Private and Confidential Enclosure 2 ZCCM INVESTMENTS HOLDINGS PLC PROPOSED CAPITAL COMMITMENT PLAN FOR INVESTRUST BANK PLC (INVESTRUST) September 2017 BACKGROUND ZCCM Investments Holdings (“ZCCM-IH” or the “Company”) underwrote the first Rights Offer in 2011, subsequently acquiring a 10.6% shareholding in Investrust Bank PLC (“Investrust” or the “Bank”). At the time, ZCCM-IH invested a total amount of ZMW 7.7 million. Prior to the Rights Offer, ZCCM-IH had no shareholding in the Bank. In February 2016, ZCCM-IH was approached by the Bank to underwrite 100% of the Rights Offer, which was targeted at meeting the minimum capital requirements of the Bank and improve on the liquidity position. An amount totalling ZMW 40 million was committed in support of the Rights Offer. Subsequent to the Rights Offer, ZCCM-IH’s shareholding in Investrust increased beyond the 35% shareholding threshold as provided for under Clause 56 of the Third Schedule of the Securities (Takeovers and Mergers) Rules, Statutory Instrument No. 170 of 1993 (the “Takeovers Rules”). On 5th May 2017, ZCCM-IH’s Board resolved to proceed with the Mandatory Offer to minority shareholders in Investrust. The decision to proceed with the Mandatory Offer was influenced by a number of factors, including: a. The failure by other key shareholders to exercise their rights during and after the 2016 Rights Offer period (from 29 February to 01 April 2016) as they had initially committed to prior to the Rights Offer. b. The failure by the second largest shareholder (Meanwood Venture Capital) to uphold its obligations under the Share and Subscription Agreement entered into with ZCCM-IH to buy shares so as to reduce ZCCM-IH’s shareholding to a level below the Mandatory Offer threshold of 35% and subsequently to the maximum of 25% prescribed under the Banking and Financial Services Act (“BFSA”). c. The continued poor financial performance of the Bank over which ZCCM-IH as a significant and majority shareholder had little influence arising from the manner in which the Company found itself with the 48% shareholding without corresponding representation and influence on the Board of the Bank. d. To limit the Company’s further exposure, it was felt that it would be prudent to take control and bring on board a strategic partner who would then provide both capital and technical expertise to turnaround the Bank, fully acknowledging that ZCCM-IH does not have the expertise nor the resources to effectively turnaround as well as recapitalise the Bank beyond what it has already injected. In view of the above, ZCCM-IH then engaged the Bank of Zambia (“BoZ” or the “Central Bank”) to obtain approval to hold a controlling interest in Investrust in accordance with the Banking and Financial Services Act. This approval from BoZ is a prerequisite for ZCCM-IH to proceed with Mandatory Offer. To obtain any such approval, BoZ requires the ZCCM-IH (as the potential controlling shareholder) to provide a short to medium term strategy and a recapitalisation plan to which ZCCM-IH would commit to adhere to (refer to Annexure 1 – Letter from Bank of Zambia dated 21 July 2017). As highlighted in the aforementioned letter from BoZ, ZCCM-IH as a significant shareholder has also been requested to submit a capital commitment plan for the Bank as well as a short to medium term strategy for the Bank. In addition, BoZ separately directed Investrust Management to come up with their short to medium strategy as well. Highlighted below, are the key points from the strategy prepared by the Bank’s management. INVESTRUST MEDIUM TERM STRATEGY Investrust provided ZCCM-IH a medium term strategy for the Bank for purposes of making submissions into the BoZ for approval to proceed with the Mandatory Offer (refer to Annexure 2). Investrust also provided a proposed recapitalisation plan that would entail ZCCM-IH contributing an additional ZMW 300 million (circa USD 32 million) [close to 5 times more than the funds earmarked for the Mandatory Offer i.e. ZMW 62 million] in fresh capital over 3 tranches from October to December. The proposed recapitalisation plan by Investrust Management was subsequently presented to BoZ by the Bank. However, the Sub-Committee expressed its lack of confidence in the strategy provided by Investrust Management and did not see any drastic measures or actions proposed to effectively turnaround the Bank. In particular, the strategy did not address: a. Meaningful reduction of operating costs – including possible closing down a number of branches, review of organizational structure, conditions of service and related expenses; b. Collection and follow ups of non-performing loans; c. The liquidation of land acquired from Meanwood Financial Services Limited (“MFS”) during the preference share issuance through the sale of the underlying plots where there is little or no evidence of sales. Meanwhile, in the interim, the Bank is losing the much needed liquidity through coupon payments of ZMW 6 million per annum payable to MFS on a quarterly basis; d. Failure in Management’s prior strategies to turnaround the Bank; e. Failure to mobilise cheaper retail deposits. f. Deposit concentration on expensive term deposits which has resulted in sustained high interest expenses and a significant amount of TBs being locked up in security. ZCCM-IH’s POSITION It is of great importance to reiterate that ZCCM-IH has in the recent past shown its commitment to assist the Bank. Thus far ZCCM-IH has invested ZMW 47.7 million directly into the Bank. Considering the amount of ZMW 62 million committed to the Mandatory Offer, this would bring the total investment in Investrust to ZMW 110 million to date. This is equivalent to Investrust’s current total market capitalisation of ZMW 110.2 million. In addition, ZCCM-IH has supported the bank through its term deposit placements, which currently stand at ZMW 3,000,000 and USD 1,000,000. Whilst ZCCM-IH is invested in Investrust and remains committed to the overall growth and development of the Zambian financial sector, as an investment holding company, there is need to have a clear link between the investments undertaken, the risk-return relationship and the interests of shareholders. Given the level of investment ZCCM-IH has made into the Bank and the Bank’s continued poor performance, it would not be prudent for ZCCM-IH to inject another ZMW 300 million from internally generated funds as this is not only beyond the Company’s capacity, but also, there is no guarantee that doing so would result in an improvement in the Bank’s performance in the long-run. To give some perspective, an amount of ZMW300 million could be invested in a completely new bank with a statutory capital base of ZMW 104 million, leaving a buffer of ZMW 196 million, without any liabilities. Assuming ZCCM-IH could consider such an option and in the event that funds were indeed available, this would limit the Company’s risk exposure whilst at the same time ensuring its commitment to supporting the local financial sector. However, the Sub-Committee opines that there is scope for ZCCM-IH to request support from key stakeholders namely the Government and BoZ to resuscitate Investrust. In the past BoZ has provided two short-term emergency loans of ZMW 137.5 million and recently ZMW 50 million. PRELIMINARY DISCUSSIONS WITH BANK OF ZAMBIA The Sub-Committee and Management of ZCCM-IH have so far engaged with the BoZ and have presented the key concerns ZCCM-IH has with the Bank and possible areas of support that include the following: a. Requesting BoZ to provide financial and technical support. b. Giving a special dispensation on the time to recapitalise the Bank. c. Appointment of industry expert to work on a turnaround strategy and identification of a strategic partner. Amongst the initiatives and support sought from Government and BoZ included the Central Bank to provide further medium to long-term funds on better terms as opposed to the prevailing short-term expensive funds to a bank which is already struggling for survival. Furthermore, the Central Bank was urged to engage with Government to ensure that more support is given to Investrust by way of deposits on favourable terms and assisting the Bank in improving its liquidity through relaxation of the Treasury Single Account system, where there is scope to do so. For instance Ministries, Provinces and Spending Agencies may hold transactional or transitory accounts with the Bank for which payments to and from the Control 99 account are made. Whilst the Central Bank acknowledged ZCCM-IH’s concerns, they were of the view that ZCCM-IH as a significant shareholder could still exert influence which could include proposals to: a. Change the Board and Management of the Bank and the Central Bank would be willing to assist with any such process if necessary. b. Appoint a technical consultant given that the Bank is still a going concern and not under the control of the Central Bank, unlike the case of Intermarket Bank Limited which the Central Bank is in control of. The Central Bank also urged ZCCM-IH to come up with written proposals of items that they would like considered in order to devise a workable solution for the Bank. PROPOSED WAY FORWARD The Sub-Committee proposes the following steps to be taken, which shall also be submitted to BoZ together with indicative timelines, where applicable, for their consideration: 1. Engage GRZ and BoZ on scope to offer financial assistance on favourable terms. 2. Request BoZ to afford Investrust a special dispensation in terms of extending the timeline in which the Bank would be recapitalised; 3. Engage the Lusaka Securities Exchange (“LuSE”) and Securities and Exchange Commission (“SEC”) on the possibility of a delisting considering the following issues: a. The effecting of a restructuring of the Bank as an unlisted entity is likely to be far much quicker, given that the process will not be guided by the strict and often longer timelines and other underlying processes prescribed by LuSE and SEC regulation. b. Managing the implications of a delisting on the overall sentiment on capital markets and specifically the Bank. 4. Appointment of Banking Industry and Turnaround Expert by ZCCM-IH to critically evaluate the business and advise whether the business can be salvaged, and if so what steps need to be taken to turnaround the bank in the form of a comprehensive turnaround strategy. If necessary, an interim Board may need to be put in place to champion the turnaround strategy developed by the advisor. The key tasks for the industry expert or advisor would be in close liaison with the interim Board: a. Business review and evaluation; b. Establish a comprehensive turnaround strategy; c. Identification of a Strategic Partner; d. Finalisation of transaction structure and terms; 5. Roll-out of short to medium term strategy – at the heart of the implementation of any such strategy, will be to quickly to rein in the Bank’s current shortcomings and keep it from making any further losses, as ZCCM-IH looks to bring onboard a Strategic Partner. 6. Embark on a recapitalisation through the introduction of the preferred strategic partner, institutional investors or Government through IDC or other agencies. Refer to Annexure 3 for the proposed timeline, which includes the Mandatory Offer. Indicatively, this process is envisaged to effectively take upwards of 12 months. ANNEXURE LIST 1. Letter from Bank of Zambia dated 21 July 2017; 2. Investrust Medium Term Strategy and proposed recapitalisation plan; and 3. Proposed timeline for proposed next steps.