For discussion purposes only. No party may place reliance on this draft Valuation Group Project Water: Assessment of the FirstRand offer 17 June 2011 Strictly private and confidential This Draft Report (“Draft Report”) has been prepared on the basis of the limitations set out in the Scope and Basis of valuation detailed on page 7 and the matters noted in the transmittal letter over the page. This draft contains a number of outstanding matters, identified by square brackets (“[ ]”) and italics, that require clarification or confirmation by management. In addition, this report is still subject to our internal review procedures and accordingly, we reserve the right to add, delete and/ or amend the report as appropriate. No party may place any reliance whatsoever upon this Draft of the Report. There are agreed terms for confidentiality that cover the Draft Report. These preclude you from disclosing the Draft Report to any other party without our prior written consent. Further details are provided on page 3 of this report. Deloitte LLP is authorised and regulated by the Financial Services Authority © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Deloitte LLP Athene Place 66 Shoe Lane London EC4A 3BQ The Bank of Zambia Tel: +44 (0)20 7936 3000 Bank Square www.deloitte.co.uk Cairo Road Lusaka 17 June 2011 FAO: Deputy Governor - Operations Dear Sir Valuation advice in connection with the FirstRand Limited (“FRL” or “FirstRand”) offer for selected assets and liabilities of Acid, the Bank under review for FRL offer purposes. In accordance with your Letter of Instruction dated 21 April 2011 (the “Letter of Our procedures and enquiries have not included verification work or constituted an audit Instruction”) which is attached in Appendix 1 we have prepared this working draft in accordance with generally accepted auditing standards. Accordingly, we do not document (“Draft Document”) summarising the progress of our work and our preliminary express any opinion on any financial data or other information provided by Acid or the valuation advice to the Bank of Zambia (“BoZ” or the “Principal”). Principal in connection with this engagement. In this connection any forecasts and the assumptions upon which they are based are the sole responsibility of the directors of The Draft Document sets out our initial views of the ranges of valuation of the selected Acid and the Principal as appropriate. We may comment on the underlying assumptions assets and liabilities of Acid at 30 April 2011. where appropriate in our report, but accept no responsibility for them, or for the ultimate The Draft Document is confidential to the Principal and is subject to the limitations and accuracy and realisation of the forecasts. restrictions on use specified in this transmittal letter. No party is entitled to rely on our This Draft Document is limited to only those matters that would appear to us to be Draft Document for any purpose whatsoever and we accept no responsibility or liability to significant in arriving at a draft estimate of Acid’s potential value under various scenarios. any party whatsoever in respect of the contents of this Draft Document. Our work has been prepared solely for the confidential use of the Principal and solely for We draw your attention to the section titled “Scope and bases of valuation” included in the purpose of assisting BoZ with valuation advice in consideration of the FRL offer. the Draft Document in which we refer to the scope of our services and the limitations on the work undertaken. This Draft Document may not be made available or copied in whole or in part to any person without the express written permission of Deloitte. Deloitte accepts no The last pricing update was conducted on 24 May 2011. responsibility for any reliance that may be placed on this Draft Document should it be Our work is ongoing and we have not as yet finalised our views on the value of Acid. used by any party or for any purpose that has not been expressly agreed by Deloitte. Our Accordingly, this Draft Document is intended to be used for discussion purposes only and name and Draft Document may not be referred to in any offering, circular or other we reserve the right to update or amend this document. document, without our prior written permission. This Draft Document is limited to reviewing the information made available to us by Acid The Report is final and supersedes all previous communication and presentations of our and FRL, the Principal and other publicly available information sources that we work and any draft findings. We have no obligation to update the Report for any considered appropriate. Whilst we have no reason to believe that these sources are not information available after 24 May 2011, when we completed our fieldwork. reliable and accurate, we do not warrant their accuracy, completeness or correctness. Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom. Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms. 2 © 2011 Deloitte LLP. Private and confidential Member of Deloitte Touche Tohmatsu Limited For discussion purposes only. No party may place reliance on this draft We each agree that where either of us is in possession of information about the other that is by its nature confidential, or is designated as such by the other (whether in writing or orally) (“Confidential Information”), we each undertake to: – keep it confidential; – use it only in connection with the FRL Offer discussion; and – not to disclose it to any other person without the other’s prior written consent. We each will be entitled to disclose Confidential Information to our legal advisors to protect our legitimate interests and to comply with any legal, professional or regulatory requirement. The Report has been prepared for BoZ and we therefore accept responsibility to BoZ alone for its contents. We accept no duty, responsibility or liability to any other parties, since the Report has not been prepared, and is not intended, for any other purpose. It should not be made available to any other parties without our prior written consent. Yours faithfully -DRAFT- Deloitte LLP 3 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Glossary of terms The Bank The Bank under review for FRL offer purposes IMF International Monetary Fund BoZ Bank of Zambia KYC Know Your Client BoZ provision Provision level calculated using the classification (pass/sub- Letter of Letter from BoZ dated 21 April 2011 standard/doubtful/loss) awarded by Acid in the monthly BoZ return Instruction and the BoZ regulations on provision level and haircut on types of Management Management of Acid in Possession security. Note that the classification as at 31/12/10 has been used as a proxy for 10/12/10 MOU Memorandum of Understanding entered into between BoZ and FRL on 10 December 2010 BFSA Banking and Financial Services Act NAPSA National Pension Scheme Authority Compensation fee Fee payable to FirstRand Limited in case of refusal of offer presented by them to Acid Normalisation Adjustments to financial information solely for assisting in the adjustments identification, documentation and accumulation of items that may dcf Discounted cash flow occur under the normal course of business. Because there is no Deloitte NRV Estimation of the NRV using traditional method of using impaired authoritative literature or common standard with respect to the security value where recovery through normal debt service is calculation of normalisation adjustments, there is no basis to state uncertain whether all appropriate and comparable adjustments have been made. In addition, while the identified adjustments may indeed be Deloitte provision Deloitte provision is the exposure less the Deloitte NRV specified unusual or infrequently occurring, it is possible that there may have above been other items not included in the calculation, and it is possible Acid The Bank under review for FRL offer purposes that future periods may also include such items, although they would be different from the historical items Draft Report Draft Report dated 17 June 2011 PBT Profit before tax FirstRand FirstRand Limited PTA PTA Bank (Eastern & Southern African Trade and Development FRA Zambian Food Reserve Agency Bank) FRL FirstRand Limited PFI Prospective Financial Information FR provision FirstRand Limited provision PRGF Poverty Reduction and Growth Facility FSDP Financial Sector Development Plan Remaining sample Those 37 loans not selected for a detailed review which were GRZ The Government of the Republic of Zambia subsequently covered by a discussion with management to assess provision levels. G-8 The countries of Canada, France, Germany, Italy, Japan, Russia, the United Kingdom and the United States SI Statutory Instruments the Hearing A hearing of all interested parties held on 9 March 2011 USD United States Dollar HIPC Heavily Indebted Poor Countries program ZMK Zambian Kwacha IDA World Bank’s International Development Association 4 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Contents Section Page Appendices No. Executive summary 5 Letter of Instruction 1 Scope and Basis of valuation 7 Sources of information 2 Introduction and background 10 Market analysis 3 Market 14 Potential buyers 4 Financial position and performance 24 Comparable listed companies 5 Potential buyers 32 Comparable transactions analysis 6 FirstRand offer 34 Intangibles valuation 7 Valuation 37 Provisions analysis 8 Appendices 47 Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 5 © 2011 Deloitte LLP.