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    EQTY   KE0000000554

EQUITY GROUP HOLDINGS PLC

(EQTY)
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Equity : 2020 Integrated Report and Financial Statements

05/25/2021 | 04:33pm EDT

2020 Integrated Report & Financial Statements

EQUITY GROUP HOLDINGS PLC AND SUBSIDIARIES INTEGRATED REPORT & FINANCIAL STATEMENTS / FOR THE YEAR ENDED 31 DECEMBER 2020

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About20This Report

A key aspect of our business conduct is to regularly provide our stakeholders with information on Equity Group Holdings Plc ("Equity", "Equity Group" or "Group"). We prepare various reports in this respect aimed at addressing stakeholder information requirements and ensuring that we remain transparent and accountable. As an ethical and responsible financial services provider, our reports provide a mechanism for ongoing deliberations and engagements with various stakeholders. It is this willingness to be above board and open that drives our publication of an annual integrated report. Primarily, we use the Integrated Report to respond or demonstrate to our financial capital providers, how we create and share value on a sustainable basis.

This report showcases our ongoing progress and performance, consistent with our overarching intent to produce sustainable value for our stakeholders and best in class customer experience and satisfaction. It is the summary of our strategies, our business, products and services and particularly the way we generate and distribute value in the short, medium and long term.

This report covers the financial year from 1st January 2020 to 31st December 2020. The financial information presented is prepared in line with the International Financial Reporting Standards (IFRS), while non-financial information is presented in accordance with the International Integrated Reporting Council's (IIRC) guidelines provided in the International Integrated Reporting Framework.

Purpose of this Report

Our Integrated Report provides information that enables Equity Group stakeholders to make an informed assessment of our ability to create sustainable value. The aim of this Integrated Report is to clearly and concisely tell the story of Equity, who we are, what we do, and how we create value. This report documents our strategy, opportunities and risks, our business model and governance, and our performance against our strategic objectives in a way that gives stakeholders a holistic view of Equity Group and our future prospects.

Key Concepts

Defining Values

Value creation is the consequence of how we apply and leverage our capitals to deliver financial performance (outcomes) and value (outcomes and outputs) for stakeholders while making trade-offs. Our value creation process is embedded in our purpose and is described as part of our business model and integrated into the way we think and make decisions.

Materiality &

Material Matter

We apply the principle of materiality in assessing which information is to be included in our Integrated Report. This report focuses particularly on those issues, opportunities and challenges that impact materially on Equity Group and its ability to be a sustainable business that consistently delivers value to Shareholders, prospective investors and our key stakeholders. Our material matters influence our Group's strategy and inform the content in this report.

The Capital

Our relevance as a Group today and in the future, and our ability to create long-term value is interrelated. It is fundamentally dependent on the forms of capital available to us (inputs), how we use these capitals (value-adding activities), our impact on them and the value we deliver (outputs and outcomes).

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EQUITY GROUP HOLDINGS PLC AND SUBSIDIARIES INTEGRATED REPORT & FINANCIAL STATEMENTS / FOR THE YEAR ENDED 31 DECEMBER 2020

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TABLE OF CONTENTS

WHO WE ARE

5 - 6 ABOUT US

  1. KEY GROUP HIGHLIGHTS
  2. GROUP STRUCTURE
  3. OUR FOOTPRINT

10 - 11 BUSINESS VALIDATION

12 MARKET VALIDATION

1 3- 15 NOTICE OF THE 17TH AGM

16 - 20 MESSAGE FROM THE GROUP CHAIRMAN

21 - 25 CHIEF EXECUTIVE OFFICER'S STATEMENT

26 - 27 GROUP BOARD OF DIRECTORS

28 - 30 GROUP EXECUTIVE MANAGEMENT

OUR BUSINESS

  1. OUR BUSINESS MODEL
  1. OUR STRATEGY
  2. VALUE CREATION MODEL
    34 - 35 STAKEHOLDERS
    36 - 38 MATERIAL ISSUES

BUSINESS PERFORMANCE

40 - 42 OPERATING CONTEXT

43 - 49 OPERATING ENVIRONMENT

50 - 51 BUSINESS HIGHLIGHTS 2020

52 - 58 SUBSIDIARY PERFORMANCE 2020

59 - 63 PERFORMANCE AGAINST OUR FOCUS AREAS

OUR CAPITALS

65 FINANCIAL CAPITAL 66 - 67 HUMAN CAPITAL

67 - 69 INTELLECTUAL CAPITAL

69 - 71 MANUFACTURED CAPITAL

71 - 80 SOCIAL AND RELATIONSHIP CAPITAL

81 - 84 SUSTAINABLE DEVELOPMENT GOALS (SDGs)

CONTROL ENVIRONMENT

86 - 88 RISK MANAGEMENT AND COMPLIANCE

88 - 89 REGULATORY LANDSCAPE

89 - 94 RISK MANAGEMENT AND COMPLIANCE WITHIN THE BUSINESS CONTEXT

CORPORATE GOVERNANCE

96 - 98 BOARD OPERATIONS & CONTROL

  1. RIGHTS OF SHAREHOLDERS
  1. STAKEHOLDER RELATIONS

98 - 99 ETHICS AND SOCIAL RESPONSIBILITY

99 COMPLIANCE WITH LAWS AND REGULATIONS 99 - 100 TRANSPARENCY AND DISCLOSURE

100 ACCOUNTABILITY, RISK MANAGEMENT AND INTERNAL CONTROL

100 - 101 DIRECTORS' REMUNERATION REPORT

101 - 102 THE GROUP BOARD

103 - 105 BOARD COMMITTEES

  1. BOARD CHANGES
  2. BOARD EVALUATION
  1. TRAINING

106 - 107 MANAGEMENT COMMITTEES

  1. COMPANY SECRETARY MANDATE AND ROLE 107 - 108 MEMBERSHIP ASSOCIATIONS
  2. REPRESENTATION OF RETAIL SHAREHOLDERS 108 - 109 PARTICULARS OF SHAREHOLDING

109 - 110 THE LARGEST SHAREHOLDERS OF EQUITY GROUP HOLDINGS PLC

110 STATEMENT OF THE RESPONSIBILITY OF DIRECTORS

FINANCIALS 2020

  1. GROUP AND COMPANY INFORMATION 114 - 116 DIRECTORS' REPORT
    117 -119 DIRECTORS' REMUNERATION REPORT
  1. STATEMENT OF DIRECTORS' RESPONSIBILITIES 121 - 125 INDEPENDENT AUDITOR'S REPORT

FINANCIAL STATEMENTS

  1. CONSOLIDATED STATEMENT OF PROFIT OR LOSS
  2. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
  3. COMPANY STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
  4. CONSOLIDATED STATEMENT OF FINANCIAL POSITION
  5. COMPANY STATEMENT OF FINANCIAL POSITION

131 - 132 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

  1. COMPANY STATEMENT OF CHANGES IN EQUITY
  2. CONSOLIDATED STATEMENT OF CASH FLOWS
  3. COMPANY STATEMENT OF CASH FLOWS

137 - 239 NOTES

DIRECTOR PROFILES

240 - 251 CONSOLIDATED BOARD OF DIRECTORS' PROFILES

252 - 256 GROUP EXECUTIVE MANAGEMENT PROFILES

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W H O

W E A R E

EQUITY GROUP HOLDINGS PLC AND SUBSIDIARIES INTEGRATED REPORT & FINANCIAL STATEMENTS / FOR THE YEAR ENDED 31 DECEMBER 2020

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A B O U T U S

At the core of our existence is our corporate purpose of "transforming lives, giving dignity and expanding opportunities for wealth creation". Right from inception, we set out on a journey to provide integrated financial services as a means of empowering businesses, people and communities to improve their lives and livelihoods. With over 37 years in operation, we remain dedicated to improving the wellbeing of the people of Africa by providing financial and non-financial services, products and tools that empower them to pursue socio-economic prosperity.

We are the largest financial services provider in East and Central Africa by customer numbers and assets with a total of over 14 million customers in the region and assets valued at over one trillion shillings. We have physical presence in seven countries - Kenya, Uganda, South Sudan, Tanzania, Rwanda, the Democratic Republic of the Congo (DRC) and a commercial representative office in Ethiopia (the "regions"). We are cognisant of the responsibility bestowed on us by our leadership position and we aspire to use it to empower people and communities to create wealth.

We are driven by our social and commercial objectives ensuring that our business creates positive impact for all stakeholders while remaining profitable. In this regard, a foundational pillar to our business model is our Social and Economic engines that catalyse each other whereby our social programmes build and enhance capacity in the value chains and ecosystems that we provide financial services to. This is illustrated as follows:

  1. Our Financial Literacy programmes enable todays unbanked to be tomorrow's bank customer
  2. Our Entrepreneurship Training and Development programmes support todays workforce to be tomorrow's employers and accelerates transition of business owners up the value curve
  3. Our Food and Agriculture interventions transform subsistence farmers into agri-businesses
  4. Our Education and Leadership Development programmes support today's learners to become tomorrow's productivity gains
  5. Our Energy and Environment interventions help households, institutions, industry's and farmers in mitigation and adaption of the effects of climate change and reduce their carbon footprint
  6. Our Social Protection interventions provides a bridge to a better tomorrow for the vulnarable people and marginalized communities

7. Our Health interventions help minimize shocks to disposable income and business resources

We are executing our "Equity 3.0" strategy, which is aimed at leveraging on technology and innovation to achieve convergence of financial products and services, seamless integration of channels, enhanced customer experience, disciplined operational controls and societal good.

In line with our intention to be a leading Pan-African financial services provider, we are undertaking a business transformation process that will position us to better capitalize on opportunities through technology, demographic changes and regional expansion. We are reengineering our business to ensure that it is adaptable to future trends and prospects. This will be achieved by offering differentiated, high quality services driven by segmentation and cross-selling initiatives and responsiveness to the needs of the customers across the different segments and regions.

Technology is a key driver of our business model offering widespread access, convenience and affordability. Most significantly, our ideals drive us since we believe that true progress is only possible if we are connected to people and for this reason, placing our customers and communities at the centre of everything we do is of utmost importance.

As a key driver of development in our region, we operate in the sectors where we can have the greatest impact on society, while being profitable. Additionally, through the Equity Group Foundation (EGF), we support social programs on Education and Leadership Development, Food and Agriculture, Health, Enterprise Development and Financial Inclusion, Energy and Environment and Social Protection. We align our decisions with the United Nations (UN) Sustainable Development Goals (SDGs) with a special focus on youth, women, enterprise development, climate change, environmental stewardship and community empowerment.

Our social programs continue to uplift lives in the regions where we operate. In 2020, we were decisive in our actions to address the COVID-19 pandemic. We continue to support vulnerable members of society as well as frontline workers in stemming the spread of the virus, while also supporting distressed customers to weather the challenges of the economic slowdown and in many cases reengineer their businesses.

We are witnessing greater depth in the convergence of our social and commercial engines making us a truly double bottom line business.

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Sales 2021 110 B 1 010 M 1 010 M
Net income 2021 32 318 M 298 M 298 M
Net Debt 2021 - - -
P/E ratio 2021 5,56x
Yield 2021 6,00%
Capitalization 185 B 1 701 M 1 703 M
Capi. / Sales 2021 1,69x
Capi. / Sales 2022 1,43x
Nbr of Employees 7 119
Free-Float 77,4%
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Number of Analysts 11
Last Close Price 49,00 KES
Average target price 49,90 KES
Spread / Average Target 1,83%
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Managers and Directors
James Njuguna Mwangi Group CEO & Non-Independent Executive Director
David Ngata Group Director-Finance
Isaac Muthure Macharia Non-Executive Chairman
Lanre Bamisebi Group Chief Information Officer
Evelyn Kamagaju Rutagwenda Independent Non-Executive Director