Letshego Holdings Limited Building a leading African financial services group Botswana . Kenya . Lesotho . Mozambique . Namibia . Rwanda . Swaziland . Tanzania . Uganda Botswana . Kenya . Lesotho . Mozambique . Namibia . Rwanda . Swaziland . Tanzania . Uganda
Agenda – FY 2014 Results Presentation “strong performance, growth, and returns to shareholders” • Strategic Update – Grow the franchise – Building capabilities – Roll out of new operating model – Balance sheet management • FY 2014 Results – Headline performance – Key financials Botswana . Kenya . Lesotho . Mozambique . Namibia . Rwanda . Swaziland . Tanzania . Uganda
We have a clearly defined Vision and Strategy A leading African financial services group Strategic intent Your preferred partner – committed to improving lives Brand promise Uniqueness Simple Appropriate Responsive Accessible Inclusive Ethical Customer Innovation Risk management People Commitment Stakeholder Sustainable experience engagement competitive “Where individuals “In everything “ An holistic advantages “A unique we do” approach” “Leveraging for make a difference and teams succeed” offering” value” Stakeholders Customers Government Regulators Staff Investors Communities “ LHG of the future will offer 2014 2015 2016 simple, appropriate and inclusive solutions; flexible Grow the franchise and convenient access; Strategic Build Capabilities responsive and ethical credit; Priorities and support for the MSE Implement a new operating model owner to build his or her Better leverage the balance sheet business – and all at a very low cost.” Break-out options 1 Botswana . Kenya . Lesotho . Mozambique . Namibia . Rwanda . Swaziland . Tanzania . Uganda
We are focusing on three key segments MSE Government Low income earners NOT Letshego Current focus Future focus Source: 1. Letshego Brand Review | 2. Genesis Team Analysis, 2014 2 Botswana . Kenya . Lesotho . Mozambique . Namibia . Rwanda . Swaziland . Tanzania . Uganda
GTF - Our payroll business remains core Letshego’s current market Government Loan growth from Current Loan book Payroll Non-payroll % of Book penetration [prior year] employees prior year %, 2014 (‘000) P’000 Botswana 150 29%[ 23%] 2 005 99% 1% 35% 11% 450 Kenya 1% 201 13% 87% 4% 139% 400 Mozambique 13%[ 8%] 1 114 100% _ 20% 40% 100 Namibia 50%[ 45%] 1 366 100% _ 24% 45% 500 Tanzania 9%[ 10%] 307 100% _ 5% _ 275 249 68% 32% 4% 25% Uganda 11%[ 12%] 50 151 100% _ 3% 36% Swaziland 11%[ 18%] 130 103 _ 100% 2% 96% Rwanda 0% 190 100% _ 3% 103% 45 Lesotho 13%[ 14%] TOTAL 5686 93% 7% 100% 28% Source: 1. Letshego financials 2014 | 2. Genesis Analytics Team Analysis, 2014 3 Botswana . Kenya . Lesotho . Mozambique . Namibia . Rwanda . Swaziland . Tanzania . Uganda
GTF - Microfinance operations growth has been strong • Group Lending loans – Loans extended to business persons who lack traditional collateral • Individual or MSE loans – Primary loan product (mostly secured) • Check-off (payroll) loans Kenya Uganda – Targets employees working with both 139% 100% private and public companies – Payroll product limited to some individuals • School Fees loans – Targets clients with school going children Rwanda 96% or dependants • Maji Nyumbani loans – Assists individuals and communities to acquire water tanks and ensure water storage • Biogas – Targets dairy farmers in Kenya 4 Botswana . Kenya . Lesotho . Mozambique . Namibia . Rwanda . Swaziland . Tanzania . Uganda
GTF - We have executed on diversification and exit • Deposit mobilisation has gone live in Mozambique (February) and Rwanda Invest to Diversify / Exit (October) Grow Defend • Namibia has been granted a provisional license • Exit of Tujijenge operations finalised in October 2014 • Disposal of interest in South Sudan scheduled • Botswana for completion in Q1 2015 • Moz’bique • Uganda • Tanzania • Rwanda • South • Namibia • Swaziland Sudan • Lesotho • Kenya 5 Botswana . Kenya . Lesotho . Mozambique . Namibia . Rwanda . Swaziland . Tanzania . Uganda
BC - Our customer centric approach has increased the customer base by 11% to 265,265 Mood Products Market Research Mapping the Customer customer journey Marketing Experience Branch standards Brand Look and feel that’s consumer friendly Service Brand refresh 6 Botswana . Kenya . Lesotho . Mozambique . Namibia . Rwanda . Swaziland . Tanzania . Uganda
BC - Our infrastructure investment has positioned us well for future growth Core banking solution from TCS BaNCS Mobile App Field Improved Internet Faster Officers Banking business development flexibility Branch USSD Single Multi-Functional Account Launch and Loan Accounts distribution of Easier access Savings Account Current Accounts products to for customers Fixed Term Deposits market Call Agents Centre Cards 7 Botswana . Kenya . Lesotho . Mozambique . Namibia . Rwanda . Swaziland . Tanzania . Uganda
BC - Our governance processes are aligning with King III Board Committees Main Board No of Main Board Group Audit & Group HR Group Group Committees Risk Committee Investment Nominations Status - of Committee Committee Committee INED/NED Membership /EXD P C P C 1 J A Burbidge (Chairman of Main Board and GNC) INED 1 P P 2 C Low (Group Managing Director) EXD 1 P P P P P 3 I M Mohammed NED 4 P P P 4 G Hassam NED 2 P P P 5 G van Heerde NED 2 P P C P 6 S Price INED 2 P P C P 7 R Thornton INED 2 P P P P 8 H Karuhanga INED 3 P P P C 9 J de Kock INED 2 INED 5 3 2 2 3 NED 3 2 2 2 2 Summary of new composition EXD 1 1 INED Independent Non-Executive Director C Chairman of Board/Committee NED Non-Executive Director 50/50 Balance to be addressed when new appointments agreed EXD Executive Director Compliant with King III 8 Botswana . Kenya . Lesotho . Mozambique . Namibia . Rwanda . Swaziland . Tanzania . Uganda
BC - Letshego’s credit rating was reaffirmed in an environment where financial services ratings were being down graded Outlook Stable Issuer Rating Ba3 RATINGS DRIVERS Established niche Sound asset quality Diverse funding profile Good profitability and solid capitalisation Source : Moody’s Investors Service Credit Opinion December 2014 9 Botswana . Kenya . Lesotho . Mozambique . Namibia . Rwanda . Swaziland . Tanzania . Uganda
OM - We are embedding the new operating model • Brand and marketing • Payroll and microfinance expertise Group • Central funding and foreign exchange management • Governance and risk management • Audit and assurance services • Group will set policy, standards, procedures and control requirements. Country • Origination, distribution and service • Local currency funding • Central bank requirements will determine other in country support functions 10 Botswana . Kenya . Lesotho . Mozambique . Namibia . Rwanda . Swaziland . Tanzania . Uganda
BSM - We have diversified our sources of funding and lowered our overall cost of funds Principal Sources of Funding • Commercial bank funding still an Funding Type important part of core funding 7% 3% • Number of relationship banks 42% increased to 6 48% • Market conditions permitting there is capacity to issue more senior unsecured debt under BWP and ZAR DMTN • Commercial Bank Development Funding Ongoing Private Placements Investment Fund Medium Term Note under Mozambique DMTN 11 Botswana . Kenya . Lesotho . Mozambique . Namibia . Rwanda . Swaziland . Tanzania . Uganda
FY 2014 RESULTS PRESENTATION Botswana . Kenya . Lesotho . Mozambique . Namibia . Rwanda . Swaziland . Tanzania . Uganda
We have a delivered a strong set of results for 2014 • Strong growth in loans and advances to customers Loans and 28% Growth • Continued geographical diversification advances • Continued diversification from payroll lending • Overall increase in revenue Revenue Mix • Margins consistent with prior period Operating 26% • Continued diversification of revenues Income Efficiency and • Return on assets remains very competitive 20% EPS • Cost to income 29% Profitability • EPS up 20% • Overall impairment charge within target levels Asset Quality 2% • Low cost of risk Impairments • Growth in loan book has not compromised quality • Continued strong capital adequacy ratio Debt to 47% Capital and Liquidity • Cash reserves on hand of USD 30 million Equity • Debt to Equity increased to 47% Ratio 12 Botswana . Kenya . Lesotho . Mozambique . Namibia . Rwanda . Swaziland . Tanzania . Uganda
All key metrics trends are positive 13 Botswana . Kenya . Lesotho . Mozambique . Namibia . Rwanda . Swaziland . Tanzania . Uganda
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