Capricorn : CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (REVIEWED) FOR THE SIX MONTHS ENDED 31 DECEMBER 2023

Condensed Consolidated Interim Financial Statements (reviewed)

for the six months ended 31 December

2023

In June 2023, the Capricorn Group unveiled an internal and external three-month brand campaign to elevate brand awareness and build customer loyalty and affinity. Our brand journey has evolved from 2017 with "Positive Change", to "I am Capricorn", "We are Capricorn", "Stronger Together" and "Together we Thrive". Our brand statement for 2023 is "Make Change Positive". This statement is a compelling call to action that encourages us and our stakeholders to participate in creating positive change in our daily lives. It conveys a forward-looking and proactive mindset and the belief that change can lead to positive outcomes.

#MakeChangePositive

1

Contents

Financial performance overview	2
Statement of responsibility by the board of
directors	4
Independent auditor's review report on interim
financial statements	5
Condensed consolidated interim statement of
comprehensive income	6
Condensed consolidated interim statement of
financial position	8
Condensed consolidated interim statement of
changes in equity	9
Condensed consolidated interim statement of
cash flows	12
Notes to the condensed consolidated interim
financial statements	13

Condensed Consolidated Interim Financial Statements (reviewed) 2024

2	Financial performance overview
	Highlights
	Return on equity (annualised)			Dividend per share
	16.8%			48 cents	23.1%
	(Dec 2022*: 18.2%)			(Dec 2022: 39 cents)
	Cost to income ratio			Profit after tax
	48.2%			N$827.6 million	7.5%
	(Dec 2022*: 50.5%)			(Dec 2022*: N$769.8 million)
	Capital adequacy ratio			Earnings per share
	17.6%			152.4 cents	7.2%
	(June 2023: 16.9%)			(Dec 2022*: 142.1 cents)
	Net asset value per share			Gross loans and advances
	1,786 cents	6.1%		N$48.9 billion	3.6%
	(June 2023*: 1,683 cents)			(June 2023: N$47.2 billion)

• Restated to account for the introduction of IFRS 17

Group Financial

Performance

Group Financial Performance

Capricorn Group Limited achieved solid results with profit after tax for the six months ended 31 December 2023 increasing by 18.5% to

N$827.6 million compared to a profit after tax of N$698.2 million that was reported in the comparative period in the prior year. This represents an increase of 19.4% in earnings per share to 152.4 cents. Annualised return on equity increased from 16.6% to 16.8% year-on-year. The strong performance is attributable to loan book growth and increased transaction volumes, offset to some extent by escalated credit impairment charges. Furthermore, the Group's profitability benefitted from implementing IFRS 17 - "Insurance Contracts". This improvement primarily stems from reduced discretionary policyholder reserves following the application of IFRS 17. Excluding the positive impact of IFRS 17 on the Group's capital reserves, return on equity would have been 17.3% for the 6 months ended 31 December 2023.

IFRS 17 requires full retrospective application for disclosure purposes. Consequently, the comparative figures for the six month period ended on 31 December 2022 were restated. Following this restatement of the comparative period figures, the Group's profit after tax for the six months ended 31 December 2023, represents a year-on-year increase of 7.5%. Similarly, both headline earnings and earnings per share for the same period experienced year-on-year growth of 7.2%. All comparisons to figures from the prior period further in this announcement are based on the restated amounts, unless explicitly stated otherwise.

Net interest income

Capricorn Group experienced a noteworthy 12.0% year-on-year increase in net interest income, driven by higher interest rates, an 8.5% year-on-year growth in the loan book and prudent management of cost of funding. The lending businesses managed their cost of funding very effectively, leading to a 23 basis point enhancement of the net interest margin to 5.1% for Bank Windhoek, while the net interest margin at Bank Gaborone increased commendably from 3.1% to 4.1%.

Impairment charges

The ongoing economic impact on increased inflation rates combined with higher interest rates caused by geopolitical instability continued to put pressure on key credit risk indicators with non-performing loans increasing from N$2.46 billion in June 2023 to N$2.66 billion in December 2023. Consequently, impairment charges increased by N$98.0 million to N$252.8 million year-on-year. The Group continues to hold prudent provisions for expected credit losses.

Non-interest income

Non-interest income for the half year increased by N$177.5 million (19.0%) mainly attributable to an increase of fee and commission income of N$67.0 million (10.1%) and net trading income of N$57.1 million (62.4%). Asset management fees from Capricorn Asset Management increased by 13.4% due to strong growth in unit trusts, exceptional growth and satisfactory growth in Capricorn Private Wealth (a joint venture between Capricorn Asset Management and Bank Windhoek) and satisfactory growth in pension fund assets.

Condensed Consolidated Interim Financial Statements (reviewed) 2024

Financial performance overview

3

Value created by Capricorn Group and shared among stakeholders

The group created value of N$2.42 billion during the six months ended 31 December 2023, which was shared by its main stakeholders as follows:

Employees		Suppliers		Government
N$563 million		N$515 million		N$574 million
Communities		Shareholders		Retained for future
		expansion
N$19.8 million		N$314 million
		N$438 million

Operating expenses

Operating expenses registered an 11.5% year-on-year increase, totalling N$137.1 million. This rise can be attributed to an increase of

N$48.8 million (42.7%) in variable operational banking expenses, directly linked to increased transaction and trading volumes. Excluding these operational banking expenses, the growth in overall expenses was contained at 8.1% (N$88.3 million). The majority of this growth is associated with an increase in staff costs amounting to N$61.2 million (9.4% increase year-on-year), primarily driven by annual increases and the filling of key vacancies, particularly in respect of IT resources.

Income from associates

Before the IFRS 17 restatement of the preceding period, the Group recorded a substantial 95.3% year-on-year increase in income from associates, amounting to N$46.7 million. This growth is attributed to both organic expansion and the impact of IFRS 17 in the current year. However, the recognition of substantial previously unrecognised IFRS 17 profits in the restated prior period, resulted in a 24.4% decline in income from associates of N$30.9 million being reported.

Liquidity

Capricorn Group retained a healthy liquidity position as at 31 December 2023 as the Group's liquid assets increased by 10.9% (N$1.56 billion) year-on-year. Liquid assets exceeded minimum regulatory requirements in Namibia and Botswana by 135% and 114% respectively as at

31 December 2023.

Loans and advances

Gross loans and advances increased by N$3.8 billion year-on-year, mainly driven by growth in term loans of N$2.3 billion (15.5%), instalment finance of N$750 million (18.9%) and overdrafts of N$423 million (6.8%).

Asset quality remained a key focus area for the group. Despite the challenging economic environment, the Group's total non-performing loans (NPLs) was contained to N$2.66 billion (June 2023: N$2.46 billion) as the group continues to manage credit risk on a pro-active basis. This resulted in the NPL ratio increasing slightly from 5.2% to 5.4% over the six months ended 31 December 2023. The NPL ratio remains below the industry average.

Capital adequacy

The Group enhanced its already robust capital position with a total risk-based capital adequacy ratio of 17.6% as at 31 December 2023 (June 2023: 16.9%).

Outlook

The central banks of both Namibia and Botswana have adopted prudent monetary policy measures to counteract inflationary pressures and to protect local currencies in volatile global market conditions brought about by spreading geopolitical tensions. The current outlook is that inflation will stay within the target range of both central banks in the short to medium term, with the possibility of interest rates decreasing in the coming 12 months.

The Bank of Namibia's Economic Outlook for December 2023 predicts a deceleration in economic growth, primarily attributed to weakened global demand and an expected contraction in the agriculture sector. The projections indicate real GDP growth rates of 3.9%, 3.4%, and 3.1% for the years 2023, 2024, and 2025, respectively. Despite these challenges, the overarching commitment of Capricorn Group remains focused on sustained growth for the benefit of all stakeholders.

Interim dividend

The Group declared an interim dividend of 48 cents per ordinary share. The interim dividend per share for the period under review is 23.1% higher than the interim dividend per share of 39 cents declared in the comparative period. The Group considered its capital and liquidity position when declaring an interim dividend that balances prudency and future growth capacity with a fair dividend yield for investors.

• Last day to trade cum dividend: 14 March 2024
• First day to trade ex-dividend: 15 March 2024
• Record date: 22 March 2024
• Payment date: 5 April 2024

www.capricorn.com.na

Condensed Consolidated Interim Financial Statements (reviewed) 2024

4	Statement of responsibility by the board of directors

Statement of responsibility by the board of directors

The directors are responsible for the preparation, integrity and objectivity of the condensed consolidated interim financial statements that fairly present the state of affairs of the Group at the end of the period, the profit and cash flow for the period and other information contained in this report.

To enable the directors to meet these responsibilities:

• the board of directors ("board") and management set standards and management implements systems of internal control, accounting and information systems aimed at providing reasonable assurance that assets are safeguarded and the risk of error, fraud or loss is reduced in a cost-effective manner. These controls, contained in established policies and procedures, include the proper delegation of responsibilities and authorities within a clearly defined framework, effective accounting procedures and adequate segregation of duties;
• the Group's internal audit function, which operates unimpeded and independently from operational management, and has unrestricted access to the various group board audit, risk and compliance committees, appraises, evaluates and, when necessary, recommends improvements in the systems of internal control and accounting practices, based on audit plans that take cognisance of the relative degrees of risk of each function or aspect of the business; and
• the board audit, risk and compliance committees of the Group subsidiaries, together with the external and internal auditors, plays an integral role in matters relating to financial and internal control, accounting policies, reporting and disclosure.

To the best of their knowledge and belief, based on the above, the directors are satisfied that no material breakdown in the operation of the systems of internal control and procedures has occurred during the period under review.

The Group consistently adopts appropriate and recognised accounting policies and these are supported by reasonable and prudent judgements and estimates on a consistent basis.

The condensed consolidated interim financial statements presented on pages 6 to 30 have been prepared in accordance with the provisions of the Companies Act of Namibia, 28 of 2004 (Companies Act of Namibia) and comply with the International Accounting Standard (IAS) 34 Interim Financial Reporting.

The directors have no reason to believe that the Group will not be a going concern in the year ahead, based on forecasts and available cash resources. These financial statements have accordingly been prepared on a going concern basis.

The condensed consolidated interim financial statements have been reviewed by the independent auditing firm, PricewaterhouseCoopers, who was given unrestricted access to all financial records and related data, including minutes of all meetings of shareholders, the board and committees of the board. The directors believe that all representations made to the independent auditor during the review were valid and appropriate. The independent auditor's review report is presented on page 5.

The directors of the Group are responsible for the controls over, and the security of the website and, where applicable, for establishing and controlling the process for electronically distributing annual reports and other financial information to shareholders.

The condensed consolidated interim financial statements, set out on pages 6 to 30, were authorised and approved for issue by the board on

27 February 2024 and are signed on their behalf:

D G Fourie	M J Prinsloo
Chairman	Group Chief Executive Officer

Condensed Consolidated Interim Financial Statements (reviewed) 2024

Independent auditor's review report

5

Independent auditor's review report on interim financial statements

to the shareholders of Capricorn Group Limited

We have reviewed the condensed consolidated interim financial statements of Capricorn Group Limited in the accompanying interim report, which comprise the condensed consolidated statement of financial position as at 31 December 2023 and the related condensed consolidated statements of comprehensive income, changes in equity and cash flows for the six-months then ended, and selected explanatory notes.

Directors' responsibility for the interim financial statements

The directors are responsible for the preparation and presentation of these interim financial statements in accordance with the International Accounting Standard (IAS) 34 Interim Financial Reporting and the requirements of the Companies Act of Namibia, and for such internal control as the directors determine is necessary to enable the preparation of interim financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express a conclusion on these interim financial statements. We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. ISRE 2410 requires us to conclude whether anything has come to our attention that causes us to believe that the interim financial statements are not prepared in all material respects in accordance with the applicable financial reporting framework. This standard also requires us to comply with relevant ethical requirements.

A review of interim financial statements in accordance with ISRE 2410 is a limited assurance engagement. We perform procedures, primarily consisting of making inquiries of management and others within the entity, as appropriate, and applying analytical procedures, and evaluate the evidence obtained.

The procedures in a review are substantially less than and differ in nature from those performed in an audit conducted in accordance with International Standards on Auditing. Accordingly, we do not express an audit opinion on these interim financial statements.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements of Capricorn Group Limited for the six months ended 31 December 2023 are not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting and the requirements of the Companies Act of Namibia.

PricewaterhouseCoopers

Registered Accountants and Auditors

Chartered Accountants (Namibia)

Per: Nina A Coetzer

Partner

Windhoek, Namibia

Date: 27 February 2024

Condensed Consolidated Interim Financial Statements (reviewed) 2024

6	Statement of comprehensive income

Condensed consolidated interim statement of comprehensive income

for the six months ended 31 December 2023

		Six months ended	Year ended
		December	December	June
		2023	2022	2023
		N$'000	N$'000	N$'000
		Reviewed	Reviewed
	Notes	Reviewed	(Restated)	(Restated)
Interest and similar income		3,263,083	2,612,260	5,626,476
Interest and similar expenses		(1,792,335)	(1,299,467)	(2,908,262)
Net interest income		1,470,748	1,312,793	2,718,214
Credit impairment losses	9	(252,886)	(154,893)	(235,610)
Net interest income after impairment charges		1,217,862	1,157,900	2,482,604
Non-interest income		1,111,131	933,636	1,875,412
Fee and commission income		733,175	666,184	1,288,294
Net trading income		148,715	91,573	213,258
Other operating income		56,750	39,785	70,185
Net insurance premium income		87,994	73,652	167,098
Net claims and benefits paid		(18,157)	(28,059)	(50,713)
Asset management and administration fees		102,654	90,501	187,290
Operating income		2,328,993	2,091,536	4,358,016
Operating expenses		(1,329,250)	(1,192,139)	(2,443,939)
Operating profit		999,743	899,397	1,914,077
Share of associates' results after tax		95,570	126,465	182,336
Profit before income tax		1,095,313	1,025,862	2,096,413
Income tax expense	10	(267,669)	(256,081)	(516,472)
Profit for the period*		827,644	769,781	1,579,941

• Refer to note 5.3 for information on the restatement.

Condensed Consolidated Interim Financial Statements (reviewed) 2024

Statement of comprehensive income

7

Condensed consolidated interim statement of comprehensive income continued

		Six months ended	Year ended
		December	December	June
		2023	2022	2023
		N$'000	N$'000	N$'000
		Reviewed	Reviewed
	Notes	Reviewed	(Restated)	(Restated)
Other comprehensive income
Items that may subsequently be reclassified to profit or loss
Change in value of debt instruments at fair value through other
comprehensive income		35,339	3,219	17,643
Income tax expense		(9,712)	(338)	(7,722)
Exchange differences on translation of foreign operations		3,429	2,625	27,126
Items that will not be reclassified to profit or loss
Change in value of equity instruments at fair value through other
comprehensive income		(77)	10	576
Income tax expense		25	(3)	(184)
Total comprehensive income for the period / year		856,648	775,294	1,617,380
Profit attributable to:
Equity holders of the parent entity		770,699	725,633	1,477,277
Non-controlling interests		56,945	44,148	102,664
		827,644	769,781	1,579,941
Total comprehensive income attributable to:
Equity holders of the parent entity		799,182	730,747	1,510,593
Non-controlling interests		57,466	44,547	106,787
		856,648	775,294	1,617,380
Earnings per ordinary share for the profit attributable to the equity holders of
the parent entity during the period:
Basic (cents)	21	152.4	142.1	292.0
Fully diluted (cents)	21	151.5	141.6	290.2

Refer to note 5.3 for information on the restatement.

Condensed Consolidated Interim Financial Statements (reviewed) 2024

8	Statement of financial position

Condensed consolidated interim statement of financial position

as at 31 December 2023

December 2023 N$'000

Notes Reviewed

December June

2022 2023

N$'000 N$'000

Reviewed Reviewed

(Restated) (Restated)

ASSETS
Cash and cash equivalents		6,670,903	5,372,448	6,080,914
Financial assets at fair value through profit or loss		2,174,997	2,027,651	2,588,556
Financial assets at amortised cost	11	1,013,238	1,013,276	989,432
Financial assets at fair value through other comprehensive income		5,824,195	5,875,830	5,883,863
Loans and advances to customers	12	47,119,591	43,509,861	45,396,558
Other assets	13	567,969	405,432	594,076
Current tax asset		99,720	96,713	83,815
Investment in associates	14	1,080,672	936,348	916,254
Intangible assets	15	471,652	401,551	449,151
Property and equipment	16	621,716	651,335	665,423
Deferred tax asset		183,471	110,760	160,881
Total assets		65,828,124	60,401,205	63,808,923
LIABILITIES
Due to other banks		435,255	388,811	609,543
Other borrowings	17	952,114	460,720	912,935
Debt securities in issue	18	5,108,841	5,602,877	5,581,034
Deposits	19	48,259,948	44,130,529	45,784,775
Other liabilities	20	1,061,924	960,278	1,459,740
Current tax liability		6,279	3,967	2,850
Insurance contract liabilities		461,244	418,278	444,475
Deferred tax liability		-	162	-
Post-employment benefits		21,467	20,501	20,752
Total liabilities		56,307,072	51,986,123	54,816,104
EQUITY
Share capital and premium		713,769	726,928	686,427
Non-distributable reserves		69,637	59,682	65,346
Distributable reserves		8,248,144	7,184,141	7,764,910
Equity attributable to the owners of the parent		9,031,550	7,970,751	8,516,683
Non-controlling interests in equity		489,502	444,331	476,136
Total shareholders' equity		9,521,052	8,415,082	8,992,819
Total equity and liabilities		65,828,124	60,401,205	63,808,923

Refer to note 5.3 for information on the restatement.

Condensed Consolidated Interim Financial Statements (reviewed) 2024