IAR 2016

HIGHLIGHTSAWARDS HEADLINE EARNINGS 419.4 AWARD (NAD millions) HEADLINE EARNINGS 400 (NAD millions) 350 275.6 419.4 300 400 250 350 200 300 275.7Winner of the large size company 2nd place winner of the Sunday 250 150category of the Deloitte’s annual Times Top 100 Companies 200“Best WCoimnnpearnoyfTtoheWlaorrgkeFsoirz”e2c0o1m5pany awards 220n15d ipnlaScoeuwthinAnferricoaf.the Sunday 100 150 50surveycainteNgaomryiboifa.the Deloitte’s annual Times Top 100 Companies 0 100 2015 2016 2016“Best Company To Work For” 2015 awards 2015 in South Africa. 419.7survey in Namibia. 50 419.8 BASI0C EARNIN20G15S 2016 (NAD millions) 201655 cents 400 BASIC EARNINGS (NAD millions) 350 303.2 400 300 250 350 303.2 200 300Winner: 2016 PMR diamond arrow Good performance in the promotion 250 150award – Most Innovative of employment equity in 2015: 200CompWaninienseirn: 2N0a1m6 iPbMiaR. diamond arrow aEwmaprldopGyinromooNmedanopmtteEiiorbqfniouaroi.mtfyeaCmnocpmelominyimtshseeionnt equity 100 award – Most Innovative 50 150Companies in Namibia. in 2015: Employment Equity Commission award in Namibia 0 100 50 2015(2P20er01ce61n6tRaRgeeesv)veennuueeccoonnttrriibbuuttiioonn Headlin0e earnings 2015 40% (Percentages) per share1199Banking and Finance sBhaasriceHpeeeararsdnhliiannrgeesepaernr ings 27%40% 55 c5e5ntscents Banking and Finance 1O1OO%O% 63 63IInnvveessttmmeennttss Net aBsasseitcveaalruneinpgesr per 41%27% 2845c5enctsents shareshare1818Insurance DshivairdeNsehhneoadtlrdsaeepsrsaseid(tFvtYoa2l0u1e5p/1e6r) NA4D14%9.4 284 centsInsurance million CSI spsDheivanirdeehnodldseprasid(FtYo2015/16)NADN7.A0D849.4millionmillion CSI spend NAD7.08 million INSURANCE INVESTMENTS BANKING AND FINANCE SHARED SERVICES Integrated Annual Report 2016 | 1

HIGHLIGHTSAWARDS HEADLINE EARNINGS 419.4 AWARD (NAD millions) HEADLINE EARNINGS 400 (NAD millions) 350 275.6 419.4 300 400 250 350 200 300 275.7Winner of the large size company 2nd place winner of the Sunday 250 150category of the Deloitte’s annual Times Top 100 Companies 200“Best WCoimnnpearnoyfTtoheWlaorrgkeFsoirz”e2c0o1m5pany awards 220n15d ipnlaScoeuwthinAnferricoaf.the Sunday 100 150 50surveycainteNgaomryiboifa.the Deloitte’s annual Times Top 100 Companies 0 100 2015 2016 2016“Best Company To Work For” 2015 awards 2015 in South Africa. 419.7survey in Namibia. 50 419.8 BASI0C EARNIN20G15S 2016 (NAD millions) 201655 cents 400 BASIC EARNINGS (NAD millions) 350 303.2 400 300 250 350 303.2 200 300Winner: 2016 PMR diamond arrow Good performance in the promotion 250 150award – Most Innovative of employment equity in 2015: 200CompWaninienseirn: 2N0a1m6 iPbMiaR. diamond arrow aEwmaprldopGyinromooNmedanopmtteEiiorbqfniouaroi.mtfyeaCmnocpmelominyimtshseeionnt equity 100 award – Most Innovative 50 150Companies in Namibia. in 2015: Employment Equity Commission award in Namibia 0 100 50 2015(2P20er01ce61n6tRaRgeeesv)veennuueeccoonnttrriibbuuttiioonn Headlin0e earnings 2015 40% (Percentages) per share1199Banking and Finance sBhaasriceHpeeeararsdnhliiannrgeesepaernr ings 27%40% 55 c5e5ntscents Banking and Finance 1O1OO%O% 63 63IInnvveessttmmeennttss Net aBsasseitcveaalruneinpgesr per 41%27% 2845c5enctsents shareshare1818Insurance DshivairdeNsehhneoadtlrdsaeepsrsaseid(tFvtYoa2l0u1e5p/1e6r) NA4D14%9.4 284 centsInsurance million CSI spsDheivanirdeehnodldseprasid(FtYo2015/16)NADN7.A0D849.4millionmillion CSI spend NAD7.08 million INSURANCE INVESTMENTS BANKING AND FINANCE SHARED SERVICES Integrated Annual Report 2016 | 1

WHAT WE DO GO BIGGESTTRUSTCO IS A DIVERSIFIED LISTED FINANCIAL SERVICES GROUP THAT INVESTS ANDOPERATES IN SUSTAINABLE HIGH GROWTH ASSETS IN EMERGING MARKETS THE GROUP HAS THREE OPERATING SEGMENTSINSURANCE INVESTMENTS BANKING AND FINANCE SHARED SERVICES2 | Integrated Annual Report 2016

SCOPE AND BOUNDARYStatement of the SCOPEboard of directorsof Trustco Group The 2016 integrated annual report seeks to present annual financial statements (presented separately)Holdings Limited a balanced and logical description of the group’s business, strategy and performance. This report were prepared in terms of the International FinancialThe board, supported includes the sustainability report and a balancedby the audit and and accurate account of the group’s financial and Reporting Standards (IFRS). It also complies withrisk committee, operational performance for the period 1 April 2015acknowledges its to 31 March 2016. Any informative and material SAICA financial reporting guides, as issued by theresponsibility to ensure information after 31 March 2016 has been included andthe integrity of the is identified in the report where applicable. The audited Accounting Practices Committee, financial reportingintegrated annualreport. The board has pronouncements as issued by the Financial Reportingapplied its mind tothe integrated annual Standards Council and in the manner as required byreport and is of theopinion that the report the Companies Act of Namibia. All of these reports areaddresses all materialissues and matters available on the group’s website at www.tgh.naand fairly presentsthe group’s integrated BOUNDARY this report, are those that affect the group’s economic,performance. environmental and social impacts significantly and This report aims to demonstrate how the group have substantial influence over the assessments andAdv R Heathcote SC achieved, and will in future achieve, its triple decisions of stakeholders, as well as substantivelyChairman context being the combined economic, social and affects the organisation’s ability to create value over environmental framework. The report focuses on the the short-, medium- and long-term. In an effort toDr Q van Rooyen group’s value creation for its shareholders, employees support the global drive to preserve the environment,Group Managing Director and and society through the utilisation of its economic, only a limited number of reports will be made availableExecutive Director social and human capital by conducting synergetic in print version. The full report is available online at business within the group. Only material factors are being reported on. Material factors, for purposes of www.tgh.na EXTERNAL ASSURANCES AND APPROVAL It is the responsibility of the board of directors to philosophy and Trustco Group Holdings Ltd (Trustco) and ensure the integrity of the integrated annual report. its subsidiaries conform to all legislative requirements. The board approved this report and has taken steps Trustco received an award from the Employment Equity to ensure the integrity of its content. The annual Commission of Namibia during 2015 in recognition of financial statements were audited and signed by good performance in the promotion of employment the external auditors, BDO. Apart from the group equity. Trustco participated in the Deloitte’s “Best auditors, additional external audit firms provided Company To Work For” survey in 2015 and was placed external assurance to the board, being BDO Mauritius first in Namibia in the large size company category. At in respect of the Mauritian business and Deloitte in the Annual PMR Africa Namibia Country Survey 2015, respect of the banking and finance segment. Trustco received the highest honour, a diamond arrow award in the category “Most Innovative Companies”. In In compliance with the Affirmative Action 2015 the group was also awarded second place in the (Employment) Act, Act 29 of 1998 of Namibia and the Sunday Times Top 100 Companies in South Africa. Employment Equity Act, Act 55 of 1998 of South Africa, as amended, the group enforces an empowerment NAVIGATION TOOLS To enable easy referencing we have developed and applied the following icons: GROUP PROFILE STAKEHOLDERS INCREASE FINANCIAL PERFORMANCE SUSTAINABILITY REPORT DECREASE INSURANCE CORPORATE GOVERNANCE REMAINS THE SAME INVESTMENTS REMUNERATION REPORT DIGITAL CHANNELS BANKING AND FINANCE SHAREHOLDERS GO ONLINE SHARED SERVICES ADDITIONAL INFORMATION www.tgh.na Integrated Annual Report 2016 | 3

CONTENTS HIGHLIGHTS C H A P T E R _0 4 C H A P T E R _0 8 Page 01 Segment operational reviews Remuneration report WHAT WE DO Page 02 INSURANCE REMUNERATION PHILOSOPHY Page 56 Page 122 SCOPE AND BOUNDARY INVESTMENTS REMUNERATION MIX Page 03 Page 60 Page 123 BANKING AND FINANCE EMPLOYEE WELLNESS C H A P T E R _0 1 Page 76 Page 124 SHARED SERVICES EMPLOYEE ENGAGEMENT Directorate Page 80 Page 126 DIVERSITY AND INCLUSION CHAIRMAN’S REPORT C H A P T E R _0 5 Page 126 Page 10 WORKFORCE STATISTICS MANAGING DIRECTOR’S REPORT Stakeholders Page 127 Page 12 TRAINING AND DEVELOPMENT CHAIRMAN OF THE AUDIT AND RISK STAKEHOLDER ENGAGEMENT Page 128 COMMITTEE REPORT Page 86 BOARD REMUNERATION Page 14 CORPORATE SOCIAL INVESTMENT Page 130 BOARD OF DIRECTORS Page 89 Page 16 C H A P T E R _0 9 C H A P T E R _0 6 C H A P T E R _0 2 Shareholders Sustainability Group profile SHAREHOLDER INFORMATION SUSTAINABILITY REPORT Page 136 VISION AND MISSION Page 98 SHAREHOLDER DIARY Page 24 Page 138 GROUP STRUCTURE C H A P T E R _0 7 NOTICE OF ANNUAL GENERAL MEETING Page 24 Page 140 GROUP STRATEGY Corporate governance FORM OF PROXY Page 25 Page 145 BUSINESS MODEL STRUCTURE Page 26 Page 108 C H A P T E R _1 0 THE ROLE OF TRUSTCO IN NAMIBIA AUDIT AND RISK COMMITTEE REPORT Page 28 Page 111 Additional information OUR FOOTPRINT REMUNERATION AND NOMINATION Page 32 COMMITTEE REPORT DIRECTORATE OF KEY SUBSIDIARIES OUR HISTORY Page 113 Page 152 Page 33 GROUP EXECUTIVE COMMITTEE CREDIT RATINGS Page 114 Page 152 C H A P T E R _0 3 RISK REVIEW FINANCIAL AND OTHER DEFINITIONS Page 116 Page 153 Financial performance ACRONYMS AND ABBREVIATIONS Page 155 VALUE ADDED STATEMENT CORPORATE INFORMATION Page 38 Page 159 FINANCIAL DIRECTOR’S REPORT Page 39 SUMMARISED GROUP RESULTS Page 464 | Integrated Annual Report 2016

@trustco_group www.tgh.naIntegrated Annual Report 2016 | 5

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_01DIRECTORATE CHAIRMAN’S REPORT Page 10 MANAGING DIRECTOR’S REPORT Page 12 CHAIRMAN OF THE AUDIT AND RISK COMMITTEE REPORT Page 14 BOARD OF DIRECTORS Page 16 Integrated Annual Report 2016 | 7

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AN IMPORTANT PARTOF TRUSTCO’S JOURNEYIS TOWARDS GREATERINTEGRATED THINKING INHOW THE GROUP DEVISESAND EXECUTES ITSSTRATEGYADV RAYMOND HEATHCOTE Integrated Annual Report 2016 | 9

DIRECTORATE ADV RAYMOND HEATHCOTE SC Trustco is an extremely creative organisation CHAIRMAN OF THE BOARD and management echoes10 | Integrated Annual Report 2016 this in its dealings with the board. It is with great satisfaction that I am afforded the opportunity to convene the board of directors because each and every session of the board brings to light new and interesting developments in Trustco’s journey.

CHAIRMAN’S REPORTTrustco is an extremely creative organisation with a stable and well-regulated financial the insurance and investments segments,and management echoes this in its dealings services industry, as well as a stable and well- I eagerly await the anticipated growth in thewith the board. It is with great satisfaction functioning democracy within a vibrant socio- banking and finance segment, where all thethat I am afforded the opportunity to convene economic climate. It is against this back drop groundwork is being done with the care andthe board of directors because each and every that I am optimistic that Namibia can weather attention it deserves.session of the board brings to light new and this trend and that Trustco will remain resilientinteresting developments in Trustco’s journey. in its largest operating centre. STAKEHOLDERS SHOULD BE ASSURED THAT THE GROUP’STRUSTCO’S STRATEGY IS A There does, however, seem to be a correlation LEADERSHIP AND GOVERNANCESYNERGETIC GROWTH FOCUS between Trustco’s share price and the JSE top ARE OF THE HIGHEST ORDERTHAT COMBINES NEW IDEAS AND 40 companies share index. This conjoinedALSO LOOKS AT CREATING NEW relationship between Trustco’s shares and Trustco has a dynamic board and managementIMPETUS IN EXISTING BUSINESSES the South African economy led to a period structure, where we challenge one another and of downward pressure on the price. Having debate issues with passion. However, whenBoth of these together call for tough decisions said that, even in trying times, the Trustco we take a decision, we are all committed toand hard work from management. I am pleased character remains steadfast. see it through and will do everything to ensureto say that in both areas there is a clear and successful implementation. The board valuespresent hunger from management to drive this THE COMPANY ALWAYS HAS the cross pollination of different ideas putgrowth and follow through on strategies. A POSITIVE AND VIBRANT together by management which more often APPROACH than not assists us to move forward withAn important part of Trustco’s journey is confidence that as much input as possibletowards greater integrated thinking in how Trustco was awarded first place in the was given to make decisions. The objectivethe group devises and executes its strategy. Deloitte’s survey “Best Company To Work For” of the board is to represent shareholders’Management achieved great success through in Namibia in the large size company category. interest and to support management in thecreative thinking, in growing and developing I am proud to be part of a company that is development of sound strategies that willfinancial services products, which contributed so acutely attuned not just to its business ensure sustainable performance and valuegreatly towards the growth in the company. opportunities, but also towards employees and creation. All measures are taken to ensureTrustco entered into a number of acquisitions the welfare of the greater community. compliance with corporate governanceand initiated new divisions within the group Management initiated a broad-based and best practices while maintaining ato fill a void and to ensure growth for employee retention plan where all employees entrepreneurial flair and creativity.the stakeholders. with 1 (one) year service were allocated shares in the company. With every employee invested I AM EXCITED ABOUT THE FUTURETRUSTCO IS AT ITS CORE in the company, Trustco has achieved an AND THE ENDLESS POSSIBILITIESNAMIBIAN, BUT REMAINS employee-shareholder alignment unparalleled FOR TRUSTCOEXPOSED TO THE SOUTHERN in Namibia. All qualifying employees are nowAFRICAN REGION’S ECONOMIC part owner and are afforded a level of control It is with great anticipation and enthusiasmVOLATILITY and the ability to provide an opportunity for that Trustco enters into the next financial growth of not only Trustco, but for themselves. period, where management will be affordedThe global economy is becoming increasingly This is viewed as a prudent instrument in one the opportunity to implement the currentinterconnected as technology and consumer of the group’s greatest assets. opportunities, think creatively to ensuretrends continue to evolve. Faced with a growth for Trustco’s shareholders andslowing Chinese economy and a European The board and I have noted with great employees, and meet all challenges head on.Union facing its own challenges ranging from satisfaction the heightened engagement I thank the managing director, executivesovereign debt to an influx of immigrants and enthusiasm observed from Trustco’s team and the board committees for theircoupled with a prolonged decline in employees. The overwhelmingly positive way commitment and dedication during the year.commodity prices worldwide, sustainable in which the employees have rolled up their To the stakeholders, thank you for youreconomic growth will be challenging. The sleeves in response to new opportunities and ongoing faith in the business. To all newsub-Saharan African economic growth is responsibilities is a satisfying dividend to the stakeholders, I extend a heartfelt welcomeprojected to be slightly higher than the investment and will stand Trustco in good and trust you will enjoy a rewardingglobal growth, however regionally, one stead in the future. association with this dynamic operation.is bombarded by headlines of electricity To my fellow directors, managing director andshortages, downgrading to junk status, TRUSTCO’S DIVERSIFICATION executive team for their unwavering supportinflation rate increases, conflict, unrest, STRATEGY OFFERS THE GROUP A and tireless efforts to ensure compliance,high unemployment rates; this amidst the BUFFER AGAINST RISKS, OFTEN while achieving growth and remaining theeveryday challenge of doing business. APPLICABLE TO A SINGLE MINDED creative company and leaders in the marketWhilst Namibia’s outlook reads marginally APPROACH you are known for.better with its government’s track recordof prudent debt management and a low By diversifying Trustco’s product offerings and ADV RAYMOND HEATHCOTE SCsusceptibility to political and financial risk, the growing synergy across the group, the groupregional trend is disturbing. Namibia has long creates value whilst mitigating risk. CHAIRMAN OF THE BOARDsince proved itself as a business destination Although Trustco’s core focus remains in Integrated Annual Report 2016 | 11

DIRECTORATE DR QUINTON VAN ROOYEN When, in the course of human events, it GROUP MANAGING DIRECTOR becomes necessary for one company to12 | Integrated Annual Report 2016 diversify the band that has connected it, and to assume among the powers of the economy the separate and equal status to which the Companies Act and the constitution entitles it, a decent respect for the opinions of mankind requires that it should declare the causes which have impelled it to diversify.

MANAGING DIRECTOR’S REPORTI am, of course, paraphrasing the unanimous flawless in its beauty, but also unmatched in We anticipate that several more will startdeclaration of independence of the United its sustainability and wealth creation from blossoming during the coming year, resultingStates, but the impetus to explain the events mine to market. in a bountiful harvest for all our shareholders.that led up to a current situation seems apt Trustco has built up a strong balance sheet,at this point in Trustco’s history. Our investments segment maintained and we plan on tapping that well to make full its expected growth during the year. Our use of its intrinsic value in the short-term.Trustco has had another prodigious year, with President Geingob’s Harambee Prosperity The well of potentiality in Trustco goes deep,accolades galore while charting a course into Plan has significant sections directed and we’re quite enthusiastic to unlock itsnew territories for us in an attempt to secure specifically towards land provision, and the value for all shareholders.our future, but unlike the United States investment segment capitalized on thisin its declaration, Trustco does not claim drive, providing 291 plots of serviced land in WHEREAS THE SAID RIGHTSindependence from our imperial master, the the Elisenheim development during the year. ARE MOST EFFECTIVELYeconomic world and the country we’re rooted Our banking and finance segment had MAINTAINED AND PROTECTED INin. Trustco has always been a Namibian significant growth this year, as the financing A DEMOCRATIC SOCIETYgroup, and during this year we’ve strived to arm flexed its muscles and showed whatstrengthen the bond we have to our nation. it was capable of, while the banking arm I, of course, cannot claim that all these plansIt is thus perhaps more apt that we see got off the ground, and continues to make are mine alone, or that I alone executed them.ourselves in the light of our own constitution headway into becoming a full-fledged local Our elected board has been my constantthan that of the global superpower. commercial bank. source of guidance and support, and I’d like to warmly thank them for their tireless work andWHEREAS RECOGNITION OF THE With the employees that carried our great support during the past year. My executiveINHERENT DIGNITY AND THE group to such heights behind me, I could not team has served as my right hand duringEQUAL AND INALIENABLE RIGHTS help but be impressed by their resilience, the year, and I thank and commend them forOF ALL MEMBERS OF THE HUMAN and embarked on a revolutionary expansion their efforts. By holding themselves to a highFAMILY IS INDISPENSABLE FOR of our broad-based employee retention standard they ensure that maximum value isFREEDOM, JUSTICE AND PEACE plan, making every employee employed for added for our shareholders. more than one year, now and in future, aTrustco has experienced a sense of peace shareholder in the company. This not only Trustco’s employees, the lynchpin that keepsin Namibia that has given us the freedom aligns employee goals with that of the Trustco performing at the top of the line yearto flourish. Trustco placed second in the shareholders, but as it turns out, companies after year, are the “assets” that truly makeprestigious Sunday Times/Johnnie Walker with employee ownership consistently our group great. Thank you for everything youTop 100 Companies Awards in 2015, making outperform others in the market. No do to at least keep this shareholder smiling.a Namibian company one of the top shareholder can complain about outsized And to all our stakeholders, our customers,performers over a five-year period on the JSE. returns, after all. our loyal friends and our investors – we couldTrustco was also proclaimed to be “The Best not have done any of this without you. ThanksCompany To Work For” in Namibia for 2015, WHEREAS THE SAID RIGHTS for joining us on this journey – but we’re notby Deloitte’s survey of the same name, after INCLUDE THE RIGHT OF THE even close to completing it. I think the nextplacing third in the 2014 survey. But, it was INDIVIDUAL TO LIFE, LIBERTY few years will be even more spectacular andnot just external accolades that perched AND THE PURSUIT OF HAPPINESS we intend to change to “second gear”.Trustco’s flag atop a field of achievements.With our South African operations But, as our constitution states, we only WHEREAS WE, THE PEOPLE OFstreamlined, the insurance segment, a have a right to the pursuit of happiness – NAMIBIA, ARE COMMITTED TOstalwart of our group, managed to achieve happiness itself is not a right. And so it is THESE PRINCIPLESits organic growth targets and once again with Trustco as well. Trustco’s Namibiancontributed meaningfully to our bottom line. roots occasionally means we are anchored Just as the people of Namibia remainOur new resources segment started with the to events beyond our control, such as the committed to their principles as enshrined inacquisition of a Namibian diamond mine and emerging markets implosion and its knock- our constitution, so too I remain committed toNamibian diamond polishing factory. on effect to our economy, as a result of Trustco, and its continuing growth. Whilst the South Africa’s currency woes. road behind was rocky and the path we nowWith only a few items outstanding to finalise travel is smooth and even, I am poignantlythe acquisition and consolidate it into the Let it not be said, though, that Trustco is aware that we should never be satisfiedgroup, the new segment is off to a running not valiant in its pursuit of happiness. My with the status quo. Together we’ve laid thestart, and I expect it to provide significant team and I always maintain a forward focus, groundwork for truly exceptional growth andvalue to shareholders in the coming years. looking for strategic opportunities to hedge I intend to turn that possibility into a reality.Aiming for greater beneficiation along the our growth while allowing for above normal Let’s make that journey together.entire value chain will not only set us apart returns on the upside. This year was nofrom other competitors, but will also ensure exception, and several of the milestones DR QUINTON VAN ROOYENthat we deliver a product that is not only we’ve aimed at are starting to bear fruit. GROUP MANAGING DIRECTOR Integrated Annual Report 2016 | 13

DIRECTORATE WINTON GEYSER I can applaud the level of expertise serving on CHAIRMAN OF THE AUDIT AND RISK COMMITTEE this committee, as they continue to monitor and14 | Integrated Annual Report 2016 review these tasks. Trustco, a company with an integrated structure, encourages transparency, cooperation and integration between the external and the internal audit function.

CHAIRMAN OF THE AUDIT AND RISK COMMITTEE’S REPORTAlthough the ultimate accountability Risk and reward are two sides of the same which they have executed their duties duringfor structure, accountability and risk coin. Risk in itself is not bad. What is bad, the year. The management of internal audit,management remains with the board of is risk that is mismanaged, misunderstood risk and compliance does not always have andirectors, ARC’s main responsibility is to or mispriced. The board of directors easy task. They often experience challengingoversee and ensure proper governance of determined the risk tolerance for the group views and opinions from management,the auditing function and identification and and ARC is constantly testing, monitoring but their dedication and resilience is trulymanagement of risk of the company. The and implementing safety measures to commendable.Kudos to their integrityboard increasingly looks to board committees ensure that the risk tolerance of the group and steadfastness.to provide assurance and as chairman of is not enthused. The risk tolerance of thethe ARC, I can applaud the level of expertise group is clearly identified and defined. To WINTON GEYSERserving on this committee, as they continue help management to identify risk indicators,to monitor and review these tasks. ARC is informed of the risks and exposures CHAIRMAN OF THE AUDIT which the company may face. ARC is also AND RISK COMMITTEETrustco, a company with an integrated updated regularly on the company’s strategicstructure, encourages transparency, objectives, procedures and evaluations.cooperation and integration betweenthe external and the internal audit Risk is not only measured in monetaryfunction. This enables ARC to get a value, but reputational risk is also of greatclear understanding of the strengths and importance. How the group’s actions areweaknesses of the group’s internal control perceived by others in the market addsmanagement systems. Any identified another layer of responsibility to be a goodweaknesses are dealt with immediately. corporate citizen. The environment in which a company operates, the social impact it hasARC has an ongoing responsibility to assess and the economic impact and influence arethe effectiveness of the control framework, all factors that must be considered whenand therefore gathers information from measuring risk.management and also from the externaland internal audit as part of our assessment To be a good corporate citizen might beprocess. This leads to ARC challenging and attainable, or even achievable throughtesting management as well as the external regulatory enforcement, but being a goodand internal auditors on any assessment corporate citizen is not good enough. Trustcothey may have made. We are constantly holds itself to a higher standard, where goodbriefed on how management is embedding is not good enough, but aims for better.a culture of good governance and ethicalbehaviour. Although embedding such a Trustco is not a company that engagesculture does not guarantee that the group in a “box-ticking” exercise to ensurewill achieve their goals, the lack of such compliance, but rather sees compliance asculture provides greater opportunity for error a means to enhance shareholder return. Asor for improprieties to occur. chairman of the ARC I can enthusiastically congratulate the company for activelyI think in future ARC will play an even more pursuing good governance, cultivating aintegrated part of a company’s reporting culture of excellence, and at all times beingstructure. It is therefore imperative for every transparent. (Refer to corporateARC member to have in-depth financial governance report)knowledge as well as theability to apply business experience I would like to use this opportunity, to thankinto practical application. all members of the committee for their considerable effort and the devotion with Integrated Annual Report 2016 | 15

DIRECTORATE BOARD OF DIRECTORS FROM LEFT TO RIGHT: DR Q VAN ROOYEN, ADV R HEATHCOTE SC, QZ VAN ROOYEN, J MAHLANGU, W GEYSER, R TALJAARD, F ABRAHAMS AND R MCDOUGALL16 | ITnrtuesgtcraoteIndteAgnrnauteadl RAenpnouratl2R0e1p6ort 2016

Trustco Integrated Annual Report 2016 | 17

DIRECTORATE R TALJAARD (56) INDEPENDENT, NON-EXECUTIVE DIRECTORBOARD OF DIRECTORS Namibian Citizen APPOINTED: 5 July 2012 ADV R HEATHCOTE SC (51) QUALIFICATIONS: INDEPENDENT, NON-EXECUTIVE DIRECTOR BEcon Namibian Citizen FCII APPOINTED: 29 September 2010 FIISA QUALIFICATIONS BA LLB ROLE AT THE COMPANY • Member of the board of directors of ROLE AT THE COMPANY Trustco Group Holdings Ltd • Chairman of the board of directors of • Member of the audit and risk committee Trustco Group Holdings Ltd of Trustco Group Holdings Ltd • Chairman of the • Chairman of the remuneration committee nomination committee of Trustco Group of Trustco Group Holdings Ltd Holdings Ltd • Member of the board of directors of Trustco Life Ltd EXPERTISE AND EXPERIENCE • Member of the board of directors of Adv Heathcote is an admitted attorney of the Trustco Insurance Ltd High Court of Namibia and was an acting judge of the High Court of Namibia in 2005, 2007, 2009 EXPERTISE AND EXPERIENCE: and 2011. Several of his judgments have been Mr Taljaard has vast experience, of more than 26 reported in both the Namibian and South African years, in both the short-term and life insurance Law Reports. Adv Heathcote is a member of the industries. After completing his FCII studies, Society of Advocates and has been honoured by Mr Taljaard was allowed as a fellow member being appointed as senior counsel in 2009. Adv of the Insurance Institute of South Africa and Heathcote served as the president of the Society Namibia. He held various senior positions within of Advocates. the industry including Managing Director at Swabou Insurance, Nasria, Harvest Reinsurance WJ GEYSER (56) Company, Trustco Insurance and Trustco Life. He INDEPENDENT, NON-EXECUTIVE DIRECTOR served on the board of Trustco Insurance from Namibian Citizen 2000 to 2006 and was appointed to the board of APPOINTED: 29 September 2010 Trustco Group Holdings in 2012 and to the board QUALIFICATIONS of Trustco Insurance and Trustco Life in 2013. BCompt (Hons) BCompt J MAHLANGU (48) CA (SA) INDEPENDENT, NON-EXECUTIVE DIRECTOR South-African Citizen ROLE AT THE COMPANY APPOINTED: 4 February 2013 • Member of the board of directors of QUALIFICATIONS: Trustco Group Holdings Ltd BCom (Acc) • Chairman of the audit and risk committee BCompt (Hons) of Trustco Group Holdings Ltd CTA and CA (SA) • Member of the remuneration and nomination committee of Trustco Group ROLE AT THE COMPANY: Holdings Ltd • Member of the board of directors of • Chairman of the board of directors of Trustco Group Holdings Ltd Trustco Life Ltd • Member of the audit and risk committee • Chairman of the board of directors of of Trustco Group Holdings Ltd Trustco Insurance Ltd EXPERTISE AND EXPERIENCE: EXPERTISE AND EXPERIENCE Mr Mahlangu completed his articles with Mr Geyser is a member of the South African PricewaterhouseCoopers (PwC) in 1996. He joined Institute of Chartered Accountants. He held the the Office for Serious Economic Offences in position of assistant manager at the audit firm 1998 and in 2000 returned to PwC where he was Deloitte, Haskins and Sells (now Deloitte) and appointed as head of the PwC Forensic Services later joined their financial management services practice in Gauteng and was later admitted division where he provided accounting assistance, as a partner in 2002. Mr Mahlangu further taxation and estate planning to a number of excelled by starting his own company, Ligwa individuals and companies. Since then he has Advisory Services and has a diverse client base. performed consultancy work and has held various He has performed audit and forensic related senior positions. Mr Geyser currently holds the assignments internationally and in addition position of group managing director of Epic carried out various statutory appointments. Holdings (Pty) Ltd and various other directorships in Namibian companies.18 | Integrated Annual Report 2016

DR Q VAN ROOYEN (51) and the Namibian Chamber of Commerce and IndustryEXECUTIVE DIRECTOR AND GROUP MANANGING DIRECTOR 2015: PMR Africa - diamond arrow award for outstandingNamibian CitizenAPPOINTED: Acquired Trustco in 1992 service and contribution to economic growth andQUALIFICATIONS: development of NamibiaBIurisLLB EXPERTISE AND EXPERIENCE:DBL (Honoris Causa) Business Leadership & Entrepreneurship Dr Van Rooyen’s business acumen, skill and leadership is the(IUM) determining factor that transformed the group into a successful dual-listed entity. His creative approach to life makes theAWARDS: mundane extraordinary. He has a fearless attitude towards 2003: Voted “Business Communicator of the Year” challenges that makes him an easy leader to follow. His 2007: Voted second “Most Admired Business Personality of talent and passion is to create products and services that are the Year” sustainable, socially responsible and that will yield extraordinary 2012: Voted Top 10 “Most influential individuals in Namibia” – wealth for stakeholders by harnessing opportunities in Namibia The Villager newspaper and throughout Africa. Dr Van Rooyen whole-heartedly believes 2014: Inducted into the prestigious Namibian Business Hall of that the full potential of Africa is yet to be realised and that Fame, under the auspices of Junior Achievement Namibia change is the spice of life.FJ ABRAHAMS (41) QZ VAN ROOYEN (30)EXECUTIVE DIRECTOR AND GROUP TREASURER ALTERNATE DIRECTOR TO THE GROUPNamibian Citizen MANAGING DIRECTORAPPOINTED: 22 August 2006 Namibian CitizenQUALIFICATIONS: APPOINTED: 16 March 2016BCom QUALIFICATIONS: BCom (Law)EXPERTISE AND EXPERIENCE: LLBMr Abrahams completed his articles in 1999.During this period he accumulated experience AWARDSin the financial sector and conducted various 2014: Ranked the “Fittest Man in Africa” atclient audits. Mr Abrahams was appointed as the CrossFit Games held in South Africagroup financial manager of Trustco in 2000 and 2014: Inducted into the prestigious Namibiansubsequently group financial director in 2004. Mr Business Hall of Fame, under theAbrahams assumed the role of group treasurer auspices of Junior Achievementin 2013 and recently celebrated his 15th year with Namibia and the Namibian Chamber ofTrustco. Commerce and Industry 2014: Ranked 42nd in the internationalR MCDOUGALL (35) Reebok CrossFit Games “Fittest onEXECUTIVE DIRECTOR AND GROUP FINANCIAL Earth”DIRECTORSouth-African Citizen (Namibian domicile) EXPERTISE AND EXPERIENCE:APPOINTED: 31 March 2013 Mr Van Rooyen joined Trustco in 2010 afterQUALIFICATIONS: the completion of his studies with the mainBBus Sc (Hons) purpose to gain experience in the company.CA (SA) Showing a natural flair for business he soonCA (Namibia) thereafter took up a position within the financeFRM and education segment in 2011. He specialised in the determination and execution of strategy,EXPERTISE AND EXPERIENCE: including focusing on and developing acquisitionsMr McDougall has a wealth of experience in within this sector. Mr Van Rooyen was appointedfinancial services, specifically banking and financial as head of the Namibian operations in 2013 andrisk management, corporate finance and mergers subsequently appointed to serve on variousand acquisitions. Following the completion of boards of subsidiaries within Trustco. Inhis articles at KPMG Johannesburg in 2006, Mr November 2014 he took charge of the insuranceMcDougall gained practical experience as head of and investments segment and following histreasury finance at HSBC securities, Johannesburg, success therein was appointed as head of groupSouth Africa. Thereafter he headed up the business in October 2015. He currently holds thefinancial and regulatory accounting department position as deputy CEO of the group.at Standard Bank in Jersey, Channel Islands. Hejoined Trustco in November 2012 as group financialdirector designate full time. He was nominated forCFO of the year and Young CFO of the year at the2016 annual CFO awards, South Africa. NOTE Adv R Heathcote and Mr R Taljaard represent one third of the non-executive directors who retire and may be re-elected by shareholders. The board has confirmed and verified the eligibility of these directors. Integrated Annual Report 2016 | 19

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_02GROUP PROFILE VISION AND MISSION Page 24 GROUP STRUCTURE Page 24 GROUP STRATEGY Page 25 BUSINESS MODEL Page 26 THE ROLE OF TRUSTCO IN NAMIBIA Page 28 OUR FOOTPRINT Page 32 OUR HISTORY Page 33 Integrated Annual Report 2016 | 21



OUR STRATEGY QUICKLYCHANGES AS THE FACTS ANDCIRCUMSTANCES CHANGEON WHICH OUR INITIALSTRATEGY WAS BASEDDR Q VAN ROOYEN

GROUP PROFILEVISION AND MISSIONOUR VISION OUR MISSIONWith our roots firmly in Namibia and our reach We provide efficient and dynamic services to our coreextended into the rest of Africa and the emerging industries, ensuring responsible and sustainable growthmarkets beyond, we seek to generate above that will have a positive impact on society and ouraverage growth over time to create wealth for our environment. We embrace technology to facilitateshareholders, customers and employees while innovative and affordable solutions in each of ourimpacting positively on society and our planet. segments. We are accountable to all stakeholders to deliver value and sustainable returns on their investments. We value our employees and recognise their intellectual value and commitment as an important component of our success. INSURANCE GROUP STRUCTURE BANKING AND FINANCE INVESTMENTS SHARED SERVICES24 | Integrated Annual Report 2016

GROUP STRATEGY CORPORATE ACQUISITIONS The group spends a fair amount of time and effort identifying new opportunities through integrated thinking. Businesses that are capable of a positive incremental increase to earnings per share are considered with a view to potential synergetic relationships within the group PRODUCT AND BUSINESS SYNERGIESIn isolation each businesscontributes incrementally toprofitability, but in concert,opportunities abound INCREASING MARKET SHARE WITH INNOVATION AND DIGITALISATION Efficiency, accessibility and customer service drive speed and impact when looking to access the market. The group is constantly looking at reviewing the efficiency of existing businesses in the group Integrated Annual Report 2016 | 25

GROUP PROFILEBUSINESS MODEL Innovation EfficiencyDigitalisation Business StrategySynergy Customer The capitals are not fixed over time, service but there is a constant movement between them as they increase26 | Integrated Annual Report 2016 and decrease. One capital might be focused on during a specific period, but focus can move to another capital, causing it to increase as it is influenced by circumstances or strategies.

INPUTS Intellectual capital The group’s unique processes, systems and Financial capital novel product designs as well as the creation The group’s financial capital of reinvested of synergetic business contribute to this base. returns and cross-section of long- and short-term Output: protecting future earning potential borrowings from banks, institutional funders and through inter alia patent registration of depositors. Output: create profits and increase unique processes and novel product designs. total financial value / pool of funds. Social and relationship capital Human capital As a public company, operating in the The group’s employees are sourced from varying banking and finance space, ensuring strong levels of experience, education, background, relationships with the public, investors and gender, race and attitude. Together they other stakeholders is a key focus. Output: collaborate to form an immense force behind value increase financial assets to support insurance creation. Output: be the employer of choice and and banking requirements. retain quality employees. Manufactured capital Natural capital Service land, extracting activities by utilising The group’s operations in property development existing property, plant and equipment. are natural capital dependent and the impact Output: create opportunities for future thereon is monitored closely. Output: build and investment and new opportunities for growth. maintain a reputable and recognisable brand.ACTIVITIES How the group’s goals are executed to drive outputEfficiency SynergyTransforming natural resources into wealth through mining and Through integrated thinking developing products tobeneficiation activities complement and grow other segments within the groupInnovation Customer serviceInvesting excess returns into new business and investment vehicles Provision of financial services and financialwith potential products, including savings, loans and insurance productsDigitalisationProviding online platforms to transactOUTPUTS BUILD AND MAINTAIN A REPUTABLE AND RECOGNISABLE BRAND CREATE RETURNS AND INCREASE TOTAL FINANCIAL VALUE CREATE OPPORTUNITIES FOR FUTURE INVESTMENT INCREASE FINANCIAL ASSETS TO SUPPORT INSURANCE AND CREATE NEW OPPORTUNITIES BANKING REQUIREMENTS FOR GROWTH BE THE EMPLOYER OF CHOICE AND Integrated Annual Report 2016 | 27 RETAIN QUALITY EMPLOYEES

GROUP PROFILETHE ROLE OF TRUSTCO IN NAMIBIA TRUSTCO AND THE NAMIBIAN ECONOMY This multiplier has three elements: • The Direct Impact is wealth created by local The role of successful local businesses in any economy is expenditure generated by a business. (Refer to extremely valuable, but often understated and hidden from Trustco’s value-added statement). public view. Local businesses generate a local multiplier • The Indirect Impact materialises as the businesses effect, the result of its profits and expenditure recirculating and individuals that receive wealth and payments through the economy multiple times by increasing the from Trustco spend at other businesses. revenue of multiple local businesses and individuals before it • The Induced Impact is the additional income exits the economy via imports. generated by all the additional income generated from the direct and indirect impacts and are spread Every dollar Trustco spends at a local business becomes throughout the economy. revenue which that business is able to spend – and if that is also spent locally, it once again becomes income in another Whilst Trustco’s indirect and induced impact is difficult to local enterprise, multiplying the effect of one dollar until it is measure, its direct impact in the Namibian economy is a used for an import. different matter. Additionally, wages paid out to employees are spent by The Namibian government has introduced the Harambee them locally, with research indicating that for every person Prosperity Plan (HPP) – an economic plan with a Namibian employed, an additional two to five service jobs are required narrative. Trustco, as part of an inclusive Namibian house, is and created to service their needs and receive directly supportive of and contributing to this plan. their expenditure. HARAMBEE PROSPERITY PLAN (HPP) STRUCTURE HARAMBEE PROSPERITY PLAN EFFECTIVE ECONOMIC SOCIAL INFRASTRUCTURE INTERNATIONAL GOVERNANCE ADVANCEMENT PROGRESSION DEVELOPMENT RELATIONS AND COOPERATION Macro-economic Hunger and Energy stability poverty infrastructure Accountability Water Respected and transparency infrastructure and trusted international Economic Residential land community transformation delivery, housing and sanitation member Improve Youth enterprise Infant and Transport International performance and development maternal infrastructure support for service delivery mortality economic Economic ICT independence competitiveness Vocational infrastructure education training ONE NAMIBIA, ONE NATION PEACE, RECONCILIATION, SECURITY AND STABILITY28 | Integrated Annual Report 2016

TRUSTCO AND EFFECTIVE GOVERNANCE TRUSTCO AND SOCIAL PROGRESSIONThe effective governance section of the HPP consists of two parts: Hunger and poverty Trustco’s corporate social investment strategy (Refer to CSI report)Accountability and transparency has continued unabated and each employee contributed meaningfullyTrustco is committed to upholding accountability and transparency to different causes throughout each reporting period. The insuranceby adhering to the highest ethical standards of business conduct and segment of the group offers Legal Shield, a quality legal insurancepromoting and maintaining a culture of accountability and transparency product, at an affordable premium, ensuring that all Namibians canthroughout the organisation. manage to pay for their access to constitutional rights and legal representation.The company protects and rewards whistle-blowers and encouragesbest practices contained in the various internationally recognised King Similar to its education programmes the corporate social investmentreports on good corporate governance, complies with all laws and initiatives of Trustco target schools and youth sports development. Theregulations applicable to its businesses and strives to be and maintain company invested heavily and will continue to invest in modern sportthe standard that others should aspire to. infrastructure of international standards in order to develop the youth and to attract the best competitors in the world, contributing to provideImprove performance and service delivery opportunities to the growing world class image Namibia aspires to.In terms of performance and service delivery Trustco’s continuedexcellence is evidenced in its sustained year-on-year performance. The Residential land delivery, housing and sanitationgroup also provides a valuable indirect service to assist government with Trustco’s property segment has worked relentlessly during the past fewthese goals. The Informanté is a free weekly newspaper that provides years to assist to supply the growing demand for housing in Namibia. Thein-depth reporting to the Namibian populace – it keeps the government acquisition of the Elisenheim residential development in 2013 suppliedaccountable and exposes that which is not yet transparent or where plots of serviced land or plots of serviced land with houses already built,there are lags in service delivery and areas of poor performance through to alleviate the housing shortage in the country.informed editorials. It forms an important pillar and partnership withthe HPP. Trustco recognises that industrial development should underpin the closing of the income gap and encourages the manufacturing sector as aTRUSTCO AND ECONOMIC ADVANCEMENT possible creator of employment. To this end, Trustco has invested in the development of industrial erven by taking the industry closer to the people.Macro-economic stability and economic transformationTrustco is a product of Namibian independence and an example and Infant and maternal mortalityproud ambassador of the enabling environment, entrepreneurial The insurance segment has several products to reduce and alleviateopportunities and the investment regime that the changing post- the financial impact this might have on families. Trustco Life offersindependence society created. Trustco serves as tangible evidence that life cover that includes families and covers up to five children, whilethe Namibian economy is one that not only can keep old industries Trustco insurance provides short-term products that cover hospitalbooming, but also allows for new businesses not only to establish stays and family protection that covers expenses for children should thethemselves, but to flourish and contribute successfully to the stability breadwinner meet an unfortunate end.of the Namibian economy. Vocational education trainingTrustco also led in the charge for economic transformation, by The distance education subsidiary of Trustco, the Institute for Openintroducing a broad based employee retention plan that makes all Learning (IOL), provides training in a variety of courses, with vocationalemployees employed for longer than a year a shareholder in the ICT courses being supplemented by training centres offering remotecompany. Transforming corporate ownership structures is a key part of training at all group branches.the HPP and Trustco is proud to be the standard bearer that shows howit should be done. TRUSTCO AND INFRASTRUCTURE DEVELOPMENTYouth enterprise development and economic competitiveness Trustco’s property division has headed the charge in infrastructureTrustco’s managing director has over the past year expanded his development in its residential developments and was further enhancedretinue and introduced the QVR Code which includes encouragement, by the acquisition of a construction company.advice and inspiration, by visiting communities across Namibia withquestion and answer sessions about entrepreneurship and managing Trustco’s ICT infrastructure is the envy of local businesses as it hassuccessful businesses. This has culminated in a national competition allowed its products and services to be accessed from the remotest ofwith communities being awarded grants for business development and locations and allows all its regional offices to operate as if directly frominitiatives to encourage entrepreneurship. the corporate headquarters in Windhoek. Integrated Annual Report 2016 | 29

GROUP PROFILETHE ROLE OF TRUSTCO IN NAMIBIA CONTINUED TRUSTCO AND INTERNATIONAL RELATIONS development and has successfully introduced such AND COOPERATION luminaries as the International Finance Corporation (IFC), a subsidiary of the World Bank to Namibia’s financial sector. The continued success of the group has elevated In addition, funders from as far afield as Germany (DEG), Namibia not only onto the regional platform, but also the France (Proparco), Norway (Norfund) and Switzerland international one, and provides key support to the corporate (ResponsAbility) have contributed to the funding of sector for Namibia’s international ambitions. Trustco has Trustco Finance’s student loan book, joining the African for the past seven years operated as a dual listed entity Development Bank (AFDB), a traditionally strong supporter and during the reporting period was placed second overall of African development. in the prestigious Sunday Times/Johnnie Walker Top 100 Companies awards on the JSE for 2015. Whilst the majority of our shareholders remain Namibian (2773 out of 3920), the group has shareholders from the Trustco’s growth ambitions also attract international USA, the United Kingdom, Belgium, Denmark and Lebanon. attention. The group has always been a strong proposition, Many chose to attend the annual general meeting and take a inviting foreign funders and investors for Namibian bit of the Namibian culture and its story back into the world after each visit. Trustco places second in the prestigious Sunday Times Top 100 companies Awards 2015, a proudly Namibian first.30 | Integrated Annual Report 2016

TRUSTCO HAS FOR THEPAST SEVEN YEARSOPERATED AS A DUALLISTED ENTITY ANDDURING THE REPORTINGPERIOD WAS PLACEDSECOND OVERALL IN THEPRESTIGIOUS SUNDAYTIMES/JOHNNIE WALKERTOP 100 COMPANIESAWARDS FOR 2015 ON THEJOHANNESBURG STOCKEXCHANGE Integrated Annual Report 2016 | 31

GROUP PROFILEOUR FOOTPRINTONGWEDIVA KATIMA MULILO RUNDU MAURITIUS OTJIWARONGO JOHANNESBURG GOBABIS WINDHOEK CAPE TOWN KEETMANSHOOPWALVIS BAY32 | Integrated Annual Report 2016

OUR HISTORYAwarded the diamond arrow award by PMR Africa in the business 2016 Trustco Resources established category for Most Innovative Companies in Namibia 2015 NAD770 million line of credit secured 2014 Winner of Deloitte’s annual “Best Company To Work For” survey 2015 ADR program launched in the USA Awarded second place in the Sunday Times Top 100 Companies, Acquisition of Fides Bank Namibia Ltd South Africa Trustco placed third in Deloitte’s annual ‘Best Company To Work For’ survey in Namibia and Southern Africa Launched the Trustco Top 40, showcasing employees with outstanding service No. 1 performing share on the JSE Trustco added to the JSE All-Share Index, the Small Cap Index, Employment Equity Commission award in Namibia in recognition of good performance in the promotion of employment equity the Value Index, Growth Index and Financial Index PMR diamond award winner for good corporate citizen, Shareholders approved the acquisition of Huso Investments advancement of corporate leadership and corporate 2013 Domestic medium-term note responsibility initiatives and investments 2012 programme listed on the JSE Main Board NAD165 million line of credit secured Elisenheim acquisition ZAR1 billion bond issue approved ZAR300 million bonds issued Insurance expanded to South Africa Trustco listing moved to Main Board of the JSE Employment Equity Commission award in Namibia. Trustco ranked 8th out of 738 employers in Namibia NAD80 million in DFI funding secured Insurance for Namibia mobile clients launched 2011 Insurance expanded to include retail clients 2010 Monetisation of land bank started 2009 Trustco lists on Johannesburg Stock Exchange Ltd (JSE) 2007 Trustco Life becomes the largest life insurer in Namibia Trustco expands into South Africa 2006 2005 Trustco lists on the Namibian Stock Exchange (NSX) Education and finance operations acquired in Namibia 2004 Trustco is granted its life insurance license 2000 Trustco is granted its first insurance license 1992 Life insurance operations commence Short-term insurance operations commence Trustco Group founded Integrated Annual Report 2016 | 33

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_03FINANCIALPERFORMANCE VALUE ADDED STATEMENT Page 38 FINANCIAL DIRECTOR’S REPORT Page 39 SUMMARISED GROUP RESULTS Page 46 Integrated Annual Report 2016 | 35

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IN THE 2016 FINANCIALYEAR, THE GROUP GREWEARNINGS, REVENUE ANDNET ASSET VALUE WHILSTCONTINUING TO DELIVER ANABOVE AVERAGE RETURNON EQUITYR MCDOUGALL Integrated Annual Report 2016 | 37

FINANCIAL PERFORMANCEVALUE ADDED STATEMENT 2016 2015 % NAD‘000 % NAD‘000 for the year ended 31 March Value added is the wealth created by Trustco Group Holdings Ltd 1 303 453 1 153 200 and its subsidiaries through the sale of products and provision (565 422) (556 695) of services Revenue from all operations 738 031 596 505 Purchases and other direct costs of services Wealth createdDISTRIBUTION OF WEALTH CREATEDBY TRUSTCO GROUP OF COMPANIES:Employee compensation 143 988 19.5% 143 983 24.1%Salaries, wages and other benefits 49 400 6.7% 40 817 6.8%ShareholdersDividends 78 464 10.6% 62 103 10.4%Government 466 179 63.2% 349 602 58.7%Taxation (PAYE, Income tax, etc.) 100% 100% 419 798 303 238Retention for expansion and future growth 46 381 46 364Net profit for the yearDepreciation and amortisation 738 031 596 505DISTRIBUTION OF WEALTH 40 817(NAD ‘000) Shareholders 49 400 62 103 Shareholders Government 78 464 143 983 Government Employee compensation 2016 143 988 2015 Employee compensation 349 602 466 179 Retention for expansion and future growth Retention for expansion and future growth38 | Integrated Annual Report 2016

GROUP FINANCIAL DIRECTOR’S REPORTRYAN “The journey to find the right balance betweenMCDOUGALL delivering returns and creating sustainable wealth has been a hallmark of Trustco’s success in recent years.”GROUPFINANCIALDIRECTOR EARNINGS BALANCE SHEET 27% GROWTH ON 27% GROWTH ON ASSETS EARNINGS PER SHARE CUSTOMERS VALUE 13% GROWTH IN REVENUE FROM 41% GROWTH IN NET ASSET VALUE CUSTOMERSOVERVIEW In the 2016 financial year, the group grew earnings, revenue and net asset value whilst continuing to deliver an aboveThe journey to find the right balance between delivering average return on equity.returns and creating sustainable wealth has been a With the first full year of operations from Trustco Bank thehallmark of Trustco’s success in recent years. In 2016, future now looks clear. The synergies between the banking,earnings from all segments grew profits alongside the insurance and investments segments will continue tocreation of a sustainable balance sheet with robust play a large part in ratcheting up the group’s local marketpotential. penetration and lay the groundwork for future successes.GROUP CONSOLIDATED PERFORMANCERevenue 2016 2015 2014 2013 2012NPAT NAD'000 NAD'000 NAD'000 NAD'000 NAD'000Headline earnings 1 150 286 1 017 073 843 554 303 238 595 239 713 304 419 798 252 672 39 384 239 824 419 432 275 744 141 522 33 863 138 540EPS (c) 55.4 43.6 33.6 5.4 35.1HEPS (c) 55.3 39.6 18.8 4.7 20.3NAV/Share (c) 284 201 162 133 134Share price (c) 310 300 119 116 114 Integrated Annual Report 2016 | 39

FINANCIAL PERFORMANCEGROUP FINANCIAL DIRECTOR’S REPORT CONTINUEDNET PROFIT AFTER TAXNet profit after tax of NAD420 million for the year, increased by 38% from the prior year (2015: NAD303 million).NET PROFIT AFTER TAX AND HEADLINE EARNINGS(NAD millions)45040035030025020015010050 0 2012 2013 2014 2015 2016REVENUE properties driving an increase in property sales, revenueRevenue increased by 13% to NAD1.150 billion (2015: NAD from insurance premiums and interest on student advances1.017 billion). Property sales revenue remained the largest showed a small but meaningful increase demonstratingcontributor to revenues, with a continuing demand for new sustained inertia. REVENUE GROUP REVENUE BY TYPE(NAD millions) Fee and Other Interest 1 400 commission revenue 1 200 income 1 000 2016 Premiums 800 600 Investment 400 sales 200 2015 2016 0 201440 | Integrated Annual Report 2016

EARNINGS PER SHARE HEADLINE EARNINGSEarnings per share has increased by 27% to 55 cents per share Headline earnings of NAD419 million showed a 52% increase on the(2015: 44 cents). prior year comparative of NAD276 million. The variance between basic earnings and headline earnings is now reduced to a 0.09% variance (FY2015: 10%) demonstrating a more stable and predictable result for the JSE prescribed metric.EARNINGS PER SHARE (EPS cents) RECONCILATION(EPS cents)70605040302010- FY2015 EPS Increase in Increase in Reduction in SA Increase in Treasury FY2016 EPS finance costs share sale investment banking and insurance cost effect income finance profitsRETURN ON EQUITY ROE in the early years of rapid growth. It is therefore important for theThe group achieved a return on equity (ROE) of 23% (FY2015: 20%). ROE group to balance funding between capital and external borrowings tois a measure of ordinary shareholders return based on book value rather ensure that it does not create a negative drag on the rest of the group.than a market-based return. This metric is one of singular importance The move towards a long-term target in excess of the group’s peersin the business as the banking and finance segment migrates towards a remains one of Trustco’s core focus areas.leveraged operating model, which can place downwards pressure on theROE 2014 2015 201624.00%23.00%22.00%21.00%20.00%19.00%18.00%17.00% 0SEGMENTAL PERFORMANCE reduction in the operating cost base in South Africa and a 7% growthBanking and finance net profit after tax grew by 8% to NAD57 million in insurance premium revenue.per annum (FY2015 NAD53 million) due to increasing loan book sizeand improving loan loss provision ratios. Non-performing loans across Investments segment net profit after tax grew by 19% to NAD317all advances showed improving credit quality, resulting in a ratio of 3% million per annum (FY2015 NAD266 million) due to a larger realised(FY2015 5.3%). property sales portfolio, increased educational revenue and a small increase in revenues relating to advertising income in the mediaInsurance segment net profit after tax grew by 400% to NAD45 divisions. The growth in revenues were further bolstered by a larger fairmillion per annum (FY2015 NAD15 million loss) due to the substantial value gain in the investment portfolio. Integrated Annual Report 2016 | 41

FINANCIAL PERFORMANCEGROUP FINANCIAL DIRECTOR’S REPORT CONTINUED SEGMENT REVENUE CONTRIBUTION (NAD millions) INSURANCE 201 2016 BANKING AND FINANCE 221 INVESTMENTS 728BALANCE SHEET After the Huso acquisition has been fully adopted into theThe growth areas on the asset side of the balance sheet group results, the mix of the balance sheet will subtly alterhave been advances (up 47% from 2015), investment to demonstrate an increased reliance on PPE with specificproperty (up 15% from 2015), receivables (up 33% from 2015) growth occurring in mining plant and yellow equipment usedand PP&E (up 71% from 2015). to operate the mine.BALANCE SHEET CONSTRUCTION INVESTMENTS(NAD millions) PROPERTY 816 OTHER RECEIVABLES 226INVENTORIES 328 2016 INTANGIBLE CASH 100 ASSETS 210 PPE ADVANCES 459 1 18442 | Integrated Annual Report 2016 PROPERTY SALES RECEIVABLES 691

DIVIDENDS dividend yield of 2.7%. The combination of the dividend cover andThe group targets a balance between a dividend yield approach, yield target is always subject to normal internal liquidity and solvencystable dividend growth and earnings cover of approximately 6 times. hurdles, but in recent times the debate about paying a dividend hasCombined, the interim and final dividend for the 2016 financial year resurfaced. The board stands by its decision to remain a dividend payingamounted to 8.4 cents per share (2015 FY: 7 cents per share). This stock for as long as local Namibian investors do not have the luxury of arepresents a dividend cover of 6.6 times headline earnings and a deep and liquid local equity market.DIVIDENDS PER SHARE 2015 2016 9 8 7 6 5 4 3 2 1 0 2014CREATING SUSTAINABLE FINANCIAL LEVERAGE CAPITAL ADEQUACYThe group’s borrowings increased from NAD1.046 billion to NAD1.105 As at 31 March 2016, the regulated entities in the group traded off thebillion during the financial year. Whilst the growth in the borrowings in below capital and performance metrics. Trustco Bank Namibia (Trustcothe fiscal year does not mirror the 47% growth achieved in advances, it Bank) remains bound to banking regulatory requirements and Trustcois expected that the borrowings will start to grow at a faster rate in the Life and Trustco Bank retain a capital adequacy level of 20% and 15%future as the banking and finance portfolios remain viable assets both respectively, the group ensures that the entities operate at a prudentin terms of consumer demand, but also in terms of being assets where buffer. Trustco Finance, which is not prescribed a capital adequacyprovisions are not expected to be affected by recent consumer trends. minimum, nevertheless maintains a capital adequacy in excess of 25% toThe effect of increasing capacity by financial leverage has increased ensure compliance with funders’ covenants.total interest cost to NAD134 million from NAD105 million in FY2015. 2016 2015 2014Bank capital adequacy 47% 56% -19%Life insurer capital adequacyTrustco Finance capital adequacy 21-1 74-1 4-1 34% 30% 30% Integrated Annual Report 2016 | 43

FINANCIAL PERFORMANCEGROUP FINANCIAL DIRECTOR’S REPORT CONTINUEDACQUISITIONS acquire a Namibian diamond mine as well as a Windhoek-During the 2016 financial year, Trustco completed another based diamond cutting and polishing factory.synergetic acquisition, that of Watermeyer Mining andConstruction (WMC). WMC enabled the group to rapidly RATINGSadvance the delivery of serviced land to the public and in Shortly after announcing the 2015 results, the Global Creditdoing so created the first significant new assets in Trustco Ratings Co (GCR) upgraded Trustco’s long-term NationalBank, being a mortgage loan portfolio of NAD40 million. rating from BBB- to BBB (with a positive outlook). The upgrade received from the ratings agency affirms Trustco’sThe year heralded Trustco’s largest corporate deal so far with view that its stable business model with a strong focus onthe Huso acquisition. During 2015 the group successfully synergies across the group remains a tantalising proposition.exercised an option with the blessing of shareholders to NAV/Share (c) HEPS (c) HEPS (c) Share price 2013 2014 60 50(cents) 40 30300 20 10250 0200 2015 2016150100 50 2012LOOKING TO THE FUTURE implementing a balanced, diversified operating model andThe insurance premiums are experiencing new and leveraging synergies within the group and in new acquisitions.unexpected levels of competition in a fiercely competitiveand innovative space. Furthermore, banking remains a RYAN MCDOUGALLsector where rising interest rates can negatively impactdisposable income and place a burden on the consumer. GROUP FINANCIAL DIRECTORWith these challenges the group remains committed to44 | Integrated Annual Report 2016

THE “NOT SO ACCOMPLISHED” TRUSTCO IS A DIVERSIFIED LISTED FINANCIAL SERVICES GROUP THAT INVESTS AND OPERATES IN SUSTAINABLE HIGH GROWTH ASSETS IN EMERGING MARKETS Integrated Annual Report 2016 | 45

FINANCIAL PERFORMANCESUMMARISED GROUP RESULTSSUMMARISED CONSOLIDATED BALANCE SHEET 31 March 2016 31 March 2015 NAD'000 NAD'000ASSETSCash and cash equivalents 99 835 118 700 New loans advancedAdvances 1 184 063 806 965 amounted to NAD678 millionTrade and other receivables 574 390 (2015: NAD402 million) withCurrent income tax assets 765 949 non-performing loan ratioInventories 7 496 12 982 of 3% (2015: 5.3%). TheseProperty, plant and equipment 323 917 advances include mortgages,Investment property 327 619 269 329 student loans, SME loansIntangible assets 459 335 708 835 and group lending advances.Deferred income tax assets 816 180 197 623Total assets 209 849 146 359 Trade receivables have grown 143 675 3 159 100 by 33% due mostly to an 4 014 001 increase in property sales not yet monetised by year endEQUITY AND LIABILITIES 17 249 15 020 (NAD690 million). 1 104 695 1 045 641 NAD157 million of propertyLiabilities debtors were realised this year.Bank overdraft 215 806 78 891Borrowings 10 257 7 945 The acquisition ofTrade and other payables 72 406 93 277 Watermeyer attractedCurrent income tax liabilities 304 441 goodwill of NAD9.5Other liabilities 329 159 63 719Deferred income tax liabilities 75 365 1 608 934 At the time of publicationInsurance provisions 1 824 937 a further NAD370 millionTotal liabilities of borrowings earmarked for the banking and financeCapital and reserves 177 595 177 595 segment had been securedShare capital 46 300 46 300Share premium (57 043) The treasury sharesDeemed treasury shares - 43 250 were disposed of in 2016Other reserves 87 282 1 319 941 generating cash proceeds ofRetained earnings 1 877 887 1 550 166 NAD244 millionTotal capital and reserves 2 189 064 3 159 100Total equity and liabilities 4 014 00146 | Integrated Annual Report 2016

SUMMARISED CONSOLIDATED INCOME STATEMENT For the year ended For the year ended 31 Mar 2016 31 Mar 2015 NAD'000 NAD'000Revenue 1 150 286 1 017 073 An increase in revenue from propertiesInvestment income 153 167 136 127 (NAD284 million) was augmented by growthIncome from operations in the financial services.Insurance benefits and claims 1 303 453 1 153 200Operating expenses (45 895) (42 616) 8% increase in insurance claims and provisionFinance costs (673 405) (608 693) is in line with policy growth.Profit before taxation (134 279) (105 496)Taxation 449 874 396 395 Effective tax rate decreased to 11% for theProfit for the year (30 076) (93 157) group, a function of the decrease in taxable 419 798 303 238 income relative to non-taxable income; specifically untaxed premium income in aHEADLINE EARNINGS RECONCILIATION 303 238 life insurance company and non-taxable fair value gains.Profit attributable to ordinary 419 798 (27 494)shareholders 2 098 (366)Adjustments: (221) 400Profit/Loss on disposals of (300)property, plant and equipment (29 244)Fair value adjustments on - (748)investment properties 155Gain on bargain purchase 275 744Tax effectHeadline earnings 419 432 Integrated Annual Report 2016 | 47

FINANCIAL PERFORMANCE CONTINUEDSUMMARISED GROUP RESULTSPER SHARE INFORMATION For the year ended For the year ended WANOS 758million (2015: 31 March 2016 31 March 2015 696million) 43.59 Diluted WANOS 763 millionEarnings per share (cents) 55.37 43.29 (2015: 701 million)Diluted earnings per share 55.02 39.64(cents) 39.36Headline earnings per share 55.32(cents) 5.75Diluted headline earnings per 54.97share (cents)Dividends paid per share (cents) 7.40STATEMENT OF CHANGES IN EQUITYFor the year ended 31 March 2016 Share Share Deemed Other Distributable Total capital premium treasury reserves reserves NAD'000 NAD'0000 NAD'000 shares NAD'000 NAD'000 177 595 46 300 NAD'000Balance at 1 April 2014 - - 46 525 1 022 961 1 224 355Transfer between reserves - - (69 026) (1692) 1 692 -Deemed treasury shares purchased - - - -Deemed treasury shares sold - - - (1 861)Total comprehensive income for the period - - (1 861) - 32 867 46 711Dividends for the period 13 844 18 540 303 238 321 778Balance at 31 March 2015 177 595 46 300 - (40 817) (40 817) - 63 373 1 319 941 1 550 166Balance at 1 April 2015 177 595 46 300 -Transfer between reserves - - (57 043) 63 373 1 319 941 1 550 166Deemed treasury shares sold - - (206) 206 -Total comprehensive income for the period - - (57 043)Dividends for the period - - - - 187 342 244 385Balance at 31 March 2016 24 115 419 798 443 913 177 595 46 300 57 043 (49 400) (49 400) - - 1 877 887 2 189 064 - 87 282 -48 | Integrated Annual Report 2016