BK GROUP PLC Rights Issue Abridged Information Memorandum

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RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

Table of Contents

Important Notice................................................................................................2 Corporate Information.......................................................................................3 Advisors to the Transaction ..............................................................................4 Letter from the Chairman..................................................................................8 SECTION 1:

Timetable for the Offer........................................................10

SECTION 2:

Executive Summary.............................................................11

SECTION 3:

The Offer..............................................................................16

SECTION 4:

Terms and Conditions of the Offer......................................20

SECTION 5:

Reporting Accountants’ Report & Legal Opinion...............26

SECTION 6:

Risk Factors........................................................................27

SECTION 7:

Authorized Selling Agents (ASAs)......................................30

SECTION 8:

Appendices.........................................................................31

8.1.

PAL Form............................................................................................31

8.2.

Form of Renunciation.........................................................................32

8.3.

Form of Entitlement............................................................................32

8.4.

Power of Attorney...............................................................................32

8.5. Irrevocable Bank Guarantee...............................................................33 8.6. Irrevocable Letter of Undertaking......................................................33

ii I&M BANK - RWANDA PROSPECTUS

(formerly Bank of Kigali Limited) Incorporated in the Republic of Rwanda, Company Registration Number 100003458 Registered by the Rwanda Development Board as a non-operating holding company and listed on the Rwanda Stock Exchange

Abridged Information Memorandum In respect of Rights Issue of 222,222,222 New Ordinary Shares with a par value of FRw 10 at and an Issue Price of FRw 270 per share in the ratio of 1 New Ordinary Share for every 3 Ordinary Shares held

Lead Transaction Advisor

Sponsoring Broker

Â

This Abridged Information Memorandum is dated October 16, 2018 and is valid for 6 months from this date

ELIGIBLE SHAREHOLDERS HAVE THE OPTION TO TAKE UP THEIR RIGHTS IN FULL OR PARTIALLY, RENOUNCE, TRANSFER BY WAY OF PRIVATE TRANSFER OR TO TRADE THEM ON THE RWANDA STOCK EXCHANGE. REFER TO SECTION 4 FOR FURTHER DETAILS ON THE OPTIONS AVAILABLE.

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

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Important NoticeTable of Contents

THIS DOCUMENT CONTAINS IMPORTANT INFORMATION FOR Responsibility Statements CONSIDERATION AND REQUIRES YOUR CAREFUL ATTENTION AS IT INCLUDES LEGAL, MARKET AS WELL AS HISTORIC, CURRENT AND FUTURE FINANCIAL Important Notice................................................................................................5 This Abridged Information Memorandum has been seen and approved by INFORMATION the Board of the Directors of the Group. The Directors, whose names are given on page 3, collectively and individually accept full responsibility for the This document (including theCorporate documentsInformation.......................................................................................8 incorporated by reference herein accuracy of the information given in this Abridged Information Memorandum (the “Abridged Information Memorandum”) relates to the offering by BK and confirm that, after having made all reasonable enquiries, and to the best Group Plc of 222,222,222 ordinary shares of a par value of FRw 10, each at an of their knowledge and belief (having taken all reasonable care to ensure Advisors to the Transaction . .............................................................................10 issue price of FRw 270 (the “Issue Price”) per offer share (the “New Shares”). that such is the case) there are no false or misleading statements and other Subject to applicable securities laws and the terms set out in the Information facts the omission of which make any statement herein false or misleading or Memorandum, the holders ofLetter ordinary shares “Shareholders”) at 12.00 otherwise likely to affect the import of such information. from the(the Chairman..................................................................................17 pm on Wednesday, 24 October 2018 (“Record Date”) are being granted transferable subscription rights to subscribe for the New Shares pro rata to The Lead Transaction Advisor acknowledges that based on all the available their shareholding in the Company.

SECTION 1: Timetable for the Offer........................................................19 information and to the best of their knowledge and belief, the Information Memorandum constitutes a full and true disclosure of all material facts The offering (“Offering”) comprises (1) the rights issue (the “Rights Issue”) concerning the Offer and they have satisfied themselves that any profit or SECTION 2: Executive Summary.............................................................20 in which Shareholders as of the Record Date will be granted 1 transferable cash flow projections for which the Directors are fully responsible, has been subscription right for 3 existing ordinary shares held on that date (the prepared for inclusion in the Information Memorandum and has been stated “Rights”) to subscribe for New Shares at3: the IssueThe PriceOffer..............................................................................28 (“Rights Shares ”), by the Directors after due and careful enquiry and have been duly reviewed SECTION and (2) the rump offer (the “Rump Offer), in which New Shares for which by the Reporting Accountants.

Rights have not been validly exercised or which are untaken during the Rights Offer Period (as defined below) (the “Rump will be and sold at a price no of the Offer......................................34 SECTION 4: Shares”)Terms Conditions Potential investors should not assume that the information in this Abridged lower than the Issue Price.

Information Memorandum is accurate as at any date other than the date of this Abridged Information Memorandum. No person is or has been authorized SECTION 5: Reporting Accountants’ Report & Legal Opinion...............44 The Rights Issue will be made by way of a public offering in Rwanda under to give any information or make any representation in connection with law N°01/2011 of 10/02/2011 Law regulating capital market in Rwanda. The the Offer and Listing, other than as contained in this Abridged Information Rights Shares shall be admitted to listing 6: on the Rwanda Securities Exchange Memorandum.

Delivery of this Abridged Information Memorandum at any SECTION Authorized Selling Agents (ASAs)......................................44 (“RSE”). time after the date hereof will not under any circumstances create any inference that there has been no change or that the information set out in SECTION Appendices.........................................................................45 this Abridged Information Memorandum is correct as at any time since its This Information Memorandum is issued7: by the Issuer in compliance with date. the requirements of the Registrar General’s Instructions No. 01/2010/ORG of 12/04/2010 relating to the form and content of a prospectus (“Information 7.1.

PAL Form............................................................................................45 Memorandum Instructions”) Law No17/2018 of 13/04/2018 relating to Selling Restrictions Companies (the “Rwanda Companies Act”), and the regulation No 7 of 6 June 2012 on Public Offers and Securities of the Capital Markets 7.2. Issues of Form of Renunciation.........................................................................47 The Offer does not constitute an offer to issue or sell, or the solicitation of Authority (CMA) of Rwanda (the “Rwanda CMA”) and the requirements of an offer to subscribe for or buy, securities in any jurisdiction in which such the RSE. an offer or solicitation would be unlawful. The Offer consists of an offering 7.3.

Form of Entitlement............................................................................49 outside the United States of America (the United States) of shares pursuant Application has been made to the Rwanda CMA and approval has been to Regulation S under the US Securities Act 1933, as amended (the Securities granted for the Rights Issue and a no objection to of theAttorney...............................................................................51 Cross Listing. As a matter Act).

7.4.

Power of policy, the Rwanda CMA assumes no responsibility for the correctness of any statements or opinions made or reports contained in this Information The Shares have not been and will not be registered under the Securities Act Memorandum. Approval of the Rights Issue and the listing of the New Shares 7.5. Irrevocable Bank Guarantee...............................................................52 or qualified for sale under the laws of any state of the United States or under on the RSE are not to be taken as an indication of the merits of the Group, the applicable laws of the United Kingdom, Canada, Australia or Japan and, its subsidiaries or of the New Shares. The securities offered have not been subject to certain exceptions, may not be offered, sold, pledged or otherwise approved or disapproved by the Authority.

7.6. Irrevocable Letter of Undertaking......................................................53 transferred in the United States or to, or for the account or benefit of, U.S. persons as defined in Regulation S or to any national, resident or citizen of the The RSE has given permission 7.7. for listing ofCSD the Rights is expectedOpening that United Canada, Australia or Japan. Neither this document nor any FormShares.

1 (a) –It Account FormKingdom, (Individuals).....................54 the admission of the trading of the Rights Shares on the RSE will commence copy of it may be sent to or taken into the United States, the United Kingdom, at 9.00 am on Friday,30 November 2018. The RSE assumes no responsibility Canada, Australia or Japan nor may it be distributed to any U.S. person. for the correctness of any of7.8. the statements made 1or(b) opinions or reports CSD Form – Account Opening Form (Companies)....................55 expressed in this Information Memorandum. Admission of the Rights Shares Supplementary Information Memorandum to the official list of the RSE is not to be taken as an indication of the merits of Form 5 – Pledge Form................................................................56 the Group, its subsidiaries or 7.9. of the NewCSD Shares.

If, prior to the Listing of the Shares a significant new development occurs in relation to the information contained in the Information Memorandum or Application has been made to the Capital Markets Authority of Kenya (the 7.10. CSD Form 7 – Private Transfer Form.....................................................57 a material mistake or inaccuracy is found that may affect the assessment of “Kenya CMA”) and to the Nairobi Securities Exchange (“NSE”) and approval the Group, a supplement to the Information Memorandum may be published has been granted for the Cross Listing of BK Group shares on Main Investment with the approval of the Regulatory Authorities.

Market Segment (“MIMS”) of the NSE. As a matter of policy, the Kenya CMA and the NSE assume no responsibility for the correctness of any statements or opinions made or reports contained in this Information Memorandum.

Approval of the Cross Listing and the subsequent admission to the official list of the NSE are not to be taken as an indication of the merits of the Group, its subsidiaries or of its shares.

Prospective investors should carefully consider the matters set forth under the caption “Risk Factors” under Section 6. If you are in doubt as to the meaning of the contents of this Information Memorandum or as to what action to take, please consult your investment bank, financial advisor, stockbroker, or other professional advisor, duly authorized under the capital markets legislation, who specializes in advising on the acquisition of shares and other securities.

If you have sold or transferred all your ordinary shares in BK, please forward this Abridged Information Memorandum and the Entitlement and Acceptance Form to the purchaser or transferee, or to the stockbroker or agent through whom the sale or transfer was effected, for delivery to the purchaser or transferee.

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BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

Forward-looking statement The Information Memorandum contains “forward-looking statements” relating to the Company’s business. These forward-looking statements can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “is expected to”, “will”, “will continue”, “should”, “would be”, “seeks” or “anticipates” or similar expressions or the negative thereof or other variations thereof or comparable terminology, or by discussions of strategy, plans or intentions. These statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of the Company to be materially different from the future results, performance or achievements that may be expressed or implied by such forward-looking statements. Some of these factors are discussed in more detail under “Risk Factors” and “Business Overview”.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the Information Memorandum as anticipated, believed, estimated or expected.

Consents

Legal Opinions

Renaissance Capital (Rwanda) Limited as Lead Transaction Advisor, BK Capital as Sponsoring Broker and Registrars; Trust Law Chambers as Legal Advisors; PricewaterhouseCoopers as Reporting Accountants; Bank of Kigali as the Receiving Bank; and Hope Holdings Ltd as the PR & Marketing Advisors to the Company have consented in writing to act in the stated capacities and to their names being included in this Information Memorandum and have not withdrawn their consent prior to its publication.

Trust Law Chambers have given and have not withdrawn their consent to the inclusion in the Information Memorandum of their Legal Opinion, and the references to their name, in the form and context in which it appears, and have authorised the contents of the said Legal Opinion.

None of the above advisors has been employed on a contingent basis by the Company and none of them owns shares in the Company which would be material to that person or has a material, direct or indirect economic interest in the Company.

Reporting Accountant’s Report PricewaterhouseCoopers Rwanda Ltd have given and not withdrawn their consent to the issue of the said report in the form and context in which they are included in the Information Memorandum.

Corporate Information 1.1.

Name of Issuer

BK Group Plc

1.2.

1.3.

1.4.

1.5.

1.6.

1.7.

1.8.

1.9.

Country of Incorporation Date of Incorporation Company Registration Number Registered/Head Office Authorised Share Capital Issued and Paid-up Share Capital Financial Calendar Website

The Republic of Rwanda 22 December 1966 100003458 BK Group PLC Building KN4 Ave No 12, Plot No 790 P.O. Box 175 Kigali, Rwanda FRw 10,504,600,000 FRw 6,745,370,000 31 December https://www.bk.rw

1.10. Directors Name

Role on Board

Nationality

Address

Profession

Marc Holtzman

Chairman

American

Richard Tusabe 1

Non-Executive Director

Rwandese

Dr. Diane Karusisi

CEO

Rwandese

Tower 2,1 Floor, The Lily, Hong Kong, China Rwanda Social Security Bureau-KN 3 Rd, Kigali P.O. Box 175 Kigali, Rwanda

Julien Kavaruganda

Independent Non-Executive Director

Rwandese

Rwanda Bar Association-KK 500 St

Reuben Karemera

Non-Executive Director

Rwandese

Alline Kabbatende Lillian Kyatengwa2

Independent Non-Executive Director Independent Non-Executive Director

Rwandese Rwandese

st

Age

Entrepreneur

58

CEO, RSSB

46

CEO, BK Group

43

President, Rwanda Bar Association

37

Director Accountant General, Ministry of Finance & Economic PlanningTreasury Management-Ministry of 12KN 3 Avenue, Kigali Finance and Economic Planning WEF-1201 Ralston Avenue, San GoR Rep for World Economic Francisco,CA 94129 Forum Chief Strategy Officer, Aviation KAMI Building KN5, Remera, Kigali Travel & Logistics Holding

40 31 41

1.11. Company Secretary

Emmanuel Nkusi Batanage KN4 Ave No 12, Plot No 790 P.O. Box 175 Kigali – Rwanda

1.12. Auditors

PricewaterhouseCoopers Rwanda Limited 5th Floor, Blue Star House, Kacyiru P.O. Box 1495 Kigali – Rwanda

1. Appointed on 22 October 2018, pending regulatory approvals 2.

Appointed on 22 October 2018

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

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1.13. Advocates Emmanuel Rukangira

Athanase Rutabingwa

P.O. Box 3270

P.O. Box 6886

Kigali – Rwanda

Kigali - Rwanda

1.14. Advisors to the Transaction Lead Transaction Advisor

Renaissance Capital (Rwanda) Limited Centenary Ground, 3rd Floor, No. 16 Kigali, Rwanda Tel: +254 (0)20 368 2000 Email: inforwanda@rencap.com Website: www.rencap.com

Rwanda Legal Counsel

Trust Law Chambers KG 569 Street, TLC House, Kacyiru P.O. Box 6679, Kigali, Rwanda Tel: +250-252 503075 Email: info@trustlawchambers.com Web: www.trustchambers.com

Receiving Bank

Bank of Kigali PLC BK Group PLC Building KN4 Ave No 12, Plot No 790 P.O. Box 175 Kigali, Rwanda Tel: +250 252 593100 Website: www.bk.rw

Rwanda Share Registrars

BK Capital Limited BK Group PLC Building KN4 Ave No 12, Plot No 790 P.O. Box 175 Kigali, Rwanda Tel: +250 252 593100 Website: www.bk.rw

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BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

Sponsoring Broker

BK Capital Limited BK Group PLC Building KN4 Ave No 12, Plot No 790 P.O. Box 175 Kigali, Rwanda Tel: +250 252 593100 Website: www.bk.rw

Reporting Accountants

PricewaterhouseCoopers Blue Star House, 5th Floor, Blvd de I’Umuganda, P.O. Box 1495, Kigali, Rwanda Tel: +250-252 588203/4/5/6 Email: info@pwc.com Web: www.pwc.com/rw

PR & Marketing agency

Hope Holdings Limited Kigali Heights,West Wing, 3rd Floor Kimihurura,Gasabo, Kigali,Rwanda Tel: +250 788 524 189 Email: info@hope-mag@.com Website: www.hope-mag.com

Definitions & Abbreviations Except where the context otherwise requires (i) words denoting the singular include the plural and vice versa; (ii) words denoting any one gender include all genders; (iii) words denoting persons include firms and corporations and vice versa and (iv) capitalized terms used in the accompanying forms shall be construed and interpreted in accordance with this Information Memorandum.

Reference to any statute or statutory provision includes a reference to that statute or statutory provision as from time to time amended, extended, replaced, re-enacted or consolidated statutory instruments or orders made pursuant to it.

TERM

DEFINITION

“AGM”

Annual General Meeting of shareholders as defined in the Articles of the Company

“Application Money”

The amount paid in Rwandese Francs to the Authorised Agent or the Receiving Bank and which is the Issue price multiplied by the number of New Shares in accordance with the relevant Entitlement and Acceptance Form

“Articles” or “Memarts”

The memorandum and articles of association of the Company

“Auditor”

PricewaterhouseCoopers

“Authorised Cheque”

Bankers or Authorised Selling Agents cheque

“Authorised Selling Agents” or “ASA” or “Authorised Agent”

Those licensed brokers, licensed commercial banks and the Receiving Bank listed in Section 16

“BK Group” or “BK” or “Group” or “Company”

BK Group Plc, a public company incorporated under the Laws of Rwanda whose Company Code is 100003458, registered as a foreign branch in Kenya with registration number CF/2012/91559, listed on the RSE and operating as a non-operating holding company for its subsidiary companies, including the Bank.

‘’Bank’’

Bank of Kigali PLC, a subsidiary of the BK Group operating as a commercial bank incorporated in Rwanda on 21 December 2017 with company registration number 107610471 and whose registered office is located in Kigali.

“Bankers Cheque”

A cheque /draft issued by a commercial bank licensed by BNR

‘’Belgolaise’’

Belgolaise S.A., a bank incorporated in Belgium

“BNR”

Banque Nationale du Rwanda / National Bank of Rwanda, being the central bank of the Republic of Rwanda

“Board” or “Directors”

The Board of Directors of the Group, which comprises the persons named in Section 8 as the directors of BK Group

‘’BVPS’’

Book Value Per Share

“Cabinet”

The Cabinet of the Government of the Republic of Rwanda

“Caisse Sociale du Rwanda”

Social Security Fund of Rwanda

“CAGR”

Compound annual growth rate

“Capital Markets Legislation”

Refers to the Capital Markets Authority Law No. 23/2017 and Law No. 01/2011 of the Laws of Rwanda and all subsidiary and subsequent legislation, regulations and guidelines; the rules and guidelines of the Rwanda Stock Exchange and any other applicable laws that govern the capital markets in Rwanda

“CAR”

Capital Adequacy Ratio which equals Total Capital divided by risk weighted assets

“CSD”

Central Securities Depository system in Rwanda that is run by the BNR for the clearing and settlement of securities

“CSD Account”

A securities account opened and maintained by the CSD (or its authorised agents) in accordance with the Rwanda law governing the Holding and Circulation of Securities No. 26/2010 of 28/5/2010 gazetted on 28 May 2010

“Closing Date” or “Closure Date”

November 9, 2018

“COMESA”

Common Market for East and Southern Africa

“Core Capital” or “Tier I Capital”

Permanent shareholders’ equity in the form of issued and fully paid up shares plus all disclosed reserves, less goodwill and any intangible assets

‘’Cross Listing’’

Cross Listing of BK Group shares on the NSE

“CSD 1R Form”

CSD Account Opening Form

“CSD 5R Form”

CSD Pledge Form

“East African”

Citizens of the East African Community including corporations incorporated in the EAC

“East African Community” or “EAC”

The regional intergovernmental organization whose current partner states include the Republic of Rwanda, the Republic of Kenya, the United Republic of Tanzania, the Republic of Uganda, Republic of South Sudan and Republic of Burundi, set up by treaty, with its headquarters in Arusha, Tanzania

“EFT”

Electronic Funds Transfer

“EGM”

A special meeting of shareholders convened in accordance with the Articles of the Group other than the AGM

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

5

Definitions & Abbreviations (Continued)

6

TERM

DEFINITION

“Eligible Shareholder”

A shareholder registered as a holder of the shares as of the Record Date

‘’Eligible Person’’

Eligible Shareholders and those persons who purchased the Rights during the Rights Trading Period

“Employee”

Any person in the employment of the BK Group as at the date of this IM

“Entitlement”

The entitlement of Offer Shares of an Eligible Shareholder (or purchaser of or Renouncee of Rights) pursuant to the Rights Issue at the Entitlement Ratio and the Rights Issue Price

“Entitlement and Acceptance Form” or “Application Form” or “PAL”

The Provisional Allotment Letter and/or Form E and/or Form R, as referred to (Refer below)

“Entitlement Ratio”

1 New Share for every 3 Existing Shares (1:3)

‘’EPS’’

Earnings Per Share

“ESOP”

Employee Share Ownership Plan of the Group as described in this IM

“Existing Shares”

Ordinary shares of par value of FRw 10 each of BK Group PLC and held by Eligible Shareholders as of the Record Date

“Form A”

Form of Power of Attorney to be completed by Eligible Persons wishing to appoint third parties as their lawful attorney or agent to act on their behalf in connection with the Rights Issue

“Form E”

Form of Entitlement to be used by any person and issued in favour of such person, in the case of Rights purchased on the RSE or balance Rights in the CSD account

“Form R”

Form of Renunciation to be completed by the Eligible Person on renunciation of the provisional Rights to a third party through direct renunciation

“FRw” or “FRW”

The Rwandan franc, the official currency of the Republic of Rwanda

“GDP”

Gross Domestic Product

“GoR” or “the Government”

The Government of the Republic of Rwanda

“IBG”

Irrevocable Bank Guarantee issued by a commercial bank licensed by BNR, a sample of which is included as Appendix 14 and can be used by an Eligible Person at their cost and on the terms of this Information Memorandum

“ILU”

Irrevocable Letter of Undertaking issued by Rump Investor, a sample of which is included in Appendix 14 and can be used by Rump Investor at their cost and terms of this Information Memorandum

“IFRS”

International Financial Reporting Standards

‘’IMF’’

International Monetary Fund

“Information Memorandum” or “IM”

The Information Memorandum dated October 16, 2018

‘Information Memorandum Instructions’’

Instructions of the Registrar General No. 01/2010/ORG of 12/04/2010 relating to the form and content of an Information Memorandum as amended from time to time

“Issued Price”

The price of FRw 270 at which the New Shares are offered

“Lead Transaction Advisor” and “Sole Bookrunner”

Renaissance Capital (Rwanda) Limited

“Legal Advisor” or collectively as “Legal Advisors”

Trust Law Chambers as the Legal Advisor in Rwanda and Coulson Harney LLP (trading as Bowmans) as the Legal Advisor in Kenya, as may be indicated

“Listing”

Admission of the New Shares to the official list of the RSE

“Listing Date”

The date on which the New Shares are listed on the RSE

“MFI”

Micro-finance Institution

“MINECOFIN”

Ministry of Finance and Economic Planning, Rwanda

“NBAs”

Non-Business Associations include non-profit organizations, charities, religious institutions, educational institutions, cooperatives etc

‘’NGO’’

Non- Governmental Organization

‘’NISR’’

National Institute of Statistics of Rwanda

“NPL”

Non-Performing Loans

“NSE”

The Nairobi Securities Exchange

“Offering” or “Offer”

The offer comprising of (i) the Rights Issue, and (ii) the Rump Offer

“Offer Period”

Means the period beginning on the Rights Issue Opening Date and ending on the Closure Date

“Offer Shares” or “New Shares” or “New Offer Shares”

The New 222,222,222 Shares that are being offered through this Rights Issue

“Office National des Postes”

National Post Office

“Opening Date”

29 October 2018

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

Definitions & Abbreviations (Continued) TERM

DEFINITION

“P/BV”

Price-book value ratio

“PAL” or “Provisional Allotment Letter”

The letter issued to Eligible Shareholders indicating their Entitlement and providing for full, additional or partial acceptance in the form or substantially in the form set out in Appendix 14

‘’PE’’

Price-earnings ratio

“POS”

Point of Sale

QII

Qualified Institutional Investor, a corporate body including a financial institution, a collective investment scheme, a fund manager or other entities whose ordinary business includes the management or investment of funds, whether as principal or on behalf of clients as approved by BK Group

“Receiving Bank”

Bank of Kigali PLC

“Record Date”

24th October 2018 the date the register of the company will be closed for the purpose of determining entitlement to participate in the Rights Issue

“Registrar” or “Share Registrar” collectively “Registrars”

BK Capital Limited as the Registrar in Rwanda and CDSC Registrars the Registrars in Kenya, as may be indicated

“Reporting Accountants”

PricewaterhouseCoopers

“Rights”

The transferable right to subscribe for one New Share for each existing ordinary share held on the Record Date at the Issue Price under the terms of this Information Memorandum and the PAL

“Rights Issue”

The offer in which Shareholders as of the Record Date will be granted Rights

“Rights Shares”

The New Shares subscribed by Shareholders as part of the Rights Issue

“Rights Offer Period

Means the period from 9.00 am on October 29, 2018 to 5.00 pm on November 9, 2018 (both dates included)

“RSSB”

The Rwanda Social Security Board

“RSE”

The Rwanda Stock Exchange

“RTGS”

Real time gross settlement

‘’Rump Offer’’

The sale of the New Shares for which Rights have not been validly exercised or which are untaken during the Rights Offer Period (as defined above) (the “Rump Shares”) at no lower than the Rights Issue Price to QIIs

“Rump Shares”

The New Shares untaken as part of the Rights Issue which shall be offered to QIIs

‘’Rwanda CMA’’

The Capital Market Authority of Rwanda

“Rwanda Companies Act”

The Law No. 17/2018 of 13/04/2018 relating to Companies

“SACCO”

Savings and Credit Cooperative Organization

“Securities Act”

United States Securities Act of 1933

“Shares”

Ordinary shares of par value FRw10 each in the capital of BK Group

“Shareholders”

Persons who own shares in BK Group and are on the register of members

‘’SME’’

Small to Medium-Sized Enterprise

“Sponsoring Broker”

BK Capital Limited

“Supplementary Capital” or “Tier II Capital

Includes 25% of revaluation reserves, subordinated debt, permanent debt and any other form of capital as determined by the BNR

“SWIFT”

Society for Worldwide Interbank Financial Telecommunication

“Time”

Any reference to time in this Information Memorandum shall refer to 2 hours in advance of Greenwich Mean Time (GMT) being the local time in Rwanda

“Total Capital” or “Net Worth”

Core Capital plus Supplementary Capital

“USD” or “US Dollars” or “US$” or “$”

The official currency of the United States of America

‘’VISA©’’

Registered trademark of Visa Inc.

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

7

Letter from the Chairman

Dear Shareholders, On behalf of the BK Board, I have great pleasure in presenting to you this Information Memorandum (“IM”) for BK’s Rights Issue, which is being effected further to your approval at the last AGM. This is the second public equity raising initiative by BK following the successful IPO in 2011 and it provides you with an opportunity to enhance your investment by taking up more shares in your company. The targeted capital raise of FRW 60 billion will be put to very good use by your management team in pursuing BK’s exciting and well-defined expansion and growth agenda. At the AGM we also received approval to pursue a potential cross listing onto the Nairobi Securities Exchange (“NSE”) and I am delighted to update that we have received approval from the Kenya CMA and the NSE for the Cross Listing, which will become effective immediately post the end of the Rights Issue offer period, and enable the trading of your shares across both the RSE and NSE. We believe the cross listing will access a wealth of new potential investors and increase our daily liquidity, which will be only to the benefit of our existing shareholder base and market.

Over the last 7 years, our business has grown steadily resulting in a balance sheet size of FRw 727billion at the end of 2017. Similarly, the net profit grew by approximately 21% CAGR from FRw 6.2billion to FRw 23.3billion between 2010 and 2017. In our banking business, we continue to enjoy market leadership and grow our platform. Bank of Kigali now proudly boasts a wide footprint of 79 branches which are supported by a growing network of agents and mobile vans, which has enabled us to reach a wider majority of Rwanda’s population and, which together with our focus on digital transformation, will enable us to remain true to our promise of financially transforming lives and contributing to the financial inclusion of all Rwandans. We have also been heavily focused on our other financial services subsidiaries, including the launch of our Insurance business, BK General Insurance which promises to create a lot of value and is highly complementary to our traditional Banking effort. In accordance with this desire to become a full suite financial services company, and further to shareholder approval last year, we restructured the listed entity to be BK Group, a new holding company that allows our shareholders to benefit from out all subsidiary initiatives. The funds raised from the Rights Issue will go towards ensuring that the Group’s subsidiaries are adequately capitalized to comply with the capital adequacy requirements as well as implement our growth strategy.

This Rights Issue is an invitation to all existing shareholders to increase your investment in the Group and be part of the growth of a vibrant business. Our talented team is mindful that our success is constantly measured by the creation of shareholder value and how well we serve our community. Given the dynamism and opportunities in Rwanda today, coupled with the transformative changes taking place in today’s financial services sector, we believe that our future is indeed limited only by ourselves. As such, I am also delighted that an Employee Share Ownership Plan (ESOP) is being established in conjunction with this capital raise which will allow our exemplary staff to participate and further align with the success of the Group. Through this Information Memorandum the Company is inviting Eligible Shareholders to apply for 222,222,222 New Shares at an Issue Price of FRw 270 per share (before costs and expenses of the Offer).

This translates into 1 New Share for every 3 Existing Shares held.

This IM contains detailed information about the Group’s operations, financial performance and corporate governance. It also outlines the risks to the Group’s business. I therefore encourage you to read this IM and other documents in their entirety and seek independent professional advice as necessary, before making an investment decision.

Yours Sincerely

Mr Marc Holtzman Chairman

8

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

Directors’ Statement

The Directors of BK Group, whose names appear in page 3, collectively and individually accept responsibility for the information contained in the Information Memorandum. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with facts and does not omit anything likely to affect the import of such information.

The Directors declare that all information stated in this Information Memorandum and the statements contained herein are correct and that no minutes of the meetings of the Board of Directors, audit reports or any other internal documents contain information which could distort the interpretation of this Information Memorandum.

The Directors are further of the opinion that the issued and fully paid up share capital is adequate for the Company for the foreseeable future. The Directors confirm that BK Group will comply, where applicable, with the Rwandan capital market laws), and (Article 52 of the Law No.17/2018 of 13/04/2018 relating to Companies, the RSE Rules, the Kenya Capital Markets Act; the Capital Markets (Securities) (Public Offers, Listing and Disclosure) Regulations, 2002, the Nairobi Securities Exchange Listing Rules 2014 and the Companies Act, 2015 of Kenya.

Signed by:

................................................................................

Marc Holtzman Chairman

.................................................................................

Dr. Diane Karusisi Director & Chief Executive Officer

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

9

SECTION 1:

TIMETABLE FOR THE OFFER

No.

Event

Time

Date

1

Record Date

12.00pm

Wednesday, 24 October

2

Upload of Rights into the depository system

4.00pm

Friday, 26 October

3

Rights Issue Opens

9.00am

Monday, 29 October

4

Last date and time for renunciation by private transfer

12.00pm

Friday, 2 November

5

Last date and time for trading in NIL paid Rights

12.00pm

Monday, 5 November

6

Rights Issue Closes

5.00pm

Friday, 9 November

7

Rump Offer Opens

9.00am

Monday, 12 November

8

Rump Offer Closes

5.00pm

Friday, 16 November

9

Last date of payment of IBGs and Rump Offer Shares

3.00pm

Wednesday, 21 November

10

Announcement of results

9.00am

Friday, 23 November

11

Electronic Crediting of CSD and CDS accounts with the New Shares

5.00pm

Wednesday 28 November

12

Listing of New Shares on the RSE and Cross Listing on the NSE and commencement of trading on 9.00am both markets.

Friday, 30 November

Notes: 1.

2.

3.

4.

5.

10

All references to time are in Rwanda local time, except as otherwise stated; If any date falls on a gazetted public holiday, the applicable date shall be the next working day; The dates may be changed at the discretion of the Board, subject to the approval by the Rwanda CMA and Kenya CMA, the RSE and NSE; Any changes or amendments shall be announced and published in public media; It should be noted that the RSE record date will be 3 working days prior to the Company’s Record Date.

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

SECTION 2:

EXECUTIVE SUMMARY

THIS SUMMARY SHOULD BE READ AS AN INTRODUCTION TO THE INFORMATION MEMORANDUM AND ANY DECISION TO INVEST IN BK’S SHARES SHOULD BE BASED ON THE CONSIDERATION OF THE INFORMATION MEMORANDUM IN ITS ENTIRETY

2.1. Company History and Business Overview BK Group is a leading financial institution in Rwanda offering a wide spectrum of financial services through its various subsidiaries, including banking and insurance services to corporate, SME and retail customers. BK was incorporated, as Bank of Kigali S.A., in the Republic of Rwanda on December 22, 1966. It was founded as a joint venture between GoR and Belgolaise, with each owning 50% of the Ordinary Share Capital of the bank. The Bank commenced operations in 1967 with the opening of its first branch in Kigali. Belgolaise was a subsidiary of Fortis Bank operating in Sub-Saharan Africa and in 2005 began to withdraw from its operations in Africa in line with Fortis’ strategy. In 2007 the GoR acquired Belgolaise’s shareholding, thereby increasing its direct and indirect shareholding to 100% of the entire issued shares.

In 2011, the Bank changed its name under the new Companies’ Law from Bank of Kigali S.A. to Bank of Kigali Limited. In June of 2011, GoR divested by selling 25% of its shareholding to the public through the capital market that led to the subsequent listing of the Bank on the Rwanda Stock Exchange.

In 2013, BK Securities, which subsequently in 2018 was renamed to BK Capital, was established while BK General Insurance and BK TecHouse were subsequently established in 2016. In 2017, the Group restructured, creating a holding company – BK Group Plc to hold and manage the investments in the subsidiaries.

2.2. Transaction Summary Issuer

BK Group PLC

The Shares

The authorised share capital of the Company is FRw 10,504,600,000 divided into 1,050,460,000 Ordinary Shares, each with par value of FRw 10.00. As at the date of this Information Memorandum the number of issued and fully paid Ordinary Shares is 674,537,000.

New Shares

The Company is offering 222,222,222 ordinary Shares by way of the Rights Issue. The New Shares are being offered to Eligible Shareholders.

Issue Price

FRw 270 per Offer Share

Securities Exchange Listing

It is expected that the Admission of the additional Shares to trading on the RSE will occur on Friday, November 30.

Registration

The New Shares will be issued as dematerialised securities. The New Shares will be registered in the Securities Account of each applicant held with the CSD and CDS. No physical share certificates will be issued.

The Offer

If subscribed in full, the issue of the New Shares is expected to raise approximately FRw 60 billion.

The Rights Issue

The Rights Issue will be made on the basis of 1 New Share for every 3 Existing Shares held by an Eligible Shareholder at close of business on the Record Date (being Wednesday, October 24, 2018).

The Rump Offer

The New Shares not taken up during the Rights Issue will be offered to QIIs at the Board’s discretion and will therefore, for avoidance of doubt, not be offered to the general public in Rwanda, Kenya or elsewhere

Cross Listing

BK has received approval from CMA Kenya and the NSE to cross list its shares on the Main Investment Market Segment of the NSE. The cross listing is expected to be effective on November 30, 2018. Any shares taken up during the Rump Offer by investors will begin trading on November 30, 2018

Employee Share Ownership Plan

It is the intention of the Group to set up an Employee Share Ownership Plan, as part of the Rights Issue. 7,200,000 New Shares, representing 3.24 % of the Offer, will be issued to employees of the Group, as per details in Section 3.

Security Codes/Ticker

BK

2.3. Investment Highlights Sound Macro Fundamentals

Significant banking sector potential

Market leadership

●●

Politically stable country with sound governance

●●

Very attractive demographic profile: population of 12.0 Million

●●

Robust economic growth averaging 8% pa in the last 5 years, expecting a sustainable high GDP growth into 2020.

●●

Moderate inflation rate; average CPI (2018): 3.2%

●●

The 2017 World Bank Doing Business Report ranked Rwanda as the 41st out of 190 countries in terms of ease of doing business and 2nd in Africa.

●●

Significant headroom for growth given under-banked and excluded population

●●

Number of financially excluded population reduced from 28% in 2012 to only 11% in 2016.

●●

Total assets/GDP of 38.0% as at 31 March 2018

●●

Well-regulated banking sector: fairly conservative regulator relative to other regulators in the EAC

●●

Strong market positioning and sustainable leadership by; o Total assets FRw 731.8 billion; 32.7% market share as at 1H 2018 o

Net Loans FRw 481.2 billion; 37.9% market share as at 1H 2018

o

Shareholders’ Equity FRw 129.9 billion; 38.7% market share as at 1H 2018

o

Customer Deposits FRw 472.3 billion; 31.0% market share as at 1H 2018

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

11

SECTION 2 (Continued) Stringent Risk Management

Experienced management team

Profitable growth

●●

Manageable level of non-performing 5.8% of gross loans as at 1H 2018, down from 19.4% in 2007.

●●

Liquid assets holding of 39.5% (minimum requirement 20%)

●●

Strong management team with extensive banking sector experience;

●●

Complemented by an experienced and diversified Board of Directors;

●●

Track record of producing profitable and stable financial results;

●●

Robust asset growth at a CAGR of 15.5% 2013 - 1H 2018) - FRw 731.8 billion as at 1H 2018

●●

ROAA ranging from 3.7 % - 4.0% between 2013 and 1H 2018

●●

ROAE ranging from 20%-23% between 2013 and 1H 2018

2.4. Financial Performance Summary1 These summary financial statements should be read along with the Reporting Accountant’s Report as set out in Section 11 of this Information Memorandum.

The summarized consolidated statements of comprehensive income of BK for the five financial years ended 31 December 2017 and the half year to June 2018 are as follows; Period Ended 30 June 2018

2017

2016

2015

2014

2013

FRw’000’

FRw’000’

FRw’000’

FRw’000’

FRw’000’

FRw’000’

Interest income

44,823,823

84,707,152

74,341,736

61,753,209

54,090,042

46,815,676

Interest expense

(8,679,207)

(18,315,980)

(16,556,236)

(13,727,086)

(12,654,600)

(10,015,908)

Net interest income

36,144,616

66,391,172

57,785,500

48,026,123

41,435,442

36,799,768

Net fees and commission income

8,888,653

15,857,994

12,072,942

10,097,923

8,718,939

9,196,329

Foreign exchange related income

4,147,361

7,786,502

6,583,450

5,301,247

7,724,325

7,476,135

153,500

1,231,111

181,442

292,651

301,838

281,008

1,547,214

2,104,762

283,950

-

-

-

Other operating income Net premium income

93,371,541

Operating income before impairment losses

50,881,344

76,907,284

63,717,944

58,180,544

53,753,240

Net impairment on loans and advances

(6,845,851)

(16,489,292)

(10,448,958)

(7,547,662)

(7,542,957)

(8,993,999)

-

(1,363,454)

(6,634,811)

(1,816,787)

-

-

(775,299)

(909,363)

-

-

-

-

Other operational related costs Insurance claims Net operating income Employee benefits Depreciation and amortisation Administration and general expenses

43,260,194

74,609,432

59,823,515

54,353,495

50,637,587

44,759,241

(10,132,460)

(21,127,700)

(14,075,178)

(15,029,991)

(14,427,737)

(11,707,238)

(2,463,630)

(4,501,210)

(3,955,171)

(3,807,120)

(3,663,534)

(4,639,637)

(8,485,208)

(14,815,059)

(11,812,051)

(9,779,152)

(9,787,611)

(9,656,130)

Total operating expenses

(21,081,298)

(40,443,969)

(29,842,400)

(28,616,263)

(27,878,882)

(26,003,005)

Profit before income tax

22,178,896

34,165,463

29,981,115

25,737,232

22,758,705

18,756,236

Income tax expense

(8,767,579)

(10,823,154)

(9,225,249)

(5,253,174)

(4,441,880)

(3,926,001)

Profit for the period/year

13,411,317

23,342,309

20,755,866

18,316,825

14,830,235

20,484,058

Other comprehensive income not to be reclassified to profit and loss in subsequent periods; Revaluation of property and equipment net tax

-

-

5,458,581

-

-

-

13,411,317

23,342,309

26,214,447

20,484,058

18,316,825

14,830,235

Basic earnings per share in FRw

19.88

34.67

22.20

Diluted earnings per share in FRw

19.88

Total comprehensive income for the year

Dividend per share (FRw)

1 12

13.87

30.87

30.49

27.34

30.76

30.38

27.22

22.13

12.31

12.15

16.33

11.10

The summary financial statements herein may differ from the Company’s Annual Reports due to adjustments for accounting changes over the period of review. For detailed information refer to the PWC Opinion in Section 11 Notes 1 and 2 of the Informartion Memorandum.

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

SECTION 2 (Continued) 2.5. Summary of Five-Year Balance Sheet The summarized consolidated balance sheets of BK for the five financial years ended 31 December 2017 and the half year to June 2018 are as follows; Period ended 30 June 2018 FRw ‘000’

For the year ended 31 December 2017

2016

2015

2014

2013

FRw ‘000’

FRw ‘000’

FRw ‘000’

FRw ‘000’

FRw ‘000’

11,110,210

ASSETS Cash in hand

15,489,713

19,731,699

15,032,721

14,951,617

12,020,669

Balances with the National Bank of Rwanda

51,665,954

42,583,327

31,832,058

44,572,594

46,938,373

24,855,050

Due from banks

45,843,817

53,055,021

84,634,868

62,568,118

102,988,217

107,377,523

Held to maturity investments Loans and advances to customers Insurance receivables Other assets Equity investments Property and equipment Intangible assets TOTAL ASSETS

88,699,681

94,248,923

77,962,606

93,503,198

58,596,907

50,820,690

481,246,614

471,704,315

385,824,570

313,925,535

233,439,509

199,025,241

2,069,896

1,147,644

-

-

-

-

13,002,141

10,304,365

8,877,766

8,255,500

7,665,385

7,695,005

221,425

221,425

221,425

221,425

221,425

218,455

32,744,653

33,529,626

33,435,701

22,846,884

20,503,423

21,018,894

791,456

678,355

514,883

381,529

234,056

239,005

731,775,350

727,204,700

638,336,598

561,226,400

482,607,964

422,360,073

LIABILITIES Due to banks

37,887,893

42,377,460

28,105,184

22,609,724

15,214,461

17,345,024

472,313,572

455,213,393

419,017,263

384,713,700

324,601,160

280,489,463

5,783,330

6,900,698

4,165,830

808,141

692,518

1,828,573

286,198

2,351,802

6,795,553

2,193,269

1,839,991

1,927,101

Dividends payable

14,762,774

9,378,311

8,343,104

34,230

5,469

7,416,579

Insurance liabilities

2,809,771

2,123,038

-

-

-

-

Other liabilities

9,514,231

15,267,691

6,286,996

9,656,897

10,860,278

8,705,581

Deposits and balances from customers Current income tax Deferred income tax

Long-term finance

58,544,298

70,842,175

57,137,068

42,475,643

40,254,954

34,190,519

TOTAL LIABILITIES

601,902,067

604,454,568

529,850,998

462,491,604

393,468,831

351,902,840

CAPITAL AND RESERVES Share capital

6,745,370

6,745,370

6,724,428

6,721,842

6,713,706

6,684,500

Share premium

18,936,176

18,936,176

18,695,343

18,665,604

18,572,040

18,236,171

Revaluation reserves

13,000,149

13,000,149

13,630,625

8,172,043

8,172,043

8,172,043

Retained earnings

91,191,588

84,068,437

69,435,204

65,175,307

55,681,344

37,364,519

129,873,283

122,750,132

108,485,600

98,734,796

89,139,133

70,457,233

561,226,400

482,607,964

422,360,073

TOTAL EQUITY TOTAL LIABILITIES AND EQUITY

731,775,350

727,204,700

638,336,598

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

13

SECTION 2 (Continued) 2.6. Summary of Five-Year Cash Flow Statements The summarized cash flows of BK for the five financial years ended 31 December 2017 and the half year to June 2018 are as follows;

Profit before income tax

Period ended 30 June 2018

2017

FRw ‘000’

FRw ‘000’

FRw ‘000’

FRw ‘000’

FRw ‘000’

FRw ‘000’

22,178,896

34,172,034

29,981,115

25,737,232

22,758,705

18,756,236

4,303,044

For the year ended 31 December 2016 2015 2014

2013

Adjusted for: Depreciation of property and equipment

2,093,180

3,884,073

3,513,410

3,503,134

3,469,943

Amortization of intangible assets

370,450

617,137

441,761

303,986

193,591

336,593

Gains on disposal of fixed assets

-

(852,793)

(50,723)

(75,778)

(84,496)

(24,753)

Loss on revaluation of long-term finance/ accrued interest Release of impairment on investment securities Interest accrued on long-term financing Dividend income Cash flows before changes in working capital

640,876

2,084,387

4,052,702

2,354,123

725,925

392,446

2,109,787

-

-

-

-

-

(45,779)

1,091,939

481,001

-

-

-

-

(47,651)

(32,427)

(67,614)

(54,254)

-

27,347,411

40,949,126

38,386,839

31,755,083

27,009,414

23,763,566

(9,542,299)

(85,879,745)

(71,899,035)

(80,486,026)

(34,414,268)

(13,958,489)

(922,252)

(850,426)

-

-

-

-

(2,697,775)

(1,723,817)

(622,262)

(590,118)

29,620

4,929,704 68,624,395

Changes in Working capital Increase in loans and advances Increase in insurance receivables Increase in other assets Increase in deposits and balances from customers Increase in cash reserve requirement Increase in insurance liabilities Increase/ (decrease) in other liabilities Income tax paid Net cash generated from operating activities

(630,530)

36,196,130

34,303,563

60,112,540

44,111,697

17,100,179

(2,529,998)

(1,989,951)

(3,375,390)

(2,325,792)

-

686,733

1,418,233

-

-

-

-

(5,753,463)

(3,948,231)

(3,369,901)

(1,347,174)

2,154,695

(6,370,132)

(11,950,552)

(12,532,032)

(5,063,962)

(4,640,477)

(5,665,044)

(2,862,521)

13,637,451

(15,267,029)

(10,254,709)

1,428,438

30,900,322

74,126,523

INVESTING ACTIVITIES Purchase of intangible assets Purchase of property and equipment Proceeds from sale of fixed assets Purchase of Held to Maturity Investments Proceeds from Held to Maturity Investments

(483,552)

(780,609)

(575,115)

(451,459)

(188,642)

(237,478)

(1,308,207)

(5,001,970)

(4,844,962)

(5,846,595)

(3,049,369)

(3,874,221)

-

1,876,780

50,723

75,778

179,393

205,000

(110,008,159)

(333,502,798)

(385,606,513)

(307,227,740)

(287,832,102)

(37,701,365) -

114,679,541

317,216,481

401,147,105

272,321,449

280,055,885

Purchase of equity Investment shares

-

-

-

-

(2,970)

-

Dividends received

-

47,651

32,427

67,614

54,254

-

2,879,624

(20,144,465)

10,203,665

(41,060,953)

(10,783,551)

(41,608,064)

19,936

(8,304,345)

(8,187,096)

(10,961,334)

(7,411,110)

(5,892,885)

Drawdown of long-term finance

-

31,362,073

19,958,446

7,250,000

9,261,851

29,154,396

Repayment of long-term finance

(1,301,301)

Net cash flows from investing activities

FINANCING ACTIVITIES Dividends paid

15,048,540

(20,833,291)

(9,830,725)

(7,383,434)

(3,923,340)

Increase in share capital

-

20,942

2,586

8,136

29,206

11,130

Increase in share premium

-

240,833

29,739

93,564

335,869

127,995

(15,028,604)

2,486,212

1,972,950

(10,993,068)

(1,707,524)

22,099,335

Net (Decrease) /increase in cash and cash equivalent

1,488,470

(32,925,282)

1,921,906

(50,625,583)

18,409,247

54,617,794

Net foreign exchange difference

1,462,518

1,277,029

(2,882,861)

502,736

2,832,074

-

Cash and cash equivalents at 1 January

46,130,278

77,778,531

78,739,486

128,862,333

107,621,012

71,379,965

Cash and cash equivalent at 31 December

49,081,267

46,130,278

77,778,531

78,739,486

128,862,333

125,997,759

Net cash flows from financing activities

14

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

SECTION 2 (Continued) 2.7. Share Price Performance High

Low

2013

250.00

170.00

2014

365.00

240.00

2015

300.00

273.00

2016

290.00

228.00

2017

300.00

228.00

2018

300.00

285.00

Q1 2017

250.00

228.00

Q2 2017

245.00

240.00

Q3 2017

280.00

245.00

Q4 2017

300.00

275.00

Q1 2018

300.00

290.00

Q2 2018

290.00

286.00

Q3 2018

290.00

288.00

March,2018

290.00

290.00

April,2018

290.00

290.00

May, 2018

290.00

289.00

June, 2018

290.00

286.00

July, 2018

290.00

285.00

August, 2018

290.00

290.00

(FRw) Annual high and low prices for each of the five years

High and low market prices for each financial quarter of the most recent two years

High and low market prices for each of the most recent six months

September ,2018 290.00 290.00

Source: Bloomberg

Source: Bloomberg

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

15

SECTION 3:

THE OFFER

3.1. The Offer The Company is offering 222,222,222 New Shares in the Offering at the Issue Price of FRw 270 per New Share, equivalent to 1 New Share for every 3 ordinary shares held. The Rights Issue is expected to raise approximately FRw 60 billion. Shareholders on register at the Record Date are being granted Rights in the Rights Offering that will entitle Shareholders that qualify as Eligible Persons to subscribe for Offer Shares at the Issue Price. The mere granting of Rights to a Shareholder does not constitute an offer of New Shares. No offer of New Shares is being made to Shareholders who are not Eligible Persons and are therefore not permitted to exercise the Rights granted to them.

The Lead Transaction Adviser has agreed, on behalf of the Company, to act as manager for the Rump and to use reasonable endeavors to procure QII subscribers for any Rump Shares. The Rump Offer, if any, is expected to commence as soon as reasonably practicable after the expiry of the Rights Issue Offer Period.

3.2. Impact on Share Capital As at the date of this Information Memorandum, BK Group has 375,923,000 unissued shares in its share capital. The share capital of the Company as at the date of this Information Memorandum is as follows: Pre-Rights Issue: Nominal Value per Share

Total No. Shares

Share Capital (FRW)

Authorised capital

FRw 10

1,050,460,000

FRw 10,504,600,000

Issued & fully paid up capital

FRw 10

674,537,000

FRw 6,745,370,000

Unissued capital

FRw 10

375,923,000

FRw 3,759,230,000

Assuming the New Shares are fully subscribed, the share capital of the Company on the closing of the Offering shall be as follows: Post-Rights Issue: Nominal Value per Share

Total No. Shares

Share Capital (FRW)

Authorised capital

FRw 10

1,050,460,000

FRw 10,504,600,000

Issued & fully paid up capital

FRw 10

896,759,222

FRw 8,967,592,222

Unissued capital

FRw 10

153,700,778

FRw 1,537,007,778

3.3. Impact on Shareholders Shareholders who transfer, or who do not timely or validly, or are not permitted to, exercise any of their Rights granted under the Rights Offering will suffer a dilution of their proportionate ownership and voting rights of approximately 25 % as a result of the issue of the Offer Shares. However, such Shareholders may receive consideration for their Rights during the Offer Period by trading their Rights on the RSE (Refer to Section 4.7 for more details on the Trading of Rights).

3.4. Rationale of the Offer and Use of Proceeds The Rights Issue is part of the Group’s broader objective of ensuring that its subsidiaries, and in particular Bank of Kigali PLC, are adequately capitalised to comply with capital adequacy requirements and implement its growth strategy. In line with this, the Group anticipates that FRw 40 billion, representing 67% of the gross proceeds, raised from the Rights Issue will be used directly by Bank of Kigali Plc to strengthen and enhance its capital base, as the basis for its mid-term strategy. The rest of the funds raised will go towards the Group’s investments in its other subsidiaries i.e. BK Capital, BK General Insurance and BK TecHouse.

Below is a summary: Beneficiary

Approx. Amount

% of Proceeds

Bank of Kigali Plc

FRw 40,000,000,000

67

BK Insurance

FRw 15,000,000,000

25

Others

FRw 5,000,000,000

8

Overview ●● ●● ●● ●●

Maintain capital adequacy ratio at greater than 20% Further expand market share and growth into retail and SME. Digitalisation of banking platform.

Expand penetration and share of General Insurance as well as introduce new products. ●● Potential acquisition of life insurance business.

Funds will go to support general working capital for BK Capital and BK TecHouse, as well as to support other general Group initiatives to align each subsidiary strategy with that of the entire Group.

BK Group anticipates that the Rights Issue and the Cross Listing on the NSE will have the following additional benefits for the Company and its stakeholders: 16

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

SECTION 3 (Continued) •

provide investors, both institutional and retail, with an opportunity to participate in the income streams and future capital growth of the Group;

•

enhance the liquidity and tradability of the ordinary Shares through a spread of investors;

•

highlight investment potential for financial and tech service companies in Rwanda;

•

further encourage local Share ownership; and

•

access broader pool of potential investors

3.5. Rights Issue Statistics

No

Data

1

Par value (FRw)

10

2

Rights Issue Price (FRw /Share)

270

3

Entitlement Ratio

4

Number of authorized shares

1,050,460,000

5

Authorized share capital (FRw)

10,504,600,000

6

Number of issued and fully paid up shares (pre-Rights Issue)

674,537,000

7

Issued and fully paid up share capital (pre-Rights Issue) (FRw)

6,745,370,000

8

Number of unissued shares

375,923,000

9

Unissued share capital (FRw)

3,759,230,000

10

Number of New Shares

11

Gross proceeds of Rights Issue assuming full subscription (FRw)

12

Number of issued and fully paid up shares post-Rights Issue assuming full subscription

13

Market capitalization of BK Group at Rights Issue Price (FRw)

242,124,990,000

14

Net asset value (shareholder funds) as of 30 June 2018 (FRw)

129,873,285,000

15

Net asset value per Existing Share as of 30 June 2018 (FRw)

16

Rights Issue Price to net asset value per Existing Share above (FRw)

17

Profit after tax for financial year ended 31 December 2017 (FRw)

18

Earnings per share using profit after tax for financial year ended 31 December 2017 (FRw)

34.60

19

Trailing price-earnings ratio using the Rights Issue Price and earnings per share for full year 2017

7.80x

20

Dividend per share for financial year ended 31 December 2017 (FRw)

13.87

21

Dividend yield on Rights Issue Price

22

Profit after tax for six months to 30 June 2018 (FRw)

23

Earnings per share using profit after tax for six months to 30 June 2018 (FRw)

1 for 3

222,222,222 60,000,000,000 896,759,222

192.54 1.40 23,342,309,000

5.14% 13,411,317,000 19.88

3.6. Intention of the Major Shareholders BK’s major shareholders are the Government of Rwanda (GoR), through the Agaciro Development Fund, who hold 29.4% and the Rwanda Social Security Board (RSSB), who hold 32.4%. GoR does not intend to participate in the Rights Issue and its shares will therefore be available for allocation in the Rump Offer. RSSB intends to participate in the Rights Issue and will subscribe but to a level that ensures a shareholding, post issue of 30%.

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

17

SECTION 3 (Continued) Post the Rights Issue, the 2 major shareholders will collectively hold 52.08% of BK Group.

The top 10 shareholders of BK currently are as follows; Shareholder

Total No. Shares

% Ownership

1 2 3 4 5 6

Rwanda Social Security Board Agaciro Development Fund* The Rock Creek Group LP -T126 A KCB Bank Uganda Ltd A/C123a Dunross and Co Aktiebolag

218,228,900 198,578,600 45,515,800 42,500,000 28,520,300

32.4 29.4 6.7 6.3 4.2

Stanbic Nominees Limited A/C Nr5156062 - T109 Au

20,937,200

3.1

7 8

Kamau Robert Wachira

15,976,700

2.2

RWC Frontier Markets Equity Master Fund Limited

8,575,200

1.3

9 10 11

Frontaura Global Frontier Fund LLC The Vanderbilt University - T133 Others

7,392,200 6,095,500 83,193,300 674,537,000

1.1 0.9 12.3 100.0

Total No. Shares

% Ownership

*Ownership transferred from GoR to Agaciro in 2018.

The share ownership of the Company post the Rights Issue is expected to be as follows: Shareholder 1

Rwanda Social Security Board

269,027,767

30.0

2

Agaciro Development Fund

198,578,600

22.1

3

ESOP

7,200,000

0.8

4

Others

421,952,852

47.1

896,759,222

100.0

3.7. Employee Share Ownership Plan BK Group will reserve 7,200,000 New Shares (the “ESOP Shares”), same as the ESOP set up during the IPO in 2011, that may be subscribed for by directors and eligible employees and each ESOP Share so subscribed shall entitle the purchaser as part of the Bank’s Directors and Employee Share Ownership Plan (The Plan) New Shares as issued by the Group.

Each beneficiary shall be entitled to purchase from the Company, from the Listing Date of the New Shares up to the third anniversary (the “Vesting Date”) and thereafter, entitled to buy options under the scheme not later than the fifth anniversary from the Listing Date, for the cash consideration equal to the Offer Price and payable in full. On the fifth anniversary, as part of the Group’s executive management retention scheme, the executive directors and senior managers shall be entitled to bonus shares equivalent to 50% of their individual holding under the scheme, if the Group’s share average price in the final year shall have doubled.

The beneficiaries shall continue to serve as Directors or be employed by the Bank, as the case may be, until the vesting date. The Board shall have the final discretion in the allotment, operations and vesting of the ESOP shares.

All eligible Employee are entitled to purchase the ESOP shares from the ESOP for 100% of the purchase price and have the option to either pay the full amount upfront by cash, or otherwise through deductions as set up and managed by the HR department.

3.8. Minimum Subscription A minimum of 70% of the total capital raise from both the Rights Issue and Rump, is required to be accepted for the Transaction to be declared successful. This implies that a minimum of 155,555,555 New Shares, equivalent approximately to FRw 42 billion, need to be taken up and fully paid for in the Rights Issue and Rump Offer.

However, if this minimum amount is not attained, approval may be sought from the Capital Markets Authorities and the Exchanges to proceed with the listing of the accepted fully paid New Shares under the Rights Issue. BK may consider raising capital from other sources in the event that the full subscription is not achieved.

In the event of Rump Shares, allocation shall be made in accordance with the procedure prescribed in Section 4 in the Terms and conditions.

3.9. Green Shoe and Over-Subscription This Rights Issue has no ‘green shoe’ option. In the event of over-subscription and following allotment, BK shall make refunds as detailed in Section 4.

18

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

SECTION 3 (Continued) 3.10. Underwriting Neither the Rights Issue nor the Rump Offer will be underwritten.

3.11. Status of the New Shares The New Shares, when issued and fully paid, shall rank pari passu with the Existing Shares, including the right to receive dividends or distributions paid or declared. After the date of this Information Memorandum the New Shares are freely transferable and are not subject to any restrictions on marketability or any pre-emptive rights. Every new share shall be entitled to one vote at shareholder meetings.

3.12. Rights Issue Documents The following documents will be used for the Rights Issue and the Rump Offer: Information Memorandum Provisional Allotment Letter (PAL)

This is a booklet that contains information on the company, the Rights Issue offer, the financial statements, legal, compliance and relevant information to assist the shareholder in making an informed decision.

The document is the renounceable (nil paid) provisional allotment letter issued to Eligible Shareholders and includes the Entitlement in the form or substantially in the form set out in Appendix 8.1 of this Abridged Information Memorandum.

Form R

Form of Renunciation: As set out in Appendix 8.2 to be used by Eligible Shareholders renouncing or transferring their Rights, by way of private transfer and by Renouncees to take up their New Shares.

Form E

Form of Entitlement: As set out in Appendix 8.3 to be used by any person and issued in favor of such person, in the case of Rights purchased on the RSE or balance Rights in the CSD Account.

Form A

Form of Power of Attorney: As set out in Appendix 8.4 to be completed by Eligible Persons wishing to appoint third parties as their lawful attorney or agent to act on their behalf in connection with the Rights Issue.

CSD Form 1

A standard form by the Central Security Depository to be used to open a CSD Account through an authorised agent.

CSD Form 5

Standard form by the Central Security Depository to be used for utilizing loan facilities to subscribe for New Shares.

CSD Form 7

Standard form by the Central Security Depository Limited that is used in connection with a private transfer by Eligible Persons with CSD Accounts.

Irrevocable Bank Guarantee (IBG)

By a commercial bank licensed by the National Bank of Rwanda. A sample letter is contained in Appendix 8.5 of this Abridged Information Memorandum and can only be used by any Eligible Person.

Letter of Undertaking (LOU)

By an institution approved by the Transaction Advisor. A sample letter is contained in Appendix 8.6 of this Abridged Information Memorandum and can only be used after the allocation policy has been announced.

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

19

SECTION 4: TERMS AND CONDITIONS OF THE OFFER THE TERMS AND CONDITIONS OF THE OFFER ARE SUBJECT TO THE RSE RULE BOOK (2013) AND THE RSE OPERATIONAL PROCEDURES FOR RIGHTS ISSUES (2010)

4.1. Availability of Documents 4.1.1.

Eligible Shareholders can obtain a copy of the Information Memorandum and their forms from their brokers where their shares are held or from a BK branch or download it from: www.bk.rw

4.1.2.

Form A, Form R and Form E shall be available from an authorised Sales Agent or www.bk.rw

4.1.3.

CSD Forms 1, 5 and7 shall be available from the authorised Sales Agents.

4.1.4.

The IBG and ILU sample formats are available in the Annexures of the Information Memorandum.

4.2. Rights 4.2.1.

Existing Shareholders as at the Record Date are being granted Rights in book entry form, to subscribe for the New Shares at the Issue Price. Each ordinary share held immediately after the close of trading on the Record Date will entitle its holder to one Right. Subject to applicable securities laws and the terms set out in this Information Memorandum. Eligible Persons will be entitled to subscribe for one Offer Share for every three held until the end of the Offer Period. As the RSE does not allow for trading of odd lots – shares that are less than 100, the Entitlement Rights shall be issued rounded down in multiples of 100. No fractional Offer Shares will be issued. Fractional Shares shall be treated as per Section 4.3

4.2.2.

If a person holds Ordinary Shares and its Ordinary Shares are registered in the Company’s shareholders’ register on the Record Date, that person will receive rights to subscribe for Offer Shares and will be sent a PAL by the Company, informing that person of the number of Rights to which it is entitled and of the procedures that it must follow to exercise or trade its Rights. Upon exercise of the Rights granted to that person, that person will receive Offer Shares in accordance with and subject to the terms and conditions of this Information Memorandum Shareholders should contact the Company (Refer to Section 4.1.3 above) if they are entitled to receive Rights but have not received their PAL.

4.2.3.

Only Shareholders who qualify as Eligible Persons during the Offer Period will be entitled to take up, sell or otherwise transfer Rights pursuant to the grant of Rights by the Company (Refer to Section 4.4). Rights granted to Shareholders who are not Eligible Persons shall not constitute an offer of Offer Shares to such person. The Rights will be credited to their account and will not confer any rights upon such person, including the right to take up, exercise, sell or otherwise transfer such credited Rights. Receipt of this Information Memorandum by a person other than an Eligible Person shall not, subject to certain exceptions, constitute an offer of Offer Shares to that person.

4.2.4.

Eligible Shareholders are required to verify the correctness of the Entitlement.

4.3. Treatment of Fractional Shares The Rights have been calculated on the basis of the Entitlement Ratio and no restrictions are placed on the number of Existing Shares to be held before a Shareholder’s Right accrues. However, mathematically, this might result in fractional Rights and odd lots of the New Shares. In such an event, fractions and odd lots (not in multiples of 100) shall be rounded down. These fractions and odd lots shall then form part of the Rump Offer.

4.4. Eligible Shareholder Options The following actions are possible by all Eligible Shareholder(s) in the Rights Issue: No. 1 2 3

Action TAKE UP their Entitlement in FULL RENOUNCE ALL the Rights to a close relation SELL ALL of their Entitlement on the RSE

Reference Refer to Section 4.5 Refer to Section 4.6 Refer to Section 4.7

4

ACCEPT PART of their Entitlement & SELL balance on the RSE

Refer to Section 4.5 and 4.7

5

ACCEPT PART of their Entitlement & RENOUNCE balance to a close relation

Refer to Section 4.5 and 4.6

6

ACCEPT PART of their Entitlement & allow balance to LAPSE

Refer to Section 4.5 and 4.8

7

DO NOTHING and allow Entitlement to lapse

Refer to Section 4.8

Other Actions No.

Action

Reference

1

PURCHASE Rights on the RSE and take-up the Entitlement

Refer to Section 4.7

2

PURCHASE and SELL all the Rights on the RSE

Refer to Section 4.7

3

PURCHASE and SELL some Rights on the RSE and take up the balance Entitlement

Refer to Section 4.7

20

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

SECTION 4 (Continued) 4.5.

Exercise of the Rights

4.5.1.

Subject to the restrictions set out below, an Eligible Person, whether a Shareholder at the Record Date or a subsequent transferee of Rights, may subscribe for New Shares by exercising its Rights from 9:00 am on [October 29, 2018] up to 5.00 pm on [November 9, 2018], which is the end of the Offer Period.

4.5.2.

4.5.3.

If an Eligible Person has not exercised its Rights by the end of the Offer Period, these can no longer be exercised by the Eligible Person. Once an Eligible Person has validly exercised its Rights, it cannot revoke or modify that exercise. Accordingly, once a holder of Rights has validly exercised its Rights, it must pay the Issue Price for the Offer Shares subscribed for, even if the market price of the Ordinary Shares fluctuates below the Issue Price.

An Eligible Person exercises his Rights by submitting a duly completed counterpart of the relevant Entitlement and Acceptance Form, together with remitting the Application Money for the number of New Shares (including where applicable any Additional Shares) specified in the relevant Entitlement and Acceptance Form on the terms set out in this Information Memorandum to the Authorized Agent by 4.00 p.m. on Rights Issue Closure Date.

Shareholder shall be required to submit the PAL Form, in addition to the resulting Form E, both duly completed and executed and accompanied with the Application Money in connection with the accepted Rights to the relevant Authorized Agent or Receiving Agent, not later than 4.00 p.m. on Rights Issue Closure Date.

4.6.5.

The last date and time for renunciation by way of private transfer is 4.00 p.m. on Private Transfer Renunciation Date.

4.6.6.

Any costs or RSE fees associated with renunciation by private transfer shall be borne by the Renouncee.

4.6.7.

Renunciation by private transfer of nil paid Rights is subject to regulatory restrictions and obligations under Section 4.14 – Regulatory Restrictions below.

4.7.

Trading of Rights

4.7.1.

The Rwanda CMA and RSE have approved the trading of nil paid Rights on the RSE.

4.7.2.

Eligible Shareholders are advised to contact an Authorized Agent for the purposes of effecting the renunciation by trading of Rights.

4.5.4.

The Entitlement and Acceptance Forms are the PAL, Form R, and Form E.

4.7.3.

4.5.5.

The relevant Entitlement and Acceptance Form must be correctly executed so as to be binding, while the Application Money must be cleared funds.

Only Eligible Shareholders with CSD Accounts who have their accounts credited with the nil paid Rights can renounce by trading of the nil paid Rights.

4.7.4.

The relevant Entitlement and Acceptance Form, once duly completed and executed, must be returned to any Authorized Agent, together with the Application Money for the number of New Shares.

The nil paid Rights constitute a security in the form of an option and are tradable on the Main Investment Market Segment of the RSE for a value. The price of the nil paid Rights is determined by demand and supply on the RSE.

4.7.5.

Nil paid Rights may be traded on the RSE from 09:00 a.m. on Rights Issue Open Day to 12:00 p.m. on Last Rights Trading Date.

4.7.6.

Trading of nil paid Rights on the RSE will attract a brokerage commission plus other statutory costs payable by the vendor and purchaser of such Rights and therefore not payable by BK. The normal brokerage commissions are:

4.5.6.

4.5.7.

4.5.8.

4.5.9.

PAL: Eligible Shareholders who wish to take up their full Entitlement are required to duly complete the section entitled ‘Acceptance in Full’ (Part 1A) together with other relevant sections of the PAL. Eligible Shareholders wishing to accept only part of their Entitlement are required to duly complete the section of the PAL entitled ‘Partial Acceptance of New Shares’ (Part 2) as well as other relevant sections of the PAL. Note that partial acceptance will not be permitted for less than 100 New Shares.

If the Entitlement and Acceptance Form is not completed correctly, BK may in its sole and absolute discretion reject it or treat it as valid, and BK’s decision as to whether to accept or reject, or how to construe, amend or complete an Entitlement and Acceptance Form shall be final.

CMA Fees

Compensation Fund

CSD Fee

Total Fees

1.50%

0.14%

0.02%

0.05%

1.71%

4.7.7.

Purchasers of nil paid Rights are issued with a completed Form E by the Sales Agent for further action. This Entitlement can subsequently be sold, (partially or wholly) on the RSE or be accepted (partially or wholly) or have a combination of sale and acceptance, within the Offer Period as per the timetable in Section 1.

4.8.

Declining the Right

4.8.1.

No action is required of Eligible Shareholders who wish to decline their Rights. These Rights not taken up by such Eligible Shareholders shall form part of the Rump Shares.

4.9.

Rump Offering

4.9.1.

The Lead Transaction Adviser has agreed, on behalf of the Company, subject to the terms and conditions of this IM and the approval granted to the Board at the last AGM to deal with shares untaken in Rights Issue as they deem fit, to act as manager for the Rump and use its reasonable endeavors to procure subscribers for any Rump Shares through a sale to eligible QIIs. The price per Rump Share shall be no less than the Rights Issue Price.

4.9.2.

The Rump Offering, is expected to commence as soon as reasonably practicable after the end of the Rights Issue Offer Period.

Entitlement and Acceptance Forms can be rejected as per Section 4.12 - Rejection Policy below

4.5.10. Acceptance is subject to regulatory restrictions and obligations under Section 4.14 – Regulatory Restrictions below.

4.6.

Brokerage Commission

Renunciation by Private Transfer

4.6.1.

Eligible Shareholders are advised to contact an Authorized Agent for the purposes of effecting the renunciation by private transfer.

4.6.2.

Eligible Shareholders wishing to transfer their nil paid Rights to a close relative, may do so by way of private transfer.

4.6.3.

In order to effect a private transfer, both the Eligible Shareholder and the person to whom the Rights are being transferred to must have a CSD account and must duly complete a CSD Form 7.

4.6.4.

If an Eligible Shareholder accepts some Rights and renounces the remainder by private transfer in the manner specified above, and where such renunciation is done via CSD Form 7, such Eligible

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

21

SECTION 4 (Continued) 4.9.3.

4.9.4.

The Rump Shares will not be offered to and will not be available to the general public but will be a limited sale to QIIs. The sale of the Rump Shares will not constitute an offer to the public as defined either under Rwandan capital markets laws or Kenyan laws (Capital Markets Act (Cap 485A of the laws of Kenya) and the Kenya Companies Act). The private placement of the Rump Shares constitutes a private offer as defined either under the aforementioned Rwandan laws or Kenyan laws Section 510(2) of the Kenya Companies Act; Section 30A (3) of the Capital Markets Act (Chapter 485A of the Laws of Kenya); and Section 21 of the Capital Markets (Securities) (Public Offers, Listings and Disclosures) Regulations 2002.

Allotment of the Rump shares will be solely at the discretion of the Board. Payment of the Rump Shares shall be done on the final allotted amount. The Rump allotment results will be published as part of the results announcement for the Rights Issue.

Payment Mode

Description

IBG

ILU

1.

The key advantage of an IBG is the ability to pay on allocation of shares.

2.

The key disadvantage of an IBG is the cost to secure it as fees vary across commercial banks.

3.

IBGs shall use the format provided in Appendix 14 and should be authenticated by the guaranteeing bank via a SWIFT message forwarded to the Receiving Bank, on or before 4:00 p.m. Rights Issue or Rump Offer closing date (as the case may be).

4.

The original IBG is to be attached to the RIF.

5.

The IBG shall be drawn down at the sole discretion of the Company.

The original ILU is to be attached to the RIF.

1.

2.

4.10. Application Money 4.10.1. The following shows authorised ways of payment of the Application Money 4.10.2. All payments shall be made in Rwanda Francs 4.10.3. Any fees payable in securing any of the payments shall be borne by the Eligible Shareholder, Entitlee or Renouncee but not the Company or its advisors/agents.

4.10.4. All payments have to be made to the Receiving Bank and shall upon receipt of the relevant amount in cleared funds, constitute acceptance of the Rights Issue on the terms and conditions set out in the Information Memorandum and on the Form, but subject to Section 4.12 -Rejection Policy.

4.10.5. No interest shall be payable by the Company nor its advisors/ agents on any Application Money received for the Rights Issue.

4.10.6. If a Financier is involved where the New Shares are to be used as security, payment can be made by the Financier as described below.

4.10.7. Eligible Shareholders can use either of the following payment modes. Note, only one payment mode maybe used to pay for one Application Form: Payment Mode Banker’s Cheque

Funds Transfer

The ILU shall be drawn down at the sole discretion of the Company.

All Application Money must be received in any of the following accounts, depending on the Authorised Sales Agent. The account at the Receiving Bank is: Bank

Broker Account Name

Account Number

Bank of Kigali

BK Rights Issue – BK Capital BK Rights Issue – African Alliance Rwanda BK Rights Issue – Baraka Capital BK Rights Issue – CDH Capital BK Rights Issue – CORE Securities BK Rights Issue – Faida Securities BK Rights Issue – MBEA Brokerage Services BK Rights Issue – SBG Securities

00040-99002018-74

Bank of Kigali Bank of Kigali Bank of Kigali Bank of Kigali Bank of Kigali Bank of Kigali Bank of Kigali

00040-99002019-75 00040-99002020-76 00040-99002021-77 00040-99002022-78 00040-99002023-79 00040-99002024-80 00040-99002025-81

4.11.

Financed Applications

4.11.1.

A Financier can be approached for loan to facilitate payment of the Application Money.

4.11.2.

The extension of loan facilities using New Shares as part or full collateral is the decision of the Financier at its sole and absolute discretion and risk.

4.11.3.

In addition, the Financier shall send a letter to the CSD stating that the New Shares will be pledged as security unless it instructs CSD in writing to lift the pledge.

Description 1.

It is preferred that this is paid directly into the Receiving Bank for the reference account of the Sales Agent (see below for the ASA accounts List).

2.

It should be drawn in favour of ‘BK Rights Issue – Form No. XXXXXXX’ and be crossed “A/C Payee Only”. (Where xxx represents the serial number)

4.11.4.

As per Section 4.14 refunds require that the Financier provide appropriate bank account details in the RIF.

3.

The Banker’s Cheque shall be attached to the Application Form and it shall be deposited immediately for collection.

Funds Transfer shall be made to the Receiving Bank directly provided it is into the correct sales agent (see account as below – ASA accounts List).

4.11.5.

The letter as per Sections 4.11.3 along with the Application Money shall be attached to the Application Form and upon receipt shall be processed by the Registrar.

4.11.6.

Neither the Company nor its advisors/agents will accept responsibility for pledges/lien not created by the Listing Date.

1.

2.

These transfers shall include the name of the shareholder and the Application Form serial number for immediate reference.

3.

Make a photocopy of the remittance advice.

4.12.

Rejection Policy

4.

Attach the original remittance advice to the Application Form and retain the photocopy.

4.12.1.

A PAL or other form used to take up Entitlement and Additional Shares shall be rejected for the following reasons: i) If incomplete, inconsistent or inaccurate with the instructions as provided in the Information Memorandum and each of the forms; ii) No signature as required or as per the signing mandate;

22

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

SECTION 4 (Continued) iii) Insufficient money paid to the Receiving Bank;

4.14. Refund Policy

iv) More than one mode of payment was used to pay for New Shares in one Application Form;

4.14.1.

Where an application has been rejected in line with 4.12, refunds shall be paid via Funds Transfer and a bank account is mandatory.

4.14.2.

Receiving Bank customers shall receive an internal credit transfer.

4.14.3.

If the first refund is unsuccessful, the Receiving Bank shall make the second attempt after re-checking the data provided on the forms. The third attempt may be made after contact with the investor.

4.14.4.

If the Funds Transfer is still declared unsuccessful, a Banker’s Cheque or bank draft may be issued.

4.14.5.

Where a Financier has advanced money to an investor to subscribe to New Shares, refunds shall be made to the details provided in the form. The Financier is responsible for ensuring their bank details are made on the form and that they are correct.

4.14.6.

Refund cheques should be collected from the Sales Agent who received the payment. Proof of identity and other documentation must be provided.

4.14.7.

Payments of refunds shall take into account the prevailing exchange rates. Exchange rate losses will be borne by the investor and not the Company or any of its appointed advisors/agents.

4.14.8.

Neither the Company nor its agents or advisors shall be responsible or liable for refunds that are not received or delayed once they have been made. Losses incurred on refunds are for the account of the investor and not the Company or any of its appointed advisors/agents.

4.14.9.

Where refunds are sent to the incorrect bank account, or where cheques are cleared incorrectly by the Receiving Bank, the Company shall take responsibility and have the transfer or cheque rectified as required, provided there is a formal notification. The investor is required to write a letter to the Sales Agent or the Company who within 10 Business Days of receipt shall investigate and give feedback to the investor. Rectification is expected to be made within another 10 Business Days.

v) Inappropriate IBG or ILU; vi) Application money was correctly received but the form is incorrect or missing; vii) Any private transfer rejected or where RSE approval is delayed beyond the Closure Date; viii) Where a Form E is used, there are no Rights in the CDS Account; ix) Multiple Sales Agent stamps on the same form; x) Deliveries after the Forward Date by the Sales Agent to the Receiving Agent; xi) Money is deemed by BK to be non-compliant with provisions under Anti Money Laundering Laws. xii) Neither BK Group nor its advisors/agents shall be liable should any form be rejected as per this Rejection Policy.

4.13. Allocation Policy 4.1.1.

Subject to the Section 4.12 – Rejection Policy:

4.1.2.

Eligible Shareholders who accept Entitlement in full, or in part, accompanied by Application Money, shall receive the fully paid New Shares indicated in their PAL.

4.1.3.

Renouncees who successfully transfer their Entitlement in full or in part, accompanied by Application Money, shall have the number of New Shares allotted in full as indicated in their Form R.

4.1.4.

Entitlees who successfully accept their Entitlement in full, or in part, accompanied by Application Money, shall receive the full number of fully paid New Shares indicated in their Form E.

4.1.5.

Any further Rump Shares shall be available for allocation to the applicants for the Rump Offer.

4.1.6.

For the avoidable of doubt, allocation of shares will be in the following order:

4.14.10. The Receiving Bank will put in place measures to ensure safe custody and clearance of cheques. These include effective coordination of information with the Sales Agents, the use of special documentation, hierarchical administrative structures and dedicated personnel with specific responsibilities.

i)

Allocation as per the provisional allotment to Existing Shareholders;

4.14.11. Refunds shall be subject to compliance with AML Laws.

ii)

Allocation to Renouncees (Form R);

4.15. Regulatory Selling Restrictions

iii)

Allocation to Entitlees (Form E);

4.15.1. Selling and transfer restrictions

iv)

Allocation to the Rump Offer

The distribution of this Information Memorandum and the Rights Issue in certain jurisdictions may be restricted by law and therefore persons into whose possession this Information Memorandum comes should inform themselves about and observe any such restrictions, including those that follow. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

No action has been taken or will be taken by the Company or the Lead Transaction Advisor in any jurisdiction that would permit a public offering or sale of the New Shares, or possession or distribution of this Information Memorandum (or any other offering or publicity material relating to the Rights Issue), in any country or jurisdiction (other than Kenya) where action for that purpose is required or doing so may be restricted by law.

4.1.7.

While applicants under category (i), (ii) and (iii) will receive their full entitlement if they have satisfied the laid down criteria, applicants in category (iv) will only be entitled to be allocated any shares if there are still unallocated shares outstanding after satisfying the first three categories.

4.1.8.

Allocations for New Shares shall be undertaken at the time and date on which the Board of BK Group meets to determine the final allocations for the Rights Issue, which includes the issue of New Shares by BK Group by way of rights on the terms, and subject to the conditions contained in this Information Memorandum, including the Rump Shares.

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

23

SECTION 4 (Continued)

None of the New Shares may be offered for subscription, sale or purchase or be delivered, and this Information Memorandum and any other offering material in relation to the Rights Issue may not be circulated, in any jurisdiction where to do so would breach any securities laws or regulations of any such jurisdiction or give rise to an obligation to obtain any consent, approval or permission or to make any application, filing or registration.

Persons into whose possession this Information Memorandum comes should inform themselves about and observe any restrictions on the distribution of this Information Memorandum and the Rights Issue contained in this Information Memorandum.

Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

4.15.3. United States

Eligible investors

The New Shares have not been and will not be registered under the US Securities Act or under any applicable state securities laws of the United States, and, subject to certain exceptions, may not be offered or sold within the United States. The New Shares will be offered or sold only in an offshore transaction outside the United States within the meaning of and in compliance with Regulation S under the US Securities Act.

In addition, until 40 days after the commencement of the Offer, an offer of New Shares within the United States by a dealer (whether or not participating in the Rights Issue) may violate the registration requirements of the US Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A.

Each person who initially acquires New Shares or to whom any offer is made will be deemed to have represented, warranted and agreed to and with the Lead Transaction Advisors and the Company that (i) it and any person for whose account it is subscribing for New Shares are outside the United States and is acquiring such New Shares in an offshore transaction within the meaning of and in compliance with Regulation S under the Securities Act; (ii) it did not become aware of nor is it making any investment decision with respect to the New Shares as a result of any “directed selling efforts” within the meaning of Rule 902(c) of Regulation S under the Securities Act; and (iii) it will not re-offer, re-sell, pledge or otherwise transfer or deliver any New Shares, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and all applicable securities laws of the states and other jurisdictions of the United States.

The Company and the Lead Transaction Advisors and their affiliates, and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements.

4.15.2. European Economic Area

In relation to each Member State of the European Economic Area (“EEA”) which has implemented the Prospectus Directive (2003/71/EC) (each, a “Relevant Member State”) an offer to the public of any New Shares may not be made in that Relevant Member State, except that the New Shares may be offered to the public in that Relevant Member State at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State: a)

24

to any legal entity which is a qualified investor as defined under the Prospectus Directive;

b)

to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive);

c)

in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of New Shares shall result in a requirement for the publication by the Company or Lead Transaction Advisor of an Information Memorandum pursuant to Article 3 of the Prospectus Directive and each person who initially acquires New Shares or to whom any offer is made will be deemed to have represented, warranted and agreed to and with the Lead Transaction Advisors and the Company that it is a “qualified investor” within the meaning of the law in that Relevant Member State implementing Article 2(1)of the Prospectus Directive.

For the purposes of this provision, the expression “an offer to the public of any New Shares” in relation to any New Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the Offer and the New Shares to be offered so as to enable an investor to decide to purchase or subscribe for the New Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State. The expression “Prospectus Directive” means Directive 2003/71/EC (and any amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU. In the case of any New Shares being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive each financial intermediary will be deemed to have represented, warranted and agreed that the New Shares acquired by it in the Offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any New Shares to the public other than their offer or resale in a Relevant Member State to qualified investors as so defined or in circumstances in which the prior consent of the Managers has been obtained to each such proposed offer or resale.

The Company, the Lead Transaction Advisors and their affiliates, and others will rely upon the truth and accuracy of the foregoing representation, acknowledgement and agreement.

Notwithstanding the above, a person who is not a qualified investor and who has notified the Lead Transaction Advisors of such fact in writing may, with the consent of the Lead Transaction Advisors, be permitted to subscribe for or purchase New Shares in the Offer

4.15.4. South Africa

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

The Rights Issue does not constitute an ‘‘offer to the public or any Section of the public’’ (as such expression is defined in the South African Companies Act, No. 71 of 2008 (as amended)) (‘‘South African Companies Act’’) in South Africa and this Information Memorandum does not, nor is it intended to, constitute a ‘‘registered Information Memorandum’’ (as that term is defined in the South African Companies Act) prepared and registered under the South African Companies Act. To the extent that the New Shares are offered for subscription or sale in South Africa, such Offer is made: (i) only to persons (“Appropriate Persons”) described in Section 96(1)(a) of the South African Companies Act; and/or (ii) in terms of Section 96(1)(b) of the South African Companies Act such that the total acquisition cost of the shares for any single addressee acting as principal is equal to or greater than South African Rand 1,000,000. To the extent that the New Shares are made available to any persons in South Africa, such persons shall be subject to, to the extent applicable, any applicable South African Exchange Control Regulations and requisite approvals from the South African Reserve Bank. Each person who initially acquires New Shares or to whom any offer is made in South Africa will be deemed to have represented, warranted and agreed to and with the Lead Transaction Advisor and the Company that it is an Appropriate Person. Accordingly, the Offer made in terms of this Information Memorandum does not constitute an ‘‘offer to the public or any Section of the public’’

SECTION 4 (Continued) within the meaning of the South African Companies Act. 4.15.5. United Kingdom

No New Shares have been marketed to, nor are they available for purchase in whole or in part by, the public in the United Kingdom in conjunction with the Offer. This Information Memorandum does not constitute a public offer or the solicitation of a public offer in the United Kingdom to subscribe for or buy any securities in the Company or any other entity.

This Information Memorandum does not constitute an admission document drawn up in accordance with the AIM Rules for Companies. This Information Memorandum is also not an approved Information Memorandum for the purposes of Section 84(2) of the Financial Services and Markets Act 2000 (“FSMA”) and has not been approved by the Financial Conduct Authority as an Information Memorandum for the purposes of Sections 85 and 87 of FSMA. This Information Memorandum has not been approved as a financial promotion in the United Kingdom for the purposes of Section 21 of FSMA.

To the extent that any New Shares are made available for purchase to persons in the United Kingdom, they shall only be made available to (i) investment professionals (within article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the “FPO”)); (ii) certified sophisticated investors (within article 50(1) of the FPO); (iii) self-certified sophisticated investors (within article 50A(1) of the FPO); (iv) persons of a kind described in article 49(2) of the FPO; (v) certified high net worth individuals (within article 48(2) of the FPO); (vi) associations of high net worth or sophisticated investors (within article 51 of the FPO); and (vii) any other persons to whom any offer for the purposes of Section 21 of FSMA can otherwise lawfully be made (in each case a “Relevant Person).

Each person who initially acquires New Shares or to whom any offer is made in the United Kingdom will be deemed to have represented, warranted and agreed to and with the Lead Transaction Advisors and the Company that it is a Relevant Person.

4.16. Taxation Implications 4.16.1.

Eligible Shareholders interested in participating in the Rights Issue should consult their tax advisor of any possible tax implication connected with the Rights Issue. The Board of Directors have not provided detailed advice in respect of taxation consequences in connection with the Rights Issue, save for what is expressly set out in this Information Memorandum.

4.16.2.

Neither BK nor any of the Directors of BK Group or any of BK officers or transaction advisors will accept any liability for any taxation implications, in connection with the Rights Issue.

4.16.3.

Residents are subject to withholding tax on dividends at the rate of 5% for EAC investors. Non EAC investors will be subject to a withholding tax rate of 15%.

4.17. Governing Law The Rights Issue documents and any contract resulting from the acceptance of an application to purchase the New Shares in connection with the Offering shall be governed by and construed in accordance with the Laws of Rwanda and it shall be a term of each such contract that the parties thereto and all other interested parties submit to the exclusive jurisdiction of the Courts of Rwanda.

4.18. Expenses of the Offer The estimated costs of the Rights Issue only are: Item

FRw (Millions)

Transaction Advisor fees

526.2

Sponsoring Stockbroker fees

21.9

Legal Advisory fees

39.5

Reporting Accountant fees

21.9

Receiving Bank fees

21.9

Marketing & Advertising (1)

21.9

Registrar

15.0

CMA Approval fees

15.0

RSE Application & listing fees

90.0

Placement Commission (2)

900.0

Others

52.6

TOTAL 1,725.9

Figures are exclusive of VAT (where applicable).

(1) Marketing, Communication and Other Expenses are indicative and subject to change.

(2) Placing commission shall be set by the issuer at a rate of up to 1.5%. The placing commission shall be payable to members of the RSE appointed as Authorized Agents. Placing commission shall be computed on the value of each successful application accepted in respect of the Entitlement and Acceptance Forms completed and signed by Eligible Shareholders, Renouncees, purchasers of Rights, bearing the stamp of a single Authorized Agent or the Sponsoring Stockbroker.

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

25

SECTION 5:

REPORTING ACCOUNTANTS’ REPORT & LEGAL OPINION

PricewaterhouseCoopers (PWC) as the Reporting Accountants have prepared and produced a Reporting Accountant’s Report and half year audit as at 30 June 2018, the full content which are included in the full Information Memorandum. PWC have not expressed an audit opinion in the Reporting Accountant’s report. Based on their review, PWC has confirmed that nothing has come to their attention that causes them to believe that the audited financial statements of BK Group PLC for each of the five years ended 31 December 2017 and half year ended 30 June 2018 do not give a true and fair view in accordance with International Financial Reporting Standards.

Trust Law Chambers as the Legal Counsel have prepared a Legal opinion, the detailed content which are included in the full Information Memorandum.

26

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

SECTION 6 : RISK FACTORS 6.1.

Risk Management Framework

Sustainable performance can only be achieved through disciplined risk management. It is part of our corporate culture that every employee at every level of the organization is accountable for risk management. This approach has enabled the Bank to overcome the challenges of a changing global, regional and domestic macroeconomic environment.

The Bank’s approach to risk management is characterized through a strong risk oversight at the Board level and a strong risk management culture at all levels and across all functions. Such an approach supports and facilitates the Bank’s decision-making process which not only ensures that the risk reward trade-off is optimized but also that risks assumed are within the overall Risk Appetite and Risk Tolerance levels as laid down by the Board of Directors in the various Policy Documents.

6.2.

General Risks

6.2.1.

Macro & Economic Risk The operational results, income and growth of assets by BK Group may depend to an extent on the stability of the Country’s macro-economy. The Group like all entities operating within Rwanda is exposed to macro-economic risks associated with the country. The Group’s management team has put in place a robust business strategy, systems and procedures to minimise the Group’s exposure to adverse economic conditions; however, this cannot provide an assurance that adverse economic conditions will not hamper the Group’s performance.

6.2.2.

Political Risk Potential political unrest is a risk to the operations of any bank or business operating in Rwanda and in the region, including BK Group as it could adversely impact the economy and the demand for credit and banking services. However, Rwanda has had a stable political system, supported by a prevailing democratic process in the country with the support from the international community which reduces the risk of significant political unrest. While the Group has systems, controls and procedures designed to mitigate political risk, there can be no assurance that any adverse political events will not have a negative impact on the Bank’s business.

6.3.

Specific Risks Relating to the Group

6.3.1.

Risks Relating to Banking 6.3.1.1. Credit Risk Credit risk is the risk of default on a debt that may arise from a borrower failing to make the required payments. The Bank is exposed to credit risk from other banks and financial institutions, as well as credit exposures to customers for outstanding loans and other receivables due. Credit losses incurred by the Bank may have a material adverse effect on the Bank’s financial performance and hence affect the price of its shares. The Bank mitigates credit risk by undertaking the following actions: •

Ensure adherence to a board approved credit policy which defines the criteria for the nature of businesses undertaken and the minimum risk acceptable;

•

The Bank only deals with creditworthy counter parties, with whom it maintains a relationship to manage and monitor the lending and obtains appropriate collateral;

•

BK structures the level of credit risk it undertakes by placing limits on amounts of risk accepted in relation to one borrower or a group of borrowers;

•

Undertake regular analysis of the ability of borrowers to meet interest and capital repayment obligations and pro-actively takes remedial action where appropriate;

•

The Bank ensures that its loan portfolio is adequately diversified, with no significant concentration of credit risk in any one sector, or customers having similar characteristics, in order to reduce potential negative exposure.

6.3.1.2. Currency Risk The Bank undertakes transactions in foreign currencies and therefore is exposed to the effects of foreign currency exchange rates fluctuations. The fluctuations in exchange rates affects the financial position and cash flows of the Bank. To demonstrate the exposure, in January 2015, the average exchange rate was FRw 690 to the US dollar. In January 2016, the rate was FRw 757 per US dollar. By January 2017, the rate was at FRw 812, a depreciation of over 20% in a period of two years. An adverse movement in foreign currency exchange rates on an open position could have a negative impact on the Bank’s financial condition.

The responsibility for managing the foreign currency risks rests with ALCO, who monitor the overall foreign exchange risk exposure and ensure that the Bank is operating within the Board approved limits.

6.3.1.3. Liquidity Risk Liquidity risk is the current or prospective risk to earnings and capital arising from a bank’s inability to meet its liabilities when they fall due. Liquidity risk often triggered by consequences of other financial risks such as credit risk, market risk etc. and similarly, liquidity problems may have significant implications on the Bank as a whole. BK addresses liquidity risk through the following measures: •

Ensuring sufficient capitalization to support lending;

•

BK has an aggressive strategy aimed at increasing the customer deposit base;

•

When required, the Bank borrows from the market through inter-bank transactions with other banks, and transactions with pension funds and insurance companies for short term liquidity requirements;

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

27

SECTION 6 (Continued) •

Investing in short term liquid instruments, which can easily be sold in the market if the need arises;

•

Ensuring that other long-term investments such as those in property and equipment are in accordance with a board approved budget and only when Bank has sufficient cash flows.

6.3.1.4. Interest Rate Risk The Bank is exposed to the risk that the value of a financial instrument will fluctuate due to changes in market interest rates, as funds are sourced at both fixed and floating rates. In addition to maintaining an appropriate mix between fixed and floating rate deposit base, interest rates on advances to customers and other risk assets are either pegged to the Bank’s base lending rate or Treasury bill rate. The base rate is adjusted from time to time to reflect the cost of deposits. Hedging activities are evaluated regularly in line with the average interest rate and the defined risk appetite.

Optimal hedging strategies are applied, by positioning the balance sheet or protecting interest expense through different interest rate cycles. While Interest rates on customer deposits are negotiated with the customer, the Bank retains the discretion to adjust the rates in line with changes in market trends. The interest rates, therefore, fluctuate depending on the movement in the market interest rates.

The Bank also invests in fixed interest rate instruments issued by the Government. It holds a considerable portfolio of fixed income instruments both for liquidity purposes, trading as well as investments. When interest rates rise, the value of these instruments fall resulting in a loss. Since the fixed income instruments are marked to market, a loss is realized as a result. In addition, a hike in interest rates means that the cost of funds will also rise leading to a lower interest spread.

6.3.2.

Risks Relating to Insurance 6.3.2.1. Insurance Risk The risk under any one insurance contract is the possibility that the insured event occurs and the uncertainty of the amount of the resulting claim. By the very nature of an insurance contract, this risk is random and therefore unpredictable.

For a portfolio of insurance contracts where the theory of probability is applied to pricing and provisioning, the principal risk that the BK Insurance faces under its insurance contracts is that the actual claims and benefit payments exceed the carrying amount of the insurance liabilities. This could occur because the frequency or severity of claims and benefits are greater than estimated. Insurance events are random and the actual number and amount of claims and benefits will vary from year to year from the level established using statistical techniques. In insurance, the larger the portfolio of similar insurance contracts, the smaller the relative variability on the expected outcome. In addition, a more diversified portfolio is less likely to be affected across the board by a change in any subset of the portfolio.

BK Insurance has developed its insurance underwriting strategy to diversify the type of insurance risks accepted and within each of these categories to achieve a sufficiently large population of risks to reduce the variability of the expected outcome.

6.3.2.2. Price Risk BK Insurance is exposed to equity securities price risk because of investments in quoted shares classified either at fair value through profit or loss or fair value through other comprehensive income. BK Insurance is not exposed to commodity price risk.

To manage its price risk arising from investments in equity and debt securities, BK Insurance diversifies its portfolio which is done in accordance with limits set by its Board and ratified by the BK Group Board.

6.3.2.3. Underwriting Risk Underwriting risk is defined as the uncertainty at the inception of the contract of the ultimate amount of cash flow from premiums, commissions, claims and claim settlement expenses. Factors which complicate underwriting risk may include collusion between various parties leading to fraudulent claims and price undercutting by underwriters to secure business amongst others.

BK Insurance sets policies to ensure proper vetting of potential clients and to guide the process of setting premiums. It also sets guidelines for use in the appointment of reinsurance providers and levels of reinsurance to be assumed for various classes of business.

6.3.3.

Risks Relating to General Business 6.3.3.1. Operational Risk Operational risk arises from inadequate or failed internal processes, people 28

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

and systems or from external events. The Group strives to ensure that its internal processes are handled professionally, to ensure operations run as smoothly as planned. It maintains a comprehensive operational risk management framework that is subjected to periodic independent reviews

by Internal Control and Compliance in order to obtain an independent opinion on the effectiveness and efficiency of the framework. Further, the findings of the Internal Audit department are reviewed by the Board Audit Committee and recommendations made implemented in line with the findings of the department.

6.3.3.2. Technology Risk The Group’s operations rely heavily on the functionality of its information technology systems. It is therefore imperative that the systems perform optimally at all times. Any disruption to the functionality of the IT system, e.g. during a system upgrade or normal maintenance routines, may lead to important business decisions being delayed or business opportunities forgone. Such a disruption may impact directly on the financial performance of the each of the subsidiaries and therefore impact the share price of the Group on the RSE. BK makes every effort to ensure that its IT systems are always fully functional and will continue to invest in the latest technology to enhance reliability, efficiency and customer experience.

6.3.3.3. Litigation Risk From time to time some of the subsidiaries may be involved in litigation, receive claims from tax authorities or claim arising from the conduct of its business. The occurrence of potential proceedings, or other claims leading to a substantial legal liability could have a material adverse effect on the Group’s overall business, results, operations, reputation and financial condition. BK Group acts within the applicable laws and thus whilst litigation may arise in the conduct of its business, it is carefully monitored to ensure there isn’t any material impact on the business. The Bank’s, being the longest standing subsidiary, tax compliance has been recognized over the years through various awards from the Rwanda Revenue Authority.

6.3.3.4. Compliance & Regulatory Risk Compliance and regulatory risk include the risk of bearing the consequences of non-compliance with applicable laws in the various sectors within which the Group’s subsidiaries operate. BK carries its business under the regulations and guidelines laid down by the relevant primary and secondary regulators. Each of those regulations subject the entities to certain requirements, restrictions and guidelines designed to create market transparency between financial institutions and their customers. While the each of the entities always ensures to be in compliance with all laid out rules and regulation, one may inadvertently find itself in non-compliance and therefore risk losing its business license. BK however endeavors at all times to run its business according to the laid down guidelines and thus minimizing the risk of losing any of its licenses.

6.3.3.5. Competition Risk Increasing competition may mean that the Group is unable to implement its growth strategy fully. A good number of competitors across the financial sector are subsidiaries of regional banks, making the financial industry in Rwanda very competitive. Any erosion of the Group’s market share could result in negative performance and subsequently the price of its shares.

BK Group will always strive to remain among the top in all its sectors of operation i.e. banking, insurance, capital markets etc. in Rwanda through enhancing its IT systems to improve efficiencies and providing world class services to attract and retain customers.

6.3.3.6. Reputational Risk Reputational risk is the potential that negative stakeholder impressions or perceptions, whether true or not, regarding the Group’s business practices, actions or inactions, will or may cause a decline in its value, brand, liquidity or customer base. It is a resultant effect of all other risks highlighted in this IM and therefore cannot be managed in isolation. Therefore, when all the other risks are managed well, this risk is substantially minimised.

BK’s reputation is an invaluable business asset essential for optimising shareholder value. The Group’s services and activities, including new ones, ensure its good reputation is always maintained or enhanced. Ultimate responsibility for this risk rests with the Board of Directors and senior management who examine the Group’s overall reputational risk as part of their regular mandate. They are assisted in this aspect by the Corporate Affairs Department. Their purpose is to ensure that all products, services, and activities meet the Group’s reputational risk objectives in line with the Board of Director’s approved appetite. Nonetheless, every employee and representative of the Group has a responsibility to contribute positively to our reputation.

Every employee and representative of the Group has a responsibility to

SECTION 6 (Continued) contribute in a positive way towards the Group reputation. This is through ensuring ethical practices are always adhered to, interactions with all stakeholders are positive, and compliance with applicable policies, legislation, and regulations. Reputational risk is most effectively managed when every individual works continuously to protect and enhance BK’s reputation.

in each country, investor reactions to the developments in one country may affect shares in other countries, including Rwanda. Accordingly, the market price of the shares may be subject to significant fluctuations, which may not necessarily be related to the financial performance of the Bank. Each investor needs to assess the market for the right time to trade their shares.

6.3.3.7. Risks related to Credit Ratings Credit rating agencies classify the Group to evaluate its ability to fulfill its financial obligations when due. Currently, only the Bank is credit rated, and this has been an important factor in determining the cost of financing for the Bank. Interest rates paid by the Bank for the financing it obtains are affected by its credit rating. Credit rating is reviewed by the relevant rating agency from time to time. In case the credit rating decreases, this could lead to an increase in the Bank’s financing costs which will adversely the Group’s financial position, results of operations and prospects.

The Bank has over the past three years being rated as AA-(RW), which is a stable outlook by South African credit rating firm, Global Credit Ratings.

To mitigate against risks associated with a downgrade, the Bank and the Group as a whole, strive to maintain strong asset quality, ensuring a capital buffer to support balance sheet risk as week as maintain strong earnings generation.

6.4.2.

Dividend Risk The Bank has a clear policy of paying dividends whenever the financial performance of the Bank has been good. Payment of dividend will among other things depend on the Bank’s business expansion capital needs as well as regulatory capital requirements. Therefore, there is always the possibility that given the economic climate and performance of the Bank, the Board may propose not to pay dividends.

6.4.

Risks Associated with Shares

6.4.1.

Volatility of Price The market price of the Group’s shares could be subject to significant fluctuations in response to actual, anticipated, or perceived variations in the Group’s operating results, adverse business developments, changes in the regulatory environment in Rwanda or changes in financial estimates by Investment professionals.

In particular the markets for emerging market securities, such as Rwanda, may be volatile and are to a varying degree, influenced by stock market conditions in other emerging market countries which may not be in the same geographic region as Rwanda. Although economic conditions are different

6.4.3.

Dilution Risk By way of this Rights Issue, the Bank is seeking to raise additional capital from its current shareholders, and potentially new shareholders. Those shareholders that chose not to take up their Rights, risk their shareholding in the Bank being diluted.

Further, the Bank may in the future require to raise capital again by issuing additional shares. This may be through a Rights Issue, a secondary offer or by way of inviting a strategic or a financial investor. Such corporate actions may result in the dilution of existing shareholders if they do not participate in the equity issuances. In order to reduce the chances of the Bank’s shareholders being diluted, the Bank will in future always endeavour to raise capital in such a manner that it gives the existing shareholders an opportunity to defend their shareholding. However, the Bank cannot guarantee that the current shareholders will not be diluted in the event that the Bank cannot obtain financing on desirable terms.

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

29

SECTION 7:

AUTHORIZED SELLING AGENTS (ASAs)

Authorised selling agents in RWANDA Members of the Rwanda Stock Exchange and Licensed Securities Central Depository Agents BK Capital Ltd Plot 6112, Avenue de la Paix P.O. Box 175, Kigali Tel : +250 252 575 504 /+250 252 573 461 Mob: +250 788 143 000 Email: bksecurities@bk.rw

Faida Securities Rwanda Centenary House,4th Floor P.O Box 124, Kigali Tel : +250 784 333 734 Mob: +250 782 859 330 Email: stephen.njoroge@fib.co.ke

African Alliance Rwanda Securities Kigali City Tower (KCT),1st Floor, Avenue du Commerce P.O. Box : 7179, Kigali Mob : +250 788 305 557 Email : securitiesrw@africanalliance.com

Contact: Mrs. Carine Umutoni, Managing Director

Contact: Mr. Stephen Njoroge, Operations Manager

Contact: Ms. Aurore Mimosa, CEO

CDH Capital Rwanda 9th Floor, Ecobank Building P.O. Box 6237, Kigali Mob: +250 788 301 007 Email: shehzadnoordally@cdhcapitalltd.org

Baraka Capital Limited 4th Floor, Building 2000 P.O. Box 7180, Kigali Tel : + 250 255 120 337/ +250 788 381 130 Email: dgathaara@barakacapital.com

MBEA Brokerage Services Ltd P.O. Box 3492, Kigali Tel : +256 788 803 370 Email : a-owiny@mbea.net

Contact: Mr. Shehzad Noordally, General Manager

Contact: Mr Davis Gathaara, Managing Director

SBG Securities Ltd Kigali City Tower,1st Floor, Avenue du commerce P.O. Box 968 Kigali Tel : + 250 784 108841/+250 788696640

Core Securities Ltd P.O. Box 4062, Kigali Mob: + 250 788 465 282 Email: fumbuka@coresecurities.coz.tz

Contact: Mr. Jean Aime Habimana,

30

Contact: Mr. George Fumbuka, CEO

BK GROUP PLC RIGHTS ISSUE INFORMATION MEMORANDUM

Contact: Mr. Andrew Owiny, Director

SECTION 8: 1.7.

APPENDICES

8.1 PAL Form PROVISIONAL ALLOTMENT LETTER (PAL)

P.T.O

USE BLOCK LETTERS TO COMPLETE THE FORM THE PAL IS OF VALUE, NEGOTIABLE AND IS ISSUED PURSUANT TO AN INFORMATION MEMORANDUM DATED [•] PLEASE CONSULT YOUR ADVISOR. READ NOTES ON THE REVERSE OF THIS PAL. RIGHTS ISSUE OPENS AT 9.00 A.M. ON MONDAY, 29 OCOTBER 2018 AND CLOSES AT 4.00 P.M.ON FRIDAY, 9 NOVEMBER 2018.

Eligible Shareholders Name and Address

If you wish to take action, please note the following:

• Use BLOCK letters to complete the form • A copy of the Information Memorandum or Abridged Information Memorandum to which this PAL is attached has been lodged with the Registrar of Companies.

• A copy of the information Memorandum or Abridged Information Memorandum may be obtained from the Sales Agents named below or www.bk.rw • Persons into whose possession this PAL may come are required to observe the restrictions contained in the Information Memorandum or Abridged Information Memorandum.

• Terms defined in the Information Memorandum shall bear the same meaning herein unless otherwise indicated.

• For advice on the Rights Issue and completion of this form an Eligible Shareholder should consult their preferred professional advisor.

• A PAL shall be rejected as per the policy set out in the Information Memorandum or Abridged Information Memorandum.

• All alterations on the PAL, other than the deletion of alternatives, must be authenticated by the full signature of the Eligible Shareholder.

• Presentation of cheques for payment or receipt of funds transferred shall not amount to the acceptance of any application.

• A completed PAL must be physically returned to a Sales Agent. Once made, it is irrevocable and may not be withdrawn.

• The PAL and Application Money should be received by the Sales Agent or the Receiving Bank by 4.00 p.m. on Friday, 9 November 2018 (Closure Date) and neither BK, nor any of the advisors nor any of the Sales Agents shall be under any liability whatsoever should a PAL not be received by this date.

• This PAL and the accompanying Information Memorandum or Abridged Information Memorandum shall be governed by and construed in accordance with the Laws of Rwanda.

BOX 1

Existing Shares as of Record Date

BOX 2

New Shares provisionally allotted to you

BOX 3

Amount payable (Frw) in full

Eligible Shareholders who wish to appoint an attorney to deal with the Rights Issue may do so via Form A(Form of Appointment of Attorney) available from a Sales Agent or downloaded from www.bk.rw

ATTORNEY

FULL ACCEPTANCE. I/We hereby accept in full, subject to the terms of the Information Memorandum, this PAL and the Memorandum and Articles of Association of BK Group PLC, the number of New Shares above in Box 2 for the value in Box 3 above

BOX 4 Number of total New Shares (Box 2 )

TOTAL SHARES. Having accepted all the New Shares in Part 1A above, I/we hereby apply for the total New Shares in Box 6 for the value in Box 7 herein

PARTIAL ACCEPTANCE. IF PART 1 ABOVE IS NOT ACCEPTED. BOX 6 I/We hereby accept in part, subject to the terms of the Information Number of New Shares Memorandum, this PAL and the Memorandum and Articles of accepted in part Association of BK Group PLC the number of New Shares specified in

Box 6 for the value set out in Box 7herein.

3.1 Direct Amount Frw. Chq/Transfer Ref No./ Payment Deposit Ref No.

Tick (√) 3.5 FINANCIER DETAILS

3.3

Agents Payment

3.4

Irrevocable: Bank Guarantee or Letter of Under taking for New Shares

Frw.

SIGNATURE of ELIGIBLE SHAREHOLDER or AUTHORISED ATTORNEY

Branch Code

a. b.

e. f.

All payments are to be made in Rwanda Francs.

Section 4.10 in the Information Memorandum and Section 4.10 in the Abridged Information Memorandum provides details on Modes of Payment.

Please read carefully the instructions.

Complete Section 3.1 with the Funds Transfer Number or Banker’s Cheque Number and name of remitting/paying bank If payment for New Shares is via Irrevocable Bank Guarantee or Irrevocable Letter of Undertaking, tick the box provided and attach the IBG/ILU to this PAL. If a Financier is involved, complete section labeled ‘Financier Details’ by providing the Loan Reference and the name of the Institution and Branch.

All Application Money must be made in cleared funds on or before 4:00 pm on Friday,9 November 2018 (Closure Date).

a. b. c.

A bank account is mandatory for eligible investors.

Please refer to Section 4.14 in the Information Memorandum and Section 4.14 in the Abridged Information Memorandum for details on Refunds Please provide clearly the relevant details in the boxes provided.

W Zd ϱ ^/'E dhZ

The PAL must be signed to ensure acceptance. For companies/institutions/organisations, signatures can be affixed as per the authorized mandate.

W Zd ϲ D /> ΘͬŽƌ DK /> EŽ

Space has been provided to insert this information so that contact can be established in case of need.

SALES AGENTS: BK Capital,Faida Securities, Africa Alliance Rwanda Securities, CDH Capital,Baraka Capital, MBEA Brokerage Services,Core Securities, SBG Securities

Sign as necessary Provide Email & Mobile No.:

Complete this part if you wish to accept a portion of the New Shares to which you are entitled. You must not have completed PART 1.

Enter number of New Shares you would like to accept into Box 6. This number must be less than the number in Box 4.

Enter the amount due for the New Shares in Box 7 by multiplying the number in Box 6 with Frw 270.00 per New Share.

c. d.

a. b. c.

W Zd ϯ W zD Ed

Bank Name & Branch

Account Number (full Account No

Country & Swift if not Rwanda

FULL. Tick PART 1A if accepting in full all New Shares as in Box 2 .

TOTAL. Complete total number of New Shares applied for in Box 6 in PART 1B, i.e. Box 6 = Box 2 Complete the total value of New Shares applied for in Box 7, PART 1B. i.e. Box 7= Box 3 Acceptance and Allocation is subject to terms and conditions in the Information Memorandum or the Abridged Information Memorandum.

W Zd ϰ Z &hE

Institution & Branch Bank Name

REFUND

BOX 7 Amount payable (Frw) (multiply figure in Box 6 by Frw 270.00)

W Zd ϭ Wd E /E &h>>͕ dKd > ^, Z ^ a. b. i. ii. c.

W Zd Ϯ W Zd/ > Wd E

CSD Form 5 Serial No

Account Name (as per Statement)

BOX 5 Amount payable (Frw) (multiply figure in box 4 by Frw 270.00)

NOTES (PAL)

GENERAL INSTRUCTIONS:

CSD A/C

Sales Agent Stamp

PAL No:

Date: ...........................................

Tear off

Tear off

Tear off

Tear off

PAL RECEIPT. Eligible Shareholder must ensure that this tear off is Stamped by the Sales Agent and returned to them for their safe custody together with the proof of payment.

BK GROUP PLC – RIGHTS ISSUE 2018-PAL RECEIPT

1.8.

PAL No

Eligible Shareholder

The last date and time for acceptance and payment of the New Shares is on or before 4:00 p.m. on Friday, 9 November 2018. If no action is taken on the Rights, they will lapse and be subject to Section 4.8 (Untaken Rights) in the Information Memorandum and Section 4.8 in the Abridged Information Memorandum

Sales Agent

8.2 Form of Renunciation FORM OF RENOUNCIATION(FORM R) USE BLOCK LETTERS COMPLETE THE FORM

1.9.

TO

Form of Entitlement

1.10.

THE FORM IS OF VALUE, NEGOTIABLE AND IS ISSUED PURSUANT TO AN INFORMATION MEMORANDUM DATED 16 OCTOBER 2018 PLEASE CONSULT YOUR ADVISOR. READ NOTES ON THE REVERSE OF THIS PAL. RIGHTS ISSUE OPENS AT 9.00 A.M. ON MONDAY, 29 OCOTBER 2018 AND CLOSES AT 4.00 P.M.ON FRIDAY, 9 NOVEMBER 2018.

Power of Attorney

If you wish to take action, please note the following: GENERAL INSTRUCTIONS:

• Use BLOCK letters to complete the form • The Form R must be accompanied by a PAL.A copy of the Information Memorandum or Abridged Information Memorandum to which this PAL is attached has been lodged with the Registrar of Companies.A copy of the information Memorandum or Abridged Information Memorandum may be obtained from the Sales Agents named below or www.bk.rw • Persons into whose possession this Form R may come are required to observe the restrictions contained in the Information Memorandum or Abridged Information Memorandum.

• Terms defined in the Information Memorandum shall bear the same meaning herein unless otherwise indicated.

• For advice on the Rights Issue and completion of this form an Eligible Shareholder should consult their preferred professional advisor.

• A Form R shall be rejected as per the policy set out in the Information Memorandum or Abridged Information Memorandum.

• All alterations on the Form R other than the deletion of alternatives, must be authenticated by the full signature of the Eligible Shareholder.

• Presentation of cheques for payment or receipt of funds transferred shall not amount to the acceptance of any application.

• A completed Form R must be physically returned to a Sales Agent. Once made, it is irrevocable and may not be withdrawn.

• The Form R and Application Money should be received by the Sales Agent or the Receiving Bank by 4.00 p.m. on Friday, 9 November 2018 (Closure Date) and neither BK, nor any of the advisors nor any of the Sales Agents shall be under any liability whatsoever should a Form R not be received by this date.

• This Form R and the accompanying Information Memorandum or Abridged Information Memorandum shall be governed by and construed in accordance with the Laws of Rwanda.

CSD A/C

Sales Agent Stamp

Eligible shareholder for NIL consideration, I/We, the eligible shareholder hereby accept,subject to the terms of the Information Memorandum,my/our PAL , the Memorandum & Articles of Association of BK Group PLC and requisite approvals from the regulator/s in good time, to renounce my/our Rights as per my/our PAL in favour of person(s) named below in this Form R relating to such New Shares.Accordingly,I/We have signed below.

BOX 1 Eligible Shareholder Name BOX 2 PAL NUMBER BOX 3 Shareholder Member No BOX 4 Number of New Shares provisionally renounced to the Renouncee(less than or equal to the number of New Shares provisionally allotted to the Eligible Shareholder in the original PAL) ENTITELEMENT BOX 5 Amount payable (Frw) multiply by the figure in Box 4 by Frw 270.00

PART 1 ACCEPTANCE IN FULL, TOTAL SHARES

SIGNATURE OF ELIGIBLE SHAREHOLDER OR AUTHORISED ATTORNEY

a. Tick PART 1A if accepting in full all New Shares as in Box 4.1 b. Complete total number of New Shares applied for in Box 6 in PART 1b, i.e. Box 6 = Box 4 c. Complete the total value of New Shares applied for in Box 7, PART 1b. i.e. Box 7= Box 5 d. Allocation and Allotment is subject to the terms in the Information Memorandum and Abridged Information Memorandum.

Date:

Sign as necessary CSD

PART 2 PAYMENT

Relationship to Eligible Shareholder

Renouncee

A/C

Name

ID/Passport No

a.All payments are to be made in Rwanda Francs b. Section 4.10 in the Information Memorandum and Section 4.10 in the Abridged Information Memorandum provides details on Modes of Payment.

Please read carefully the instructions. c. Complete Section 2.1 with the Funds Transfer Number or Banker’s Cheque Number and name of remitting/paying bank d. If payment is via Irrevocable Bank Guarantee or Irrevocable Letter of Undertaking, tick the box provided and attach the IBG/ILU to this PAL. e. If a Financier is involved, complete section labeled ‘Financier Details’ by providing the Loan Reference and the name of the Institution and Branch f. All Application Money must be made in cleared funds on before 4.00 p.m on Friday,9 November 2018.

Postal Address including post code & Email/Mobile No PART 1A

PART 1B

PART 2

2.1 Tick (√)

2.2

Frw.

Direct Amount Payment

Agents Payment

Frw.

PART 3

REFUND

BOX 6 Number of total New Shares (Box 4)

2.3

BOX 7 Amount payable (multiply value in Box 6 by Frw 270.00) Bank Name & Branch

Chq/Transfer Ref No./ Deposit Ref No.

PART 3 REFUND

FULL ACCEPTANCE. I/We hereby accept in full, subject to the terms of the Information Memorandum, this PAL and the Memorandum and Articles of Association of BK Group PLC, the number of New Shares above in Box 4, for the value in Box 5 above TOTAL SHARES. Having accepted all the New Shares in Part 1A above I/we hereby apply for the total New Shares in Box 6 for the value in Box 7 herein

ENDORSEMENTS BY SALES AGENT & REGULATOR

FINANCIER DETAILS

Renunciation by Private Transfer requires certain documentation to support this action by Eligible Shareholders. This section provides for the Sales Agent to confirm that the documentation is attached including the PAL.

Institution & Branch

Renunciation by Private Transfer requires private transfers to be approved by regulators. This section provides for the regulator to approve the transfer (if applicable).

Bank Name

SALES AGENTS: BK Capital,Faida Securities,Africa Alliance Rwanda Securities,CDH Capital,Baraka Capital,MBEA Brokearge Services,Core Securities, SBG Securities

Branch Code

Account Number (full Account No

Country & Swift if not Rwanda

Form R No

APPROVAL by REGULATOR for RENUNCIATION(where applicable) Name, Signature & Stamp Tear off

Eligible Shareholder

Date:

Tear off

Tear off

FORM R RECEIPT. Eligible Shareholder must ensure that this tear off is Stamped by the Sales Agent and returned to them for their safe custody together with the proof of payment.

FORM R RECEIPT-BK GROUP PLC RIGHTS ISSUE 2018

Eligible Shareholder

SIGNATURE OF RENOUNCEE

CDS Form 5 Serial No

ENDORSENENT by SALES AGENTfor RENUNCIATION(where applicable)

Name,Signature & Stamp

Tear off

a. A bank account is mandatory for eligible investors.. b. Please refer to Section 4.14 in the Information Memorandum and Section 4.14 in the Abridged Information Memorandum for details on Refunds. c. Please provide clearly the relevant details in the boxes provided.

The Form R must be signed to ensure acceptance

Account name(as per statement)

SIGNATURE OF RENOUNCEE & DATE

NOTES (FORM R)

The last date and time for acceptance and payment of the New Shares is on or before 4:00 p.m. on Friday, 9 November 2018. If no action is taken on the Rights, they will lapse and be subject to Section 4.8 (Untaken Rights) in the Information Memorandum and Section 4.8 in the Abridged Information Memorandum

Sales Agent P.T.O

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

31

SECTION 8 (Continued) 1.1.

Form of Renunciation

1.2.

8.3

Form of Entitlement

FORM OF ENTITLEMENT(FORM E)

USE BLOCK LETTERS TO COMPLETE THE FORM

1.3.

If you wish to take action, please note the following:

PowerTHE ofFORM Attorney

IS OF VALUE, NEGOTIABLE AND IS ISSUED PURSUANT TO AN INFORMATION MEMORANDUM DATED 16 OCTOBER 2018 PLEASE CONSULT YOUR ADVISOR. READ NOTES ON THE REVERSE OF THIS PAL. RIGHTS ISSUE OPENS AT 9.00 A.M. ON MONDAY, 29 OCOTBER 2018 AND CLOSES AT 4.00 P.M.ON FRIDAY, 9 NOVEMBER 2018.

CSD A/C

Sales Agent Stamp

BOX 1 No of Rights in your CSD A/C

Entitlee Name

Box 2 Amount Payable(Frw)in full

ddKZE z

Entitless who wish to appoint an attorney to deal with the Rights Issue may do so via Form A(Form of Appointment of Attorney) available from a Sales Agent or downloaded from www.bk.rw

• Use BLOCK letters to complete the form • The Form E must be accompanied by a PAL.A copy of the Information Memorandum or Abridged Information Memorandum to which this PAL is attached has been lodged with the Registrar of Companies.A copy of the information Memorandum or Abridged Information Memorandum may be obtained from the Sales Agents named below or www.bk.rw • Persons into whose possession this Form E may come are required to observe the restrictions contained in the Information Memorandum or Abridged Information Memorandum.

• Terms defined in the Information Memorandum shall bear the same meaning herein unless otherwise indicated.

• For advice on the Rights Issue and completion of this form an Eligible Shareholder should consult their preferred professional advisor.

• A Form E shall be rejected as per the policy set out in the Information Memorandum or Abridged Information Memorandum.

• All alterations on the Form E other than the deletion of alternatives, must be authenticated by the full signature of the Eligible Shareholder.

• Presentation of cheques for payment or receipt of funds transferred shall not amount to the acceptance of any application.

• A completed Form E must be physically returned to a Sales Agent. Once made, it is irrevocable and may not be withdrawn.

• The Form E and Application Money should be received by the Sales Agent or the Receiving Bank by 4.00 p.m. on Friday, 9 November 2018 (Closure Date) and neither BK, nor any of the advisors nor any of the Sales Agents shall be under any liability whatsoever should a Form E not be received by this date.

• This Form E and the accompanying Information Memorandum or Abridged Information Memorandum shall be governed by and construed in accordance with the Laws of Rwanda.

W Zd ϭ Wd E /E &h>>͕ dKd > ^, Z ^

PART 1A

PART 1B

NOTES (FORM E)

GENERAL INSTRUCTIONS:

FULL ACCEPTANCE. I/We hereby accept in full, subject to the terms of the Information Memorandum, this Form E and the Memorandum and Articles of Association of BK Group PLC, the number of New Shares above in Box 1, for the value in Box 2 above

BOX 3 Number of total New Shares (Box 1)

TOTAL SHARES. Having accepted all the New Shares in Part 1A above I/we hereby apply for the total New Shares in Box 3for the value in Box 4 herein

a. Tick PART 1A if accepting in full all New Shares as in Box 1. b. Complete total number of New Shares applied for in Box 6 in PART 1b, i.e. Box 3 = Box 1 c. Complete the total value of New Shares applied for in Box 6, PART 1b. i.e. Box 4= Box 2 d. Allocation and Allotment is subject to the terms in the Information Memorandum and Abridged Information Memorandum.

BOX 4 Amount payable (multiply value in Box 3 by Frw 270.00)

W Zd Ϯ W Zd/ > Wd E

BOX 5 Number of New Shares accepted in part

PARTIAL ACCEPTANCE. IF PART 1 ABOVE IS NOT ACCEPTED. I/We hereby accept in part, subject to the terms of the Information Memorandum, this PAL and the Memorandum and Articles of Association of BK Group PLC the number of New Shares specified in Box 6 for the value set out in Box 7herein.

3.1 Tick (√)

3.2

Direct Amount Payment

Agents Payment

Frw.

Frw.

Chq/Transfer Ref No./ Deposit Ref No.

3.3

BOX 6 Amount payable (Frw) (multiply figure in Box 5 by Frw 270.00)

FINANCIER DETAILS

W Zd ϰ Z &hE

Institution & Branch

REFUND

Bank Name

Account Name (as per Statement)

Country & Swift if not Rwanda

W Zd ϱ ^/'E dhZ

The Form E must be signed to ensure acceptance.For companies/institutions/organisations,signatures can be affixed as per the authorised mandate.

Account Number (full Account No

a. A bank account is mandatory for eligible investors.. b. Please refer to Section 4.14 in the Information Memorandum and Section 4.14 in the Abridged Information Memorandum for details on Refunds. c. Please provide clearly the relevant details in the boxes provided.

Branch Code

W Zd ϯ W zD Ed a. All payments are to be made in Rwanda Francs b. Section 4.10 in the Information Memorandum and Section 4.10 in the Abridged Information Memorandum provides details on Modes of Payment. c. Please read carefully the instructions. d. Complete Section 3.1 with the Funds Transfer Number or Banker’s Cheque Number and name of remitting/paying bank e. If payment for Shares is via Irrevocable Bank Guarantee or Irrevocable Letter of Undertaking, tick the box provided and attach the IBG/ILU. f. If a Financier is involved, complete section labeled ‘Financier Details’ by providing the Loan Reference and the name of the Institution and Branch. g. All Application Money must be made in cleared funds on or before 4:00 pm on Friday, 9 November 2018.

Bank Name & Branch

CSD Form 5 Serial No

PART 4

a. Complete this part if you wish to accept a portion of the New Shares to which you are entitled. You must not have completed PART 1. b. Enter number of New Shares you would like to accept into Box 5. This number must be less than the number in Box 3. c. Enter the amount due for the New Shares in Box 6 by multiplying the number in Box 5 with Frw 270.00 per New Share.

W Zd ϲ D /> ΘͬŽƌ DK /> EŽ

Space has been provided to insert this information so that contact can be established in case of need.

SIGNATURE OF ENTITLEE or AUTHORISED ATTORNEY

SALES AGENTS: BK Capital,Faida Securities, African Alliance Rwanda Securities, CDH Capital,Baraka Capital. MBEA Brokerage Services,Core Securities, SBG Securities

Date:

Sign as necessary

Provide Email & Mobile No: Tear off

Tear off

Form E No

Eligible Shareholder

Form of Renunciation

1.2.

1.3 Form of Entitlement

Entitlee

Sales Agent P.T.O

8.4

Power of Attorney FORM OF POWER OF ATTORNEY (FORM A)

THIS DOCUMENT IS TO BE READ AND EXECUTED IN CONJUCTION WITH DOCUMENTS FOR THE RIGHTS ISSUE 2018 INCLUDING THE INFORMATION MEMORANDUM. PLEASE CONSULT YOUR PREFERRED ADVISOR IF REQUIRED. RIGHTS ISSUE CLOSES AT 4.00 P.M. ON FRIDAY, 9 NOVEMBER 2018. Available from Sales Agents or www.bk.rw

Sales Agent

Eligible Shareholder/Rump Investor: Name and Address:

REFERENCE PAL/Rump Form Serial No

CSD A/C

1. This Form A is only for Eligible Shareholders/Rump Investors who wish to appoint entirely at their own risk an attorney to act on their behalf for the Rights Issue.

2. This Form A will be required to be attached to a PAL or Rump Form.

To: The Directors, BK Group PLC This appointment of Attorney is limited in respect of the BK Group PLC Rights Issue 2018 (Rights Issue).

I/We hereby accept, subject to the terms of the Information Memorandum and the Memorandum and Articles of Association of BK Group PLC to appoint the persons as named in Attorney Details below to be my/our attorney (“Attorney”) in my/our name and on my/our behalf, to take appropriate action including complete any forms in connection with the New Shares and to do all or acts which the Attorney thinks fit with regard to any other forms. I/We agree to ratify everything the Attorney does or purports to do in accordance with this appointment of Attorney and to indemnify the Attorney against all claims and liabilities arising out of anything lawfully done by the Attorney. This power shall remain irrevocable until Friday, 9 November 2018 SIGNATURE OF ELIGIBLE SHAREHOLDER / RUMP INVESTOR Signature 1

Signature 2

Company Seal/Stamp (If applicable

Date: __________________________________ Provide Email & Tel/Mobile No:

ATTORNEY DETAILS Name

ID/Passport No.

Postal Address including postcode and Email

Tel/Mobile No

SIGNATURE OF ATTORNEY Signature 1

Signature 2

Company Seal/Stamp (If applicable

Date: __________________________________

[]

32

Tear off

The last date and time for acceptance and payment of the New Shares is on or before 4:00 p.m. on Friday,9 November 2018. If no action is taken on the Rights, they will lapse and be subject to Section 4.8 (Untaken Rights) in the Information Memorandum and Section 4.8 in the Abridged Information Memorandum.

1.1.

1.3.

Tear off

FORM E RECEIPT. Eligible Shareholder must ensure that this tear off is Stamped by the Sales Agent and returned to them for their safe custody together with the proof of payment.

FORM E RECEIPT-BK GROUP PLC RIGHTS ISSUE 2018

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

SECTION 8 (Continued) 1.11.

8.5

Irrevocable Bank Guarantee

1.12.

[ON LETTERHEAD OF ISSUING BANK]

8.6

Irrevocable Letter of Undertaking

[ON LETTERHEAD OF ISSUING INVESTOR/CUSTODIAN]

Ref: [ • ] Date: [ • ]

Ref: [ • ] Date: [ • ]

The Directors

The Directors

BK Group PLC BK Group PLC Building KN4 Ave No 12, Plot No 790 P.O. Box 175 Kigali, Rwanda

BK Group PLC BK Group PLC Building KN4 Ave No 12, Plot No 790 P.O. Box 175 Kigali, Rwanda

Dear Sirs

Dear Sirs

BK GROUP PLC LTD - RIGHTS ISSUE 2018

BK GROUP PLC LTD - RIGHTS ISSUE 2018

IRREVOCABLE BANK GUARANTEE RESPECT OF PAYMENT FOR ALLOCATION OF NEW SHARES TO [name of investor] (the “IBG”)

IRREVOCABLE LETTER OF UNDERTAKING IN RESPECT OF PAYMENT FOR ALLOCATION OF NEW SHARES TO [name of investor] (the “ILU”)

WHEREAS [name of investor] (the “Investor”) has by an [RIF No] [ • ] applied for [ • ] New Shares in the BK GROUP PLC - RIGHTS ISSUE 2018 as set out in the Information Memorandum dated 16 October 2018 (capitalised terms used in this IBG shall have the meaning and interpretation given to such terms in the BK Group PLC Information Memorandum),

WHEREAS [name of investor] (the “Investor”) has by an [RIF No] [ • ] applied for [ • ] New Shares in the BK GROUP PLC - RIGHTS ISSUE 2018 as set out in the Information Memorandum dated 16 October, 2018 (capitalised terms used in this ILU shall have the meaning and interpretation given to such terms in the BK Group PLC Information Memorandum),

AND WHEREAS it has been stipulated in the BK Group PLC Information Memorandum that the Investor shall furnish you with an irrevocable on demand guarantee for the full value of the New Shares applied for at the Rights Issue Price,

AND WHEREAS it has been stipulated in the BK Group PLC Information Memorandum that the Investor shall furnish you with a letter of undertaking for the full value of the New Shares applied for at the Rights Issue Price,

AND WHEREAS we [name of guarantor] have agreed to give this IBG, NOW, at the request of the Investor and in consideration of you allocating to the Investor the New Shares or such lesser number as you shall in your sole and absolute discretion determine, we hereby irrevocably undertake to pay you in Rwanda Francs, upon your first written demand (vide email, fax, hand delivered letter or SWIFT) and without any delay or argument, such sums as may be demanded by you up to a maximum of Rwanda Francs [amount in words] (Frw [amount in figures]) without your needing to prove or show grounds or reasons for your demand or the sum specified therein by way of EFT/RTGS within 24 hours of the said demand or before 3.00 p.m. on November 21,2018 whichever occurs earlier, as set out in the BK Group PLC Information Memorandum.

This IBG shall remain in force up to and including 3.00 p.m. on November 21, 2018 and any demand in respect thereof should reach our office not later than the above date and time.

This IBG shall be governed and construed in accordance with the Laws of Rwanda and we irrevocably submit to the non-exclusive jurisdiction of the Courts of Rwanda.

IN WITNESS WHEREOF THIS IRREVOCABLE LETTER OF UNDERTAKING HAS BEEN EXECUTED BY US ON THIS [ • ] DAY OF [ • ] 2018.

[signed as per bank mandate]

AND WHEREAS we [name of guarantor] have agreed to give this ILU, NOW, at the request of the Investor and in consideration of you allocating to the Investor the New Shares or such lesser number as you shall in your sole and absolute discretion determine, we hereby irrevocably undertake to pay you in Rwanda Francs, upon your first written demand (vide email, fax, hand delivered letter or SWIFT) and without any delay or argument, such sums as may be demanded by you up to a maximum of Rwanda Francs [amount in words] (Frw [amount in figures]) without your needing to prove or show grounds or reasons for your demand or the sum specified therein by way of EFT/ RTGS within 24 hours of the said demand or before 3.00 p.m. on November 21,2018 whichever occurs earlier, as set out in the BK Group PLC Information Memorandum.

This ILU shall remain in force up to and including 3.00 p.m. on November 21, 2018 and any demand in respect thereof should reach our office not later than the above date and time.

Should such payment not be made within two business weekdays by 3:30 p.m. following the deemed service of such notice then BK Group PLC shall be entitled without further notice to either: treat our application as having been repudiated and cancel the provisional allotment to us and re-allocate the provisionally New Shares on such terms and conditions as it shall think fit without prejudice to any rights to damages for such repudiation, or to allow us further time for payment on such terms and conditions as it shall think fit in which event we shall pay default interest on all sums outstanding at an agreed rate per annum calculated on daily balances and compounded monthly.

This ILU shall be governed and construed in accordance with the Laws of Rwanda and we irrevocably submit to the non-exclusive jurisdiction of the Courts of Rwanda.

IN WITNESS WHEREOF THIS IRREVOCABLE LETTER OF UNDERTAKING HAS BEEN EXECUTED BY US ON THIS [ • ] DAY OF [ • ] 2018.

[signed as per mandate]

BK GROUP PLC RIGHTS ISSUE ABRIDGED INFORMATION MEMORANDUM

33

www.bk.rw www.bk.co.rw BK Group PLC Building | KN4 Ave No 12, Plot No 790 | P.O. Box 175 Kigali, Rwanda

PB

BK GROUP PLC RIGHTS ISSUE INFORMATION MEMORANDUM