operating expenses 7 (8,529,941) ( 6,880,549) Total expenses (22,354,367) (19,573,397 ) Profit before income tax 3,202,212 3,401,299 Income tax expense 9 (357,372) ( 1,047,817) Profit for the year 2,844,840 2,353,482 Other comprehensive income - - Total comprehensive income 2,844,840 2,353,482

Annual Report 2010 27 Financial Statement

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2010

2010 2009 UShs’000 UShs’000 ASSETS Cash 16,132,658 6,487,474 Financial investments- held to maturity - 7,536,765 Loans and advances to customers 58,615,019 47,805,118 Other assets 1,336,671 1,449,303 Deferred tax asset - 45,772 Current tax asset 297,970 29,460 Property and equipment 2,854,414 2,669,159 Intangible assets 376,939 60,223 Total assets 79,613,671 66,083,274

LIABILITIES AND EQUITY Customer deposits 24,789,796 13,772,783 Excess savings over loan insurance 3,648,526 3,154,232 fund Loan insurance fund 8,746,240 8,781,372 Other liabilities 5,050,758 4,378,078 Amount due to related company 371,640 371,640 Debenture 4,281,663 4,281,663 Borrowed funds 14,493,640 16,130,703 Deferred grants 238,533 109,760 Deferred tax liability 44,992 - Total liabilities 61,665,788 50,980,231

Shareholder’s equity Share capital 6,001,750 6,001,750 Retained earnings (page 10) 10,725,088 8,253,498 Regulatory reserves 1,221,045 847,795 Total equity 17,947,883 15,103,043 Total liabilities and equity 79,613,671 66,083,274

The financial statements were approved by the Board of Directors on 24th March 2011 and signed on its behalf by:-

Director (Chairman): ...... Managing Director: ......

Director: ...... Secretary: ......

Annual Report 2010 28 Financial Statement

STATEMENT OF CASHFLOWS

2010 2009 Ushs ‘000 Ushs ‘000 Cash flow from operating activities 12,817,576 8,641,223 Cash flow from investing activities Available for sale reserve - 207,535 Proceeds from disposal of assets 6,334 57,236 Purchase of property and equipment (1,203,517) (1,524,304) Acquisition of intangible assets (504,903) (48,303) Net cash flow from investing activities (1,702,086) (1,307,836) Cash flow from financing activities Capital grant received 166,757 93,535 Loans repaid (6,907,063) (6,565,333) Long term loans 5,270,000 4,730,000 Net cash flow from financing activities (1,470,306) (1,741,798) Net increase in cash and cash equivalents 9,645,184 5,591,589 Cash and cash equivalents at beginning of the year 6,487,474 895,885 Cash and cash equivalents at end of the year 16,132,658 6,487,474

Annual Report 2010 29 Financial Statement

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2010

Share Retained Statutory Available for Total capital earnings reserves sale reserve equity Ushs’000 Ushs’000 Ushs’000 Ushs’000 Ushs’000 At 1 January 2009 6,001,750 6,136,918 610,893 (145,274) 12,604,287 Profit for the year - 2,353,482 - - 2,353,482 Available for sale financial - - - 145,274 145,274 instruments Transfer to regulatory reserve - (236,902) 236,902 - - At 31st December 2009 6,001,750 8,253,498 847,795 - 15,103,043

At 1 January 2010 6,001,750 8,253,498 847,795 - 15,103,043 Profit for the year 2,844,840 2,844,840 Transfer to regulatory reserve (373,250) 373,250 At 31 December 2010 6,001,750 10,725,088 1,221,045 - 17,947,883

Annual Report 2010 30 General Information

FOR THE YEAR ENDED 31 DECEMBER 2010

Principal Place Of Business: Metropole House Plot 8-10 Entebbe Road P. O. Box 7566 Kampala

Registered Office: Metropole House Plot 8-10 Entebbe Road P. O. Box 7566 Kampala

Solicitors And Company: Sebalu & Lule Secretary Advocates and Legal Consultants EADB Building Plot 4 Nile Avenue P. O. Box 2255 Kampala

Auditors: KPMG 3rd Floor, Rwenzori Courts Plot 2 & 4A, Nakasero Road P. O. Box 3509 Kampala

Annual Report 2010 31 General Information

BANKERS:

Stanbic Bank Uganda Limited 17 Hannington Road Crested Towers P. O. Box 7131 Kampala

Barclays Bank Uganda Limited Kampala Road P. O.Box 7101 Kampala, Uganda

Centenary Rural Development Bank Ltd P. O. Box 137 Bugiri

Citibank Uganda Limited Centre Court, Ternan Avenue Nakasero Plot No 4 P. O. Box 7505 Kampala, Uganda

Crane Bank Limited P. O. Box 2572 Kampala, Uganda

Bank of Africa Plot 45, Jinja Road, P. O. Box 2750, Kampala, Uganda

Annual Report 2010 32 PML Branch Network addresses

Branch Address 1 Arua Plot 1 Avenue Road P. O. Box 905 Arua Telephone: +256476420490 2 Bugiri Plot 1 Mivule Road P. O. Box 170 Bugiri Tel: +256 43 250 130 3 Bushenyi Plot 3 High Street P. O Box 341, Bushenyi Tel: +256 485 433 929 4 Buwenge Corner House Kamuli Road P. O. Box 1839 Jinja Tel: + 256 392 718 417 5 City Centre Plot 40-46 Mukwano Arcade P. O. Box 7566 Kampala Tel: +256 414 507 051 6 Branch Plot 23 Rukidi P. O. Box 968 Fortportal Tel: +256 483 422 989 7 Entebbe Road Plot 8-10 Metropole House Entebbe Road P. O. Box 7566 Kampala Tel: +256 041 446297, +256 0414 346930, +256 0414 258150, +256 0312 226265/6 8 Hoima Branch Plot 30 Old Tooro Road Muganywa Centre Building P. O. Box 168 Hoima Tel: +256 465 40 469 9 Iganga Branch Plot 37/38 Main Street P. O. Box 170 Iganga Town Tel: +256 43 242 430 10 Ishaka Plot 22 Rukungiri Road P. O. Box 341 Ishaka Tel: +256 485 443 477 11 Jinja Branch Plot 32/34 Main Street P. O. Box 1839 Jinja Tel: +256 434 121 316 12 Kabalagala Plot 261 Road P. O. Box 7566 Kampala Tel: +256 510 447

13 Plot 413 Katwe Road P. O. Box 7566 Kampala Tel: +256 414 345 709 14 Plot 3726 Bombo Road (Lukadde Stage before Total Petrol Station) P. O. Box 7566 Kampala Tel: +256 414 567 155

Annual Report 2010 33 PML Branch Network addresses

Branch Address 15 Nakulabye Nakulabye S J Basiriak Building Hoima Road P. O. Box 7566 Kampala Tel: +256 414 345 709 16 Mukono Jinja Road next to URA Offices P. O. Box 541 Mukono Tel: +256 414 290 130 17 Nakawa UMA Show Ground Behind UMA Offices P. O. Box 7566 Kampala Tel: +256 414 220 751 18 Plot 122 Masaka Road Block 18 P. O. Box 7566 Kampala Tel: +256 414 272 600 19 Plot 951/2 Bombo-Gayaza Road Round About P. O. Box 7566 Kampala Tel: +256 414 540 078 20 Lugazi Plot 6 Ntenga Road P. O. Box 541 Mukono Tel: +256 414 448 106 21 Masaka Plot 25 Masaka-Kampala Road P. O. Box 351 Masaka Tel: +256 481 420 647 22 Mbarara Plot 59 High Street P. O. Box 1619 Mbarara Tel: 0485420826 23 Kasese Saad Building P. O. Box 487 Kasese Tel: +256 483 444 151 24 Kabale Plot 143 Kabale P. O. Box 368 Kabale Tel: +256 486 424 207 25 Mbale Plot 15 Republic Street P. O. Box 2516 Mbale Tel: 0454434235/0757334235

26 Sororti Plot 33/35 Solot Avenue P. O. Box 720 Soroti Tel: +256 454 461 632 27 Lira Plot 48 Obote Avenue Lira Town Tel: +256 473 420 283 28 Kabwohe Mbarara Road Opp. Caltex Filling Station P. O. Box 341 Bushenyi Telephone: +256 485 422 939 29 Rukungiri Plot 22 Rukungiri Road P. O. Box 289 Rukungiri Telephone: +256 486 442 483

Annual Report 2010 34 Annual Report 2010 35