FINCA Financial Year 2020

a dedicated Digital lending application, which • digitization and automation of our own Managing will exclusively cater for digital on boarding, and internal processes as well as processing of loans for customers using internal • increased skills development. The Board of Director’s and external sources of information and state- of-the-art machine learning and algorithms. Our The Board of Directors have continuously Directors have Statement alternative delivery channels like Cente-Agency engaged with the management to setup business continuously engaged service to our clients, VISA ATM partnership goals, which benefit all the stakeholders with United Bank of Africa, the mobile banking including the shareholders. Our strategy this with the management services as well as internet banking, have year will be to consolidate the challenges to setup business already resulted in lower turnaround time and and achieve better efficiency parameters better customer experience. while delivering healthy growth in credit and goals, which benefit profitability. In addition, we are conscious of the James Onyutta The pace of change has never been greater. The fact that the way we do business has to change in all the stakeholders digital transition has affected all sectors and the post COVID’19 world. We plan to strategize on including the activities, and, right now, the financial sector these lines so that the adversity is converted into It gives me great pleasure to place before you the in particular. Ease of use, simple and intuitive opportunities. As the Managing Director of FINCA shareholders. highlights of the FINCA Uganda’s performance design, and the ability to connect large amounts Uganda, I am excited to be part of this journey. during the financial year 2020. of data thereby providing a completely new The following are the highlights of the 2020 FINCA Uganda’s 29 years of institutional customer experience in focus. performance in a tough year characterized by excellence, has strategically evolved into a We have reorganized operations into customer the spread of the COVID-19 Pandemic globally; • The Balance sheet size grew by 6% from digitally savy Micro finance Deposit Taking segments as well as changing our way of Ugx.183.5 billion in 2019 to UGX. 194.4 billion Institution and incorporated technology in our working. We have gone from running large • Net Loans and Advances to customers in 2020 on account of growth in Investments every day operations. We have successfully projects to testing prototypes, better versions dropped by 3% (From Ugx. 113.2 billion in with other financial institutions. adopted the mantra of collaboration and co- where much of the development is in tune with 2019 to Ugx. 106.6 billion in 2020) creation with other financial institutions and customers. We are always testing in order to • Deposits volume grew by 17% (From Ugx. 87.5 In regards to regulation, FINCA Uganda remained Fintechs for technology led innovations. meet customer needs in the best way. billion in 2019 to Ugx. 102.4 billion in 2020 compliant with regulatory requirements throughout the period. The key We have been investing in technology to Our focus is on the transformation of three main • Profit for the year decreased by 64% (From ratios include the core capital and total capital improve customer experience. Initiatives such components: Ugx. 5.9 billion recorded in 2019 to UGX. 2.16 adequacy which were at 25.19% and 28.27% as digitizing account opening through Digital billion in 2020). This was mainly as a result of • enhance the customer experience through respectively compared to the Bank of Uganda Field Automation tablets. We are expanding drop in the loan book. excellent service requirement of 15% and 20% respectively. our digital focus even further with setting up of

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FINCA Uganda is regulated by Bank of Uganda and Customer Deposits are protected by the Deposit Protection Fund of Uganda. Summarised Audited Financial Statements for the year ended 31 December 2020

REPORT OF THE INDEPENDENT AUDITOR ON THE SUMMARY FINANCIAL STATEMENTS TO THE MEMBERS OF FINCA UGANDA LIMITED (MDI)

Opinion Summary Financial Statements judgement, were of most significance in our audit of the “Engagements to Report on Summary Financial Statements”. financial statements of the current period. The summary financial statements, which comprise the The summary financial statements do not contain all the summary statement of financial position as at 31 December disclosures required by International Financial Reporting Directors’ Responsibility for the Summary Financial 2020, the summary statement of profit or loss and other Standards, the Microfinance Deposit-Taking Institution (MDI) Statements comprehensive income for the year then ended and other Act, 2003 and the Companies Act, 2012 of Uganda. The directors are responsible for the preparation of the disclosures are derived from the audited financial statements BDO East Africa Reading the summary financial statements and the auditor's summary financial statements in accordance with the Financial of FINCA Uganda Limited (MDI) for the year ended 31 December report thereon, therefore, is not a substitute for reading the Institutions (External Auditors) Regulations, 2010 and the Certified Public Accountants of Uganda 2020. audited financial statements and the auditors report thereon. Microfinance Deposit-Taking Institution (MDI) Act, 2003. 6th Floor, Business Park In our opinion, the accompanying summary financial The Audited Financial Statements and Our Report statements are consistent, in all material respects, with the Auditors’ Responsibility Plot 3-5, New Road Thereon audited financial statements, in accordance with the Financial Our responsibility is to express an opinion on whether the P O Box 9113, , Uganda Institutions (External Auditors) Regulations, 2010 and the We expressed an unmodified audit opinion on the audited summary financial statements are consistent, in all material Microfinance Deposit-Taking Institution (MDI) Act, 2003. financial statements in our report dated 28 April 2020. The respects, with the audited financial statements based on Date: 28 April 2021 report also includes communication of key audit matters. our procedures, which were conducted in accordance with Key audit matters are those matters that, in our professional International Standard on Auditing (ISA) 810 (Revised),

SUMMARY STATEMENT OF FINANCIAL POSITION SUMMARY STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 2020 2019 2020 2019 Ushs' 000 Ushs' 000 Ushs’ 000 Ushs’ 000 ASSETS Interest income 41,391,860 46,089,518 Cash on hand 18,056,236 13,034,861 Interest expense (13,305,142) (10,881,282) Deposits and balances due from other financial institutions 36,624,396 29,429,104 Loans and advances to customers 110,303,524 113,266,787 Net interest income 28,086,718 33,365,772 Tax recoverable 212,840 - Other assets 2,336,000 3,547,268 Fees and commission income 6,761,148 8,089,079 Deposit with Bank of Uganda 134,261 124,446 Fees and commission expense (90) (11,066) Government securities 1,955,019 - Property and equipment 20,079,004 21,362,247 Net fee and commission income 6,761,058 8,078,013 Intangible assets 3,668,776 2,756,167 Investment income 3,709,264 1,842,464 Total Assets 193,370,056 183,520,880 Grant income 752,714 416,548 Other income 1,520,204 2,149,418 LIABILITIES AND SHARE HOLDERS' EQUITY LIABILITIES Net operating income 40,829,958 45,852,216 Customer deposits 102,356,666 87,462,411 Other liabilities 15,864,745 8,080,576 Employee benefit expense (16,355,803) (16,643,604) Amounts due to related parties - 285,180 Other operating expenses (15,322,017) (15,188,105) Deferred grants 1,404,685 1,698,197 Grant expenses (376,816) (326,908) Notes payable 29,838,354 38,155,437 Impairment losses on loans and advances (5,328,356) (4,146,972) Other provisions 110,000 134,000.00 Finance costs (522,599) (664,776)

Income tax payable - 1,243,304 Profit before tax 2,924,367 8,881,850 Deferred tax liability 355,361 1,029,393 Tax charge (759,428) (2,930,153) Total liabilities 149,929,811 138,088,498 Profit for the year 2,164,939 5,951,697 Reserves Share capital 13,893,324 13,893,324 Other comprehensive income - - Share premium 6,795,620 6,795,620 Capital fund 3,449,905 3,449,905 Total comprehensive income 2,164,939 5,951,697 Proposed dividend 1,078,476 4,157,076 Regulatory reserve 2,731,730 3,261,309 Total assets (shs.000) Retained earnings 15,491,190 13,875,148

250,000,000

200,000,000 Total shareholders equity 43,440,245 45,432,382 150,000,000 Total liabilities and shareholders equity 193,370,056 183,520,880 100,000,000 50,000,000 Total Assets 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 UGX OTHER DISCLOSURES - CAPITAL ADEQUACY 193.3 billion Net Loans and advances ( shs.000) 2019: Ugx 183.5 billion 2020 2019 120,000,000 Ushs’ 000 Ushs’ 000 100,000,000 80,000,000 Capital Position 60,000,000 Loans & Advances Core Capital 36,199,441 34,564,092 40,000,000 UGX Supplementary capital 4,427,385 4,529,291 20,000,000 110.3 billion 0 Total qualifying capital 40,626,826 39,093,383 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2019: Ugx 113.2billion

Total Risk Weighted Assets (RWA) 143,712,183 146,818,291 Core Capital to RWA 25.18% 23.29% Client Deposits Total Qualifying Capital to RWA 28.27% 26.34% UGX 102.3 billion 2019: Ugx 87.4 billion OTHER DISCLOSURES - CREDIT EXPOSURES 2020 2019 Ushs’ 000 Ushs’ 000 Net Profit (shs.000) Profit After Tax Credit Exposures 8,000, 000 UGX 7,000, 000 2.2 billion Non-performing loans and other assets 12,097,879 5,830,612 6,000, 000 5,000, 000 2019: Ugx 5.9billion Interest in suspense 2,192,579 718,169 4,000, 000 3,000, 000 Bad debts written off 2,526,516 4,679,196 2,000, 000 1,000, 000 Insider loan exposures 98,861 72,193 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Message from Directors: The directors have the pleasure to share with you the summarized audited financial statements for FINCA Uganda Limited (MDI) for the year ended 31 December 2020. The above summarised statement of financial position, summarised statement of profit or loss and other comprehensive income and other disclosures were audited by BDO East Africa and received an unqualified opinion. The financial statements were approved by the Board of Directors on 19th March, 2021 and discussed with Bank of Uganda on 22nd April, 2021.

Olive Lumonya Birungi James Onyutta Claire Akampulira Ochienghs Board Chairperson Managing Director Head Legal & Company Secretary

FINCA Uganda is regulated by Bank of Uganda and Customer Deposits are protected by the Deposit Protection Fund of Uganda.