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«Atlas Mara Limited Unaudited 3rd Quarter Results – Nine Months Ended 30 September 2015 Atlas Mara Limited (Atlas Mara or the Company including its ...»

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29 October 2015

Atlas Mara Limited Unaudited 3rd Quarter Results – Nine Months Ended 30 September 2015

Atlas Mara Limited ("Atlas Mara" or the "Company" including its subsidiaries, the “Group”), the sub-Saharan

African financial services group, today releases unaudited summary year-to-date results for the nine months

ended 30 September 2015.

Key financial highlights during the period

 Reported profit after tax for the nine months ended 30 September 2015 was $7.1 million compared to a Pro Forma loss of $38.7 million for Q1-Q3 2014.

 Atlas Mara reported net interest income growth of 19.1%, non-interest revenue growth of 22.0% and essentially unchanged operating expenses year-over-year, on a constant currency basis.

 On an adjusted operating profit basis (excluding one-off items and M&A transaction expenses), Atlas Mara reported a profit of $23.7 million (Pro Forma Q1-Q3 2014: $(13.3) million) and a cost to income ratio of 79.9% (Pro Forma Q1-Q3 2014: 88.5%). This reflects the Company’s focus on driving cost efficiencies, while continuing to invest in the platform.

 Union Bank of Nigeria Plc (“UBN”) contributed income from associates of $15.1 million, reflecting Atlas Mara’s 31% shareholding on an equity accounted basis. This represents an increase of 18.3% year-over- year, excluding the impact of Naira depreciation  Loans and advances grew by 14.4% on a constant currency basis, reflecting Atlas Mara’s emphasis on improvements in credit origination processes, and deposits increased by 9.7% on a constant currency basis, underscoring the Company’s focus on funding and liability management. Retail deposits now comprise 19% of the total deposit book (compared to 13% at 30 June 2014 and 17% at 31 December 2014). Asset recoveries totaled $17.5 million for the nine month period reflecting the continued focus on this area.

 Reported equity at period end was $605.9 million, a decline from 31 December 2014 of $76.5 million, largely due to $79.9 million of foreign exchange translation losses driven by the strengthening of the U.S.

Dollar against most African currencies, particularly the Nigerian Naira, Botswana Pula and Zambian Kwacha. Implied book value per share at 30 September 2015 was $8.73 (compared to $9.13 at 30 June 2015).

Key operational highlights during the period  Atlas Mara has been implementing a comprehensive program to strengthen its subsidiaries’ end-to-end credit processes, which will continue to benefit the group meaningfully going forward in terms of sustained and profitable loan book growth. Recent asset recoveries, a decrease in NPL ratios and increasing coverage ratios are evidence of the early successes of this focused program.

 The Company has continued to focus on centralizing and standardizing processes across the Group in an effort to reduce back office support resources, improve frontoffice focus, and drive efficiencies. Flat expense growth year-over-year, on a constant currency basis, is illustrative of this focus.

1  The Company announced a partnership with the U.S. Government’s Overseas Private Investment Corporation ("OPIC"), whereby OPIC is committing $200 million for both selected acquisitions and to advance inclusive lending.

 A number of innovative new products have been (or are about to be) launched, notably an “e-voucher” program for small scale farmers in Zambia, supported by the Zambian government, which is aimed at providing enhanced access to agricultural inputs, pre-paid cards for pensioners, also supported by the Zambian government, whereby registered pensioners’ monthly disbursements get loaded directly onto their BancABC cards, and a chip-and-pin co-branded fuel card in partnership with Puma Energy in Zambia.

 Additionally, Atlas Mara’s BancABC subsidiary has, over the past several months, launched various digital channels, including a mobile wallet, mobile banking and internet banking, specifically aimed at retail customers. Enhanced Visa card services and ATM services are also now available across all BancABC operating banks. A significantly improved online banking offering for corporate customers is currently being tested and will be rolled out across the network during Q4 2015.

Convertible Bonds Issuance

On 1 October 2015, Atlas Mara completed a $63.4 million placement of senior secured convertible notes due 2020 (“Convertible Bonds”). The Convertible Bonds have a coupon of 8.0%, were issued at an issue price of 82.7% of their principal amount, have a maturity date of 31 December 2020 and are convertible into the ordinary shares of Atlas Mara at a price of $11.00 per share. Atlas Mara will use the net proceeds of the issue of the Convertible Bonds to fund near-term acquisition opportunities and for general corporate purposes. This issuance, together with the aforementioned $200 million of financing from OPIC, is demonstrative of the Company’s continued access to external financing to execute its strategy.

Agreements Reached on Combination of Banque Populaire du Rwanda and BRD Commercial Following the announcement on 27 April 2015 that the Company was in exclusive negotiations, Atlas Mara is pleased to announce that it has reached agreements to invest, subject to conditions precedent (including requisite regulatory approvals), approximately $21 million in Banque Populaire du Rwanda Limited (“BPR”).

Following completion of this step, Atlas Mara intends to merge BPR and BRD Commercial Bank Limited (“BRD Commercial”), the Rwandan bank Atlas Mara acquired in 2014, which will result in Atlas Mara owning 62% of the combined entity and Rabobank and other existing shareholders retaining a minority stake.

BPR enjoys strong customer loyalty, given its roots as a customer-owned bank, its forty-year operating history, and comprehensive geographic footprint. As of 30 June 2015, BPR had approximately $246 million of assets, $153 million of loans, and $200 million of deposits. It has 191 branch locations and approximately 1,370 employees. The combined institution will be Rwanda’s largest bank by branch locations and second largest bank by assets.

The proposed combination represents a unique opportunity to merge BRD Commercial with the second largest bank in Rwanda and accelerate Atlas Mara’s strategy in both Rwanda and the East Africa Community, more broadly. The merger will provide Atlas Mara with a powerful platform to meet unmet demand for retail and corporate credit, leverage mobile technology to provide differentiated product offerings and address the underbanked, and to effect economies of scale and scope through integration and resulting cost synergies.

2 This transaction is consistent with Atlas Mara’s strategic objective of being a “scale” participant in its countries of operation. The completion of the transaction is subject to conditions precedent, notably requisite regulatory approvals, and is expected during the fourth quarter of 2015.

Potential Acquisition of Finance Bank of Zambia Plc Today, 29 October 2015, Atlas Mara is pleased to announce that it is in advanced negotiations with respect to the potential acquisition of 100% of Finance Bank of Zambia Plc ("FBZ"), currently Zambia’s 6th largest bank.

The potential transaction is subject to the parties entering into definitive documentation and the subsequent satisfaction of selected conditions precedent (including requisite regulatory approvals). The Company expects that definitive documentation will be signed shortly.

During its thirty year history and roots as an independent Zambian financial institution, FBZ has created a formidable retail franchise. As at 30 June 2015, it had approximately $261 million of assets, $127 million of loans, $181 million of deposits and $59 million of equity. It has 63 branch locations and over 800 employees.

In addition to corporate and retail banking, FBZ operates leasing finance, micro finance and mortgage finance subsidiaries, which would also form part of the potential transaction.

Subject to agreeing definitive documentation and the subsequent satisfaction of relevant conditions precedent, Atlas Mara anticipates that it would acquire FBZ for approximately $60 million in cash and 2.6 million Atlas Mara shares (this may increase to $61 million and up to 5.7 million Atlas Mara shares, subject to a number of conditions, including the Zambian Kwacha/U.S. Dollar exchange rate at closing and the meeting of specific future profitability targets). Subject to signing definitive documentation, Atlas Mara would expect the transaction to close in Q1 2016. Once completed, the transaction, which would include the merger of FBZ with Atlas Mara’s Zambian subsidiary, African Banking Corporation Zambia Limited (“BancABC Zambia”), would result in the creation of Zambia’s largest bank by branch network and fifth largest bank by assets with combined assets of approximately $418 million. The enlarged group would be well-positioned to contribute meaningfully to the development of financial services in Zambia and the potential combination would be consistent with Atlas Mara’s over-arching strategic objective of being a “scale” player in its countries of operation. The Company will provide further updates to the market as appropriate in relation to the transaction.

Share Repurchase Program and Management/Founder Share Purchases

As was previously communicated, on 11 May 2015, the Board of Directors renewed the granting of authority to repurchase up to 10% of the Company's issued share capital. Given the conclusion of the prohibited period in which the Company was operating due to pending corporate actions and the release of these Q3 results, the Company’s Board of Directors has approved the re-initiation of the Company’s previously suspended share repurchase program. By way of its nominated brokers, to whom it has granted discretion, Atlas Mara will seek to acquire up to $10 million of its ordinary shares in the market.

Furthermore, following a decision earlier in the year by the Executive Committee to invest a substantial portion of their 2014 after-tax bonuses in Atlas Mara shares and by the Founders, Bob Diamond and Ashish Thakkar, to acquire additional shares, selected management members and the Founders will similarly seek to undertake purchases of the Company’s ordinary shares, by way of nominated brokers, to whom they have granted discretion, having previously invested more than $1 million earlier in the year in Atlas Mara ordinary shares.

3 Commenting on both the results and recent corporate activity, John F. Vitalo, CEO, said: “Our results for the nine months ended 30 September 2015 reflect our continued focus on acquiring the right assets and being astute operators. We place particular emphasis on prudently growing the asset base, reducing funding costs, delivering efficiencies and launching innovative products and services for our customers.

“I am delighted that we have announced the signing of definitive agreements in relation to BPR in Rwanda.

Upon completion of the BPR transaction, Atlas Mara will be the largest bank in Rwanda by distribution network and second largest bank in Rwanda by assets, thus providing further evidence of delivery of our stated strategy of being a scale participant in our countries of operation and progress in building sub-Saharan Africa’s premier financial institution. In relation to FBZ, our discussions are ongoing, but similarly speak to our intentions to execute follow-on transactions in attractive sub-Saharan African markets, such as Zambia. Finally, reflecting both the Board’s and management’s confidence in the Company’s prospects, I am pleased to report that the Company will be re-initiating its share repurchase program and management and the Founders will similarly be seeking to acquire Atlas Mara ordinary shares, as we continue to see meaningful value in them.” Investor Conference Call Atlas Mara’s senior management will today be holding a market update for investors at 8am EST / 12pm GMT.

There will be a presentation available in the Investor Relations section of the Company's website, http://atlasmara.com.

The Company will not be disclosing any new material information.

Dial-in details are as follows:

- Conference ID: 67198761

- US: 1 631 621 5256

- UK: 0844 871 9299

- International: +44 (0) 1452 560304 Contact Details Investors Brad Gibbs, +971 4 275 6000 Kojo Dufu, +1 212 883 4330 Media StockWell Communications, +44 (0)20 7240 2486 Anthony Silverman About Atlas Mara Atlas Mara was listed on the London Stock Exchange in December 2013. Atlas Mara's vision is to create subSaharan Africa's premier financial services institution through a combination of its experience, expertise and access to capital, liquidity and funding. Its goals are to combine the best of global institutional knowledge with extensive local insights and to support economic growth and financial inclusion in the countries in which the Company operates.

–  –  –

(1) Constant currency variances reflect the operational variance (either positive or (negative)) period-on-period excluding the impact of foreign currency translation, due to the U.S. Dollar strengthening against all of the relevant African currencies. By way of example: Total Income for Q1-Q3 2015 would have reflected positive growth of 20.6% compared to the prior period had it not been for the impact of foreign exchange translation.

5Basis of Presentation

Overview The term “Atlas Mara”, “the Company” or “Group” refers to Atlas Mara Limited and its subsidiaries and associates. This release covers the unaudited consolidated results for the Group for the nine months ended 30 September 2015.

Unless otherwise stated, the financial information for the nine month period ended 30 September 2015 is set out in this release on a basis consistent with International Financial Reporting Standards, as adopted by the EU (IFRS) and consistent with the group accounting policies as disclosed in the 2014 annual report.

Pro Forma Comparative Basis Given that Atlas Mara’s establishing acquisitions were only concluded during Q3 and Q4 of 2014, no meaningful comparative financial information is available. 2014 was the first year of operation for Atlas Mara and 2015 the first full year of operating the banks acquired during the latter part of 2014.

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