Letshego Africa : CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023

LETSHEGO AFRICA HOLDINGS LIMITED

Consolidated Annual Financial Statements

For the year ended 31 December 2023

CONTENTS

____________________________________________________________

Details
Group corporate information	3
Directors' report	4
Directors' responsibility statement	6
Independent auditor's report	7
Consolidated financial statements
∙ Consolidated statement of financial position	14
∙ Consolidated statement of profit or loss and other comprehensive income	15
∙ Consolidated statement of changes in equity	16
∙ Consolidated statement of cash flows	17
∙ Accounting policies	18
∙ Notes to the consolidated financial statements	43

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GROUP CORPORATE INFORMATION

Letshego Africa Holdings Limited is incorporated in the Republic of Botswana Registration number: UIN BW00000877524 and previously Co. 98/442 Date of incorporation: 4 March 1998

A publicly listed commercial entity whose liability is limited by shares

Company Secretary and Registered Office

Gorata Tlhale Dibotelo

Tower C, Zambezi Towers

Plot 54352

Central Business District

Gaborone, Botswana

Independent External Auditors

Ernst and Young

2nd Floor, Plot 22 Khama Crescent Gaborone, Botswana

Transfer Secretaries

PricewaterhouseCoopers (Pty) Limited

Plot 50371

Fairground Office Park

Gaborone, Botswana

Attorneys and Legal Advisors

Armstrongs

Acacia House

Plot 53438

Cnr Khama Crescent Extension and PG Matante Road

Gaborone, Botswana

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DIRECTORS REPORT

The Directors have pleasure in submitting to the Shareholders their report and the audited consolidated financial statements of Letshego Africa Holdings Limited, formerly Letshego Holdings Limited, ("the Company") and its subsidiaries (together "the Group") for the year ended 31 December 2023.

Nature of business

Letshego Group is a retail financial services organisation involved in banking and microfinance activities in 11 African countries across East, West and Southern Africa. Six of the 11 operations have deposit- taking licenses, with the remainder being microfinance institutions. The Group's ambition is to increase its deposit taking capabilities across the footprint.

Change of name

On the 8th of December 2023, Letshego Holdings Limited changed its name to Letshego Africa Holdings Limited to reiterate the Group's differentiating Pan African presence and reach across the continent's emerging markets.

Financial results

The consolidated financial statements adequately disclose the results of the Group's operations for the year ended 31 December 2023.

Impact of IAS 29 Financial Reporting in Hyperinflationary Economies

During the second half of the year the Group classified Ghana as a hyperinflationary economy. This was following a number of professional organisations outside of Ghana, including global accounting firms, having assessed the economy of Ghana to be considered as hyperinflationary as at 31 December 2023 and thereafter. Consequently, the results of the Group's activities in Letshego Ghana Savings and Loans PLC have been prepared in accordance with IAS 29 Financial Reporting in Hyperinflationary Economies. The impact of this on the Group's financial results, which is a net loss of approximately P130.4 million, is outlined in Note 40 of the consolidated financial statements.

Prior period error

In 2023, it was determined that during the financial years 2019 to 2022, the calculation of the Expected Credit Loss Allowances was incorrect due to the inclusion of a discount factor to Stage 3 exposures at default. This was corrected retrospectively in accordance with IAS 8 Accounting policies, changes in accounting estimates and errors as outlined in Note 41 of the consolidated financial statements and has had the impact of reducing opening retained earnings by approximately P72.6 million. The change in the calculation methodology also had an impact of increasing current year expected credit losses recognised in profit or loss by approximately P128.2 million.

Stated capital

Stated capital of the Group at 31 December 2023 amounted to P917,909,651 (31 December 2022: P889,571,189).

On 9 March 2023, 25,924,588 ordinary shares were issued in terms of the Group's Long Term Incentive Plan (prior year: 14,291,633 ordinary shares). These were issued from new ordinary shares. Treasury shares remaining at the end of the year were 11,651,597 (prior year: 3,989,970).

Dividends

An interim dividend of 5.1 thebe per share (prior year: 5.8 thebe per share) was declared on 22 August 2023. Due to exceptional matters that had an impact on the financial performance of the Group in the second half of the year, the Board of Directors found it prudent not to declare a further dividend for the second half of 2023. The dividend declared on 22 August 2023 is the full and final dividend for the year ended 31 December 2023.

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DIRECTORS' REPORT (continued)

Directors

The following persons were directors of the Group:

Non-executive

Name	Details	Nationality
P. Odera		Kenya
C. Lesetedi		Botswana
G. Van Heerde	Retired 30 August 2023	South Africa
A. Odubola		Nigeria
R. Hoekman		The Netherlands
R. Mwaura		Kenya
J. Ramesh		Botswana
C. Mokgware		Botswana
K. Motshegwa		Botswana
Prof. E. Botlhale		Botswana
Executive
Name		Position	Nationality
A.A. Monyatsi		Group Chief Executive Officer	Botswana
T.G. Muteiwa		Group Chief Financial Officer	Zimbabwe

Directors' shareholdings

The aggregate number of shares held directly by Directors at 31 December 2023 were 6,623,906 shares (31 December 2022: 821,109 shares). Full details of this shareholding are available at the registered office of the Company or at the office of the transfer secretaries.

Long Term Incentive Plan

The Group operates an equity-settled conditional Long-Term Incentive Plan (LTIP), which was approved by shareholders at an Extraordinary General Meeting held on 20 December 2005. Under the plan, conditional share awards are granted to management and key employees. The estimation of shares to vest for a year is based on internal projections as to the specified non-market conditions being achieved. Shares are awarded in the holding company, Letshego Africa Holdings Limited, which is listed on the Botswana Stock Exchange.

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DIRECTORS' RESPONSIBILITY STATEMENT

The Directors are responsible for the preparation of the consolidated annual financial statements of Letshego Africa Holdings Limited (the "Group") that give a true and fair view, comprising the consolidated statement of financial position at 31 December 2023, the consolidated statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, a summary of significant accounting policies and other explanatory notes, in accordance with International Financial Reporting Standards and the Botswana Companies Act.

The Directors are also responsible for such internal controls as they determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and for maintaining adequate accounting records and an effective system of risk management, as well as the preparation of the supplementary schedules included in these financial statements.

The Directors have made an assessment of the ability of the Group to continue as a going concern and have no reason to believe the businesses will not be a going concern in the year ahead.

The external auditor is responsible for reporting on whether the consolidated annual financial statements give a true and fair view in accordance with International Financial Reporting Standards.

Approval of the consolidated annual financial statements:

The consolidated annual financial statements of Letshego Holdings Limited as identified in the first paragraph, were approved by the Board of Directors on 30 May 2024 and are signed on its behalf by:

_____________________	_____________________
P. ODERA	A. MONYATSI
CHAIRMAN	GROUP CHIEF EXECUTIVE OFFICER

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Firm of Chartered Accountants	Tel: [phone] 4000
2nd Floor	Fax: [phone]
Plot 22, Khama Crescent	Email: [e-mail]
P O Box 41015	Partnership registered in Botswana
Gaborone, Botswana	Registration No: 10829
	VAT No: P03625401112
	www.ey.com

Independent Auditor's Report

To the Shareholders of Letshego Africa Holdings Limited

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the consolidated financial statements of Letshego Africa Holdings Limited and its subsidiaries (the Group) set out on pages 14 to 99, which comprise the consolidated statement of financial position as at 31 December 2023, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and the notes to the consolidated financial statements, including a summary of material accounting information.

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group at 31 December 2023, and of its consolidated financial performance and of its consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board and the requirements of the Companies Act (CAP 42:01).

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) together with other ethical requirements that are relevant to our audit of the consolidated financial statements in Botswana. We have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.

The Key Audit Matters apply only to the audit of the consolidated financial statements.

Key Audit Matter		How the matter was addressed in the
			audit
IFRS 9 considerations (Expected credit loss allowance of loans and advances)
The Group's net loans and advances of	With the support of our internal
P13,487,892 thousand (2022: P12,654,857	specialists, we performed the following
thousand) comprised 74% (2022: 76%) of the	audit procedures amongst others:
Group's total assets at the reporting date. The
related ECL impairment allowance was	We obtained an understanding of the
P857,897	thousand (2022:	P477,003	Group's credit policy and evaluated and
thousand as restated), representing an 80%	tested the design and the operating
increase in the impairment allowance	effectiveness of key controls over the
compared to the prior year. The ECL	processes of credit assessment, loan
impairment allowance is significant in the	classification	and loan impairment
context of the consolidated financial	assessment.
statements in respect of IFRS 9 - Financial
Instruments.		We assessed the appropriateness of the
			models and	methodologies	against
The estimation of credit losses is inherently	accounting standards and	generally
uncertain and subject to significant judgement	accepted industry principles as applied
and estimates. Furthermore, models used to	by similar organisations operating in the
determine	credit impairments are	complex,	same economic sector and geographical

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and certain inputs used in the models are not fully observable.

Any model and data deficiencies are compensated for by applying overlays to the outputs. The calculation of these overlays is highly subjective.

Significant judgements and estimates applied in determining the Group's expected credit loss (ECL) allowance include:

• Choosing appropriate models and assumptions for the measurement of expected credit loss allowances
• Determining criteria for significant increase in credit risk (SICR)
• Determination of overlays for model and data deficiencies
• Estimation of the probability of default (PD), exposure at default (EAD) and loss given default (LGD) parameters.

This estimation uncertainty is further increased by ongoing volatility in geographical sectors in which the Group operates.

The expected credit loss models require the application of forward-looking information in determining key inputs such as economic variables that affect the output of the models.

Given the combination of inherent subjectivity in the preparation of the excepted credit loss models, and the judgement and estimates involved in determining the inputs into the models, we considered the calculation of the expected credit loss allowance in accordance with IFRS 9 - Financial Instruments as applicable to the Group's loans and advances

areas.

We challenged management's rationale and assessments as to whether overlays should be considered for model and data deficiencies against our understanding of the factors considered by management and independent data.

We reconciled and agreed the data from the core banking systems of each jurisdiction to the inputs used in the respective ECL models.

We evaluated the appropriateness of the

forward-looking macroeconomic scenarios and the probability weightings developed by management by comparing these to historical data and those applied by similar organisations operating in the same economic sector and geographical areas.

We reperformed the staging distribution for a sample of loans and advances to assess the accuracy of the staging applied in the models against the criteria indicated by management.

We evaluated management's criteria used to allocate the loans and advances between stage 1, 2 or 3 against the requirements of IFRS 9.

We developed a challenger model to independently calculate the PD, LGD and EAD parameters and compared the results from the challenger model to the ECL allowance recognised by the Group in its consolidated financial statements.

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to be a key audit matter in our audit of the
consolidated financial statements.	We assessed the adequacy of the
		disclosures related to IFRS 9 - Financial
The disclosures associated with impairment of	Instruments, in the consolidated
loans and advances are set out as follows in	financial statements.
the consolidated financial statements:
∙	note 1.3.1 - Credit risk
∙	note 2.1 - Impairment of
advances to customers
∙	note 6 - Advances to customers
∙	note 41 - Correction of prior
period expected credit losses error

Other Information

The directors are responsible for the other information. The other information comprises information included in the 103-paged document titled "Letshego Africa Holdings Limited Consolidated Annual Financial Statements for the year ended 31 December 2023" which includes the Group Corporate Information, the Directors' Report, the Directors' Responsibility Statement, the Group Value Added Statement, the Five-Year Financial History and the Analysis of Shareholding which we obtained prior to the date of this report, and the Annual Report, which is expected to be made available to us after that date. Other information does not include the consolidated financial statements and our auditor's report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements, or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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