2019 BRITAM HOLDINGS PLC 2019 ANNUAL REPORT & FINANCIAL STATEMENTS THE ICONIC AWARD-WINNING BRITAM TOWER Work is easier when you have the best view in Africa. The Tower has won international The 31 storey tower is located in the heart awards: of East Africa’s financial capital, Upper Hill, and also encapsulates the spirit of Emporis Skyscraper Award: the African renaissance. The only skyscraper in Africa to win and feature among the Features top ten buildings in the world. • 11-storey parking silo for 1,000 cars Council of Tall Building and • State-of-the-art security system Urban Habitat Award: • High speed lifts Recognized for Mechanical, • Advanced telecommunications Electrical and Plumbing infrastructure Engineering. • Six storey atrium with a sky glass IFC Excellence in Design for zen garden(s) Greater Efficiencies Award: Recognized for strategies put in place to save energy and water use. KENYA l UGANDA l TANZAN IA | RWANDA Head Office: Britam Tower, Hospital Road, Upper Hill SOUTH SUDAN l MOZAMB IQUE | MALAWI Tel: (254-20) 2833000, (254-703) 094000 | Email: [email protected] www.britam.com BritamEA BritamEA BRITAM HOLDINGS PLC Annual Report & Financial Statements 2019 3 WELCOME TO BRITAM HOLDINGS PLC Our Vision To be the leading diversified financial 2019 ANNUAL REPORT services company in our chosen markets across Africa by 2020. The report has been prepared in compliance with the best practice and relevant accounting frameworks to cater for the needs of both the Our Mission current and prospective investors. It is aligned Providing you with financial security to the requirements of the Kenya Companies every step of the way. Act, 2015 and the Capital Markets Authority (CMA) guidelines. Our Goal The Annual Report and Financial Statements We aim to provide our clients, with were prepared in accordance with the an unmatched offering, ensuring International Financial Reporting Standards first class solutions that help secure (IFRS). The report is part of our commitment the future. to be transparent and accountable to our stakeholders. Our Values • Respect • Integrity The Annual Report and Financial Statements • Innovation and were audited by PricewaterhouseCoopers LLP • Customer Focus. and received an unqualified opinion (page 73). BRITAM HOLDINGS PLC 4 Annual Report & Financial Statements 2019 TABLE OF CONTENTS Section Overview1 05 About Us and Our Footprint 05 Our Structure 06 Our Five Year Financial Highlights 07 Our Business Model 08 Our Stakeholder Engagement 10 Section Our5 Corporate Governance 51 Our Corporate Governance Statement 51 Shareholding Report 60 Directors Remuneration Report 62 Section Governance Audit 65 Our2 Leadership 12 Statement of the Responsibilities of the Directors 67 Chairman’s Statement 12 Group Managing Director’s Statement 18 The Board of Directors 25 Executive Management 30 Section Our6 Financial Statements 68 Report of the Directors 69 Statement of Directors’ Responsibilities 72 Section Independent Auditor’s Report 73 Our3 Performance 32 Financial Statements 79 Notes to the Financial Statements 89 Our Strategic Performance 32 Our Financial Review 36 Our People 38 Our Corporate Social Responsibility Highlights 41 Our Environmental Sustainability Highlights 42 Section Other7 Corporate Information 209 Notice of the Annual General Meeting 209 Section Corporate Information 220 Our4 Control Environment 44 Our Enterprise Risk Management (ERM) Framework 44 Our Risk Management Principles 45 Overview of our Principle Risks 47 Other Material and Emerging Non – Financial Risks 48 BRITAM HOLDINGS PLC Annual Report & Financial Statements 2019 5 OVERVIEW — About Us Britam is a leading diversified financial services group listed on the Nairobi Securities Exchange. The Group has a presence in seven countries in Africa namely: Kenya, Uganda, Tanzania, Rwanda, South Sudan, Mozambique and Malawi. The Group offers a wide range of financial solutions in life assurance, general insurance, health insurance, retirement planning, asset management, property and banking. These solutions enable our customers to protect and grow their wealth and achieve their financial goals every step of the way. 1 KENYA Established 1965 — Our Footprint STAFF 624 BRANCHES 32 2 UGANDA Established 2010 STAFF 55 BRANCHES 9 3 SOUTH SUDAN Established 2012 STAFF 17 BRANCHES 1 4 RWANDA 3 Established 2012 STAFF 40 BRANCHES 3 2 1 4 5 TANZANIA Acquired 2014 5 STAFF 73 BRANCHES 8 7 6 6 MOZAMBIQUE Acquired 2014 STAFF 41 BRANCHES 4 7 MALAWI Acquired 2014 STAFF 73 BRANCHES 3 Note: Staff and branches numbers are as at 31 Dec 2019 BRITAM HOLDINGS PLC 6 Annual Report & Financial Statements 2019 OVERVIEW — Our Structure Britam Holdings Plc Insurance Asset Property Portfolio Management Investments 100% 100% 100% 100% 48.2% 7.3% Britam Asset Britam Asset Britam Britam HF Group Plc Equity Group Managers Managers Properties Properties Holdings Plc (Kenya) (Uganda) (Kenya) (Uganda) Limited Limited Limited 100% 100% 100% 55% 100% 100% 100% 98% Britam Life Britam General Britam Britam Britam Britam Britam Britam - Assurance Insurance Insurance Insurance Insurance Insurance Insurance Companhia De Company Company Company (Tanzania) Company Company Company Seguros De (Kenya) Limited (Kenya) Limited Limited (Uganda) Limited (South (Rwanda) Mozambique Limited (Malawi) Limited Sudan) Limited S.A BRITAM HOLDINGS PLC Annual Report & Financial Statements 2019 7 OVERVIEW — Our Five Year Financial Highlights Summary statement of profit or loss and other comprehensive income 2019 2018 2017 2016 2015 Shs’ 000 Shs’ 000 Shs’ 000 Shs’ 000 Shs’ 000 Income Gross earned premiums and fund management fees 27,667,284 24,986,224 24,058,941 21,221,078 20,324,212 Gross earned premium 27,131,870 24,325,111 23,298,311 20,291,844 19,605,675 Net earned premium 23,109,892 21,061,660 20,298,120 17,393,585 16,373,722 Fund management fees 535,414 661,113 760,630 929,234 718,537 Investment income 6,966,794 6,667,588 4,446,714 5,223,975 4,550,017 Realised & unrealised gains/(losses) on financial assets 4,777,716 (3,049,273) 1,324,833 (2,412,009) (2,836,211) Commission earned & other income 1,056,436 1,052,523 1,006,377 1,225,429 1,324,922 Total income 36,446,252 26,393,611 27,836,674 22,360,214 20,130,987 Expenses Net insurance benefits and claims 15,442,505 14,247,140 12,498,761 5,001,165 10,614,215 Interest payments/increase in unit value 3,889,475 1,688,638 2,462,961 1,742,978 495,774 Operating and other expenses 8,794,161 8,244,558 7,355,818 7,094,697 6,716,741 Finance costs 234,667 905,567 1,186,147 1,177,264 802,155 Commission expense 3,461,322 3,313,922 3,520,150 3,547,258 3,291,904 Total expenses 31,822,130 28,399,825 27,023,837 18,563,362 21,920,789 Share of results of the associate (53,099) (289,656) 53,006 442,281 594,864 Profit/(loss) before income tax 4,571,023 (2,295,870) 865,843 4,239,133 (1,194,938) Total comprehensive income/(loss) for the year 5,420,656 (2,856,296) 1,908,150 784,673 (3,183,699) Earnings per share 1.41 (0.92) 0.26 1.26 (0.50) Summary statement of financial position 2019 2018 2017 2016 2015 Shs’ 000 Shs’ 000 Shs’ 000 Shs’ 000 Shs’ 000 Shareholders’ funds 29,376,826 23,956,170 22,670,010 17,877,596 17,674,448 Total assets 125,243,565 103,656,332 99,024,857 83,642,609 77,632,352 Total liabilities 95,866,739 79,700,162 76,354,847 65,765,013 59,957,904 Gross earned premium and Investment income Total assets Shareholders’ equity fund management fees CAGR +13% CAGR +8% CAGR +11% CAGR +14% 20,324 21,221 24,059 24,986 27,667 83,643 17,674 17,878 22,670 23,956 29,377 77,632 99,025 103,656 125,244 4,447 6,668 6,967 4,550 5,224 Shs in millions Shs in millions Shs in millions Shs in millions Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 BRITAM HOLDINGS PLC 8 Annual Report & Financial Statements 2019 OVERVIEW — Our Business Model CE AN Inputs RN VE GO • Investment in information technology Intellectual Capital • Investment in transformation and training of our proprietary distribution channel This capital includes our intellectual assets • Strategic bancassurance partnerships such as institutional knowledge, product • Enterprise risk management practices development capability, systems, • Strong Britam brand across the region procedures and protocols. • Specialized skills and expertise of employees Insurance and our Board Asset Management Human Capital • 900+ dedicated workforce R Our human capital consists of the • 2000+ financial advisors E competencies, capabilities and experience of • Experienced leadership team V our employees and how they innovate, • Corporate culture based on clear ethics and values S collaborate and align with Britam’s objective. S Property E N I S U Financial Capital B The pool of funds supporting business • Shs 125 billion total assets operations includes revenue from products and • Shareholders funds grew by 23% to Shs 29 bn Portfolio • Assets Under Management of Shs 227 bn services offered to clients and investment Investments return earned on shareholder funds. P R O Natural Capital Our natural capital includes: • Land Renewable and non-renewable resources • Electricity used by Britam to function. • Paper • Water Insurance • Life • General Social Capital • Collaboration with partners and service providers These are the strong relationships we build within Service Level Agreements (SLAs) with stakeholders to sustain our • Stakeholder relationships social license to operate. Manufactured Capital • Branches Profitable • Digital assets (online portals, USSD and other Growth The resources owned, leased or controlled core applications) • Call centres, data centres and premises Customer by Britam that contribute to product Service contribute to production or for support functions serviceor service provision.