GLC_-_Presentation_-_for_review

Ghana Leasing Company (“GLC”)Private PlacementSelected materials for discussion : 

Ghana Leasing Company (“GLC”)Private PlacementSelected materials for discussion February 2010

Disclaimer : 

This document and the investment activity to which it relates may only be communicated to, and is only directed at: (i) persons outside the European Economic Area; (ii) persons having professional experience in matters relating to investments, being investment professionals as defined under MIFID, the Financial Service Regulation of Malta and persons to whom the communication may otherwise lawfully be made, (together “Permitted Recipients”). This document and its contents must not be acted on or relied upon by any persons who are not Permitted Recipients.  Any investment or investment activity to which this document relates is available only to Permitted Recipients and will be engaged in only with Permitted Recipients.  In consideration of receipt of this document, each recipient warrants and represents to Ghana Leasing Company Limited (“the Company” or “GLC”) and their directors, partners, officers, affiliates, subsidiaries, employees, advisers or agents (each a “Protected Person”) that such recipient is a Permitted Recipient. The distribution of this document in certain jurisdictions may be restricted by law or regulation and therefore persons into whose possession this document come should inform themselves about and observe any such restrictions.  Any failure to comply with these restrictions may constitute a violation of the securities laws or the laws of any such jurisdiction.  This document and its contents are confidential, are being supplied to Permitted Recipients for information only and must not directly or indirectly be reproduced, disclosed, published, distributed to any person, in whole or in part, by any medium or in any form for any purposes whatsoever and at any time.  This document and its contents do not constitute or form any part of: any prospectus, offer or invitation to subscribe or purchase interests, any recommendation regarding the topic of this presentation or the basis of any contract whatsoever.  This document and its contents are in draft form and remain subject to updating, amendment and verification.  No reliance whatsoever by any person for any purpose should be placed on this document, its contents and/or their truth, fairness, accuracy and/or completeness.  In issuing this document, no Protected Person undertakes any obligation to any person to update and/or correct any inaccuracy which is or may become apparent in it.   Certain of the information contained in this document has been obtained from published sources prepared by parties other than the Company or any other Protected Person. No Protected Person assumes any responsibility for the truth, fairness, accuracy and/or completeness of such information. No representation or warranty express or implied is made or given, and no responsibility or liability is accepted, by or on behalf of any Protected Person in connection with this document and its contents, including (without limitation) as to its truth, fairness, accuracy, completeness, the achievement and/or reasonableness of any projections and/or underlying assumptions, forecasts, estimates and/or statements as to prospects contained and/or referred to herein.  Each Permitted Recipient must make its own investigation and assessment in connection with this document and its contents.  To the fullest extent permitted by applicable law and regulation, no responsibility or liability whatsoever is accepted by any Protected Person for any loss howsoever arising from any use of, or in connection with, this document and its contents.  If a Permitted Recipient is in any doubt about the investment to which this document relates, such recipient should consult a person specialising in advising on investments of the kind to which this document relates.  Statements included herein that are not historical facts are forward-looking statements, including, but not limited to, statements concerning the Company's plans, objectives, goals and strategies. By their nature, such forward-looking statements involve a number of risks and uncertainties, and such forward looking statements are subject to change at anytime and may not be achieved.  The contents of this presentation are not intended to be nor should they be construed as legal, financial or tax advice, and therefore prospective investors must not treat the contents of this presentation as advice relating to legal, taxation, investment or any other matters. Disclaimer

Agenda : 

2 Executive Summary Ghana Leasing Market GLC Business Overview Capital Raising Timeline Agenda

Executive Summary : 

3 Executive Summary Ghana Leasing Company (“GLC”) is Ghana’s #1 independent leasing company: #1 segment leader: ~40% market shares among non-bank leasing companies #1 profitability and returns: Consistently between 17%-27% ROE and 8-11% Net Income margins over 5 years #1 Management team: CEO Ernest A. Mintah and his team rank among the most experienced leasing and finance professionals in Ghana Superior track record and history: GLC was set up as Ghana’s first leasing company in 1991 with renowned founding shareholders such as CDC, IFC and DEG Ghana Leasing Company seeks to increase Regulatory as well as operating Capital in order to be able to continue to meet market demand. Ghana’s leasing market has recently increased by 90% CAGRs (05-07). Potential key terms: Size of capital raising: >US$ 10 million in either 2 or 3 milestone dependent steps Type of capital: straight equity or other forms of equity-like instruments (preference shares) recognized by Ghana’s Central Bank (Bank of Ghana) as eligible Governance rights to Investor: Board majority, drag-along rights, exit rights

Key investment considerations : 

4 Key investment considerations

Agenda : 

5 Executive Summary Ghana Leasing Market GLC Business Overview Capital Raising Timeline Agenda

Ghana benefits from a favourable macroeconomic outlook : 

6 Macroeconomic Outlook Recent oil discoveries (>1bn barrels) are expected to provide a major economic boost as of 2010 (start of production) which should also support a strong and stable currency Recently, Ghana issued its first sovereign bond, redenominated its currency and adopted inflation-targeting as the anchor for monetary policy Inflation Bank of Ghana is focused to bring near term inflationary pressures back under control. The prime rate was increased by 1.5% to 18.5% in Q1/2009 and interbanking rates increased by approx. 3% to 23% Inflation is expected to move towards 10 per cent in the fourth quarter of 2010 and in single digit range in early 2011 Political Stability Ghana adopted a democratic government in 1992, and has since become one of the most stable democracies in Africa Elections in December 2008 marked the end of President John Kufuor’’s NPP parties’ two terms. John Atta Mills’’ NDC party won by a narrow margin. The peaceful outcome of the poll and the ensuing seamless handover of power re-confirmed Ghana’’s status as a modern democratic state Ghana benefits from a favourable macroeconomic outlook Ghana’s Real GDP growth set to accelerate on the back of oil Real GDP % growth Inflation % (CPI) Inflation expected to come back under control Real GDP take off backed by oil Oil to overtake past growth drivers mining, construction, retail Source: Ghana Statistical Services, Bank of Ghana

Ghana’s leasing market has recently started to take off : 

7 Ghana’s leasing market has recently started to take off Leasing penetration = leasing volume / gross fixed capital investment; Source: IFC/Worldbank 2009 Ghana: $71m / 2.6% Leasing continues to show significant penetration upside Recent market development Prior to 2005, there were 7 licensed leasing companies (of which 2 banks). The top 3 leasing companies (GLC, Leasafric and Horizon) had a combined market share of 90% In 2005, the Bank of Ghana issued leasing licenses to Banking Institutions. The number of bank lessors increased from 2 players in 2005 to 9 players in 2007 (of which 5 Nigerian Banks) The bank lessors leasing volume increased from US$ 5.5 in 2005 to US$ 71 million in 2007. Leasing booked in 9 regions, up from 5 As a result of lax lending policies many new entrants suffered from high NPL ratios. As a result Banks decelerated their leasing lending growth in 2008 and 2009. Market potential Ghana continues to show significant upside for leasing industry growth: Ghana has a leasing penetration (as % of total annual capital investment) ratio of only 2.6% (post recent 90% CAGR since 2005) while countries similar in terms of GDP-per-capita like Nigeria and Mozambique show 4-6% penetration ratios Further economically advanced countries show ratios from ~19% (S. Africa) to 27% (USA) illustrating the significant additional upside along GDP/capita growth likely to be boosted by the start of oil production in 2010 Source: IFC GDP / capital Leasing Penetration

GLC continues to lead in terms of market shares and profitability among the non-Bank leasing companies : 

8 GLC continues to lead in terms of market shares and profitability among the non-Bank leasing companies GLC’s position vis-à-vis bank-independent leasing companies In 2007, GLC was ahead vis-à-vis its bank-independent peers in terms of total assets and highest lease income and pre-tax ROE. GLC ranked second and third in terms of PBT margin and debt ratio respectively GLC’s position within the leasing industry There are 14 leasing companies in Ghana, 9 of which are banks and 5 are non-banking leasing companies. Approx. 50% of banks were both new entrants to the leasing industry as well as new entrants into the Ghana Banking industry with an origin in Nigeria GLC continues to lead also vis-a-vis non- bank-dependent leasing companies in terms of margins, quality of lease portfolio, credit approval, monitoring and work-out process Source: GLC; KPMG; Annual reports 2007; other two non-banking leasing companies include: FS Finance and Dalex Leasing

Regulation and supervision meets international standards : 

9 Regulation and supervision meets international standards General framework Ghana is one of the very few countries in Africa with a financial lease law (Finance Lease Law, 1993, PNDCL 331) Ghana’s central bank, Bank of Ghana, supervises and regulates the leasing industry. Non-bank lessors are subject to regulation through the Financial Institutions Law, 1993 (PNDCL 328) and the Non-Bank Financial Institutions Business (BoG) Rules Ghana’s regulatory framework is in line with international guidelines. Enforcement bodies are comparatively weaker capitalized (2005 budget for supervision amounted to ~US$ 0.5 million according to Worldbank survey) Minimum capital requirements All Non-Banking Leasing institutions require a minimum capital for non-deposit-taking business of one million Ghana cedis (approx US$ 1.0 million) Single obligor limits established at 25% Maximum gearing ratio at 8:1 Subordinated debt can not be used to meet minimum capital requirements Selected regulatory benchmarks (Worldbank survey Oct 2008) Source: Worldbank Banking Regulation Survey III, 06 October 2008

Agenda : 

10 Executive Summary Ghana Leasing Market GLC Business Overview Capital Raising Timeline Agenda

Ghana Leasing Company (“GLC”) Attractive market position but growth constrained by lack of capital : 

11 Historical track record Ghana Leasing Company was set up as Ghana’s first Leasing Company in 1991. Initial founding shareholders (56%) included: CDC, UK IFC (Worldbank), USA DEG, Germany In 2004, GLC’s management acquired the 55% held by CDC, IFC, DEG in an MBO and has invested in excess of US$ 1.3million (incl. accrued interest). The Ghana based institutions remained as core minority shareholders (CAL Bank, Vanguard, SDC) GLC’s has spearheaded Ghana’s leasing industry since its inception as the first Ghana leasing company in 1991 Throughout it’s history GLC has maintained market leadership position in terms of market shares (>40% of non-bank leasing) and quality of income (bad debt provisions < 5%) Attractive financial performance Double digit growth CAGRs in Lease Income (28%) and Profit after Tax (32%) from 2005-2009 Return on Equity consistently in excess of 17% (2006-2009) and reaching 27%-30% in 2007-2009 New business activity decreased temporarily in 2009 due to the lack of equity and debt funding. Current capitalization limits GLC’s total balance sheet approx. US$ 25 million Ghana Leasing Company (“GLC”) Attractive market position but growth constrained by lack of capital Current shareholder structure Consistent historic out-performance Management: 54.59% CAL Bank, Ghana: 40.80% Vanguard Assurance Ltd: 3.57% Securities Discount Ltd: 1.03% Source: GLC

Highly experienced and proven management team : 

12 Experienced Management Senior management combines significant Leasing Industry experience and prior Investment and Auditing experience: CEO with Principal Investment and Credit experience from leading global institutions like: CDC, IFC, Chase Manhattan Established track record with company: all senior management members have been with GLC between 5-15 years Established prior track record with renowned institutions like: KPMG, Deloitte & Touche, Wayss & Freytag All senior members have MBA degrees from globally leading universities like: Berkeley, Columbia, Manchester, Cardiff Company is organized along two key functional lines Credit and Recovery Finance and Administration Total staff (including senior management) amounts to 22 30% of employees have post graduate qualification 45% of employees with tertiary qualification 55% of employees are 35 years or below Highly experienced and proven management team Senior management Source: GLC

Current Board and Corporate Governance : 

13 Current Board and Corporate Governance Overview of GLC’s Board members Board members combine significant Banking and Financial Industry experience and are representatives of current and former shareholders. Previous and current positions of board members include: CDC, UK UBA: West Africa’s #2 pan-African bank CAL Bank: Ghana’s 1st largest and indigenous bank Securities Discount Company: Ghana’s largest Securities company Merchant Bank Board committees: Compensation Committee: Top Management compensation External Credit Committee: Larger transaction sizes are referred by management to the board Source: GLC

Product offering to diversify away from pure Finance Leases : 

14 Product offering to diversify away from pure Finance Leases GLC’s lease products GLC provides medium term financing to individuals and corporate clients. Finance leases are the main lease form. GLC de-emphasised offering operating lease products due to tax implications in relation to the capital allowances and rental income mismatch. GLC is now considering re-introducing an operating lease product GLC relies mostly on bank financing for its lease business. GLC generally aims to achieve average spreads of 6.0% GLC limits its leases to a maximum of 5 years in terms of maturities. Depending on the underlying asset the following three categories act as limits in terms of maturity eligibilities Historically GLC’s average (max) leasing ticket size amounted to $200,000 ($1.3million) New business sales channels: Repeat Business: About 50% of new leases as over 500 clients of which ~80% with expired leases. Introduction and Referrals through CAL Bank, dealers and partner suppliers of equipment -> 15% of new business. Direct Marketing: Direct marketing accounts for remaining 35% Source: GLC

Trend towards higher quality lease portfolio : 

15 Current lease portfolio industry exposure: GLC’s largest sector exposure is in financial and professional services, with 18%, 28% and 22% of total leases outstanding as at 31 December 2007, 31 December 2008 and 30 June 2009 respectively GLC has continued to diversify its lease portfolio across five main sectors, incl. finance and professional services, construction, transportation, schools and individuals (67%, 71% and 72% at YE 2007, 2008, and June 2009 respectively) Client assets / equipment collateral exposure: While vehicles constitute the largest constituent (40% as of 06/09) its composition has developed from passenger cars to special purpose vehicles. Overall vehicles grew from 29% to 40% of sales since 2007 The second largest group is office equipment, accounting for 27% of total portfolio in 06/2009 up from 10% in 12/2007 Forest and timber processing equipment has been reduced to zero since June 2007 Future portfolio exposure targets: Multinationals: 25% Oil sector: 40% Mining, Manufacturing: 30% Local SMEs: 5% Trend towards higher quality lease portfolio Current lease portfolio by industry exposure Current lease portfolio by type of underlying asset Source: GLC, KPMG

Risk Management: Proven credit approval, monitoring and workout process : 

16 Key elements of GLC’s risk management include: Lease approvals follow a strict approval escalation grid (see chart). Even smaller leasing contracts require approval by senior GLC officers Significant discounts in terms of collateral recognition Over-collateralization. Acceptable instruments are: Funds on deposits; guarantees; bonds, shares, bills, and notes Life insurance Mortgage on real estates; assignments on assets; stock inventory; accounts receivable assignment; and assignment of funds due under a contract Expedited re-possessions in case of defaults outside courts to maximise re-lease value GLC’s management follows a stringent collaterization philosophy to ensure an effective repossession and release process in case of client defaults: Fixed & floating charges over the entire assets of Lessee Second lien on all other assets of Lessee Guarantees from Lessee Company’s majority shareholder Personal guarantee from Lessee Company’s Director(s) Risk Management: Proven credit approval, monitoring and workout process Leasing approval levels Collateral recognition levels (excerpts) Source: GLC

Historic financial performance: Double digit top line growth : 

17 Historic financial performance: Double digit top line growth Lease receiveable growth Net lease receivables have been increasing at 16% CAGRs (2004- 2008), increasing from GHC10.0million in 2004 to GHC18.4 million in 2008 Payments in advance for finance leases which represent payments made on behalf of customers for which amounts are not yet due has grown at an annual compound rate of 155% over the 5-year period from 2004 to 2008 Terminated lease assets represent those leases that have been terminated due to non- payment of lease rentals by lessees and those lease assets that the company has repossessed. A GHC 1.6 million contract was re-possessed and successfully re-leased during H1 2009 lowering terminated leases by 40% to approx. GHC 2.6 million GLC repossession policy: Due to the length of time it takes for the company to seek court’s decision to sell off leased assets, GLC negotiates with the lessee to structure repayments or find alternative lessors to take up the lease assets Source: KPMG, GLC

Historic financial performanceDeleveraging due to regulatory requirements slowed GLC’s growth in 09 : 

18 Excess leverage (>8:1 leverage) and lack of equity funding has decreased new business activity and as such lease income in 2009. Interest margin compression has further lowered net lease income. Current equity limits GLC’s total balance sheet to approx. US$ 25 million The increase in interest margin compression from 2005-2009 is attributable to increasing interest rates on its borrowings and an increasing proportion of commercial rate funds as against government funds in GLC’s borrowing portfolio The Company’s cost to income has consistently declined from 2005 to 2008. Average cost to income for the five-year period from 2004 to 2008 was 22%, declining to its lowest in 2008 at 13% Net assets increased at a compound annual rate of 18.7% from GH¢1.3million in 2004 to GH¢2.6million in 2009 as a result of the company’s continued profitability GLC sources capital primarily from commercial banks and local currency denominated borrowings constitute a significant portion of total borrowings. This source of funding is comparatively expensive and in many cases less attractive than offered by banks. Gearing peaked in 2007 at 13.5:1, which is in excess of the statutory maximum of 8:1. 2008 gearing ratio also exceeded the regulatory maximum and is higher than the industry average of 7.5:1 Historic financial performanceDeleveraging due to regulatory requirements slowed GLC’s growth in 09 Key financials Source: GLC

Business Plan – projected P&LNew $5mn equity accelerate growth at prudent leverage : 

19 The following principal assumptions have been applied in the preparation of the financial projections: Spread: Lending rates have been assumed at 16.5% whilst borrowings are at 10% thus given spread 6.5% per year Average Lease Period: been assumed at 36 months for each lease written Operating Expenses: Operating expense ratio assumed at 25% of the income. Average historic operating expense ratio is 24% Equity: Equity capital of $5m assumed to be raised in 2010. ($10m would allow for faster growth) Funding: borrowing levels to increase from 30% for 2010 new business to 80% over time Provision for Bad Debts: 1% provision on net finance lease receivables Taxation: effective corporate tax rate of 23% - - > $ 5m new equity generates > 40% IRR Business Plan – projected P&LNew $5mn equity accelerate growth at prudent leverage Key financials (assuming $5mm Capital Increase in 2010) Source: GLC

Business Plan: Cash-Flow Statement : 

20 Business Plan: Cash-Flow Statement Cash-Flow Statement Source: GLC Loan interest remains one of the key variables to both profitability and excess cash-flows. Tapping non-local banking debt financing could be a key source for lower financing costs Security Deposit and Residual income: A refundable security deposit (10% of facility) has been assumed at the start of each lease transaction (to be used to offset residual value required from the lessees to acquire ownership of the leased equipment) Facility Fees: A facility fee of 2.5% on lease facilities whilst 1.5% to be charged on all borrowings Dividend pay-out ratio is here assumed at 0%. If and what amount to be agreed among future shareholders

Agenda : 

21 Executive Summary Ghana Leasing Market GLC Business Overview Capital Raising Timeline Agenda

Private placement, potential structure and use of funds : 

22 Ghana Leasing Company intends to raise US$ 5-10 million equity/convertible financing from an international institution with significant experience in the financial services industries in emerging markets Key Term Sheet cornerstones could include two equity tranches with the first to be drawn upon signing and the second upon meeting certain set of operational milestones and leverage thresholds: First US$ 5 million new equity: Pricing: TBA Timing: Q1/Q2 2010 Second US$ 5 million new equity [or convertible]: Pricing: TBD Timing: milestone dependent Milestones: (1) Lease A/R at $50mn and (2) Debt / Equity > 8:1 Private placement, potential structure and use of funds Key terms