Capricorn : 2021 INTEGRATED ANNUAL REPORT

We are catalysts for sustainable opportunities that bring positive change. We strive to have an organisational culture that encourages exceptional performance, accountability and a strong sense of responsible behaviour. We want to improve lives through leadership in financial services by being Connectors of Positive Change.

A year of positive change

Namibia is home to 2.5 million (2019) people of which almost half rely on subsistence farming. Our country enjoys about 300 days of sunshine annually with a subtropical desert climate characterised by great differences in day and night-time temperatures, low rainfall and overall low humidity.

This year was different. With very few exceptions, the region enjoyed abundant rainfall - the highest since the 2010/11 season. The rain replenished surface and groundwater, provided grazing for livestock and brought lilies to bloom in the desert. Nature restored herself and brought balance, harmony and colour to our landscapes.

For Capricorn Group, this symbolises the start of a positive growth phase following the hardship brought about by the COVID-19 pandemic. We capture this spiral of growth potential in our cover design and throughout the report. It references the sequence in all living things described by the Italian mathematician Leonardo Fibonacci.

About this report

This integrated annual report ("the report") is a reflection on the performance, activities and engagements of Capricorn Group Ltd ("the Group" or "Capricorn Group") to bring positive change during the financial year from 1 July 2020 to 30 June 2021 ("the year"). The report is aimed primarily at providers of financial capital.

The financial and non-financial information contained in this report relates to the entities that constitute the Group, as set out on page 4.

The principle of materiality guided the selection of content for this report. Read more about the process we followed on page 20.

We reviewed and adjusted our reporting suite for conciseness and to package information for specific audiences. As a result, we are publishing standalone reports on governance and risk management, with the full annual financial statements available in a separate download. The 2021 reporting suite consists of the following separate elements (including the frameworks and legislation to which they adhere and comply), all available on our website at http://www.capricorn.com.na/Pages/Reporting-Centre.aspx:

Integrated	•	The International Integrated Reporting
annual report		Council ("IIRC") Integrated Reporting
with summarised		Framework, January 2021
annual financial	•	King IV Report on Corporate Governance™
statements		for South Africa, 2016 ("King IV™")
	•	The Namibian Companies Act, 28 of
		2004 ("Companies Act of Namibia")
	•	The Namibian Stock Exchange ("NSX")
		Listing Requirements
Annual financial	•	International Financial Reporting
statements		Standards ("IFRS")
	• The Namibian Banking Institutions Act,
		2 of 1998
	•	The Botswana Banking Act, 13 of 1995
Risk report	•	King IV™
Governance report	•	King IV™
	•	Companies Act of Namibia
	•	NSX Listing Requirements
King IV™ index	•	King IV™

Additional information is available online at www.capricorn.com.na/ Pages/Reporting-Centre.aspx. For more information or feedback on this report or any other elements listed above, contact Marlize Horn on [e-mail] or [phone].

Approval of this report

The board sustainability and ethics committee ("BSEC") initiated a formal assessment against the compliance requirements of the Framework this year. We identified four areas of improvement for this report:

	Guiding principle: Strategic focus and future orientation
1	Content element: Strategy and resource allocation
	Read more in the strategy section from page 33.
2	Guiding principle: Stakeholder relationships
Read more in the stakeholder section from page 14.
3	Content element: Business model
Read more in the business model section from page 36.
4	Guiding principle: Materiality
Read more about our material matters and how we define
	them from page 20.

Our core reporting team works with content owners from functional areas and business entities as well as with Group principal risk owners in compiling the different reporting suite elements. The executive management team approved the information and data contained in the reports. Thereafter, the audit, risk and compliance committee and the BSEC reviewed the elements before submitting them for approval by the board. The board of directors ("board"), which is responsible for the quality and integrity of the reporting suite, including the integrated annual report, approved the elements on 7 September 2021. The board concluded that the reporting suite is presented in accordance with the frameworks and regulatory requirements listed above. Detail of the members of the board is set out on page 63.

Assurance of reporting content

The external auditors of Capricorn Group, PwC, provided assurance on the financial aspects of the reporting suite. Their opinion, available on page 3 of the full annual financial statements, states that the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Capricorn Group and its subsidiaries as at 30 June 2021, and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with IFRS and the requirements of the Companies Act of Namibia.

Non-financial data contained in the reporting suite was not subject to external assurance. The board relied on the Group Combined Assurance Framework to ensure the integrity of such data and statements.

Forward-looking information

This report contains certain forward-looking statements regarding the results and operations of the Group, which by their nature involve risk and uncertainty because they relate to events and circumstances that may or may not occur in the future. These forward-looking statements have not been reviewed or reported on by the Group's external auditors.

1 Copyright and trademarks are owned by the Institute of Directors in South Africa NPC and all of its rights are reserved.

Table of contents

GROUP AT A GLANCE	2
FIVE-YEAR REVIEW	6
INVESTMENT CASE	7
GROUP CHAIRPERSON'S MESSAGE	10
CONNECTING FOR POSITIVE CHANGE	14
OUR OPERATING CONTEXT	18
OUR MATERIAL MATTERS	20
OUR STRATEGY	33
BUSINESS MODEL	36
OUR PERFORMANCE: GROUP CEO'S REPORT	40
OUR PERFORMANCE: FINANCIAL DIRECTOR'S REVIEW	44
GOVERNANCE AT A GLANCE	60
BSEC REPORT	66
REMUNERATION REPORT	68
APPENDICES	73
GLOSSARY OF TERMS	73
GROUP SHAREHOLDING	74
THE CAPRICORN BRAND STORY	75

1

GLANCE A AT GROUP

Group at a glance

Capricorn Group is a Namibian-owned financial services group listed on the NSX. We have two banking subsidiaries operating in Namibia and Botswana, with other subsidiaries such as Capricorn Asset Management and Entrepo, as well as associates, providing associated and complementary financial products and services.

Our customers range from personal to corporate, and small and medium enterprises in between. Our value proposition is built around customers rather than products or channels. We apply data and digital technology in banking services, products and functionality to enhance our processes and services and thereby address current and future customer needs.

Our Purpose

Improving lives through leadership in financial services by being Connectors of Positive Change.

We improve lives by making		Leadership is the		The sector we		Our ambition is to be the
a positive difference. We		benchmark for		play in.		undisputed best in delivering
do this by constantly		everything we do				offerings with a clear and
pushing the boundaries		and the way we				meaningful difference.
through innovation and		do everything.				Being Connectors of Positive
improvement.						Change is the outcome of our
						purpose.

What it means to be Connectors of Positive Change

• We connect our customers to products and services that positively impact their lives
• We bring positive change to our communities by being a responsible corporate citizen
• We encourage employee volunteerism through the Changemaker initiatives
• We connect our customers, partners and suppliers with opportunities for growth
• We seek to find innovative ways in which to bring together our customers and their aspirations
• We collaborate with the like-minded to bring about positive change in the countries in which we operate
• We are catalysts of sustainable opportunities

The Capricorn Way

We realise our purpose by making deliberate strategic choices and working according to The Capricorn Way. The Capricorn Way directs us towards positive change and is underpinned by three beliefs:

1.  We believe that	2.  We believe that	3.  We believe that
Purpose Inspires	Diversity Ignites	Being Connected
Leadership	Quantum Leaps	Helps Us Grow

2 INTEGRATED ANNUAL REPORT

Our footprint

94% of the Group's profit from continued operations attributable to shareholders derives from Namibia. The main contributors are:

	Bank Windhoek	Capricorn Asset Management and
	66%	Capricorn Unit Trust Management Company
						6%

GLANCE A AT GROUP

Our three strategic choices

We will transform our business using data and digital to achieve superior customer experience, lower cost to serve and scalable competitive advantage

EntrepoNamibian associates

12% 10%

Botswana through

Bank Gaborone

6%

Our material matters

Our stakeholders

• Meeting customer needs and expectations
• Enhancing and optimising

management and operational systems

• Financial and cybercrime

risk management

Customers

Suppliers

Regulators

• Credit risk management and mitigating losses due to bad debt

Our principal risks

1.	Capital
2.	Compliance
3.	Credit
4.	Finance and tax
5.	Financial crime
6.	Investment management
7.	Legal
8.	Liquidity
9.	Market
10.	Operations

• Ethical leadership (business and management)

We will grow through	• Demand for specialist
entrepreneurial action in	skills driving focused	Shareholders	Strategic
order to contribute to a	development,
	alliance partners
sustainable organisation	training and diversity

11.	People
12.	Reputation
13.	Strategic
14.	Technology

We will prioritise diversity, equity and inclusivity focusing on race and gender to represent the demographics in our chosen markets, including future-fit leadership, as a catalyst for growth

• Responding to a changing regulatory and operating context
• Fintech, Insurtech, and evolving digital assets

Communities Media

Employees Government

3