Botswana Insurance : PRELIMINARY UNAUDITED GROUP RESULTS FOR THE YEAR ENDED 31 DECEMBER 2023

KEY FEATURES

The directors hereby present the unaudited consolidated financial results of Botswana Insurance Holdings Limited (BIHL) and its subsidiaries (the group) for the financial year ended 31 December 2023. The full year audited financials have been delayed due to the extensive work required to compile the new IFRS17 reporting standard notes and disclosures. The audited group financial statements are expected to be published on or before 30 April 2024.

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.

REVENUE

EARNINGS

Net insurance service result

Operating profit

ASSETS UNDER MANAGEMENT (AUM)

DIVIDENDS

Paid as dividends during the 2023 financial year

Investment service result

Core earnings

SOLVENCY

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

Revenue from contracts with customers

Share of profit of associates

Final dividend proposed net of tax

Value of new businessProfit attributable to equity holders

GROUP EQUITY VALUE

Return on group equity value

P754 million

(Dec 2022:

P402 million)

Made up of:

Interim dividend

P218 million

Final dividend

P285 million

Special dividend

P251 million

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2023

Restated1, 2	Restated1
31 Dec	31 Dec	31 Dec
2023	2022	2021
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	1 761 651	1 910 194	1 972 698
Long-term reinsurance assets	-	-	64 840
Non-current asset held for sale	-	99 988	-
Financial assets at fair value through profit or loss	14 935 316	15 411 628	15 385 244
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	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	140 814
Cash and cash equivalents	170 583	400 711	137 418
Total assets	17 308 840	18 310 789	18 041 551
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent
Stated capital	204 936	154 936	154 936
Non-distributable reserves	115 842	354 149	395 716
Retained earnings	3 292 911	3 267 691	3 190 026
Total equity attributable to equity holders of the parent	3 613 689	3 776 776	3 740 678
Non-controlling interests	23 751	22 428	18 728
Total equity	3 637 440	3 799 204	3 759 406
Liabilities
Insurance contract liabilities	7 391 187	6 997 685	6 764 028
Investment contract liabilities	3 598 953	3 298 512	3 238 037
External investors in consolidated funds	2 082 020	3 619 273	3 635 183
Long-term reinsurance liability	36 346	45 486	-
Derivatives instrument	25 429	37 259	42 366
Deferred tax liability	141 908	73 545	138 974
Lease liability	12 707	16 210	9 234
Other payables	357 359	394 180	449 293
Tax payable	18 624	26 246	3 441
Related party balances	6 867	3 189	1 589
Total equity and liabilities	17 308 840	18 310 789	18 041 551

• 1 Restated for correction of error in the prior period, refer to Appendix A.

2

Restated for transition to IFRS 17, refer to Appendix A.

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2023

Restated1, 2
31 Dec	31 Dec
2023	2022
P'000	P'000
Net result from life insurance contracts	585 752	143 193
Result from life insurance contracts	601 727	156 444
Net insurance service result	286 394	277 710
Insurance revenue	2 422 501	2 392 542
Insurance service expenses	(2 120 634)	(2 089 982)
Income or expense from reinsurance contracts	(15 473)	(24 850)
Investment service result	315 333	(121 266)
Insurance finance income or expense	(463 795)	(349 018)
Reinsurance finance income or expense	(26 935)	(19 511)
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	538 652	468 745
Revenue from contracts with customers	295 546	259 591
Other revenue	156 969	89 925
Investment income	284 903	(23 920)
Interest income using the effective interest rate (EIR)	4 395	4 127
Other interest income from investment contracts	179 223	245 282
Fair value (losses)/gains from derivatives instrument	(11 830)	(5 107)
Change in fair value of investment contract liabilities	(191 331)	144 129
Change in fair value of external investors' liabilities	86 571	36 538
Net changes in investment contract benefits	(265 794)	(281 820)
Other expenses	(256 018)	(268 942)
Administration expenses	(218 189)	(204 278)
Sales remuneration	(37 067)	(63 588)
Finance cost on leases	(762)	(1 076)
Impairments	(7 188)	(5 231)
Profit before equity accounted earnings and other income	861 198	337 765
Profit on sale of associate	141 669	-
Share of profit of associates and joint ventures	78 934	216 456
Profit before tax	1 081 801	554 221
Income tax expense	(302 737)	(105 419)
Profit for the year	779 064	448 802
Profit attributable to:
- Equity holders of the parent	771 494	442 578
- Non-controlling interests	7 570	6 224
Total profit for the year	779 064	448 802
Earnings per share (thebe) (attributable to ordinary equity holders of the parent)
- Basic	273	158
- Diluted	273	158

• 1 Restated for correction of error in the prior period, refer to Appendix A.

2

Restated for transition to IFRS 17, refer to Appendix A.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2023

31 Dec	31 Dec
2023	2022
P'000	P'000
Profit for the year	779 064	448 803
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	(167 479)	(13 951)
Total comprehensive income for the year	611 585	434 851
Total comprehensive income attributable to:
- Equity holders of the parent	604 015	428 627
- Non-controlling interests	7 570	6 224
611 585	434 851

• 1 Restated for correction of error in the prior period, refer to Appendix A.

2

Restated for transition to IFRS 17, refer to Appendix A.

Restated1, 2

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2023

Total
equity
attributable
Non-	to equity	Non-
Stated	distributable	Retained	holders of	controlling	Total
capital	reserves	earnings	the parent	interest	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 adjustment	-	-	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	-	-	3 840	3 840	-	3 840
Balance as at 31 December 2022
restated1, 2	154 936	354 149	3 267 691	3 776 776	22 428	3 799 204

Profit for the year Foreign currency translation reserve movement Share-based payment expense Cost of treasury shares (acquired)/ disposed New shares issued Dividend paid Transfers from non-distributable reserves to retained earnings Other movements in reserves	- - - - - 771 494 771 494 7 570 779 064 (167 479) (47 066) (33 223) - - - (167 479) (47 066) - 9 461 (753 930) (33 223) 50 000 (753 930) - - - - (6 247) (167 479) (47 066) (33 223) 50 000 (760 177)
50 000 - - - - - - (9 461) 17 117 - 17 117 - - - 17 117
Balance as at 31 December 2023	204 936 115 842 3 292 911 3 613 689 23 751 3 637 440

• 1 Restated for correction of error in the prior period, refer to Appendix A.

2

Restated for transition to IFRS 17, refer to Appendix A.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2023

31 Dec	31 Dec
2023	2022
P'000	P'000
Cash generated (utilised in)/generated from operations	(425 600)	244 493
Cash generated from operations1	115 692	244 688
Interest received	246 218	295 056
Dividend received from equity investments	56 851	70 791
Dividend received from associates and joint ventures	144 928	149 844
Interest paid	(762)	(1 076)
Tax paid	(228 350)	(109 846)
Dividend paid	(760 177)	(404 964)
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	(39 673)	(4 664)
Payment of principal portion of lease liabilities	(6 450)	(5 781)
Disposal of treasury shares	(33 223)	1 117
Net (decrease)/increase in cash and cash equivalents	(230 128)	263 293
Cash and cash equivalents at the beginning of the year	400 711	137 418
Cash and cash equivalents at the end of the year	170 583	400 711

Restated

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 A.

GROUP EMBEDDED VALUE

For the year ended 31 December 2023

GROUP EQUITY VALUE

The Group equity value is an aggregate of embedded value 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)
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 at the beginning of the year	5 759 291	5 292 077
IFRS 17 transition adjustment	75 539	-
Asset mismatch reserve	(44 080)	-
Group equity value at the beginning of the year - restated	5 790 750	-
Group equity value at the end of year	5 378 685	5 759 291
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%

Year ended	Year ended
31 Dec	31 Dec
2023	2022
Group equity value results	P'000	P'000
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	176 199
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	412 113
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 covered business	523 998	477 194
Return on shareholders' assets	158 718	263 576
Investment returns	14 760	15 198
Net profit non-life operations	143 958	248 378
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	892 629

GROUP EMBEDDED VALUE continued

Year ended	Year ended
31 Dec	31 Dec
2023	2022
P'000	P'000
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	314 080	519 773
Staff share scheme	(23 006)	(22 959)
Non-life operations write-up to fair value (Bifm)	389 923	332 087
Non-life operations write-up to fair value - other	100 295	255 261
Group holding expenses	(194 927)	(166 367)
Reversal of cross-holding adjustment	41 795	39 168
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
Overall investment return (before taxation)	6,65	8,15
Expense inflation rate	4,10	5,15