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Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
Imara Group 2008 annual report
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Imara Group 2008 annual report

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Imara Group financial report for the year ended 30 April 2008

Imara Group financial report for the year ended 30 April 2008

Published in: Investor Relations
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  • 1. Imara Holdings Limited Group Annual Report Year ended 30 April 2008
  • 2. Imara Holdings Limited Group Annual Report – 30 April 2008 CONTENTS Page/s Group Profile............................................................................................................................................................ 2 Directorate and Group Management ....................................................................................................................... 3 Glossary of Terms and Definitions ......................................................................................................................... 4 Five Year Financial Highlights ............................................................................................................................... 5 Graphical Five Year Financial Highlights .............................................................................................................. 6 Chairman’s Statement ......................................................................................................................................... 7-10 Chief Executive Officer’s Review of Operations ............................................................................................ 11-13 Report of the Directors ..................................................................................................................................... 14-18 International Footprint and Regional Offices ....................................................................................................... 19 Group Organisational Structure............................................................................................................................. 20 Corporate Governance ...................................................................................................................................... 21-24 Independent Auditor’s Report .............................................................................................................................. 25 Consolidated Income Statement ............................................................................................................................ 26 Consolidated Balance Sheet .................................................................................................................................. 27 Consolidated Cash Flow Statement....................................................................................................................... 28 Consolidated Statement of Changes in Equity ................................................................................................ 29-32 Notes to the Consolidated Financial Statements.............................................................................................. 33-78 Shareholder Information ........................................................................................................................................ 79 Shareholders’ Diary ............................................................................................................................................... 80 Notice of Annual General Meeting .................................................................................................................. 81-82 Form of Proxy ................................................................................................................................................... 83-84 1
  • 3. Imara Holdings Limited Group Annual Report - 30 April 2008 GROUP PROFILE GENERAL INFORMATION Country of incorporation: Botswana Principal activities: Holding company for a Pan-African financial services group. Company registration number: CO -2002 / 3377 Tax registration number: CO - 65018-01-01-9 Registered office: Union Provident Trust Ground Floor, BIC House Main Mall, Gaborone P.O. Box 46699, Village, Gaborone Registration status: Registered in the Botswana International Financial Services Centre (IFSC) Tax Certificate Number 22 - Effective date 28 July 2003 Independent auditors: Ernst & Young Bankers: Close Bank Guernsey Limited Barclays Bank of Botswana First National Bank Limited (Botswana) First National Bank Limited (South Africa) Reporting currency: Botswana Pula (“BWP” or “P”) Transfer Secretaries: Corpserve Botswana Unit 3, Block A, Plot 117 Millennium Office Park, Kgale Hill, Gaborone Telephone: +267 393 2244 Facsimile: +267 393 2243 email: corpserve@info.bw 2
  • 4. Imara Holdings Limited Group Annual Report - 30 April 2008 DIRECTORATE AND GROUP MANAGEMENT DIRECTORATE Imara Holdings Limited: PJS Gray Chairman British Non-executive MJS Tunmer Chief Executive South African Executive AR Fleming British Non-executive MS Golding South African Executive Resigned -18 July 2007 JR Legat British Executive ACH Mackeurtan South African Executive RH Macleod South African Executive Appointed-19 July 2007 RR Matthews British Non-executive M Mothibatsela Botswana Executive Resigned-31 October 2007 M Mothibatsela Botswana Non-executive Appointed-1 November 2007 SM Ndoro Zimbabwe Non-executive DE Stone South African Executive Company Secretary: DE Stone Botswana Stock Exchange Compliance Officer: DE Stone Audit Committee: RR Matthews Chairman Non-executive PJS Gray Non-executive SM Ndoro Non-executive DE Stone Executive Remuneration Committee: PJS Gray Chairman Non -executive RR Matthews Non-executive SM Ndoro Non-executive Nominations Committee: PJS Gray Chairman Non-executive ACH Mackeurtan Executive MJS Tunmer Executive MANAGEMENT MJS Tunmer Chief Executive Officer DE Stone Chief Financial Officer JR Legat Head: Asset Management MS Golding Head: Corporate Finance Resigned - 18 July 2007 RH Macleod Head: Corporate Finance Appointed - 19 July 2007 MJS Tunmer Head: Stockbroking 3
  • 5. Imara Holdings Limited Group Annual Report - 30 April 2008 GLOSSARY OF TERMS AND DEFINITIONS The following is a glossary of terms and definitions used in this Annual Report: The glossary of terms and definitions above should be read in conjunction with the Group’s accounting policies. Term Meaning or Definition Attributable earnings the portion of net profit for the year, which is attributable to ordinary shareholders of the Company. Attributable earnings growth the percentage increase in attributable earnings, from one reporting year to the next. BEE broad based black economic empowerment. Cash flow the movement of cash in and out of the Group. Cost to income ratio cost of services sold plus operating expenses, as a percentage of total income, which comprises revenue and other income. Diluted earnings per share attributable earnings divided by the diluted weighted average number of shares. Diluted weighted average number of the weighted average number of shares increased by the number of shares that may be shares issued in future, as a result of existing dilutive instruments (share options & debentures). Dividend per share dividend declared for the year divided by the number of shares in issue at year end. Dividend yield Dividend per share as a percentage of the closing price of the Company’s ordinary shares. Earnings per share or EPS attributable earnings divided by the weighted average number of shares. Earnings yield Earnings per share as a percentage of the closing price of the Company’s ordinary shares. EBITDA Earnings before interest, taxation, depreciation and amortisation. Effective tax rate the tax (charge)/credit as a percentage of profit before taxation. Free cash flow per share net cash flows for the year, (inclusive of working capital changes), divided by the weighted average number of shares. Funds under management assets managed by the Group, which are beneficially owned by clients and as such do not form part of the consolidated balance sheet. Net asset value per share shareholders’ equity divided by the number of ordinary shares in issue at year end. Price earnings ratio the price of the Company’s ordinary shares divided by earnings per share. Pula or BWP Botswana Pula, the standard monetary unit of Botswana. Rand or ZAR South African Rand, the standard monetary unit of South Africa Return on average assets net profit for the year as a percentage of average total assets. Return on equity attributable earnings as a percentage of shareholders’ equity at year end. Revenue growth the percentage increase in revenue, from one reporting period to the next. Shareholders’ equity Stated capital plus reserves. The Group Imara Holdings Limited together with its subsidiaries and associates. The Company Imara Holdings Limited, a company registered in Botswana. Thebe The smallest monetary unit of Botswana amounting to one hundredth of a Pula USD or US$ United States Dollar, the standard monetary unit of The United States of America Weighted average number of shares the number of ordinary shares in issue at the beginning of the year, increased by shares issued during the year, which in turn are weighted on a time basis for the period during which they participated in the income of the Group ZWD or Z$ Zimbabwean Dollar, the standard monetary unit of Zimbabwe 4
  • 6. Imara Holdings Limited Group Annual Report - 30 April 2008 FIVE YEAR FINANCIAL HIGHLIGHTS Years ended 30 April 2008 2007 2006 2005 2004 Re-stated Re-stated Re-stated Re-stated Salient financial results and data: Revenue P 000’s 174 960 127 481 57 680 30 368 14 191 EBITDA P 000’s 67 936 59 487 13 280 2 099 (6 502) Profit before taxation P 000’s 66 075 58 460 12 174 1 202 (7 114) Taxation P 000’s 9 692 10 847 2 716 1 155 (1 410) Profit after taxation P 000’s 55 582 47 437 9 457 47 (5 704) Attributable earnings P 000’s 56 449 48 143 9 816 47 (5 704) Weighted average shares in issue 000’s 54 877 51 700 46 613 41 789 2 868 Diluted weighted average shares in issues 000’s 56 602 53 678 53 569 50 731 2 868 Dividend per share – ordinary thebe 19,00 17,00 0,60 - - ( li liper share – special Dividend )* thebe 17,00 10,00 - - - Shareholders’ equity P 000’s 139 098 91 713 55 983 21 537 16 979 Total assets P 000’s 256 652 172 683 106 330 37 829 28 952 Free cash flows for the year P 000’s 9 910 7 563 13 431 (4 828) (8 319) Funds under management P m’s 3 457 2 058 1 128 217 141 Quoted share price at year end Pula 8,40 3,00 0,90 - - Ratios: Revenue growth % 37,24 121,01 89,94 113,66 196,20 Cost to income % 63,59 55,84 80,50 95,69 149,72 Attributable earnings growth % 17,25 390,46 Over 200 times 100,83 (365,69) Effective tax rate % 14,67 18,55 22,31 85,39 19,82 EPS- basic (All operations) Pula 1,03 0,93 0,21 0,001 (1,99) EPS- basic (Continuing operations) Pula 1,03 0.92 0,21 0,001 (1,99) EPS – diluted (All operations) Pula 1,00 0,90 0,19 0,004 (1,99) EPS – diluted (Continuing operations) Pula 1,00 0,89 0,19 0,004 (1,99) Return on equity % 40,53 51,72 17,53 0,22 (33.60) Net asset value per share Pula 2,53 1,77 1,20 5,15 5,92 Return on average assets % 26,27 34,00 13,12 0,15 (33,40) Price earnings ratio Times 8,16 3,22 4,27 - - Dividend yield – ordinary dividend % 2,26 5,60 0,67 - - Free cash flow per share Pula 0,18 0,15 0,29 (1,16) 2,90 Re-statement of prior years: 1. At an Extraordinary General Meeting of the company on 2 August 2007, shareholders approved a sub-division of the share capital of the company on a 10 for 1 basis. Comparatives for prior year “per share” disclosures have been re-stated accordingly. 2. Certain revenue items previously classified as “Other Income” have been re-classified as “Revenue”. The re-classification has been undertaken to ensure full compliance with the accounting policies relating to revenue recognition, presentation and disclosure and to ensure consistency in reported financial information. 3. The financial statements for the year ended 30 April 2007 have been re-stated to take account of a prior year adjustment relating to Value Added Tax, (VAT), at the South African stockbroker Imara SP Reid. The impact of the adjustment is more fully described in Note 2. 5
  • 7. Imara Holdings Limited Group Annual Report - 30 April 2008 GRAPHICAL FIVE YEAR FINANCIAL HIGHLIGHTS 6
  • 8. Imara Holdings Limited Group Annual Report - 30 April 2008 CHAIRMAN`S STATEMENT Developing the theme from our last annual report, the Imara Group continues to successfully implement its strategic objective of broadening and growing its earnings base on the African continent and perhaps more importantly, improving the quality of its earnings. In this context, the Directors’ are pleased to announce that post tax profits in the year ended April 2008 increased by 17.2% from P 47.4 million to P 55.6 million, equivalent to P 1.03 per share. The company has increased its total dividend by 33% to 36 thebe per share. Net asset value per share increased from P 1.77 to P 2.53 while return on shareholder's equity was a healthy 40.5%. Summary of Group results and divisional contributions: Profit / (loss) before tax Profit/ (loss) before tax 2008 2007 Pula Pula Asset Management 46 922 300 11 632 364 Corporate Finance (5 217 885) 2 049 605 Stockbroking 25 553 790 45 096 432 Other (1 182 765) (318 846) Total 66 075 440 58 459 555 % contribution to Group % contribution to Group Asset Management 71,01 19,90 Corporate Finance (7,89) 3,51 Stockbroking 38,67 77,14 Other (1,79) (0,55) 100,00 100,00 Comparisons with the prior year are again problematic as the 2007 financial year included a non-recurring profit of P18.6 million from the sale of available-for-sale-financial assets. In a similar vein, the 2008 financial year's profits have been significantly and materially enhanced by performance fees earned from our stable of African Equity Funds, equivalent to approximately P35.2 million. However, it is a moot point whether performance fees should be classified as non-recurring for an investment management company. Irrespectively, one point to note is that the quantum amount of performance fees can only be determined at year end and it cannot be included in the Group's results during the year. The 2008 financial year was a challenging and stimulating period for us. On the internal front, we continue to strengthen our compliance, risk management and internal control systems and we have expanded our finance team to cope with the increasing demands and increasing complexity of our business. We have also made some key additions to our investment team while greater discipline and more formalisation of our business strategy process has lead to some exciting business initiatives which could have a significant impact on the Group in years to come. Finally, we have successfully concluded a BEE transaction in terms of which a 20% interest in each of our South African businesses has been transferred to a BEE consortium, with whom we look forward to working closely. 7
  • 9. Imara Holdings Limited Group Annual Report - 30 April 2008 CHAIRMAN`S STATEMENT (continued) On the external front, world market conditions became progressively more difficult during the course of the year as the sub-prime market crisis got overtaken by the spectre of rapidly rising inflation and declining economic activity. Given this backdrop, our South African stock broking subsidiary, Imara SP Reid, (“ISPR”) did well to hold profits steady, stripping out last year's non-recurring gain on a financial asset sale. Local market conditions in the RSA were extremely choppy as characterised by a wide divergence in performance of the various sectors - banks shed 24% on an annual basis as the Reserve Bank increased interest rates while booming resource prices saw a 36% increase in resource sector prices. Against this backdrop, ISPR’s net profit after tax came in at ZAR 20.95 million as average monthly brokerage rose from ZAR 2.73 million in the 2007 financial year to ZAR 2.96 million in the current year and the average trade per month figure increased from 9076 to 9883 trades over the same period. However, notwithstanding all this and the broadening of our earnings base, it has been becoming clear that 2008 - 2009 will be even more challenging and difficult, especially for our futures side, but such is life in a notoriously volatile and cyclical business. In the meantime, tight cost controls and good risk management should limit the downside. Our Pan African brokerage company, Imara African Securities, opened its doors for business late last year. The company has been actively recruiting dealers and analysts and with the addition of Cote d'Ivoire, Ghana and Uganda, we can now trade eleven markets with all the necessary settlement and custody arrangements now in place. Although, it is early days, the portents for this business look good. Our asset management business exceeded all our expectations in 2007 - 2008 and a 299% increase in net profits was substantially ahead of budget. The net asset value of our flagship Imara African Opportunities Fund increased by 297% from USD 70 million to USD 250 million while the unit price rose by some 30% including a performance fee of over USD 7 million. Our Imara Zimbabwe Fund, part of our Imara African Series of specialist funds, experienced an accelerating trend of new subscriptions towards the end of the year, rising from USD 9.4 million at the end of the previous year end to USD 30.5 million, an increase of 224%. This fund also rose by some 30% generating a performance fee of USD 1.6 million. The other two and more recent additions to our Imara African Series stable, namely East Africa and Nigeria, experienced more modest developments, but should be important contributors in due course. In the longer term, African markets' relatively low correlations to world markets and low institutional exposure to this asset class has resulted in robust and sustained demand for our investment products notwithstanding a depressed world backdrop. Our Corporate Finance division recorded a small loss for the 2008 financial year as a result of some key staff resignations and the subsequent re-building of the team, which inevitably had an impact. Notwithstanding this, the division successfully executed eight corporate finance mandates during the period under review and at year end; we had five mandates as work in process. In addition, the division is recovering strongly and now has a solid pipeline of interesting transactions consisting of a further eight mandates, three of which were signed after year end. In the meantime, several investment type new products such as a Private Equity Fund are under active consideration and construction which should increase the quality of this division's earnings, let alone the quantum, in the longer term. On balance, looking at the carnage in the banking/finance sectors around the world and political crises in African countries such as Kenya and Zimbabwe (where our associate is still producing satisfactory profits) our results for 2007 - 2008 could be deemed somewhat satisfactory whilst solidly underpinning our strategic business model. However, there is no room for complacency. 8
  • 10. Imara Holdings Limited Group Annual Report - 30 April 2008 CHAIRMAN`S STATEMENT (continued) In this context and recognising our large cash holdings, we have increased the dividend by 33% to 36 thebe per share. However, as in the previous year we have divided the dividend into two tranches - an ordinary dividend of 19thebe reflecting the core/underlying business and a "special" dividend of 17thebe per share reflecting the exceptional performance fee which may or may not be non-recurring. Only time will resolve the debate, but given the dynamics of our operating environment, prudence and caution should prevail. This approach should also extend to our forecast for the current year where it is difficult to be optimistic, especially given the progressive softness in our broking division. However, having said that, our conservatively based budgets suggest that overall Group profits could be maintained at current levels - a significant achievement under current conditions. In addition, recent history would suggest that the forecast risks could be asymmetrically biased to the upside as we progress to Q3 and Q4 of our financial year. With regards to the longer term outlook, it is probably fair, given recent developments in Africa, to revisit our relatively bullish scenario outlined in our last annual report. Investors will recall we based some of our optimism on the following assumptions: 1) The long-term economic and profit outlook for many African countries such as Zambia and Kenya has improved dramatically, outweighing any short-term considerations, whilst the explosive upside potential in Zimbabwe comes inexorably closer as the economic downturn continues. 2) In the meantime, most African stock markets, South Africa aside, are at early stages of their respective development, and remain undervalued by international standards, providing major business opportunities for your Pan-African group. 3) The group is growing organically from a small base where every strategic move forward, be it in expanding our geographic footprint or designing new investment products, can potentially have a significant impact on the bottom line. In addition to the points listed above, there have been some other somewhat more latent themes, which have knitted these points neatly together, namely: 1) African markets are an "emerging" asset class in their own right 2) African markets are, from an institutional perspective, under owned in a global context 3) African markets have demonstrated fairly low correlations with developed markets Given political setbacks in countries such as Kenya, Zimbabwe's political elites dogged determination to win Olympiad style records for hyperinflation and South Africa's president elect's challenge to the country's established political institutions, has this strategic vision gone either terribly wrong or at least suffered a major setback? On sober and mature reflection, we believe that, against the backdrop of the worst global financial crisis for the last 50 years, our bullish strategic scenario remains relatively intact possibly enhanced by two relative new developments; namely the boom in commodity prices and China's increasing involvement in the continent. It should be borne in mind that Africa is a complex patchwork of a myriad of politico-economic systems and situations, each with their own rhythm or advances and setbacks often referred to as "two steps forward one step backwards"; as Kenya lurched into it's long awaited and somewhat anticipated political crisis, (one step back), Angola has successfully emerged from it's domestic civil strife to record GNP growth rates in the order 15% - 20% per annum (two steps forward). 9
  • 11. Imara Holdings Limited Group Annual Report - 30 April 2008 CHAIRMAN`S STATEMENT (continued) Admittedly, African market valuations are no longer as attractive as they were and inevitably the global stock market crisis has impacted somewhat on market correlations. However, not only do we believe that our core themes and assumptions are broadly intact, but more importantly that there is still a plethora of business opportunities in this large emerging and diverse continent for nimble entrepreneurial players such as Imara. In the meantime, growing organically from a small base, some of our key strategic moves to exploit these opportunities have already had a major impact on the Group and with some exciting initiatives in the pipeline, we feel we are still in control of our own destiny and growth trajectory. As we stated before, there is no room for complacency and from an insider’s or internal perspective, there is still work to be done on improving or strengthening some management issues such as manpower planning, internal communication, effectiveness of financial reporting and so on. However, none of this is apparent from an external perspective as we seem to move effortlessly through the various stages of our corporate development, avoiding some of the major traps awaiting ambitious companies such as ours. Admittedly we have made some errors of judgement along the way, but these have been detected early, corrected immediately and have had a limited impact on our strategic development. Indeed, somewhat perversely, we have learnt and benefited from these inevitable mistakes that small rapidly developing companies usually make and the Group is stronger as a result. In the meantime, we have not deviated from our key strategic goals of broadening our footprint in terms of geographic and earnings diversity, improving the quality of our earnings in terms of visibility, stability and predictability whilst striving for cyclically adjusted strong earnings growth and high returns on equity. Inevitably, we will meet some tough patches along the way; our current operating environment is probably almost certainly one of those, but in the long term we believe Imara's strategic vision is intact and we are well equipped to exploit it. My thanks to our Founder and CEO, Mark Tunmer, his team of executives and all our hard working staff who have made this possible. We have come a long way but in some respects, we are still at the early stage of a long and hopefully profitable journey. P GRAY CHAIRMAN 5th September 2008 10
  • 12. Imara Holdings Limited Group Annual Report - 30 April 2008 CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS Group Review The Imara Group has produced strong 2008 after tax earnings of P55.6 million, which were 17% above the prior year. Prior year earnings included a non-recurring profit of P18.6 million, which arose from the sale of available for sale financial assets. It is encouraging to note that this performance was achieved despite relatively unfavourable market conditions in the second half of the year. Asset Management was the largest contributor to Group profit, primarily based on the strong performance of the Africa Funds, whilst Imara SP Reid did well to match last year’s earnings at the operating level. The Corporate Finance division recorded a small loss due principally to the loss of certain key staff. The Asset Management division witnessed significant growth in funds under management, which, including our associate companies, totalled almost BWP3.5 billion at year end. Revenues grew considerably to account for 48% of Group revenue, whilst the performance fees on the Imara African Opportunities Fund and the Imara Africa Series, were a major contributor to Group profits. With the exception of Imara Asset Management Botswana, all businesses were profitable or breakeven and cash flow positive. Despite the very difficult markets, in South Africa there was growth in funds under management, which resulted in a breakeven position with positive cash flow. The financial planning and advisory firm acquired at the beginning of the year was successfully integrated into the business and is making a positive contribution. The recent launch of our first South African unit trust, the Imara Equity Fund and the establishment of the Imara International Managed Fund, as a vehicle for our offshore investment allowance is expected to enhance earnings going forward. There were a number of divisional highlights in the year, which included the launch in January of the Imara East Africa Fund, which is the third sub fund in the Imara Africa Series. The Imara African Opportunities Fund had a very strong year with net asset value growing from US$70 million to close the year at US$250 million (July US$247 million). It was again necessary to manage inflows as far as possible to match underlying liquidity in the markets. Of significance was the positive performance of the Nigeria Fund and the Zimbabwe Fund despite volatility there. On a disappointing note, a decision was taken to mothball Imara Asset Management Botswana in October 2007 due to its failure to be appointed as one of the managers to the Botswana Public Officers Pension Fund in mid 2007. Imara SP Reid was again a positive contributor to group profits despite difficult world markets due to the sub- prime crisis, rising inflation and slowing economic activity. After adjusting for the non-recurring profit last year of P18.6 million, profits were flat, a significant achievement in this environment. The derivatives division continued to perform well while assets under administration grew by 11%. It was also encouraging to note a 9% increase in the average number of trades carried out per month. Our Malawi associate, Stockbrokers Malawi Limited, had a difficult year despite strong market performance. This was due to changes in senior management, which have now been rectified. The company was sponsoring broker to the very successful privatisation and listing of NBS Bank Limited. In Zimbabwe, Imara Edwards again had a strong year despite the difficulties inherent with dealing in that market. Imara Africa Securities, despite registering a small operating loss, continued to receive a positive response from international investors. Broking services are now being offered in Botswana, BRVM (Cote d` Ivoire, Benin, Guinea Bissau, Niger, Mali, Togo, Burkina Faso, Senegal), Ghana, Kenya, Malawi, Mauritius, Namibia, Nigeria, Uganda, Zambia and Zimbabwe. The team has been bolstered with the recruitment of two analysts and a dealer, which places the company in a strong position to grow its service delivery going forward. 11
  • 13. Imara Holdings Limited Group Annual Report - 30 April 2008 CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS (continued) The Corporate Advisory division had a very disruptive year with the resignation of Michael Golding, who headed up the division, in July 2007. This was followed during the year by the resignation of three other executives. A considerable effort has been put into rebuilding the team under Rod Macleod and I am pleased to report that this is now complete. The team is now well balanced with a strong skills set. Despite these difficulties eight mandates were successfully completed. These included the inward listing of Rockwell Diamonds on the JSE Securities Exchange, the disposal of a stake in Koornfontein Mines, the disposal of CDC Group’s rubber plantations and factory in Cote d`Ivoire and the privatisation and listing of NBS Bank on the Malawi Stock Exchange. In addition to this two new products were launched after year end, which should provide annuity income to the division. These include the Imara African Private Equity Fund and the Imara Participating Underwriting Programme. We were also particularly pleased to be appointed as lead adviser together with our Zambian partners, Stockbrokers Zambia, for the privatisation and listing of the Zambia National Commercial Bank (ZANACO) on the Lusaka Stock Exchange. Our Zimbabwe associate worked on nine mandates, but the year was dominated by executing as lead adviser the merger of Meikles Africa, Kingdom Financial Holdings, Tanganda Tea Company and Cotton Printers to form Kingdom Meikles Africa. This was the largest corporate transaction in the history of the Zimbabwe Stock Exchange. Prospects for the coming year are encouraging with mandates being executed in Botswana, Malawi, South Africa, Zambia and Zimbabwe while the pipeline is strong. Our associate, Imara Capital Zimbabwe performed well in a continually deteriorating environment in which hyper- inflation and currency weakness are the dominant economic forces. The Zimbabwe Stock Exchange is the only viable investment destination for local institutional and private investors and as Imara Capital Zimbabwe is directly geared to the Stock Exchange, it provides a strong inflation and devaluation hedge. Skills retention remains a problem despite management’s best efforts. The current year has started positively. Efforts to grow the Imara business and to increase its geographical spread continued. Agreement was reached in January with ICEA Asset Management to co-manage the Imara East Africa Fund and it is hoped this will lead to stronger ties. Subsequent to the year end a license was granted to Imara Trust Company (Mauritius) Limited, which will provide a full trust and offshore service to our African clients. Initiatives to gain a presence in West Africa and other countries are ongoing. Imara Holdings remained listed on the Venture Capital Market of the Botswana Stock Exchange and it is our stated intention to apply to move to the Main Board once we have achieved the minimum of 300 shareholders. At present we have 261 shareholders and it is expected that Imara will meet the requirements this year to facilitate this move. The 10 for 1 share split, which was approved by shareholders in August 2007, has assisted liquidity. In the year under review liquidity was 10.67% (2007 – 3.8%) with 5.9m shares, with a value of P43.65m, trading (2007 adjusted for the 10 for 1 split - 2.02m shares/P2.86m). In March, your Directors deemed it prudent to publish a Trading Update, to advise shareholders that the results for the year ended 30 April 2008 could be significantly affected by the performance fees earned on the Africa Funds. These fees, which crystallised on 30 April 2008, did have a substantial impact on Group earnings and as such, a further Trading Update was published in May. Imara shareholders approved the South African empowerment transaction, at the Annual General Meeting in October 2007, in terms of which Zingwenya Holdings now holds a 20% interest in each of the South African operating subsidiaries. It is believed that Zingwenya Holdings’ three prominent shareholders will add significant value to the South African operations. In addition to this, work is ongoing to establish a broad based trust, which will own 5% of the three operating subsidiaries. With this in place Imara will have achieved the recommended ownership requirements in terms of the Codes of Good Practice on Black Economic Empowerment. 12
  • 14. Imara Holdings Limited Group Annual Report - 30 April 2008 CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS (continued) Staff training remains a high priority and in this regard Imara SP Reid continues to assist with the training of analysts for the regional offices. Imara Capital Zimbabwe has also initiated a training programme for analysts as well as administrative staff. Outlook With global markets still weak as a result of the sub-prime crisis and certain African markets experiencing weakness this year, it is expected that it may be difficult to match the record earnings achieved in 2008. Despite this Imara is expected to produce acceptable earnings in the current year but this will be dependent on market conditions. In closing, I would like to thank my Chairman, Philip Gray, and the Board of Directors for their support and guidance during the year. Special mention must be made of the contribution made by Michael Golding as Head of the Corporate Finance division, who stood down from the Board in July 2007. I welcome Rod Macleod, who joined the board as his replacement. Finally, I would like to acknowledge the tremendous effort of the Imara staff, all of whom continue to contribute to the success of the Group. MJS TUNMER CHIEF EXECUTIVE OFFICER 5th September 2008 13
  • 15. Imara Holdings Limited Group Annual Report - 30 April 2008 REPORT OF THE DIRECTORS The directors of Imara Holdings Limited have pleasure in presenting their report for the year ended 30 April 2008. Nature of Business Imara Holdings Limited is a registered International Financial Services Centre (“IFSC”) company, and is the holding company of a group of companies conducting primarily stock-broking, asset management and corporate finance activities for institutions and private clients. There have been no significant changes to the nature of business from the prior year. Botswana Stock Exchange The Imara share was listed on the Venture Capital Market of the Botswana Stock Exchange on 4 October 2006. At 30 April 2008, Imara had 261 shareholders’ and 55 618 916 shares in issue. A minimum of 300 shareholders is required for a company to be listed on the main board of the Botswana Stock Exchange. The Imara share was trading at a price of P 8.40 at 30 April 2008. Since the year end date, the share price has traded as high as P 13.00 and closed on the 5 September 2008 at P 11.75. Authorised Share Capital The Companies Act (Chapter 42:01) was revised and replaced with the Companies Act, 2003 Act No. 32 of 2004. The new Act came into effect on 3 July 2007. Under the revised Act all shares to be issued after 3 July 2007 will be of no par value (Section 47) and all shares already issued are deemed to have been converted to no par shares (Section 47) as of the same date. The conversion of the shares from par value shares to no par value shares does not affect the rights of shareholders. This change does not affect the operations of the company but affects the disclosure and presentation of share capital and share premium which are now presented as a single reporting line item in the financial statements as “Stated Capital”. The authorised share capital of the company is 200 000 000 ordinary shares of no par value (2007 – 20 000 000 ordinary par value shares of 1 thebe each). The un-issued ordinary shares are under the control of the directors. Sub-Division of Shares At an Extraordinary General Meeting of the company held in Gaborone Botswana on 2 August 2007, shareholders approved, by Special Resolution, a sub-division of the company’s ordinary shares on a ten-for-one basis and authorised the directors to take such steps and sign all documents to give effect to the Special Resolution passed at the meeting. The rationale for the share sub-division of Imara shares was to: • Facilitate the acquisition of shares in Imara by smaller investors; • Promote transferability and liquidity of Imara’s shares on the Botswana Stock Exchange; and • Encourage a greater spread of investors. The sub-division resulted in the allotment of 49 319 335 new shares. Stated Capital At year end the stated capital of the company was P 37 111 325, comprising 55 618 916 ordinary shares of no par value. Share capital and share premium, (now classified as stated capital), for the year ended 30 April 2007 totalled P 29 807 821, comprising 5 368 815 ordinary shares of 1 thebe each. The holders of ordinary shares are entitled to receive dividends as and when declared by the company. All ordinary shares carry one vote per share without restriction. 14
  • 16. Imara Holdings Limited Group Annual Report - 30 April 2008 REPORT OF THE DIRECTORS (continued) Stated Capital (Continued) In respect of the year ended 30 April 2007, shareholders were given the option to receive their ordinary dividend of 17 thebe per share, either in cash or to receive ordinary shares in lieu of the dividend entitlement. Shareholders electing to receive ordinary shares in lieu of the dividend were allotted shares at a price of P 7.20 per share. A total of 100 shareholders, holding 37 430 386 ordinary shares of the company and representing 68.96% of the total issued share capital of the company elected to receive shares in lieu of dividend resulting in the allotment of 8 837 730, (adjusted for the 10 for 1 split), new shares in the company. Accounting Policies and Disclosure The consolidated financial statements of the Group and Company have been prepared on a going concern basis in accordance with International Financial Reporting Standards (IFRS), which comprise standards and interpretations approved by the International Financial Reporting Standards Board and interpretations approved by the International Financial Reporting Interpretations Committee, (IFRIC), and the applicable requirements of the Botswana Companies Act (CAP. 42:01). The financial statements have been prepared on an historical cost basis except for certain financial instruments that are carried at fair value. The accounting policies adopted in the preparation of the Group’s and Company’s financial statements are consistent with those of the previous financial year. Financial Results The directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of Botswana (Companies Act, 2003). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. The audited results of the Group and Company are set out in the annual financial statements and accompanying notes. These financial statements were approved and adopted by the Board of Directors on 23 July 2008, and Messrs. MJS Tunmer and DE Stone were authorised to sign these statements on behalf of the board. As alluded to in the Trading Statement issued to shareholders on 3 March and confirmed in the Trading Statement of 16 May 2008, performance fees relating primarily to the Imara Africa Opportunities Fund have had a significant and beneficial impact on the financial results of the Group for the year ended 30 April 2008. Under current accounting conventions and guidelines, such performance fees can only be accounted for at year-end when the amounts can be reliably determined. Such accounting treatment results in a distortion between first and second half earnings, a trend which is likely to continue in future years. The impact of the performance fees on the net earnings of the Group for the year amounts to P 35.2 million and accounts for 63% of group profitability for the year. Shareholders are reminded that results for the previous financial year included a non-recurring exceptional profit, arising from the disposal of available-for-sale-financial assets, which resulted in non-recurring profit of P18.6 million. 15
  • 17. Imara Holdings Limited Group Annual Report - 30 April 2008 REPORT OF THE DIRECTORS (continued) Financial Results (continued) In relation to the current year, it is a moot point whether performance fees should be classified as non-recurring or exceptional for a company engaged in investment management activities, but the Board have nevertheless decided that for dividend distribution purposes there should be a differentiation between profits from core trading activities and exceptional items. Accordingly the dividends declared in respect of the current year are to be split between an ordinary dividend, reflecting core underlying business and a special dividend reflecting the exceptional performance fee. Details of the ordinary and special dividend are outlined in more detail below. Audit and Risk Committee The Audit and Risk Committee comprising executive and non-executive directors’ meets regularly with senior management and risk management committees in order to assess and review the effectiveness of the Group’s systems of risk management and internal control. The Audit and Risk Committee is also responsible for reviewing the financial statements of the group and ensuring that these are IFRS compliant. The Committee meets periodically with the group’s Independent Auditors to consider the nature and scope of the audit reviews and to receive reports in connection with these audit reviews. Directors and Company Secretary Details of the Directors and Company Secretary are reflected on page 3 of this Annual Report. Michael S Golding resigned as an executive director with effect from 18 July 2007 and was replaced by Roderick H Macleod, who joined the Board on 19 July 2007. On 31 October 2007, Maleho Mothibatsela resigned as an executive director but was retained on the Board as a non- executive director. He resigned from the Board on 7 August 2008. It is the Board’s intention to appoint a new independent Motswana non- executive director in his stead. Directors Shareholdings Directors are not required to hold shares in the company but the majority have independently elected to do so. As at 30 April 2008 and 31 August 2008, the directors, directly and indirectly, held the following shares in the company: Number of shares Movement in Number of shares held directly and directors held directly and Share options Share options Director indirectly shareholding indirectly held held 30 April 2008 post year end 31 August 2008 30 April 2008 31 August 2008 AR Fleming 5 327 219 - 5 327 219 250 000 250 000 PJS Gray 1 138 650 (200 000) 938 650 100 000 - JR Legat 2 182 118 (6 500) 2 175 618 200 000 200 000 ACH Mackeurtan 1 828 858 - 1 828 858 - - RH Macleod 1 363 159 20 000 1 383 159 20 000 - RR Matthews 920 800 100 000 1 020 800 100 000 - M Mothibatsela 29 600 25 000 54 600 16 600 - SM Ndoro - - - - - DE Stone 78 669 30 000 108 669 100 000 90 000 MJS Tunmer 5 490 026 169 963 5 659 989 133 330 - TOTALS 18 359 098 138 643 18 457 561 919 930 540 000 16
  • 18. Imara Holdings Limited Group Annual Report - 30 April 2008 REPORT OF THE DIRECTORS (continued) Directors’ Interests in Contracts None of the directors and officers of the Company had an interest in any contract of significance during the financial year. Directors’ Remuneration Shareholders will be asked to approve, at the company’s Annual General Meeting, the remuneration paid to the directors for the year amounting to P11 118 782. (2007 – P 6 290 778). The composition of directors’ remuneration is detailed in note 14 to the Annual Financial Statements. Black Economic Empowerment Transaction On 1 October 2007, the Group concluded a Black Economic Empowerment (“BEE”) Transaction in terms of which 20% of the South Africa operating entities, were transferred to Zingwenya Holdings Limited (Proprietary) Limited. Entities covered by the BEE transaction comprise: - Imara Asset Management South Africa (Proprietary) Limited, - Imara Corporate Finance South Africa (Proprietary) Limited, - Imara SP Reid (Proprietary) Limited, (“Imara SP Reid”), Full details of the transaction are contained in note 24 of the Consolidated Financial Statements. Dividend Declaration In recognition that profits generated through the performance fees are of an exceptional nature, the Board has decided that for dividend distribution purposes, such profits should be differentiated from the profits from core business activities, and be the subject of a special dividend to shareholders. Notice is hereby given that the Board has declared both a special dividend and an ordinary dividend, in respect of the year ended 30 April 2008. Special dividend A special dividend of 17 thebe per share, payable in cash to all shareholders registered in the books of the company as at 15 August 2008. Ordinary dividend An ordinary dividend of 19 thebe per share, payable either in cash or scrip at the election of each shareholder, to all shareholders registered in the books of the company as at 15 August 2008. A Form of Election containing details of the scrip offer was sent to shareholders on 22 August 2008. In terms of the Botswana Income Tax Act (Chapter 42:01) as amended, withholding tax of 15%, unless varied by a Double Taxation Agreement, or any other currently enacted tax rate will be deducted, where applicable, from the gross dividend payable to shareholders. Withholding tax will be applied to both the special and ordinary dividend and in the case of the ordinary dividend, to either the cash or scrip dividend payment. Adoption of a New Constitution The new Companies Act ( Chapter 42:01) which came into effect on 3 July 2007, permits companies to substitute their existing Memorandum and Articles of Association with a Constitution. While there is no obligation to do so, Imara believes that it is both progressive and pragmatic to do so. Shareholders will therefore be asked to approve the adoption of a new Constitution for the company at the forthcoming Annual General Meeting of the Company. At this juncture it is not considered necessary to adopt new Constitutions for all of the Group subsidiary companies, and for the time being these companies will continue to operate under their existing Memorandum and Articles of Association. 17
  • 19. Imara Holdings Limited Group Annual Report - 30 April 2008 REPORT OF THE DIRECTORS (continued) Litigation As reported in the 2007 Annual Report, on 18 July 2007 the company received notification of a legal claim against the Group for damages and breach of contract in the sum of Malawi Kwacha 757, 3 million. (BWP 35,8 million). The claim is against Imara Botswana Limited and relates to an advisory mandate executed on behalf of the Privatisation Commission of Malawi. No new facts have emerged during the current year, which have caused the Board to change the view, taken in July 2007, that the likelihood of a successful claim is remote. This view continues to be supported by a written opinion from the Company’s legal advisors. Correspondence and documentation relating to the claim has been the subject of an extensive review by the Board and, consistent with the prior year, no provision has been raised nor contingent liability noted in the group’s Annual Audited Financial Statements. The matters set out above, together with the legal opinion, have been considered by the independent auditors, prior to the issuance of their Audit Report, which is set out on page 25. However as provided for in the original agreement, relating to disputes arising from the advisory mandate, the company has agreed to enter in a process of arbitration in order to bring finality to this matter. A panel of three Arbitrators, one of whom has been nominated by Imara, have been appointed to hear the case. The first meeting of the panel took place in South Africa in July 2008, at which a timetable for the arbitration process was agreed. It is likely that arbitration proceedings will only commence in January 2009 and be concluded shortly thereafter. Non-recoverable costs relating to this process have been estimated at P 300 000. Post Balance Sheet events Other than the above, no events or transactions have occurred since 30 April 2008 or are pending that would have a material effect on the financial statements at that date or for the year then ended, or that are of such significance in relation to the company's or group’s affairs to require mention in a note to the financial statements in order to not make them misleading regarding the financial position, results of operations, or cash flows of the company or group. By Order of the Board. DE STONE COMPANY SECRETARY 5th September 2008 18
  • 20. Imara Holdings Limited Group Annual Report - 30 April 2008 INTERNATIONAL FOOTPRINT AND REGIONAL OFFICES BOTSWANA ZIMBABWE (associate) Imara Holdings Limited Imara Capital Zimbabwe (Private) Limited Unit 3, Block A, Plot 117, Tendeseka Office Park, 1st Floor Millennium Office Park, Kgale Hill Block 2, Samora Machel Ave. East Gaborone, Botswana P.O. Box 1475, HARARE P Bag 00186, Gaborone, Botswana Tel: + 263 4 790090 / 790936 Tel: + 267 3188708 Fax: + 263 4 791345 Fax: + 267 3188113 SOUTH AFRICA UNITED KINGDOM Imara Capital South Africa (Pty) Limited Imara Asset Management (UK) Limited Imara House, 257 Oxford Road Andersen House, Illovo, South Africa, 2116 Newton Road, P.O. Box 696, Johannesburg 2000 Henley-on-Thames, Tel: + 27 11 550 6100 Oxon RG9 1HG Fax: + 27 11 550 6110 Tel: + 44 1 491 577 238 Fax: + 44 1 491 579 368 MALAWI (associate) MAURITIUS Stockbrokers Malawi Limited Imara Trust Company (Mauritius) Limited Ground Floor, Able House, 1001 Alexander House, 35 Ebene Cybercity Cnr Hannover Ave & Chilembwe Rd, Blantyre Republic of Mauritius P O Box 31180, Chichiri, Blantyre 3, Malawi, Central Tel: +230 464 9799 Africa Telefax: +230 464 9798 Tel: +265 08 824 327, 09 824 327 Fax: +265 01 624 353 19
  • 21. Imara Holdings Limited Group Annual Report - 30 April 2008 GROUP ORGANISATIONAL STRUCTURE Imara Holdings Limited Group Holding Company Incorporated in Botswana Registered International Financial Services Company (Offshore Investment Status) 100% 100% 100% 100% 100% 50% 100% 69.3% 100% 100% Africa Imara Asset Imara Asset Imara Trust Imara Capital Imara Imara Capital C F Africa Imara Non Trading Investments Management Management Company Limited Securities Botswana Limited Trademarks Companies Limited Limited UK Limited (Mauritius) Angola SVM (Pty) Ltd Limited Limited Limitada Management 100% Contracts 25% 47.2% Imara Securities Imara Global Stockbrokers Botswana Imara Capital Imara Fund Malawi 100% (Pty) Limited Zimbabwe Holdings Limited Trading as (Pvt) Limited Namibia Imara Africa (Pty) Limited Securities 100% Imara African Imara Imara Imara Capital Opportunities 100% Botswana Edwards Limited Fund Limited Securities Zambia (Pvt) Limited Imara Series Fund Imara Capital Imara Asset Imara Capital 100% Sub Funds: Limited Management Kenya • Zimbabwe Fund (Dormant) (Pvt) Limited Limited • Nigeria Fund • East Africa Fund Imara Asset Imara 51% Management Corporate (Pty) Limited Finance (Pvt) Limited Imara Zingwenya Capital Holdings South Africa (Pty) Ltd LEGEND: (Pty) Ltd Botswana Kenya 80% 20% South Africa Namibia British Virgin Islands United Kingdom Imara Zimbabwe Corporate Imara S P Imara Asset Zambia Finance Reid (Pty) Management South Africa Ltd South Africa Malawi Mauritius (Pty) Ltd (Stockbroking) (Pty) Ltd Angola 20
  • 22. Imara Holdings Limited Group Annual Report - 30 April 2008 CORPORATE GOVERNANCE The Board of Imara Holdings Limited is committed, in its stewardship of the Group’s affairs, to the seven characteristics of good corporate governance, as contained in the second King Report, namely discipline, transparency, responsibility, independence, fairness, accountability, and social responsibility. The Board recognises the significance and evolving nature of corporate governance and assesses the Group’s compliance with sound corporate governance practices on a regular basis, directly and through its Board Committees. The directors endorse the Code of Corporate Practices and Conduct contained in the second King Report. By supporting the code, Imara Holdings Limited demonstrates its commitment to the highest standards of integrity and ethical conduct in its dealings with stakeholders. Board of Directors The Board of directors is chaired by Philip Gray an independent, non-executive director and comprises ten directors, four of whom are non -executive. In appointing directors, emphasis is placed on achieving a balance of skills, experience and professional and industry knowledge necessary to meet the Group’s strategic objectives. The selection and appointment of directors is a formal and transparent process, and a matter for the board as a whole, assisted by the Nominations Committee. The board composition is balanced so that no individual board member or small group of members has unfettered control over decision making. The Board is responsible to shareholders for setting the strategic direction of the company, for the monitoring of operational performance and management and for ensuring that succession planning is in place. The Board is also responsible for the integrity and quality of communications with stakeholders, regulators, shareholders and employees. In terms of the company’s Articles of Association, directors are appointed for three years. At least one third of the directors, (rounded down), retire by rotation annually, and if available, can offer themselves for re-election at the company’s Annual General Meeting. Non-executive directors are not required to hold shares in the company but the majority have independently elected to do so. Remuneration levels of non-executive directors are reviewed annually and bench-marked against the Botswana financial services sector companies and proxy groups with a regional presence. All directors have direct access to the Company Secretary and to information on the Group’s affairs, are entitled to make use of independent professional advisors, at company expense, when necessary to discharge specific tasks and duties and have access to the Chief Executive Officer and senior executives where required. The Board meets at least three times a year to review the financial performance of the Group, its strategic direction and key policies. It approves budgets and reviews the overall effectiveness of systems of internal controls, risk management and statutory and regulatory compliance. It also monitors the implementation of strategy and policy through a structured approach to reporting and consequent accountability of executive management. Board Committees The Board is assisted in the discharge of its duties and responsibilities by a number of board sub-committees, including audit and risk, remuneration and nominations. These sub-committees are accountable to the main board and are chaired by non- executive directors. Terms of reference of the sub-committees have been agreed by the main board and are reviewed periodically. Minutes of sub-committee meetings are circulated and reported on at subsequent board meetings. Senior executives are invited to attend meetings of sub-committees where considered appropriate. 21
  • 23. Imara Holdings Limited Group Annual Report - 30 April 2008 CORPORATE GOVERNANCE (continued) Audit and Risk Committee The Audit and Risk Committee is chaired by Roger Matthews, an independent non-executive director, and comprises four members, three of whom are non-executive. The Committee has formal terms of reference, which set outs its responsibilities. The main responsibility of the Committee is to assist the board in discharging its responsibilities under the Companies Act, for ensuring compliance with regulations imposed by regulators and supervisory authorities and for assessing, managing and monitoring risks. It also monitors financial controls and reporting, compliance with International Financial Reporting Standards, (IFRS), the effectiveness of the independent external auditors and evaluates risk management procedures in subsidiary companies and other internal systems of control. It also monitors statutory and regulatory compliance at both Group and subsidiary company level. Meetings are held at least three times per annum and are attended by the independent external auditors, who have unrestricted access to the Chairman of the Committee. Meetings are also attended by internal auditors, compliance officers and senior management, on an as required basis. At least once in each calendar year, the Committee, excluding the executive management representative, meet with the external auditors. The Committee has considered and recorded the facts and assumptions on which it has concluded that the company and the Group are going concerns and will continue as such in the year ahead. It has recommended that the board endorse a statement to this effect and that the financial statements, prepared on this basis, are approved and adopted. The current members of the audit committee are set out on page 3. Remuneration Committee The Remuneration Committee is chaired by Philip Gray, an independent non-executive director, and comprises three members all of whom are non-executive directors. The Chief Executive Officer and one other executive director attend meetings of the Committee by invitation. The Remuneration Committee is responsible for setting remuneration policies for the Group. It aims to ensure that the financial rewards offered to employees are sufficient to attract people of the calibre required to effectively implement strategy, and manage the Group’s affairs in order to produce the required returns for shareholders. It also seeks to ensure that directors and executives are fairly rewarded for their respective contributions to the Group. Annually the Committee reviews the profit sharing scheme and the apportionment of profit shares to executives and employees. The committee met three times during the year. The current members of the Remuneration Committee are set out on page 3. Nominations Committee The Nominations Committee is chaired by Philip Gray and comprises three members, one of whom is a non-executive director. The Committee includes the Chief Executive Officer, and is responsible for making recommendations to the board on all new appointments to the main board and also reviews the appointment of directors to subsidiary company boards. A formal and transparent process is in place in terms of which the requisite skills needed on the board are identified and those individuals who are best suited for the position and who are able to assist the board in their endeavours are recruited. The Committee meets on an as required basis. The current members of the Nominations Committee are set out on page 3. 22
  • 24. Imara Holdings Limited Group Annual Report - 30 April 2008 CORPORATE GOVERNANCE (continued) 2007/2008 Board Attendance Register Director Audit & Risk Remuneration Nominations Main AGM Committee Committee Committee PJS Gray 3/3 3/3 3/3 3/3 0/1 MJS Tunmer - 3/3 3/3 3/3 1/1 AR Fleming - - - 0/3 0/1 JR Legat - - - 3/3 0/1 ACH Mackeurtan - 3/3 3/3 3/3 1/1 RH McLeod - - - 3/3 0/1 RR Matthews 3/3 3/3 3/3 3/3 0/1 M Mothibatsela - - - 3/3 1/1 SM Ndoro 3/3 3/3 - 3/3 1/1 DE Stone 3/3 - - 3/3 1/1 It should be noted that whilst Adam Fleming, for a variety of reasons, has been unable to attend formal board meetings, his informal contribution and assistance to the Group has been invaluable, given his proven and widespread experience internationally. The board have granted special leave of absence to him regarding his attendance at meetings. Compliance The Group and certain of its subsidiary companies are subject to supervisory and regulatory controls in the geographic or country jurisdictions where they operate. In the case of Imara Holdings Limited, the regulators and supervisory authorities are: • Bank of Botswana • International Financial Service Centre (“IFSC”) • Botswana Stock Exchange. The regulators and supervisory authorities at subsidiary company and Fund level, are as follows: • Imara Asset Management (UK) Limited – Financial Services Authority -UK • Imara Africa Opportunities Fund - Dublin Stock Exchange • Imara Asset Management (South Africa) (Pty) Limited -Financial Service Board - SA • Imara SP Reid Limited - Financial Services Board & JSE Limited Supervisory and regulatory controls are generally based on the submission of prescribed returns and annual compliance certificates and in all instances there is an exception reporting requirement. There have been no material breaches of supervisory and regulatory controls within the Group and its subsidiaries during the past year, and where necessary, remedial action has been taken to address minor matters brought to the attention of Compliance Officers. Dealing in Securities The Imara share has been listed on the Venture Capital Board of the Botswana Stock Exchange since 4 October 2006. The Group has a policy prohibiting dealings in its shares by directors, officers, executive management and all employees for a designated period, (closed period), which is from the close of the financial reporting period to the date of the announcement of its results or when they are in possession of price sensitive information, not readily available to the public. The Groups’ policy is fully compliant with the Botswana Stock Exchange requirements for listed companies. 23
  • 25. Imara Holdings Limited Group Annual Report - 30 April 2008 CORPORATE GOVERNANCE (continued) Ethics and Business Integrity Professional and ethical conduct and the highest standards of integrity are an integral part of how the Group conducts its business affairs. The Group recognizes that investor and stakeholder perceptions are based on the manner in which the Group, its directors, management and staff conduct business and the Group therefore strives to achieve the highest standards of integrity, transparency and business ethics at all times. Directors and management are required to make an annual declaration of their interests, and a register of interests is maintained by the Company Secretary. Directors and management are also required to disclose any material interests in contracts and business transactions relating to the Group, which occur during the ordinary course of business and to recuse themselves from any discussions relating thereto. Communication with Stakeholders The Group is committed to a policy of effective communication with stakeholders on matters of mutual interest. The Group has fully adopted the BSE guidelines pertaining to the dissemination of financial information to stakeholders. Liaison meetings are also held with the Bank of Botswana, the International Financial Services Centre, regulators and supervisory authorities to brief them on the Groups’ performance and key strategic initiatives. In keeping with the Groups’ commitment to continually improve communications with stakeholders, the Group incorporated an Investor Relations section within the Imara Holdings website, (www.imaraholdings.com), which allows stakeholders to access salient information pertaining to the Group.. Social Responsibility Imara is a Group with an authentic African heritage and we owe our success, in part, to the support of the communities in which we operate. The group recognises its role and responsibility as a corporate citizen and is committed to providing support to these communities through broad based programmes, sponsorship and initiatives. 24
  • 26. Imara Holdings Limited Consolidated Annual Financial Statements INDEPENDENT AUDITOR’S REPORT INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF IMARA HOLDINGS LIMITED Report on the Financial Statements We have audited the group financial statements of Imara Holdings Limited and the Company financial statements, set out on pages 26 to 78 which comprise the directors report, balance sheets as at 30 April 2008, and the income statements, statements of changes in equity and cash flow statements for the year then ended, and a summary of significant accounting policies and other explanatory notes. Directors’ Responsibility for the Financial Statements The directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of Botswana (Companies Act, 2003). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects the financial position of the Group and the Company as of 30 April 2008, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of Botswana (Companies Act, 2003). Certified Public Accountants 5th September 2008 2nd Floor, UN Place Khama Crescent PO Box 41015 Gaborone, Botswana 25
  • 27. Imara Holdings Limited Consolidated Annual Financial Statements CONSOLIDATED INCOME STATEMENT Year Ended 30 April Group Group Company Company 2008 2007 2008 2007 Pula Pula Pula Pula Note Re-stated Re-stated CONTINUING OPERATIONS: Revenue 3 174 959 517 127 480 896 25 737 188 7 619 427 Costs of services sold (16 495 102) (8 085 690) - - Gross profit 158 464 415 119 395 206 25 737 188 7 619 427 Other income 3 6 407 080 4 753 975 503 782 889 611 Operating expenses 3 (98 426 515) (65 613 320) (6 044 333) (5 784 385) Finance costs 3 (458 599) (237 120) (563 142) (490 318) Share of profits from associates 89 059 160 814 - - Profit before taxation 66 075 440 58 459 555 19 633 495 2 234 335 Taxation (expense)/credit 4 (9 692 211) (10 846 936) (655 222) 66 746 Profit for the year from continuing 56 383 229 47 612 619 18 978 273 2 301 081 operations DISCONTINUED OPERATION: (Loss after tax) for the year from a 5 (801 576) (175 528) - - discontinued operation Profit for the year 55 581 653 47 437 091 18 978 273 2 301 081 Attributable to: Equity holders of the parent 56 449 140 48 142 648 - - Minority interest (867 487) (705 557) - - Profit for the year - as above 55 581 653 47 437 091 - - Earnings per share - (All operations): 6 - Basic (Thebe) 103 93 - - - Diluted (Thebe) 100 90 - - Earnings per share - (Continuing operations): - Basic (Thebe) 103 92 - - - Diluted (Thebe) 100 89 - - Certain revenue items previously classified as “Other Income” have been re-classified as “Revenue”. The re-classification has been undertaken to ensure full compliance with the accounting policies relating to revenue recognition, presentation and disclosure and to ensure consistency in reported financial information. Comparative figures for the year ended 30 April 2007 have been re-stated where applicable. 26
  • 28. Imara Holdings Limited Consolidated Annual Financial Statements CONSOLIDATED BALANCE SHEET As at 30 April Group Group Company Company 2008 2007 2008 2007 Pula Pula Pula Pula Note Re-stated ASSETS Non-Current Assets Equipment 8 3 821 393 3 969 211 396 666 31 605 Goodwill 9 96 027 100 952 - - Intangible assets 10 804 190 714 000 571 200 714 000 Investment in subsidiaries 11 - - 12 483 013 11 756 884 Investment in associates 12 2 712 265 2 786 067 - - Available-for-sale financial assets 13 8 714 677 9 944 438 1 600 558 694 010 Accounts receivable -group companies 14 - - 31 309 659 21 085 174 Deferred tax asset 4 857 748 1 762 435 - 239 831 17 006 300 19 277 103 46 361 096 34 521 504 Current Assets Listed trading securities 15 3 539 570 3 635 740 - - Trade and other receivables 16 188 382 152 123 559 364 1 117 754 467 434 Cash and cash equivalents 17 44 884 280 26 211 131 1 579 181 399 898 Tax refundable 2 839 866 - - - 239 645 868 153 406 235 2 696 935 867 332 TOTAL ASSETS 256 652 168 172 683 338 49 058 031 35 388 836 EQUITY AND LIABILITIES Equity Stated capital 18 37 111 325 29 807 821 37 111 325 29 807 821 Non-distributable reserves 9 650 370 11 362 928 2 390 022 2 229 193 Distributable reserves 92 336 185 50 541 896 2 479 364 (1 844 058) Total shareholders’ equity 139 097 880 91 712 645 41 980 711 30 192 956 Minority interest 423 221 (289 096) - - Total equity 139 521 101 91 423 549 41 980 711 30 192 956 Non-current liabilities Accounts payable -group companies 14 - - 4 055 987 3 628 072 Interest bearing loans and borrowings 19 15 739 126 752 - - Deferred taxation 4 7 525 - 7 525 - 23 264 126 752 4 063 512 3 628 072 Current Liabilities Trade and other payables 20 105 859 500 68 304 322 2 539 764 1 567 808 Current portion of interest bearing loans and borrowings 19 10 020 169 704 - - Taxation payable 407 866 8 902 355 407 866 - Provisions 21 1 719 114 3 408 159 - - Bank overdraft 19 9 111 303 348 497 66 178 - 117 107 803 81 133 037 3 013 808 1 567 808 Total liabilities 117 131 067 81 259 789 7 077 320 5 195 880 TOTAL EQUITY & LIABILITIES 256 652 168 172 683 338 49 058 031 35 388 836 27
  • 29. Imara Holdings Limited Consolidated Annual Financial Statements CONSOLIDATED CASH FLOW STATEMENT Year ended 30 April Group Group Company Company 2008 2007 2008 2007 Cash flows from operating activities Note Pula Pula Pula Pula Profit before tax – Continuing operations 66 075 440 58 459 555 19 633 495 2 234 335 Profit before tax – Discontinued operations (801 576) (175 528) - - Profit before tax 65 273 864 58 284 027 19 633 495 2 234 335 Adjusted for: Depreciation & amortisation 1 402 464 789 948 192 138 5 854 Interest received 3 (10 983 858) (6 973 242) (2 758 626) (2 748 991) Finance charges paid 458 599 311 134 563 142 490 318 Share of profit from associates 12 (89 059) (160 814) - - Share based payment expense- Options 393 051 506 938 (333 076) 506 938 Share based payment expense - BEE 1 495 199 - - - Net foreign exchange difference (2 424 413) (5 574 351) (545 642) (1 925 873) (Decrease) / Increase in provisions (1 689 045) 240 143 - 663 627 Profit from sale of investments (1 065 377) - - - (Profit) on sale of equipment (40 750) - - - Operating cash inflows/(outflows) before working capital changes 57 730 675 47 423 783 16 751 431 (773 792) Increase/ (decrease) in trading stock 96 170 (2 030 814) - - Increase in trade & other receivables (64 822 786) (63 780 773) (650 320) (29 171) Increase in trade and other payables 37 555 181 25 721 968 971 956 476 619 Cash generated from operations 25 559 240 7 334 164 17 073 067 (326 344) Income tax paid (20 114 354) (4 618 873) - - Net cash flows from/(used) in operating activities 5 444 886 2 715 291 17 073 067 (326 344) Cash flows from investing activities Interest received 3 10 983 858 6 973 242 2 758 626 2 748 991 Dividends received from associate 162 861 191 730 - - Acquisition of intangible assets (232 990) - - Purchase of equipment 8 (1 609 987) (2 122 737) (414 399) (31 500) Proceeds from sale of equipment 406 899 30 750 - - Loans granted to group companies - - (10 224 485) (773 016) Sale / (purchase) of available-for-sale-financial assets 1 255 659 1 149 657 (593 130) (694 010) Net cash flows from / (used in) investing activities 10 966 300 6 222 642 (8 473 388) 1 250 465 Cash flows from financing activities Finance charges paid (458 599) (311 134) (563 138) (490 318) Proceeds from issue of shares 940 049 494 532 940 049 494 532 Proceeds from issue of additional shares in subsidiary 1 579 804 - - - Finance lease instalments (270 697) (127 765) - - Finance leases raised - 25 319 - Loans received from group companies - - 427 915 393 107 Repayment of loans and borrowings - (316 848) - (316 848) Dividends paid (8 291 400) (1 138 869) (8 291 400) (1 138 869) Net cash flows from financing activities (6 500 843) (1 374 765) (7 486 574) (1 058 396) Net increase in cash and cash equivalents 9 910 343 7 563 168 1 113 105 (134 275) Cash and cash equivalents at beginning of year 25 862 634 18 299 466 399 898 534 173 Cash and cash equivalents at end of year 17 35 772 977 25 862 634 1 513 003 399 898 Analysed as follows: Cash and bank 44 884 280 26 211 131 1 579 181 399 898 Bank overdraft (9 111 303) (348 497) (66 178) - Net cash and cash equivalents 35 772 977 25 862 634 1 513 003 399 898 28
  • 30. Imara Holdings Limited Consolidated Annual Financial Statements CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 April Company Company 2008 2007 Number Number Shares in Issue: In issue at the beginning of the year 5 368 815 4 743 800 Adjustment for the 10 for 1 share sub-division 48 319 335 - In issue at the beginning of the year - re-stated 53 688 150 4 743 800 Issued during the year: Debenture conversions - 365 040 Scrip dividend 883 810 151 738 Share options exercised 1 046 956 108 237 In issue at the end of the year 55 618 916 5 368 815 In August 2007 the company implemented a sub-division of shares on a 10 for 1 basis. Stated Capital: In terms of the new Companies Act, 2003 Act No 32, which came into effect on 3 July 2007, all shares already issued are deemed to have been converted to no par value shares as of the same date. The change affects the disclosure and presentation of share capital and share premium which are now presented as a single reporting line item. The effect of these changes, are show in the table below and are more fully described in note 18. For the year ended April 2008 For the year ended April 2007 Company Company Share Share Stated Share Share Stated capital premium capital capital premium capital Re-stated Re-stated Re-stated 2008 2008 2008 2007 2007 2007 Pula Pula Pula Pula Pula Pula Balance at beginning of year 53 688 29 754 133 47 438 25 650 034 Issue of ordinary shares: Debenture conversions - - 3 651 1 867 179 Scrip dividend 884 6 362 567 1 517 493 450 Share options exercised 1 047 939 006 1 082 1 743 470 55 619 37 055 706 53 688 29 754 133 Reclassified to stated capital (55 619) (37 055 706) 37 111 325 (53 688) (29 754 133) 29 807 821 Balance at end of year - - 37 111 325 - - 29 807 821 Stated capital comprises of ordinary shares and share premium as more fully disclosed in note 18. The holders of ordinary shares are entitled to receive dividends as and when declared by the Group. All ordinary shares carry one vote per share without restriction. 29
  • 31. Imara Holdings Limited Consolidated Annual Financial Statements CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued) Total Equity: As at 30 April Non - Total Stated distributable Distributable Shareholders Minority Total capital reserves reserves Equity interest Equity (Per above) (See below) Group: Balance - 1 May 2006 25 697 472 23 979 887 6 305 887 55 983 246 416 461 56 399 707 Prior year adjustment (Note 2) ( 1 022 783) (1 022 783) - (1 022 783) Balance - 1 May 2006 re-stated 25 697 472 23 979 887 5 283 104 54 960 463 416 461 55 376 924 (Decrease) / Increase in foreign currency translation for the year (5 626 670) - (5 626 670) - (5 626 670) Available-for-sale gains / (losses) recognised directly in equity - (4 936 265) - (4 936 265) - (4 936 265) Transfers to Income Statement on disposal - (12 433 492) - (12 433 492) - (12 433 492) Total income and expense for the year recognised directly in equity 25 697 472 10 855 990 5 283 104 41 836 566 416 461 42 253 027 Profit / (loss) for the year re-stated - - 48 142 648 48 142 648 (705 557) 47 437 091 Total income and expense for the 25 697 472 10 855 990 53 425 752 89 979 214 (289 096) 89 690 118 year Issue of new shares 4 110 349 - - 4 110 349 - 4 110 349 Share based payment expense- share options (net) - 506 938 - 506 938 - 506 938 Dividends paid - - (2 883 856) (2 883 856) - (2 883 856) Balance - 30 April 2007 29 807 821 11 362 928 50 541 896 91 712 645 (289 096) 91 423 549 Group: Balance - 1 May 2007 29 807 821 11 362 928 50 541 896 91 712 645 (289 096) 91 423 549 Decrease) / Increase in foreign currency translation for the year - (2 561 327) - (2 561 327) - (2 561 327) Available-for-sale gains / (losses) recognised directly in equity - (4 573) - (4 573) - (4 573) Transfers to Income Statement on disposal - (1 034 908) - (1 034 908) - (1 034 908) Share based payment expense- BEE transaction - 1 495 197 - 1 495 197 - 1 495 197 Total income and expense for the year recognised directly in equity 29 807 821 9 257 317 50 541 896 89 607 034 (289 096) 89 317 938 Profit for the year - - 56 449 140 56 449 140 (867 487) 55 581 653 Total income and expense for the 29 807 821 9 257 317 106 991 036 146 056 174 (1 156 583) 144 899 591 year Issue of new shares 7 303 504 - - 7 303 504 - 7 303 504 Issue of shares in subsidiary company - - - 1 579 804 1 579 804 Share based payment expense- share options (net) - 393 053 - 393 053 - 393 053 Dividends paid - - (14 654 851) (14 654 851) - (14 654 851) Balance - 30 April 2008 37 111 325 9 650 370 92 336 185 139 097 880 423 221 139 521 101 30
  • 32. Imara Holdings Limited Consolidated Annual Financial Statements CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued) Total Equity: As at 30 April Non - Stated distributable Distributable Total capital reserves reserves Equity (Per above) (See below) Company: Balance - 1 May 2006 25 697 472 3 648 129 (1 261 283) 28 084 318 Issue of new shares 4 110 349 - - 4 110 349 (Decrease) / Increase in foreign currency translation for the year - (1 925 874) - (1 925 874) Share based payment expense- share options - 506 938 - 506 938 29 807 821 2 229 193 ( 1 261 283) 30 775 731 Profit for the year - - 2 301 081 2 301 081 Dividends paid - - (2 883 856) (2 883 856) Balance - 30 April 2007 29 807 821 2 229 193 (1 844 058) 30 192 956 Company: Balance - 1 May 2007 29 807 821 2 229 193 (1 844 058) 30 192 956 Issue of new shares 7 303 504 - - 7 303 504 Share based payment expense- share options (net) - 393 053 - 393 053 Share based payment expense- employees of subsidiary companies - 726 129 - 726 129 Share based payment expense – employees of the company (333 076) - (333 076) Available-for-sale gains / (losses) recognised directly in equity - (232 224) - (232 224) 37 111 325 2 390 022 (1 844 058) 37 657 289 Profit for the year - - 18 978 273 18 978 273 Dividends paid - - (14 654 851) (14 654 851) Balance - 30 April 2008 37 111 325 2 390 022 2 479 364 41 980 711 31
  • 33. Imara Holdings Limited Consolidated Annual Financial Statements CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued) Non-distributable Reserves: As at 30 April Total Foreign currency Share based Available-for- Non- translation payment sale-financial distributable reserve reserve reserve reserves (Per above) Group: Balance - 1 May 2006 7 225 518 396 277 16 358 092 23 979 887 (Decrease) / Increase in foreign currency translation for the year (5 626 670) - - ( 5 626 670) (Decrease) in available-for-sale reserve for the year (7 497 227) ( 7 497 227) Share based payment expense- share options - 506 938 - 506 938 Gains / (losses) recognised directly in equity - - - - Transferred to profit and loss on sale - - - - Balance - 30 April 2007 1 598 848 903 215 8 860 865 11 362 928 Group: Balance - 1 May 2007 1 598 848 903 215 8 860 865 11 362 928 (Decrease) / Increase in foreign currency - translation for the year (2 561 328) - (2 561 328) (Decrease) in available-for-sale reserve for the year - - (1 039 481) (1 039 481) Share based payment expense- share options - 393 053 - 393 053 Share based payment expense- BEE transaction - 1 495 197 - 1 495 197 Balance - 30 April 2008 (962 480) 2 791 465 7 821 384 9 650 369 Company: Balance - 1 May 2006 - 396 277 3 251 852 3 648 129 Decrease) / Increase in foreign currency translation for the year - - (1 925 874) (1 925 874) Share based payment expense- share options - 506 938 - 506 938 Balance - 30 April 2007 - 903 215 1 325 978 2 229 193 Company: Balance - 1 May 2007 - 903 215 1 325 978 2 229 193 Share based payment expense- share options (net) - 393 053 393 053 Share based payment expense- employees of subsidiary companies - 726 129 726 129 Share based payment expense – employees of the company - (333 076) (333 076) Gains / (losses) recognised directly in equity - - (232 224) (232 224) Balance - 30 April 2008 - 1 296 268 1 093 754 2 390 022 32
  • 34. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The consolidated financial statements of the Group and the financial statements of the Company have been prepared on a going concern basis in accordance with International Financial Reporting Standards (IFRS), which comprise standards approved by the International Accounting Standards Board, (IASB), and interpretations approved by the International Financial Reporting Interpretations Committee, (IFRIC), and the applicable requirements of the Botswana Companies Act, 2003. The financial statements have been prepared on a historical cost basis except for certain financial instruments that are carried at fair value and in accordance with IAS 29 where the functional currency is the currency of a hyperinflationary economy where they are stated in terms of the measuring unit current at the balance sheet date. Basis of consolidation The consolidated financial statements comprise the financial statements of Imara Holdings Limited and its subsidiaries drawn up to 30 April each year. All intra group balances, transactions, income and expenses are eliminated in full on consolidation. Subsidiaries are consolidated from the date on which control is transferred to the group and cease to be consolidated from the date on which control is transferred out of the group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The subsidiaries have the same reporting date as the holding company and apply consistent accounting policies. Minority interests represent the portion of profit or loss and net assets not held by the Group and are presented separately in the Income Statement and within equity in the Balance Sheet, separately from parents’ shareholders’ equity. Investments in subsidiaries are carried at cost at a company level. Borrowing costs Borrowing costs are recognised as an expense when incurred. Changes in accounting policies The accounting policies adopted are consistent with those of the previous financial year, except as follows: The group has adopted the following new and amended IFRS and IFRIC interpretations during the year. Adoption of these revised standards and interpretations did not have any effect on the financial statements of the group. They did however give rise to additional disclosures. • Amendment to IAS 1 Presentation of Financial Statements – Capital disclosures • IFRS 7 Financial Instruments: Disclosure This standard requires disclosure that enables users of the financial statements to evaluate the significance of the Group’s financial instruments and the nature and extent of risks arising from those financial instruments. The new disclosures are included throughout the financial statements. While there has been no effect on the financial position or results, comparative information has been revised as needed. Cost of services sold Cost of services sold consists of all direct costs associated with revenue generation inclusive of sub-contractor expenses and recoverable and non-recoverable disbursements. 33
  • 35. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Equipment Equipment is stated at cost less accumulated depreciation, and accumulated impairment losses. Depreciation is computed on a straight line basis over the estimated useful life to reduce the asset’s value to residual value as follows: Electronic library 10% Motor vehicles 20% (or the lease period whichever is shorter) Office and computer equipment 10% - 33.33% It is the policy to apportion depreciation in the year of acquisition and disposal. The carrying amounts are reviewed for impairment when events or changes in circumstance indicate that the carrying value may not be recoverable. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset, (calculated as the difference between the net disposal proceeds and the carrying amount of the asset), is included in the income statement in the year of de- recognition. Residual values, useful lives and methods of depreciation are reviewed on an annual basis. Fiduciary activities The Group acts in fiduciary capacities that result in the holding, placing or managing of assets for the account of and at the risk of clients. As these are not assets of the company, they are not reflected on the balance sheet but are included as a note to the financial statements at market value as part of funds under management. (See note 22) Financial instruments: Initial recognition and measurement Financial assets in the scope of IAS 39 are classified as either financial assets at fair value through profit or loss, loans and receivables and available-for-sale-assets as appropriate. • Regular way purchases or sales of investments and other financial assets are recognised on the trade date. Regular way purchases or sales are purchases or sale of investments and other financial assets that require delivery of assets within the period generally established by regulation or convention in the market place. • When financial assets or financial liabilities are initially recognised, they are measured at fair value, plus, in the case of a financial asset or financial liability not at fair value through the Income Statement, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. The group determines the classification of its financial assets after initial recognition and where appropriate re-evaluates this designation at each financial year-end. • Financial assets and financial liabilities are initially recognised on the Balance Sheet when the company becomes party to the contractual provisions of the instrument. • Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Gains or losses on financial assets are recognised in the Income Statement. • Financial liabilities at fair value through Income Statement, include the option liability which arose as a result of the BEE transaction with Zingwenya Holdings (Pty) Limited. Gains or losses on financial liabilities through Income Statement are recognised in Income Statement • Long-term financial instruments, including interest bearing loans and borrowings are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in the Income Statement when the financial instrument is derecognised or impaired, as well as through the amortisation process. • Trade and other receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, trade and other receivables are carried at amortised cost less any allowance for impairment. Gains and losses are recognised in the Income Statement. 34
  • 36. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Financial instruments: (continued) Initial recognition and measurement (continued) • Cash and cash equivalents are defined as cash on hand, demand deposits and short-term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Cash and cash equivalents are subsequently carried at amortised cost. For the purposes of the Consolidated Cash Flow Statement, cash and cash equivalents consists of cash and cash equivalents as defined above, net of outstanding bank overdrafts. • Available-for-sale-financial-assets are those non-derivative financial assets that are not designated as either at fair value through Income Statement or loans and receivables. After initial recognition available-for-sale-financial- assets are measured at fair value with gains and losses being recognised as a separate component of equity, until the financial instrument is sold, collected or otherwise disposed of, or until the financial instrument is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in the income statement. • For financial instruments that are actively traded in organised financial markets, fair value is determined by reference to quoted market bid prices at the close of business on the balance sheet date. For financial instruments where there is no quoted market price, fair value is determined by reference to the current market value of another instrument which is substantially the same or is calculated based on the expected cash flows of the underlying net asset base of the investment. Impairments Non-financial assets An assessment is made at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the recoverable amount. An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use and, is determined for an individual asset, unless the asset does not generate cash flows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. The calculations are collaborated by valuation multiples, quoted share prices for publically traded subsidiaries or other available fair value indicators. Impairment losses of continuing operations are recognised in the Income Statement for the period, in those expense categories consistent with the function of the impaired asset, except for equipment previously re-valued where the revaluation was taken to equity. In this case the impairment is also recognised in equity up to the amount of any previous revaluation. For assets, excluding goodwill, an assessment is made at each reporting date as to whether there is an indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group makes an estimate of the recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the estimate used to determine the asset’s recoverable amount since the last impairment loss was recognised. If this is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the Income Statement unless the asset is carried at its re-valued amount, in which case the reversal is treated as a revaluation increase. 35
  • 37. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Impairments of financial assets • At amortised cost Held to maturity investments and loans and receivables are measured at amortised cost. This is computed using the effective interest method less any allowance for impairment. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the effective interest rate. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced to its estimated recoverable amount either directly or through the use of an allowance account and the amount of the loss is included in the Income Statement for the period. The group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed, to the extent that the carrying value of a financial asset does not exceed its amortised cost at the reversal date. Any subsequent reversal of an impairment loss is recognised in the Income Statement for the period. • Available-for-sale-financial assets When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the asset is impaired, the cumulative loss that had been recognised directly in equity shall be removed from equity and recognised in Income Statement even though the financial asset has not been derecognised. Objective evidence would include a significant or prolonged decline in the fair value if the investment is below its cost. The amount of the cumulative loss that is removed from equity and recognised in Income Statement is the difference between the acquisition cost (net of any principal repayment and amortisation) and current fair value, less any impairment loss on that financial asset previously recognised in Income Statement. Impairment losses recognised in Income Statements for an investment in an equity instrument classified as available-for- sale shall not be reversed through Income Statement. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in Income Statement, the impairment loss shall be reversed, with the amount of the reversal recognised in Income Statement. For the purpose of collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics. Those characteristics are relevant to the estimation of future cash flows. In relation to trade receivables, a provision for impairment is made when there is objective evidence, (such as probable insolvency, significant financial difficulties of the debtor, default or delinquency), that the Group will not be able to collect all of the amounts due under the original terms of the invoice or contract. The carrying amount of the receivable is reduced either through the use of an allowance account or directly by a charge against the amount due. Impaired debts are derecognised when they are assessed as un-collectible. 36
  • 38. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Financial assets: (continued) Derecognition Financial assets A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when: • the rights to receive cash flows from the asset have expired; • the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass through’ arrangement; or • the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de- recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the income statement. Leases The determination of whether an arrangement is, or contains a lease, is based on the substance of the arrangement, at inception date of whether or not the fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset. Group as lessee Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges and any transaction costs are charged directly to Income Statement. Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term. Group as lessor Leases where the Group does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease rentals are recognised in the Income Statement when the lessor’s right to receive the rental is established. 37
  • 39. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Foreign currency translation The consolidated financial statements are presented in Pula, (“BWP”), the currency of Botswana. The Pula is the functional and presentation currency of the parent company and that of the Group. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date. All differences are taken to the Income Statement. Non- monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. The assets and liabilities of overseas subsidiaries are translated into Pula, at the rate of exchange ruling at the balance sheet date. The income statements of overseas subsidiaries are translated at weighted average exchange rates for the year. The exchange differences arising on the retranslation are taken directly to equity. On disposal of a foreign entity, accumulated exchange differences are recognised in the Income Statement when the gain or loss on disposal is recognised. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the acquired company and are recorded at the closing exchange rate. Goodwill Goodwill acquired in a business combination is initially measured at cost being the excess of the business combination over the net fair value of identifiable net assets, liabilities and contingent liabilities of a subsidiary, associate or joint venture at the date of acquisition. Goodwill is tested for impairment annually or more frequently if circumstances indicate that the goodwill is impaired. Goodwill is subsequently stated at cost less accumulated impairment in value. Impairment is determined for goodwill by assessing the recoverable amount of the cash generating unit to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount of the cash generating unit to which the goodwill has been allocated, an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods. The Group performs its annual impairment test of goodwill as at 30 April. Income taxes Current taxation is charged on the net income for the year after taking into account income and expenditure which is not subject to taxation, and deductible capital allowances on fixed assets. Withholding tax on dividends paid is set off against the additional company taxation of the group in the year in which the dividends are paid. Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all taxable temporary differences except: • where the deferred tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and , at the time of the transaction, affects neither the accounting income or taxable income; and • in respect of taxable temporary differences associated with investments in subsidiaries, associates and interest in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carry-forward of unused tax assets and unused tax losses can be utilised except: • where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting income or taxable income; and • in respect of deductible temporary differences associated with investments in subsidiaries, associates and interest in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. 38
  • 40. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Income taxes (continued) The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it is probable that future taxable income will allow the deferred tax asset to be recovered. Current and deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantially enacted at the balance sheet date. Income tax relating to items recognised directly in equity is recognised in equity and not in the income statement. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The intangible assets of the Group are assessed as having a finite useful life. Intangible assets with finite useful lives are amortised over their useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method is reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of the future economic benefit embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in Income Statement. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in Income Statement when the asset is derecognised. The Group’s intangible assets are amortised on a straight line basis over a five year period. Investment in associates The Group’s investment in associates, are accounted for under the equity method of accounting. The investment in associate is accounted for in the financial statements of the company at cost. An associate is an entity in which the Group has significant influence and which is neither a subsidiary nor a joint venture of the Group. Under the equity method of accounting, the investment in associates is carried in the balance sheet at cost plus post acquisition changes in the Group’s share of net assets of the associates, less any impairment in value. Goodwill relating to associates is included in the carrying amount of the investment and is not amortised. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in associates. The Income Statement reflects the share of the results of operations of the associates. When there has been a change recognised directly in the equity of the associates, the Group recognises its share of any changes and discloses this, when applicable, in the Statement of Changes in Equity. Profits or losses resulting from transactions between the Group and this associate are eliminated to the extent of the interest in the associate. The reporting dates of the associates differ from those of the holding company. In the case of Stockbrokers Malawi Limited, the reporting date is 31 December 2007. The majority shareholder in this company is unwilling to change the reporting date to bring it into line with the rest of the Imara Group. The reporting date for Imara Capital Zimbabwe (Private) Limited is 31 March 2008. Adjustments are made for the effects of any significant transactions or events that occur between the reporting date of the associate and that of the Group. The accounting policies of associates conform to those used by the Group for like transactions and events in similar circumstances. 39
  • 41. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Pensions and other post-employment benefits The Group does not provide pensions and other post-employment benefits other than in Botswana where it provides for severance benefits mandated by the Employment Act for other fulltime employees. Expenses are recognized in the Income Statement as incurred. The severance benefit is not subject to periodic actuarial valuation. Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to any provision is presented in the Income Statement, net of any expected reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects the risks specific to the liability. International Financial Reporting Standards (IFRS's) not yet effective during the year The group has not applied the following IFRSs and IFRIC interpretations that have been issued but are not yet effective: Annual Improvement to IFRS (2007): Various minor amendments to existing IFRS The standard becomes effective on or after 1 January 2009. This standard is not expected to impact the reported financial performance or position of the Group. IFRS 1 First-time Adoption of IFRS (Amended re cost of Investment in a Subsidiary, Joint Controlled Entity or Associate) The standard becomes effective on or after 1 January 2009. This standard is not expected to impact the reported financial performance or position of the Group. IFRS 8 Operating Segments The IFRS specifies how an entity should report information about its operating segments in its financial statements. The standard becomes effective on or after 1 January 2009. This amendment is expected to impact the disclosure in the financial statements; however, it will not affect the reported financial performance or position of the Group. IAS 23 Borrowing Costs Revised This standard becomes effective on or after 1 January 2009. This standard is not expected to impact the reported financial performance or position of the Group. IAS 27 Consolidation and Separate Financial Statements (Amended re cost of Investment in a Subsidiary, Jointly Controlled Entity or Associate.) This standard becomes effective on or after 1 January 2009. This standard is not expected to impact the reported financial performance or position of the Group. IFRIC 12 Service Concession Arrangements This interpretation becomes effective on or after 1 January 2008. This standard is not expected to impact the reported financial performance or position of the Group. IFRIC 13 Customer Loyalty Programmes This interpretation becomes effective on or after 1 July 2008. This standard is not expected to impact the reported financial performance or position of the Group. IFRIC 14 IAS 19 – The limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction This interpretation becomes effective on or after 1 January 2008. This standard is not expected to impact the reported financial performance or position of the Group. IFRIC 15 Agreements for the Construction of Real Estate This interpretation becomes effective on or after 1 January 2008. This standard is not expected to impact the reported financial performance or position of the Group. IFRIC 16 Hedges of a Net Investment in a Foreign Operation This interpretation becomes effective on or after 1 October 2008. This standard is not expected to impact the reported financial performance or position of the Group. IFRS 3 (Revised) Business Combinations Revised IFRS 3 replaces IFRS 3 as issued in 2004 and comes into effect for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. This standard is not expected to impact the reported financial performance or position of the Group. IAS 1 (Revised) – Presentation of Financial Statements The revised standard will come into effect for the annual periods beginning on or after 1 January 2009. This standard is not expected to impact the reported financial performance or position of the Group but will impact the presentation and disclosure of financial statements when adopted by the Group. 40
  • 42. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) International Financial Reporting Standards (IFRS's) not yet effective during the year (continued) IFRS 2 Share- based Payment – Vesting Conditions and Cancellations This amendment will apply for annual periods beginning on or after 1 January 2009. This standard is not expected to impact the reported financial performance or position of the Group. IFRS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation Amendments to IAS 31 and IAS 1 were issued in February 2008 and become effective for annual periods beginning on or after 1 January 2009. The amendments to IAS 32 require certain puttable financial instruments and obligations arising on liquidation to be classified as equity if certain criteria are met. The amendment to IAS 1 requires disclosure of certain information relating to puttable instruments as classified as equity. The Group does not expect these amendments to affect the financial statements of the Group. Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: • Brokerage Brokerage revenue, commissions, handling fees and sponsor broker fees are recognised upon performance of services, net of value added taxes and discounts. • Commission and fees Commission and fees include fees earned from corporate finance consultancy and asset management. Commissions and fees are recognised as revenue when the related services have been performed, except for corporate finance transactions where the fees are contingent. In such cases revenue is recognised only upon completion of the contingent event. • Dividends Revenue is recognised when the shareholders’ right to receive the payment is established. • Interest Revenue is recognised as the interest accrues (taking into account the effective yield on the asset). • Intra group management fees Revenue is recognised on an accrual basis in respect of intra group services rendered. • Futures trading Revenue comprises securities trading profits, which are earned for facilitating the acquisition of single stock futures by clients. Revenue is recognised when the service is provided. • Securities trading Revenue is recognised based on changes in the fair value of the listed securities traded, net of charges. Share based transactions The cost of equity-settled transactions is measured by reference to the fair value at the date on which the option was granted. The fair value is determined by an external valuer using a binomial valuation model, further details of which are given in note 24. No expense is recognised for awards that do not ultimately vest. Share option scheme The share option scheme is defined as an “equity settled scheme”. Under such a scheme, equity instruments are issued to certain directors and employees in consideration for services rendered to the Group. In terms of the Share Option Scheme, equity-settled awards cannot be cancelled. Where the terms of an equity-settled award are modified, as a minimum, an expense is recognised at the date of modification, as if the terms had not been modified. In addition, an expense is recognised for any modification, which increases the total fair value of the shares-based payment arrangement or is otherwise beneficial to the holder. The expense arising from share based payments is included as part of “operating expenses”, with a corresponding increase to the Share based Payment Reserve. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of earnings per share (Note 6). 41
  • 43. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Share based transactions (continued) Black Economic Empowerment (“BEE”) transaction- Zingwenya Holdings (Proprietary) Limited BEE transactions that result in equity instruments being issued to third parties at less than fair value are accounted for as equity settled share based payment transactions. Where no vesting conditions are imposed on the counterparty, the related expense is recognised immediately with a corresponding amount being accounted for as a share based payment reserve in equity. Further details relating to the BEE transaction are detailed in note 24 Stated capital Stated capital comprises of ordinary issued shares and share premium. Stated capital is recognised at the fair value of the consideration received by the Group. Expenses relating to the issuance of shares are charged to the income statement as incurred. Significant accounting estimates and judgements The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates and judgements are regularly evaluated and are based on historical experience and other related factors, including expectations of future events that are believed to be reasonable under the circumstances. The areas involving a higher degree of judgement or complexity, or areas where assumptions are significant to the financial statements are: • Measurement of the provision for potential claims is based on the gross amount of intimated claims, amounts previously settled in terms of similar claims and the view of legal advisers. (Note 21) • Objective evidence of impairment of loans receivable by reference to the market value of collateral held as security in the related client account. (Note 16) • The estimated useful lives of equipment and their residual values are re-assessed annually. (Notes 1 and 8) • Recoverability of deferred taxation based on expected future profitability. (Note 4) • Share based payments (Note 24) Value Added Tax (VAT) Revenues, expenses and assets are recognised net of VAT, except where the VAT incurred on a purchase of an asset or service is not recoverable from the Tax Authorities, in which case the VAT is recognised as part of the cost of acquiring the asset or as part of the cost of the service. The net amount of VAT recoverable from, or payable to, the Tax Authorities is included as part of receivables or payables in the Balance Sheet. 42
  • 44. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 2 PRIOR YEAR ADJUSTMENTS Imara Global Fund Management shares in the Imara Global Fund, which were previously classified as available-for- Shares: sale-financial-assets, and were carried at cost, have been re-classified in the current year as intangible assets. The net effect of the re-classification is a net increase in intangible assets by P714 000 and a net decrease in available-for-sale-financial-assets, by a corresponding amount. Directors Prior year amounts disclosed as directors’ emoluments have been re-stated to include directors’ emoluments: expenses and profit share bonuses awarded after the year end, that were not previously reported in the financial statements. This adjustment only affects disclosure in the financial statements and has no impact on the profit previously reported. Value Added Tax: The financial statements for the year ended 30 April 2007 have been re-stated to take account of a prior year adjustment relating to Value Added Tax, (VAT), at the South African stockbroker, Imara SP Reid. The impact of the prior year adjustment on the results of the Group are as follows: Year ended 30 April Group Group Company Company 2008 2007 2008 2007 Pula Pula Pula Pula Increase in operating expenses - 1 243 526 - - Decrease in distributable reserves/retained earnings - 2 266 342 - - Increase in trade and other payables - 2 266 342 - - 3 REVENUES AND EXPENSES Revenue: Asset management – investment & advisory fees 33 038 828 11 209 557 - - Asset management – performance fees 55 199 040 11 968 490 - - Administration fees- stockbroking 50 832 - - - Brokerage 34 693 854 31 769 994 - - Commissions 368 860 63 736 - - Corporate finance consultancy fees 5 740 924 11 042 386 - - Dividends received: From listed investments Non group 740 759 2 559 954 - - From un-listed investments Group - - 14 570 562 3 221 300 Futures trading 26 303 526 28 216 037 - - Interest received: Group - - 2 741 757 2 732 518 Non group 10 983 858 6 973 242 16 869 16 473 Intra group management fees - - 8 408 000 1 649 136 Securities trading (fair value losses or gains) 6 804 128 11 244 008 - - Realised gains on available-for-sale-financial-assets 1 034 908 12 433 492 - - 174 959 517 127 480 896 25 737 188 7 619 427 Other income: Exchange gains - - 89 876 - Profit on disposal of equipment 40 750 - - - Sundry income 6 366 330 4 753 975 413 906 889 611 6 407 080 4 753 975 503 782 889 611 43
  • 45. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 3 REVENUES AND EXPENSES (continued) Year ended 30 April Group Group Company Company 2008 2007 2008 2007 Pula Pula Pula Pula Operating expenses: Included in operating expenses are: Auditor’s remuneration Current year 1 360 479 865 949 325 000 195 000 Prior year 312 517 20 244 67 340 19 752 Other services 49 152 - - - Amortisation (note 10) 142 800 - - - Depreciation (note 8) 1 259 663 789 948 49 338 5 854 Directors’ emoluments –executive (note 14) 10 292 194 5 707 438 1 333 347 615 947 Directors’ emoluments –non-executive (note 14) 826 588 583 340 698 295 395 854 Exchange losses 272 081 126 392 - 21 178 Impairment losses on financial instruments At amortised cost - - - - Financial assets at fair value - - - - Available-for-sale-financial assets - - - - Information technology expenses 993 014 2 282 756 - - Insurance and licences 709 145 540 765 493 556 444 307 Inter-company management fees - - 338 262 432 453 Management fees – non group - 354 781 - - Operating lease expense 2 215 712 1 989 874 16 875 - Relocation expenses - 628 222 - 1 635 Share based payment expense 393 053 506 938 (333 076) 506 938 BEE share based expense 1 532 579 - - - Staff costs 60 289 504 36 682 484 1 215 408 1 013 349 Stock exchange fees 5 055 504 5 605 240 46 152 - 79 210 473 56 806 994 3 662 837 3 652 267 Finance costs: Interest expense: Related party loans - - 539 916 445 998 Bank overdraft 426 010 73 761 23 226 645 Loans and borrowings 27 673 116 760 - 43 675 Finance lease charges 4 916 46 599 - - 458 599 237 120 563 142 490 318 44
  • 46. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 4 INCOME TAX - GROUP Year ended 30 April Group Group 2008 2007 Current income tax: Pula Pula Current income tax charge 7 536 890 10 740 645 Adjustment in respect of (over) / under provision of income tax in previous year (647 510) 160 205 Secondary Tax on Companies (STC) 1 153 208 207 132 Capital gains tax 151 789 - Deferred income tax: Relating to origination and reversal of temporary differences 1 317 504 42 819 Changes in tax rates 71 251 - Utilisation of prior year deferred tax assets not recognised (549 776) - Adjustments in respect of deferred tax in previous years 658 854 (143 660) Income tax reported in the Income Statement 9 692 210 10 846 936 Tax rate reconciliation (Pula): A reconciliation between the tax expense and the product of accounting profit multiplied by Botswana’s International Financial Services Centre (“IFSC”) tax rate for the year is as follows: Accounting profit before tax at Botswana IFSC income tax rate of 15% 9 911 319 8 768 933 Adjusted for: Effect of higher domestic rate in Botswana 21 064 (97 444) Effect of higher rate in South Africa 2 235 646 6 825 443 Effect of higher rate in United Kingdom 10 840 - Effect of lower rate in British Virgin Islands (6 582 858) (2 293 628) Effect of rate change on opening deferred tax balances 71 251 - Non- deductible expenses / non taxable income 521 438 (2 935 622) Secondary Tax on Companies (STC) 1 153 208 207 132 Capital gains tax at lower tax rates (146 515) - Adjustment in respect of (over) / under provision of income tax in previous year (647 510) 160 205 Adjustment in respect of deferred tax in the previous year 2 217 890 (148 062) Utilisation of prior year deferred tax assets not recognised (549 776) - 8 215 997 10 486 957 Deferred tax asset credit not recognised due to uncertainty of future taxable income 1 476 213 359 979 At effective tax rate (See reconciliation below) 9 692 210 10 846 936 During the year the Government of South Africa enacted a change in the income tax rate from 29% to 28%. The decrease in tax rate resulted in a net decrease in deferred tax assets by P 71 251 and a net increase in deferred tax expenses by a corresponding amount. 45
  • 47. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 4 INCOME TAX – GROUP (continued) Year ended 30 April Group Group 2008 2007 Pula Pula Reconciliation of income tax rate: % % Standard Botswana International Financial Services Centre (IFSC) tax rate 15.00 15.00 Adjusted for: Effect of higher domestic rate in Botswana 0.03 (0.10) Effect of higher rate in South Africa 3.38 10.40 Effect of higher rate in United Kingdom 0.02 - Effect of lower rate in British Virgin Islands (9.96) (3.50) Effect of rate change on opening deferred tax balances 0.11 - Non- deductible expenses / non taxable income 0.79 (4.50) Tax on dividends declared 1.75 0.50 Capital gains tax (0.22) - Secondary Tax on Companies (STC) 1.75 0.50 Adjustment in respect of (over) / under provision of income tax in previous year (0.98) 0.35 Adjustment in respect of deferred tax in the previous year 3.36 (0.20) Prior year adjustment - 0.35 Utilisation of prior year deferred tax assets not recognised (0.83) - 12.45 17.95 Deferred tax asset not recognised due to uncertainty of future taxable income 2.22 0.60 Effective tax rate 14.67 18.55 Deferred income tax asset: Deferred income tax liabilities: Accelerated depreciation for tax purposes (653 216) (31 492) Unrealised trading profits (16 143) (172 450) Unrealised exchange losses (4 403) (4 403) (673 762) (208 345) Deferred tax assets: Assessable loss 2 054 957 1 198 378 Provisions 909 237 1 351 525 2 964 194 2 549 903 Net deferred tax asset 2 290 431 2 341 558 Deferred tax asset not recognised due to uncertainty of future taxable income (1 440 208) (579 123) Net deferred tax asset 850 223 1 762 435 Analysed as follows per balance sheet: Deferred tax assets 857 748 1 762 435 Deferred tax liabilities (7 525) - Net deferred tax per above 850 223 1 762 435 46
  • 48. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 4 INCOME TAX GROUP (continued) Year ended 30 April Group Group 2008 2007 Assessable losses: Pula Pula Balance brought forward 4 115 455 4 050 759 Prior year adjustment - 216 586 (Increase) / decrease in current year 1 525 861 (151 890) Balance carried forward 5 641 316 4 115 455 Expiring as follows: 30 June 2009 - 1 168 134 30 June 2010 - 1 773 991 30 June 2011 - 781 415 30 June 2012 - 391 915 Indefinite assessed losses 5 641 316 - 5 641 316 4 115 455 INCOME TAX - COMPANY Year ended 30 April Company Company 2008 2007 Current income tax: Pula Pula Current income tax charge 407 866 - Deferred income tax: Relating to origination and reversal of temporary differences 247 356 (71 149) Adjustments in respect of deferred tax in previous years - 4 403 Income tax reported in the Income Statement 655 222 (66 746) Reconciliation of tax rate: A reconciliation between the tax expense and the product of accounting profit multiplied by Botswana’s IFSC tax rate for the year is as follows: Accounting profit before tax at Botswana IFSC income tax rate of 15% 2 945 025 335 150 Adjusted for: Non- deductible expenses / non deductible income (2 263 286) (397 493) Adjustment in respect of deferred tax in the previous year (26 517) (4 403) 655 222 (66 746) Deferred tax asset not recognised due to uncertainty of future taxable income - - At effective tax rate (See reconciliation below) 655 222 (66 746) Reconciliation of income tax rate: % % Standard Botswana International Financial Services Centre (IFSC) tax rate 15.00 15.00 Adjusted for: Non- deductible expenses / non taxable income (11.53) (18.00) Adjustment in respect of deferred tax in the previous year (0.14) 0.20 3.34 (3.00) Deferred tax asset credit not recognised due to uncertainty of future taxable income - - Effective tax rate 3.34 (3.00) 47
  • 49. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 4 INCOME TAX - COMPANY (continued) Year ended 30 April Company Company 2008 2007 Pula Pula Deferred income tax asset: Deferred income tax liabilities: Accelerated depreciation for tax purposes (5 653) (567) Unrealised exchange losses (4 403) (4 403) (10 056) (4 970) Deferred tax assets: Assessable loss - 169 801 Provisions 2 531 75 000 2 531 244 801 Net deferred tax asset (7 525) 239 831 Deferred tax asset not recognised due to uncertainty of future taxable income - - Net deferred tax asset (7 525) 239 831 Analysed as follows per balance sheet: Deferred tax assets - 239 831 Deferred tax liabilities (7 525) - Net deferred tax per above (7 525) 239 831 Assessable losses: Balance brought forward 1 808 785 1 155 885 (Increase) / decrease in current year (1 808 785) 652 900 Balance carried forward - 1 808 785 Expiring as follows: 30 June 2009 - 85 190 30 June 2010 - 1 408 638 30 June 2011 - 337 943 30 June 2012 - 22 986 - 1 808 785 48
  • 50. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 5 DISCONTINUED OPERATION On 1 November 2007, a decision was taken to discontinue the operations of Imara Asset Management Botswana (Pty) Limited. The company has been in a loss making situation for the past four years. The intention is for the Imara Group to re-acquire the 49% shareholding from minority shareholders and for the company to then become dormant. There is currently no intention to dispose of the company or any of its assets and liabilities. The results for Imara Asset Management for the year are presented below: 2008 2007 Pula Pula Revenue 116 280 71 894 Expenses (1 530 194) (1 301 715) Gross operating loss (1 413 914) (1 229 821) Finance costs (356 467) (210 092) (Loss) before tax (1 770 381) (1 439 913) Elimination of intra group charges 968 805 1 264 385 Tax - - (Loss) after tax (801 576) (175 528) The major classes of assets and liabilities of Imara Asset Management Botswana (Pty) Limited are as follows: Assets: - Cash and short term deposits 673 785 490 542 - Accounts receivable 90 895 22 662 764 680 513 204 Liabilities: - Intra group liabilities 1 436 147 1 924 531 Net cash flows attributable to discontinued operations: - Operating activities (1 339 915) (1 225 638) - Investing activities - - - Financing activities 1 523 158 1 689 255 - Net increase in cash and cash equivalents 183 243 463 671 6 EARNINGS PER SHARE Basic earnings per share are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding for the year. Diluted earnings per share are calculated by dividing net profit attributable to ordinary equity holders of the parent, by the weighted average number of ordinary shares outstanding for the year, plus the weighted average number of ordinary shares that would be issued on the conversion of all dilutive potential shares into ordinary shares. Basic earnings per share from continued operations are calculated by dividing net profit for the year from continuing operations by the weighted average number of ordinary shares outstanding for the year. Diluted earnings per share from continuing operations are calculated by dividing net profit for the year from continuing operations, by the weighted average number of ordinary shares outstanding for the year, plus the weighted average number of ordinary shares that would be issued on the conversion of all dilutive potential shares into ordinary shares. 49
  • 51. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 6 EARNINGS PER SHARE (continued) The following table reflects the profit and share data used in the basic and diluted earnings per share computations : Year ended 30 April Group Group 2008 2007 Pula Pula Re-stated Dilution of earnings: Profit attributable to ordinary shareholders 56 449 140 48 142 648 Interest paid on convertible redeemable debentures - 41 356 Adjusted profit attributable to ordinary shareholders 56 449 140 48 184 004 Attributable earnings for the year from continuing operations 56 383 229 47 612 619 Interest on convertible redeemable debentures - 41 356 Minority interest - - Profit for the year 56 383 229 47 653 975 Year ended 30 April Group Group Number Number Weighted average number of ordinary shares -basic earnings per share 54 876 969 51 700 430 Effect of dilution: Share option scheme 1 724 716 1 978 290 Weighted average number of ordinary shares for effect of dilution 56 601 685 53 678 720 In August 2007 the company implemented a sub division of shares on a 10 for 1 basis. Comparative information has been adjusted to reflect the effect of the sub division. Earnings per share – basic Thebe 103 93 Earnings per share – diluted Thebe 100 90 Earnings per share from continuing operations – basic Thebe 103 92 Earnings per share from continuing operations– diluted Thebe 100 89 7 SEGMENTAL REPORTING The primary segmental reporting format adopted by the Group is by business segment, as its risks and rates of return are affected predominately by the differences in the products and services offered by these entities. The business segments are organised and managed separately according to the nature of the products and services offered and provided. The Group’s geographical segmental reporting is based on the location of the Group’s assets and its spread of customers on a geographical basis. The following table presents revenue and profit before tax information in respect of the Group’s business entities and geographical segments for the years ended 30 April 2008 and 2007: 50
  • 52. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 7 SEGMENTAL REPORTING (continued) BUSINESS SEGMENTS Revenue: 30 April 2008 Asset Corporate Stock Group Management Finance Broking Other Adjustments Consolidated External customers 84 164 955 6 187 120 83 180 648 361 417 - 173 894 140 Inter segment revenue 643 754 - 256 442 26 882 591 (27 782 787) - Total segmental revenue 84 808 709 6 187 120 83 437 090 27 244 008 (27 782 787) 173 894 140 Profit before taxation: Continuing operations 46 922 300 (5 217 885) 25 553 790 (1 182 765) - 66 075 440 Discontinued operations (801 576) - - - - (801 576) 46 120 724 (5 217 885) 25 553 790 (1 182 765) - 65 273 864 Percentage of group 70,65 (7,99) 39,15 (1,81) - 100,00 Revenue: 30 April 2007 Asset Corporate Stock Group Management Finance Broking Other Adjustments Consolidated External customers 19 312 336 11 609 370 94 702 716 1 856 474 - 127 480 896 Inter segment revenue 2 579 845 1 273 909 3 856 273 14 928 304 (22 638 331) - Total segmental revenue 21 892 181 12 883 279 98 558 989 16 784 778 (22 638 331) 127 480 896 Profit before taxation: Continuing operations 11 632 364 2 049 605 45 096 432 (318 846) - 58 459 555 Discontinued operations (175 528) - - - - (175 528) 11 456 836 2 049 605 45 096 432 (318 846) - 58 284 027 Percentage of group 19,66 3,52 77,37 (0,55) - 100,00 The split between sales to external customers and inter- segment revenue is only shown for business segments, as this is the primary reporting segment. Group Group 2008 2007 Total assets: Pula Pula Stockbroking 147 287 870 125 958 861 Asset Management 83 875 945 17 776 119 Corporate Finance 4 138 423 14 311 013 Other – Group 21 349 930 14 637 345 Total assets 256 652 168 172 683 338 Equipment: Stockbroking 1 427 932 1 573 508 Asset Management 170 299 116 801 Corporate Finance 1 034 987 2 030 280 Other – Group 1 188 175 248 622 Total equipment 3 821 393 3 969 211 51
  • 53. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 7 SEGMENTAL REPORTING (continued) BUSINESS SEGMENTS (continued) Year ended 30 April Group Group 2008 2007 Pula Pula Intangible assets & goodwill: Asset management 232 989 - Other - Group 667 228 100 952 900 217 100 952 Equity accounted assets: Other - Group 2 712 265 2 786 067 Liabilities: Stockbroking 87 784 958 61 476 255 Asset Management 21 991 094 5 557 685 Corporate Finance 385 323 7 124 863 Other – Group 6 969 692 4 834 641 Total liabilities 117 131 067 78 993 444 Depreciation: Stockbroking 632 907 331 960 Asset Management 43 843 29 673 Corporate Finance 284 206 407 483 Other – Group 298 704 20 832 Total depreciation 1 259 660 789 948 Capital expenditure: Stockbroking 620 807 1 313 654 Asset Management 104 740 122 937 Corporate Finance 22 680 440 019 Other – Group 861 760 246 127 Total capital expenditure 1 609 987 2 122 737 52
  • 54. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 7 SEGMENTAL REPORTING (continued) GEOGRAPHICAL SEGMENTS Year ended 30 April Group Group 2008 2007 Pula Pula Revenue: Botswana 3 647 455 986 548 British Virgin Islands 80 059 773 16 213 668 South Africa 90 151 818 48 923 523 United Kingdom 35 094 - Total revenue 173 894 140 66 123 739 Profit before taxation: Botswana 4 897 899 (1 544 816) British Virgin Islands 43 799 601 12 198 661 South Africa 17 197 291 48 753 165 United Kingdom 180 649 120 579 Total profit before tax 66 075 440 59 527 589 Total assets: Botswana 13 243 753 5 275 735 British Virgin Islands 92 630 611 26 045 385 South Africa 149 723 549 140 505 499 United Kingdom 1 054 255 856 719 Total assets 256 652 168 172 683 338 Equipment: Botswana 886 419 706 169 British Virgin Islands 520 3 909 South Africa 2 923 413 3 238 657 United Kingdom 31 041 20 476 Total equipment 3 821 393 3 969 211 Intangible assets & goodwill: Botswana 571 200 - South Africa 329 017 100 952 Total intangible assets & goodwill 900 217 100 952 53
  • 55. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 7 SEGMENTAL REPORTING (continued) GEOGRAPHICAL SEGMENT (continued) Year ended 30 April Group Group 2008 2007 Pula Pula Depreciation: Botswana 197 421 171 735 British Virgin Islands 3 506 5 772 South Africa 1 047 326 595 861 United Kingdom 11 407 16 580 Total depreciation 1 259 660 789 948 Capital expenditure: Botswana 631 855 290 778 British Virgin Islands - - South Africa 956 486 1 798 644 United Kingdom 21 647 33 315 Total capital expenditure 1 609 988 2 122 737 Liabilities: Botswana 8 285 240 8 914 039 British Virgin Islands 23 553 043 10 102 842 South Africa 85 129 633 59 826 741 United Kingdom 163 151 149 822 Total liabilities 117 131 067 78 993 444 Equity accounted assets: British Virgin Islands 2 712 265 2 786 067 54
  • 56. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 8 EQUIPMENT - GROUP Year ended 30 April 2008 Motor vehicles Office Electronic Total Note 19 & 23 equipment library 2008 Pula Pula Pula Pula Balance at beginning of year At cost 695 226 5 140 974 1 706 674 7 542 874 Accumulated depreciation (367 794) (2 594 178) (611 691) (3 573 663) Net carrying amount 327 432 2 546 796 1 094 983 3 969 211 Exchange rate adjustment - (82 863) (49 130) (131 993) Additions - 1 609 987 - 1 609 987 Disposals (179 007) (142 758) (44 384) (366 149) Depreciation (66 459) (1 017 708) (175 496) (1 259 663) Balance at end of year net of accumulated depreciation 81 966 2 913 454 825 973 3 821 393 Balance at end of year At cost 224 360 6 556 578 1 662 291 8 443 229 Accumulated depreciation (142 394) (3 643 124) (836 318) (4 621 836) Net carrying amount 81 966 2 913 454 825 973 3 821 393 EQUIPMENT – GROUP Year ended 30 April 2007 Motor vehicles Office Electronic Total Note 19 & 23 equipment library 2007 Pula Pula Pula Pula Balance at beginning of year At cost 676 218 3 419 607 1 474 016 5 569 841 Accumulated depreciation (261 600) (2 144 986) (446 637) (2 853 223) Net carrying amount 414 618 1 274 621 1 027 379 2 716 618 Exchange rate adjustment - (299 569) 250 123 (49 446) Additions 19 008 2 103 729 - 2 122 737 Disposals - (30 750) - (30 750) Depreciation (106 194) (501 235) (182 519) (789 948) Balance at end of year net of accumulated depreciation 327 432 2 546 796 1 094 983 3 969 211 Balance at end of year At cost 695 226 5 140 974 1 706 674 7 542 874 Accumulated depreciation (367 794) (2 594 178) (611 691) (3 573 663) Net carrying amount 327 432 2 546 796 1 094 983 3 969 211 55
  • 57. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 8 EQUIPMENT – COMPANY Year ended 30 April 2008 Motor Office Total vehicles equipment 2008 Pula Pula Pula Balance at beginning of year : At cost - 47 390 47 390 Accumulated depreciation - (15 785) (15 785) Net carrying amount - 31 605 31 605 Additions 304 546 109 853 414 399 Depreciation (38 182) (11 156) (49 338) Balance at end of year, net of accumulated depreciation 266 364 130 302 396 666 Balance at end of year: At cost 304 546 157 243 461 789 Accumulated depreciation (38 182) (26 941) (65 123) Net carrying amount 266 364 130 302 396 666 EQUIPMENT – COMPANY Year ended 30 April 2007 Office Total equipment 2007 Pula Pula Balance at beginning of year: At cost 15 890 15 890 Accumulated depreciation (9 931) (9 931) Net carrying amount 5 959 5 959 Additions 31 500 31 500 Disposals Depreciation (5 854) (5 854) Balance at end of year, net of accumulated depreciation 31 605 31 605 Balance at end of year: At cost 47 390 47 390 Accumulated depreciation (15 785) (15 785) Net carrying amount 31 605 31 605 56
  • 58. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 9 GOODWILL Year ended 30 April Group Group Company Company 2008 2007 2008 2007 Pula Pula Pula Pula Re-stated Balance at the beginning of the year 100 952 103 825 - - Exchange adjustment (4 925) (2 873) - - 96 027 100 952 - - Goodwill is tested for impairment annually or more frequently if circumstances indicate that goodwill is impaired. Goodwill is subsequently stated at cost less accumulated impairments in value. 10 INTANGIBLE ASSETS GROUP: 30 April 2008 Cost: Management shares Client data base * Total At beginning of year 714 000 - 714 000 Arising on acquisition of client data base - 229 881 229 881 Purchase price adjustment - 3 109 3 109 At end of year 714 000 232 990 946 990 Amortisation: At beginning of year - - - Amortisation charge (142 800) - (142 800) At end of year (142 800) - (142 800) Net book value 571 200 232 990 804 190 30 April 2007 Cost: Management shares Client data base * Total At beginning of year - - - Re-classified from available-for-sale-financial-assets (Note 2) 714 000 - 714 000 At end of year 714 000 - 714 000 *Client data base – The client data base was recognised as an intangible asset following Imara Asset Management South Africa (Proprietary) Limited’s acquisition of an asset management client data base from Leitch & Associates in July 2007. The acquisition was subject to suspensive conditions, which were only fulfilled at 30 April 2008. As a result no amortisation charge has been raised in respect of this class of intangible asset for the current year. INTANGIBLE ASSETS - COMPANY: 30 April 2008 Cost: Management Total shares At beginning of year & end of year 714 000 714 000 Amortisation: At beginning of year - - Amortisation charge (142 800) (142 800) At end of year (142 800) (142 800) Net book value 571 200 571 200 57
  • 59. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 10 INTANGIBLE ASSETS (continued) COMPANY (continued) Cost: 30 April 2007 Management Total shares At beginning of year - - Re-classified from available-for-sale-financial-assets (Note 2) 714 000 714 000 At end of year 714 000 714 000 11 INVESTMENT IN SUBSIDIARIES Group Group Company Company 2008 2007 2008 2007 Ordinary shares at cost: Pula Pula Pula Pula % holding Africa Investments Limited (1) 100% - - 7 877 845 7 877 845 CF Africa Limited (1) 69,3% - - 1 747 525 1 747 525 Imara Asset Management Limited (1) 100% - - 22 754 22 754 Imara Asset Management UK Ltd (2) 100% - - 83 473 83 473 Imara Capital Botswana (Pty) Ltd (3) 100% - - 1 819 936 1 819 936 Imara Capital Limited (1) 100% - - 6 6 Imara Trademarks (BVI) Limited (1) 100% - - 6 6 - - 11 551 545 11 551 545 Country of incorporation: (1) British Virgin Islands (2) United Kingdom (3) Botswana The percentage holding equates in all instances to the voting rights attached to shares. % Preference shares at cost: holding Imara Asset Management UK Limited 100% - - 205 339 205 339 Share based payment reserve: - - 726 129 - Share based payment reserve relates to the equity component of share options granted to employees and directors of the company and its subsidiaries under the group’s Share Option Scheme. - - 12 483 013 11 756 884 12 INVESTMENT IN ASSOCIATES Stockbrokers Malawi Limited – see below 189 492 263 294 - - Imara Capital Zimbabwe (Private) Limited - see below 2 522 773 2 522 773 - - 2 712 265 2 786 067 - - 58
  • 60. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 12 INVESTMENT IN ASSOCIATES (continued) Stockbrokers Malawi Limited: The Group, through its British Virgin Islands company, Imara Capital Limited, owns 25% of Stockbrokers Malawi Limited, a company incorporated in Malawi. Year ended 30 April Group Group 2008 2007 Pula Pula Balance – beginning of year 263 294 294 210 Share of profits 92 529 239 920 Dividends received (162 861) (191 730) Impairment of investment (3 470) (79 106) Balance – end of year 189 492 263 294 Share of profits for the year - per above 92 529 239 920 Less: Impairment charge for the year (3 470) (79 106) Income from associate –per Income Statement 89 059 160 814 The financial year end of Stockbrokers Malawi Limited is 31 December. The assessment of impairment in value is based on audited financial statements of the company to 31 December 2007 and the unaudited management accounts to 30 April 2008, which are the latest available financial statements for the company. Dividend remittances from Malawi are subject to Exchange Control approval. The following tables give summarised information of the Group’s investment in associates, based on audited financial statements to 31 December 2007 and un-audited financial statements to 30 April 2008: April 2008 April 2007 Share of associate’s balance sheet: MK (‘000’s) MK (‘000’s) Current assets 4 207 5 983 Non-current assets 3 453 4 459 Current liabilities (2 700) (3 165) Other liabilities - (249) Net assets 4 960 7 028 Share of associate’s revenue and profit after tax: Revenue 15 512 22 155 Profit after taxation 2 142 5 403 Imara Capital Zimbabwe (Private) Limited: The Group owns 69,27% of CF Africa Limited, a British Virgin Islands registered company, whose only asset is a 46.45% interest in Imara Capital Zimbabwe (Private) Limited, a company incorporated in Zimbabwe. The year-end of Imara Capital Zimbabwe (Private) Limited is 31 March. Current exchange control regulations in Zimbabwe do not readily allow for the remittance of dividends from Zimbabwe due to severe shortages of foreign currency. An independent statutory audit of Imara Capital Zimbabwe (Private) Limited, for the year ended 31 March 2008 has been carried out. The annual financial statements of Imara Capital Limited Zimbabwe (Pty) Limited, for the year ended 31 March 2008, have been prepared on a current cost basis in accordance with International Accounting Standard (IAS 29 “ Financial Reporting in Hyperinflationary Economies.”). IAS 29 requires that financial statements prepared in the currency of a hyperinflationary economy be stated in terms of a measuring unit current at the balance sheet date and that corresponding figures for the previous periods be stated in the same terms at the balance sheet date. 59
  • 61. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 12 INVESTMENT IN ASSOCIATES (continued) Imara Capital Zimbabwe (Private) Limited (continued) Year ended 30 April Group Group 2008 2007 Pula Pula Investment in Imara Capital Zimbabwe (Private) Limited 2 741 218 2 522 773 The investment in associate is carried at cost plus the post acquisition changes in the Group’s share of the net assets of the associate. The effective shareholding in Imara Capital Zimbabwe (Private) Limited is 32.11%. The following tables give summarised information of the Group’s investment in this associate, based on audited inflation adjusted financial statements to 31 March 2008. 2008 2007 ZWD (Millions) ZWD (Millions) Inflation adjusted Inflation adjusted Share of associate’s balance sheet: Current assets 5 020 901 9 509 544 Non-current assets 20 497 883 26 634 998 Current liabilities (4 229 273) (5 212 254) Other liabilities (3 707 111) (5 556 002) Net assets 17 582 299 25 376 287 ZWD (Millions) ZWD (Millions) Share of associate’s revenue and profit after tax: Inflation adjusted Inflation adjusted Revenue 101 903 440 33 451 602 Profit after taxation 12 262 385 9 980 933 13 AVAILABLE-FOR-SALE-FINANCIAL ASSETS Group Group Company Company 2008 2007 2008 2007 Pula Pula Pula Pula Listed securities: JSE securities 7 048 367 9 245 553 - - Other listed securities 1 600 558 594 121 1 600 558 594 121 Unlisted securities: Imara / Investec Unit Trust Wrap Fund 4 698 4 875 - - Old Mutual Unit Trusts 61 054 - - - Term deposits - 99 889 - 99 889 8 714 677 9 944 438 1 600 558 694 010 Listed securities The fair value of listed securities is determined by reference to the quoted market bid prices at the close of business on the balance sheet date. 60
  • 62. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 13 AVAILABLE-FOR-SALE-FINANCIAL ASSETS (continued) Unlisted securities The fair value of the Imara / Investec Unit Trust Wrap Fund is determined by reference to the bid price for this class of product at the close of business daily. The bid price is computed by reference to the underlying value of assets in the Fund and is published daily by Investec Bank. The last valuation was carried out on 30 April 2008. Management shares in the Imara Global Fund, which were previously classified as Available-for-Sale-Financial Assets, have been re-classified in the current year as Intangible Assets. Previously the Management Shares were carried at cost. These are founder shares and are held primarily to secure the on-going management rights for the Fund. The shares do carry voting rights but have no entitlement to economic rights or to the underlying value of the Fund itself. The management agreement for the Imara Global Fund is for an indefinite period. 14 RELATED PARTY DISCLOSURES Subsidiary companies: Imara Asset Management Limited is registered in British Virgin Islands and is a wholly owned subsidiary of Imara Holdings Limited. Imara Capital South Africa Limited is a wholly owned subsidiary of Africa Investments Limited, a British Virgin Islands company, which is itself a wholly owned subsidiary of Imara Holdings Limited. Imara Asset Management South Africa (Pty) Limited, Imara Corporate Finance South Africa (Pty) Limited and Imara SP Reid (Pty) Limited are subsidiaries of Imara Capital South Africa Limited. Imara Botswana Limited is a wholly owned subsidiary of Imara Capital Botswana (Pty) Limited, which in turn is a wholly owned subsidiary of Imara Holdings Limited. Imara Capital Limited and Imara Trademarks Limited are British Virgin Island registered companies which are both wholly owned subsidiaries of Imara Holdings Limited. Imara Asset Management Botswana (Pty) Limited is owned 51% by Imara Capital Botswana Limited and 49% by Worxnet (Pty) Limited. A decision was taken in October 2007, to discontinue the operations of the company. The amount payable to Worxnet (Pty) Limited is in respect of working capital contributed to the business. Associate companies: Stockbrokers Malawi Limited is an associate company of Imara Holdings Limited. The amount due is in respect of dividends declared but not received. CF Africa Limited is a British Virgin Islands registered company whose sole asset is a 46,45% interest in Imara Capital Zimbabwe (Private) Limited. CF Africa Limited is an associate company of Imara Holdings Limited. Imara Capital Zimbabwe (Private) Limited is an associate company of Imara Holdings Limited. CF Africa Limited, which is registered in the British Virgin Islands, owns 69.3% of Imara Capital Zimbabwe (Private) Limited. Other related parties: Obelisk International Trust Company (Guernsey) Limited, (“Obelisk”) was a professional adviser and provider of administrative and company secretarial services to the group until 7 March 2007. On this date the company was sold to Beresford Trust and Corporate Services Limited (“BTCS”). Prior to its sale, Obelisk was controlled by a non executive director, who is a consultant to BTCS. Fees charged for services rendered are on normal commercial terms, on an arm’s length basis. Imara SP Limited is registered in the British Virgin Islands and is a shareholder in the Group. The company is controlled by a non-executive director. The Etana Trust, controls Etana Limited, which is also registered in Guernsey (Channel Islands). It also controls Etana Holdings Limited, which is registered in Mauritius. The Etana Trust is a shareholder in the company and is controlled by a non- executive director of the company. The Rhodes Trust is an independent Trust. An executive director of Imara Holdings Limited is a beneficiary of the Trust. The amount payable is in respect of consultancy fees. The Sarian Trust is an independent Trust. An executive director of Imara Holdings Limited is the settlor of the Trust. The amount payable represents monies deposited with the company. DE Stone is an executive director of Imara Holdings Limited. The amount payable is in respect of emoluments due at year end. MS Golding is a former executive director of Imara Holdings Limited. The directors’ loan relates to moneys advanced in order to acquire debentures issued by Imara Holdings Limited. 61
  • 63. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 14 RELATED PARTY DISCLOSURES (continued) During the year the Group entered into transactions with the directors and other related parties. These transactions along with related balances at 30 April 2008 and for the period then ended are as follows: Year ended 30 April Group Group Company Company 2008 2007 2008 2007 Pula Pula Pula Pula Professional fees paid: Obelisk International Trust Company (Guernsey) Limited / Beresford Trust and Corporate Services Limited 425 120 249 304 - - Directors’ loans- MS Golding - 46 436 - - Fees charged to / (by) related parties: Imara Asset Management Limited - BVI - - 2 911 914 - Imara Asset Management South Africa (Pty) Limited - - 27 045 - Imara Capital South Africa (Pty) Limited - - 468 288 - Imara Corporate Finance South Africa (Pty) Limited - - 2 386 156 1 649 136 Imara SP Reid (Pty) Limited - - 2 614 597 - Imara Botswana Limited - - (338 262) (432 453) - - 8 069 738 1 216 683 Imara Holdings Limited charges an annual management fee to each of the three operating divisions (Asset Management, Corporate Finance and Stockbroking) in respect of services rendered to these divisions by the Imara Holdings Limited executives. Interest charged to / (by) related parties: Africa Investments Limited - - 131 022 368 848 Imara Asset Management Limited - BVI - - (17 534) 141 264 Imara Botswana Limited - - 729 735 538 490 Imara Capital South Africa (Pty) Limited - - 1 298 145 1 494 095 Imara Capital Botswana (Pty) Limited - - 66 640 8 307 Imara Capital Limited - BVI - - 510 765 181 514 Imara Asset Management (Pty) Limited- - - 5 450 (2 320) Botswana Imara Trademarks Limited - BVI - - (522 378) (445 998) - - 2 201 845 2 284 200 Short term: Imara SP Limited 124 064 41 474 124 064 61 196 Stockbrokers Malawi Limited - 12 520 - - CF Africa Limited 176 202 72 408 176 202 72 408 Etana Limited 120 917 23 022 120 917 23 022 421 183 149 424 421 183 156 626 62
  • 64. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 14 RELATED PARTY DISCLOSURES (continued) Group Group Company Company 2008 2007 2008 2007 Amounts owed by related parties: Pula Pula Pula Pula Amounts owed by group companies: Long term: Imara Capital Limited - - 5 329 413 2 323 129 Africa Investments Limited - - 2 355 732 3 033 594 Imara Asset Management Limited -BVI - - 2 365 082 997 167 Imara Asset Management (Pty) Limited - Botswana - - 69 750 4 763 Imara Botswana Limited - - 5 554 439 5 270 574 Imara Asset Management UK Limited - - 283 471 277 378 Imara Capital South Africa (Pty) Limited - - 13 953 122 9 108 870 Imara Capital Botswana (Pty) Limited - - 1 398 650 69 699 - - 31 309 659 21 085 174 Amounts owed to related parties: Short term: Imara Capital Zimbabwe (Private) Limited 592 549 1 017 805 - - Imara SP Limited 19 722 - - - Worxnet (Pty) Limited - 856 080 - - Rhodes Trust - 624 651 - - Sarian Trust - 69 243 - - DE Stone - 125 171 - - 612 271 2 692 950 - - Amounts owed by group companies: Short term: Imara Trademarks (BVI) Limited - - 4 055 987 3 628 072 - - 4 055 987 3 628 072 Inter-company long-term loans have no fixed term of repayment, are unsecured and attract interest at rates of 14.00% (2007: 14.00%) for Botswana and British Virgin Islands incorporated companies and 10.50% (2007: 10.50%) for companies incorporated in South Africa. These interest rates equate to market related interest rates for similar type loans in the respective country jurisdictions. Imara Holdings has subordinated portions of the loans owed to it by Group companies. As these loans are not expected to be repaid in the foreseeable future, where the loan is in a foreign currency the loan has been treated as a net investment in the foreign entity and exchange gains and losses are recognised in equity. 63
  • 65. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 14 RELATED PARTY DISCLOSURES (continued) Remuneration paid to directors and key management personnel: Directors: Year ended 30 April 2008 Non- Executive Total executive Pula Pula Pula Fees 648 436 - 648 436 Expenses 128 293 - 128 293 776 729 - 776 729 Salary - 6 073 006 6 073 006 Short term benefits - 194 252 194 252 Fixed remuneration - 6 267 258 6 267 258 Performance bonus 3 874 646 3 874 646 Share based payment expense 49 859 150 290 200 149 826 588 10 292 194 11 118 782 Directors: Year ended 30 April 2007 Non- Executive Total executive Pula Pula Pula Fees 389 042 - 389 042 Expenses 132 507 - 132 507 521 549 - 521 549 Salary - 4 056 286 4 056 286 Short term benefits - 155 373 155 373 Fixed remuneration - 4 211 659 4 211 659 Performance bonus 1 380 706 1 380 706 Share based payment expense 61 791 115 073 176 864 583 340 5 707 438 6 290 778 Amounts disclosed as directors’ emoluments for the year ended 30 April 2007, have been re-stated to include directors’ expenses and profit share bonuses awarded after the year end, that were not previously reported in the financial statements. This adjustment only affects disclosure in the financial statements and has no impact on the profit previously reported. 64
  • 66. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 14 RELATED PARTY DISCLOSURES (continued) Remuneration paid to directors and key management personnel: (continued) Key management personnel: Year ended 30 April 2008 Pula Salary 2 287 806 Short term benefits 3 276 327 Fixed remuneration 5 564 133 Performance bonus 1 511 338 Share based payment expense 587 699 7 663 170 Year ended 30 April 2007 Pula Salary 1 273 640 Short term benefits 31 817 Fixed remuneration 1 305 457 Performance bonus 59 688 Share based payment expense 271 938 1 673 083 Remuneration in respect of key management personnel relates to four employees, two of who are employed at Imara SP Reid (Pty) Limited, (12 month period), one who is employed at Imara Asset Management, the British Virgin Islands company, (12 month period) and one employed by Imara Capital South Africa (Pty) Limited, (1 month period). Comparative information for the prior year is in respect of two management personnel, one employed at Imara SP Reid (Pty) Limited and the other at Imara Asset Management (UK) Limited, (both for 12 month periods). The 2007 comparative figures have been re-stated to take account of performance bonuses paid in respect of that year. Year ended 30 April Group Group Company Company 2008 2007 2008 2007 Pula Pula Pula Pula 15 LISTED TRADING SECURITIES Listed traded securities 4 116 788 4 179 795 - - Listed traded securities sold short (577 218) (544 055) - - Net listed securities 3 539 570 3 635 740 - - 16 TRADE AND OTHER RECEIVABLES Trade receivables 60 936 703 24 560 186 - - Amounts receivable in respect of broking activities 65 764 693 41 438 183 - - Collateral deposits against scrip lending 33 953 044 31 818 061 - - Loans receivable – carry accounts 26 160 435 25 056 441 - - Sundry receivables 1 146 094 537 069 696 571 310 808 Related party receivables (note 14) 421 183 149 424 421 183 156 626 188 382 152 123 559 364 1 117 754 467 434 65
  • 67. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 16 TRADE AND OTHER RECEIVABLES (continued) Trade receivables are non interest bearing and are generally on 30 to 60 day terms. Amounts receivable due to broking activities are due on demand and do not attract interest. Collateral deposits against scrip lending attract interest at a rate of 16%. Loans receivable, in respect of carry accounts, are due on demand and attract interest at rates ranging between 14% and 18%. Impairment losses, where applicable, are charged either directly against the carrying cost of trade and other receivables or through the use of an allowance account. Financial Assets pledged as collateral: There are no financial assets that have been pledged as collateral for financial liabilities or contingent liabilities. As at 30 April, the ageing analysis of trade and other receivables is as detailed below. These balances are neither past due or impaired : Less than 30 to 61 to 91 to More than April 2008: 30 days 60 days 90 days 120 days 120 days TOTAL Trade receivable 60 549 340 - - - 387 363 60 936 703 Sundry receivables 939 182 28 695 - - 178 217 1 146 094 Related parties - - - - 421 183 421 183 April 2007: Trade receivable 21 703 950 1 493 134 5 461 726 598 631 043 24 560 186 Sundry receivables 355 053 115 145 - - 66 871 537 069 Related parties - - - - 149 424 149 424 No other class of financial assets are past due as at the balance sheet date. As at 30 April, the following trade and other receivables were impaired and provided for in full. They are therefore not included in the above receivables as their net carrying amount is nil. Group Company Group Company 2008 2008 2007 2007 Pula Pula Pula Pula Trade receivables 50 800 - 29 191 29 191 Sundry receivables 714 112 - - - 764 912 - 29 191 29 191 Movements in the provision for past due trade receivables and sundry receivables were as follows: Group Company Individually Collectively Individually Collectively impaired impaired Total impaired impaired Total Pula Pula Pula Pula Pula Pula At 1 May 2006 - - - - - - Charge for the year 620 152 - 620 152 29 121 - 29 121 Utilised - - - - - - At 30 April 2007 620 152 - 620 152 29 121 - 29 121 Charge for the year 764 912 - 764 912 - - - Utilised (620 152) - (620 152) (29 191) - (29 191) At 30 April 2008 764 912 - 764 912 - - - 66
  • 68. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 17 CASH AND CASH EQUIVALENTS Year ended 30 April Group Group Company Company 2008 2007 2008 2007 Pula Pula Pula Pula Cash on hand and at bank 43 917 867 16 660 957 1 579 181 399 898 Short term deposits 963 229 9 549 366 - - Other 3 184 808 - - 44 884 280 26 211 131 1 579 181 399 898 For purposes of the Cash Flow Statement, cash and cash equivalents comprise the following: Cash and cash equivalents –per above 44 884 280 26 211 131 1 579 181 399 898 Bank overdraft (note 19) ( 9 111 303) (348 497) (66 178) - 35 772 977 25 862 634 1 513 003 399 898 Rand call deposits bear interest, linked to prime, of between 9.44% and 9.45% per annum (2007 - 6.00% and 7.50%). Short-term deposits held with African Alliance and Stanbic Investment Management Services (Pty) Limited, have effective returns of between 11.01% and 11.52% per annum (2007 - 10.82% and 11.61%). Foreign bank balances attracted interest during the year of between 2.60% and 4.50% per annum (2007 – 2.10% and 4.10%) on US Dollar deposits, and 2.20% and 2.55% per annum (2007 - 3.25% and 4.12 %) on Sterling deposits. 18 STATED CAPITAL Authorised Share Capital: 200 000 000 ordinary shares of no par value each (2007- 20 000 000 ordinary shares of P 0.10 each) Reconciliation of the number of shares in issue: Company Company 2008 2007 Number Number In issue at beginning of the year 5 368 815 4 743 800 Shares issued resulting from share split (10 for 1) 48 319 335 - Shares in issue after share sub-division 53 688 150 4 743 800 Shares issued in respect of debenture conversion - 365 040 Shares issued in respect of scrip dividend 883 810 151 738 Shares issued under the Share Option Scheme 1 046 956 108 237 In issue at end of the year 55 618 916 5 368 815 67
  • 69. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 18 STATED CAPITAL (continued) Company: Year ending 30 April 2008 Share capital Share Stated premium capital Pula Pula Pula Balance at beginning of year 53 688 29 754 133 Issue of ordinary shares: Debenture conversions - - Scrip dividend 884 6 362 567 Share options exercised 1 047 939 006 55 619 37 055 706 Reclassified to stated capital (55 619) (37 055 706) 37 111 325 Balance at end of year - - 37 111 325 Company: Year ending 30 April 2007 Share Share Stated capital premium capital Pula Pula Pula Balance at beginning of year 47 438 25 650 034 Issue of ordinary shares: Debenture conversions 3 651 1 867 179 Scrip dividend 1 517 493 450 Share options exercised 1 082 1 743 470 53 688 29 754 133 Reclassified to stated capital (53 688) (29 754 133) 29 807 821 Balance at end of year - - 29 807 821 The Companies Act (Chapter 42:01) was revised and replaced with the Companies Act, 2003 Act No. 32 of 2004. The new Act came into effect on 3 July 2007. Under the revised Act all shares to be issued after 3 July 2007 will be of no par value (Section 47) and all shares already issued are deemed to have been converted to no par shares (Section 47) as of the same date. The conversion of the shares from par value shares to no par value shares does not affect the rights of shareholder’s. This change will not affect the operations of the company but affects the disclosure and presentation of share capital and share premium. Issued share capital and share premium and any new shares that may be issued by the company will be presented in a single reporting line item. In August 2007 the company implemented a share sub-division on a 10 for 1 basis. The holders of ordinary shares are entitled to receive dividends as and when declared by the company. All ordinary shares carry one vote per share without restriction. The un-issued ordinary shares are under the control of the directors. A special dividend of 10 thebe per share and an ordinary dividend of 17 thebe were declared in August 2007 in respect of the financial year ended 30 April 2007. The special dividend was payable in cash. Shareholders were given the option to receive their ordinary dividend in cash or to receive ordinary shares in lieu of the dividend entitlement. Shareholders electing to receive ordinary shares in lieu of the dividend were allotted shares at a price of P 7.20 per share. 68
  • 70. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 19 INTEREST BEARING LOANS AND BORROWINGS Year ended 30 April Group Group Company Company 2008 2007 2008 2007 Short term: Pula Pula Pula Pula Motor vehicle lease (Note 23) - 169 704 - - Office equipment lease 10 020 - - - 10 020 169 704 - - Bank overdraft 9 111 303 348 497 66 178 - Long term: Motor vehicle lease (Note 23) - 90 346 - - Office equipment lease 15 739 - - - Other - 36 406 - - 15 739 126 752 - - Leased assets are secured by the underlying assets and the carrying value of such assets. All motor vehicle leases have been repaid during the current year. The effective interest rate on such leases for the 2007 financial year was 16.00%. Bank overdrafts are unsecured and attract interest at rates varying between 12,5 and 15.0 %. 20 TRADE AND OTHER PAYABLES Group Group Company Company 2008 2007 2008 2007 Pula Pula Pula Pula Trade payables 11 584 940 21 432 170 - - Amounts payable in respect of broking activities 58 091 683 38 795 386 - - Other payables 570 463 849 610 270 444 686 393 Accruals 35 000 143 4 534 206 2 269 320 881 415 Related party payables (Note 14) 612 271 2 692 950 - - 105 859 500 68 304 322 2 539 764 1 567 808 Trade payables are non interest bearing and are normally settled on 30 to 60 day terms Amounts payable in respect of broking activities are non interest bearing and are settled within five days of the transaction date. Other payables are non interest bearing and have average terms of between 30 and 60 days. 21 PROVISIONS Group Group Company Company 2008 2007 2008 2007 Pula Pula Pula Pula Balance - beginning of year 3 408 159 3 168 016 - - Revision of estimate following settlement by a co- defendant. (1 522 798) - - - Exchange rate adjustment (166 247) 240 143 - - Balance - end of year 1 719 114 3 408 159 - - The above represents provisions to cover potential claims arising from: • A civil case against Imara SP Reid, where it is a defendant relating to the operation of its former branch in Nelspruit. 69
  • 71. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 22 FUNDS UNDER MANAGEMENT Year ended 30 April Group Group 2008 2007 Pula Pula Funds under management – group companies 2 481 304 042 1 237 384 658 Funds under management – associate companies 975 318 000 820 649 700 3 456 622 042 2 058 034 358 The Group provides asset management and unit trust services to pension funds, trusts, institutions, companies and individuals, whereby it holds, places and manages funds on behalf of clients. The Group receives management fees for providing these services. Funds under management are not assets of the Group and are not recognised in the balance sheet. The Group is not exposed to any credit risk relating to funds under management. 23 COMMITMENTS AND CONTINGENCIES Year ended 30 April Group Group Company Company 2008 2007 2008 2007 Pula Pula Pula Pula Hire purchase commitments: Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows: Within one year 13 213 12 472 - - After one year but not more than five years 17 091 - - - 30 304 12 472 - - Less: future finance charges (4 545) (1 385) - - Present value of hire purchase liabilities 25 759 11 087 - - Operating lease commitments: Operating leases- company as lessee: The Group has entered into commercial lease agreements in relation to office premises in Botswana and South Africa. The Botswana lease, in respect of property in Gaborone, has a remaining lease term of 21months with an option to renew for a further 36 months term. The South African lease, in respect of premises in Johannesburg, has a remaining lease term of 46 months with an option to renew for a further 60 months term. Future minimum rentals payable under non-cancellable operating leases are as follows: Year ended 30 April Group Group Company Company 2008 2007 2008 2007 Pula Pula Pula Pula Within one year 1 697 674 1 373 888 182 655 166 050 After one year but not more than five years 5 222 916 5 980 292 147 015 329 670 6 920 590 7 354 180 329 670 495 720 70
  • 72. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 23 COMMITMENTS AND CONTINGENCIES (continued) Year ended 30 April Group Group Company Company 2008 2007 2008 2007 Pula Pula Pula Pula Operating leases- company as lessor: The Group has entered into commercial property sub-lease agreements with subsidiaries, in relation to the Group’s surplus office space. These non- cancellable leases are on terms similar to the head lease agreement, and have a remaining term of 46 months. The lease agreements include a clause allowing an upward revision of the rental charge on an annual basis. No disclosure has been made in respect of the financial impact of these sub- lease agreements, as on consolidation the financial amounts are eliminated. Finance lease commitments: Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows: Within one year - 200 059 - - After one year but not more than five years - 97 423 - - More than five years - - - - - 297 482 - - Less: future finance charges - (37 432) - - Present value of finance lease liabilities - 260 050 - - Capital commitments: At 30 April 2008 the group has no material capital commitments. 24 SHARE BASED PAYMENTS Share based payment plan: The share option scheme introduced by the company in its 2005 financial year is defined as an “equity settled scheme”. Under the scheme share options are granted to directors and employees with more than 12 months service. In terms of the scheme, up to 10% of the issued share capital of the company at any one time is available to the Directors to grant share options. Minor modifications were made to the Scheme in 2006 in order to ensure compliance with the requirements of the Botswana Stock Exchange, ahead of the company’s listing. The exercise price of the options is equal to the market price of the shares on the date of grant. The exercise period for each option is five years. One third of the options granted vest in each financial year, provided that the grantee is still in the employ of the company, and performance criteria are not taken into account. The full price of any option granted, must be settled in cash before shares are allotted. The holders of share option grants, as at 2 August 2007, were eligible for the 10 for 1 share split implemented by the company. 71
  • 73. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 24 SHARE BASED PAYMENTS (continued) During the year, the following options were granted: 30 April 2008 Expiry date Number of Option price Grant date options (Pula) 18 July 2007 17 July 2012 150 000 6.00 30 April 2007 Expiry date Number of Option price Grant date options * (Pula) * 1 September 2006 31 August 2011 250 000 0.90 30 November 2006 31 October 2011 580 000 1.402 19 March 2007 18 March 2012 400 000 2.100 * In August 2007, the company implemented a share sub-division on a 10 for 1 basis. Comparative data relating to options granted in the 2007 financial year have been adjusted to take account of the sub-division. The range of exercise prices for options outstanding at the end of the year was P 0.4364 to P 6.00. The expense recognised during the year in respect of services received and the apportionment of this cost to operating companies within the Group is as follows: 2008 2007 Pula Pula Imara Holdings Limited (333 076) 113 992 Imara Asset Management South Africa (Pty) Limited 122 458 63 867 Imara Asset Management Limited - BVI 150 495 56 650 Imara Asset Management (Pty) Limited - Botswana 11 920 4 487 Imara Capital South Africa Limited 98 921 - Imara Corporate Finance South Africa (Pty) Limited 20 670 78 237 Imara SP Reid (Pty) Limited 321 665 189 705 393 053 506 938 72
  • 74. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 24 SHARE BASED PAYMENTS (continued) Share based payment plan The following table illustrates the number and weighted average exercise prices, (WAEP), of and movements in, share options granted since inception of the option scheme. 2008 2008 2007 2007 Number WAEP Number WAEP Outstanding -beginning of year 3 127 230 0,85127 3 020 000 0,45345 Granted during the year 150 000 6,00000 1 230 000 1,52696 Forfeited during the year (33 270) 1,96011 (40 400) 0,48790 Exercised during the year (1 046 950) 0,89790 (1 082 370) 0,45690 Outstanding and exercisable –end of the year 2 197 010 0,94260 3 127 230 0,85127 The following table lists the inputs to the binomial valuation model used for the year. 2008 2007 Dividend yield % 4.66 7.06 Expected volatility % 43.45 46.07 Risk free interest rate % 12.00 11.25 Weighted average share price- exercisable options Pula 1.19890 0.87504 Expected volatility is a measure of the expected price fluctuations of the underlying share. As the Imara share was not publicly quoted at certain of the grant dates, and has only been listed since 4 October 2006, reliable historical trading data relating to the share is not available. Volatility has therefore been determined by reference to listed companies, which could be regarded as proxies for Imara Holdings Limited. Expected volatility reflects the assumption that historical volatility is indicative of future trends, which may not necessarily be the actual outcome Black Economic Empowerment share based payment Imara Asset Management South Africa (Proprietary) Limited, (“Imara Asset Management”), Imara Corporate Finance South Africa (Proprietary) Limited, (“Imara Corporate Finance”), and Imara SP Reid (Proprietary) Limited, (“Imara SP Reid”), each entered into separate share loan agreements with Zingwenya Holdings Limited (Proprietary) Limited, (“ Zingwenya”), on 1 October 2007, in terms of which each of the subsidiaries loaned shares to Zingwenya as follows: Value of share Value of share loan loan Number of shares loaned to Zingwenya Rand Pula equivalent Imara Asset Management: 38 ordinary shares in Imara Corporate Finance 8 500 000 7 306 234 1 250 ordinary shares in Imara SP Reid 8 500 000 7 306 234 17 000 000 14 612 468 Imara Corporate Finance: 38 ordinary shares in Imara Asset Management 8 500 000 7 306 234 1 250 ordinary shares in Imara SP Reid 8 500 000 7 306 234 17 000 000 14 612 468 Imara SP Reid: 38 ordinary shares in Imara Asset Management 8 500 000 7 306 234 38 ordinary shares in Imara Corporate Finance 8 500 000 7 306 234 17 000 000 14 612 468 73
  • 75. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 24 SHARE BASED PAYMENTS (continued) Black Economic Empowerment share based payment (continued) The share loan agreements resulted in a transfer of the shares loaned to Zingwenya, such that Zingwenya is entitled to 20% of the voting rights and dividends declared by each subsidiary between 1 October 2007 and 31 October 2010. Other salient terms of the share loan agreement are summarised below: a) Each of the loans above accrues interest at RSA R153 Bond yield to maturity plus 2; b) Dividends will accrue to Zingwenya and will be withheld by the subsidiaries until settlement; c) The loans can be settled at any time between 1 October 2007 and 31 October 2010: i) in cash at a settlement price of R17 million plus interest accrued, less dividends accrued to Zingwenya, less the deposit and interest accrued thereon; or ii) by return of the shares loaned, in which event the dividends accrued to Zingwenya will be forfeited and the deposit, together with interest earned thereon, will be refunded to Zingwenya; d) the share loans have to be settled simultaneously and in the same manner, (i.e. all by way of a cash settlement or all by way of a share settlement); and e) Zingwenya paid a good faith deposit of R 1.7 million to each of the subsidiaries. In addition to the share loan agreement described above, Imara Capital South Africa (Proprietary) Limited, (“Imara Capital”), entered into a Shareholders Agreement with Zingwenya, the salient terms of which are summarised below: a) The subsidiaries will maintain a dividend cover of 2 times between 1 October 2007 and 31 October 2010, subject to liquidity and solvency requirements imposed by the South African Companies Act (Act 1973 of 1973) b) Zingwenya appointed three directors to the Imara Capital board and one director to each of the Imara Asset Management, Imara Corporate Finance and Imara SP Reid boards of directors; c) Imara Capital will hold the good faith deposits, totalling R 5,1 million, which will be invested in money market instruments; and d) Imara Capital will hold the loan shares, transferred by each of the subsidiaries to Zingwenya, in safe custody on behalf of Zingwenya and the subsidiaries, pending settlement. In terms of IFRS 2, the substance of the Agreement referred to above, is deemed to be that each of the subsidiaries wrote a call option to Zingwenya, in respect of the shares loaned. Furthermore, an IFRS 2 share based payment expense arose on 1 October 2007, being the amount by which the value of the option exceeded the amount received for the option (R- Nil). As a result of the transaction described above, the three subsidiaries will all be able to illustrate 20% black empowerment ownership in terms of the Codes of Good Practise on Black Economic Empowerment. The share based expense recognised on 1 October 2007 and the apportionment thereof between the subsidiaries was as follows: 2008 2008 Rand Pula equivalent Imara Asset Management - - Imara Corporate Finance - - Imara SP Reid 1 739 500 1 494 770 1 739 000 1 494 770 No option value was ascribed to the Imara Asset Management and Imara Corporate Finance options as these two companies both recorded net losses for the year ended 30 April 2008. The value of the options was determined in terms of a binomial option pricing model. The key inputs into the model were as follows: Dividend yield 2 times Expected volatility 32% Risk free rate of return 9.01% 74
  • 76. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 25 FINANCIAL INSTRUMENTS Financial risk management objectives and policies The Group’s principal financial instruments comprise bank loans, leases, cash and short-term deposits. The main purpose of these financial instruments is to finance the Group’s operations. The Group has various other financial instruments such as trade debtors and trade creditors, which arise directly from its operations. The main risks arising from the Group’s financial instruments are credit risk, equity price risk, interest rate risk, foreign currency risk, liquidity risk and securities exchange trading risk. Credit risk The Group’s policy is to trade only with recognised and creditworthy third parties. All customers who wish to trade on credit terms are subject to credit vetting and “know your customer” procedures before any credit is extended. With respect to credit risk arising from the other financial assets of the Group, comprising cash and cash equivalents and trade and other payables, the Group’s exposure to credit risk arises from default of the other party, with a maximum exposure equal to the carrying amount of these instruments. Interest rate risk The Group’s exposure to market risk for changes in interest rates relates primarily to its bank and cash balances and long term liabilities. The Group’s policy is to manage its interest cost using a mix of fixed and variable rate debt. Parameters for managing the mix between fixed rate and variable rate debt have not been specifically set. Interest rate risk table The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, on the Group’s profit before tax (through the impact of floating rate borrowings) Percentage Effect on profit Effect on profit increase before tax before tax 2008 2007 Group: 0.75% 169 021 71 244 1.25% 281 701 116 455 Company: 0.75% 11 272 1 588 1.25% 18 769 7 086 Equity price risk: Equity price risk is the risk that the fair values of equity instruments decrease as a result of changes in the levels of equity indices and the value of individual stocks. The equity price risk exposure arises from the Group’s listed trading securities portfolio. The effect on equity as a result of a change in the fair value of listed trading securities due to a reasonably possible change in the Johannesburg Stock Exchange All Share Index, with all other variables held constant, is as follows: Group Group 2008 2007 Change in Effect on Change in Effect on equity equity price equity value equity price value Market indices: % Pula % Pula Botswana Stock Exchange 12% 192 067 12% 84 481 Johannesburg Stock Exchange 12% 1 270 552 12% 772 878 Botswana Stock Exchange (6%) (96 033) (6%) (42 240) Johannesburg Stock Exchange (6%) (635 276) (6%) (386 439) 75
  • 77. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 25 FINANCIAL INSTRUMENTS (continued) Foreign currency risk As a result of significant investment operations in South Africa and the British Virgin Islands, and investments in associate companies in Malawi and Zimbabwe, the group’s balance sheet can be affected significantly by movements in the US$/Rand, US$/ Pula and Sterling / Pula exchange rates. The group also has transactional currency exposures. Such exposures arise from sales or purchase by an operating unit in currencies other than the unit’s measurement currency. There is no formal policy for the management of foreign currency risk relating to intra group loans but such loans are settled as and when cash flows permit and are reviewed monthly. Cash surpluses are maintained in a mix of Sterling and US$ denominated bank and investment accounts. The following table demonstrates the sensitivity to a reasonably possible change in the US dollar and Sterling exchange rates, with all other variables held constant, on the Group’s profit before tax (due to changes in the fair value of monetary assets and liabilities) and the Groups equity. US Dollars GBP Sterling Increase /(decrease) Effect on profit Increase /(decrease) Effect on profit in US$ rate before tax in GBP rate before tax 2008: 7.0% 113 978 2.5% 225 949 (3.0%) (48 848) (1.25%) (112 975) 2007: 7.0% 1 981 2.5% 182 611 (3.0%) (849) (1.25%) (91 306) Securities exchange trading risk Companies in the Group periodically short the market and are therefore exposed to short-term fluctuations in the market prices of the securities shorted. Trading risk management is based on the principle that trading risks are properly identified, measured, reported and monitored on a daily basis. 76
  • 78. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 25 FINANCIAL INSTRUMENTS (continued) Liquidity risk The group’s objective is to maintain a balance between continuity of funding and flexibility through the use of overdrafts, bank loans, finance leases and hire purchase contracts. The table below summarises the maturity profile of the Group’s financial liabilities at 30 April 2008, based on contractual un-discounted payments. On demand Less than 3 3 to 12 1 to 5 years More than 5 Total months months years Pula Pula Pula Pula Pula Pula At 30 April 2008: Interest bearing loans & borrowings - - 13 213 - - 13 213 Trade and other payables - 97 865 050 7 993 929 - - 105 858 979 Current portion of loans and borrowings - - 17 091 - - 17 091 Bank overdraft 9 111 303 - - - - 9 111 303 At 30 April 2007: Interest bearing loans & borrowings - - - 133 829 - 133 829 Trade and other payables - 61 421 306 6883 015 - - 68 304 322 Current portion of loans and borrowings - - 200 059 - - 200 059 Bank overdraft 348 497 - - - - 348 497 Capital management The Group itself is not subject to any statutory or regulatory capital adequacy or liquidity prudential controls. The primary objective of the Group’s capital management is to ensure that it maintains prudent capital and gearing ratios in order to support its business and maximise shareholder value. The Stock-broking Division is subject to capital adequacy and liquidity controls imposed by the regulators and Stock Exchanges in the jurisdictions where they are licenced to operate. Responsibility for compliance with the prescribed capital and liquidity ratios is delegated to the respect Risk and Compliance Committees. The individually regulated companies within the Group have complied with all externally imposed requirements throughout the year. The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payments to shareholders, offer scrip in lieu of dividends, buy back shares, issue new shares or negotiate borrowings. Capital comprises equity attributable to the shareholders of the parent company. No material changes were made to the objectives or policies relating to the management of capital during the year. 77
  • 79. Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 25 FINANCIAL INSTRUMENTS (continued) Net fair values Financial instruments at fair value are either priced with reference to a quoted market price for that instrument or by using a valuation model. Where a valuation model is used, the methodology is to calculate the expected cash flows fro the specific financial instrument and then discount these values back to a present value. The fair value of long term loans are estimated using discounted cash flows applying appropriate market rates. The carrying amounts of all other financial instruments approximate their fair value due to the short term nature of the instruments. Set out in the table below is a comparison by category of carrying amounts and fair values of all Group financial instruments. Carrying amount Fair value Group Group Group Group 2008 2007 2008 2007 Pula Pula Pula Pula Financial assets: Available-for-sale-financial assets 8 714 677 9 944 438 8 714 677 9 944 438 Trade and other receivables 188 382 152 123 559 364 188 382 152 123 559 364 Listed trading securities 3 539 570 3 635 740 3 539 570 3 635 740 Cash and cash equivalents 44 884 280 26 211 131 44 884 280 26 211 131 Financial liabilities: Interest bearing loans and borrowings - 126 752 - 126 752 Trade and other payables 105 859 500 68 304 322 105 859 500 68 304 322 Current portion of loans and other borrowings 10 020 169 704 10 020 169 704 Tax payable 407 866 8 902 355 407 866 8 902 355 26 SUBORDINATION AGREEMENTS Imara Holdings Limited has signed agreements to subordinate for the benefit of the other creditors both past and present of a number of its subsidiaries, so much of their claims that would enable the claims of such creditors to be paid in full. The subordinations will remain in force and effect in respect of each subsidiary for which such an agreement has been given only so long as that subsidiary’s liabilities exceed its assets, fairly valued and shall lapse immediately upon that date. 27 FOREIGN CURRENCY TRANSLATION RATES 2008 2007 2006 2005 Pula : US Dollar 6.50212 6.31269 5.62487 4.54959 Pula : British Sterling 12.88506 12.60808 10.26696 8.6738 South African Rand : Pula 1.16339 1.10664 1.07602 1.3514 South African Rand : US Dollar 7.56447 6.98585 6.05246 6.1480 Malawi Kwacha : Pula 21.13 21.58 740 485 Zimbabwe Dollar : Pula 34 180 119 3 154 *849 - The Zimbabwe dollar exchange rate is based on the Old Mutual Implied Rate and has been adjusted for the 2006 devaluation, when three zero’s were removed from the currency value. 78
  • 80. Imara Holdings Limited Group Annual Report - 30 April 2008 SHAREHOLDER INFORMATION AT 30 APRIL 2008 TOP 20 SHAREHOLDERS OF IMARA HOLDINGS LIMITED Rank Name Country Total shares held % interest 1 Etana Holdings Limited (Ref – RET01) Mauritius 5 490 026 9.87% 2 Imara S P Limited Mauritius 3 613 450 6.50% 3 First National Nominees (Pty) Limited South Africa 3 444 999 6.19% 4 BTCS Nominees Limited (Ref – RC008) United Kingdom 2 996 177 5.39% 5 Barclays Botswana Nominees Limited Botswana 2 789 198 5.01% 6 Elsingham Investments Limited Guernsey 2 774 576 4.99% 7 Fahris Limited United Kingdom 2 627 460 4.72% 8 Barclays Bots Nominees Limited Botswana 2 598 365 4.67% 9 JPMIB Nominees Limited Switzerland 2 203 650 3.96% 10 Cannon International Limited Guernsey 2 070 000 3.72% 11 Rhodora Limited Jersey 1 882 220 3.38% 12 James Findlay United Kingdom 1 400 000 2.52% 13 Idlewild Investments Limited Switzerland 1 363 159 2.45% 14 Basfour 883 (Pty) Limited South Africa 1 336 253 2.40% 15 Neil Mark Ostrer United Kingdom 1 174 300 2.11% 16 Neil Ramsay Burnett South Africa 1 150 000 2.07% 17 BTCS Nominees Limited (Ref – RT001) United Kingdom 1 138 650 2.05% 18 Stock Market Investments Limited France 920 800 1.66% 19 Etana Holdings Limited (Ref – RET02) Mauritius 900 000 1.62% 20 BTCS Nominees Limited (Ref - RC 004) United Kingdom 864 286 1.55% Total shares held by top 20 shareholders 42 737 569 76.84% No of Distribution of shareholders shareholders Local Foreign % interest Individual Residents 131 141 321 1.87% Individual Residents 27 4 897 415 8.81% Companies 11 573 872 1.03% Companies 13 17 936 063 32.25% Nominees 8 6 670 495 11.99% Nominees 60 24 467 632 43.99% Investment Companies & Trusts 5 23 138 0.04% Investment Companies & Trusts 2 8 280 0.01% Other Organisations 1 700 0.00% 258 8 309 526 47 309 390 100.00% No of Shareholder spread shareholders Total shares held % interest 0 - 100000 204 2 642 813 4.75% 100001 - 250000 18 3 274 085 5.89% 250001 - 500000 11 3 808 964 6.85% 500001 - 750000 5 3 155 485 5.67% 750001 - 1000000 3 2 685 086 4.83% 1000001 - 2000000 7 9 444 582 16.98% 2000001 - 3000000 7 18 059 426 32.47% 3000001 - 5000000 2 7 058 449 12.69% 5000001 - 10000000 1 5 490 026 9.87% 258 55 618 916 100.00% Public/Non-public shareholders Total shares held No of shareholders % interest Non public shareholders Directors of the company and its subsidiaries 21 625 411 14 38.88% Public shareholders 33 993 505 244 61.12% Total 55 618 916 258 100% 79
  • 81. Imara Holdings Limited Group Annual Report - 30 April 2008 SHAREHOLDERS’ DIARY The following dates are important for shareholders: Wednesday 23 July 2008 Board approval of the audited Group results for the year ended 30 April 2008 Wednesday 30 July 2008 Announcement of audited Group results for the year ended 30 April 2008 and dividend declaration Thursday 31 July 2008 Analyst briefing – Botswana Friday15 August 2008 Closure of share register and last date to register for dividend Friday 22 August 2008 Details of scrip dividend offer and Form of Election circulated to shareholders Friday 12 September 2008 Latest date for receipt of Forms of Election regarding the scrip dividend Friday 26 September 2008 Share certificates or cheques and dividend warrants mailed to shareholders Friday 12 September 2008 Notice of Annual General Meeting and Annual Report posted to shareholders Wednesday 8 October 2008 Annual General Meeting – Gaborone, Botswana 80
  • 82. Imara Holdings Limited Group Annual Report - 30 April 2008 NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the Sixth Annual General Meeting of members of the Company will be held at the Gaborone Sun Hotel, Gaborone, Botswana on wednesday, 8 October 2008 at 16h00 for the following purpose: 1. APPROVAL OF MINUTES To approve the minutes of the previous Annual General Meeting of members held on 5 October 2007 at the Gaborone Sun Hotel, Gaborone, Botswana. SPECIAL BUSINESS 2. ADOPTION OF A NEW CONSTITUTION Special Resolution 1: To adopt a new Constitution for the Company in place of the existing Memorandum and Articles of Association. A copy of the new Constitution is available for perusal at the registered offices of the Company, Union Provident Trust, Ground Floor, BIC House, Main Mall, Gaborone and at Second Floor, Block A, Unit 3, Plot 117, Millennium Office Park, Kgale Hill, Gaborone. ORDINARY BUSINESS 3. APPROVAL OF ANNUAL FINANCIAL STATEMENTS Ordinary Resolution 1: To receive, consider and if deemed fit, approve and adopt the audited Annual Financial Statements for the year ended 30 April 2008, together with the Report of the Directors and Independent Auditors thereon. 4. ELECTION OF DIRECTORS Ordinary Resolution 2: To elect Directors in place of those retiring in accordance with the provisions of Article 62 of the Article of Association. Messrs J Legat, RR Matthews and SM Ndoro retire as directors in terms of Article 62 of the Article of Association. Being available and eligible, they offer themselves for re-election. 5. DIRECTORS REMUNERATION Ordinary Resolution 3: To approve the remuneration of Directors for the year ended 30 April 2008. Directors’ remuneration for the year ended 30 April 2008 amounted to P 11 459 642, (2007: P 6 290 778 ). 6. SPECIAL DIVIDEND Ordinary Resolution 4: To approve the payment of a special dividend of 17 thebe per share, payable in cash in respect of the year ended 30 April 2007, to all shareholders registered in the books of the company on 15 August 2008. The directors have recommended the payment of a special dividend of 17 thebe per share in respect of the year ended 30 April 2008. The special dividend relates specifically to the profits generated through performance fees and are regarded as being of an exceptional nature. The directors have decided that for dividend distribution purposes, these profits should be differentiated from the profits from core business activities and be the subject of a special dividend. 81
  • 83. Imara Holdings Limited Group Annual Report - 30 April 2008 NOTICE OF ANNUAL GENERAL MEETING (continued) 7. ORDINARY DIVIDEND Ordinary Resolution 5: To approve the payment of an ordinary dividend of 19 thebe per share, either in cash or scrip, at the election of each shareholder, to all shareholders registered in the books of the company on 17 August 2007. The directors have recommended the payment of a dividend of 19 thebe per share in respect of the year ended 30 April 2008. Directors have further recommended that the dividend be payable either in cash or scrip at the election of each shareholder. Details of the scrip dividend offer and terms of election, were mailed to shareholders on 22 August 2008. 8. AUDITORS REMUNERATION Ordinary Resolution 6: To approve the remuneration of the Independent Auditors for the year ended 30 April 2008. Auditors remuneration for the year ended 30 April 2008 amounted to P1 672 996, (2007: P 886 193). The current year fee includes an amount of P 312 517 which relates to the prior year. 9. APPOINTMENT OF INDEPENDENT AUDITORS Ordinary Resolution 7: To appoint Independent Auditors for the ensuing year ending 30 April 2009. Messrs Ernst & Young have indicated a willingness to continue as Independent Auditors to the company for the ensuing year. 10. OTHER BUSINESS To transact such other business as may be transacted at an Annual General Meeting. By Order of the Board DE STONE COMPANY SECRETARY 5th September 2008 82
  • 84. IMARA HOLDINGS LIMITED Form of Proxy For use at the Sixth Annual General Meeting of members of the company to be held at the Gaborone Sun Hotel, Gaborone, Botswana on 8 October 2008 at 16h00 for the following purpose: PLEASE READ THE NOTES HERETO BEFORE COMPLETING THIS FORM I/We _______________________________________________ (NAME(S) IN BLOCK LETTERS) being the holder of _________________________________________(Number of) ordinary shares in Imara Holdings Limited do hereby appoint (see Note 2) 1. __________________________________________________ or failing him/her; 2. __________________________________________________ or failing him/her; 3. the Chairman of the Annual General Meeting as my/our proxy to act for me/us at the Annual General Meeting, for the purpose of considering and, if deemed fit, passing, with or without modification, the resolutions set out in the Notice convening the meeting and to be proposed thereat and at each adjournment thereof, and to vote for and/or against the resolutions and/or abstain from voting in respect of the ordinary shares registered in my/our name/s (in accordance with the following instructions: For Against Abstain Special Resolution 1 Ordinary Resolution 1 Ordinary Resolution 2 Ordinary Resolution 3 Ordinary Resolution 4 Ordinary Resolution 5 Ordinary Resolution 6 Ordinary Resolution 7 Signed at _____________________ on ___________________________ 2008 Signature_________________________________________________________ Assisted by (if applicable) ____________________________________________ Assisted by (if applicable) ____________________________________________ 83
  • 85. Form of Proxy (continued) NOTES: 1. Each ordinary shareholder is entitled to appoint one or more proxies (who need not be a member of the Company to attend, speak and vote in place of that ordinary shareholder at the Annual General Meeting. A proxy need not be a member of the company. 2. A shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in the space provided, with or without deleting “the Chairman of the Annual General Meeting”, but such deletion must be initialled by the shareholder. The person who is to be present at the meeting and whose name appears first on the form of proxy and whose name has not been deleted shall be entitled to act as proxy to the exclusion of those whose names follow. 3. If the shareholder completing the proxy does not indicate how the proxy is to vote on any resolution, the proxy shall be deemed authorized and be entitled to vote on such resolution as he/she deem fit. 4. The authority of a person signing proxy under a power of attorney of a Company, must be attached to the proxy unless that authority has already been recorded by the Company Secretary or waived the Chairman of the Annual General Meeting. 5. Forms of proxy must be lodged at or posted to be received at the offices of the Company, Imara Holdings Limited, Block A, Unit 3, Plot 117, Millennium Office Park, Kgale Hill, Gaborone, Private Bag 00186, Gaborone not more than 48 hours and less than 24 hours before the time of the meeting. 6. The completion and lodging of this form of proxy shall not preclude the relevant shareholder from attending the Annual General meeting and speaking and voting in person thereat to the exclusion of any proxy form which is completed and/or received other than in accordance with theses instructions. Provided that he is satisfied as to the manner in which a shareholder wishes to vote. 7. Any alteration or correction to this form must be initialled by the signatory/signatories. 84

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