LEASING MICROFINANCE INVESTMENT BANKING

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Earnings Release Second Quarter 2018 LEASING MICROFINANCE INVESTMENT BANKING www.cicapital.com Total revenues for the group reached EGP 1.1 billion in, up 46% versus.

1 Earnings Release Second Quarter 2018 LEASING MICROFINANCE INVESTMENT BANKING Total revenues for the group reached EGP 1.1 billion in, up 46% versus. Operating profit more than doubled to reach EGP million in. Consolidated net profit after tax and minority interest increased by 88% versus to reach EGP million Non-banking financial services contribution to net profit after tax and minority interest of 72% (48% leasing and 24% microfinance) while holding company and investment bank represented the remaining 28%.

2 CI Capital Holding Cairo, 1 st August, 2018 CI Capital Holding (Ticker: CICH.CA), Egypt s leading diversified financial services group, announced today its consolidated financial results for the 6-month period ended 30 th of June I. Consolidated Financial and Operational Highlights Total Revenues Net Operating Profit Margin Net Profit Before Tax Net Profit After Tax and Minority Annualized ROAE 1 EGP1.1bn 46% 26.7% EGP 254.0mn 93% EGP 161.3mn 88% 27.3% Leasing Portfolio Microfinance Loans Outstanding Brokerage Market Share 2 Asset Mgmt. AUM s IB Advisory Revenue EGP5.3bn 28% EGP596mn 121% 10.8% 80bps EGP8.3bn 14% EGP54.3mn 137% Result Commentary - Economic dynamics continued to improve in 1H18, as GDP growth remained on an uptrend coming in at 5.3% in FY17/18, up from 4.2% in the previous year. This was driven by sustained recovery in investment and external activities, and a pick-up in various sectoral activities. Such dynamics have supported a decline in unemployment to 10.5% in 1Q18, while headline inflation also fell to an average of 14% during 1H18 vs. 29% in the same period last year. The recent removal of energy subsidies raised headline inflation rate which is likely to be of short term impact, hence delay monetary easing by Central Bank of Egypt until later this year or early next year. Ongoing fiscal consolidation, subsidy reforms, progressing with the government s IPO program, and IMF support should continue to weigh positively on investor confidence. - CI Capital s performance remained strong despite the high interest rate environment. Total consolidated revenues grew 46% year on year to reach EGP 1.1 billion in the period, up from EGP million in the prior year. Consolidated net profit after tax and minority increased by 88% versus to reach EGP million. Normalizing for CI Capital s IPO transaction related expenses which impacted Q income statement by c. EGP 21.5 million would result in net profit after tax and minority more than doubling. - The group continued to deliver on its strategy in expanding its non-banking financial services businesses that contributed 72% to consolidated net profit during the period versus 33% in prior to the acquisition of Reefy. - Robust bottom-line growth led the group to generate an annualized ROAE 1 of 27.3% despite completion of a c. EGP 1 billion capital increase in the second half of Q ROAE calculation is normalized for one-off IPO transaction related expenses and calculated using weighted average equity during the period. 2 Market share is for CIBC and Dynamic for executions on the main market excluding deals 1

3 II. Consolidated Revenue 1, Consolidated Summary Income Statement EGP mn Total Revenues Q Q % 1, % Operating Expenses Financing Cost Dep. of finance leased assets People Cost & Other SG&A % 44.4% 19.4% 31.5% % 53.9% 10.7% 29.2% Net Operating Profit Net Operating Margin Net Profit After Tax & Minority Interest % % 242.7% % % 110.6% % % 18.9% 22.7% 19.6% 22.1% 25.9% 25.7% 26.7% 27.0% Q1 Q2 People Cost & Other SG&A as % of revenue People Cost & Other SG&A as % of operating expenses Operating Expenses People Cost & Other SG&A 26% Financing Cost 42% Net Profit By Business Line 27.9% 67.1% 32.9% 23.6% 48.5% Holding and Investment Bank Microfinance Source: CI Capital Financial Statements The group s total consolidated revenues for Q increased by 57.7% to reach EGP million, up from EGP million in Q Revenues grew 45.5% for the first half of 2018 to reach EGP 1.1 billion versus EGP million in. Revenue growth was driven by robust financial and operational improvement in all three of the group s business lines. Reefy, the group s microfinance arm acquired in late December 2017, was consolidated as of the beginning of 2018, with its revenues contributing 12.4% of top-line in. The group incurred operating expenses totaling EGP million in Q and EGP million in, c. 32% higher. Financing cost, which represented 40.4% of OPEX this quarter and 41.2% in the first half of the year, grew on the back of a significant uptick in leasing and microfinance operations, as well as a recovery in the brokerage s margin lending activities. As expected, growth in financing cost in Q was significantly lower than Q as a result of deleveraging the balance sheet using the IPO proceeds. Dep. of finance leased assets 32% Leasing Group Financial Performance People s cost and other SG&A represented 25.9% of total operating expenses for the quarter and 26.7% for, coming in at EGP million and EGP million respectively. The c. 29% increase is a result of the regular increase in employee salaries at the beginning of the year as well as the consolidation of Reefy, which employs over 1,200 individuals across 44 branches. Significant revenue growth coupled with effective cost management led to triple-digit growth of the group s operating profits, with operating profit margin widening 14.4pp to 26.8% y-oy and net profit after tax and minority reaching EGP 79.4 million in Q2 2018, growing 3.1x versus Q For the first 6 months of 2018, operating profits grew 110.6% to reach EGP million while net profit after tax and minority was EGP million, an 88% increase. Worth highlighting that Q results were negatively impacted by one-off IPO expenses charged to income statement of c. EGP 21.5mn. Normalizing for 2

4 ` Shareholder's Equity 2, Pre IPO - Q Post IPO - Paid-in Capital Retained Earnings Share Premium Reserve Other such expenses would result in net profit after tax and minority for the first 6 months of 2018 more than doubling. Q witnessed significant developments for the Group. CI Capital Holding successfully completed an initial public offering of 41.5% of its shares3. CICH shares began trading on the EGX on the 30th of April As a part of the IPO, CI Capital underwent a EGP 1 billion capital increase which resulted in increasing shareholders equity from EGP 962,250,848 to EGP 2,034,468,713, of which paid-in capital amounts to EGP 544,184,033 distributed over 544,184,033 shares. During Q2 2018, part of the IPO proceeds totaling EGP 210 million were used to fully settle outstanding acquisition finance facility and partially settle the deferred consideration for the Reefy acquisition (EGP 120 million and EGP 90 million respectively). In addition, c. EGP 300 million have been deployed in financing margin lending activities. III. Business Line Performance Leasing Revenues i. Financial performance EGP mn Total Revenues Q1 Leasing (Corplease) Q Q % % Operating Expenses % % Financing Cost Dep of finance leased assets % 19.4% % 10.7% People Cost & Other SG&A % % Net Operating Profit % % Net Profit After Tax % % Q2 * Leasing Net Interest Margin (NIM) 5.5% 3.9% Source: CI Capital Financials Leasing revenues grew 31.6% to reach EGP million in Q and 30.8% y-oy to reach EGP million in. Corplease s annualized 2018 net interest margin (NIM) increased 160 bps to reach 5.5% from 3.9% in The widening margin is due to successfully reducing cost of borrowing and higher weight of equity in Corplease s funding structure, which effectively decreased its D/E from 8.1x in Q to 7.3x in Q2 2018, reducing marginal cost of funding. Accordingly, Q net profit after tax ended the quarter at EGP 46.1 million, a c. 3x increase from EGP 15.5 million in Q bringing H net profits to EGP 89.5 million, a 131.0% increase from EGP 38.8 million in. 3 On a fully diluted basis, after completion of the capital increase 3

5 ` Operational performance Leasing Portfolio/New Bookings (EGP bn) Total outstanding leased portfolio reached EGP 5.3 billion growing 28.3% versus in which the outstanding leasing portfolio stood at EGP 4.1bn. Despite the high interest rate environment, new bookings for were EGP 1.67bn up 61% from EGP 1.03bn in the comparable period in Corplease maintained its leading position in terms of market share across all players in the Egyptian leasing market. The most recent publically available data on leasing companies market share as per the Financial Regulatory Authority (FRA) monthly report5 for Q is as follows: Top Leasing Companies By Market Share Q Portfolio Outstanding Rank Company Name New Bookings Contracts Value4 Market Share % 1 Corplease 1, Incoleasee BM Lease Housing & Developemnt Bank Technolease GB Lease Aptree Aviation Limited QNB ElAhli Leasing Arab African Int. Leasing EFG Hermes Leasing Others 1, Total 7, Figures based on leasing contracts registered with the FRA which do not necessarily equal new lease bookings due to timing differences in registering contract versus new bookings. 5 Latest report was published in March

6 ` ii. Microfinance Revenue Q1 Q2 Microfinance Loans Outstanding Microfinance (Reefy) Financial Performance EGP mn Q Q Operating Expenses 38.8 Financing Cost People Cost & Other SG&A Net Operating Profit Net Profit After Tax Total Microfinance Revenue 177.8% % % % 53.1% % 62.7% % % % % *Microfinance revenues were not consolidated prior to % Source: CI Capital & Reefy Financials Microfinance revenues reached EGP 75.2 million in Q2 2018, a c.2.8x increase from EGP 27.1 million in Q2 2017, with net interest income growing 3.2x to EGP 49.6 million in Q as compared to EGP 15.4 million in Q On a year-to-date basis, revenue grew 2.7x to record EGP million, up from EGP 51.7 million in. The significant increase in net interest income coupled with tight control on operating expenses led to growth in net profit after tax of almost seven-fold to EGP 26.7 million in Q and c. 5.1x to EGP 47.7 million in. Operational performance Microfinance loans outstanding grew 121% to EGP million year-to-date in 2018 from EGP million for the comparable period in Reefy continued its rapid expansion throughout Egypt as the total number of branches at the end of reached 44 branches with several additional branches planned to be operational before year end. Total number of active borrowers reached 89k in versus 54k in representing a growth rate of 65%. 5

7 ` iii. Investment Bank Revenue Financial Performance Q1 Q2 Investment Bank Revenues Capital Markets 8% IB Advisory 24% Asset Mgmt. 9% Brokerage 59% Investment Bank OPEX Financing Cost 24% People Cost & Other SG&A 76% Investment Bank EGP mn Brokerage Asset Management IB Advisory Capital Markets and Treasury Total IB Revenues Q Q H H % 13% 377% 45% 59% % -9% 137% -22% 17% Operating Expenses Financing Cost People Cost & Other SG&A % 142% 22% % 139% 10% Net Operating Profit % % Net Operating margin 37% 29% 40% 44% Net Profit After Tax % -1.1% * The Investment Bank s total revenues grew 59% to record EGP million in Q due to an expansion in each of the business lines. Specifically, revenues from investment banking advisory grew c. 4.8x to reach EGP 30.0 million as revenue from several transactions were booked in the quarter, brokerage revenues grew 27% to reach EGP 66.7 million as margin lending activity picked up, while asset management revenues grew 13% to EGP 5. 1 million as an increase in AUMs brought management fees up. On a semi-annual basis, investment bank revenues increased 17%, reaching EGP million in, up from EGP million in. Investment banking advisory revenues grew 137% to reach EGP 54.3 million, brokerage revenues grew 7% to reach EGP million, while asset management fees decreased 9% to EGP 20.4 million on lower performance fees in Q Operating expenses increased 40% in Q on the back of a 142% increase in financing cost from the brokerage division and 27% in on a 139% growth in financing cost. The increase in financing cost was primarily due to dividend distribution by the investment bank s business lines used to partially finance previous acquisitions of additional stake in Corplease and Reefy back in the second half of Overall, IB revenue growth outpaced expense growth in Q2 2018, leading to a 78.7% growth in net profit after tax, which reached EGP 30.3 million in Q from EGP 17.0 million in the comparable quarter in Semi-annually, the investment bank s net profit after tax remained flat on lower Q1 revenues in

8 ` Operational Performance by Business Line CI Capital's Market Share by Investor Nationality (%) 21.9% 17.3% 12.4% - Executions on the EGX (excluding deals) grew 40% to reach EGP 149bn in Q Value traded by CI Capital s brokerage arm registered at EGP 15.1bn, equivalent to a Q market share of 10.1%. On a semi-annual basis, market executions grew 26% to reach EGP 327.7bn, with CI Capital executing EGP 35.3bn, leading to a market share of 10.8%, an 80bps increase. 8.9% 6.4% 4.6% Foreign Local Arab CI Capital Securities Brokerage signed a brokerage services agreement with ASEAN s Maybank Kim Eng. The agreement is set to provide global institutional investors with access and local insights into wide-spanning emerging and frontier markets. CI Capital will provide Maybank Kim Eng s clients streamlined solutions covering execution, research and corporate access for the MENA markets. CI Capital s research team initiated coverage on 8 additional stocks in Q2 2018, bringing our coverage universe to 102 stocks across 6 MENA markets. The team s quality research enabled CI Capital to rank 3rd in Extel s 2018 Research Survey for MENA. AUMs Jun-18 CI Asset Management beat average peers fund returns across all asset classes while ranking first for overall equity funds Jun-17 MM & FI Funds & Portfolios Equity Funds & Portfolios CI Capital's Fund Perfomance vs Peers' 16.0% CIAM 10.2% 9.2% 7.0% Equity - Investment Banking Advisory CI Capital Investment Banking successfully advised on two transactions with an aggregate value of c. EGP 2.6 billion during Q2 2018, bringing the total number of deals advised on by the division since the beginning of the year to 4. The division acted as global coordinator and bookrunner on the EGP 1.74bn initial public offering of CI Capital Holding in April. The offering generated strong demand from global, regional and local institutional investors, having been oversubscribed 8.4x. CI Capital s IPO represents one of the largest offerings on the EGX in the past few years. 22.1% Balanced Asset Management (CI Asset Management - CIAM) Aggregate AUMs increased 14%, reaching EGP 8.3bn as of Q vs EGP 7.3bn as of Q despite a difficult quarter for emerging markets across the globe. The overall increase is attributable to the 52% increase in equity AUMs, which outpaced the 6% fall in money market and fixed income AUMs due to the Central Bank of Egypt s restrictions on MM & Fixed income funds sizes % Securities Brokerage FI & MM Additionally, the division acted as exclusive sell-side financial advisor to Orascom Development Holding AG (ODHN.SW) on its divestiture of Citadel Azur to Pickalbatros Group, in a deal valued at c. USD50 million. It is worth noting that the investment banking division has a robust pipeline of M&A and ECM transactions to be executed over the course of Peers Average 6 Performance measured on a YTD basis. Source: EIMA 7

9 Financial Statements: Full financial statements can be downloaded at Consolidated Income Statement Q Q % Change % Change Operating revenue % 1, % Gain from selling assets available for sale % % Interest income from treasury bills and bonds % % Profit from selling investments at fair value through profit and loss Profit (losses) from revaluations of investments at fair value through profit or loss % % (0.3) % % Foreign exchange differences 3.3 (6.9) -148% 6.9 (9.1) -176% Gain from selling fixed assets Credit interest % % Dividend income % % Other income % % Total Revenues % 1, % Finance cost (174.6) (120.9) 44% (342.1) (222.3) 54% General and administrative expenses (107.4) (81.9) 31% (214.4) (165.4) 30% Dep. of finance leased assets (145.8) (125.2) 16% (266.1) (243.6) 9% Direct Cost of lease (4.3) - - (7.7) (3.4) 126% Impairment of client accounts (7.2) (7.3) -1% (26.3) (12.0) 118% Impairment of other assets IPO transaction fees (21.5) - - (21.5) - - Provisions (Net) (2.0) - (2.0) - Reefy acquisition cost (1.3) - - (2.6) - - Total expenses (464.1) (335.3) 38% (878.2) (646.7) 36% Net Profit before taxes % % Current income tax (35.2) (11.3) 211% (71.0) (36.1) 96% Deferred tax % % Net profit after tax % % Distributed as: Parent company % % Non- controlling interest % % 8

10 ` Consolidated Balance Sheet 30-Jun Jun Settlement guaranteed fund Finance leased assets, net 6, ,580.8 Leased assets - Leases contract settlement -1, PP&E Goodwill Securitization difference, net Other non-current assets Non-current assets 5, ,240.5 Cash and cash equivalents 1, Available for sale assets Investments at fair value through profit or loss Clearing accounts debit Debit clients 1, Other current assets Current assets 2, ,627.6 Total assets 8, ,868.1 Paid-in capital Legal reserve Translation difference Retained earnings Treasury stocks Share premium reserve Shareholders equity (Parent company) 2, Shareholders equity (Non-controlling interest) Total shareholder s equity 2, Long-term loans & facilities 4, ,137.6 Prepaid lease rent Employees end of service benefits Deferred taxes liabilities Non-current liabilities 4, ,175.4 Short-term loans & facilities 1, Credit customers Leased assets payable to suppliers Clearing accounts credit Taxes payable Other current liabilities Provisions Due to related parties Current liabilities 2, ,854.9 Total liabilities & equity 8, ,

11 ` Additional Information Share Information Ticker: CICH.CA; CICH EY Shares Outstanding: 544,184,033 Paid-In Capital: EGP 544,184,033 Investor Relations Contacts Tarek Tantawy, Managing Director & Group Deputy CEO Ahmed Kamel, Financial Planning & IR Manager Farida Galal, Investor Relations Analyst +20 (02) About CI Capital CI Capital is a diversified financial services group and Egypt s leading provider of leasing, microfinance, and investment banking products and services. Through its headquarters in Cairo and presence in New York and Dubai, CI Capital offers a wide range of financial solutions to a diversified client base that includes global and regional institutions and family offices, large corporates, SMEs, and high net worth and individual investors. CI Capital leverages its full-fledged investment banking platform to provide market leading capital raising and M&A advisory, asset management, securities brokerage, custody and research. Through its subsidiary Corplease, CI Capital offers comprehensive leasing solutions, including finance and operating leases, and sale and leaseback, serving a wide range of corporate clients and SMEs. In addition, CI Capital offers microfinance lending through Egypt s first licensed MFI, Reefy. The Group has over 1,700 employees, led by a team of professionals who are among the most experienced in the industry, with complementary backgrounds and skill sets and a deep understanding of local market dynamics. 10

12 ` Important Notice This announcement contains certain forward-looking statements. A forward-looking statement is any statement that does not relate to historical facts and events, and can be identified by the use of words and phrases like according to estimates, anticipates, assumes, believes, could, estimates, expects, intends, is of the opinion, may, plans, potential, predicts, projects, should, to the knowledge of, will, would, annualized or, in each case their negatives or other similar expressions, which are intended to identify a statement as forward-looking. This applies, in particular, to statements containing information on future financial results, plans, or expectations regarding the Company s business and management, the Group s future growth or profitability and general economic and regulatory conditions and other matters affecting the Group. Forward-looking statements reflect the current views of management of future events and are based on management s assumptions and involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. The occurrence or non-occurrence of an assumption could cause the actual financial condition and results of operations of the Group to differ materially from, or fail to meet expectations expressed or implied by, those forward-looking statements. The Company s business is subject to a number of risks and uncertainties that could also cause a forward-looking statement, estimate or prediction to become inaccurate. These risks include fluctuations in employee costs required by the operations of the Group, its ability to retain the services of certain key employees, its ability to compete successfully, changes in political, social, legal or economic conditions in Egypt, worldwide economic trends, global and regional trends in the industry, the impact of war and terrorist activity, inflation, interest rate and exchange rate fluctuations and the ability of management to identify accurately and in a timely manner future risks to the business of the Group and manage the risks mentioned above. Accordingly, investors should not rely on the forward-looking statements in this announcement. None of CI Capital, any of its subsidiaries, or management give any assurance regarding the future accuracy of the opinions set forth in this announcement or as to the actual occurrence of any predicted developments. After the date of this announcement, none of the Group s companies or its management assumes, and each of the Group and its management expressly disclaim, any obligation, except as required by law and the listing rules of the EGX, to update any forward-looking statements. 11

Investor Presentation - Second Quarter August 2018 Cairo, Egypt

Investor Presentation - Second Quarter 2018 1 August 2018 Cairo, Egypt Table of Contents I. Macro Overview Economic Fundamentals Results in Perspective II. Consolidated Results Group Highlights Consolidated