BUDGET NOTES TO THE BUDGET FOR THE YEAR 2010 A) INCOME. 071: Interest from loans to members Kshs.630 million.

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1 BUDGET NOTES TO THE BUDGET FOR THE YEAR 2010 A) INCOME 071: Interest from loans to members Kshs.630 million. Loans to members are expected to increase at the rate of 19% during the year 2010 in line with the members deposits as anticipated in the current strategic plan. Based on this projection the society expects to realize a total of Kshs.630 million as compared to Kshs.529 million for : Income from investing activities Kshs.32 million. It is the policy of the Society to ensure that members loan requirements are met before funds are invested elsewhere. However, it is also prudent to ensure that excess funds are invested in short term fixed assets and therefore readily available to meet member needs. The Board expects to invest any excess funds in Treasury bills and fixed deposits on terms of between 91 days and 182 days. It is projected that during the financial year 2010 an average of Kshs.400 million will be invested in the money market instruments at interest rates averaging 8%. This will generate a total of Kshs.32 million as compared to Kshs.26 million for : Members insurance subscriptions Kshs.13.4 million. The Society has currently insured the entire loan portfolio with Co-operative insurance Company. This policy is financed by the members insurance subscriptions of Kshs.300/= per month. With an expected total membership of 3,724 in the year 2010, it is projected that a sum of Kshs.13.4 million will be raised from this source as compared to Kshs.12 million in the year : Income from Bridging Finance Kshs.46.0 million Bridging Finance is a FOSA product which the Board developed in an effort to assist our members who may not have available cash to pay off their outstanding loans in order to qualify for new ones. During the year 2010, we expect to raise a total of Kshs.46 million in revenue as compared to Kshs43 million in : Commissions/ Other incomes - Kshs.9.5 million Income under this item covers dividends processing, sales of bankers cheques, withdrawal commissions, safe custody, Money Gram, funds transfers e.t.c. The Society expects to generate revenue to the tune of Kshs.9.5 million in the year 2010 as compared to Kshs.7.7 million for EXPENDITURE Staff costs are expected to take a total sum of Kshs.36 million in the year 2010 as compared to Kshs.32 million in the year Salaries and wages item alone is expected to cost Kshs.25 million in 2010 as compared to Kshs.22 million in 2009, while provident fund contribution which is calculated at the rate of 25% of the employee s basic pay will cost kshs.5.4 million as compared to kshs.4.7 million in 2009.

2 The other items of expenditure include operating costs, depreciation and amortization costs and finance cost which are expected to cost the Society as follows: Salaries and wages 24,924,577 21,673, Leave provisions 200, , N.S.S.F 36,000 36, Staff Sub. & traveling 1,200,000 1,200, Staff medical 3,000,000 2,700, Staff Training & seminars 950, , Staff insurance 750, , Staff provident fund 5,356,725 4,658,022 Total 36,417,302 31,717,567 OPERATING COSTS 147 Repairs & Maintenance 720, , Lease of office equipment expenses 600, , Audit fees 480, , Audit supervision fees 48,000 40, Accounts registration charges 2,000 2, Legal fees 216, , Consultancy services 2,500,000 2,200, Committee sitting allowance 2,100,000 1,900, Committee Education 1,280,000 1,000, Committee sub. & traveling 1,200,000 1,200, Education to members 1,200,000 1,000, Entertainment & AGM expenses 1,800,000 1,800, Printing & stationery 1,500,000 1,500, Postage & Telephones 360, , Advertising & Public relations 800, , loan guard insurance policy 12,000,000 11,000, Provision for non performing loans 300, , Bad debts Software Licenses 1,000, , Fosa cash insurance 929, , Contingencies 444, ,000 Total 29,479,500 26,481,000 2

3 DEPRECIATION AND AMORTIZATION 206 Amortization of operating lease 1,600,000 1,600, Depreciation 7,312,000 6,971, Bond amortization 400, ,000 Total 9,312,000 8,971,070 FINANCE COSTS 172 Bank charges 1,600,000 1,600,000 Total 1,600,000 1,600,000 C) CAPITAL EXPENDITURE During the year 2009 the Society has set aside a sum of Kshs.16,870,000 for purposes of reingineering its processes. The project involves the purchase, installation and commissioning of the new computer software, purchase of new computer servers, and replacement of aging computers. The remaining funds will be utilized in installing internet banking and related items, purchase of a shredding machine, and installation of ATM services. In the year 2010 we have also set aside a sum of Kshs.2,560,000 to meet the cost of replacing old computers and improving on the Automatic Teller Machines connectivity and SMS banking. D) LOANS TO MEMBERS Loans to member s item as usual will take the biggest share of the Society's cash flow during the year It is expected that the Society will disburse loans amounting to Kshs. 3.4 billion in 2010 as compared Kshs.2.8 billion in E) INTEREST ON MEMBERS DEPOSITS AND COMMITTEE HONORARIA Interest on members' deposits (dividends) payable to members plus honoraria payable to the Board of Directors and Supervisory Committee for the year 2009 will be disbursed in the first quarter of year It is projected that a total of Kshs.501 million will be paid as compared to Kshs.364 million in F) CORPORATION TAX Corporation tax is a Government levy on income from investing activities. It is expected that with a projected income of Kshs.32 million from investing activities the Society will be expected to pay corporation taxes in the tune of Kshs.4.8 million in 2010 as compared to Kshs.4.2 million in G) LOAN GUARD INSURANCE POLICY The Society currently underwrites risks relating to the entire loan portfolio with Co-operative insurance Company. This policy is financed by the members insurance subscriptions of Kshs.300/= per month. In the year 2010 it is projected that a sum of Kshs.12 million will be spend on his policy as compared to Kshs.11 million in the year

4 COMBINED OPERATING BUDGET FOR THE YEAR 2010 Year-2010 Year-2009 Year-2009 Year-2008 Year-2008 Jan - Mar April - June July - Sept Oct - Dec Budget Revised Budget Budget Actual Budget INCOME KShs. KShs. KShs. KShs. Kshs. KShs. Kshs. KShs. KShs. 071 Interest from loans 157,500, ,500, ,500, ,500, ,000, ,715, ,929, ,450, ,545, Income from investing activitie 8,000,000 8,000,000 8,000,000 8,000,000 32,000,000 26,389,020 21,000,000 21,111,216 21,000, Members Insurance subscriptions 3,351,600 3,351,600 3,351,600 3,351,600 13,406,400 12,004,846 10,800,000 9,603,877 7,200, Bridging finance incomes 11,500,000 11,500,000 11,500,000 11,500,000 46,000,000 43,118,945 36,000,000 34,495,156 32,000, Other income/commissions 2,370,000 2,370,000 2,370,000 2,370,000 9,480,000 7,695,564 3,512,400 5,434,477 3,512,400 TOTAL INCOME 182,721, ,721, ,721, ,721, ,886, ,923, ,241, ,094, ,257,651 EXPENDITURE STAFF COSTS. 131 Salaries and wages 6,231,144 6,231,144 6,231,144 6,231,144 24,924,577 21,673,545 17,929,488 18,020,884 16,653, Leave provisions 50,000 50,000 50,000 50, , ,000 1,020,881 74,710 2,397, N.S.S.F 9,000 9,000 9,000 9,000 36,000 36,000 36,000 24,400 28, Staff Sub. & traveling 300, , , ,000 1,200,000 1,200,000 1,200,000 1,634,273 1,200, Staff medical 750, , , ,000 3,000,000 2,700,000 4,550,000 1,771,668 4,387, Staff Training & seminars 237, , , , , , , , , Staff insurance 187, , , , , , , , , Staff provident fund 1,339,181 1,339,181 1,339,181 1,339,181 5,356,725 4,658,022 3,827,952 3,340,138 3,508,957 Total 9,104,326 9,104,326 9,104,326 9,104,326 36,417,302 31,717,567 30,254,321 25,642,470 29,226,645 OPERATING COSTS 147 Repairs & Maintenance 180, , , , , , , , , Lease of office equipment expense 150, , , , , , , , Audit fees 120, , , , , , , , , Audit supervision fees 12,000 12,000 12,000 12,000 48,000 40,000 40,000 35,992 33, Accounts registration charges ,000 2,000 2, Legal fees 54,000 54,000 54,000 54, , , , , Consultancy services 625, , , ,000 2,500,000 2,200,000 2,500,000 3,410,599 3,000, Committee sitting allowance 525, , , ,000 2,100,000 1,900,000 1,800,000 2,122,710 2,160, Committee Education 320, , , ,000 1,280,000 1,000,000 1,280, ,874 1,536, Committee sub. & traveling 300, , , ,000 1,200,000 1,200,000 1,200,000 1,189, , Education to members 300, , , ,000 1,200,000 1,000,000 1,000, , , Entertainment t t & AGM expenses 450, , , , ,800, ,800, ,800, ,753 2,160, Printing & stationery 375, , , ,000 1,500,000 1,500,000 1,200,000 1,323,902 1,320, Postage & Telephones 90,000 90,000 90,000 90, , , ,000 91, , Advertising & Public relations 200, , , , , , , , , loan guard insurance policy 3,000,000 3,000,000 3,000,000 3,000,000 12,000,000 11,000,000 15,738,392 9,560,197 15,108, Provision for non performing loans 75,000 75,000 75,000 75, , , , Bad debts , Software Licenses 250, , , ,000 1,000, ,000 1,400,000 1,771,131 1,440, Fosa cash insurance 232, , , , , , , , , Contingencies 111, , , , , , , ,000 0 Total 7,369,875 7,369,875 7,369,875 7,369,875 29,479,500 26,481,000 31,520,392 23,924,847 31,651,176 DEPRECIATION AND AMORTIZATION 206 Amortization of operating lease 400, , , ,000 1,600,000 1,600,000 1,600,000 1,654,539 1,600, Depreciation 1,828,000 1,828,000 1,828,000 1,828,000 7,312,000 6,971,070 3,016,000 2,816,962 4,715, Bond amortization 100, , , , , , , , ,000 Total 2,328,000 2,328,000 2,328,000 2,328,000 9,312,000 8,971,070 5,016,000 4,710,091 6,715,000 FINANCE COSTS 171 Interest on members Deposits 172 Bank charges 400, , , ,000 1,600,000 1,600,000 1,600,000 1,047,674 1,600,000 Total 400, , , ,000 1,600,000 1,600,000 1,600,000 1,047,674 1,600,000 TOTAL COSTS 19,202,201 19,202,201 19,202,201 19,202,201 76,808,802 68,769,637 68,390,713 55,325,082 69,192,821 SURPLUS BEFORE TAXATION 163,519, ,519, ,519, ,519, ,077, ,153, ,850, ,769, ,064,830 TAXATION 200 Taxation 1,200,000 1,200,000 1,200,000 1,200,000 4,800,000 4,200,000 3,150,000 3,165,182 3,150, Total 1,200,000 1,200,000 1,200,000 1,200,000 4,800,000 4,200,000 3,150,000 3,165,182 3,150,000 SURPLUS AVAILABLE FOR DISTR 162,319, ,319, ,319, ,319, ,277, ,953, ,700, ,604, ,914,830 Date...3/3/2009 Date...3/3/2009 Date...3/3/ Date...3/3/2009 Date..3/3/2009

5 OPERATING BUDGET - SOCIETY GENERAL FOR THE YEAR 2010 Year-2010 Year-2009 Year-2009 Year-2008 Year-2008 Jan - Mar April - June July - Sept Oct - Dec Budget Revised Budget Budget Actual Budget INCOME KShs. KShs. KShs. KShs. Kshs. KShs. Kshs. KShs. KShs. 071 Interest from loans 135,000, ,000, ,000, ,000, ,000, ,059, ,300, ,714, ,642, Income from investing activitie 8,000,000 8,000,000 8,000,000 8,000,000 32,000,000 26,389,020 21,000,000 21,111,216 21,000, Members Insurance subscriptions 3,351,600 3,351,600 3,351,600 3,351,600 13,406,400 12,004,846 10,800,000 9,603,877 7,200, Bridging finance incomes Other income/commissions 1,200,000 1,200,000 1,200,000 1,200,000 4,800,000 3,415,564 2,732,451 0 TOTAL INCOME 147,551, ,551, ,551, ,551, ,206, ,868, ,100, ,162, ,842,000 EXPENDITURE STAFF COSTS. 131 Salaries and wages 4,928,347 4,928,347 4,928,347 4,928,347 19,713,386 17,142,075 14,172,840 15,717,047 13,159, Leave provisions 40,000 40,000 40,000 40, , , ,881 59,768 1,918, N.S.S.F 7,200 7,200 7,200 7,200 28,800 28,800 28,800 19,000 21, Staff Sub. & traveling 250, , , ,000 1,000,000 1,000,000 1,000,000 1,307,418 1,000, Staff medical 600, , , ,000 2,400,000 2,160,000 3,200,000 1,417,334 3,037, Staff Training & seminars 190, , , , , , , , , Staff insurance 150, , , , , , , , Staff provident fund 1,063,969 1,063,969 1,063,969 1,063,969 4,255,874 3,700,760 3,040,108 2,847,305 2,786,768 Total 7,229,515 7,229,515 7,229,515 7,229,515 28,918,061 25,191,635 23,462,629 21,988,990 22,523,645 OPERATING COSTS 147 Repairs & Maintenance 144, , , , , , , , , Lease of office equipment expense 120, , , , , , , , Audit fees 96,000 96,000 96,000 96, , , , , , Audit supervision fees 9,600 9,600 9,600 9,600 38,400 32,000 32,000 28,954 28, Accounts registration charges ,600 1,600 1, Legal fees 43,200 43,200 43,200 43, , , , , Consultancy services 500, , , ,000 2,000,000 1,760,000 2,000,000 2,728,479 2,500, Committee sitting allowance 420, , , ,000 1,680,000 1,540,000 1,440,000 1,698,168 1,800, Committee Education 256, , , ,000 1,024, ,000 1,024, ,099 1,280, Committee sub. & traveling 240, , , , , , , , , Education to members 240, , , , , , ,000 81, , Entertainment & AGM expenses 360, , , , ,440, ,440, ,440, ,402 1,800, Printing & stationery 300, , , ,000 1,200,000 1,200, ,000 1,059,122 1,100, Postage & Telephones 72,000 72,000 72,000 72, , , ,000 72, , Advertising & Public relations 160, , , , , , , , , loan guard insurance policy 2,400,000 2,400,000 2,400,000 2,400,000 9,600,000 8,800,000 12,590,714 9,560,197 12,590, Provision for non performing loans 50,000 50,000 50,000 50, , , , Bad debts , Software Licenses 200, , , , , ,000 1,120,000 1,416,905 1,200, Fosa cash insurance Contingencies 75,000 75,000 75,000 75, , , , Total 5,686,200 5,686,200 5,686,200 5,686,200 22,744,800 20,517,600 24,816,314 20,741,473 25,959,313 DEPRECIATION AND AMORTIZATION 206 Amortization of operating lease 320, , , ,000 1,280,000 1,280,000 1,280,000 1,323,631 1,280, Depreciation 1,462,400 1,462,400 1,462,400 1,462,400 5,849,600 5,576,856 2,412,800 2,253,570 3,772, Bond amortization 80,000 80,000 80,000 80, , , , , ,000 Total 1,862,400 1,862,400 1,862,400 1,862,400 7,449,600 7,176,856 4,012,800 3,768,073 5,372,000 FINANCE COSTS 172 Bank charges 200, , , , , , , , ,000 Total 200, , , , , , , , ,000 TOTAL COSTS 14,978,115 14,978,115 14,978,115 14,978,115 59,912,461 53,686,091 53,091,743 46,839,522 54,654,958 SURPLUS BEFORE TAXATION 132,573, ,573, ,573, ,573, ,293, ,182, ,008, ,322, ,187,042 TAXATION 200 Taxation 1,200,000 1,200,000 1,200,000 1,200,000 4,800,000 4,200,000 3,150,000 3,165,182 3,150, Total 1,200,000 1,200,000 1,200,000 1,200,000 4,800,000 4,200,000 3,150,000 3,165,182 3,150,000 SURPLUS AVAILABLE FOR DISTR 131,373, ,373, ,373, ,373, ,493, ,982, ,858, ,157, ,037,042 5 Date...3/3/2009 Date...3/3/2009 Date...3/3/2009 Date...3/3/2009 Date...3/3/2009

6 FOSA BUDGET FOR THE YEAR 2010 Year-2010 Year-2009 Year-2009 Year-2008 Year-2008 Jan - Mar April - June July - Sept Oct - Dec Budget Revised Budget Budget Actual Budget INCOME KShs. KShs. KShs. KShs. KShs. KShs. KShs. KShs. KShs. 071 Interest from loans 22,500,000 22,500,000 22,500,000 22,500,000 90,000,000 77,655,816 73,629,064 59,735,243 58,903, Income from investing activitie Members Insurance subscriptions Bridging finance incomes 11,500,000 11,500,000 11,500,000 11,500,000 46,000,000 43,118,945 36,000,000 34,495,156 32,000, Other income/commissions 1,170,000 1,170,000 1,170,000 1,170,000 4,680,000 4,280,000 3,512,400 2,702,026 3,512, TOTAL INCOME 35,170,000 35,170,000 35,170,000 35,170, ,680, ,054, ,141,464 96,932,425 94,415,651 EXPENDITURE STAFF COSTS. 131 Salaries and wages 1,302,798 1,302,798 1,302,798 1,302,798 5,211,191 4,531,470 3,756,648 2,303,837 3,494, Leave provisions 10,000 10,000 10,000 10,000 40,000 40, ,000 14, , N.S.S.F 1,800 1,800 1,800 1,800 7,200 7,200 7,200 5,400 7, Staff Sub. & traveling 50,000 50,000 50,000 50, , , , , , Staff medical 150, , , , , ,000 1,350, ,334 1,350, Staff Training & seminars 47,500 47,500 47,500 47, , , ,000 82, , Staff insurance 37,500 37,500 37,500 37, , , ,000 72, , Staff provident fund 275, , , ,213 1,100, , , , ,189 Total 1,874,810 1,874,810 1,874,810 1,874,810 7,499,241 6,525,932 6,791,692 3,653,480 6,703,000 OPERATING COSTS 147 Repairs & Maintenance 36,000 36,000 36,000 36, , , ,000 39, , Lease of office equipment expense 30,000 30,000 30,000 30, , , , , Audit fees 24,000 24,000 24,000 24,000 96,000 80,000 80,000 72,385 80, Audit supervision fees 2,400 2,400 2,400 2,400 9,600 8,000 8,000 7,038 5, Accounts registration charges Legal fees 10,800 10,800 10,800 10,800 43,200 36,000 36, , Consultancy services 125, , , , , , , , , Committee sitting allowance 105, , , , , , , , , Committee Education 64,000 64,000 64,000 64, , , , , , Committee sub. & traveling 60,000 60,000 60,000 60, , , , , , Education to members 60,000 60,000 60,000 60, , , ,000 20, , Entertainment & AGM expenses 90,000 90,000 90,000 90, , , , , , Printing & stationery 75,000 75,000 75,000 75, , , , , , Postage & Telephones 18,000 18,000 18,000 18,000 72,000 60,000 60,000 18,200 60, Advertising & Public relations 40,000 40,000 40,000 40, , ,000 72, ,305 72, loan guard insurance policy 600, , , ,000 2,400,000 2,200,000 3,147, ,518, Provision for non performing loans 25,000 25,000 25,000 25, , , , Bad debts Software Licenses 50,000 50,000 50,000 50, , , , , , Fosa cash insurance 232, , , , , , , , , Contingencies 36,000 36,000 36,000 36, , , , ,000 0 Total 1,683,675 1,683,675 1,683,675 1,683,675 6,734,700 5,963,400 6,704,078 3,183,374 5,691, Amortization of operating lease 80,000 80,000 80,000 80, , , , , , Depreciation 365, , , ,600 1,462,400 1,394, , , , Bond amortization 20,000 20,000 20,000 20,000 80,000 80,000 80,000 47,718 80,000 Total 465, , , ,600 1,862,400 1,794,214 1,003, ,018 1,343,000 FINANCE COSTS 172 Bank charges 200, , , , , , , , ,000 Total 200, , , , , , , , ,000 TOTAL COSTS 4,224,085 4,224,085 4,224,085 4,224,085 16,896,341 15,083,546 15,298,970 8,485,560 14,537,863 SURPLUS BEFORE TAXATION 30,945,915 30,945,915 30,945,915 30,945, ,783, ,971,215 97,842,494 88,446,865 79,877,788 TAXATION 200 Taxation Total SURPLUS AFTER TAXATION 30,945,915 30,945,915 30,945,915 30,945, ,783, ,971,215 97,842,494 88,446,865 79,877,788 6 Date...3/3/2009 Date...3/3/2009 Date...3/3/2009 Date...3/3/2009 Date...3/3/2009

7 CAPITAL BUDGET REVISED FOR THE YEAR 2009/10 Year-2010 Year-2009 Sept. - Dec. Revised ITEMS Jan - Mar Apr - June July - Sept. KShs. Budget Budget KShs. KShs. KShs. 0 KShs. KShs. 1 Shredding Machine , , ,000 Printers 125, , , , ,000 Five docking stations ,000 Cash counting machine ,000 3 servers core banking applications ,200,000 Core Sacco application software ,500,000 Windows servers 2008 enterprise ,000 System implementation costs ,000 75, ,000 Off site server hosting 75,000 75,000 75,000 15, , ,000 Website upgrade 15,000 15,000 15, , , ,000 Printer lease 125, , , , , ,000 ATM-Installation 300, , , ,000 1,500,000 Internet Banking ,000, , , , ,000 2,560,000 16,870,000 7 Date..3/3/2009 Date..3/3/2009 Date...3/3/2009 Date...3/3/2009 Date...3/3/2009

8 COMBINED CASH BUDGET FOR THE YEAR 2010 CASH INFLOWS: Year-2010 Year-2009 Year-2009 Jan - Mar April - June July - Sept Oct - Dec Budget Revised Budget Budget INCOME KShs. KShs. KShs. KShs. Kshs. KShs. Kshs. Interest from loans 157,500, ,500, ,500, ,500, ,000, ,715, ,929,064 Income from investing activitie 8,000,000 8,000,000 8,000,000 8,000,000 32,000,000 26,389,020 21,000,000 Members Insurance subscriptions 3,351,600 3,351,600 3,351,600 3,351,600 13,406,400 12,004,846 10,800,000 Bridging finance income 11,500,000 11,500,000 11,500,000 11,500,000 46,000,000 43,118,945 36,000,000 Other income/commissions 2,370,000 2,370,000 2,370,000 2,370,000 9,480,000 7,695,564 3,512,400 Shares contributions 248,811, ,811, ,811, ,811, ,245, ,517, ,766,211 Entrance fees 84,050 84,050 84,050 84, , , ,000 Loan Repayments 650,626, ,626, ,626, ,626,480 2,602,505,920 2,150,821,328 1,777,546,552 TOTAL INCOME 1,082,243,557 1,082,243,557 1,082,243,557 1,082,243,557 4,328,974,228 3,591,536,989 3,095,829,227 CASH OUTFLOW: Staff costs 9,104,326 9,104,326 9,104,326 9,104,326 36,417,302 31,717,567 30,254,321 Operating costs 7,369,875 7,369,875 7,369,875 7,369,875 29,479,500 26,481,000 31,520,392 Finance costs 400, , , ,000 1,600,000 1,600,000 1,600,000 Capital expenditure 640, , , ,000 2,560,000 16,870,000 8,800,000 Loans to members 847,985, ,985, ,985, ,985,069 3,391,940,276 2,802,595,270 1,986,111,400 Shares Refunds 94,072,990 94,072,990 94,072,990 94,072, ,291, ,985, ,012,472 Corporation Tax 1,200,000 1,200,000 1,200,000 1,200,000 4,800,000 4,200,000 3,150,000 Interest on members deposits(dividend 500,700, ,700, ,227, ,748,387 TOTAL OUTFLOWS 1,461,472, ,772, ,772, ,772,260 4,343,789,038 3,558,675,981 2,665,196,972 NET INFLOW/(OUTFLOW) (379,228,703) 121,471, ,471, ,471,297 (14,814,810) 32,861, ,632,255 BALANCE B/F 570,257, ,028, ,500, ,971, ,257, ,396, ,277,034 BALANCE C/F 191,028, ,500, ,971, ,442, ,442, ,257, ,909,289 8 Date...3/3/2009 Date...3/3/2009 Date..3/3/2009 Date...3/3/2009 Date...3/3/2009