S3* RATING RATIONALE. CP 2 & 3 Rating

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1 UACN Property Development Company Plc (UPDC) 2,268,321, Day Series 2 Commercial Paper under the 24 billion Programme 3,995,215, Day Series 3 Commercial Paper under the 24 billion Programme CP 2 & 3 Rating S3* Outlook: Stable Issue Date: 21 November 2016 The CP rating for series 2 & 3 is valid throughout the life of this instrument and will be subject to periodic monitoring and review. Issuer Rating: Bb- Expiry Date: 30 June 2017 Analysts: Ikechukwu Iheagwam ikechukwuiheagwam@agusto.com Olusegun Owadokun olusegunowadokun@agusto.com Agusto & Co. Limited UBA House (5th Floor) 57, Marina Lagos Nigeria Commercial Paper rated `S3' are judged to offer HIGH safety of timely payment of interest and principal; however, changes in circumstances can adversely affect such issues more than those in the higher rated categories. RATING RATIONALE UACN Property Development Company Plc ( UPDC, the Issuer, or the Company ) is a major player in the Nigerian Real Estate Industry. The Company, which is a subsidiary of UAC of Nigeria Plc ( UACN ) 1 is primarily focused on residential and commercial property development in Nigeria. In April 2016, UPDC issued a 16,799,893,000 ( billion) 183-day unsecured commercial paper ( Series 1 ), under its 24 billion Commercial Paper Issuance Programme (CPIP). Upon maturity of the Series 1 CP on 18 October 2016, 5.42 billion was reissued into two new tranches (Series 2 & 3), while the balance of billion was paid to investors. This repayment was partly funded from UPDC s operating cash flow as well as utilizing 9.06 billion out of the 10 billion revolving Liquidity Support Facility (LSF) 2. We have reviewed the 2,268,321, day unsecured Commercial Paper (Series 2) and 3,995,215, day unsecured Commercial Paper (Series 3), both under the 24 billion CPIP. The Series 2 & 3 CPs are backed by a corporate guarantee issued by UACN capped at 46% of the CPIP (estimated at billion) as well as the undrawn LSF balance of 0.94 billion. These credit enhancements are provided as a stop gap in the unlikely event of default by UPDC. The Series 2 & 3 CPs are senior unsecured obligations of the Issuer and each ranks pari passu with other present and future senior unsecured obligations of the Company outstanding from time to time. In line with the Series 2 & 3 CP pricing supplements, UPDC will be responsible for meeting the CP obligations. Agusto & Co. recognizes that the Issuer may require credit support to fulfill its CP obligations, on account of its weak cash flow position. Nonetheless, we believe that the Series 2 & 3 CPs have moderate credit risk, mainly strengthened by the additional credit enhancements provided by UACN and the Lenders. Based on the above, Agusto & Co. hereby assigns an S3 rating to UPDC s Series 2 & 3 commercial papers. * This CP rating is equivalent to A- for a long term rating. 1 UACN is currently rated A- by Agusto & Co. 2 The Liquidity Support Facility (LSF) was jointly arranged by FBN Merchant Bank Limited and Coronation Merchant Bank Limited ( the lenders ) with each lender pledging 5 billion as liquidity back stop for the UPDC s 24 billion Commercial Paper Issuance Programme. The copyright of this document is reserved by Agusto & Co. Limited. No matter contained herein may be reproduced, duplicated or copied by any means whatsoever without the prior written consent of Agusto & Co. Limited. Action will be taken against companies or individuals who ignore this warning. The information contained in this document has been obtained from published financial statements and other sources which we consider to be reliable but do not guarantee as such. The opinions expressed in this document do not represent investment or other advice and should therefore not be construed as such. The circulation of this document is restricted to whom it has been addressed. Any unauthorized disclosure or use of the information contained herein is prohibited.

2 COMMERCIAL PAPER STRUCTURE UACN Property Development Company Plc issued a billion 183-day unsecured commercial paper ( Series 1 ) in April 2016, representing the first tranche under its 24 billion Commercial Paper Issuance Programme (CPIP). The net proceeds of the first tranche (issued at a discount of 10.43%) was used to refinance existing short term borrowings of the Company (priced at an average interest rate of 16.6%). The CPIP is supported by a corporate guarantee issued by the parent company, UAC of Nigeria Plc, subject to a limit of 46% of the CPIP ( billion). In addition, the CPIP is backed by a 10 billion Liquidity Support Facility jointly provided by FBN Merchant Bank Limited and Coronation Merchant Bank Limited with each lender pledging 5 billion. Upon maturity of the Series 1 CP on 18 October 2016, UPDC reissued 5.42 billion into two new tranches (Series 2 & 3), while the balance of billion was paid to the CP investors. 2,268,321, Day Unsecured Commercial Paper (Series 2) In October 2016, UPDC issued a 2,268,321,000 (Two billion, two hundred and sixty eight million, three hundred and twenty one thousand naira only) 91-day unsecured CP (Series 2) maturing on 17 January The Series 2 CP was issued at a discount to face value of 18% to support the Company s working capital requirements. The Series 2 CP is fully backed by a corporate guarantee issued by the parent company, subject to a limit of 46% of the CPIP ( billion) as well as the LSF outstanding balance of 0.94 billion. In our view, these credit enhancements provide adequate cover for the Series 2 CP obligation. 3,995,215, Day Unsecured Commercial Paper (Series 3) Following the maturity of the Series 1 CP on 18 October 2016, the Company issued a 3,995,215,000 (Three billion, nine hundred and ninety five million, two hundred and fifteen thousand naira only) 182-day unsecured CP (Series 3) at a discount to face value of 21% to mature on 18 April 2017, in addition to the Series 2 CP issued on the same date. The Series 3 CP is also backed by the same credit enhancements. The total credit enhancements amounting to billion (comprising UACN s corporate guarantee of billion and LSF outstanding balance of 0.94 billion) provide a total coverage ratio of 191% over the Series 2 & 3 CPs in issue. Table 1: Schedule of Existing Credit Enhancements for the CPIP as at 15 November 2016 S/N Description Support Type Value of Enhancement ('N'mns) Value of Series 2 & 3 CPs in Issue ('N'mns) 1 Corporate Guarantee - Partial guarantee up to 11,040 UACN 46% of the CP Programme 2 Liquidity Support Facility FBN Merchant Bank & Coronation Merchant Bank Liquidity backstop jointly provided by the lenders Total Existing Credit Support 11, Coverage ratio 6, % 2

3 OUTLOOK The Series 2 & 3 CPs issued on 18 October 2016 are senior unsecured obligations of the Issuer and are expected to be paid from UPDC s OCF. In the unlikely event of a shortfall in meeting the CP obligations on respective due dates, the outstanding balance on the LSF as well as the pledged value of UACN s corporate guarantee will be utilized to repay the Series 2 & 3 CP obligations. Based on our analysis, the total value of credit enhancements will be sufficient to cover the Series 2 & 3 CP obligations, evidenced by a total coverage ratio of 191%. Based on the above, we attach a stable outlook to the Series 2 & 3 CPs. 3

4 COMMERCIAL PAPER RATING DEFINITIONS S1 Commercial Paper rated `S1' are judged to offer HIGHEST safety of timely payment of interest and principal. S2 S3 Investment Grade Commercial Paper rated 'S2' are judged to offer VERY HIGH safety of timely payment of interest and principal. Commercial Paper rated `S3' are judged to offer HIGH safety of timely payment of interest and principal; however, changes in circumstances can adversely affect such issues more than those in the higher rated categories. S4 Commercial Paper rated `S4' are judged to offer ADEQUATE safety of timely payment of interest and principal for the present; however, changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal than for instruments in higher rated categories. SP5 SP6 D Speculative Grade Commercial Paper rated `SP5' are judged to carry INADEQUATE safety of timely payment of interest and principal; while they are less susceptible to default than other speculative grade instruments in the immediate future, the uncertainties that the issuer faces could lead to inadequate capacity to make timely interest and principal payments. Commercial Paper rated `SP6' are judged to be SUSCEPTIBLE to default; while currently interest and principal payments are met, adverse business or economic conditions would lead to lack of ability or willingness to pay interest or principal. Commercial Paper rated `D' are in PAYMENT DEFAULT and in arrears of interest or principal payments or are expected to default on maturity. Such instruments are extremely speculative and returns from these CP may be realized only on reorganisation or liquidation. 4

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