Botswana Insurance : BIHL GROUP ABRIDGED AUDITED GROUP RESULTS FOR THE YEAR ENDED 31 DECEMBER 2023

ABRIDGED AUDITED GROUP RESULTS

for the year ended 31 December 2023

REVENUE

Net insurance service result increased by

é 3% to P286 million

Revenue from contracts with customers increased by

é 14% to P296 million

Investment service result increased from

a loss of

P121 million to a positive result of é P315 million

Value of new business decreased by

 12% to P140 million

EARNINGS

Operating profit	Core earnings
increased by	increased by

é		é
257% to		195% to
P801 million		P873 million
Share of profit of	Profit attributable to equity
associates decreased by	holders increased by
		é
64% to		74% to
P79 million		P774 million

ASSETS UNDER MANAGEMENT (AUM)

increased by

é 16% to P44 billion

SOLVENCY

Business is well capitalised; required capital for the group is covered

7 times

(Dec 2022: 7,7 times)

DIVIDENDS

Paid as dividends during the 2023 financial year

P753 million

(Dec 2022: P402 million)

Made up of:

Interim dividend

P218 million

Final dividend

P285 million

Special dividend

P251 million

Final dividend proposed (not subject to tax)

P313 million

(Dec 2022: P285 million)

GROUP EQUITY VALUE

Decreased by		Return on group equity
		value decreased to
 7% to
P5,38 billion		 8,3%
(Dec 2022:		(Dec 2022
P5,76 billion)		restated: 16,9%)

CONSOLIDATED STATEMENT

OF FINANCIAL POSITION

As at 31 December 2023

	31 Dec	Restated1, 2	Restated1,2
	31 Dec	1 Jan
	2023	2022	2022
	P'000	P'000	P'000
ASSETS
Property and equipment	170 052	173 158	183 232
Intangible assets	97 247	101 197	107 076
Right-of-use assets	11 879	14 713	8 112
Investment property	26 480	12 260	10 160
Investments in associates
and joint ventures	1 758 469	1 910 194	1 972 698
Long-term reinsurance assets	17 874	10 271	11 882
Insurance contract assets	612 935	553 701	582 812
Non-current asset held for sale	-	99 988	-
Financial assets at fair value	14 935 316	15 411 628	15 385 244
through profit or loss
Bonds	8 543 705	8 426 652	8 663 449
Investment in property funds
and companies	1 277 962	1 205 650	1 173 325
Equity investments (local and
foreign)	3 040 954	2 589 245	2 403 845
Money market instruments	2 072 695	3 190 081	3 144 625
Loans at amortised cost	-	-	31 957
Other receivables	135 632	186 940	135 798
Cash and cash equivalents	170 583	400 711	137 418
Total assets	17 936 467	18 874 761	18 566 389
EQUITY AND

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2023

		Non-		Total equity
			attributable to	Non-
	Stated	distributable	Retained	equity holders	controlling
	capital	reserves	earnings	of the parent	interest	Total equity
	P'000	P'000	P'000	P'000	P'000	P'000
Balance as at 31 December 2021	154 936	395 716	2 781 611	3 332 263	18 728	3 350 991
IFRS 17 transition adjustment2	-	-	408 154	408 154	-	408 154
Balance as at 1 January 2022 restated2	154 936	395 716	3 189 765	3 740 417	18 728	3 759 145
Profit for the year1	-	-	442 578	442 578	6 224	448 802
Foreign currency translation reserve movement	-	(13 951)	-	(13 951)	-	(13 951)
Share-based payment expense	-	5 215	-	5 215	-	5 215
Cost of treasury shares (acquired)/disposed	-	1 117	-	1 117	-	1 117
Dividend paid	-	-	(402 440)	(402 440)	(2 524)	(404 964)
Transfers from non-distributable reserves to retained
earnings	-	(33 948)	33 948	-	-	-
Other movements in reserves	-	(3 941)	3 840	(101)	-	(101)
Balance as at 31 December 2022 restated1	154 936	350 208	3 267 691	3 772 835	22 428	3 795 263
Profit for the year	-	-	773 953	773 953	7 570	781 523
Foreign currency translation reserve movement	-	(170 662)	-	(170 662)	-	(170 662)
Share-based payment expense	-	5 168	-	5 168	-	5 168
Transfer from retained income/(Transfer to statutory reserve)	-	9 461	(9 461)	-	-	-
Transfer to retained income from share-based reserve	-	(29 199)	29 199	-	-	-
Cost of treasury shares (acquired)/disposed	-	(8 601)	(2 459)	(11 060)	-	(11 060)
New shares issued	50 000	(50 000)	-	-	-	-
Dividend paid	-	-	(753 930)	(753 930)	(6 247)	(760 177)
Other movements in reserves	-	-	(2 263)	(2 263)	-	(2 263)
Balance as at 31 December 2023	204 936	106 375	3 302 730	3 614 041	23 751	3 637 792

1. Restated for transition to IFRS 17, refer to appendix 1.
2. Restated for correction of error in the prior period, refer to appendix 3.

COMMENTARY

ECONOMIC ENVIRONMENT

The year 2023 began with a lot of uncertainty regarding inflation and interest rates across the globe which negatively impacted investment markets. As the year progressed it became increasingly clear that the pressures on central banks to raise interest rates further had substantially reduced. These indications of slowing inflation and a cooling labour market led market participants to price in an accelerated path of rate cuts for 2024, prompting a broad rally across the global bond market. This saw significant investment returns accruing in offshore portfolios as the year ended.

Locally, the new Pension Fund Investment Rules (PFR2), which came into effect in 2023, were a topical theme throughout the year, leading to an increase in banking sector liquidity towards the end of the year as pension funds began the process of repatriating their funds onshore. The risk of asset bubbles remains prevalent, with the property market seemingly having begun heating up from a pricing perspective.

Following its December 2023 meeting, the central bank's Monetary Policy Committee (MPC) announced a 25-basis points rate cut in the Monetary Policy Rate (MoPR) to 2,40%. The announcement came as a surprise to market players as the consensus expectation was that the MPC would maintain a steady hand and keep the rate unchanged.

Botswana's real GDP grew by 3,2% in Q3 2023, down from 6,3% registered in the same quarter in the previous year negatively impacted by weaker performance from the mining sector.

Accounting policies and presentation

The accounting policies adopted for the year comply in all material respects with IFRS Accounting standards (formerly IFRS® 'International Financial Reporting Standards' and are presented in the manner required by the Insurance Industry Act, 2015. These policies are consistent with those applied for the year ended 31 December 2023 except for the new accounting policies adopted by the group on Insurance Contracts as necessitated by the new IFRS 17 standard.

FINANCIAL OVERVIEW

Analysis of earnings

Year to	Restated
Year to
31 Dec	31 Dec
2023	2022	%

LIABILITIES
Equity attributable to
equity holders of
the parent
Stated capital	204 936	154 936	154 936
Non-distributable reserves	106 375	350 208	395 716
Retained earnings	3 302 730	3 267 691	3 189 765
Total equity attributable
to equity holders of	3 614 041	3 772 835	3 740 417
the parent
Non-controlling interests	23 751	22 428	18 728
Total equity	3 637 792	3 795 263	3 759 145
Liabilities
Insurance contract liabilities	8 004 121	7 551 386	7 304 508
Investment contract liabilities	3 598 953	3 298 512	3 341 397
External investors in
consolidated funds	2 082 020	3 619 273	3 635 183
Reinsurance contract liability	54 222	55 757	9 228
Derivatives instrument	25 429	37 259	42 366
Deferred tax liability	141 908	73 545	138 900
Lease liability	12 707	16 210	9 234
Other payables	353 824	398 121	321 398
Tax payable	18 624	26 246	3 441
Related party balances	6 867	3 189	1 589
Total equity and liabilities	17 936 467	18 874 761	18 566 389

1. Restated for transition to IFRS 17, refer to appendix 1.
2. Restated for correction of error in the prior period, refer to appendix 3.

CONSOLIDATED

INCOME STATEMENT

For the year ended 31 December 2023

				31 Dec	Restated1, 2
				31 Dec
		2023	2022
				P'000	P'000
Net result from life insurance contracts	585 751	143 194
Result from life insurance contracts	601 726	156 445
Net insurance service result			286 393	277 710
Insurance revenue				2 422 502	2 392 542
Insurance service expenses				(2 120 634)	(2 089 982)
Income or expense from reinsurance
contracts				(15 475)	(24 850)
Investment service result			315 333	(121 265)
Insurance finance income or	expense			(463 795)	(349 018)
Reinsurance finance income	or expense			(26 935)	(19 510)
Investment income on assets held in
respect of insurance contracts			806 063	247 263
Other expenses relating to
insurance operations		(15 975)	(13 251)
Result from other operations	541 111	468 744
Revenue from contracts with customers	295 546	259 591
Investment income		284 903	125 819
Interest income using the Effective
Interest Rate (EIR)		4 395	4 127
Other interest income from investment
contracts		202 721	245 282
Fair value (losses)/gains from derivative
instrument		(11 830)	(5 107)
Change in fair value of investment
contract liabilities		(31 903)	84 314
Change in fair value of external investors'
liabilities		88 254	36 538
Net changes in investment contract
benefits		(290 975)	(281 820)
Other expenses		(252 324)	(269 199)
Administration expenses		(214 495)	(204 535)
Sales remuneration		(37 067)	(63 588)
Finance cost on leases		(762)	(1 076)
Impairments reversed/(raised)	(10 881)	(4 974)
Profit before equity accounted	863 657	337 765
earnings and other income
Profit on sale of associate		141 669	-
Share of profit of associates and
joint ventures		78 934	216 456
Profit before tax		1 084 260	554 221
Income tax expense		(302 737)	(105 419)
Profit for the year		781 523	448 802
Profit attributable to:
-  Equity holders of the parent		773 953	442 578
- Non-controlling interests		7 570	6 224
Total profit for the year		781 523	448 802
Earnings per share (thebe) (attributable
to ordinary equity holders of the parent)
-  Basic		274	158
-  Diluted3		272	157

1. Restated for transition to IFRS 17, refer to appendix 1.
2. Restated for correction of error in the prior period, refer to appendix 3.
3. Diluted EPS was also restated as a result of an error in adjusting for an incorrect number of unvested shares under the share scheme, which are accounted for as treasury shares in the group financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2023

		31 Dec	Restated1
		31 Dec
		2023	2022
		P'000	P'000
Cash generated (utilised in)/generated	(458 823)	244 493
from operations
	Cash generated from operations1	58 971	244 688
	Interest received	269 716	295 056
	Dividend received from equity investments	56 851	70 791
	Dividend received from associates
	and joint ventures	-	-
	Interest paid	144 928	149 844
	Tax paid	(762)	(1 076)
	Dividend paid	(228 350)	(109 846)
Net cash flow utilised in investing activities1	235 145	23 464
	Purchase of property and equipment	(8 953)	(6 652)
	Purchase of computer software	(5 902)	(5 201)
	Receipts from loans receivable at
	amortised cost	-	35 317
	Proceeds from sale of investment
	in associates	250 000	-
Net cash flows from financing activities	(6 450)	(4 664)
	Payment of principal portion of lease liabilities
	(IFRS 16)	(6 450)	(5 781)
	Disposal of treasury shares	-	1 117
Net (decrease)/increase in cash and cash	(230 128)	263 293
equivalents
Cash and cash equivalents at the beginning of
the year	400 711	137 418
Cash and cash equivalents at the end of	170 583	400 711
the year
1	The prior year has been restated due the error classification of cash	movements in

investments held as part of operating activities, refer to appendix 2.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2023

	31 Dec	Restated1, 2
	31 Dec
	2023	2022
	P'000	P'000
Profit for the year	781 523	448 802
Other comprehensive income
Items that are or may be reclassified
subsequently to profit or loss (net of tax):
Exchange differences on translation of foreign
operations	(170 662)	(13 951)
Total comprehensive income for the year	610 861	434 851
Total comprehensive income attributable to:
-  Equity holders of the parent	603 291	428 627
- Non-controlling interests	7 570	6 224
	610 861	434 851

1. Restated for transition to IFRS 17, refer to appendix 1.
2. Restated for correction of error in the prior period, refer to appendix 3.

GROUP EMBEDDED VALUE

GROUP EQUITY VALUE

The group equity value is an aggregate of embedded balue from the life insurance covered business and the fair value of all other shareholders' net assets. It represents an estimate of the economic value of the group excluding the value attributable to future new business from life insurance and the value attributable to minorities.

The group equity value comprises:

• The value of the shareholders' net assets;
• Fair value adjustments; and
• The value of in-force business including the value of new business written during the year.

DEFINITION OF EMBEDDED VALUE

The embedded value represents an estimate of the economic value of the life insurance covered business excluding the value attributable to future new business. Covered business represents the group's long-term insurance business for which the value of new and in-force contracts is attributable to shareholders.

The value of in-force business is the present value of future after-tax profits arising from business in force at the valuation date, discounted at the risk discount rate, and adjusted for the cost of capital required to support the business.

The value of new business represents the value of projected after-tax profits at the point of sale arising from new policies sold during the year ended 31 December 2023, accumulated to the end of the year at the risk discount rate. The value is adjusted for the cost of capital required to support the new business.

						Year ended	Year ended
						31 Dec	31 Dec
						2023	2022
			Group equity value results	P'000	P'000
			Shareholders' net assets after fair value
			adjustments	3 212 601	3 464 538
				Shareholders' net assets, excluding goodwill		3 638 614	3 464 538
				Fair value adjustments		(426 013)	-
			Value of in-force		2 166 084	2 294 753
				Value before cost of capital		1 986 011	1 910 101
				Fair value adjustments		314 080	519 774
				Cost of capital		(134 007)	(135 122)
				Group equity value at the beginning	5 759 291	5 292 077
			of the year
			Group equity value at the beginning	5 834 830	5 292 077
			of the year - restated
			Group equity value at the end of year	5 378 685	5 759 291
			Required capital	457 412	447 951
		Required capital cover	7.00	7.70
		Group equity value per share (Pula)	18.90	20.40
		Group equity value earnings	477 022	892 629
				Change in group equity value		(412 066)	467 214
				Movement in capital		135 158	22 975
				Dividends paid		753 930	402 440
	Return on group equity value		8.3%	16.9%
				These earnings can be analysed
	as follows:
	Embedded value earnings from
	covered business
				Expected return on life business in force	203 811	209 011
				Value of new business	140 347	160 274
	Operating experience variances	179 931	103 876
				Mortality/morbidity		(10 557)	100 607
				Persistency		12 225	(10 115)
				Expenses		20 951	(7 037)
				Working capital		126 787	-
				Other		30 525	20 421
				Operating assumption changes	(253 274)	(76 972)
				Mortality/morbidity		(64 230)	(41 109)
				Persistency		(166 069)	(6 911)
				Expenses		(78 200)	(10 673)
				Other		55 225	(18 279)
	Embedded value earnings from operations		270 815	396 189
	Investment variances	143 974	82 605
	Economic assumption changes	109 209	(17 524)
				Investment return		(70 720)	29 313
				Risk discount rate		179 929	(46 837)
	Embedded value earnings from
		523 998	461 270
	covered business
	Return on shareholders' assets	158 718	263 576
				Investment returns		14 760	15 198
				Net profit non-life operations		143 958	248 378
				BIFM		118 219	127 430
				Letshego		(77 185)	112 161
				FSG		110 501	12 593
				BIC		21 398	19 685
				Nico		90 080	57 277
				Other		(119 055)	(80 768)
Change in shareholders' fund adjustments		(205 693)	151 860
				Changes in treasury share adjustments		2 627	(640)
				Movement in fair value of incentive
				scheme shares		(47)	13 991
				Movement in present value of holding
				company expenses		(28 560)	(7 974)
				Movement in other net worth adjustments		(179 713)	146 483
Group equity value earnings		477 023	876 706
			a) Value of new business
			Value of new business at point of sale	140 347	160 274
				Value before cost of capital		149 715	173 338
				Recurring premium		79 139	83 129
				Single premium		70 576	90 209
				Cost of capital
					(9 368)	(13 064)
				b) Fair value adjustments
				Staff share scheme	(23 006)	(22 959)
				Non-life operations write-up to	389 923	332 087
				fair value (Bifm)
				BIFM write-up to fair value		389 923	332 087
				Non-life operations write-up to		100 295	255 261
				fair value - other
				FSG write-up to fair value		-	104 421
				Nico write-up to fair value		28 244	107 732
				BIC write-up to fair value		72 051	43 108
				Group holding expenses
					(194 927)	(166 367)
				Reversal of cross-holding adjustment	41 795	39 168
				Total	314 080	519 773
			Consisting of:
			Net asset value adjustments
			Value of in-force adjustments	314 080	519 773
			c) Assumptions
		The main assumptions used are as follows:
		Economic assumptions	% p.a.	% p.a.
		Risk discount rate	10,15	11,65
		Discount rate for liabilities	risk-free rate	risk-free rate
		Expense inflation rate	4,19	5,15

		P'000	P'000	change
Operating profit	801 148	224 120	257
Investment income on shareholders' assets	72 205	72 324	-
Core earnings	873 353	296 444	195
Profit on sale of associate	141 669	-	100
Share of profit of associates and joint ventures net of tax	78 934	216 456	(64)
Investment surpluses on shareholders assets	(9 696)	41 321	(123)
Profit	before tax	1 084 260	554 221	96
Tax		(302 737)	(105 419)	187
Profit	after tax	781 523	448 802	74

Group operating profit increased by 257% for the year ended 31 December 2023 compared to the prior year. Life operating profit increased significantly compared to the prior year mainly due to higher investment returns earned from positive fair value gains across insurance contracts and IFRS 9 investments contracts. The asset management business operating profit for the year excluding the Zambian operation results, was 20% higher than prior year owing to increased Assets Under Management. Equity accounted earnings decreased by 64% mainly due to the underperformance from Letshego Holdings as impairments surged. The Nico Holdings Group posted a strong set of results for the year despite the 44% devaluation of the Kwacha against the Botswana Pula which resulted in a P82 million foreign currency exchange loss recognised in the statement of other comprehensive income.

Group equity value

The group equity value (GEV) decreased to P5,38 billion from P5,76 billion (restated 2022). The group equity value allowed for dividends of P754 million paid during the year ending 31 December 2023. The decrease in GEV is driven by a decrease in the value of in-force (VIF) for the life insurance business and negative fair value adjustments for the non-life businesses, specifically Letshego and Nico.

Value of new life business

The value of new business decreased by 12% to P140 million compared to the prior year mainly due to lower new business volumes.

Overview of operations

For management purposes, the group is organised into two principal business areas based on their products and services, and these make up the reportable operating segments as follows:

• The life insurance segment which provides life insurance services to its customers through Botswana Life Insurance Limited (Botswana Life), Botswana's leading life insurance company, a full subsidiary of the group
• The asset management segment which provides asset management services to its customers through Botswana Insurance Fund Management Limited (Bifm), and Bifm Unit Trusts, both subsidiaries of the group.

Segments that do not fall under the two key segments have been classified under 'other'. These comprise of associate businesses (Letshego Africa Holdings Limited, NICO Holdings Plc, Botswana Insurance Company Limited, Grand Reinsurance Tanzania and BIHL Insurance Company Limited) and the holding company.

Inter-segment transactions between business segments took place on an arm's-length basis in a manner similar to transactions with third parties. Segmental income, segment expenses and segment results include those transfers between business segments, which are eliminated on consolidation.

SEGMENT RESULTS

	Life	Asset		Inter-	Consoli-
	business	management	Other	segmental	dated
For the year ended 31 Dec 2023	P'000	P'000	P'000	P'000	P'000
Net insurance service result	286 393	-	-	-	286 393
Investment service result	315 333	-	-	-	315 333
Other expenses relating to insurance
operations	(15 975)	-	-	-	(15 975)
Net result from life insurance	585 751	-	-	-	585 751
operations
Revenue from contracts with
customers
-  Internal	-	3 327	-	(3 327)	-
-  External	137 379	158 167	-	-	295 546
Investment income1	264 024	16 875	851 901	(847 897)	284 903
Interest income using the effective
interest rate (EIR)	2 088	-	2 307	-	4 395
Other interest income from investment
contracts	-	-	-	202 721	202 721
Fair value (losses)/gains from
derivatives instrument	(11 830)	-	-	-	(11 830)
Change in fair value of investment
contract liabilities	(69 085)	34 723	-	2 459	(31 903)
Change in fair value of external
investors' liabilities	-	-	-	88 254	88 254
Net changes in investment contract
benefits	-	-	-	(290 975)	(290 975)
Result from other operations	322 576	213 092	854 208	(848 765)	541 111
Depreciation	(9 988)	(1 230)	(841)	-	(12 059)
Amortisation and impairment	(9 164)	(568)	(120)	-	(9 852)
Right-of-use asset depreciation	(5 319)	(1 420)	(1 734)	2 702	(5 771)
Administration expenses	(60 754)	(79 543)	(74 864)	16 705	(198 456)
Sales remuneration	(37 067)	-	-	-	(37 067)
Profit before equity-accounted	786 035	130 331	776 649	(829 358)	863 657
earnings
Profit on sale of associate	-	-	141 669	-	141 669
Net equity-accounted earnings	-	-	78 934	-	78 934
Profit before tax	786 035	130 331	997 252	(829 358)	1 084 260
Income tax expense	(221 160)	(19 624)	(61 953)	-	(302 737)
Profit after tax	564 875	110 707	935 299	(829 358)	781 523
Segment assets and liabilities
Total assets	14 299 587	5 464 023	1 828 692	(4 284 340)	17 307 962
Total liabilities	11 617 776	4 925 295	1 233 681	(4 106 582)	13 670 170

ABRIDGED AUDITED GROUP RESULTS

for the year ended 31 December 2023

The Directors hereby present the abridged audited consolidated financial results of Botswana Insurance Holdings Limited (BIHL) and its subsidiaries (the group) for the financial year ended 31 December 2023. These financial results are presented in accordance with IFRS® Accounting Standards (previously IFRS 'International Financial Reporting Standards' requirements, and the Group has adopted IFRS 17, the insurance reporting standard which took effect on 1 January 2023. The comparative numbers have been restated to comply with this new standard.

WWW.BIHL.CO.BW

COMMENTARY continued

	Life	Asset		Inter-	Consoli-
	business	management	Other	segmental	dated
For the year ended 31 Dec 2022	P'000	P'000	P'000	P'000	P'000
Net insurance service result	277 710	-	-	-	277 710
Investment service result	(121 265)	-	-	-	(121 265)
Other expenses relating to insurance operations	(13 251)	-	-	-	(13 251)
Net result from life insurance operations	143 194	-	-	-	143 194
Revenue from contracts with customers
-  Internal	-	2 383	-	(2 383)	-
-  External	118 455	141 136	-	-	259 591
Investment income1	105 095	17 108	486 585	(482 969)	125 819
Interest income using the EIR	1 541	-	2 586	-	4 127
Other interest income from investment contracts	-	-	-	245 282	245 282
Fair value (losses)/gains from derivatives instrument	(5 107)	-	-	-	(5 107)
Change in fair value of investment contract liabilities	43 621	40 693	-	-	84 314
Change in fair value of external investors' liabilities	-	-	-	36 538	36 538
Net changes in investment contract benefits	-	-	-	(281 820)	(281 820)
Result from other operations	263 605	201 320	489 171	(485 352)	468 744
Depreciation	(14 668)	(1 221)	(837)	-	(16 726)
Amortisation and impairment	(10 277)	(555)	(248)	-	(11 080)
Right-of-use asset depreciation	(5 653)	(1 065)	(1 282)	2 347	(5 653)
Administration expenses	(56 204)	(71 396)	(53 462)	3 936	(177 126)
Sales remuneration	(63 588)	-	-	-	(63 588)
Profit before equity-accounted earnings	256 409	127 083	433 342	(479 069)	337 765
Net equity-accounted earnings	-	-	216 456	-	216 456
Profit before tax	256 409	127 083	649 798	(479 069)	554 221
Income tax expense	(66 232)	(18 632)	(20 555)	-	(105 419)
Profit after tax	190 177	108 451	629 243	(479 069)	448 802
Segment assets and liabilities
Total assets	13 684 660	6 754 562	1 826 157	(3 950 143)	18 315 236
Total liabilities	10 917 834	6 220 147	1 224 792	(3 846 742)	14 516 031

1 Included under other are dividends received from subsidiaries and associates by the holding company which are then eliminated under inter-segmental line.

LIFE INSURANCE BUSINESS

New accounting standard

2023 marks the first year in which Botswana Life's annual financial statements are being presented in accordance with the new IFRS 17 Insurance Contracts standard. Insurers are required to present comparative financial information for the year immediately preceding the date of initial application to enable meaningful comparison, therefore, the 2022 results previously published have been restated in accordance with the new standard.

Transitioning

IFRS 17 requires a restatement of a company's results as if IFRS 17 had always been applicable (the 'fully retrospective approach') unless it is 'impracticable' to do so. Where a fully retrospective approach has been impracticable, Botswana Life has followed a fair value approach. These transitioning revaluations have resulted in a release of P408 million from policyholder liabilities to shareholder equity.

2023 performance

Profit before tax from insurance operations has increased by 136% compared to the prior year. The key driver for the increase in profitability is a 326% increase in investment returns earned during the year on the back of positive fair value gains across assets backing insurance contracts and IFRS 9 Investment Contracts.

The Insurance service result has remained stable compared to prior year, with both Insurance revenue and Insurance service expenses increasing by 1% compared to 2022. Revenue is mainly driven by the expected release from the Contractual Service Margins (CSM) and the Risk Adjustment (RA). The CSM represents the unearned profits released as the insurance service is provided. CSM and RA releases for 2023 amounted to P181 million which was P96 million lower than for 2022. This reduction has been the result of reduced new business volumes and high lapses. Insurance service expenses were higher in 2023 mainly due to increased notional Deferred Acquisition Costs (DAC).

Value of new business which measures the present value of future new business profits declined by 12% owing to declining new business volumes as well as assumption strengthening on the group business portfolio.

ASSET MANAGEMENT BUSINESS

The Bifm Group's operating profit for the year grew by 1% over the prior year. The Zambian business operation was the main detractor as it closed the year with a significantly lower operating performance, owing to a once-off positive accounting adjustment recorded in the prior year. Operating profits excluding the Zambian operations registered 20% year-on-year growth. The growth in profits was mainly

driven by operating income which closed 13% higher than the prior year, driven by a substantial increase in AUM. Bifm's contribution to the group performance continues to grow and impact results positively, recording an operating profit improvement of 15% against the prior year.

Total Bifm AUM increased by 16% to close the year at P44 billion (2022: P38,5 billion), including Zambia's P5,9 billion and Bifm Unit Trusts at P2,6 billion.

CAPITAL MANAGEMENT AND SOLVENCY

The group remains well positioned in terms of capital management and solvency. This was taken into consideration by the board when resolving to declare a final dividend. The group-required capital cover is 7 times, having reduced from 7,7 times in the previous year. The reduction in required capital cover was driven by the drop in group equity value from P5,76 billion to P5,38 billion which was influenced by the sale of FSG during the first quarter.

LOOKING AHEAD

2024 marks the start of a new strategy for the group, having officially closed off the 2018 - 2023 strategy period. There is a lot of groundwork that management has laid over the years and will leverage going into the future. Work will continue to focus on strengthening the group's position in the market, by driving growth of new business, client retention, human capital development and efficiency of operations, while delivering solid returns to the shareholders.

DIVIDEND DECLARATION

The directors have resolved to award a final dividend of 110 thebe per share (not subjected to tax).

The important dates pertaining to the dividends are:

Declaration date	25 March 2024
Ex-dividend date	15 April 2024
Record date	17 April 2024
Payment of dividend	25 April 2024

For and on behalf of the board
Dr Keith Jefferis	Catherine Lesetedi
BIHL Board Chairperson	Group Chief Executive Officer
6 June 2024

APPENDIX

RESTATEMENTS OF PRIOR YEARS

1. Impact of first-time application of IFRS 17 by recognition and measurement basis:

The table below summarises the impact of transition impact to retained earnings based on measurement model and does not include reallocation entries.

	Gross		Net of		Gross		Net of
	balance	Reinsurance	reinsurance		balance	Reinsurance	reinsurance
	P'000	P'000	P'000		P'000	P'000	P'000
Insurance contracts under IFRS 17					Balances as reported at 1 January 2022 under
General measurement model					IFRS 4
Individual life risk	(694,952)	64,840	(640,967)		Policyholder liabilities as reported at 1 January 2022
					under IFRS 4		10,447,441

2. Statement of cash flows

During prior periods, the group classified cash flows arising from the acquisition and disposal of investments held in the ordinary course of its business operations (i.e., to meet policyholder and other operating obligations) as investing activities. Such classification was not appropriate given that these acquisition and disposal activities are part of the group's normal operations and should thus have been classified as part of cash flows from operating activities. This error has been corrected through retrospective restatement of previously reported amounts, as set out below and this correction has no impact on amounts and balances reported in other components of the condensed group annual financial statements:

	As previously
	reported
	Audited	Adjustments	Restated
2022	P'000	P'000	P'000

Annuities	6,722,174	-	6,722,174			Less: Investment contract liabilities
	6,027,222	64,840	6,092,062
			(refer to note 4) below	(3,234,340)
Premium allocation approach
					Insurance contract liabilities under IFRS 4	7,213,102
Group life and credit life	597,765	(10,855)	586,910
		Reinsurance asset	(10,855)
	597,765	(10,855)	586,910
			Net insurance contract liabilities under IFRS 4	7,202,246	(b)
Total	6,624,987	53,985	6,678,972	(a)
Transition adjustment to retained earnings (before
						tax impact)	(523,274)	(a) - (b)
						Deferred tax impact at 22%	115,120
						Transition adjustment to retained earnings (net
						of tax impact)	(408,154)

Restated Statement of financial position due to correction of prior period errors and adoption of IFRS 17: Insurance Contracts is shown below.

1. Refer to note appendix 4 for additional information on the correction of prior period error - Separate presentation of investment contract liabilities
2. Refer to appendix 3 for additional information on the correction of prior period error - Investment in associate

2022

2021

Net cash flows from operating activities

Cash generated from operations Interest received

Dividend received from equity investments

Dividend received from associates and joint ventures Interest paid

Tax paid Dividend paid

Net cash flows utilised in investing activities

Purchase of property and equipment Purchase of computer software Acquisition of property investments

Net purchases and withdrawals of bonds (Purchase)/withdrawals of equity investments

Net purchases and withdrawals of money market instruments

Receipts from loans receivable at amortised cost

630 895	(386 402)	244 493
631 093	(386 402)	244 691
295 053	-	295 053
70 791	-	70 791
149 844	-	149 844
(1 076)	-	(1 076)
(109 846)	-	(109 846)
(404 964)	-	(404 964)
(362 938)
386 402
23 464
(6 652)	-	(6 652)
(5 201)	-	(5 201)
(39 091)	39 091	-
(54 242)	54 242	-

		As previously	Correction	Correction			As	Correction
		of prior	of prior			previously	of prior
		reported	period	period	Adoption		reported	period	Adoption
		Audited	error (i)	error (ii)	of IFRS 17	Restated	Audited	error (i)	of IFRS 17	Restated
	Note(s)	P'000	P'000	P'000	P'000	P'000	P'000	P'000	P'000	P'000
ASSETS
Property and equipment		173 158	-	-	-	173 158	183 232	-	-	183 232
Intangible assets		101 197	-	-	-	101 197	107 076	-	-	107 076
Right-of-use assets		14 713	-	-	-	14 713	8 112	-	-	8 112
Insurance contract asset	1	-	-	-	553 701	553 701	-	-	582 812	582 812
Reinsurance contract assets	2	7 555	-	-	2 716	10 271	10 855	-	1 027	11 882
Investment property		12 260	-	-	-	12 260	10 160	-	-	10 160
Investments in associates and joint ventures	1 930 412	-	(20 218)	-	1 910 194	1 972 698	-	-	1 972 698
Non-current asset held for sale		99 988	-	-	-	99 988	-	-	-	-
Financial assets at fair value through profit	or loss	15 411 628	-	-	-	15 411 628	15 385 244	-	-	15 385 244
Loans at amortised cost		-	-	-	-	-	31 957	-	-	31 957
Insurance and other receivables	3	359 802	-	-	(172 862)	186 940	280 725	-	(144 927)	135 798
Deferred tax		2 016	-	-	(2 016)	-	-	-	-	-
Cash and cash equivalents		400 711	-	-	-	400 711	137 418	-	-	137 418
Total assets		18 513 440	-	(20 218)	381 539	18 874 761	18 127 477	-	438 912	18 566 389
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Stated capital		154 936	-	-	-	154 936	154 936	-	-	154 936
Non-distributable reserves		350 208	-	-	-	350 208	395 716	-	-	395 716
Retained earnings	4	3 021 413	-	(20 218)	266 497	3 267 691	2 781 611	-	408 154	3 189 765
Total equity attributable to equity holders of the parent	3 526 557	-	(20 218)	266 497	3 772 835	3 332 263	-	408 154	3 740 417
Non-controlling interests		22 428	-	-	-	22 428	18 728	-	-	18 728
Total equity		3 548 985	-	(20 218)	266 497	3 795 263	3 350 991	-	408 154	3 759 145
Liabilities
Long term policyholder liabilities	5	10 511 760	(3 177 051)	-	(7 334 709)	-	10 447 441	(3 234 340)	(7 213 101)	-
Insurance contract liabilities	5	-	-	-	7 551 386	7 551 386	-	-	7 304 508	7 304 508
Investment contract liability		-	3 298 512	-	-	3 298 512	-	3 341 397	-	3 341 397
Reinsurance contract liabilities	6	-	-	-	55 757	55 757	-	-	9 228	9 228
External investors in consolidated funds		3 619 273	-	-	-	3 619 273	3 635 183	-	-	3 635 183
Derivatives instrument		37 259	-	-	-	37 259	42 366	-	-	42 366
Deferred tax liability	7	-	-	-	73 545	73 545	23 780	-	115 120	138 900
Lease liability		16 210	-	-	-	16 210	9 234	-	-	9 234
Trade and other payables	8	750 518	(121 461)	-	(230 936)	398 121	613 452	(107 057)	(184 997)	321 398
Tax payable		26 246	-	-	-	26 246	3 441	-	-	3 441
Related party balances		3 189	-	-	-	3 189	1 589	-	-	1 589
Total equity and liabilities		18 513 440	-	(20 218)	381 540	18 874 761	18 127 477	-	438 912	18 566 389

Notes with respect to adoption of IFRS 17

1. IFRS 17 requires an entity to present separately in the statement of financial position the carrying amount of portfolios of insurance contracts issued that are assets.

1. IFRS 17 requires an entity to present separately in the statement of financial position the carrying amount of portfolios of reinsurance contracts held that are assets.
2. Insurance receivable (premium receivable and amounts due from reinsurers) is included in the measurement of IFRS 17 and now form part of insurance/reinsurance contract assets or liabilities.
3. The change in valuation of insurance contract liabilities from IFRS 4 to IFRS 17. Measurement of insurance contract liabilities under IFRS 17 requires the release all discretionary and compulsory reserves held on IFRS 4 liabilities to be replaced by a risk adjustment which represents the compensation the insurer requires for non-financial risk on future cash flows. Adjustments are also made for Introduction of a contractual service margin (CSM) representing the future profits the insurer stands to earn as it provides future service. These valuation changes are adjusted against retained earnings.

5. IFRS 17 requires an entity to present separately in the statement of financial position the carrying amount of portfolios of insurance contracts issued that are liabilities.

1. IFRS 17 requires an entity to present separately in the statement of financial position the carrying amount of reinsurance contracts held that are liabilities.
2. The expected future tax effects arising from the earnings impact of transitioning to IFRS 17 resulting in a deferred tax liability.
3. Insurance payable (claims payable, premiums received in advance and amount due to reinsurers) is included in the measurement of IFRS 17 and now form part of insurance/reinsurance contract assets or liabilities.

3. Associates

During the current financial year, the group's associate, Letshego Africa Holdings Limited, identified an error in the manner in which it previously estimated Expected Credit Losses (ECL) on those loans which had defaulted at the reporting date. The historical ECL calculation had incorrectly applied a discount factor to such loans, resulting in a material misstatement of the ECL balances and resultant charges to income in prior periods. The group has corrected the impact of this error through a retrospective restatement of its equity accounted share of the associate's results after tax, as summarised below:

	As previously
	reported
	Audited	Adjustments	Restated
2022	P'000	P'000	P'000
Investments in associates and joint ventures
Carrying amounts at the beginning of the year	1 972 698	-	1 972 698
Equity-accounted earnings	236 674	(20 218)	216 456
Dividend received	(149 844)	-	(149 844)
Reclassified to Held for sale	(99 988)	-	(99 988)
Change in reserves in associates	(15 177)	-	(15 177)
Foreign currency translation differences	(13 951)	-	(13 951)
Carrying amount at the end of the year	1 930 412		1 910 194
Income statement impact
Profit before equity accounted earnings (as restated)1	337 765	-	337 765
Equity-accounted earnings	236 674	(20 218)	216 456
Profit after tax	574 439	(20 218)	554 221

4. Separate presentation of investment contract liabilities

Group had not disclosed the investment contract liabilities separately on the statement of financial statements in its previous financial statements instead it had been included within the policyholder liabilities. It was also noted that some investment contracts such as unit linked investment contracts with no risk riders and annuity certain contracts had been classified as insurance contracts. The policy benefits payable under investment contract liabilities have been presented in trade and other payables.

						As previously	Increase/
						reported	(decrease)	Restated*
						P'000	P'000	P'000
Extract of statement of financial	position	as	of	31	December	2021
Policyholder liabilities						10 447 441	(3 234 340)	7 213 101
Investment contract liabilities						-	3 341 397	3 341 397
Trade and other payable						613 452	(107 057)	506 395
							-
Extract of statement of financial	position	as	of	31	December	2022
Policyholder liabilities						10 511 760	(3 177 051)	7 334 709
Investment contract liabilities						-	3 298 512	3 298 512
Trade and other payable						750 518	(121 461)	629 057
							-

• Prior to adoption of IFRS 17: Insurance Contracts. Refer to 'Restated Statement of financial position due to correction of prior period errors and adoption of IFRS 17: Insurance Contract' on note 1 above.
  The correction of above error does not have any impact on statement of comprehensive income and statement of cash flows.

The errors and corrections reflected above impacted the unaudited interim financial statements for the six months ended 30 June 2023 published on 30 August 2023 (the 'interim results'). Specifically:

i. The classification matters impacting on the cash flow statement as explained in 2 above were incorrectly reflected in the cash flow statements included in the interim results.

1. The error in accounting for associates detailed in 3 above were not corrected in the statement of financial position at 31 December 2022 and the statement of profit or loss for the year then ended as included in the interim results.
2. The error detailed in 4 did not impact on the balances disclosed in the interim results.

Botswana Insurance Holdings Limited		Directors	Auditor
Incorporated in 1990 in Botswana		Dr Keith Jefferis (Chairperson) (appointed 10 July 2023)	PricewaterhouseCoopers Proprietary Limited
Company registration number: BW00000798601		Catherine Lesetedi Group Chief Executive Officer), Kudakwashe Mukushi (Group Chief Financial Officer)***	Plot 64289, Tlokweng Road
		Andrew Cartwright**, Mustafa Sachak (appointed 28 July 2023)****, Robert Dommisse** John Hinchliffe*,	PO Box 294, Gaborone, Botswana
Registered office		Lieutenant General Tebogo Masire Nigel Suliaman**, Kobus Vlok**, Chandrakant Chauhan (resigned 6 March	Transfer secretaries
	2023), Mahube Mpugwa (resigned 17 August 2023), Edwin Elias (appointed 22 August 2023),
Plot 66458, Block A, 3rd Floor, Fairgrounds Office Park,	Gaborone, Botswana
Central Securities Depository Company of Botswana Limited
Kate Maphage (appointed 20 September 2023)
PO Box 336, Gaborone, Botswana		4th Floor, Fairscape Precinct, Plot 70667, Fairgrounds Office Park
Tel: [phone] | Fax: [phone]		* British ** South African *** Zimbabwe **** American	Private Bag 00417, Gaborone, Botswana
www.bihl.co.bw