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. Private and confidential For discussion purposes only. No party may place reliance on this draft Executive summary Based on our analysis we consider a reasonable range for the selected assets and liabilities of Acid to be ZMK(23.5)bn to ZMK39.0bn, before accounting for the compensation fee

Net asset value overview FRL offer and conclusion • We have assessed the current market value of Acid as at 30 April 2011 under the terms of Deloitte view your Letter of Instruction dated 21 April 2011 in order to benchmark the offer received from ZMK 'million FRL for select assets and liabilities of the Bank under the terms of an Memorandum of FRL offer Low Mid High Understanding entered into between BoZ and FRL on 10 December 2010 (“MOU”). • Notwithstanding its size, Acid has significant concentration in its customers with three key Total assets 905,985 873,712 [1] 873,712 905,985 [2] relationships (FRA, PTA and NAPSA) that contributed c.47% of total income in 2010. • Acid was in a precarious position necessitating BoZ taking possession of the Bank and it Total liabilities 902,745 902,745 902,745 902,745 requires significant capital to enable it to continue operating at its current level. • We have considered the valuation of Acid by reference to internationally accepted valuation Net asset value 3,240 (29,033) (29,033) 3,240 approaches, which are consistent with the ways analysts approach the valuation of banks. In forming our views we have performed a revised net asset valuation for Acid. • In forming our view of the net realisable value of the loans and advances, we have applied a Intangible asset value 23,924 5,500 [3] 17,300 [4] 35,800 [5] downward adjustment of c.ZMK32bn based on our review of a sample of the 47 largest borrowers. As an upside, we have adopted the Acid carrying value for loans and advances Adjusted net asset value 27,164 (23,533) (11,733) 39,040 at the high end. • The Valuation Principles within the MOU include the potential for an intangible asset value, Compensation fee (23,765) [6] (23,765) (23,765) while the MOU also sets out a compensation fee of c.ZMK23.8bn payable to FRL in the instance of failing to reach an agreed sale.

Adjusted net asset value 27,164 (47,298) (35,498) 15,275 • Our indicative valuation for the intangible assets of Acid is in the range of ZMK5.5bn to ZMK35.8bn with an average of ZMK17.3bn. • FRL have made a ZMK27.2bn offer for selected assets and liabilities of Acid including ZMK23.8bn for intangible assets. • FRL have also undertaken to invest significantly in Acid and Zambia as part of this transaction, protecting the branch network and the employment of the staff. • Accounting for differences in the net realisable value of loans and advances and the potential compensation fee payable results in the FRL offer exceeding our assessment of Notes: the adjusted net asset value. [1] Assume an additional provision of ZMK32bn for loans and advances per 28 February 2011 Deloitte analysis [2] Assume FRL provision for loans and advances • Based on our analysis we consider a reasonable range for the selected assets and liabilities [3] Reflecting low end of our intangible asset valuation of Acid to be ZMK(23.5)bn to ZMK39.0bn. [4] Reflecting average position of our intangible asset valuation • This reduces to ZMK(47.3)bn to ZMK15.3bn if the compensation fee is taken into account; [5] Reflecting top end of our intangible asset valuation [6] Adopt inclusion of compensation fee payable upon assumed refusal of the FRL offer this compares to the FRL ZMK27.2bn offer. Source: BoZ, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 6 © 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 7 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Scope and Basis of valuation Scope We have assessed the current market value of Acid as at 30 April 2011 under the terms of your Letter of Instruction dated 21 April 2011

Scope and limitations Scope and limitations (cont’d) • The scope of our work, summarised in this Draft Document, has been limited to matters • All Prospective Financial Information (“PFI”), being any financial information about the which we have identified that would appear to us to be of significance within the context future) relates to the future and involves estimates, assumptions and uncertainties. PFI of our scope as set out in the Letter of Instruction. is based on information available at the time of its preparation. Accordingly, the PFI will • Our research did not attempt to identify the purchaser with the greatest special interest. not include unanticipated events after the date on which it was prepared, including, but Such “special purchasers” may be willing to pay higher prices because of, for example, not limited to, changes in law and regulations, changes in government policies and reduced or eliminated competition, ensured source of material supply or sales, cost changes in accounting standards. The attainment of the predicted results depends upon savings arising on business combinations following acquisitions or other synergies which successful implementation of the underlying strategies by management and the could be enjoyed by the purchaser. realisation of the underlying assumptions including any operational improvements. Events and circumstances frequently do not occur as expected and actual results are • Our procedures were not intended to determine a specific value for Acid and, likely to be affected by events beyond the control of management resulting in differences accordingly, we have not expressed such an opinion. between the predicted and the actual results. Such differences are normal and may be • We have relied on information and explanations that we have received from the material. Management of Acid in Possession (“Management”) and on publicly available • Management has provided us with information as set out in Appendix 2 and we have information. had discussions with the people listed in Appendix 2. • Our involvement in the calculation of normalisation adjustments consisted solely of • The sensitivities included in this report are illustrative examples of potential scenarios. assisting you in the identification, documentation and accumulation of items using The sensitivities do not represent the worst possible case. criteria discussed and agreed between ourselves. Because there is no authoritative literature or common standard with respect to the calculation of normalisation • Whilst our work was conducted on site, our work has been performed largely on a adjustments, there is no basis to state whether all appropriate and comparable desktop basis with limited access to management. adjustments have been made. In addition, while the identified adjustments may indeed • Our work in relation to loans and advances was based on discussions with the credit be unusual or infrequently occurring, it is possible that there may have been other items team at Acid and for the sampled 10 cases, information in the loan file as provided to us not included in the calculation, and it is possible that future periods may also include by management specifically looking at information dated between 1 June 2010 and 28 such items, although they would be different from the historical items. February 2011. We have relied on the accuracy of the information and explanations • As a result of the normalisation adjustments that have been presented you should note provided to us. that the figures presented within this Draft Document do not represent figures that may • In relation to our review of the loans and advances, access to finance staff was limited be or have been reported in any of the periods presented. due to recent reorganisation and resulting redundancies, as well as holidays of • We have presented various market data points on which we place reliance. You should remaining staff while Management have been unable to provide all of the information be aware of the inherent limitations of relying on market data. The choice of parties from requested, including explanations and reconciliations. The quality of information whom we gather information is subjective and cannot be comprehensive. The nature of provided has been variable and some requests were not met on a timely basis . some of our enquiries is such that we rely on oral comments from third parties and we cannot seek independent verification of all information supplied. It is possible that had we spoken to other parties we might have been provided with different information from which we might have drawn different conclusions.

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 8 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Scope and Basis of valuation Basis of valuation We have assessed the current market value of Acid to compare to the offer received from FRL for select assets and liabilities of the Bank

Approach Approach (cont’d) • We have considered the current market value of Acid (as at 30 April 2011) on a • In this regard we have considered trading multiples and other market data up to 24 May standalone basis to compare to the offer received from FRL under the terms of the 2011. MOU. • Our valuation analysis has used internationally recognised business valuation • We consider market value to be “ the amount for which the asset in question could approaches including: reasonably be expected to change hands in a transaction between parties who are – a revised “Net Asset Approach”, where we have considered individual market values equally willing and informed as to the relevant facts, and under prevailing market of all the assets and liabilities of the Bank (including those not recorded in the Acid conditions taking into consideration the financial situation and circumstances of Acid.” accounts, most notable being the intangible assets of the business); • In this instance, you have provided us with the Statement of Affairs for Acid as at 10 – a “Market Approach”, where we considered capitalisation of earnings based on both December 2010 which indicates that the Bank is technically solvent, undercapitalised broadly comparable listed companies and transactions; and and in breach of numerous Banking and Financial Services Act (“BFSA”) requirements. – an “Income Approach”, where we have considered discounted cash flow (“DCF”) • In forming our view on value we have considered the business, its performance and its analysis. projected performance. • The “Net Asset Approach” is based on determining the market value of the individual • We have also had regard to the market in which the Group operates and key drivers for assets and liabilities of the Bank, where we have also included an estimation of the its products and services. intangible assets of Acid that are not recorded within the financial statements of the • Our analysis takes into consideration the potential acquirers who may have an interest in Bank and includes use of both the Market and Income approaches. acquiring Acid and the approaches such acquirers may take when assessing the value • Our “Market Approach” is based on a capitalisation of earnings derived from broadly of the Bank. However, we have not tested the market as to potential market interest. comparable transactions and listed companies, where we have assessed earnings • In undertaking our analysis, we have taken into consideration the evidence provided by multiples we consider applicable to the valuation of Acid taking into consideration the a review of broadly comparable listed companies, transactions and potential trade growth of the Bank’s future earnings and the risk of achieving these earnings relative to acquirers where we have benchmarked Acid’s performance against its peers. We have the Bank’s peers. We have applied these earnings multiples to our estimates of also considered the impact of recent developments in economic and financial market maintainable earnings. We consider our assessment of maintainable earnings to be conditions and the impact of these on the marketability of Acid. consistent with the level of ongoing earnings that potential acquirers would attribute to Acid. This is approach is primarily used to inform our view on the intangible asset value of Acid. • Within the “Income Approach” due to the absence of any Management prepared forecasts, our DCF analysis is based on various scenarios where we have discussed key inputs with management and where possible confirmed with independent market data. We have assessed the present day value of the assumed equity cash flows forecast to be generated by Acid at a discount rate that reflects the rate of return we consider potential equity investors would require in order to invest in the Bank. This relatively simplistic approach is primarily used to inform our view on the present value of the intangible asset value of Acid.

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 9 © 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 10 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Introduction and background Background to the transaction Pursuant to BoZ taking possession of Acid, it entered into an MOU with FRL presenting a period of exclusivity to consider and make an offer for, certain assets and liabilities of the Bank Background to the transaction Background to the transaction (continued...) • On 10 December 2010 with effect from 16:00 hours, in exercise of the powers • In addition to providing management services, we understand the MOU affords FRL the contained in section 81 (1) (c) (i) and (ii) of the BFSA, Chapter 387 of the Laws of opportunity to present an offer for certain assets and liabilities of Acid. Zambia the BoZ took possession of Finance Bank, Zambia Limited (“Acid” or the • FRL are entitled to an exclusivity period under the MOU to consider and make an offer “Bank”) citing contravention of the BFSA by the Bank's shareholders, directors, for certain assets and liabilities of Acid as well as to perform due diligence for a period management and senior staff. of 60 days after BoZ has provided all of the information requested by FRL. The latest • During its investigation of Acid, BoZ concluded that in its opinion the Bank was failing date for the offer is no more than two weeks after the due diligence completes. and would have continued to fail to conduct its business in accordance with the law and • In addition to the undertakings provided for in the MOU, BoZ are required to grant a in a manner that was unsafe and unsound. In particular, BoZ noted in its Statement of reasonable opportunity for a hearing of all interested parties (“the Hearing”). Affairs of the Assets and Liabilities of FBZL (the “SoA”), that Acid through its “shareholders, directors and senior management of Acid had failed in their duties to • The Hearing was held on 9 March 2011 with written submissions being accepted up to comply with the relevant laws, good governance and management practices”. The BoZ 17 March 2011. noted that Acid had violated various provisions of the BFSA and its Statutory Instruments (“SI”). This included granting significant single party loans which breached • Unsolicited offers have been received as part of the Hearing and written submissions SI 96 which instruct that the aggregate of a loan or an extension of credit to an entity although no proposals may be solicited under the terms of the MOU. Additional shall be considered a single exposure and shall not exceed, in the aggregate, 25% of information on the unsolicited offers is set out in the “Potential buyers” section of this the bank or financial institution’s regulatory capital and SI 97 where the provision of report. loans or advances to an insider will not exceed 100% of the regulatory capital. In BoZ’s • If the transfer of selected assets and liabilities does not take place, Acid will be liable to opinion, Acid would have become unable to continue its operations in the ordinary pay a compensation fee to FRL of R35m (ZMK23.8bn/c. US$5.2m). course of business. • BoZ has 14 days from the receipt of the FRL formal offer to either accept, decline or • Republic of Zambia, Government Gazette, Gazette Notice No. 815 of 2010, dated 31 seek clarification or amendments. We understand a lack of response will result in the December 2010 understanding that the FRL offer is accepted. Additional information on the FRL formal • The SoA was prepared by the BoZ with an effective date of 10 December 2010 and a offer is set out in the “FRL offer” section of this report. preparation date of 16 February 2011. • The action by BoZ to take possession of Acid was also deemed necessary to protect the interest of depositors and other creditors of the Bank and to ensure the stability of the banking sector in Zambia in general. • On 22 December 2010 the central bank removed Acid’s Board of Directors and entire management team. • In planning for and after taking possession of Acid, BoZ agreed to second staff from FirstRand Limited (“FRL” or “FirstRand”) to provide ongoing management services under the terms of the MOU.

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 11 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Introduction and background Valuation approach The MOU contains Valuation Principles under which BoZ and FRL have sought to conclude a transaction MOU Appendix 4, Valuation Principles Observation

1. “General Principles • The General Principles provide a broad understanding of the value to be contributed by FRL although they do not specifically deal with the value that BoZ/the The Parties record and acknowledge that FirstRand will be safeguarding value and Government of Zambia will bring to the value of Acid including, inter alia: adding value to Finance Bank by assisting BOZ in the manner contemplated in this • the provision of guarantees to the depositors and creditors of Acid MOU. The Parties recognise that FirstRand and its Affiliates should not be • maintaining Governmental and State affiliated deposits with Acid disadvantaged in the valuation of any Selected Assets and Liabilities as a result of • other actions taken to stabilise the Zambian financial system that may positively the value added by FirstRand by assisting BOZ in the manner contemplated in the impact on Acid MOU. The Parties shall endeavour to fairly recognise these factors in any agreed transfer or in trying to reach agreement to transfer. 2. Liabilities • If FRL assumes any liabilities these will be transferred at the nominal value of the obligation i.e. at the full face value. Verified depositor liabilities (including balances from other financial institutions), and • Both deposits and valid liabilities are currently guaranteed by BoZ/the Government of other non-banking liabilities with and to the extent it constitutes a legally valid and Zambia (i.e. the full obligation recorded in the accounts of Acid are underwritten ) enforceable claim, to be valued at nominal value as at the date of transfer. and those obligations would need to be assumed at the full obligation by FRL. 3. Assets • The MOU makes provision for FRL to acquire the gross loans and advances book adjusting for the greater of: 3.1 Loans and advances, credit balances on transmission accounts, credit card account balances, balances to other financial institutions and other customer related assets will be valued at face value as at the date of transfer, less the greater of: 3.1.1. any amounts provisioned against such face value in accordance with • any provision required by FRL in terms of its methodologies based on Basel II FirstRand’s provisioning methodology based on Basel II default provision principles; definitions and as refined for FirstRand’s ex-South Africa subsidiaries; or 3.1.2. any amounts provisioned against such face value in accordance with • any provision required by Acid in terms of statutory provisions laid out by BoZ. statutory provisioning policies as stipulated by the Bank of Zambia.

FirstRand will make available to BOZ detailed calculations relating to the determination of the provision amount to allow for scrutiny and verification of the proposed valuation.

Note: We have reviewed the MOU but legal due diligence would be required to confirm our understanding of the provisions Source: MOU, Appendix 4

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 12 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Introduction and background Valuation approach The Valuation Principles within the MOU include the potential for an intangible asset value, while the MOU sets out a compensation fee of c.ZMK23.8bn payable to FRL in the instance of failing to reach an agreed sale

MOU Appendix 4, Valuation Principles Observation

3.2 Investment securities and government bonds to be valued at net realisable value • Government securities and bonds are required to be valued at the net realisable as at the date of transfer. value of those securities and bonds i.e. market valued.

3.3 Fixed and moveable assets, including but not limited to immovable property assets, • The property assets (primarily buildings and equipment) are required to be valued at information technology infrastructure (including hardware and software), vehicles, the net realisable value of those assets i.e. market value. machinery, office equipment, furniture and fittings which do not form part of immoveable property, artworks, displays, signage, and stationary, shall be valued at net realisable value as determined between third parties on an arm’s length basis, taking into account the General Principle stated in 1 above. 3.4 Intangible assets, including trademarks, designs, or patents shall be valued at net • While the defined intangible assets do not apply in the case of Acid, the definition in realisable value as determined between third parties on an arms’ length basis, the MOU does not limit the intangible assets to only those described. taking into account the General Principle stated in 1 above.” • Intangible assets of Acid include the network, relationships, established workforce, established deposit book and goodwill. MOU Compensation fee Observation

2.6.2 Subject to Clause 2.6.3, FirstRand shall be entitled to a compensation fee • The MOU makes provision for a payment to FRL of ZAR35m (c.ZMK23.8bn) in the (“Compensation Fee”) calculated on the basis set out in Part II of Appendix 8 instance that the transfer of selected assets and liabilities does not occur in terms of (Secondment Fee) if (i) no transfer to FNB Zambia of Selected Assets and the MOU. Liabilities occurs in terms of Clause 6 (FirstRand Offer) within 90 days of receipt by • The implication is that a failure to transact or a desire to market the Bank to another BOZ of the FirstRand Offer in terms of Clause 6.1 (FirstRand Offer) (or such longer potential acquirer would result in compensation being payable to FRL as well as BoZ period as FirstRand may agree), (ii) this MOU is terminated by FirstRand in assuming all risk associated with marketing the business. accordance with Clause 11 (Termination) or (iii) any provision of this MOU provides for the payment of the Compensation Fee;

Appendix 8, paragraph 2 ZAR 35 million irrespective of the time spent on the project or duration of the Secondment.

Source: MOU, Appendix 4

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 13 © 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 14 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Market Footprint Through its 34 branches, 16 agencies and 61 ATMs, Acid provides a national footprint including numerous previously unbanked rural areas

Acid footprint Banking footprint • Acid was incorporated in 1986 and has expanded through both organic growth and a series of strategic partnerships and projects, to being one of the most significant banks in Zambia. • The bank employed 667 personnel and has a total of 34 branches and 16 agencies across ▪ Mpulungu Zambia as well as maintaining 61 ATMs. ▪ Mbala 8 • The Bank offers a relatively full range of banking products to the public and private sectors

▪ Nakonde including international investors, multi-national organisations, development and aid- agencies, non-governmental organisations, major local corporations, government and its ▪ Isoka * agencies and other financial institutions. Amongst the banking products on offer are savings ▪ Kasama accounts, current accounts, student pride accounts, senior citizens accounts, fixed deposit ▪ Chinsali * accounts, internet banking, pensioner accounts and money transfer via Money Gram * Samfya ▪ service. ▪ Mwinilunga * ▪ Mpika • Of the 18 Zambian banks at 10 December 2010, Acid was the only one present in the areas ▪ Solwezi ▪ Chililabombwe of Chinsali, Isoka, Kabompo, Kaoma, Kasumbalesa, Katete, Mwinilunga, Samfya, Serenje 4 Chingola ▪ ▪ Mufulira and Sesheke. It had improved accessibility for its customers to access funds through ATMs 6 Kitwe ▪ ▪ Ndola and the increasing popularity of internet banking. ▪ Serenje * 2 ▪ Luanshya • We note that Samfya, one of the rural branches, had recorded the highest number of users ▪ Kabompo * ▪ Chipata as at 10 December 2010. ▪ Kabwe ▪ Katete *

▪ Kaoma 3 2 ▪ Chongwe * ▪ Lusaka 17

▪ Monze ▪ Chirundu

▪ Choma 7 * Sesheke ▪ ▪ Kalomo ▪ Livingstone

Source: Management; Statement of Affairs

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 15 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Market Zambia history Real GDP growth has averaged in excess of 6% in the last few years which is forecast to continue while inflation is projected to decline

Economic position Zambia economic development and outlook IMF GDP and average inflation growth 2006 – 2011 • The Zambian economy has historically experienced relatively low levels of GDP generation 16.0% and the country has been highly indebted. 13.4% • In April 2005, the International Monetary Fund (“IMF”) and the World Bank's International 14.0% 12.4% Development Association (“IDA”) provided Zambia significant debt service relief and debt 12.0% 10.7% forgiveness under the Heavily Indebted Poor Countries program (“HIPC”) of c.U.S.$6 billion. 10.0% 9.0% 8.2% In July 2005, the G-8 (“G-8”) agreed on a proposal to cancel 100% of outstanding debt of 7.5% 8.0% eligible HIPC countries to the IMF, African Development Fund and IDA including Zambia. 6.2% 6.2% 6.3% 6.6% 6.4% 5.7% Zambia also completed a Poverty Reduction and Growth Facility (“PRGF”) arrangement with 6.0% the IMF for the period 2008-2011. 4.0% • The Zambian Government is currently pursuing an economic diversification programme to 2.0% reduce the economy's reliance on the copper industry. This initiative seeks to exploit other 0.0% components of Zambia's rich resource base by promoting agriculture, tourism, gemstone 2006 2007 2008 2009 2010 2011 mining, and hydropower. The government of Zambia is also seeking to create an environment that encourages entrepreneurship and private-sector led growth. Real GDP % growth Average inflation % growth • More recently, Zambia’s economy has begun to stabilise with average inflation in 2006-2008 Copper trends 2009 - 2010 of 10.7%, real GDP growth of 6.3% in 2009, decreasing interest rates and increasing levels of trade. 10,000 250 9,000 • The IMF anticipates real GDP growth of 6.6% in 2010 (7.1% per EIU) driven by a 8,000 200 considerable harvest, a surge in foreign direct investment and a rebound in copper prices ‘000 tonnes 7,000 and production. 6,000 150 5,000 • Overall, average inflation is forecast at 8.2% in 2010 declining to 7.5% in 2011. 1 4,000 100

US$/ tonne US$/ 3,000 • During 2010 the kwacha appreciated against the US$ by c.4.9% driven by a c.40% rise in 2,000 50 copper prices. As copper price growth begins to slow, import demand increases, the US 1,000 dollar strengthens and aid inflows slow, the EIU expects the kwacha to return to a trend of 0 0 gradual depreciation in 2011-12. This is however expected to be partially mitigated by Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 increases in production of the mineral and an increase in public borrowing for large infrastructure projects. Overall, the kwacha is forecast to depreciate by 3.7% to ZMK’4,973: 2009 2010 US$1 in 2011 and by 5% to ZMK’5,223: US$1 in 2012. 2 Copper, LME (US$/ tonne) Copper in concentrates, production ('000 tonnes)

Sources: imf.org, World Economic Outlook Oct 2010; U.S. department of State Background note: Zambia, 13 December 2010; EIU Sources: 1 - imf.org; 2 - EIU Country Report – Zambia, February 2011 Country Report – Zambia, February 2011

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 16 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Market Global banking outlook While banks in the emerging market have outperformed those in developed countries since the onset of the global financial crisis, increased capital requirements are likely to act as a constraint on future growth Global banking developments Global banking outlook • The banking market (and especially the Western European banking market) is characterised Banking sector equity developments since September 2007 by stringent national and international regulations on capital requirements. These are (Sept 07 = 1) governed by the Bank of International Settlements, commonly referred to as the Basel regulations. 1.4 • The recent global banking crisis fuelled by a liquidity shortfall in the U.S.A. and Europe has 1.2 resulted in the collapse of large financial institutions, the bailout of banks by governments and downturns in markets around the world. The UN annual report (2010) reflects a difficult 1 economic outlook for Europe's debt-laden countries in 2011, stating "countries entrenched in fiscal crises, such as Greece, Ireland, Portugal and Spain... will either remain in recession or 0.8 see minimal recovery at best ”1 .

0.6 • Emerging market economies were also affected by the global financial crisis but not to the same degree as the fully developed economic countries. Since the second quarter of 2009, 0.4 there have been signs of improved stability and the beginnings of recovery: “emerging market economies have begun to outperform advanced economies both in terms of 0.2 economic growth and in asset price valuations ”2 .

0 • The graph alongside clearly indicates the relative outperformance of emerging market banks in comparison to developed country banks since the onset of the global financial crisis. • Following the banking crisis, global banking regulators set Basel III, a new key capital ratio requirement of 4.5% (up from the 2% level) plus a further buffer of 2.5%. Banks whose

FTSE DEVELOPED BANKS $ - PRICE INDEX FTSE EMERG BANKS $ - PRICE INDEX capital falls below the 7% hurdle will face restrictions on paying dividends and discretionary

FTSE EMEA BANKS $ - PRICE INDEX FTSE EMERG EMEA BANKS $ - PRICE INDEX bonuses. The new rules will be phased in from January 2013 through to January 2019. FTSE WORLD BANKS $ - PRICE INDEX • The need to maintain a certain proportion of core capital against the bank’s risk weighted assets represents a major growth constraint for a bank.

Sources: 1 - The Wall Street Journal 18 January 2011; 2- www.bis.org , BIS paper No 54; FT.com, Basel rewrites capital rules for banks, 12 Sept 2010; Citigroup Smith Barney report, “How to skin a cat”, September Source: Thomson Datastream 2003

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 17 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Market Zambian banking market The Zambian banking market is relatively undeveloped with a large portion of the population unbanked, although modest growth has been experienced since 2005

Zambian banking market • The Government of the Republic of Zambia (“GRZ”) has implemented the Financial Sector Development Plan (“FSDP”) which represents a comprehensive strategy to address the current weaknesses in the Zambian financial system and its limited role in the economy. The FSDP was initially run from 2004-2009 and has now been extended to cover the period 2010 – 2012. • An initiative of the FSDP is the FinScope Zambia survey, last carried out in 2009, the findings of which are detailed below: ‒ in 2009 there were approximately 6.4million adults in Zambia of which 62% lived in rural areas; ‒ a large proportion of adults lived in poverty and did not have access to basic amenities such as safe drinking water and sanitation; ‒ claimed home ownership was high, but very few people had title deeds for the land they lived on; and ‒ overall, farming income and self-employment were the two biggest earners and most adults earned their income on an irregular and inconsistent basis. • Other findings in the survey were that financial inclusion (which included the use of banking services, use of non-bank financial institutions and use of informal financial services) extended to 37.3% of the population, a growth of only 3.6% since 2005. Inclusion in urban and rural areas had reached levels of 42% and 34.4%, respectively. • The most significant barriers to expanding the proportion of the banked population appeared to be low income followed by the affordability of banking products and services. Additionally, only 2.6% of the unbanked had the necessary documentation under Know Your Customer (“KYC”) requirements although, it is noted that these requirements are not currently imposed. • The survey concluded that the expansion of the banking market in Zambia has been driven by new bank products and services on offer which are improving service delivery to existing customers. The ratio of the number of services offered by banks had increased from an average of two products per person in 2005 to three products per person in 2009. Additionally the survey suggested that the impact of the recent global financial crisis was most significant at the grassroots level in Zambia, with many people having to take up credit to meet their needs.

Sources: FinScope - http://www.finscope.co.za/zambia.html ; FinScope Zambia 2009 Top Line Findings, Draft Report, June 2010

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 18 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Market Zambian banking market The potential for growth in the Zambian banking market is significant with expected increases in GDP, per capita income and population by 2015

Drivers of banking market growth Zambian banking market

Zambia 2010 2011 2012 2013 2014 2015 CAGR • Key factors driving structural growth in banking systems are generally considered to include GDP (USD bn) 15.69 17.34 18.85 20.62 22.77 25.18 9.9% wealth levels, levels of banking penetration and population growth. % growth 10.5% 8.7% 9.4% 10.4% 10.6% • Per capita income is a measure of wealth which is a determinant of credit demand and Per capita income system liquidity; furthermore countries with higher per capita income demand more products (USD m) 1,286 1,395 1,487 1,596 1,720 1,856 7.6% related to wealth management whilst those with lower per capita income demand more % growth 8.5% 6.6% 7.3% 7.8% 7.9% basic banking products.

Population (m) 13.30 13.63 13.97 14.32 14.68 15.05 2.5% • Levels of penetration can be measured by the banking assets / GDP ratio. Low levels of the % growth 2.50% 2.5% 2.5% 2.5% 2.5% ratio indicate that banking is un-established in the system although conversely it is likely to Banking assets/ GDP provide opportunities. As the level of banking assets / GDP increase, fewer opportunities for 556% banking institutions are likely to exist. Relative to other African countries, Zambia has one of 600% the lowest banking assets/ GDP ratios at 32% indicating that there are significant 500% opportunities for banking institutions to grow. In comparison, the UK has approximately over 400% 500% banking assets/ GDP; a much more saturated market. 300% • Population growth (together with high per capita income) is considered crucial for volume 200% 153% growth in the system and is likely to present more opportunities to increase banking 99% services. 52% 59% 60% 100% 23% 32% 36% 37% 46% Banking assets/ assets/ Banking GDP 12% 16% 0% • Additionally, measurements of market share, size and capitalisation are important. Markets that are fragmented present fewer opportunities and dilute earnings capacity due to competition. The size of a business provides advantages, including diversification of revenue by geography and economies of scale which may be perceived to reduce risk. GDP and inflation forecasts Further, a higher level of capital for a bank facilitates the defence of market share. 9.0% 8.2% • The IMF has forecast a Zambian GDP CAGR of 9.9% in the period 2010 – 2015 coupled 7.5% 8.0% 7.3% 7.4% 6.6% 6.7% 6.5% 6.8% with an annual growth rate of 7.6% in per capita income in the country. In addition, the 7.0% 6.4% 5.5% Zambian population is expected to increase at c.2.5% per annum to number 15 million by 6.0% 5.0% 5.0% 5.0% 2015. 4.0% 3.0% • Financial institutions currently provide only basic services to the Zambian market. 2.0% • The potential for growth is, however, significant albeit from a low base. As the GDP, per Percentage growth Percentage 1.0% 0.0% capita income and population continue to increase, people will demand more 2010 2011 2012 2013 2014 2015 comprehensive and complex services from their banking institutions. Real GDP forecast % growth Average inflation forecast % growth Sources: IMF; World Population Datasheet; ECB; Resbank

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 19 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Market Zambian banking market Total banking assets, deposits and loans and advances have grown in excess of 20% pa since 2006, with loans and advances being c.50% of the deposit book

Drivers of banking market growth Zambian banking market

Total Assets • Since 2006 the total assets held by banks in Zambia have increased at a CAGR of 21.2% to ZMK’23tr in 2010.

25,000,000 23,037,985 • Deposit balances have seen similar increases from 2006 (ZMK’7.9tr) to ZMK’17.2tr in 2010 at a CAGR of 21.6%. 20,000,000 18,525,606 • Loans and advances awarded by the Zambian banking community have grown in line with 17,146,627 deposit balances at a CAGR of 22.3% and have generally represented between 45% and 15,000,000 13,779,299 54% of the total deposit balances. As at 2010, loans and advances corresponded to 46.8% of total deposits for the banking sector. 10,675,230 10,000,000 • Given that in 2009, 62.7% of the Zambian population did not use any kind of banking or

ZMK’ millions ZMK’ financial services, the potential for the banking market to grow is significant.

5,000,000 • As mentioned above growth will also be further driven by the increasing population, GDP and per capita income. 0 2006 2007 2008 2009 2010

Loans and Advances and deposit balances

20,000,000 17,243,973 18,000,000 16,000,000 13,377,819 14,000,000 12,203,524 12,000,000 9,928,064 10,000,000 7,886,471

ZMK‘ millions ZMK‘ 8,000,000 6,000,000 7,596,371; 62.2% 8,073,418; 46.8% 4,000,000 5,335,338,53.7% 2,000,000 7,167,692; 53.6% 3,603,012; 45.7% 0 2006 2007 2008 2009 2010

Loans and advances Deposit balance Source: IMF; World Population Datasheet

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 20 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Market Other market participants Acid is one of the 18 Commercial Listed Banks in Zambia and as at December 2010 was ranked 7 th by deposit base and 5 th by the level of loans and advances

Zambian banking market participants Other market participants • Acid is one of the 18 ‘Commercial Listed Banks’ operating at 26 May 2011 under the Rank by deposit Banking and Financial Services Act of 1994. ‘Commercial Listed Banks’ comprise those Established in base/ loans and financial services businesses that conduct banking business in Zambia. Name Abbreviation Zambia advances • Access Bank provides retail and commercial services in Zambia and aims to be one of the top five banks in Zambia by 2012 measured by, amongst other things, deposits, customer Access Bank Zambia ACC 2008 10/ 10 service and trade finance. African Banking Corporation Zambia ABC 1999 14/ 9 • African Banking Corporation is a subsidiary of ABC Holdings Limited the parent company of Bank of China (Zambia) BOC 1997 5/ 14 a number of sub-Saharan Africa banks operating under the BancABC brand that offer a diverse range of financial services including personal, business and corporate banking as Barclays Bank Zambia BBZ 1918 1/ 2 well as asset management, stock broking and treasury services. It operates as a retail bank Cavmont Capital Bank CCB 2004 13/ 16 in Zambia. Citibank Zambia CITI 1979 8/ 8 • Bank of China currently has only one branch in Zambia (in Lusaka) but holds a large Ecobank Zambia ECO 1985 16/ 13 number of customer deposits (ranked 5 th by deposit base). Acid Acid 1986 7/ 5 • Barclays employs more than 1500 people in 90 offices around the country. It provides First Alliance Bank Zambia FAB 1994 12/ 11 banking for individual customers and corporate clients. In 1991 Barclays opened the first business banking centre in Lusaka. First National Bank Zambia FNBZ 2009 11/ 12 • Cavmont Capital Bank was established in 2004 when Cavmont Merchant Bank Limited and Indo- Zambia Bank INDO 1984 6/ 7 New Capital Bank Plc merged. It is a fully owned subsidiary of Cavmont Capital Holdings Intermarket Banking Corporation IBC n/a 15/ 15 Zambia, a financial conglomerate in Africa listed on the Lusaka Stock Exchange. International Commercial Bank Zambia ICBZ 2009 18/ 18 • Citibank has a two-branch network and a number of correspondent banking arrangements Investrust Bank INVEST 1996 9/ 6 covering the remainder of the Zambian provinces. It is the 8 th largest by deposit base and Standard Chartered Bank plc SCB 1906 2/ 4 loans and advances. Stanbic Bank Zambia STAN 1956 4/ 3 • Ecobank is a full service regional banking institution in Africa owned and managed by the African private sector. In October 1985, Ecobank was incorporated with an authorised share United Bank for Africa Zambia UBA n/a 17/ 17 capital of US$100 million. Zambia National Commercial Bank ZNCB 1969 3/ 1 • First Alliance is a small financial services provider in Zambia providing retail services to the communities it services. Its niche market is corporate clients in the mining and manufacturing sectors of the Zambian economy. • First National is a FirstRand subsidiary providing retail banking services in Zambia. FirstRand only have one branch present in the country. Source: BoZ website, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 21 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Market Other market participants Acid is one of the 18 Commercial Listed Banks in Zambia and as at December 2010 was ranked 7 th by deposit base and 5 th by the level of loans and advances (cont...)

Other market participants (cont...) Other market participants (cont...) • Indo-Zambia is a significant employer in the communities that it serves and is an active • Zambia National Commercial was founded in 1969 by the Government of Zambia. It is participant in corporate social responsibilities in Zambia. It has a network of 14 branches one of the leading banks in Zambia operating c.57 branches and has a partnership with in various parts of the country. It is 40% owned by the Government of Zambia. the Zambian Post-office with 100 posts over the country that allow customers to deposit and withdraw funds from their accounts. Approximately 29% of its shares are listed on • Intermarket Banking Corporation is 80% owned by Afriland First Bank Group (acquired in the Lusaka Stock Exchange, c.25% owned by the Government of Zambia and c.46% March 2010). The group has a branch in Lusaka and is expected to switch to the Afriland owned by Rabobank. brand in 2013. • International Commercial is a subsidiary of ICB Financial Group Holdings, the holding company for several banks operating in Africa, Asia and Europe. The ICB Banking Group has within the last fourteen years established or acquired commercial banks in Africa, Asia and Europe and operates as a retail bank in Zambia. • Investrust is a purely Zambian bank providing retail and commercial banking services. It has a network of 14 branches and three agencies. • Standard Chartered provides retail and commercial services in Zambia through 18 branches. Established in 1906 it is one of the better placed banks in Zambia and offers both consumer and wholesale banking products ranging from personal banking to structured trade products (trade finance and cash management). • Stanbic Bank is part of Standard Bank Group Limited, which is based in South Africa and listed on the Johannesburg Securities Exchange. It is one of the leading four banks in Zambia and has branches in five of the Zambian provinces. In 1992 it acquired the African branches of ANZ Grindlays Bank as part of its African business development. • United Bank for Africa was the product of a merger between UBA and Standard Trust Bank (the 3rd and 5th largest banks in Nigeria), and subsequent acquisition of Continental Trust Bank. They provide wholesale, commercial, consumer and transactional banking services as well as investment banking, asset management, wealth management, merchant banking and securities services. Within the African business clusters, it provides wholesale, correspondent, commercial, consumer and transactional banking services to target customers.

Source: BoZ website, LuSE; Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 22 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Market Acid vs. other market participants The four largest banks in Zambia account for in excess of 65% of the market while Acid is one of the largest of the remaining relatively fragmented operators

Market share statistics at 31 December 2010 Market share as at 31 December 2010 Market share (% loans and advances) • Currently the Zambian banking market is dominated by four major banks: Barclays (with 1% 0% 19% and 18% of the total loans and advances and deposits, respectively), Zambia National 2% 0% Commercial (20% and 15%), Standard Chartered (14% and 18%) and Stanbic (16% and 1% 1% 1% 14%). 1% 2% • As at 31 December 2010, Acid was the seventh largest commercial bank in Zambia as 1% 5% 19% measured by its deposit base (4%) and it was the fifth largest as measured by loans and 6% advances (6%). • We note that this includes a number of the loans and deposits that have since been fully 4% provided, however we consider that this is an indication of the financial scale and structure that the Acid infrastructure is able to support. 3% 20% BBZ ZNCB SCB STAN CITI INDO • Additionally we note that the market is not saturated and there is significant growth opportunities in the market. Management have indicated this could be achieved by 16% Acid BOC FAB competing for existing customers of the big four banks as well as growing, as the banked- ABC INVEST CCB 14% population increases. Acid is currently the only of the 18 banks present in Zambia with IBC ACC FNBZ locations in all of its nine provinces enabling it to reach a large proportion of the population. ECO UBA ICBZ Market share (% deposits) 1% 1% 1% 0% 3% 2% 0% 1% 1% 1% 18%

10%

4% BBZ ZNCB SCB 15% 5% STAN CITI INDO

4% Acid BOC FAB

ABC INVEST CCB 14% 18% IBC ACC FNBZ

ECO UBA ICBZ

Source: BoZ website, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 23 © 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 24 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Financial position and performance Historical Acid experienced significant growth up to 2006 before slowing substantially; the latest audited accounts are for 2008 and there are concerns over the reliability of the 2009 and 2010 performance figures Income statement Historical financials • We have included historical financial information for Acid although we note that the 31 ZMK’ millions 2007 2008 2009 2010 December 2008 financial statements are the most recently audited results. Given the prevalence of related party transactions discovered as part of the Possession of the Bank Interest income 123,197 147,096 160,770 119,466 there are concerns around the reliability of the performance information in 2009 and 2010. ---- Interest expense (25,200) (30,248) (52,440) (43,276) • Since 2002 the Bank experienced substantial growth, benefiting from, inter alia, growth in emerging market economies. Acid grew substantially in the period to 2006 experiencing a Net interest income 97,997 116,848 108,329 76,190 c.CAGR of 41% in profit before tax (“PBT”) and loan loss provisions. % growth 54.8% 19.2% -7.3% -29.7% • In the period subsequent to this, the same benchmarks experienced substantially lower Provision for loan losses (4,592) (39,338) (6,104) (24,611) growth (and indeed negative growth was experienced in PBT and loan loss provisions) following the slowing of the copper market and the general economic downturn of the Net interest income (after provision for loan losses) 93,405 77,510 102,225 51,579 banking market. % growth 50.3% -17.0% 31.9% -49.5% • Shown alongside are the audited financial results for 2007-08 and the prudential returns submitted to BoZ for 2009-10 with no audited financial statements available for these latter Non-interest and other income 72,787 104,646 141,810 100,017 % growth 13.0% 43.8% 35.5% -29.5% periods. % of net interest income 74.3% 89.6% 130.9% 131.3% • Since 2007 net interest income has slowed, followed by periods of negative growth in 2009 and 2010. Net interest and other income 166,192 182,156 244,035 151,596 % growth 31.3% 9.6% 34.0% -37.9% • We note that 2010 net interest income dropped below 2007 levels driven by the suspension of a number of loans and advances and interest associated with these. This, coupled with Non-interest expense (93,215) (109,136) (133,423) (148,897) the substantially higher level of loan loss provisions in 2010, lead to net interest income % growth 36.2% 17.1% 22.3% 11.6% (after provisions for loan losses) amounting to approximately half of its level in 2009 of % of total income 54.6% 49.3% 53.3% 84.5% ZMK51.6bn.

Profit / (loss) before tax 72,977 73,020 110,612 2,699 • Non-interest and other income has been a more stable stream of earnings growing to 2009, only experiencing a drop in 2010. (30,577) (27,339) (43,044) (5,892) Tax • Non-interest expense has grown steadily over the four years to 2010 and given that income Effective tax rate 41.9% 37.4% 38.9% 218.3% has decreased over the period, non-interest expense as a proportion of total income has grown to c.85%. Profit / (loss) after tax 42,400 45,681 67,568 (3,193) % growth 7.8% 7.7% 47.9% -104.7% • The Bank went from reported (prudential) profits before tax in 2009 of ZMK110.6bn to ZMK2.7bn in 2010, a drop of 98% as a result of the recognition of the number of unrecoverable loans and interest associated with these in the year. • Similarly, reported profit after tax fell from c.ZMK67.6bn to a loss of c.ZMK3.2bn over a one year period to 2010. • We note that the previously reported numbers may not be representative of the Bank’s true Note: 2007-08 per audited financial statements; 2009-10 per BoZ prudential returns position to date, however they do provide an indication of the capacity levels supportable by Source: Audited financial statements; Management the Bank.

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 25 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Financial position and performance Historical After the significant provisioning exercise undertaken as a result of two inspections carried out by BoZ, the Bank had a relatively low capital base at 2010 and required emergency funding

Balance sheet Historical financials • As with the income statements presented above, the reliability of the 2009 and 2010 31 Dec 31 Dec 31 Dec 10 Dec balance sheets are limited as they are unaudited and subject to investigation. We have ZMK’ millions 2007 2008 2009 2010 presented the balance sheet for 2010 as per the Statement of Affairs as at 10 December 2010 given the significant adjustments that were made to the management accounts. The Assets Notes and cash 31,708 35,605 38,883 78,909 nature of the specific additional provisioning provided in the Statement of Affairs indicates Balances with Bank of Zambia 84,110 443,405 193,820 197,768 that the recoverability of loans and advances and related interest and fees accrued in 2009 Balances with domestic institutions 3,281 5,060 15,666 44,319 and 2010, were uncertain. Balances with foreign institutions 302,816 18,466 57,450 92,994 Investments in securities 93,276 241,978 269,993 408,842 • The loans and advances to deposits ratio was historically maintained at between c.54% and Net loans and advances 717,180 649,508 775,850 405,428 70% excluding 2010. In 2010, per the Statement of Affairs, the level of loans and advances Bills of exchange ---- was adjusted significantly to reflect their fair value. In addition, adjustments were made for Inter-branch 8,372 9,097 2,518 2,019 Fixed assets 61,235 76,647 79,926 87,998 insider lending breaches, lending practices and poor credit origination practices. The loans Other assets 86,881 74,787 75,005 85,421 and advances: deposits ratio at this time stood at c.36%.

Total assets 1,388,859 1,554,553 1,509,111 1,403,699 • Government securities held to maturity grew substantially as a proportion of total assets from 6.7% in 2007 to 29.1% in 2010. • Following two inspections in 2009/10 and in 2010, the net asset position of Acid has Liabilities and shareholders equity Deposits 1,030,305 1,214,773 1,127,605 1,139,781 declined significantly as at 10 December 2010 as a result of a detailed provisioning exercise Balances due to Bank of Zambia - 57,395 34,527 - undertaken by BoZ once the Bank was in the possession of BoZ. Balances due to domestic institutions 114,146 24,862 46,942 60,441 Balances due to foreign institutions 22,631 22,708 16,380 33,216 • With shareholder equity of only ZMK34.3bn, the Bank is significantly under-capitalised for Bills of exchange ---- the size of its loan book. Given requirements of single party exposure (no more than 25% of Inter-branch ---- regulatory capital) and that of total exposures (not exceeding 100% of the regulatory capital) 68,619 61,273 77,902 135,939 Other liabilities it may fail to meet these criteria unless it is sufficiently capitalised. Other borrowed funds ---- • As a result, the capital adequacy ratio which grew from 11% in 2007 to 13.6% in 2009 fell to Total liabilities 1,235,701 1,381,011 1,303,356 1,369,377 2.4% in 2010 whilst ROE previously at 26% - 33% fell to c.-9%. 153,158 173,542 205,755 34,322 Shareholders equity • Fixed assets of ZMK85.4bn primarily relate to the 50 branches and agencies distributed 1,388,859 1,554,553 1,509,111 1,403,699 across Zambia. Total liabilities and shareholders equity • We note that the Statement of Affairs was written as at the point immediately prior to BoZ Loans and advances to deposits 69.6% 53.5% 68.8% 35.6% taking possession of Acid. Upon taking possession of Acid, BoZ injected ZMK180bn in Investments in securities as % of assets 6.7% 15.6% 17.9% 29.1% emergency funding to secure the stability of Acid and the broader Zambian banking market. Capital adequacy ratio 11.0% 11.2% 13.6% 2.4% In addition, the Government provided a guarantee for all genuine depositors and creditors. ROE 27.7% 26.3% 32.8% -9.3% Note: 2007-09 per prudential returns, 2010 per SoA. Source: Management; BoZ

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 26 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Financial position and performance Key relationships/ concentrations Acid has a number of key relationships that contribute to a large proportion of the Bank’s income, with the top three accounting for c.47% of total income in 2010

FRA and PTA are two of Acid’s key relationships Key relationships / concentrations FRA balances and income 2010 - 2011 • Acid has a number of key relationships that contribute to a large proportion of the Bank’s income. Income from the top three accounts, account for c.47% of total income for 2010. 160,000 3,500

USDbalance and other incomes (ZMK’ millions) • The Food Reserve Agency (“FRA”) has an overdraft balance with Acid which charges an 140,000 3,000 average interest rate of c.21.1% and c.4.7% for commission income per annum. The

120,000 balance is highly seasonal, with September to December showing lower balances than the 2,500 remainder of the year. The average ZMK balance for 2010 was c.ZMK130bn. In 2010 total 100,000 2,000 income from the FRA relationship amounted to ZMK33.8bn, c.15.4% of 2010 total income. 80,000 We note that the balances for January and February 2011 for this account are significantly 1,500 60,000 lower than the average balance in 2010 at ZMK70.4bn.

1,000 • The Bank plays a major role in the collection and payment of fuel revenues payable to the 40,000 ZMK balance (ZMK’ millions) (ZMK’ balance ZMK Ministry of Energy and Water Development by oil companies upon purchase of fuel. Acid 20,000 500 guarantees payment by way of a letter of credit. The customer will pay the amount into an

- - Acid escrow account for the PTA bank and take their allotted fuel. PTA withdraw money

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb periodically from the relevant accounts and Acid earns a commission fee for the PTA transfer and for the letters of credit issued. In 2010, a total of ZMK33.5bn in revenue was 2010 2011 earned from the PTA relationship correspondent to 33.5% of total non-interest and other

Commission income Credit income ZMK balance USD balance income for the year. • The National Pension Scheme Authority (“NAPSA”) holds a number of deposits with Acid PTA balances and income 2010 - 2011 who earn approximately 8%-11.5% interest on these. The active accounts total 12 180,000 ZMK balance (ZMK’ millions) c.ZMK109.9bn, representing c.15.2% of the February balance sheet total deposits of 160,000 10 140,000 ZMK722.1bn. 8 120,000 • Acid is one of the leading collectors of the Zambian government tax revenue for the Zambia 100,000 6 Revenue Authority, although we understand relatively low fees are generated, although Acid 80,000 4 60,000 does benefit through the cash float maintained at the Bank. (ZMK’ millions) (ZMK’ 40,000 2 • Additionally Acid is the acting collection agent for Citibank in Zambia as the latter has no 20,000

USD balance and other incomes incomes other and balance USD branch presence in the country. Resultantly, Acid earn a fee for the provision of this service. - - • Acid has created an Alliance with Africa Supermarkets (trading as Shoprite Supermarkets) July May April June March

August in order to develop in-store banking facilities called money market services (which also January October January February February November December September expand the bank’s hours of operations and general accessibility). As at 10 December 2010 the Bank had Cairo Road Shoprite, Chilenje Shoprite, Livingstone Shoprite and Solwezi 2010 2011 Shoprite in operation. ZMK other income USD (ZMK) other income USD (ZMK) LC income

ZMK balance USD (ZMK) balance Source: Management, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 27 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Financial position and performance Forecast financials We have prepared a relatively simplistic scenario for valuation purposes for Acid assuming a standalone business beginning operations with capital of ZMK112.7bn

Balance sheet Assumptions

Balance sheet Normalised • In the absence of management forecasts, in order to assess the potential future Normalised Year 1 Year 2 Year 3 Year 4 performance of Acid we have prepared an illustrative performance scenario built on a Assets Notes and cash 66,171 63,347 59,060 57,118 59,291 number of assumptions based on management views or historical market trends having Balances with Bank of Zambia 136,097 136,097 136,097 136,097 136,097 ‘normalised’ the April 2011 balance sheet. This scenario reflects a possible outcome but Government bonds (rolled over) 70,056 70,056 98,179 121,380 146,521 Government bonds (from retained earnings) 28,123 23,200 25,141 26,538 changes in assumptions could result in a different outcome. Total government bonds 70,056 98,179 121,380 146,521 173,059 Due from other banks 52,761 52,761 52,761 52,761 52,761 • The initial scenario is based on a starting capital position of ZMK112.7bn (after accounting Treasury bills (rolled over) 217,442 217,442 304,733 376,743 454,778 Treasury bills (from retained earnings) 87,291 72,010 78,035 82,369 for the required capital injection into the Bank to reach a capital adequacy ratio of 10.8%), Total treasury bills 217,442 304,733 376,743 454,778 537,147 which takes into account the seasonality of the PTA deposit accounts. Net loans pre provisions 378,173 452,374 587,364 758,256 974,011 Loan loss provision (1,195) (5,744) (13,646) (24,903) (39,513) • The forecast is driven by the Acid balance sheet, with growth in deposits projected at 20% Net loans and advances 376,978 446,630 573,718 733,354 934,498 per annum, broadly in line with the market growth experienced to date (deposits across the % loans: deposits 48.2% 48.2% 52.1% 56.1% 60.0% Zambian banking sector grew at a CAGR of 21.6% between 2006 and 2010). Fixed assets 67,016 67,016 67,016 67,016 67,016 Other assets 59,828 59,828 59,828 59,828 59,828 • Loans and advances are projected to begin at c.48% to deposits, in line with the average of the other banks in the Zambian market as at December 2010. This ratio of loans to deposits Total assets 1,046,350 1,228,591 1,446,604 1,707,473 2,019,697 is grown to 60% of total deposits by year 4 of the forecast model, in line with management guidance. Liabilities and shareholders equity Deposits 782,866 939,439 1,127,327 1,352,792 1,623,351 • Balances held with the Bank of Zambia and advances due from other banks are maintained New debt raised 90,364 90,364 90,364 90,364 90,364 at current levels. Balances due to other banks and institutions 22,790 25,069 27,576 30,334 33,367 Other liabilities 37,662 41,428 45,571 50,128 55,141 • Government bonds and treasury bills are assumed to be rolled over and retained earnings are re-invested in both securities in the ratio 40% bonds, 60% treasury bills. Total liabilities 933,682 1,096,301 1,290,838 1,523,619 1,802,223 • Capital expenditure is assumed to equal depreciation and fixed and other assets are Opening capital 112,667 112,667 132,290 155,765 183,855 maintained at existing levels, in line with the view that the current level of branches provide Retained earnings - 29,814 63,653 100,270 significant infrastructure and footprint from which to grow the business further. P&L account - current year 29,814 33,839 36,618 38,398 Revaluation reserve • Emergency funding received from the Bank of Zambia at possession is assumed to be repaid in a standalone scenario with new inter-bank debt of ZMK90.4bn raised at an interest Shareholders equity 112,667 132,290 155,765 183,855 217,474 Sh equity to total assets 10.8% 10.8% 10.8% 10.8% 10.8% rate of 3.5%, in line with management guidance. • Balances due to other banks and other liabilities are grown at 10% per annum, slightly in Total liabilities and shareholders equity 1,046,350 1,228,591 1,446,604 1,707,473 2,019,697 excess of inflationary growth.

Dividend distribution - 10,191 10,364 8,528 4,778 • The ratio of shareholders equity: total assets is maintained at a level of 10.8% and any excess capital is distributed as dividends in each period where there is any excess. Source: Management, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 28 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Financial position and performance Forecast financials Acid’s income statement is driven by growth in the balance sheet, specifically the growth in deposits and results in a c.20% ROE over the projection period

Income statement Assumptions

Income statement • Acid’s income statement is driven by its balance sheet position over the four year forecast ZMK' millions Normalised Year 1 Year 2 Year 3 Year 4 period.

Interest and similar income 108,879 123,539 151,247 181,392 215,474 • Interest rates on loans and advances are currently considered by Management to be % Growth 13.5% 22.4% 19.9% 18.8% unsustainably high at an average of c.18%-20%. We have modelled an assumption that the Interest expense (25,092) (31,620) (42,530) (56,673) (74,908) average interest rate falls to 16.5% by year 4 in order to drive an increased and higher % Growth 26.0% 34.5% 33.3% 32.2% quality loan book. • Similarly, Management have indicated that the interest paid on deposits is low compared to Interest margin 83,786 91,919 108,717 124,719 140,566 % Growth 9.7% 18.3% 14.7% 12.7% the market (per prudential returns average interest paid on deposits is c.4% as at 31 December 2010). The current rate is below 3% per annum and this is assumed to increase to 4.75% by year 4 of the forecast period. Overall, the net interest margin reduces from Loan loss provison (1,195) (4,549) (7,903) (11,256) (14,610) % Growth 280.7% 73.7% 42.4% 29.8% c.18% to c.12% by year 4.

Net interest margin 82,591 87,370 100,815 113,462 125,956 • Provisions for loan losses are grown towards a target loan loss provision to net loans and % Growth 5.8% 15.4% 12.5% 11.0% advances of 1.5% by year 4.

Other income 88,788 97,445 106,946 117,373 128,817 • Other income in this scenario is grown at 9.75% (inflation plus a 2.75% margin) per annum. % Growth 9.7% 9.7% 9.7% 9.7% • The overall implication on net interest and other income is a growth of 9.7% in the first year Total income 171,379 184,815 207,760 230,835 254,772 followed by growth of approximately between 11% and 14% for the following three years. % Growth 7.8% 12.4% 11.1% 10.4% • A ZMK6bn fee is introduced in the normalised period which accounts for the management Existing staff expenses (66,942) (77,485) (89,689) (103,815) (120,166) salaries necessary to replace the seconded staff. Management have advised that staff salaries are considered to be too low currently and are forecast to nearly double by year 4. Other operating expenses incl. dep (53,868) (57,639) (61,673) (65,991) (70,610) • Other operating expenses, depreciation and operational losses are grown in-line with Total expenses (120,810) (135,124) (151,363) (169,806) (190,776) inflation for the forecast period. % Growth 11.8% 12.0% 12.2% 12.3% • A terminal growth rate of 7% is assumed and tax is applied at a rate of 40% compared to a Profit before tax 50,569 49,691 56,398 61,029 63,996 37.3% average effective tax rate for the period 2006-09. % Growth -1.7% 13.5% 8.2% 4.9% • Profit after tax growth slows from 13.5% in year 2 to 4.9% in year 4 driven by a tightening of

Tax (20,228) (19,876) (22,559) (24,412) (25,598) the margin and an increasing cost base. Tax rate 40.0% 40.0% 40.0% 40.0% 40.0% • Returns on equity are maintained above 20% for the initial three years before dropping to Profit after tax 30,342 29,814 33,839 36,618 38,398 19% in year 4 as costs increase and the net interest margin is reduced. % Growth -1.7% 13.5% 8.2% 4.9% ROE 26.9% 24.3% 23.5% 21.6% 19.1% Source: Management, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 29 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Financial position and performance Forecast financials As a sensitivity we have flexed the net interest margin, growth in non interest income and growth in deposits downwards

Balance sheet Assumptions Balance sheet Normalised • We have prepared a sensitivity to the initial scenario based on the same assumed capital at Normalised Year 1 Year 2 Year 3 Year 4 Assets inception of ZMK112.7bn. Notes and cash 66,171 55,338 45,342 38,669 37,719 Balances with Bank of Zambia 136,097 136,097 136,097 136,097 136,097 • We consider a slower growth in deposits of 18% per annum, marginally below market Government bonds (rolled over) 70,056 70,056 97,635 119,104 141,590 Government bonds (from retained earnings) 27,579 21,469 22,486 22,756 growth to date (2% per annum lower than the initial scenario). Total government bonds 70,056 97,635 119,104 141,590 164,346 Due from other banks 52,761 52,761 52,761 52,761 52,761 • As previously, all other assumptions are maintained at the same levels: Treasury bills (rolled over) 217,442 217,442 303,042 369,679 439,472 Treasury bills (from retained earnings) 85,600 66,637 69,793 70,630 ‒ Loans and advances are projected to begin at c.48% to deposits, in line with the average Total treasury bills 217,442 303,042 369,679 439,472 510,102 of the other banks in the Zambian market as at December 2010. This ratio of loans to Net loans pre provisions 378,173 444,834 567,949 720,972 910,682 Loan loss provision (1,195) (5,506) (12,934) (23,478) (37,138) deposits is grown to 60% of total deposits by year 4 of the forecast model, in line with management guidance. Net loans and advances 376,978 439,328 555,015 697,494 873,544 % loans: deposits 48.2% 48.2% 52.1% 56.1% 60.0% ‒ Balances held with the Bank of Zambia and advances due from other banks are Fixed assets 67,016 67,016 67,016 67,016 67,016 maintained at current levels. Other assets 59,828 59,828 59,828 59,828 59,828 ‒ Government bonds and treasury bills are assumed to be rolled over and retained

Total assets 1,046,350 1,211,045 1,404,843 1,632,928 1,901,413 earnings are re-invested in both securities in the ratio 40% bonds, 60% treasury bills. ‒ Capital expenditure is assumed to equal depreciation and fixed and other assets are Liabilities and shareholders equity maintained at existing levels, in line with the view that the current level of branches Deposits 782,866 923,782 1,090,063 1,286,274 1,517,803 Balances due to Bank of Zambia 0 0 0 0 0 provide significant infrastructure and footprint from which to grow the business further. New debt raised 90,364 90,364 90,364 90,364 90,364 Balances due to other banks and institutions 22,790 25,069 27,576 30,334 33,367 ‒ Emergency funding received from the Bank of Zambia at possession is assumed to be Other liabilities 37,662 41,428 45,571 50,128 55,141 repaid in a standalone scenario with new inter-bank debt of ZMK90.4bn raised at an interest rate of 3.5%, in line with management guidance. Total liabilities 933,682 1,080,644 1,253,574 1,457,100 1,696,675 ‒ Balances due to other banks and other liabilities are grown at 10% per annum, slightly in excess of inflationary growth. Opening capital 112,667 112,667 130,401 151,269 175,828 ‒ The ratio of shareholders equity: total assets is maintained at a level of 10.8% and any Retained earnings - 28,567 59,430 90,663 excess capital is distributed as dividends in each period where there is any excess. P&L account - current year 28,567 30,863 31,233 29,860

Shareholders equity 112,667 130,401 151,269 175,828 204,738 Sh equity to total assets 10.8% 10.8% 10.8% 10.8% 10.8%

Total liabilities and shareholders equity 1,046,350 1,211,045 1,404,843 1,632,928 1,901,413

Dividend distribution - 10,833 9,996 6,673 950

Source: Management, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 30 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Financial position and performance Forecast financials Relatively modest reductions in the net interest margin, growth in non interest income and growth in deposits results in a significant decrease in the profitability of Acid and in its ROE

Income statement Assumptions

Income statement • We have sensitised the initial scenario by reducing: ZMK' millions Normalised Year 1 Year 2 Year 3 Year 4 ‒ the average interest rates on loans and advances to 16.25% by year 4 (from 16.5% in Interest and similar income 108,879 121,727 146,573 172,534 200,882 scenario 1). % Growth 11.8% 20.4% 17.7% 16.4% ‒ similarly, the interest paid on deposits is assumed to increase to 5.0% by year 4 of the Interest expense (25,092) (31,902) (42,803) (56,702) (74,326) forecast period (from 4.75%) leading to an overall net interest margin reduction. % Growth 27.1% 34.2% 32.5% 31.1% ‒ non-interest and other income growth has been reduced to 2.5% (from 2.75%)on top of inflation. Interest margin 83,786 89,824 103,770 115,832 126,556 % Growth 7.2% 15.5% 11.6% 9.3% • The overall implication on income is growth of 6.6% in the first year followed by growth of approximately between 8% and 11% for the following three years. Loan loss provison (1,195) (4,311) (7,428) (10,544) (13,660) % Growth 260.8% 72.3% 42.0% 29.6% • Profit after tax growth slows from 8.0% in year 2 to negative 4.4% in year 4 driven by an tightening of the margin and increasing cost base. Net interest margin 82,591 85,513 96,342 105,288 112,896 % Growth 3.5% 12.7% 9.3% 7.2% • Returns on equity are maintained above 21% for the initial three year period, dropping to c.15% for year 4. Other income 88,788 97,223 106,459 116,573 127,647 % Growth 9.5% 9.5% 9.5% 9.5%

Total income 171,379 182,736 202,801 221,861 240,543 % Growth 6.6% 11.0% 9.4% 8.4%

Existing staff expenses (66,942) (77,485) (89,689) (103,815) (120,166)

Other operating expenses incl. dep (53,868) (57,639) (61,673) (65,991) (70,610)

Total expenses (120,810) (135,124) (151,363) (169,806) (190,776) % Growth 11.8% 12.0% 12.2% 12.3%

Profit before tax 50,569 47,612 51,439 52,055 49,766 % Growth -5.8% 8.0% 1.2% -4.4%

Tax (20,228) (19,045) (20,575) (20,822) (19,907) Tax rate 40.0% 40.0% 40.0% 40.0% 40.0%

Profit after tax 30,342 28,567 30,863 31,233 29,860 % Growth -5.8% 8.0% 1.2% -4.4% ROE 26.9% 24.3% 23.5% 21.6% 14.9% Source: Management, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 31 © 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 32 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Potential buyers We have identified a number of banks alongside FRL that we consider may be interested in pursuing an acquisition of Acid; to date, interest has been received from c.5 banks

Potential buyers Commentary • To consider the potential marketability of Acid and to assess whether an intangible asset Target Target business Scale M&A Likely Competition Overall (out geographies focus activity appetite issues of 25) value may be realised, we have analysed Zambian and sub-Saharan African market Name participants.

FirstRand Bank 5 5 5 2 5 0 22 • We have identified a number of banks alongside FRL that we consider may be interested in the acquisition of Acid. Citibank Zambia (Citigroup) 5 5 5 1 4 0 20 Credit Agricole 3 553 4 0 20 • To date the Bank has received approximately 5 other letters of expressions of interest in Bank of China (Zambia) 5 5 5 1 4 0 20 Acid however, under the terms of the MOU is constrained from engaging with any of these. Access Bank plc 5 5 3 1 3 0 17 Additionally from preliminary assessment, it appears that the interested parties have been 5 5 3 1 3 0 17 relatively small sub-Saharan regional operators who do not appear capable of financing an Ecobank Transactional Incorporated acquisition or the necessary future injection of capital. United Bank for Africa Zambia 5 5 2 2 3 0 17 African Banking Corporation 5 5 1 1 3 0 15 • FRL has been involved with the ongoing management of Acid since possession and now, Standard Chartered plc 5 5 5 3 2 -5 15 under the terms of the MOU, have presented an offer for certain assets and liabilities of 3 3 5 3 1 0 15 Acid. Acquisition of Acid would increase the FRL presence in Africa; the bank currently has HSBC Holdings plc one branch in Lusaka and operates at the bottom end of the market in terms of scale. Credit Suisse 4 4 5 2 0 0 15 Investrust Bank 5 5 1 1 2 0 14 • Amongst those that we have considered as credible potential acquirers are Citibank, Credit Standard Bank Group (Stanbic Bank) 5 5 5 1 2 -5 13 Agricole and the Bank of China: Barclays 5 5 5 1 2 -5 13 − Citibank is already present in Zambia and is one of the top 8 banks as ranked by deposit International Commercial Bank Zambia 5 5 1 1 1 0 13 base and loans advances. The acquisition of Acid could help to consolidate it’s position ABSA group 3 3 5 1 0 0 12 in the market, provide it with a substantial branch network and save fees that it currently Cavmont Capital Bank 5 5 1 1 0 0 12 pays to Acid for acting as its collection agent. It is worth noting that Citibank has opened few branches in the last few years. Intermarket Banking Corporation (Afriland 5 5 1 1 0 0 12 First Bank Group) − Credit Agricole have been increasing their presence in Africa in 2010 with two Zambia National Commercial Bank 5 5 2 1 2 -5 10 acquisitions – Banque Indosuez Mer Rouge in Djibouti and a 20% stake in Credit du First Alliance Bank Zambia 5 3 1 1 0 0 10 Maroc. They have the necessary scale and are not currently present in Zambia so the Nedbank 1 3 3 3 0 0 10 acquisition would provide an opportunity to expand into the country. Capitec Bank 2 3 2 1 1 0 9 − There is a long and well-entrenched relationship between China and Zambia and there Indo- Zambia Bank 5 5 1 1 0 -5 7 has been much investment in Zambia from the former. The Bank of China has been present in Zambia since 1997 and is ranked 14th by deposit base. The acquisition of Acid could help further consolidate its position in the Zambian banking market. It is worth noting that the Bank of China has opened few branches in the last few years. • Credit Suisse made an initial investment of US$80m in March 2008 into Acid. We have considered them as a potential buyer as in January 2010 Credit Suisse published a paper Notes: Scale of 1 -5 (5 = high, 1 = low strategic fit) 5 points have been subtracted from those companies that may face competition restrictions on Africa's promising development prospects and growth outlook. Investment in Acid could help them to capitalise this potential in Zambia while additionally, providing an opportunity to

Source: Management, Deloitte analysis recover their initial investment by way of growing Acid. We note that Credit Suisse had indicated that they would withdraw their investment in Acid on its assumed IPO.

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 33 © 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 34 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft First Rand offer

FRL have made an initial offer of ZMK27.2bn for selected assets and liabilities of Acid

Net asset value overview Net asset value overview • FRL have made a number of exclusions of assets and liabilities along with fair value Fair value ZMK 'million Apr-11 Excluded Adjusted total Adjusted total adjustments adjustments to get to reach their net asset value of ZMK27.2bn. ASSETS • The following have been excluded from the 30 April balance sheet starting point: Cash on hand 66,171 66,171 - 66,171 ‒ balances due from Cladava Mining (ZMK49.1bn), Finsbury Investments (ZMK6.3bn), Finsbury Park (ZMK4.2bn), Ital Terazzo (ZMK27.4bn) and Zambezi Portland Cement Balance with Central Banks 136,075 136,075 22 136,097 (ZMK47.9bn) amounting to a total of ZMK134.9bn; Treasury Bills 215,839 215,839 1,603 217,442 ‒ provisions of ZMK131.0bn for the accounts of Cladava Mining (ZMK51.4bn), Finsbury Government Bonds 69,563 69,563 493 70,056 Investments (ZMK4.3bn), Ital Terazzo (ZMK27.4bn) and Zambezi Portland Cement

Due from other Banks 52,761 52,761 - 52,761 (ZMK47.9bn); ‒ ZMK1.9bn of motor vehicles that were not imported in compliance with import duties and Loans and advances 523,311 (134,942) 388,369 - 388,369 premises and equipment and utilised by former executives; Provisions & interest suspended (276,348) 130,991 (145,357) (6,398) (151,755) ‒ a withholding tax asset of ZMK35.2bn and a deferred tax liability of ZMK23.6bn; and Premises and equipment 74,902 (1,914) 72,988 (5,972) 67,016 ‒ advisory fees accrued subsequent to taking possession amounting to ZMK9.4bn.

Other assets 95,034 (35,206) 59,828 59,828 • Cash on hand, balances with central banks, balances due from other banks, premises and equipment, other assets, savings, demand and term deposits, balances due to the Bank of 957,308 (41,071) 916,237 (10,252) 905,985 LIABILITIES Zambia, to other banks and institutions and other liabilities have all been assessed at Deposits nominal value.

- Savings 169,572 169,572 169,572 • Valuations of the treasury bills and government bonds held by Acid have been market valued by FRL. These have been marked up by a total ZMK2.1bn [ however, we note that we - Demand 431,209 431,209 431,209 are yet to receive any details of these valuations from First Rand .] - Term 221,512 221,512 221,512 • An additional provision of 2.5% on the loan book amounting to ZMK6.0bn has been

Due to Bank of Zambia 20,000 20,000 20,000 deducted in line with FRL’s general policy on this matter. • A downward adjustment of ZMK6.0bn is made to the premises and equipment fair value Due to other Banks & Institutions 22,790 22,790 22,790 reflecting Knight Frank’s valuation of these. [ We note that we are yet to receive any Deferred tax,WHT and other taxes 23,553 (23,553) - - documentation in relation to these valuations. ] Other liabilities* 47,062 (9,400) 37,662 37,662 • Following these adjustments an adjusted net asset value of ZMK3.2bn is resultant after which a value of ZMK23.9bn is attributed to the intangible assets of Acid. FRL make no 935,698 (32,953) 902,745 - 902,745 adjustment for the potential compensation fee payable under the MOU that would be saved NET ASSETS VALUE 21,610 (8,118) 13,492 (10,252) 3,240 by BoZ through completing this transaction.

Intangible asset value 23,924 Compensation fee - Adjusted net asset value 27,164 Source: Management, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 35 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft First Rand offer FRL have also undertaken to invest significantly in Acid and Zambia as part of this transaction, protecting the branch network and the employment of the staff

Other items in the FRL offer • In addition to their offer of ZMK27.2bn for the selected assets and liabilities of Acid, FRL have also undertaken to provide certain commitments to BoZ as part of the transaction. • While the following items have not been expressly covered in the initial offer, we understand that they will be captured in the sale and purchase agreement. • FRL has undertaken to: ‒ maintain the branch network for a period of two years; ‒ maintain the employment of all of the staff taken over as part of the transaction for a period of two years at equal or better terms, subject to certain conditions and on the assumption that average pay will increase substantially across the workforce; ‒ inject significant foreign direct investment into Zambia in the form of capital for FNB Zambia, increased training for Acid staff and skills development, increased systems, controls, risk management and improved connectivity for the branch network to ensure greater availability and accessibility to customers; ‒ introduce new banking products and services into the Zambian economy. • While these items are not immediately quantifiable they provide further benefit to the Zambian economy and banking sector and are important considerations when assessing the offer.

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 36 © 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 37 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Valuation Conclusion Based on our analysis we consider a reasonable range for the selected assets and liabilities of Acid to be ZMK(23.5)bn to ZMK39.0bn, before accounting for the compensation fee

Net asset value overview FRL offer and conclusion FRL view Deloitte view • In assessing the reasonableness of the FRL offer we have considered both the FRL Adjusted Fair value Adjusted ZMK 'million Apr-11 Excluded Low Mid High valuation of the selected assets and liabilities of Acid under the terms of the MOU, their total adjustments total additional commitments to BoZ as well as a revised net asset valuation for the Bank on the Cash on hand 66,171 66,171 - 66,171 66,171 66,171 66,171 assumption that a different buyer acquired Acid. Balance with Central Banks 136,075 136,075 22 136,097 136,097 136,097 136,097 • In the instance that a different purchaser was to acquire Acid (given that FRL has made an offer under the MOU), BoZ would be required to terminate the MOU and in that instance Treasury Bills 215,839 215,839 1,603 217,442 217,442 217,442 217,442 compensation amounting to R35m (ZMK23.8bn) would be payable to FRL. The Government Bonds 69,563 69,563 493 70,056 70,056 70,056 70,056 compensation fee represents a cost of marketing the Bank, which would be saved in the

Due from other Banks 52,761 52,761 - 52,761 52,761 52,761 52,761 instance that the transaction with FRL is completed. • We consider that the most likely potential buyers for Acid would be other relatively large Loans and advances 523,311 (134,942) 388,369 - 388,369 388,369 388,369 388,369 Provisions & interest banking operators and the acquisition would be subject to a similar level of due diligence suspended (276,348) 130,991 (145,357) (6,398) (151,755) (184,028) (184,028) (151,755) and investigation into the health, or not, of the Bank. Premises and equipment 74,902 (1,914) 72,988 (5,972) 67,016 67,016 67,016 67,016 • In addition, we have assumed that the staff of Acid will be transferred to FRL without Acid being required to pay retrenchment or other fees to effect the transfer. If retrenchment fees Other assets 95,034 (35,206) 59,828 59,828 59,828 59,828 59,828 are payable by Acid there may be a substantial negative adjustment to the net asset Total assets 957,308 (41,071) 916,237 (10,252) 905,985 873,712 873,712 905,985 position. Deposits • Items of difference to FRL consist of: -Savings 169,572 169,572 169,572 169,572 169,572 169,572 ‒ additional provisioning (as at 28 February 2011, our ZMK167.8bn NRV estimate of the -Demand 431,209 431,209 431,209 431,209 431,209 431,209 47 sampled borrowers was ZMK44.8bn lower than the Acid provision, which equates to

-Term 221,512 221,512 221,512 221,512 221,512 221,512 ZMK32.3bn when excluding the 5 related party accounts); ‒ intangible asset valuation which we consider could be ZMK5.5bn to ZMK35.8bn Due to Bank of Zambia 20,000 20,000 20,000 20,000 20,000 20,000 Due to other Banks & compared to the FRL offer of ZMK23.9bn; and Institutions 22,790 22,790 22,790 22,790 22,790 22,790 Deferred tax,WHT and other ‒ saving of ZMK23.8bn for the compensation fee that Acid would otherwise have to pay. taxes 23,553 (23,553) - - - - - • The FRL offer is in excess of the potential net liability position that we have calculated on Other liabilities* 47,062 (9,400) 37,662 37,662 37,662 37,662 37,662 the assumption that any due diligence would result in similar adjustments. Further, if the business was marketed, the compensation fee would need to be paid to FRL. Total liabilities 935,698 (32,953) 902,745 - 902,745 902,745 902,745 902,745 • In forming our estimate of the net realisable value of the loans and advances we have NET ASSETS VALUE 21,610 (8,118) 13,492 (10,252) 3,240 (29,033) (29,033) 3,240 applied a downward adjustment of c.ZMK32bn based on our review of a sample of the 47 largest borrowers. As an upside, we have adopted the Acid carrying value for loans and Intangible asset value 23,924 5,500 17,300 35,800 advances at the high end. Compensation fee - (23,765) (23,765) (23,765) • Based on our analysis we consider a reasonable range for the selected assets and liabilities Adjusted net asset value 27,164 (47,298) (35,498) 15,275 of Acid to be ZMK(23.5)bn to ZMK39.0bn, which reduces to ZMK(47.3)bn to ZMK15.3bn if Source: BoZ, Deloitte analysis the compensation fee is taken into account; this compares to the FRL ZMK27.2bn offer.

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 38 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Valuation Valuation methodology We have considered the valuation of Acid by reference to internationally accepted valuation approaches for banking institutions

Revised net asset approach 1. P/E multiples • Given the requirements of the MOU we have initially considered the value of Acid by • We adopt P/E multiples as: reference to revaluing its assets and liabilities to market values and including a value for the ‒ they are a commonly used metric by the financial analyst community in the intangible assets of the Bank. valuation of banks; Market approach ‒ it is generally difficult to determine the net debt for banks as they finance their • In forming our view on value we have also considered the market approach where we lending activities using funds from both their deposit base and borrowing from the identified listed comparable companies (comparable company analysis) and transactions market. This makes EV multiples less appropriate; and (comparable transactions analysis) in the banking sector predominantly in Africa. ‒ banks do not generally operate fixed asset intensive businesses, making EBITDA • In assessing the intangible assets of Acid we have capitalised its earnings and book value multiples less relevant. using the multiples derived from the comparable companies and transactions in a 2. P/B multiples normalised operating scenario. We have then present valued the potential “exit” value at a discount rate commensurate with a potential acquirers required rate of return for investing in • We adopt P/B multiples as: an asset like Acid, given its current position and performance. ‒ they are a commonly used metric by the financial analyst community in the • Appendices 5 and 6 present the comparable companies and transactions, respectively. valuation of banks; • In line with internationally adopted approaches to bank valuations we adopt P/E and P/B ‒ unlike many other businesses, the book value of banks’ assets and liabilities do multiples for the valuation of Acid. not simply reflect their historical costs. Fair value accounting and credit impairments ensure that the book value of loans and advances are more in line with their market values; and ‒ the profitability of banks is to a large extent driven by the size of their loan book, which in turn is affected by the size of the deposit base.

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 39 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Valuation Tangible assets and liabilities As at 28 February 2011 we estimated the NRV of a sample of 47 of the largest borrowers at ZMK167.8bn, some ZMK44.8bn lower than the Acid provision notwithstanding there are inconsistencies in the way Acid collated its figure Loans and advances overview Loans and advances • Our review of a sample of 47 of the largest borrowers at 28 February 2011 indicated a Assessment Exposure Provision Net realisable Provision as % 28 February 2011 value of debt value of the loans and advances at ZMK167.8bn, some ZMK44.8bn lower than the (ZMKm) stated Acid net realisable value. • Given that FRL has elected to exclude certain loans and advances that were included in our sample we have revised our calculation to adjust for these. The adjusted differential reduces from ZMK44.8bn to ZMK32.3bn after excluding the 5 connected accounts. Deloitte 446,015 278,174 167,841 62% • The primary differential relates to the Hotellier connection with additional details set out Acid 446,015 233,417 212,598 52% in Appendix 8. BoZ 446,015 248,273 197,742 56% • The BoZ returns submitted by Acid have been used to obtain Acid’s classification of the exposures. From this the provision level has been estimated using BoZ regulations. Deloitte (excl. Hotellier) 403,224 235,383 167,841 58% • We have not checked all of the estimated provision levels back to actual levels Acid (excl. Hotellier) 403,224 212,273 190,951 53% submitted in the BoZ returns. However, we noted a number of irregular classifications BoZ (excl. Hotellier) 403,224 226,877 176,347 56% and provision values, for example the provision for Cladava Mining in the February 2011 BoZ return was ZMK19bn despite being classified as ‘Loss’ and having an unsecured exposure of ZMK37bn. The figure reported in our review is the estimated provision using Deloitte (excl. Connected accounts) 307,845 140,004 167,841 45% the Acid classification and applying BoZ regulations, hence a full provision of ZMK37bn. Acid (excl. Connected accounts) 307,845 107,731 200,114 35% • We have estimated the net realisable value (“NRV”) of the loans and advances by using BoZ (excl. Connected accounts) 307,845 101,496 206,349 33% the impaired security value where recovery through normal debt service is uncertain based on valuations by either external or internal valuers and information contained in the loan files. • Based on the information available we consider a potentially more prudent provision level than Acid could be supported and we reach a lower estimated NRV of the book. • When Hotellier (a contentious case, with limited reliable information) is stripped out the differential in NRV estimation is significantly narrower. Note that Acid have deducted interest in suspense from the exposure before calculating provision which reduces the provision value. • The Acid provision basis is a mixture of NRV estimation and BoZ regulation and is therefore not consistent. Note: 1) Excluded accounts comprise Cladava Mining, Finsbury Investments, Finsbury Park, Ital Terazzo and • For individual cases we have commented by exception where additional information may Zambezi Portland Cement. be sought to further assess provision levels, as set out in Appendix 8. 2) We were initially provided with customer loan and advance details which did not reconcile to the Other tangible assets and liabilities accounts of Acid subsequent to late adjustments associated with the preparation of the Statement of Affairs. We have therefore corrected the schedules provided to those reflected in the accounts, most We have adopted the market value of the cash, balances with central bands, t-bills and notably adjusting the level of provisioning for Finsbury Investments and Flame Promotions government bonds, amounts due from other banks, loans and advances, premises and Source: Management, Deloitte analysis equipment and other assets, deposits, due to BoZ, due to other banks and institutions, deferred tax, withholding tax and other taxes and other liabilities.

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 40 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Valuation Intangible asset valuation An indicative value for the intangible assets of Acid may lie in the range ZMK5.5bn to ZMK35.8bn, with an overall average in the region of ZMK17.3bn

Summary analysis Intangible asset valuation • Given that all the tangible assets and liabilities of Acid have been considered in arriving at an adjusted fair value position, we consider that the sum of the expected returns of the forward looking business ZMK'm £'m R'm USD'm over the capital that will be contributed, would reflect a good proxy for the intangible asset value of the business. Our analysis is conducted as at 30 April 2011. 30% cost of equity 7,585 679 4,689 • An indicative value for the intangible assets of Acid may lie in the range ZMK5.5bn to ZMK35.8bn based on a scenario analysis and applying sensitivities (calculations are set out in Appendix 7). Scenario 1 35,762.8 4.7 52.7 7.6 • The initial scenario yields a mid-point potential intangible asset value of c.ZMK35.8bn. This is based on the forecast assumptions and is determined by capitalising PAT in the fourth year at a multiple of Scenario 1, delay of 1 year 15,754.1 2.1 23.2 3.4 10.0x, which is then discounted back to a present value at a mid point rate of 30%. The value in excess Scenario 2 5,533.4 0.7 8.1 1.2 of the initial total investment of ZMK112.7bn is considered as the potential value of the total intangible assets of Acid (including its brand which FRL and many other potential buyers would not be interested Scenario 2 delay of 1 year 11,949.9 1.6 17.6 2.5 in maintaining). • We have applied a range of discount rates between 25% and 35% (with a mid-point of 30%) to the Average 17,250.0 2.3 25.4 3.7 equity cash flows in each scenario. There is no publically available data on the cost of equity for Zambian banks, while there is also no data on pricing long term risk free rates or market risk premia. Therefore, the discount rate range is based in part, on our experience of required rates of return for Sensitivities - Scenario 1 banks generally, the FRL indicated cost of equity of 20%, the real dollar growth rate in Zambia of 9.9% (2010-2015) as well as accounting for the additional premium required to account for the risk 35,762.8 20.0% 25.0% 30.0% 35.0% 40.0% associated with Acid, including, inter alia , customer concentration, poor compliance record, insufficient 9.0 x 72,381.8 45,064.2 23,146.1 5,410.4 (9,054.1) capital and unaudited financial statements. 9.5 x 81,425.5 52,590.2 29,454.4 10,733.4 (4,534.7) • Making only marginal changes to our assumptions under the sensitivities (an interest margin squeeze of 0.5%, non-interest and other income growth of 2.5% vs. 2.75% (over inflation) and deposit growth 10.0 x 90,469.1 60,116.2 35,762.8 16,056.5 (15.3) rate of 18% instead of 20%) has a significant impact on the potential value of the intangible assets, 10.5 x 99,512.8 67,642.2 42,071.1 21,379.5 4,504.2 which falls to c.ZMK5.5bn in the mid-point case. 11.0 x 108,556.4 75,168.2 48,379.4 26,702.5 9,023.6 • This goes to demonstrate the sensitivity (and the susceptibility to obtaining low intangible values) of the forecasts to small changes in assumptions. Sensitivities - Scenario 2 • The purchase of the assets and liabilities of Acid will provide a buyer the opportunity to access the Zambian banking market almost immediately as opposed to taking the time necessary to establish a presence in the country. As such, we consider this time saving to be an intangible asset for the 5,533.4 20.0% 25.0% 30.0% 35.0% 40.0% business. 9.0 x 34,010.1 12,766.6 (4,277.9) (18,070.0) (29,318.3) • In order to estimate a potential value for this timing differential, we have calculated the difference 9.5 x 41,042.8 18,619.2 627.7 (13,930.6) (25,803.8) between realising the forecast dividends in the first year, compared to a delay of one year. We have 10.0 x 48,075.6 24,471.7 5,533.4 (9,791.2) (22,289.3) analysed the present value of these dividend distributions that are potentially realisable in the future, at a mid point cost of equity of 30%. 10.5 x 55,108.3 30,324.3 10,439.0 (5,651.8) (18,774.8) • The timing differential in the initial scenario may be worth ZMK15.8bn whilst in the post sensitivity case 11.0 x 62,141.1 36,176.9 15,344.7 (1,512.3) (15,260.3) it falls to ZMK11.9bn indicating that the time saved is of significant value. Additionally we note that this analysis is based on a differential of only one year and it may take a longer period for a foreign bank to establish themselves in Zambia to the same degree that is achievable through the acquisition of Acid. Source: Management, Deloitte analysis • The average of our sensitivity analyses indicates potential value of the intangible assets of Acid lies in the region of ZMK17.3bn.

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 41 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Market pricing introduction Comparable listed companies We have identified Kenya and Tanzania as having banking sectors most comparable to that of Zambia

Country level data Comparable listed companies Country-level analysis Income per capita (USD) and GDP growth • To identify organisations relevant in the valuation of Acid, we have examined the listed banks predominantly in Sub-Saharan Africa for which reliable market data is available. 8,000 8% • On the basis of the analysis illustrated opposite, we have allocated the banks to the 7,000 7% following groups:

6,000 6% ‒ Zambia;

Income 5,000 5% ‒ South Africa; per capita GDP growth ‒ Botswana, Mauritius & Namibia; (USD) 4,000 4% (%) ‒ Kenya & Tanzania; and 3,000 3% ‒ Nigeria. 2,000 2% • One of the factors determining valuation of a bank is the level of wealth in the markets

1,000 1% where it operates. A high level of wealth, as indicated by per capita income and GDP growth, is likely to lead to higher saving and borrowing activities and higher demand for fee - 0% paying banking services. Zambia South Botswana Kenya Mauritius Tanzania Namibia Nigeria • We have also included Standard Chartered plc in our analysis. Although headquartered in Africa the UK, only about 20% of Standard Chartered plc’s total deposits (current, savings and Income per capita (USD) GDP Growth - average 2011-12 (%) time deposits) come from the Americas, UK and Europe. The balance come from emerging markets, with the Asia Pacific region accounting for over 70% of total deposits. Africa Loans to deposits (%) and interest rate margin contributes about 5%. Loans to 100% 25% Interest • We have also analysed the loans to deposits ratio of the different markets; this is an deposits 90% margin indication of the banks’ liquidity – a low loans to deposits ratio suggests that a bank has a 80% 20% relatively large balance of liquid assets to meet its liabilities (i.e. customer deposits). 70% Sophisticated financial markets are usually characterised by high loans to deposit ratios, as 60% 15% banks can readily borrow in the financial markets to meet their liabilities. 50% • The interest rate margin is the difference between the interest rate charged by a bank on its 40% 10% loans and advances and the interest rate it pays on deposits. A high margin will lead to high 30% profitability, everything else being equal. 20% 5% • We have also analysed the overall sophistication of the financial market in the different 10% countries: this is indicated by a combination of factors including the score on the financial 0% 0% market development index [1] , loans to deposits ratios and domestic credit provided by the Zambia StanChart South Africa Botswana, Kenya & Nigeria Group Mauritius & Tanzania banking sector (as a % of GDP). See Appendix 5 for further details. Namibia • We conclude that Kenya and Tanzania are most comparable to Zambia.

Median loans to deposits Median interest rate margin

Source: World Bank, IMF, EIU, Annual reports, BoZ, Deloitte analysis Note 1: World Economic Forum Global Competitiveness Report

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 42 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Market pricing introduction Comparable listed companies African banks (excluding Nigeria and outliers) trade at an FY11 P/E multiple of 10.0x to 13.0x

P/E and P/B ratios Comparable listed companies (cont) Country-level analysis(cont) FY 10 and FY11 P/E ratios • The charts opposite illustrate the average P/E and P/B multiples for the categories above, excluding the outliers. Zambia National Commercial 13.7x Bank • We consider the following banks to be outliers: 26.2x StanChart Zambia 23.2x ‒ Capitec: the bank has grown rapidly since its creation in 2001. Its operations differ from the peers as it caters for a specific segment of the market and charges very low fees 13.6x StanChart Group 12.5x compared with its competitors. Capitec has a P/B ratio of 7.5x and a RoE of 28%;

13.1x ‒ the StanChart African subsidiaries - StanChart Kenya, StanChart Botswana and South Africa (excl Capitec) 10.8x StanChart Zambia: they trade at a premium to their peers. This is in line with their Botswana, Namibia & 14.5x significantly higher RoE, as illustrated in the charts on the following page. The high RoE Mauritius (excl StanChart … 12.9x could be explained by robust cost control measures, more attractive net interest Kenya & Tanzania (excl 11.4x margins, lower credit impairment charges and efficient group capital management. StanChart Kenya) 10.6x Appendix 5 illustrates detailed financial information about the comparable companies. 13.5x Nigeria (excl Guaranty Trust) 8.4x ‒ We note that Standard Chartered Group reported an RoE of 14% for 2010 compared to the high ratios for its Zambian (43%) and Kenyan (37%) subsidiaries. Both of these are 2x 3x 4x 5x 6x 7x 8x 9x 10x11x12x13x14x15x16x17x18x19x20x21x 22x 23x 24x 25x 26x 27x 28x maintained at low levels of shareholders equity: total assets (Zambia at c.8%, Kenya at

P/E FY10 P/E FY11 c.14%) which goes some way to explaining the high returns on equity. It is likely that this is possible given that as the parent company, Standard Chartered is able to provide a P/B ratios number of guarantees to enable both companies to write all necessary loans and Zambia National Commercial 3.4x Bank advances.

StanChart Zambia 10.9x • Nigeria experienced a banking crisis in 2009 as the volume of non performing loans increased due to the fall in oil prices. As a result, the Central Bank of Nigeria spent about

StanChart Group 1.5x £2.5bn to bail out 9 banks in August 2009 and the Asset Management Corporation of Nigeria bought non-performing loans from 21 of Nigeria’s 24 banks in December 2010. South Africa (excl Capitec) 1.6x Subsequently, there have been discussions of a levy on banks and a reform in regulations. These factors make the information on Nigerian banks less comparable and we have not Botswana, Namibia & 1.8x used the multiples of the Nigerian banks in our valuation. Mauritius (excl StanChart … Kenya & Tanzania (excl • We also note that elections are planned to take place in Nigeria in April 2011. 2.6x StanChart Kenya) • Overall, excluding the outliers and Nigeria, the FY10 P/E range is 10.0x to 14.0x and the Nigeria (excl Guaranty Trust) 1.1x FY11 P/E range is 10.0x to 13.0x. • The corresponding P/B ratio range is 1.5x to 3.5x. Our analysis shows a very strong 0x 1x 1x 2x 2x 3x 3x 4x 4x 5x 5x 6x 6x 7x 7x 8x 8x 9x 9x 10x10x11x11x correlation between RoE and P/B as illustrated on the following page.

P/B

Source: Thomson OneBanker, Bloomberg, Annual reports, BoZ, Deloitte analysis Note 1: World Economic Forum Global Competitiveness Report

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 43 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Market pricing introduction Comparable listed companies We conclude that a P/B ratio of 1.1x to 1.7x and a P/E ratio in the region of 10.0x may be appropriate for the valuation of Acid in a more normal operating situation

Comparable listed companies (cont) Company-level analysis Company-level analysis – P/B ratio Kenya, Tanzania & Zambia • The chart above opposite shows that the range of P/B multiples from banks in Kenya and Company P/E P/E P/E P/B PBT/Operating Annual PAT RoE Tanzania (excl StanChart Kenya) is 1.6x to 3.4x. Hist'cal Current F'cast Hist'cal income growth (PAT / 2009-10 average equity) • As is typically the case with the valuation of banking institutions, there is a strong correlation between P/B and RoE. This is illustrated in the charts opposite below. Finance Bank (Dec 2010 prudential) 2% nmf Finance Bank (normalised) 25% 16% • Appendix 5 show the correlation for the larger population of comparables. Zambia overall 21% 13% Company-level analysis – P/E ratio Zambia Cavmont Capital Holdings Zambi @ 1.3x nmf nmf @ • The range of P/E ratios for Kenya and Tanzania is 8.0x to 13.1x (FY10), excluding Investrust Bank PLC @ 1.4x nmf nmf @ Standard Chartered Bank Zambia 26.2x 23.2x 10.9x 48% 66% 46% StanChart Kenya, and 9.3x to 11.3x (FY11). Zambia National Commercial Ban 13.7x 3.4x 30% 23% 28% Mean 4.2x 39.4% 44.3% 36.9% • It must be noted that: Mean (excl StanChart Zambia) 2.0x 30.4% 23.0% 27.6% ‒ we have been unable to obtain the 2010 annual report for Barclays Bank of Kenya. We Median 2.4x 39.4% 44.3% 36.9% have estimated the PAT on the basis of the press release concerning the 2010 Standard Chartered plc 13.6x 12.5x 10.8x 1.5x 13% performance of the bank; Kenya & Tanzania ‒ StanChart Zambia is very thinly traded. As a result, the market price may not be Equity Bank Limited 12.8x 10.9x 8.6x 3.4x 47% 68% 28% Barclays Bank Of Kenya Limited 12.2x 11.9x 10.7x 3.8x 40% @ 38% reflecting all information publicly available about the stock; Standard Chartered Bank Kenya Limited 14.5x 10.8x 10.3x 5.0x 56% 14% 31% Kenya Commercial Bank Limited 10.6x 8.5x 6.6x 2.0x 34% 76% 23% ‒ National Bank of Kenya and CRDB are not covered by analysts. Therefore, no forecast Co-Operative Bank Of Kenya Ltd (The) 13.4x 10.8x 8.0x 3.0x 37% 55% 25% information is available; and National Bank Of Kenya Limited @ 10.7x @ 1.6x 40% 38% 21% Crdb Bank Plc 7.9x @ @ 1.6x 38% 9% 21% ‒ StanChart Kenya, StanChart Zambia and Zambia National Commercial Bank are each Mean11.9x 10.6x 8.8x 2.9x 42% 43.3% 27% covered by one analyst. This reduces the credibility we attribute to the forecast Mean (excl Standard Chartered Kenya) 11.4x 10.6x 8.5x 2.6x 39% 49.1% 26% Median12.5x 10.8x 8.6x 3.0x 40% 46.4% 25% information. • Our analysis shows that the P/E multiples are positively correlated to profitability (as Correlation between RoE and P/B indicated by RoE and PBT margin). Equity Bank and StanChart Kenya have the highest P/E Botswana, Mauritius, Namibia, Kenya, Kenya, Tazania and Zambia multiples and the highest PBT margins. Tanzania and Zambia 12.0x StanChart 12.0x Conclusion Zambia 10.0x • Given the normalised operating performance of Acid is at a RoE of c.20% pa we consider it 10.0x y = 30.474x - 4.9641 appropriate to capitalise the forecast “exit” profit after tax at a multiple of 10x, in line with the 8.0x y = 10.98x + 0.2209 R² = 0.8173 R² = 0.3842 8.0x regression analysis. P/B 6.0x FNB Botswana 6.0x 4.0x StanChart 4.0x 2.0x FNB Botswana Namibia 2.0x 0.0x 0.0x 0% 10% 20% 30%RoE 40% 50% 60% 70% RoE 0% 10% 20% 30% 40% 50% Source: Thomson OneBanker, Bloomberg, Annual reports, BoZ, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 44 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Market pricing introduction Comparable transactions analysis We have examined the transactions in the African banking industry in the period January 2007 to May 2011

Comparable transactions Comparable transactions analysis • We have obtained the population of transactions in the banking industry in Africa between Controlling stake transactions January 2007 and [March] 2011.

Ann Target Company Target Description Target Bidder Implied PE PB • We then identified the relevant transactions based on the activities of the target (e.g. nature Date Country Company Equity Multiple Multiple of their lending activities), the size of the transaction and the income per capita in the Value (GBP target’s main country of operation. For the purposes of the valuation of Acid we consider million) minority stakes transactions to be less relevant. • However, we consider the Zambia National Commercial Bank transaction multiple in our Dec-09 Intermarket Banking Corporation Zambian retail bank Zambia Afriland First 4 nmf @ (Zambia) Limited Group analysis even though it involves a minority stake transaction as it is one of the Banks direct competitors. Jan-09 Continental Bank Benin SA (56.4% Republic of Benin based Benin, United Bank for 38 nmf 4.8x Stake) company engaged in Republic of Africa Plc • Our analysis shows that similar to the listed companies, there is a positive correlation banking business between P/B transaction multiples and RoE of the target companies. See Appendix 6.

May-08 Nedfin Limited Zambia based provider of Zambia Blue Employee 5 9.6x 7.1x • We discuss below the relevance of the transactions shown opposite in the valuation of Acid: micro finance Benefits (Pty) Limited ‒ Continental Bank Benin: The ratio of non interest to net interest income was 136% in FY08. The corresponding ratio for Zambia as a whole is less than 100% while Acid is Nov-08 Credit du Congo S.A. (81% Stake); Congo based bank and Societe Ivoirienne de Banque S.A. Congo; currently at c.96% (2011 YTD). Consequently, Continental Bank Benin derives a smaller subsidiary of Credit Agricole Attijariwafa 280 14.1x 3.4x (51% Stake); Ivory Coast; SA; Bank proportion of its value from the assets on its balance sheet. This explains the relatively Union Gabonaise de Banque (59% Gabon; Ivory Coast based bank; high P/B ratio. In addition, its loan book grew at a CAGR of c.20% in the 3 years prior to Stake); Senegal Gabon based retail bank; Credit du Senegal S.A. (95% Stake) the transaction. It is therefore possible that growth expectations were strong at the time Senegal based retail bank of the transaction. In our opinion, this makes this transaction multiple less relevant;

Jan-08 Ecobank Kenya (75% Stake) Kenya based regional bank Kenya Ecobank 10 10.8x 0.7x ‒ Nedfin Limited: Nedfin is a provider of micro finance and is not a deposit taker. Consequently its business model is different to that of a traditional bank. While the P/E Minority stake transactions ratio appears consistent with that of the market, P/B is significantly higher. This is because of the relatively very high interest rate it earns on its lending and the resulting Ann Target Company Target Description Target Bidder Implied PE PB RoE which is higher than what is observed in traditional banks. As a result, we do not Date Country Company Equity Multiple Multiple Value use this transaction multiple to form our view on the value of Acid; (GBP million) ‒ Credit du Congo et al.: these transactions form part of an agreement whereby Attijariwafa acquired a number of the African subsidiaries of Crédit Agricole. We have Dec-06 Zambia National Commercial Bank Zambia based private bank. Zambia Rabobank NV 4 4.3x 0.5 x PLC (45% Stake) analysed the transactions as a unit given that they involve one buyer and one seller and [Note 1] [Note 1] were negotiated together. The targets had an RoE of 25% in the year prior to acquisition, which may explain the P/B multiple of 3.4x; Note 1: Multiples based on financials for the year in which the transaction took place. All other multiples ‒ Ecobank Kenya: in the year prior to the transaction, Ecobank Kenya had a lower are historical. operating profit margin (11%) and RoE (8%) than the industry average. It is likely that the transaction value was depressed by the low profitability; and

Nmf: not meaningful Source: Mergermarket, BoZ, Mint, Annual reports, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 45 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Market pricing introduction Comparable transactions analysis Transactions analysis is less robust when considering its application to Acid due to a lack of publically available information on the details of transactions, as well as the prospects for target companies underlying operations

Comparable transactions analysis (cont) ‒ Zambia National Commercial Bank: this transaction was in line with the Zambian government’s privatisation program. There is little information publicly available about the terms of the transaction to allow us to determine its relevance. However, we note that the target had a relatively low profitability. In addition, the multiples for this transaction are based on financial data for the year in which the transaction took place, unlike the other transactions multiples which are based on historical data.

Intermarket Banking Corporation • Intermarket Banking Corporation is a Zambian retail bank with a market share of 1% (based on deposit base), compared with Acid’s market share of 4%. In terms of loans and advances, Intermarket had a market share of 1% while Acid had 6%. • The acquisition of Intermarket Banking Corporation by Afriland First Group began in December 2009. • An inspection by BoZ found that Intermarket’s has negative equity of ZMK4.1bn at December 2009. The negative equity was caused by losses which arose because of loan impairment charges and high interest payments on deposits. • Subsequently, Afriland acquired 80% of Intermarket’s shareholding in 2010 for USD4.8m, which implies a pro rata equity value of USD6m, an amount similar to the capital invested by the previous shareholders which was insufficient to recapitalise the bank and place it on a firming footing at the time. • In addition to paying USD 4.8m (ZMK21bn) for a share of the equity, Afriland also undertook to inject USD 4.3m in Tier I capital (ZMK20bn) (which would have resulted in the minimum capital requirement for the bank) and USD 5m (ZMK23bn) in Tier II capital through a 6 year loan, yielding an 11% return. • This implies that Afriland paid Sabre Capital Worldwide Limited for their initial USD6m capital injection (i.e. a net nil position) and subsequently inserted enough capital to meet the minimum capital requirements in the country. • We note that despite forecast RoE’s of c.63%, the bank is still underperforming with a prudential PAT of ZMK(6.1bn) and is now 15 th in Zambia in terms of net loans and advances and deposits.

Conclusion • Our analysis shows a wide range of multiples implied by the transactions. One of the determinants of the multiples is RoE, although the correlation is less strong than in our comparable company analysis.

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 46 © 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 47 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 1 Letter of Instruction

Letter of Instruction

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 48 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 2 Sources of information

Information sources Information provided

• Our report is based on the information supplied by, and discussions with the following: • We have been provided with information relating to Acid including, inter alia: – Leonard Haynes, Chief Executive Officer, Finance Bank – Annual financial statements for 2008;

– Willem Richard, Financial Director, Finance Bank – Management accounts and accompanying commentary for the period January to April 2011; – Rob Wishart, Executive Director – Credit, Finance Bank – Zambia Branch network; – Charity Shitumbanuma – Head of Credit, Finance Bank – Livingstone Property Balance_201105-12; – Jane Karina – Credit Officer, Finance Bank – Salaries and wages worksheet, Acid liquidity commentary, 31 Jan 2011 Citibank London • We visited Finance Bank’s head office at Finance House, Cairo Road, Lusaka for the period US$ Account; 21 st to 25 th March 2011 as well as on various other occasions. – Accounts opened – closed April 2010 to March 2011; • We also used the following resources: – Loans and advances summary; − Bank of Zambia website; – Employee information; − IMF; – Audid document going forward for Zambia; − EIU; – Selection of branches MT; − World Population Datasheet; – Branch P&L; − Thomson Datastream; – Zambian Banking Act; − Bloomberg; – Consolidated Zambian Banks schedules; − Factiva; − Mint; – FRA Balances and income Jan10-Feb11; − MergerMarket; – Profit Loss Detailed Analysis Feb 2011; − OneSource; – PTA-MEWD Jan 10-Feb11; − Perfect Information; and – NAPSA balances with interest paid; − Thomson Research. – Acid T-bills and GRZ bonds holdings as at 25 Feb 2011, 28 Jan 2011 and 28 March 2011; – Acid BoZ Prudential returns 20100102 – 201103-09 – Additionally we have been provided access to the Intralinks data-room and the information therein, under the following headings: Greneral; Finance; Additional Info; Corporate Governance; Credit; Legal; Internal Audit; IT; HR; Branch; Commercial – Consumer Banking; Treasury and HR general.

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 49 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 3 Market analysis

Zambia – key economic benchmarks – (2010 – 2015 forecasts)

Zambia 2010 2011 2012 2013 2014 1015 CAGR Per capita income (US billion)

2,000 GDP (USD 1,856 billion) 15.69 17.34 18.85 20.62 22.77 25.18 9.9% 1,800 1,720 1,596 1,600 1,487 % growth 10.5% 8.7% 9.4% 10.4% 10.6% 1,395 1,400 1,286 Per capita 1,200 income 1,286 1,395 1,487 1,596 1,720 1,856 7.6% 1,000 % growth 8.5% 6.6% 7.3% 7.8% 7.9% USD 800 600 Population 13.30 13.63 13.97 14.32 14.68 15.05 2.5% 400 % growth 2.50% 2.5% 2.5% 2.5% 2.5% 200 - 2010 2011 2012 2013 2014 1015 GDP (US billion) Population estimates (World Population Datasheet 2010) 30.00 15.50 25.18 15.05 25.00 22.77 15.00 14.68 20.62 20.00 18.85 14.50 14.32 17.34 15.69 13.97 14.00 15.00 13.63

millions 13.50 13.30 USD USD billions 10.00 13.00 5.00 12.50

- 12.00 2010 2011 2012 2013 2014 1015 2010 2011 2012 2013 2014 1015

Source: Deloitte analysis, IMF; World population datasheet

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 50 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 3 Market analysis

Zambian banking market – key benchmarks (2006 – 2010)

Total Assets Loans and Advances and deposit balances 20,000,000 17,243,973 25,000,000 23,037,985 18,000,000 16,000,000 13,377,819 20,000,000 18,525,606 14,000,000 12,203,524 17,146,627 12,000,000 k'millions 9,928,064 15,000,000 13,779,299 10,000,000 7,886,471 8,000,000 10,675,230 6,000,000 10,000,000 7,596,371; 62.2% 8,073,418; 46.8% 4,000,000 5,335,338,3.7% 2,000,000 7,167,692; 53.6% 5,000,000 3,603,012; 45.7% 0 2006 2007 2008 2009 2010 0 2006 2007 2008 2009 2010 Loans and advances Deposit balance Loans and advances as percentage of assets Loans and advances as percentage of deposits

50.0% 70.0% 44.3% 62.2% 45.0% 38.7% 38.7% 60.0% 40.0% 53.7% 53.6% 33.8% 35.0% 35.0% 50.0% 45.7% 46.8% 30.0% 40.0% 25.0% 20.0% 30.0% 15.0% 20.0% 10.0% 5.0% 10.0% 0.0% 0.0% 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 Source: Deloitte analysis, IMF; World population datasheet Note: Acid are unadjusted for bad loans and advances

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 51 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 3 Market analysis

Acid asset split vs. Zambian banking market 2010 Market share (% loans and advances) Market share (% loans and advances) 0% 0% 1% 1% 1% 1% 1% 2% 0% 1% 1% 2% 0% 1% 2% 2% 1% 1% 5% 5% 19% 1% 1% 19%

6% 6%

4% 4% 3% 20% 3% BBZ ZNCB SCB 20% BBZ ZNCB SCB STAN CITI INDO STAN CITI INDO 16% Acid BOC FAB 16% Acid BOC FAB ABC INVEST CCB 14% ABC INVEST CCB IBC ACC FNBZ 14% IBC ACC FNBZ ECO UBA ICBZ ECO UBA ICBZ

Market share (% assets) 1% Market share (% shareholders equity) 1% 1% 2% 0% 2% 1% 2% 1% 3% 1% 1% 1% 2% 1% 1% 1% 18% 2% 10% 1%

8% 3% 3% 17% 5% 15% 7% 5% BBZ ZNCB SCB BBZ ZNCB SCB 6% STAN CITI INDO 9% STAN CITI INDO Acid BOC FAB 13% 18% Acid BOC FAB 13% ABC INVEST CCB ABC INVEST CCB IBC ACC FNBZ 16% 7% ECO UBA ICBZ IBC ACC FNBZ ECO UBA ICBZ Source: Deloitte analysis, BoZ Consolidation Schedule Bank by Bank version 1 (December 2010) Note: Acid are unadjusted for bad loans and advances

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 52 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 3 Market analysis

Acid asset split vs. Zambian banking market 2010

Acid

Notes and cash 0% 7% 5% 2% 4% 0% 6% Balances with Bank of Zambia 4% Balances with domestic institutions Balances with foreign institutions

Investments in securities 32% 40% Net loans and advances

Bills of exchange

TOTAL

0% 3% 0% Notes and cash 4% 3% Balances with Bank of Zambia 19% Balances with domestic institutions 1% Balances with foreign institutions 35%

16% Investments in securities

Net loans and advances

19% Bills of exchange

Source: Deloitte analysis, BoZ Consolidation Schedule Bank by Bank version 1 (December 2010) Note: Acid are unadjusted for bad loans and advances

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 53 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 3 Market analysis

Acid vs. Zambian banking market – key ratios (2006 – 2010) Profit after tax

80000 71,335 67,568 70000

60000 51,930 50000 39,336 40000 30000

Z'millions 19,448 20000 12,696 13,327 11,876 10000 2 0 -10000 -3,193 2006 2007 2008 2009 2010

Industry median FBZAcid Return on average equity

50.0% 43.7% 45.0% 40.9% 39.1% 40.0% 35.6% 32.7% 35.0% 29.9% 30.0% 25.2% 24.2% 25.0% 21.0% 18.5% 20.0% 15.4% 15.0% 12.7% 9.4% 10.0% 4.1% 5.0% 0.0% -5.0% -1.7% 2006 2007 2008 2009 2010

Overall FBZAcid Median Source: Deloitte analysis, BoZ Consolidation Schedule Bank by Bank version 1 (December 2010) Note: Acid are unadjusted for bad loans and advances

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 54 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 3 Market analysis

Acid vs. Zambian banking market – key ratios (2006 - 2010)

Interest to non-interest income

2.0x 1.8x 1.8x 1.9x 1.7x 1.7x 1.7x 1.8x 1.6x 1.5x 1.6x 1.5x 1.5x 1.4x 1.4x 1.4x 1.2x 1.2x 1.1x 1.2x 1.0x 0.8x 0.6x 0.4x 0.2x 0.0x 2006 2007 2008 2009 2010

Overall FBZAcid Median Cost: Income ratio

80.0% 67.8% 70.0% 66.7% 61.4% 63.0% 57.8% 60.0% 56.5%56.5% 56.5% 49.8% 51.3% 48.1%47.8% 45.9%48.2% 50.0% 43.2% 40.0%

30.0%

20.0%

10.0%

0.0% 2006 2007 2008 2009 2010

Overall FBZAcid Median Source: Deloitte analysis, BoZ Consolidation Schedule Bank by Bank version 1 (December 2010) Note: Acid are unadjusted for bad loans and advances

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 55 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 3 Market analysis

Interest income to loans and advances vs. Interest expense to deposits in 2010

50.0%

45.5% 45.0%

40.0% 38.4%

35.0% 32.0% 30.3% 30.0% 27.8% 26.9% 24.7% 25.0% 24.0% 22.9% 21.3% 20.9% 20.9% 19.6% 20.0% 18.3% 16.2% 16.7% 15.5% 13.9% 15.0% 13.3%

10.5% 10.0%

5.9% 6.4% 5.2% 4.0% 4.8% 5.0% 3.5% 3.6% 2.4% 2.1% 2.6% 2.5% 2.2% 1.6% 1.7% 1.7% 1.2% 1.0% 0.1% 0.0% BBZ ZNCB SCB STAN CITI INDO FBZAcid BOC FAB ABC INVEST CCB IBC ACC FNBZ ECO UBA ICBZ TOTAL

Interest income to loans and advances Interest expense to deposits

Source: Deloitte analysis, BoZ Consolidation Schedule Bank by Bank version 1 (December 2010) Note: Acid are unadjusted for bad loans and advances

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 56 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 3 Market analysis

Acid vs. Zambian banking market – key ratios (2006 - 2010)

Acid

30.0%

24.0% 25.0% 22.7% 20.7% 20.0% 18.6% 17.1%

15.0%

10.0% 5.9% 4.7% 5.0% 2.1% 2.4% 2.5%

0.0% 2006 2007 2008 2009 2010

Interest income: loans and advances Interest expense: deposits Overall market

35.0% 31.4% 28.3% 30.0% 27.7% 27.8% 26.5% 25.9% 22.7% 25.0% 22.9% 22.9% 21.3% 20.0%

15.0%

10.0% 3.6% 2.1% 2.4% 2.9% 3.6% 2.6% 5.0% 2.2% 2.5% 3.0% 2.2%

0.0% 2006 2007 2008 2009 2010

Interest income: loans and advances Sector median income: L&A Source: Deloitte analysis, BoZ Consolidation Schedule Bank by Bank version 1 (December 2010) Interest expense: deposits Secotr median interest expense: deposits Note: Acid are unadjusted for bad loans and advances

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 57 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 4 Potential buyers

Size (US$ millions) 2010 results (if available)

Name Description Target markets/ geographies Market Operating PAT Rationale Recent M&A activity cap revenue

FirstRand Bank FirstRand is an integrated financial services The bank operates Staff from bank has been seconded to Acid and are On May 31, 2010, FRL acquired an additional company consisting of banking, insurance predominantly in South Africa 16,552 6,428 1,425 involved with the ongoing management since 51.6% interest in Makalani Holdings Limited, and asset management and health (c.71% of operations) with possession was taken in December 2010. We note thereby increasing its total interest to 91.2%. operations. The Company's segments include c.11% of operating income that they are working for and reporting to BoZ. In the last year they announced a number of FNB, FNB Africa, RMB and WesBank. generated from other African Under the terms of the MOU, FRL has presented an deals in the financial services market countries. It operates in Zambia offer for certain assets and liabilities of Acid. The however there have been no reported deals as FNB Africa. acquisition of Acid would increase their presence in outside South Africa since 2007 when the Zambia where they currently have one branch in group acquired an 80% stake in a Lusaka and operate at the bottom end of the market Mozambique bank. in terms of scale.

Citibank Provides consumers, corporations, The U.S. (49% of operations), The bank is ranked 8th by depositors and loans and No publically available data on African M&A Zambia governments and institutions with a range of EMEA (including Zambia; 19%), 130,845 86,600 10,951 advances in Zambia. The acquisition of Acid could activity. (Citigroup) financial products and services. Citigroup Asia Pacific (17%) and Latin help to consolidate its position in the market. operates through two primary business America (15%). segments: Citicorp and Citi Holdings.

Credit Agricole Credit Agricole SA is a French banking group Primary focus is on France Credit Agricole could use the acquisition of Acid as In August 2010 acquired Banque Indosuez that offers a range of banking and insurance (c.51% of operations), Rest of 37,825 29,708 1,864 an opportunity to expand its small existing presence Mer Rouge in Djibouti for an undisclosed services through a network of regional and Europe (c.32%) with 2% of in Africa. consideration. local banks. The banks principal lines of operations in Africa/ Middle In April 2010 the group acquired a c.20% business include French retail banking, East. It is one of the largest stake in Credit du Maroc, a commercial bank specialized financial services, asset banks in South Africa. in Marocco. management, insurance and private banking, corporate and investment banking, and international retail banking.

Bank of China The bank's core business is commercial The bank is present in China, There is a long and well-entrenched relationship No publically available data on African M&A (Zambia) banking, including corporate banking, Europe, the U.S., Asia-Pacific 147,922 42,533 16,061 between China and Zambia and there has been activity. personal banking and financial market and Africa (South Africa and much investment in Zambia from the former. The services. Zambia) Bank of China has been present in Zambia since 1997 and is ranked 14th by deposit base. The acquisition of Acid could help further consolidate its position in the Zambian banking market.

Source: BoZ, Deloitte analysis Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 58 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 4 Potential buyers

Size (US$ millions) 2010 results (if available)

Name Description Target markets/ geographies Market Operating PAT Rationale Recent M&A activity cap revenue

Access Bank Established in Nigeria in 1988 the bank offers The bank has 148 branches with Access Bank has only been present in Zambia for c.3. No publically available data on African M&A plc institutional banking (full range of services to the primary contribution 966 447 71 years. The acquisition of Acid could grow its market activity since 2005. multinational, large domestic corporates and coming from Nigeria. Other position in the Zambian market and increase the other institutional clients, 41% contribution locations include eight other overall contribution to the Access Bank group (now to total assets), commercial banking (serves African countries (including 3 at 0.03%). all non-institutional clients, 29%), investment branches in Zambia) and the banking (28%), and retail banking (2%). U.K.

Ecobank A full service regional banking institution in The bank is present in twenty As one of the lowest-ranked banks in Zambia an No public M&A activity in Africa since the Transactional Africa owned and managed by the African nine west, central and east and 993 900 132 acquisition of Acid could help grow Ecobank's acquisition of 75% in Ecobank Kenya and Incorporated private sector. In October 1985, Ecobank was southern African countries. presence in the Zambian banking market. 90% in Banque Agricole Et Commerciale Du incorporated with an authorised capital of Burkina in 2008. US$100 million.

African ABC Holdings Limited is the parent company Present in Botswana, Despite its presence in Zambia since 1999, ABC No publically available data on African M&A Banking of a number of sub-Saharan Africa banks Mozambique, Tanzania, Zambia n/a 60 * 9 * Group is not a leading competitor in the Zambian activity. Corporation operating under the BancABC brand that and Zimbabwe. banking market. An acquisition of Acid could help to offer a diverse range of financial services bolster it's position in the market, although it may including personal, business and corporate lack the necessary scale to acquire Acid. banking as well as asset management, stockbroking and treasury services.

Standard Standard Chartered PLC is a holding Its geographical areas of Given its emerging market geographical focus, On July 1, 2009, it completed the acquisition Chartered plc company. Through its subsidiaries, the interest are predominantly 61,098 16,062 4,332 Standard Chartered could use the acquisition of Acid of its remaining 75% interest in First Africa Company is engaged in the business of retail focussed on emerging markets to help expand their presence in Zambia; the bank is Group Holdings Limited. and commercial banking, and the provision including Hong Kong, Asia already one of the principal banks in the country On 27 April 2010 it acquired the African of other financial services. It operates in two Pacific, Middle East and South and the acquisition of Acid could help to make custody and fund administration business of business segments: Consumer Banking and Asia, India, Sinagapore, Korea Standard Chartered the leading bank in the country. Barclays Plc, the listed UK based banking Wholesale Banking. and Africa (including Zambia). An acquisition may however be restricted by group. competition regulations.

Source: BoZ, Deloitte analysis Note: * 2009 reported results

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 59 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 4 Potential buyers

Size (US$ millions) 2010 results if available

Name Description Target markets/ Market Operating PAT Rationale Recent M&A activity geographies cap revenue

Standard Bank Offers a range of banking and related financial services. It has Operates in 17 countries Standard Bank is already one of the top No publically available M&A activity data Group (Stanbic three business units: personal and business banking; in Africa (including 23,108 8,761 1,606 four banks in Zambia. An acquisition of since 2008. Bank) corporate and investment banking, and Wealth - Liberty. Zambia as Stanbic Bank), Acid would increase its market share and N.B. Since 2007 ICBC owns 20% in Standard and 16 countries outside overall presence in the country. An Bank. Africa. acquisition may, however, be restricted by competition regulations.

Barclays Barclays PLC (Barclays) is a global financial services provider 15% of Barclays' The acquisition of Acid could be used to Barclays Plc, bought 55% in Absa Group Ltd., engaged in retail banking, credit cards, corporate and operations are in Africa 55,004 51,455 3,833 cement its leading position in the Zambian South Africa’s largest retail bank, for $4.48 investment banking and wealth management. Barclays has partly through it's banking market. An acquisition may, billion in 2005, promising the two would two business groups: Global Retailing and Commercial investment in the ABSA however, be limited by competition expand in Africa under Absa’s banner. Five Banking, and Investment Banking and Investment Group. restrictions. years later, after spending the equivalent of Management. half of Namibia’s gross domestic product to buy control of Absa, profit from the unit has dwindled.

United Bank Product of merger between UBA and Standard Trust Bank (the Present in the UK, France Has the necessary scale to acquire Acid and Acquired a c.56% stake in the Continental for Africa 3rd and 5th largest banks in Nigeria), and subsequent and the US as well as 17 1,413 945* 11* given it is one of the smallest banks in Bank of Benin in January 2009. Since then, Zambia acquisition of Continental Trust Bank. Provide wholesale, African countries. Zambia could likely use the acquisition to there has been no publically available M&A commercial, consumer and transactional banking services as improve its position. activity data. well as investment banking, asset management, wealth management, merchant banking and securities services. Within the African business clusters, it provides wholesale, correspondent, commercial, consumer and transactional banking services to target customers.

Zambia Offer retail and corporate banking in Zambia. Since 2007 it It is one of the leading One of the leading banks in Zambia and No publically available data on African M&A National has partnered with Rabobank who own 45.59% of the bank. banks in Zambia with 247 110 23 has sufficient scale required to acquire activity. Commercial The Government of the Republic of Zambia own 25% in close to 50 branches and Acid. An acquisition could help the bank Bank Zanaco. agencies nationwide. consolidate its position more quickly. An acquisition may be restricted by competition regulations.

Source: BoZ, Deloitte analysis Note: * 2009 reported results

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 60 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 4 Potential buyers

Size (US$ millions) 2010 results (if available)

Name Description Target markets/ Market cap Operating PAT Rationale Recent M&A activity geographies revenue

Credit Suisse A financial services company providing Predominantly operates In January 2010 Credit Suisse published a paper on Africa's US$80m investment in Acid in advisory services, solutions and in the U.S. and 51,798 36,370 5,930 promising development prospects and growth outlook. Investment March 2008. products to companies, institutional Switzerland with c.24% of in Acid could help them to capitalise this potential in Zambia. We clients and private clients globally, as operations in EMEA and also note their existing US$80m investment in Acid, although there well as to retail clients in Switzerland. It c.6% in Asia Pacific. are questions of whether this was truly an acquisition rather than a operates in three business segments: lending transaction. Private Banking, Investment Banking and Asset Management.

Indo- Zambia Founded in 1984 and formed through It has a network of 14 The bank is one of the larger in Zambia and therefore would benefit No publically available data on Bank three state-owned Indian banks, Indo branches in various parts n/a 28 5 from acquiring the assets of Acid. However, Indo-Zambia is 40% African M&A activity. Zambia Bank is a significant employer of the country. state owned and furthermore, may be restricted by competition in the communities that it serves and is restrictions. an active participant in corporate social responsibilities in Zambia. It is 40% owned by the Government of Zambia.

International ICB Financial Group Holdings AG is the ICB is headquartered in Although it would benefit from the acquisition of Acid in Zambia, The group has not reported any Commercial holding company for several banks Switzerland and has 229 69 5.2 the bank made an overall loss in 2009 both locally and at the group acquisitions since the beginning Bank Zambia operating in Africa, Asia and Europe. presence in Albania, level. Likely to lack the necessary scale to be able to fund the of 2008. The ICB Banking Group has within the Bangladesh, Lao, business going forward. However, the group is expanding and last fourteen years established or Malaysia, Indonesia and consolidating its presence in countries where financial services acquired commercial banks in Africa, ten countries in Africa. represent a significant pillar of the economy and constitute the Asia and Europe. fastest growing sector in the country. The number of banks and branches is expected to increase further with ICB extending its reach to other countries to further strengthen and expand its position as an international Banking Group.

Source: BoZ, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 61 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 4 Potential buyers

Size (US$ millions) 2010 results (if available)

Name Description Target markets/ Market Operating PAT Rationale Recent M&A activity geographies cap revenue

HSBC Holdings HSBC Holdings plc (HSBC) is a global banking and financial Its international network HSBC had sought to acquire Nedbank, In October 2010, after eight weeks of talks plc services organizations. It consists of Personal Financial covers 87 countries and 186,828 80,014 13,159 South Africa’s fourth - largest lender, to HSBC abandoned its bid to buy a $7.3bn Services (PFS), including consumer finance, and Commercial territories in six help it expand in emerging markets and controlling stake in South Africa's Nedbank Banking (CMB), and two global businesses, Global Banking geographical regions; profit from trade flows in Africa. Group from Old Mutuel plc. The acquisition and Markets (GB&M), and Global Private Banking (GPB). Europe, Hong Kong, Rest Given the size of the Nedbank acquisition, of Acid is unlikely to provide the size and of Asia-Pacific, the Middle it may be unlikely to pursue an acquisition scale that HSBC would have gained from an East, North America and of Acid's scale. acquisition of Nedbank. Latin America.

Capitec Bank Capitec Bank Holdings Limited is a South African bank The bank operates The bank is amongst the youngest of South As of 7 December 2009 35.62% of the bank controlling company. The Company's subsidiaries are involved predominantly in South 2,242 303 67 Africa's retail banks. Currently not present was owned by PSG Group Limited, the South in retail banking and the wholesale distribution of consumer Africa with c.460 branches in Africa and it may not wish to expand African based financial services company. goods. nationwide. until fully established in South Africa.

First Alliance A small financial services provider in Zambia providing retail The bank has three Likely to be too small to acquire Acid. No publically available data on African M&A Bank Zambia services to the communities it services. Its niche market is the branches in Zambia n/a 8 3 Additionally its niche customer base is activity. corporate clients in the mining and manufacturing sectors of likely to be concentrated in the copper belt the Zambian economy. area. Acid could provide First Alliance with a branch network that allows the bank to gain access to the remainder of the Zambian population.

Nedbank The group provides a wide range of wholesale and retail Controlling stake owned by Old Mutuel Three deals in 2009-2010 in South Africa in banking services and a growing insurance, asset management 10,504 3,516 716 which is strugling to fund debt structure - the financial services sector. and wealth management offering predominantly in South unlikely to want to acquire Acid Africa.

Source: BoZ, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 62 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 4 Potential buyers

Size (US$ millions) 2010 results (if available)

Name Description Target markets/ geographies Market cap Operating PAT Rationalle Recent M&A activity revenue

ABSA group The Absa Group Limited (Absa), listed Absa's business is conducted Barclays owns 55% of ABSA with struggling Completed a deal at the beginning of 2010 to acquire a 50% on the JSE Limited, is one of South primarily in South Africa. It 14,029 5,476 1,196 profits currently – unlikely to be able to stake in Sanlan Home Loans, a South African based provider Africa’s largest financial services also has equity holdings in compete in a market where Barclays is of home loans. groups offering a complete range of banks in Mozambique and currently active banking, assurance and wealth Tanzania and representative management products and services. offices in Namibia and Nigeria.

Investrust Provide retail and commercial Have 14 branches and three It is one of the more substantially placed No publically available data on African M&A activity. Bank banking services in Zambia. agencies in Zambia. 11 14* 2* banks in Zambia. Product offering is similar to that of Acid and it could use Acid's assets to consolidate its position. May lack the necessary scale.

Cavmont CCBL provides an array of banking One of the smaller banks in Zambia - unlikely No publically available data on African M&A activity. Capital Bank services including community, retail, 5 1.9 (0.9) to have necessary scale necessary to acquire investment, merchant and corporate Acid banking.

Intermarket A full-service African bank. The bank operates in Unlikely to want to acquire another bank in In March 2010, at the direction of the Bank of Zambia, Banking Cameroon, Equatorial n/a 0.2 (0.4) Zambia so soon after their acquisition of Afriland First Bank Group, based in Cameroon, acquired 80% Corporation Guienea, Sao Tome and Intermarket. Does not have the scale and shareholding in Intermarket Bank, for an undisclosed sum of (Afriland First Principe, Democratic Republic profitability required to acquire Acid. money. Sabre Capital, the former majority shareholders in Bank Group) of the Congo, Zambia, Liberia, Intermarket Bank retained 20% ownership. Afriland also took France and China. 80% shareholding in Intermarket Securities, which is 100% owned by Intermarket Bank. The new majority owners will keep the Intermarket brand until 2013 when they will switch to the Afriland brand.

Source: BoZ, Deloitte analysis Note: * 2009 reported results

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 63 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 5 Comparable listed companies

Comparable company analysis Company-specific metrics Country level metrics Company P/E P/E P/E P/B PBT/Operati Annual PAT RoE Cr imprmnt Loans to Cost to Non Interest Interest Net interest Income per Real GDP Population of Financial Domestic credit Hist'cal Current F'cast Hist'cal ng income growth (PAT / charges / av Deposits income interest income / expense / margin capita (USD) growth largest market market provided by 2009-10 average equity) L&A (%) ratio income / average average 2009 (average (million) development banking sector net interest loans and deposits 2011-12) 2010 Rank out of 132 (% of GDP) income advances countries (2008) (2010)

Finance Bank (Dec 2010 prudential) 2% nmf 3.9% 68% 85% 131% 18.8% 4.7% 14.1% 970 7.0% 13.3 49 19% Finance Bank (normalised) 25% 16% 1.6% 58% 73% 322% 25.9% 8.6% 17.3% Zambia overall 21% 13% 3.4% 47% 72% 89% 24.3% 2.5% 21.7%

Zambia Cavmont Capital Holdings Zambi @ 1.3x nmf nmf @ 2.6% 34% 120% 105% 39.4% 3.2% 36.2% 970 7.0% 13.3 49 19% Investrust Bank PLC @ 1.4x nmf nmf @ 7.6% 79% 79% 74% 22.8% 6.1% 16.7% 970 7.0% 13.3 49 19% Standard Chartered Bank Zambia 26.2x 23.2x 10.9x 48% 66% 46% 1.8% 37% 49% 109% 23.0% 1.2% 21.8% 970 7.0% 13.3 49 19% Zambia National Commercial Ban 13.7x 3.4x 30% 23% 28% 2.4% 63% 65% 80% 25.6% 1.7% 23.8% 970 7.0% 13.3 49 19% Mean 4.2x 3.6% 53% 78% 92% 27.7% 3.1% 24.6% Mean (excl StanChart Zambia) 2.0x 4.2% 59% 88% 87% 29.3% 3.7% 25.6% Median 2.4x 2.5% 50% 72% 93% 24.3% 2.5% 22.8%

Standard Chartered Plc 13.6x 12.5x 10.8x 1.5x 13% 0.3% 87% 56% 90% 4.6% 1.5% 3.1%

South Africa Standard Bank Group Limited 14.5x 11.0x 9.0x 1.5x 30% 13% 1.0% 90% 62% 104% 8.7% 4.3% 4.4% 5,760 4.3% 49.9 9 215% Firstrand Limited 11.6x 11.0x 9.3x 1.9x 35% 20% 1.3% 85% 59% 164% 9.1% 4.5% 4.6% 5,760 4.3% 49.9 9 215% Absa Group Limited 11.6x 9.7x 8.2x 1.5x 32% 15% 1.1% 133% 58% 83% 10.2% 7.9% 2.3% 5,760 4.3% 49.9 9 215% Nedbank Group Limited 14.8x 11.4x 9.3x 1.5x 27% 11% 1.3% 97% 56% 80% 9.6% 5.8% 3.8% 5,760 4.3% 49.9 9 215% Capitec Bank Holdings Limited 25.5x 18.3x 13.5x 8.4x 32% 28% 13.3% 71% 54% 102% 43.0% 9.2% 33.8% 5,760 4.3% 49.9 9 215% Mean15.6x 12.3x 9.9x 3.0x 31% 17% 3.6% 95% 58% 16.1% 6.3% 9.8% Mean (excl Capitec) 13.1 x 10.8 x 9.0 x 1.6 x 31% 15% 1.2% 101% 59% 9.4% 5.6% 3.8% Median14.5x 11.0x 9.3x 1.5x 32% 15% 1.3% 90% 58% 9.6% 5.8% 4.4%

Botswana, Mauritius & Namibia Standard Chartered Bank Botswana Ltd 11.9x 11.3x 10.8x 4.2x 43% -24% 66% 1.8% 60% 52% 48% 21.5% 5.4% 16.0% 6,260 6.2% 1.8 47 -11% First National Bank Of Botswana 15.5x 14.2x 12.7x 5.3x 59% 7% 42% 0.8% 56% 39% 75% 20.3% 5.0% 15.4% 6,260 6.2% 1.8 47 -11% Mauritius Commercial Bank Limited 13.9x 12.0x 10.1x 1.9x 54% -15% 18% 0.3% 83% 47% 53% 9.0% 3.3% 5.7% 7,250 4.0% 1.3 29 112% State Bank Of Mauritius Limited 15.1x 13.8x 11.4x 1.8x 67% -8% 13% 0.8% 71% 38% 46% 11.7% 3.8% 7.9% 7,250 4.0% 1.3 29 112% Fnb Namibia Holdings Ltd. @ @ @ 1.5x 45% 25% 24% 0.1% 93% 52% 90% 13.2% 5.6% 7.7% 4,270 4.4% 2.2 24 44% Mean14.1x 12.8x 11.3x 2.9x 54% -3% 33% 0.7% 73% 46% 62% 15.2% 4.6% 10.5% Mean (excl Standard Chartered Botswana and FNB 14.5x 12.9x 10.8x 1.8x 55% 0% 18% 0.4% 82% 46% 63% 11.3% 4.2% 7.1% Botswana) Median14.5x 12.9x 11.1x 1.9x 54% -8% 24% 0.8% 71% 47% 53% 13.2% 5.0% 7.9%

Kenya & Tanzania Equity Bank Limited 12.8x 10.9x 8.6x 3.4x 47% 68% 28% 2.7% 75% 53% 82% 19.5% 2.4% 17.1% 760 5.7% 40.0 27 40% Barclays Bank Of Kenya Limited 12.2x 11.9x 10.7x 3.8x 40% @ 38% 0.5% 74% 60% 57% 18.7% 2.2% 16.5% 760 5.7% 40.0 27 40% Standard Chartered Bank Kenya Limited 14.5x 10.8x 10.3x 5.0x 56% 14% 31% 0.8% 60% 43% 69% 16.9% 1.6% 15.3% 760 5.7% 40.0 27 40% Kenya Commercial Bank Limited 10.6x 8.5x 6.6x 2.0x 34% 76% 23% 1.6% 75% 61% 56% 17.1% 1.9% 15.1% 760 5.7% 40.0 27 40% Co-Operative Bank Of Kenya Ltd (The) 13.4x 10.8x 8.0x 3.0x 37% 55% 25% 1.1% 68% 68% 53% 16.2% 2.9% 13.3% 760 5.7% 40.0 27 40% National Bank Of Kenya Limited @ 10.7x @ 1.6x 40% 38% 21% 2.1% 44% 57% 63% 31.9% 2.4% 29.6% 760 5.7% 40.0 27 40% Crdb Bank Plc 7.9x @ @ 1.6x 38% 9% 21% 2.1% 56% 55% 58% 15.4% 2.0% 13.4% 500 7.3% 45.0 90 17% Mean11.9x 10.6x 8.8x 2.9x 42% 43.3% 27% 1.6% 65% 57% 63% 19.4% 2.2% 17.2% Mean (excl Standard Chartered Kenya) 11.4x 10.6x 8.5x 2.6x 39% 49.1% 26% 1.7% 65% 59% 61% 19.8% 2.3% 17.5% Median12.5x 10.8x 8.6x 3.0x 40% 46.4% 25% 1.6% 68% 57% 58% 17.1% 2.2% 15.3%

Nigeria First Bank Of Nigeria Plc 13.2x 10.1x 8.1x 1.3x 20% 10% 4.8% 81% 59% 34% 22.7% 6.3% 16.3% 1,190 6.2% 158.3 84 27% Guaranty Trust Bank Plc 12.3x 10.2x 8.9x 2.0x @ 19% n/a 108% n/a n/a n/a n/a n/a 1,190 6.2% 158.3 84 27% Zenith Bank Plc 12.8x 9.1x 6.8x 1.3x 34% @ 0.4% 84% 65% 65% 11.8% 2.9% 9.0% 1,190 6.2% 158.3 84 27% United Bank Of Africa Plc 14.7x 8.4x 5.6x 1.1x 9% 0% 2.0% 86% 70% 58% 13.2% 3.7% 9.5% 1,190 6.2% 158.3 84 27% Access Bank Nigeria Plc 12.9x 7.0x 5.4x @ 6% 6% 3.7% 98% 68% 41% 12.6% 3.3% 9.4% 1,190 6.2% 158.3 84 27% Diamond Bank Plc 13.8x 7.4x 4.2x 0.8x @ 1% n/a 81% n/a n/a n/a n/a n/a 1,190 6.2% 158.3 84 27% Mean13.3x 8.7x 6.5x 1.3x 17% 7% 2.8% 90% 65% 15.1% 4.0% 11.0% Mean (excl Guaranty Trust Bank) 13.5x 8.4x 6.0x 1.1x 17% 4% 2.8% 86% 65% 15.1% 4.0% 11.0% Median13.0x 8.7x 6.2x 1.3x 14% 6% 2.9% 85% 66% 12.9% 3.5% 9.4%

Interest rate spread is the different between the interest rates on loans and interest rates on deposits Cost-to-income ratio is total operating expenses (excl credit impairment charges) as a percentage of total income In the calculation of loans-to-deposits, "debt securities in issues" is excluded from deposits Note 1: The Egyptian Exchange has been closed between 30 Jan and 22 Mar 2011 inclusive Thomson, Bloomberg, Annual Reports and results announcements, World Bank, EIU, IMF, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 64 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 5 Comparable listed companies

Correlation between return on equity (RoE) and price to book (P/B)

All banks South Africa

y = 41.117x - 4.1864 Standard Chartered R² = 0.7835 12.0x Zambia 9.0x Capitec y = 11.156x + 0.3769 8.0x 10.0x R² = 0.4173 7.0x Capitec 8.0x 6.0x

5.0x 6.0x 4.0x

4.0x 3.0x Standard Chartered 2.0x 2.0x Botswana FirstRand 1.0x 0.0xUBA 0.0x 0% 10% 20% 30% 40% 50% 60% 70% 0% 5% 10% 15% 20% 25% 30% “All Banks” includes South Africa, Botswana, Kenya, Mauritius, Nigeria, Zambia and Morocco.

Nigeria Botswana, Mauritius, Namibia, Kenya, Tanzania and Zambia

2.5x 12.0x StanChart Zambia y = 10.98x + 0.2209 2.0x 10.0x R² = 0.3842

1.5x 8.0x y = 5.0512x + 0.9797 R² = 0.9003 6.0x 1.0x FNB Botswana

4.0x 0.5x StanChart Botswana 2.0x 0.0x FNB Namibia

0% 5% 10% 15% 20% 25% 0.0x 0% 10% 20% 30% 40% 50% 60% 70% Mergermarket, Annual Reports, Mint, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 65 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 6 Comparable transaction analysis

Transactions involving controlling stakes

Ann Date Compl Target Company Target Description Target Country Bidder Company Implied Equity PE Multiple RoE PB Multiple Date Value (GBP million)

Dec-09 Intermarket Banking Corporation (Zambia) Limited Zambian retail bank Zambia Afriland First Group 4 nmf nmf @

Jan-09 Jan-09 Continental Bank Benin SA (56.4% Stake) Republic of Benin based company engaged in Benin, Republic United Bank for Africa Plc 38 nmf nmf 4.8x banking business of

Nov-08 Credit du Congo S.A. (81% Stake); Congo based bank and subsidiary of Credit Congo; Attijariwafa Bank 280 14.1x 25% 3.4x Societe Ivoirienne de Banque S.A. (51% Stake); Agricole SA; Ivory Coast; Union Gabonaise de Banque (59% Stake); Ivory Coast based bank; Gabon; Credit du Senegal S.A. (95% Stake) Gabon based retail bank; Senegal [Note 3] Senegal based retail bank

Aug-08 Aug-08 Banque Agricole Et Commerciale Du Burkina (90% Stake) Burkina Faso based bank Burkina Faso Ecobank Transnational Incorporated 12 81.2x 1.0x [Note 1]

May-08 May-08 Nedfin Limited Zambia based provider of micro finance Zambia Blue Employee Benefits (Pty) Limited 5 9.6x 119% 7.1x

May-08 May-08 Omnifinance Bank [Note 2] Ivory Coast based bank Ivory Coast Access Bank Plc 10 nmf nmf 0.7x

Apr-08 Apr-08 Bramer Banking Corporation Ltd (60% Stake) Mauritius based commercial bank Mauritius British American Investment Co. (Mtius) Ltd 11 11.5x 2.0x

Mar-08 Mar-08 First City Bank of Mauritius Mauritius based bank Mauritius I&M Bank Limited; CIEL Investment Limited 8 nmf nmf 2.1x

Jan-08 Jun-08 Ecobank Kenya (75% Stake) Kenya based regional bank Kenya Ecobank 10 10.8x 8% 0.7x

Nov-07 May-08 West Africa Bank (79.15% Stake) Senegal based bank Senegal Attijariwafa Bank 105 9.4x 24% 2.4x

Jul-07 Jun-08 Stanbic Bank Kenya Ltd Kenya based bank Kenya CFC Bank 98 20.0x 4.8x

May-07 Jul-07 Banco de Desenvolvimento e Comercio (BDC) (80% Stake) Mozambique bank. Mozambique First National Bank of Southern Africa Ltd 12 7.3x 3.0x

Aug-10 Banque Indosuez Mer Rouge Djibouti based bank Eritrea,Ethiopia Bank of Africa @@@

Apr-09 Apr-09 Orient Bank Limited (80% Stake) Uganda based banking firm Uganda Platinum Habib Bank @@@

Dec-08 Dec-08 Spring Bank (67% Stake) Nigeria Platinum Habib Bank @@@

Apr-08 Jul-08 Uganda Microfinance Limited Uganda based microfinance services provider Uganda Equity Bank Ltd @@@ for entrepreneurs and low-income earners

Apr-08 Oct-08 Woolworths Financial Services (Proprietary) Limited (50% Stake) South Africa based financial services and South Africa Absa Group Limited @@@ consumer retailer.

Note 1: (H-1) multiples Note 2: Current multiples Note 3: The agreement between Attijariwafa and Crédit Agricole also involves Société Camerounaise de Banque. However, this transaction has not been completed yet nmf: not meaningful @: not available Mergermarket, Annual reports, Mint, BoZ, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 66 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 6 Comparable transaction analysis

Transactions involving minority stakes

Ann Date Compl Target Company Target Description Target Country Bidder Company Implied Equity PE Multiple RoE PB Multiple Date Value (GBP million)

Dec-09 Jan-10 Capitec Bank (less than 1% Stake) Listed retail bank South Africa PSG Group Limited 257 9.6x 2.2x

Feb-09 Sep-09 Caixa Economica de Cabo Verde S.A. (27.41% Stake) Cape Verde based commercial bank Cape Verde Geo Capital 36 19.1x 2.2x

Sep-08 Dec-08 Banco de Fomento Angola (BFA) (49.9% Stake) Angolan bank owned by listed Portuguese Angola,Portugal Unitel S.A 476 9.2x 2.5x bank BPI

Jun-08 Jun-08 Banque Populaire du Rwanda (35% Stake) Rwandian retail bank. Rwanda Rabo Financial Institutions Development B.V. 13 45.9x 1.2x [Note 1]

Nov-07 Dec-07 Equity Bank Ltd (24.99% Stake) Kenya based bank Kenya Helios Investment Partners LLP 327 58.7x 20.1x

Oct-07 Mar-08 Standard Bank Group Limited (20% Stake) South Africa based financial services companySouth Africa Industrial and Commercial Bank of China 13,097 16.9x 3.3x Limited

Apr-07 Jun-07 Capitec Bank Holdings (16.53% Stake) South Africa based bank controlling company South Africa PSG Group Limited 239 20.0x 3.5x

Feb-07 Jun-07 Diamond Bank Plc Nigerian bank. Nigeria CDC Group Plc ; Actis Africa Fund 2 LP; 358 21.0x 2.4x Canada Investment Fund for Africa

Dec-06 Apr-07 Zambia National Commercial Bank PLC (45% Stake) [Note 2] Zambia based private bank. Zambia Rabobank NV 4 4.3x 12% 0.5x

Dec-09 Dec-09 Banque Commerciale du Congo SARL (25.6% Stake) Democratic Republic of Congo based bank Congo, the George Forrest (private investor) @@@ Democratic Republic of

May-08 May-08 Millennium Angola (49.9% Stake) The Angola based bank Angola Sonangol E P; Banco Privado Atlantico SA @ @ @

Note 1: (H-1) multiples Note 2: Current multiples nmf: not meaningful @: not available Mergermarket, Annual reports, Mint, BoZ, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 67 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 7 Intangible asset valuation

Intangible asset valuation Commentary

ZMK'm £'m R'm USD'm • Given that all the tangible assets and liabilities of Acid have been considered in arriving at 7,579 694 4,646 an adjusted fair value position, we consider that the sum of the returns expected by management of the forward looking business over the capital that will be contributed, would Year 4 normalised reflect as good a proxy as is available for the intangible asset value of the business. Earnings based Annual PAT 41,085.5 5.4 60.5 8.8 • The initial scenario shown opposite yields a potential intangible asset value of c.ZMK35.8bn. P/E multiple 10.0 10.0 10.0 10.0 This is based on the forecast assumptions and is determined by capitalising PAT in the Gross value 410,855.1 54.2 604.9 87.6 fourth year at a multiple of 10.0x, which is then discounted back to a present value at a cost Year 4 shareholders equity 217,474.0 of equity of 30%. The value in excess of the initial total investment of ZMK112.7bn is considered as the potential value of the intangible assets of Acid. Implied P/BV 1.9 x • The implied price to book value is 1.3x under this scenario. Period 4.5 4.5 4.5 4.5

Discount rate 30%

Discount factor 0.3071 0.3071 0.3071 0.3071

Net present gross value 126,166.4 16.6 185.8 26.9 Net present value of dividend distribution 22,263.7 2.9 32.8 4.7 Total 148,430.1 19.6 218.5 31.7

Shareholders equity 112,667.3

Implied P/BV 1.3 x

Value in excess of investment 35,762.8 4.7 52.7 7.6

Source: Management, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 68 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 7 Intangible asset valuation

Intangible asset valuation Commentary • We present our sensitised case alongside. ZMK'm £'m R'm USD'm 7,579 694 4,646 • Making only marginal changes to our assumptions under the sensitivities (an interest margin squeeze of 0.5%, non-interest and other income growth of 2.5% vs. 2.75% (over inflation) Year 4 normalised Earnings based and deposit growth rate of 18% instead of 20%) has a significant impact on the potential Annual PAT 31,950.0 4.2 47.0 6.8 value of the intangible assets which falls to c.ZMK5.5bn. P/E multiple 10.0 10.0 10.0 10.0 Gross value 319,500.2 42.1 470.4 68.1 • This goes to demonstrate the sensitivity (and the susceptibility to obtaining low intangible values) of the forecasts to small changes in assumptions. Year 4 shareholders equity 204,737.6 • Under this scenario there is an implied price to book value of 1.0x. Implied P/BV 1.6 x

Period 4.5 4.5 4.5 4.5

Discount rate 30%

Discount factor 0.3071 0.3071 0.3071 0.3071

Net present gross value 98,112.9 12.9 144.5 20.9 Net present value of dividend distribution 20,087.8 2.6 29.6 4.3 Total 118,200.7 15.6 174.0 25.2

Shareholders equity 112,667.3

Implied P/BV 1.0 x

Value in excess of investment 5,533.4 0.7 8.1 1.2

Source: Management, Deloitte analysis

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 69 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft Appendix 8 Provisions analysis - work steps undertaken

Detailed sample Remaining sample

• A sample of 10 loan files was selected based on principal value, provision value • A total of 10 customers were selected for the loan file review, the following 37 and percentage change in provision between 31 st May 2010 and 2 th February customers (“remaining sample”) were covered by a discussion with 2011 positions. management to assess provision levels. • The sample selected was, as follows: The work steps for the 37 customers were as follows: 1. Africrete • Agree loan balances to Acid loan balance listings as at 28 th February 2011. 2. Finsbury Investments Ltd • Interview loan officer to obtain a summary of developments from 1 st June 2010 to 28 th February 2011. 3. Flame Promotions & Procurement • High-level review of provision levels as at 28 th February 2011 by considering 4. Hotellier Ltd the net realisable value. 5. Mines Air Services Ltd t/a Zambian Airways 6. Mushe Milling Ltd 7. Nchilla Farms 8. Ody's Work Limited 9. Staykleen Zambia Ltd 10. Zambezi Source Investments/Lodge Ltd • For the sample above, the following work steps were carried out: – Agreed loan balances to bank statements as at 28 th February 2011. – All credit files were reviewed and developments from 1 st June 2010 to 28 th February 2011 were captured. – The relevant loan officers were interviewed to fully understand developments. – Following our review of the credit file and credit officer interview, the provision levels were assessed as at 28 th February 2011 by considering the net realisable value.

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 70 For discussion purposes only. No party may place reliance on this draft Appendix 8 Provisions analysis – provision variance

28 th February 2011

Exposure Deloitte provision Acid provision Borrower Difference (ZMKm) (ZMKm) (ZMKm) (ZMK)

Africrete 1,579 1,191 1,129 62 Finsbury Investments Ltd 8,564 8,564 4,300 4,264 Flame Promotion & Procurement Ltd 28,352 28,352 15,807 12,545 Hotellier Ltd 42,791 42,791 21,144 21,647 Mines Air Services Ltd t/a Zambian Airways 34,765 34,765 34,765 0 Mushe Milling Ltd 12,495 0 0 0 Nchila Farms Ltd 15,801 0 1,482 -1,482 Ody's Work Limited 48,525 24,263 24,263 0 Staykleen Zambia Ltd 309 119 163 -44 Zambezi Source Investments/Lodge Ltd 406 0 140 -140 Barkat Ali 570 360 386 -26 Betternow Family Ltd 33 0 0 0 Celtel Zambia PLC 4,446 0 0 0 Cladava Mining Ltd 49,611 49,611 47,403 2,207 Dar Farms & Transport Ltd 0 0 0 0 El Sewedy Electric Ltd 6,669 0 0 0 E-Switch Zambia Ltd 0 0 0 0 Finance Building Society 4,323 0 0 0 Finsbury Park Ltd 4,288 4,288 0 4,288 Food Reserve Agency 57,961 0 0 0 Ital Terazzo Ltd 27,489 27,489 27,489 0 J Majere Gondwe Enterprises Ltd 416 0 0 0 Kagem Mining Ltd 0 0 0 0 Kaya Rex International Ltd 0 0 0 0 King DM 832 832 812 20

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 71 For discussion purposes only. No party may place reliance on this draft Appendix 8 Provisions analysis – provision variance

28 th February 2011

Exposure Deloitte provision Acid provision Borrower Difference (ZMKm) (ZMKm) (ZMKm) (ZMK) Lamasat International Ltd 0 0 0 0 Little Park Ltd 128 128 127 1 Livingstone Management Ltd 452 0 0 0 Lusaka Premier Health Clinic Ltd 1,065 1,065 1,065 0 Metro Investments Ltd 9,760 0 0 0 Miracle Life Ministries 6,387 0 0 0 Mr Noel Nkoma 428 0 268 -268 Mr Tom Mtine 203 0 0 0 Mukuyu Homes 0 0 0 0 Olympic Milling Ltd 2,949 0 0 0 Professional Life Assurance 0 0 0 0 PTA Bank 0 0 0 0 Rex Desmond Ellis 0 0 0 0 The Colosseum Ltd 4,477 0 0 0 Tripple S Ranch 11,681 0 0 0 Wangwa farm Ltd 0 0 0 0 Wangwa Roses Ltd 0 0 0 0 Yezyani Enterprizes Ltd 774 774 774 0 Yustina Cotton & Oil Ltd in receivership 5,405 5,405 5,405 0 Zambezi Portland Cement Ltd 48,218 48,218 46,494 1,723 Zambezi Sawmills Ltd 3,862 0 0 0

TOTAL 446,015 278,174 233,417 44,757

TOTAL (excluding Hotellier) 403,224 235,383 212,273 23,110

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 72 For discussion purposes only. No party may place reliance on this draft Appendix 8 Intangible asset valuation

31st May 2010 28 th February 2011

BoZ Exposure Exposure BoZ provision Acid provision Difference provision Observations Borrower (ZMKm) (ZMKm) (ZMKm) (ZMK) (ZMKm) (ZMKm) Flame Promotion & 28,418 28,418 28,352 14,838 15,807 969 • Refer to Hotellier Limited for a synopsis of developments since 31/05/10. Procurement Ltd • Note Acid’s total exposure on the three linked borrowers (Ody’s, Hotellier, Flame) is approximately USD25m while PTA has an exposure of USD5.8m (excluding accrued interest). PTA has a USD12m first charge mortgage over the property. • Pre 10/12: As at October 2010, the bank’s proposed workout strategy entailed a cash payment of USD4m to be used to settle the debt of Flame, conversion of the Hotellier Limited's facilities into a term loan (5-7 year) secured by a second legal charge/mortgage on stand 19029 (petrol station and offices) together with the hotel and all infrastructure erected on the land and conversion of Ody’s Works facilities into a USD denominated term loan (5-7 year) secured by liquid marketable security. The bank suggested that up to USD 2-3m could be waived in return for cash and security. Term sheets were issued but not signed. • Post 10/12: Management advise that the borrower is disputing the previous Hotellier Ltd 43,144 21,572 42,791 21,396 21,144 -252 restructuring proposal. The current proposal is that all exposure that can be directly linked to the construction of the hotel complex is transferred into the name of Hotelllier subject to FIL foregoing its 51% equity. This is currently in dispute as the 49% shareholder is taking legal action to have the sale rescinded and the shares returned back to him on the grounds of non payment and failure to deliver on certain commitments regarding arranging additional finance. PTA Bank has continued to fund the development ($16m of a committed $18m has been provided to date) which is due to complete in July 2011. No revised valuation has been sought and the borrower values the development at $45m to $60m. Acid management has yet to fully assess Hotellier’s ability to service the restructured loan as no forecasts have been provided. The developer privately indicated that he has other investors in the wings as soon as he has reversed the Finsbury sale. PTA have security to the value of c. $18m, leaving c. $27m for unsecured creditors. There is no visibility on the total unsecured creditor position, therefore it is difficult to ascertain a precise figure for provision. • Refer to Hotellier Limited for a synopsis of developments since 31/05/10. Ody's Work Limited 48,525 24,263 48,525 48,525 24,263 -24,263

Draft Report 17 June 2011 - Project Water: Assessment of the FirstRand offer 73 © 2011 Deloitte LLP. Private and confidential For discussion purposes only. No party may place reliance on this draft

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