LETSHEGO HOLDINGS LTD 2019 GROUP INTEGRATED ANNUAL REPORT Table of Contents About this Report 4 Our People 88 Evolving the Integration of our Annual Reports 4 Employee Value Proposition 90 Scope 4 Promoting Diversity 91 Materiality 4 Employee Training and Development 92 A Note on Disclosures 4 Our Values 5 Realising Financial Inclusion while Enhancing Financial Performance 94 Our Business 6Addressing the Needs of our Customers 96 Commentary from our Group Chairman 8 Group Chief Executive Review 12 Returning to Growth 98 2019 Milestones 17 Returning to Growth 100 Our Journey 18 Non-Communicable Disease (NCD) Care 104 Our Group Structure 20 Measuring our Social Impact 106 Our Solutions 22 Our Footprint 23 How We Create Value 24 Consolidated Annual Financial Statements 112 Financial Highlights 25 Group Corporate Information 114 Non-Financial Highlights 28 Directors’ Report 115 Portfolio Review 32 Directors’ Responsibility Statement 117 Independent Auditor’s Report 118 Our Leadership 36 Consolidated Annual Financial Statements Group Board of Directors 38 Consolidated Statement of Financial Position 124 Group Executive Committee 46 Consolidated Statement of Profit or Loss and other Comprehensive Income 125 Country CEOs 48 Consolidated Statement of Changes in Equity 126 Consolidated Statement of Cash Flows 128 The Board 50 Significant Accounting Policies 129 Notes to the Consolidated Financial Statements 145 Composition and Structure 52 Five-Year Financial History 204 Board Process and Outcomes 54 Value Added Statement 206 Composition of the Board Committees 58 Analysis of Shareholding 207 Executive Management Committees 62 Attendance at Meetings 66 Country Profiles 208 Remuneration Policy 67 Annual General Meeting 222 Governance Enablers 70 Compliance with King IV 74 Form of Proxy 224 List of Abbreviations 226 Stakeholder Engagement and Material Matter 78 Stakeholder Mapping Process 80 Our Key Stakeholders 81 Our Material Matter Identification and Management Process 83 Material Stakeholder Matters 84 2 INTEGRATED ANNUAL REPORT 2019 3 INTRODUCTION About this Report EVOLVING THE INTEGRATION OF OUR ANNUAL REPORTS matters, opportunities, and challenges that are likely to affect the delivery of our strategic intent and ability The standards used in Letshego’s annual integrated reporting to create value in the short, medium, and long term for align with global protocols. They also reflect key risks and relevant stakeholders. opportunities and show how these factors affect our strategy, financial and non-financial performance, and the impact we Letshego applies principles of stakeholder inclusiveness, have on the markets in which we operate. We have endeavoured sustainability, materiality, and completeness when assessing to provide a concise, balanced, and transparent commentary which information to include in the Integrated Annual Report. on the progress we have made during the year on our strategy, The Group also applies the principles of accuracy, balance, performance, operations, governance, and reporting. clarity, comparability, reliability, and timeliness when assessing information for this report. In preparing this report, Letshego followed the principles of the International Integrated Reporting Framework (IIRC), the MATERIALITY King Code of Governance Principles for South Africa (King IV), and the Botswana Stock Exchange (BSE) Listing Requirements. We consider material matters that impact on value creation in In addition, Letshego also strives to adhere to the Global terms of our operating environment, the interests of our key Reporting Initiative (GRI) Standard and has produced this stakeholders, and the identified priority risks and opportunities report in accordance with the ‘core’ level of the GRI. facing the organisation. The content of this report is relevant to all our stakeholders, The material matters presented in this report were identified including our staff, customers, investors, funders, strategic through a thorough and methodical stakeholder review partners, governments, regulators, and the members of the process. The areas reviewed qualify in one or more of the communities in which we operate. following categories: strategic; financial; environmental; social; competitive, and legislative. Material matters are The Group Board committees responsible for corporate prioritised by relevance and impact on Letshego’s ability accountability and risk management, combined assurance, to achieve and deliver on the Group’s strategic objectives. and integrated reporting, have overseen the production of this The Group’s leadership team manages this process with • Letshego Holdings Limited was incorporated in the Republic • Letshego is a commercial entity whose liability is limited report. They are satisfied with its accuracy, completeness, support from the Letshego Group’s Board of Directors. of Botswana in March 1998, and publicly listed on the by shares and integrity andvp’s Board acknowledges its responsibility Botswana Stock Exchange in 2002 for ensuring the integrity of the report by sanctioning its Material matters identified are reviewed in terms of their preparation and presentation of this report. significance and risk to Letshego’s ability to operate and deliver value to its stakeholders. The 2019 Integrated Annual Report is presented in accordance OUR VALUES with the framework of the IIRC and approved by the Letshego There are no material changes to the content of this report compared with the 2018 Integrated Annual Report. Holdings Limited Board of Directors. Also referred to as Letshego’s ‘uniquenesses’, the Group’s values define its unique culture, ways of working, and its guiding principles for improving the lives of customers, delivering sustainable value to stakeholders and optimising sustainable All comments and inquiries related to the contents of this report A NOTE ON DISCLOSURES performance. Letshego’s Group code of conduct outlines the behaviour and policies that govern Letshego’s interactions with all may be directed to [email protected] its stakeholders across its footprint. and/or the Group’s company secretary, Matshidiso Kimwaga Letshego Holdings Limited affirms the following terms with on [email protected]. This report is also available respect to its annual integrated reporting strategy: on our website www.letshego.com. • Non-disclosure of confidential data such as granular data SCOPE on remuneration, yields and margins, where the information is deemed to be competitively sensitive The 2019 Integrated Annual Report covers the 12-month • Infographics are used to report various metrics, while period from 1 January 2019 to 31 December 2019. retaining proprietary information SIMPLE APPROPRIATE ACCESSIBLE ETHICAL RESPONSIVE INCLUSIVE • Any official and direct enquiries are encouraged in relation to The report examines the forms of capital used to create any aspect of the company’s competitively sensitive sustainable value, trade-offs mitigated, significant operations that may not have been publicly disclosed material matters raised by our stakeholders during the • All monetary figures used in the report are in Botswana Easy and Affordable Convenient Transparent Efficient Positive and 12-month period, and Letshego’s response to the material Pula (P) clear and useful and obtainable and trusting and warm respectful matters raised. Letshego considers as material, those 4 INTEGRATED ANNUAL REPORT 2019 5 OUR BUSINESS Commentary from our Group Chairman 2019 was a year of transition for Letshego and I am pleased The strengthening of our leadership credentials took on even that the Business has come through stronger, and better greater significance against the backdrop of the COVID-19 positioned, to deliver long-term success and value for all pandemic. Since its emergence globally in December 2019, our shareholders. the response required to manage the impact of the Coronavirus pandemic has become a focal point for all businesses across Letshego weathered the last year well under its established the globe. Together, we share the challenge of minimising transitional leadership, producing a solid set of results for the pandemic’s downside risk and impact on our employees, the last financial period under review. Results were driven customers and operations as well as seeking interventions to by a focus on improving efficiencies, increasing overall protect and sustain local economic activity. asset quality supported by enhanced credit processes, and impairment write-backs to enable cost savings. As we apply immediate measures to contain current threats imposed by the pandemic, it is also important that we maintain The recent appointment of our Group Chief Executive, Andrew our future perspective, deploying the interventions now that Fening Okai, along with other senior Group Executives, has will be needed to adjust to the ‘new normal’ envisaged post brought stability to the Group’s leadership team. This was a this pandemic. welcome development for our various stakeholders, including regulators, customers, investors and employees. IMPACT OF COVID-19 In addition to the executive appointments, we announced In February 2020, when COVID-19 became a reality for sub the appointment of three new Independent Non-Executive Saharan Africa, Letshego was swift to initiate our risk and Directors to strengthen our Group Board with complimentary pandemic plans, that include ongoing identification, monitoring skills in banking, risk and financial technology. The and implementation of effective risk and