Investor Presentaiton

16 ANNUAL FINANCIAL STATEMENTS DIRECTORS' RESPONSIBILITY AND APPROVAL STANDARD BANK NAMIBIA LIMITED Annual financial statements 2020 REPORT OF THE INDEPENDENT AUDITOR In accordance with the Companies Act of Namibia (Companies Act), the directors are responsible for the preparation of the annual financial statements. These annual financial statements conform to International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), the Institute of Chartered Accountants' of Namibia (ICAN) Financial Reporting Guides as issued by the Accounting Practices Committee, the Namibian Stock Exchange (NSX) Listings Requirements and the Johannesburg Stock Exchange (JSE) Listing requirements. Financial Pronouncements as issued by the Reporting Standards Council, the requirements of the Namibian Companies Act and fairly present the affairs of the company as at 31 December 2020, and the net income and cash flows for the year then ended. The directors are ultimately responsible for the internal controls of the company. Management enables the directors to meet these responsibilities. Standards and systems of internal controls are designed, implemented and monitored by management to provide reasonable assurance of the integrity and reliability of the financial statements and to adequately safeguard, verify and maintain accountability for shareholder investments and company assets. Systems and controls include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties. It is the responsibility of the independent auditor to report on the fair presentation of the financial statements. Based on the information and explanations provided by management and the company's internal auditor, the directors are of the opinion that the internal financial controls are adequate and that the financial records may be relied upon for preparing the financial statements in accordance with IFRS and to maintain accountability for the company's assets and liabilities. Nothing has come to the attention of the directors to indicate that a breakdown in the functioning of these controls, resulting in material loss to the company, has occurred during the year and up to the date of this report. The directors have a reasonable expectation that the company will have adequate resources to continue in operational existence and as a going concern in the financial year ahead. The 2020 annual financial statements, which appear on pages 17 to 127, were approved by the board on 24 March 2021 and signed on its behalf by: تصال Mr H Maier Chairman Mr VJ Mungunda Chief executive To the Members of Standard Bank Namibia Limited Our opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Standard Bank Namibia Limited (the Company) as at 31 December 2020, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of Namibia. What we have audited Standard Bank Namibia Limited's financial statements set out on pages 21 to 127 comprise: ⚫ the directors' report for the year ended 31 December 2020; the statement of financial position as at 31 December 2020; the income statement for the year then ended; ⚫the statement of other comprehensive income for the year then ended; ⚫ the statement of changes in equity for the year then ended; ⚫ the statement of cash flows for the year then ended; and ⚫the notes to the financial statements, which include a summary of significant accounting policies, excluding the section marked as "unaudited" in Annexure C. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Company in accordance with the International Ethics Standards Board for Accountants International Code of Ethics for Professional Accountants (including International Independence Standard) (Code of Conduct) and other independence requirements applicable to performing audits of financial statements in Namibia. We have fulfilled our other ethical responsibilities in accordance with the Code of Conduct and in accordance with other ethical requirements applicable to performing audits in Namibia. Our audit approach Overview Materiality Key audit matters Overall group materiality N$33.4 Million, which represents 5% of the average profit before direct tax for the last three years. Key audit matters • Expected credit losses on Corporate and Investment Banking (CIB) loans and advances; and • Expected credit losses on Personal and Business Banking (PBB) loans and advances. As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. Materiality The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole. Overall group materiality How we determined it Rationale for the materiality benchmark applied N$33.4 million. 5% of the average profit before direct tax for the last three years. We chose profit before direct tax as the benchmark because, in our view, it is the benchmark against which the performance of the Company is most commonly measured by users and is a generally accepted benchmark. Due to the volatility of the results in the current year as a result of economic downturn in the local market and the decrease in repo rates by the Bank of Namibia, and to reflect normalised profitability levels, we used a three-year average profit before direct tax. We chose 5% which is consistent with quantitative materiality thresholds used for profit-oriented companies in this sector. 17