Isimba Hydro Power Dam Isimba Hydropower Station Umeme Limited FY 2018 Results Presentation Contents ❑ Macro Economic Update ❑ Electricity Supply Industry Overview ❑ Umeme Capex Plan ❑ Concession & Regulatory Updates ❑ Operational Review ❑ Financial Highlights ❑ Strategic Priorities 2 Macro Economic Update % GDP Growth Trend 7.0% 6.4% 6.3% 6.4% • Real GDP up 6.1% 6.1% 6.0% 5.6% supported by rise in 5.2% 5.1% 4.8% private sector credit, 5.0% favourable weather 3.8% 3.9% 4.0% 3.6% 3.0% • Gov’t focus on infrastructure supported 2.0% further recovery in 1.0% construction 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 • Rebound in services Source: UBOS, Bank of Uganda sector – growth in telecom, financials and ▪ 2018 Headline Inflation average – 2.6% (from 5.6%) insurance ▪ 2018 Currency performance – 2% vs 1% weakening in • Bank of Uganda 2017 Composite Index of Economic Activity points ▪ FY 2018/19 growth projected at 6.3% supported by accommodative monetary policy, infrastructure spending, to improved business stronger credit growth and improved agriculture sentiments performance 3 Installed Generation (MW) Karuma +600 MW 1,800 1,767 Installed Capacity 1,600 Source MW % 1,400 Hydro 927.3 79.5 Isimba +183 Thermal 101.6 8.7 1,167 1,200 (HFO) 984 Solar 40.8 3.5 1,000 905 932 863 872 872 895 Cogeneration 96.2 8.2 800 Diesel 1.0 0.1 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Umeme, UETCL, MEMD Isimba Dam Commissioned on 21st Mar 2019 4 State of Electricity Supply GWh +9.1% MW +5.9% Electricity Sales (GWh) 650 Max System Demand 3,011 596 600 3,000 563 534 2,760 550 521 508 492 500 2,567 2,458 450 2,500 400 2,277 350 300 2,000 2013 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Source: UETCL ▪ Effective Generation – 700 MW ▪ Peak Demand excluding exports - +5.9% ▪ System Demand include exports – 645MW ▪ Generation Load Factor – 74% ▪ 5-Year Max Demand CAGR – 4.9% ▪ 2018 GWh sales up 8.6% (FY17: 7.5%) 5 Isimba & Karuma Hydropower Plants Isimba HPP – Complete Commissioned – 21 Mar 2019 Karuma HPP – 93% Status Source: Uganda Electricity Generation Company Limited Commissioning – Dec 2019 6 Electricity Demand Outlook Strong Industrial Electricity Demand Pipeline Connections Policy – 655MW by 2023 – 500MW additional Cement, Steel, Mining, demand in 5 years Agro-processing… - 2m connections National Cement Company Osukuru Industrial Complex, Tororo 7 Transmission System Update Transmission grid system availability maintained at average 98% in 2018 Transmission switch yard at Isimba Dam 8 Transmission Grid 9 Umeme Umeme Capex Plan (USDm) Capex Plan: 80 70 2019 - 2025 60 50 40 30 20 10 0 2019 2020 2021 2022 2023 2024 2025 Asset Mgt Systems 5.5 3.6 2.8 2.2 1.5 Asset Performance and 15.3 24.6 23.4 29.9 32.8 37.3 30.3 Reliability Asset Replacement 16.8 8 9.8 8.2 12.9 8.6 10.1 Technical Losses 4.1 3.6 7.2 Growth and Access 33.3 34.8 31.6 34.2 27.8 28.4 28.3 10 ❑ Network Adequacy to meet forecast growth driven by need to absorb the anticipated generation; – Priority in industrial parks and industrial zones of Namanve, Mukono, Iganga, Kapeeka, Luzira Umeme and Mbale ❑ Improvement of reliability and Quality of supply; Capex – Priority will be to inject new substations and Focus: new transformer zones in high growth areas ❑ Support the Government agenda for accelerated 2019 - access. – Target is to connect 2M+ customers in the next 2025 6 yrs ❑ Improve efficiency of the distribution network by leveraging on new technologies Concession Extension Government supportive of contract resolution 12 13 • Revenue Recovery: UShs 103.7 billion lifeline tariff revenue was recovered in Q2 – Q4 2018 tariffs • Bujagali Energy Limited refinancing was completed – directed towards reducing large- industrial tariffs 2018 • Offsets of USD 8.5m effected for arrears government installations (post-paid accounts) Regulatory • 331 out of 469 government installations Updates converted to pre-paid metering • Pending unrecognized Capex by ERA – US$ 93m • Ongoing engagement on 2019 – 2025 tariff parameters Electricity Tariff Developments Umeme Distribution Margin Tariffs (Ushs) 50% 550 45% 500 40% 450 35% 400 350 30% 300 25% 250 20% 2016 2017 Q1 18 Q2 18 Q3 18 Q4 18 200 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017 2017 2017 2017 2018 2018 2018 2018 • Weighted Average End User Tariff up 4.4% in Weighted End User Tariff Bulk Supply Tariff 2018 • Bulk Supply Tariff reduced by 21.4% in Q2 Tariffs per Consumer Category (Ushs) 2018 800 • Bujagali Refinancing benefits (generation tariff 700 down from 11 cents from 8 cents) passed onto 600 extra-large industrial category to drive 500 consumption 400 • Recovery of UShs 103.7 billion lifeline tariff 300 revenue started in Q2 2018 200 Street Lighting Domestic Commercial Medium Large Extra-large Industrial Industrial Industrial • Distribution Margin increased as a result of lifeline revenue recovery Q1 2018 Q2 2018 Q3 2018 Q4 2018 14 Electricity Demand: +9.1% Customer numbers Sales (GWh) Growth Up 15% from FY 2017 Category GWh Growth (y/y) FY 2017 (%) ('000) 79% on pre-paid 1,400 Post-paid 1,292 Domestic 640.4 +2.4% +6.9% 1,200 Pre-paid 1,125 Commercial 366.9 +7.5% +5.7% 1,000 951 794 800 Street Lighting 1.1 -32.9% -0.7% 651 600 1,015 Industrial – Med 477.2 +10.4% +3.0% 400 Industrial – Large 1525.4 +12.2% +9.7% 200 277 Total 3,011.0 +9.1% +7.5% - 2014 2015 2016 2017 2018 Prepaid Revenue Share Sales (GWh) by Customer Category % Prepaid Revenues % of Total 28% 24% 24% 21% 20% 16% 16% 12% 12% 8% 6% 4% 0% 2014 2015 2016 2017 2018 15 Operational Performance Energy Losses Revenue collections % % 22 21.3 105 102.5 20 19.5 19.0 100.2 18 17.2 100 99.1 16.6 98.2 98.4 16 14 95 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Operating costs Regulatory targets* US$m 65 Tariff parameter ‘13 ‘14 ‘15 ‘16 ‘17 ‘18 60 15.1 60 Energy losses 19.6 21.0 18.9 17.4 16.1 (%) 55 Collection rate 81.1 97.5 97.7 97.9 98.2 98.5 55 53 (%) 51 Operating 36.5 44.4 45.7 47.2 48.7 50.2 50 allowance 48 (US$m) ** 45 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 16 Financial Performance (US$) Financials Summary (US$m) EBITDA (US$) US$ m 2017 EBITDA Income Statement 2018 2017 %ch 100 excl. Amendment 5 effects 95 Revenue 400.3 410.7 -2.5% 90 90 90 Cost of Sales (244.6) (265.7) -7.9% Gross Profit 155.7 145.0 +7.3% 80 76 Operating Expenses 60.4 55.3 +9.2% 70 68 EBITDA 94.9 89.9* 5.6% Finance Costs (ex. lease) 16.1 19.0 -15% 60 PBT 52.3 44.0* 18.9% 50 Tax Rate 31.6% 30%* - 2014 2015 2016 2017 2018 Profit After Tax 35.8 30.8* +16.3% Profit after tax (US$) US$ m 45 2017 PAT excl. * Adjustments for effects of Amendment 5 40 Amendment 5 ** Assuming 30% tax rate on adjusted PBT. 40 36 34 effects 36 35 31 30 25 Financial Position at FY 2018 FY 2017 %ch 20 Total Assets 662.8 645.0 +2.8% 15 Shareholders Equity 194.3 169.6 +14.6% 10 Net Debt 147.0 187.0 -21.4% 5 - 2014 2015 2016 2017 2018 17 Financial Highlights Cumulative Capital investment Net Debt (US$m) US$ 62m invested in 2018 US$m 700US$m Total Unrecovered 627 220 566 201 600 500 200 187 500 407 180 460 400 434 321 160 383 142 147 300 224 316 140 200 166 250 130 120 102 172 100 127 100 95 84 110 - 80 2010 2011 2012 2013 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Dividend Pay-out Ratio Sample projects in 2018 % 60% 50% Load Growth 50% • Kampala Industrial Business 40% 35% Park/Namanve 33kv Industrial Ring 30% • Upgrade of Gulu sub-station 23% • Nyakesi substation, Tororo 20% • Kawanda-Kapeeka Load Transfer 10% 0% 2016 2017 2018 18 Financial Performance (UShs) Financials Summary (UShs bn) Gross Profit & EBITDA (UShs) Figures are rounded. Ushs bn 700 2017 EBITDA excl. Income Statement 2018 2017 %ch Amendment 5 effects 581 600 Revenue 1,493.2 1,485.2 +0.5% Gross profit 525 500 EBITDA 476 Cost of Sales (912.0) (960.5) -5.0% 418 Gross Profit 581.2 524.7 +10.8% 400 354 318 308 325 Operating Expenses 225.6 199.3 +13.2% 300 248 178 EBITDA 354.1 325.9* +8.6% 200 Finance Costs (ex.lease) 60.1 68.6 -12.3% 100 Profit Before Tax 195.1 159.8* +22.1% - Tax Rate (%) 31.9 30** 2014 2015 2016 2017 2018 Profit After Tax 132.8 111.9* +18.7% Profit after tax (Ushs) EPS 82.0 68.9* 2017 PAT excl. Ushs bn Amendment 5 effects DPS (Total) 40.9 7.6 140 132 133 *Figures adjusted for effects of Amendment **Assuming 30% tax rate. 120 112 106 100 Financial Position at FY2018 FY 2017 %ch 80 70 Total Assets 2,463.6 2,349.4 +4.8% 60 Shareholders Equity 722.2 617.7 +16.9% Net Debt 546.5 681.2 -19.8% 40 2014 2015 201619 2017 2018 Trading Update Market cap US$129m at UShs 296 share price ❑ Buy-Out amount less net Umeme Share Price (UShs) debt at $396m 530 ❑ Share trading at Buy-Out 480 amount less net 430 debt/Market Cap multiple 380 of 3x 330 ❑ Dividend yield at 13.8% relative to 364-day 280 Treasury Bill at 12.5% 230 ❑ 2019 YTD vol.