FDH BANK PLC IPO FDH Bank PRE-LISTING STATEMENT FDH Bank Offer for Sale of 979,175,000 Ordinary Shares and Offer for Subscription of 401,031,250 Ordinary Shares each at an Offer Price of MWK10.00 per Share and admission to trade on the Malawi Stock Exchange A copy of the Pre-Listing Statement has been delivered to and registered by the Registrar of Financial Institutions (‘Registrar’). The Registrar has not checked and will not check the accuracy of any statements and they accept no responsibility therefor or for the financial soundness of FDH Bank Plc or the value of the securities offered. The Registrar registered this Pre-Listing Statement on 26th June 2020 CORPORATE ADVISORS PRE-LISTING STATEMENT Lead Corporate Advisor Legal Advisor This Pre-Listing Statement is in respect of an Offer for Sale of up Ernst & Young Tembenu, Masumbu & Company to 979,175,000 ordinary shares and Offer for Subscription of up to Chartered Accountants Malawi Gelu House 401,031,250 ordinary shares (‘Offer Shares’) each at an Offer Price of Apex House, Kidney Crescent Kamuzu Procession Rd MWK10.00 per Share and admission to trade on the Malawi Stock P.O. Box 530 P.O. Box 2777 rd Blantyre, Malawi Lilongwe, Malawi Exchange with effect from the commencement of trading on Monday, 3 Tel +265 (0) 1 876 476 Tel +265 (0) 1 756 286 August 2020 (‘the Listing Date’). [email protected] [email protected] Reporting Accountant Transfer Secretary This Pre-Listing Statement is not an invitation to the public to subscribe for shares but is issued in compliance with the rules and requirements of the Deloitte NICO Asset Managers Limited Malawi Stock Exchange for the purpose of giving information to the public Chartered Accountants Malawi Chibisa House P.O. Box 187 19 Glyn Jones Road with regard to FDH Bank Plc (‘FDH’, the ‘Bank’ or the Company’). PCL House P.O. Box 3173 Kaohsiung Road Blantyre, Malawi The information in this Pre-listing Statement has been extracted, in Blantyre, Malawi Tel +265 (0) 1 832 085 summarised form, from the full Prospectus to be issued by FDH on Tel +265 (0) 1 822 277 [email protected] th [email protected] Monday 29 June 2020. This Pre-listing Statement is not complete and Sponsoring Broker Media and Communications does not contain all of the information that investors should consider before subscribing for Offer Shares. Prospective investors should read Continental Capital Limited Corporate Graphics Limited the Prospectus in its entirety, including the ‘Risk factors’ section in the 1st Floor, Ulimi House 31 Chilembwe Road Prospectus, which describes certain risk factors that should be considered Sharpe Road P.O. Box 2455 P.O. Box 1444 Blantyre, Malawi before making an investment decision. Blantyre, Malawi Tel +265 (0) 1 879 135 Tel +265 (0) 1 830 679 [email protected] The Issuer and nature of business [email protected] ▶ FDH Bank Plc was incorporated in Blantyre, Malawi on 16th May 2007, Underwriter Underwriter with registration number 8328 under the Companies Act, 1984, as repealed by the Companies Act, 2013 (the ‘Act’), as a private limited First Discount House Limited Cedar Capital Limited Umoyo House Livingstone Towers liability company P.O. Box 512 P.O. Box 3340 ▶ The Company was re-registered as a public limited liability company Blantyre, Malawi Blantyre, Malawi under the Companies Act, 2013 on 3rd June 2020 Tel: +265 (0) 1 820 219 Tel: +265(0)1 831 995 ▶ The Bank is also registered with the Reserve Bank of Malawi (‘RBM’) [email protected] [email protected] as a commercial bank and authorized dealer for exchange control Underwriter Receiving Bank purposes Reunion Insurance Company Limited FDH Bank Plc ▶ The Bank’s registered office is situated at Umoyo House, Victoria Reunion House, Maselema Umoyo House Avenue, P O Box 512, Blantyre, Malawi Private Bag 242 P.O. Box 512 ▶ The principal function of FDH is to provide banking services through Blantyre, Malawi Blantyre, Malawi Tel: +265 (0) 1 874 4006 Tel +265 (0) 1 820 219 its main divisions of Retail Banking, Corporate Banking, International [email protected] info@ fdh.co.mw Banking, Structured Trade Finance, Treasury Management, Corporate Receiving Bank Auditors Advisory Services, Asset Finance and the related products are: ▶ Current accounts Standard Bank Plc Deloitte ▶ Savings accounts Standard Bank Centre Chartered Accountants Malawi African Unity Avenue PCL House ▶ Call and fixed deposits P.O. Box 30380 Kaohsiung Road ▶ Overdrafts and loans Lilongwe, Malawi Blantyre, Malawi ▶ Foreign exchange and international trade transactions Tel: +265 (0) 999 331 372 Tel +265 (0) 1 822 277 ▶ Custodial services [email protected] [email protected] ▶ Financial advice to corporate and private clients Attorneys ▶ The Bank currently employs approximately 700 people. st Mbendera & Nkhono Associates ▶ As at 31 March 2020, FDH acquired the entire equity of MSB 34 Link Road, Namiwawa Properties Limited (‘MSBP’). MSBP is a real estate investment company Off Independence Drive whose registered address is FDH House, Corner Victoria Avenue P.O. Box 1785 Blantyre, Malawi and Chilembwe Road, P.O. Box 512, Blantyre, Malawi. Information Tel: +265 (0) 1 822 027 and relevant disclosures on MSBP are included in Appendix 7 of the [email protected] Prospectus The IPO timing of the outcome of these discussions is presently unknown ▶ Initial Public Offer of MK13,802,062,500 in the ordinary share capital ▶ GoM acquired a 5.04% equity stake in FDH by virtue of the acquisition of FDH as follows: by FDHFHL of MSB No. of shares MWK ▶ MSB ESOP (‘MESOP’) was incorporated in 2016 to enable MSB Offer for sale 979,175,000 9,791,750,000 employee ownership in the shares of FDH Offer to subscribe excluding preference shares 89,931,250 899,312,500 ▶ FDH related companies are as follows: Offer to subscribe by preference share holders 311,100,000 3,111,000,000 ▶ MSBP: MSBP is a real estate investment company Total offer to subscribe 401,031,250 4,010,312,500 ▶ FDH Money Bureau Limited (‘FDHMBL’): FDHML offers forex Offer price 10.00 trading and international money transfer services including Total IPO 1,380,206,250 13,802,062,500 MoneyGram, Western Union, Hello Paisa and Mukuru Authorised number of shares at no par value 10,000,000,000 - ▶ First Discount House Limited (‘FDHL’): FDHL offers investment No. of shares MWK products to individuals and corporate clients Existing shares in issue and fully paid for 6,500,000,000 - Number of shares post IPO 6,901,031,250 - Indicative shareholding Market capitalisation post IPO - 69,010,312,500 The indicative shareholding post IPO is set out below: Shareholder No. of shares Interest ▶ 311,100,000 ordinary shares out of the 401,031,250 ordinary shares FDHFHL 5,437,625,000 78.79% for subscription have been ring-fenced for subscription by preference MSB ESOP 83,200,000 1.21% shareholders Public 1,380,206,250 20.00% ▶ The IPO will constitute 20% of the ordinary share capital of the Bank Summary of Financial information Purpose of the IPO and use of proceeds The financial information in this document has been prepared in ▶ Application for a listing on the Main Board of the MSE of 20% of the accordance with International Financial Reporting Standards (‘IFRS’) as issued ordinary shares of FDH by way of an offer for sale and offer for promulgated by the International Accounting Standards Board (‘IASB’). subscription as prescribed in the Listings Requirements to: ▶ Deloitte were the external auditors of FDH for the years ended 31st ▶ Raise capital to support future growth December 2017, 31st December 2018 and 31st December 2019 and ▶ Fulfil a contractual obligation with the Government of Malawi reported on the financial statements without qualification (GoM), as part of the MSB acquisition, to list FDH and allow GoM ▶ Forecast financial information presented in this Pre-Listing Statement to dispose of its entire shareholding in FDH has been sourced from the Reporting Accountant’s Report in ▶ Allow existing shareholders to dispose part of their shareholding Appendix 2 of the Prospectus in FDH ▶ The expenses of the listing fees will be paid out of the proceeds of the Historical and forecast earnings summary Offer Description FY17A FY18A FY19A FY20F FY21F (Loss)/profit before tax (MWK’mn) (1,986) 8,157 11,743 10,114 15,068 FDH current shareholders and related companies (Loss)/profit after tax (MWK’mn) (1,004) 5,965 7,846 7,080 10,548 Basic/earnings per share before tax (0.29) 1.18 1.70 1.47 2.18 (MWK)* FDHFHL Basic/earnings per share after tax 0.15 0.86 1.14 1.03 1.53 (MWK)*[a] 93.68% 100% 100% GoM Dividends per share (MWK) [b] - - 0.15 0.58 0.84 5.04% FDH Money FDH Discount Dividend cover (Times) [a/b] - - 7.54 1.77 1.82 FDH Bureau House 1.28% *EPS has been calculated on the number of shares that will be in issue post the IPO for the historic and forecast MSB ESOP 100% periods MSBP Summarised historical and forecast income statements Currency: MWK mn FY17A FY18A FY19A FY20F FY21F ▶ FDHFHL is a diversified investments and financial solutions company Gross interest income 17,116 14,781 16,344 18,652 28,920 with interest in banking, discount house operations, forex bureau Interest expense (8,924) (6,735) (7,767) (5,235) (6,137) operations as well as investment management. The shareholding in Net interest income 8,192 8,046 8,577 13,417 22,783 FDHFHL is as follows: Commissions and fee income 13,074 21,020 25,813 20,155 18,670 ▶ M Development Limited (‘MDL’): a company with interests in Total income 21,266 29,066 34,390 33,572 41,453 property and financial services.