Research

Division

25 January 2018

Absa Research is produced by Absa Bank Limited acting through its Corporate and

Investment Bank division, which is a part of Barclays Africa Group Limited and also

affiliated with the Investment Bank of Barclays Bank PLC and its affiliates (referred to as

“Absa”).

PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES STARTING AFTER PAGE 7

South Africa Morning Sheet

In an interview with Bloomberg in Davos yesterday, SARB Governor Kganyago

delivered a positive assessment of South Africa, noting that there has been a

resurgence of confidence due to the political changes since the ANC’s elective

conference in December

Headline CPI inflation edged higher in December on higher fuel prices; low point

still likely to come in February

We expect PPI inflation to increase slightly to 5.2% y/y in December from 5.1% in

November due to the effects of higher fuel prices

DA leadership intensifies approach towards Cape Town’s water crisis

Speaking in Davos yesterday to Bloomberg TV, SARB Governor Kganyago provided

an encouragingly positive assessment of South Africa’s progress both politically and,

by implication, economically since the ANC’s National Conference in December

chose Deputy President Ramaphosa as its new leader. Kganyago said that confidence

had surged with “renewed optimism” and evidence that South Africa’s institutions were

robust. In particular, he cited parliament’s return to its core purpose of holding the

executive and public officials to account, and said that “corruption and misrule will

soon be history”. We agree that developments appear to have been favourable since

Ramaphosa was narrowly elected, but think it could take a long time to root out alleged

corruption at all levels of government, even if the state capture at the top is addressed

quickly. The Governor said that the rand’s strength currently reflected the end of long-

standing political uncertainty, and argued separately that a “cyclical recovery” was

underway now. However, we think that, despite current optimism, the still relatively

weak macro fundamentals will likely reassert and the exchange rate could weaken. We

also note that some of the performance of the exchange rate recently is due to the

weaker USD. Interestingly, Kganyago observed that while Zuma is still the president of

the country, Ramaphosa as deputy president and leader of the ANC is showing that he

is able to exercise some executive powers. Finally, Kganyago said that South Africa had

a good case to make for avoiding a downgrade when Moody’s completes its rating

review at end-February or early March, after putting the country on review for a

downgrade of its Baa3 Negative Outlook ratings on 24 November. However, we think

that Moody’s (whose current foreign currency rating is one notch above Fitch’s and two

notches above S&P’s) is more likely than not to downgrade South Africa unless the

Budget on 21 February is a masterful defeat of the huge fiscal slippage without further

constraining weak growth. In this regard, we think a hike in VAT is needed, but doubt

that even this new, more energized, ANC leadership would implement such a hike in a

pre-election year.

Peter Worthington

+27 21 927 6525

peter.worthington@absacapital.com

Absa, South Africa

Miyelani Maluleke

+27 11 895 5655

miyelani.maluleke@absacapital.com

Absa, South Africa

www.absa.co.za

ABSA | South Africa Morning Sheet

25 January 2018 2

The December CPI data showed headline CPI inflation at 4.7% y/y, just 0.1pp higher

compared with November. This was in line with consensus but higher than our forecast of

an unchanged print. Core CPI inflation edged lower by 0.2pp to 4.2%, in line with our

forecast but slightly lower than consensus (4.3%). With food price inflation also easing in

December, the rise in headline CPI inflation owed primarily to the sharp increase in fuel

prices. The fuel price increase of 5.2% m/m in December, already earlier confirmed by the

Department of Energy, pushed y/y inflation on fuel to 14.2%, up from 7.9% in November.

Food price inflation eased less than we had expected, to 4.8% y/y in December from 5.2%

in November. Within the food basket, price pressures remained broadly contained with

meat price inflation slowing for the third straight month, to 14.0% y/y (Nov: 14.9%), but

there was some upside offset from ‘milk, eggs and cheese’ price inflation, which increased

to 4.8% y/y (Nov: 4.4%). Meanwhile, we see the decline in core CPI inflation as consistent

with persistent slack in economic activity and the effect of the stronger rand on tradable

goods. We expect headline CPI inflation to ease in the next two months, touching its low

point of 4.1% in February before beginning to rise gradually, averaging 5.2% in Q4 18.

Softer prints of around and below the mid-point of the SARB target range in the next two

releases could raise market expectations of a rate cut, but we remind investors that the

SARB MPC is more concerned with the CPI inflation outlook 12-18 months ahead. Both our

forecasts and the SARB’s show headline CPPI inflation averaging 5.5% in Q4 19 – close to

the upper end of the target range (see South Africa: Headline CPI edges higher on fuel

prices, 24 January 2018).

Stats SA is due to publish the December PPI data this morning at 11:30, adding more

evidence on inflation trends. We forecast headline PPI (i.e. PPI for final manufactured

goods) to have risen slightly to 5.2% y/y (consensus: 5.2%) from 5.1% in November. While

we look for food PPI inflation to have continued to ease on base effects and easing meat

price pressures, this is likely to be more than offset by the sharp 5.2% m/m increase in fuel

prices in December, particularly as fuel prices have a relatively higher weighing in PPI

relative to the CPI basket.

The leader of the Democratic Alliance, which governs the Western Cape and the City of

Cape Town, yesterday moved to take firmer control of the gathering water crisis, after

the estimates of Day Zero, when the city’s taps run dry, had been moved forward a week,

to 12 April. DA Cape Town executive mayor Patricia de Lille has been stripped of her

responsibility to manage the water crisis, with such powers being handed to Ian Neilson, the

Deputy Mayor, and Xanthea Limberg, the city counsellor in charge of the energy and

climate change portfolio. Also joining Maimane’s “drought crisis team” are Premier Helen

Zille, provincial DA leader Bonginkosi Madikizela and Anton Bredell, the provincial Minister

of Local Government, Environmental Affairs and Development Planning. Maimane warned

that intensified water-saving efforts were the only way to postpone and possibly avoid Day

Zero, with the current water supply augmentation efforts (mainly tapping into aquifers but

also three small scale desalination plants) only coming fully on stream by May and only

providing 120 million litres per day, compared with the current targeted consumption for

the city of 450 million litres/day, about 50 litres per person. Maimane also said that water

supply would be maintained in “essential service areas” without naming them, except for

hospitals. He also said, however, that Cape Town’s central business district might be spared

water shut-offs. Nonetheless, the CBD is only a tiny portion of Cape Town’s economic

activity, and thus the drought could pose a significant risk to growth. It is important to

remember, however, that Day Zero is predicated on the idea that there will be no more

water available when dam levels hit the 13.5% average. However, we think that this water

may still be utilized. Maimane said that he and Premier Zille would step up efforts to get the

necessary engagement from the national Department of Water and Sanitation, which has

legal and political responsibility for bulk water supply, and which they have accused of

dragging its feet during the gathering crisis.

ABSA | South Africa Morning Sheet

25 January 2018 3

ABSA | South Africa Morning Sheet

25 January 2018 4

FIGURE 1

Calendar

Time Country Event Period Consensus Absa Prior Prior-1

23-Jan 09:00 SA Leading Indicator index Nov -- 105.4 A 105.4 104.7

24-Jan 10:00 SA CPI, % y/y Dec 4.7 4.7 A 4.6 4.8

10:00 SA CPI, % m/m Dec 0.5 0.5 A 0.1 0.3

10:00 SA Core CPI, % y/y Dec 4.3 4.2 A 4.4 4.5

10:00 SA Core CPI, % m/m Dec 0.2 0.3 A 0.0 0.1

25-Jan 11:30 SA PPI, % y/y Dec 5.2 4.6 5.1 5.0

11:30 SA PPI, % m/m Dec 0.6 0.0 0.5 0.7

Source: Bloomberg, Absa Research

FIGURE 1

Review of last week’s key domestic data releases

Main indicators Period Survey Actual Prior Comments

Mining output, % m/m sa Nov -- -0.7 A 2.7 R Contraction mainly driven by PGMs and gold output.

Retail Sales constant, % m/m, sa Nov 0.8 4.0 A -0.1 Surge likely by the effect of ‘Black Friday’ sales.

SARB Repo rate, % Jan 6.75 6.75 A 6.75 MPC voted 5:1 to keep the repo rate on hold.

Source: Bloomberg, Absa Research

ABSA | South Africa Morning Sheet

25 January 2018 5

FIGURE 3

Rand price of oil

FIGURE 4

SA petrol price movements, as of 23 Jan 2018

Source: Thomson Reuters, Absa Research Source: CEF, Absa Research

FIGURE 5

Agriculture futures prices

FIGURE 6

ZAR performance

Source: SAFEX, Thomson Reuters, Absa Research Note: Rise/fall in Nominal effective exchange rate implies ZAR app/depreciation.

Source: Thomson Reuters, Absa Research

500

550

600

650

700

750

800

850

900

950

1,000

Jan-17 Apr-17 Jul-17 Oct-17 Jan-18

ZAR/bbl Petrol 95

unleaded

Petrol 93

unleaded

Diesel

0.05%

Diesel

0.005%

Pump price (c/l) 1,442 1,420 1,274 1,276

Basic fuel price (c/l) 636 625 649 653

Daily over/(under)

recovery (c/l)16 16 13 12

Avg. over/(under)

recovery (c/l)33 30 17 17

o/w due to int'l price -14 -16 -32 -32

o/w due to FX rate 47 46 49 49

A petrol price move that fully reflects the month-to-date over/under

recovery in Jan will trim 0.13pp from the CPI.

1,500

1,600

1,700

1,800

1,900

2,000

2,100

2,200

3,500

3,700

3,900

4,100

4,300

4,500

4,700

4,900

Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18

R/mtR/mt Wheat (LHS)

White maize (RHS)

Yellow maize (RHS)

12

12.5

13

13.5

14

14.5

15

50

52

54

56

58

60

62

64

66

68

70

Jan-17 Apr-17 Jul-17 Oct-17 Jan-18

IndexNEER (LHS) USD/ZAR (RHS)

ABSA | South Africa Morning Sheet

25 January 2018 6

FIGURE 7

Absa exchange rate forecasts (end of period)

NEER USDZAR EURZAR CNYZAR ZARJPY GBPZAR

Spot 64.53 12.46 14.89 1.91 8.96 16.81

Monthly

Feb-18 61.12 13.26 15.73 2.01 8.50 17.65

Mar-18 59.03 13.80 16.28 2.08 8.19 18.22

Apr-18 58.71 13.86 16.41 2.09 8.18 18.29

May-18 58.55 13.89 16.47 2.09 8.18 18.33

Jun-18 58.24 13.95 16.60 2.10 8.17 18.41

Jul-18 58.00 13.97 16.68 2.11 8.13 18.55

Aug-18 57.88 13.98 16.72 2.11 8.11 18.62

Sep-18 57.64 14.00 16.80 2.12 8.07 18.76

Oct-18 57.24 14.04 16.96 2.13 7.99 18.87

Nov-18 57.04 14.06 17.04 2.14 7.95 18.93

Dec-18 56.64 14.10 17.20 2.15 7.87 19.04

Quarterly

Dec-17 66.03 12.38 14.49 1.86 9.13 16.35

Mar-18 59.03 13.80 16.28 2.08 8.19 18.22

Jun-18 58.24 13.95 16.60 2.10 8.17 18.41

Sep-18 57.64 14.00 16.80 2.12 8.07 18.76

Dec-18 56.64 14.10 17.20 2.15 7.87 19.04

Mar-19 55.74 14.30 17.57 2.18 7.87 19.37

Jun-19 55.48 14.40 17.66 2.19 7.87 19.45

Sep-19 55.26 14.45 17.76 2.20 7.87 19.53

Dec-19 54.51 14.50 18.13 2.23 7.86 19.87

Mar-20 53.73 14.75 18.35 2.25 7.66 20.23

Jun-20 53.51 14.86 18.41 2.26 7.61 20.33

Sep-20 53.33 14.90 18.47 2.27 7.56 20.42

Dec-20 52.70 14.96 18.70 2.29 7.35 20.79

Annual

Dec-18 56.64 14.10 17.20 2.15 7.87 19.04

Dec-19 54.51 14.50 18.13 2.23 7.86 19.87

Dec-20 52.70 14.96 18.70 2.29 7.35 20.79

Dec-21 50.84 15.43 19.60 2.35 7.13 21.45

Dec-22 49.27 16.00 19.68 2.46 6.56 22.56

Source: Bloomberg, Absa Research

ABSA | South Africa Morning Sheet

25 January 2018 7

FIGURE 8

Absa exchange rate forecast (period average)

Period avg. USDZAR EURZAR CNYZAR ZARJPY GBPZAR

Spot 12.46 14.89 1.91 8.96 16.81

Monthly

Feb-18 12.86 15.31 1.96 8.73 17.23

Mar-18 13.53 16.01 2.05 8.34 17.93

Apr-18 13.83 16.35 2.08 8.19 18.25

May-18 13.87 16.44 2.09 8.18 18.31

Jun-18 13.92 16.53 2.10 8.18 18.37

Jul-18 13.96 16.64 2.11 8.15 18.48

Aug-18 13.97 16.70 2.11 8.12 18.58

Sep-18 13.99 16.76 2.12 8.09 18.69

Oct-18 14.02 16.88 2.13 8.03 18.82

Nov-18 14.05 17.00 2.14 7.97 18.90

Dec-18 14.08 17.12 2.15 7.91 18.98

Quarterly

Dec-17 13.20 15.66 2.00 8.53 17.58

Mar-18 13.09 15.39 1.97 8.66 17.28

Jun-18 13.87 16.44 2.09 8.18 18.31

Sep-18 13.97 16.70 2.11 8.12 18.58

Dec-18 14.05 17.00 2.14 7.97 18.90

Mar-19 14.20 17.39 2.17 7.87 19.20

Jun-19 14.35 17.62 2.19 7.87 19.41

Sep-19 14.43 17.71 2.20 7.87 19.49

Dec-19 14.48 17.94 2.22 7.86 19.70

Mar-20 14.63 18.24 2.24 7.76 20.05

Jun-20 14.80 18.38 2.26 7.63 20.28

Sep-20 14.88 18.44 2.26 7.58 20.37

Dec-20 14.93 18.58 2.28 7.46 20.60

Annual

Dec-18 13.24 16.03 2.03 8.45 17.88

Dec-19 14.30 17.66 2.19 7.87 19.45

Dec-20 14.73 18.41 2.26 7.61 20.33

Dec-21 15.19 19.15 2.32 7.24 21.12

Dec-22 15.72 19.64 2.41 6.85 22.01

Source: Bloomberg, Absa Research

ABSA | South Africa Morning Sheet

25 January 2018 8

FIGURE 9

Detailed CPI inflation forecasts

Date CPI index CPI % y/y Core CPI index Core CPI % y/y Food CPI index Food CPI % y/y Brent, $/bbl* Brent R/bbl

Jan-17 100.6 6.6 100.3 5.5 101.6 11.4 55.4 752

Feb-17 101.7 6.3 101.4 5.2 102.3 9.9 56.0 740

Mar-17 102.3 6.1 102.1 4.9 102.8 8.7 52.6 680

Apr-17 102.4 5.3 102.3 4.8 102.8 6.7 53.8 725

May-17 102.7 5.4 102.4 4.8 103.3 6.9 51.4 682

Jun-17 102.9 5.1 102.8 4.8 103.3 6.9 47.6 614

Jul-17 103.2 4.6 103.3 4.7 103.6 6.8 49.1 646

Aug-17 103.3 4.8 103.4 4.6 103.4 5.7 51.9 687

Sep-17 103.8 5.1 103.8 4.6 103.3 5.5 55.5 729

Oct-17 104.1 4.8 103.9 4.5 104.0 5.3 52.3 716

Nov-17 104.2 4.6 103.9 4.4 104.4 5.2 53.1 755

Dec-17F 104.6 4.6 104.2 4.2 104.3 4.3 53.6 761

Jan-18F 105.1 4.5 104.6 4.3 105.8 4.1 54.1 768

Feb-18F 105.8 4.0 105.7 4.2 106.0 3.7 54.3 771

Mar-18F 106.8 4.4 106.8 4.6 106.7 3.8 54.4 777

Apr-18F 107.2 4.6 107.1 4.7 107.2 4.2 53.7 769

May-18F 107.4 4.6 107.3 4.8 107.7 4.2 53.9 772

Jun-18F 107.7 4.7 107.8 4.8 107.5 4.1 54.4 780

Jul-18F 108.4 5.1 108.3 4.9 107.7 4.0 55.7 800

Aug-18F 108.7 5.2 108.5 5.0 108.1 4.6 56.3 812

Sep-18F 109.1 5.1 109.0 5.0 108.6 5.1 56.7 820

Oct-18F 109.4 5.1 109.2 5.1 109.5 5.3 56.6 822

Nov-18F 109.6 5.2 109.3 5.2 110.0 5.4 57.0 831

Dec-18F 109.9 5.1 109.6 5.2 110.1 5.5 57.4 840

Jan-19F 110.5 5.2 110.0 5.2 111.7 5.5 57.9 851

Feb-19F 111.5 5.3 111.2 5.2 111.9 5.5 58.5 863

Mar-19F 112.5 5.4 112.4 5.2 112.6 5.5 59.1 876

Apr-19F 113.0 5.4 112.7 5.2 113.1 5.5 59.4 881

May-19F 113.2 5.4 112.9 5.2 113.6 5.5 59.7 886

Jun-19F 113.6 5.5 113.4 5.2 113.5 5.5 60.0 890

Jul-19F 114.4 5.5 114.0 5.2 113.7 5.5 60.3 898

Aug-19F 114.7 5.5 114.2 5.2 114.1 5.5 60.6 905

Sep-19F 115.2 5.5 114.7 5.2 114.6 5.5 60.9 912

Oct-19F 115.5 5.5 114.9 5.2 115.6 5.5 61.2 920

Nov-19F 115.7 5.5 115.0 5.2 116.1 5.5 61.5 927

Dec-19F 116.0 5.5 115.3 5.2 116.2 5.5 61.0 923

Quarterly averages

Q1 17 101.5 6.3 101.3 5.2 102.2 10.0 54.7 724

Q2 17 102.7 5.3 102.5 4.8 103.1 6.9 50.9 674

Q3 17F 103.4 4.8 103.5 4.6 103.4 6.0 52.2 687

Q4 17F 104.3 4.7 104.0 4.4 104.2 4.9 53.0 744

Q1 18F 105.9 4.3 105.7 4.4 106.2 3.9 54.3 772

Q2 18F 107.4 4.6 107.4 4.8 107.5 4.2 54.0 774

Q3 18F 108.8 5.1 108.6 5.0 108.1 4.6 56.2 811

Q4 18F 109.7 5.1 109.4 5.2 109.9 5.4 57.0 831

Q1 19F 111.5 5.3 111.2 5.2 112.0 5.5 58.5 863

Q2 19F 113.3 5.5 113.0 5.2 113.4 5.5 59.7 886

Q3 19F 114.8 5.5 114.3 5.2 114.1 5.5 60.6 905

Q4 19F 115.7 5.5 115.1 5.2 116.0 5.5 61.2 923

Annual averages

2013 82.9 5.8 83.5 5.2 77.3 5.7 108.7 1051

2014 88.0 6.1 88.1 5.6 83.1 7.6 99.8 1080

2015 92.0 4.6 93.0 5.5 87.4 5.1 52.7 666

2016 97.8 6.3 98.2 5.6 96.6 10.5 44.2 646

2017F 103.0 5.3 102.8 4.7 103.3 6.9 52.7 707

2018F 107.9 4.8 107.8 4.8 107.9 4.5 55.4 797

2019F 113.8 5.4 113.4 5.2 113.9 5.5 60.0 894

Note: * Crude oil price assumptions embedded into our inflation forecasts are based on Bloomberg consensus forecasts for Brent. Source: Absa Research, Bloomberg

ABSA | South Africa Morning Sheet

25 January 2018 9

FIGURE 10

Main macroeconomic variables in South Africa

2017 2018 2019

2016 2017F 2018F 2019F 2020F 2021F Q3 Q4F Q1F Q2F Q3F Q4F Q1F Q2F Q3F Q4F

Output (% q/q saar)

Real GDP 2.0 1.5 1.1 1.0 1.2 1.2 1.7 2.1 2.5 2.6 0.3 0.9 1.4 1.7 1.9 1.9

Real GDP (%y/y) 1.0 1.4 1.8 1.4 1.2 1.1 1.3 1.6 1.9 2.2 0.3 0.9 1.4 1.7 1.9 1.9

Private consumption 2.6 0.8 0.8 0.8 0.9 1.1 1.2 2.5 2.7 3.2 0.8 1.3 1.3 1.7 2.0 1.9

Public consumption -0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 2.0 0.3 0.4 0.5 0.5 0.5

Investment 4.3 -0.1 0.9 1.5 1.8 2.1 2.5 3.3 3.4 4.5 -3.9 0.2 1.3 2.7 3.2 3.3

Exports -10.3 3.8 3.4 2.7 4.3 1.9 2.4 1.2 1.9 0.4 -0.1 0.8 2.2 2.1 1.7 1.8

Imports -13.7 3.2 2.2 2.4 3.8 2.4 1.4 2.2 1.9 1.5 -3.7 1.9 1.1 2.2 2.1 1.9

Prices (% y/y)

CPI inflation 4.8 4.7 4.3 4.6 5.1 5.1 5.3 5.5 5.5 5.5 6.3 5.3 4.8 5.5 5.5 5.7

Core CPI inflation 4.6 4.4 4.4 4.8 5.0 5.2 5.2 5.2 5.2 5.2 5.6 4.8 4.9 5.2 5.4 5.6

PPI inflation 4.3 4.9 4.9 5.0 5.2 5.0 4.6 5.3 5.2 5.2 7.1 4.8 5.0 5.1 5.4 5.1

External and government accounts (% of GDP)

Current account -2.3 -1.4 -2.1 -2.2 -2.2 -2.6 -2.8 -2.8 -2.8 -3.1 -3.3 -2.0 -2.3 -2.9 -3.3 -3.7

Consolidated fiscal balance* n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a -3.3 -4.3 -3.3 -3.2 -3.0 -2.9

Consolidated primary balance* n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 0.0 -0.8 0.4 0.6 0.9 1.0

Government debt* n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 50.7 54.2 56.4 57.5 58.5 59.4

Interest rates (% eop)

Repurchase rate 6.75 6.75 6.75 6.75 6.75 6.75 6.75 6.75 6.75 6.75 7.00 6.75 6.75 6.75 6.75 6.75

Prime rate 10.25 10.25 10.25 10.25 10.25 10.25 10.25 10.25 10.25 10.25 10.50 6.75 10.25 10.25 10.25 10.25

Note:*For fiscal year commencing 1 April.

Source: SARB, National Treasury, Stats SA, Thomson Reuters, Absa Research

Analyst Certification

We, Miyelani Maluleke and Peter Worthington, hereby certify (1) that the views expressed in this research report accurately reflect our personal views

about any or all of the subject securities or issuers referred to in this research report and (2) no part of our compensation was, is or will be directly or

indirectly related to the specific recommendations or views expressed in this research report.

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No.: 1986/004794/06. Registered Credit Provider Reg No NCRCP7), is distributing this material in South Africa. Absa Bank Limited is regulated by the

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professional advice or service whatsoever. Any South African person or entity wishing to effect a transaction in any security discussed herein should do so

only by contacting a representative of Absa Bank Limited acting through its Corporate and Investment Bank division in South Africa, 7th Floor, Barclays

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not required. Accordingly, Barclays does not maintain an insurance coverage pursuant to the Advisory Law.

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Principal place of business in the Dubai International Financial Centre: The Gate Village, Building 4, Level 4, PO Box 506504, Dubai, United Arab Emirates.

Barclays Bank PLC-DIFC Branch, may only undertake the financial services activities that fall within the scope of its existing DFSA licence. Related financial

products or services are only available to Professional Clients, as defined by the Dubai Financial Services Authority.

Barclays Bank PLC in the UAE is regulated by the Central Bank of the UAE and is licensed to conduct business activities as a branch of a commercial bank

incorporated outside the UAE in Dubai (Licence No.: 13/1844/2008, Registered Office: Building No. 6, Burj Dubai Business Hub, Sheikh Zayed Road, Dubai

City) and Abu Dhabi (Licence No.: 13/952/2008, Registered Office: Al Jazira Towers, Hamdan Street, PO Box 2734, Abu Dhabi).

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address is 10 Marina Boulevard, #23-01 Marina Bay Financial Centre Tower 2, Singapore 018983.

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defined by the Australian Corporations Act 2001.

IRS Circular 230 Prepared Materials Disclaimer: Absa does not provide tax advice and nothing contained herein should be construed to be tax advice.

Please be advised that any discussion of U.S. tax matters contained herein (including any attachments) (i) is not intended or written to be used, and

cannot be used, by you for the purpose of avoiding U.S. tax-related penalties; and (ii) was written to support the promotion or marketing of the

transactions or other matters addressed herein. Accordingly, you should seek advice based on your particular circumstances from an independent tax

advisor.

© Copyright Absa Bank Limited (2017). All rights reserved. No part of this publication may be reproduced or redistributed in any manner without the prior

written permission of Absa. Absa Bank Limited is duly registered in South Africa Registration No. 1986/004794/06 Registered office Barclays Towers

West, 15 Troye Street, Johannesburg, 2001. Additional information regarding this publication will be furnished upon request.