Imara Holdings 2009 annual report

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Savage bear markets have an uncanny ability to expose myths and challenge long held beliefs. In our case, two fundamental premises underpinning our business model proved to be flawed - both negatively and positively.
Prior to the recent period of extreme market turbulence, years of statistical evidence confirmed that African stockmarkets had low correlations with global stock market indices, thereby offering a unique diversification opportunity and offering the ultimate investors’ dream of reducing risk while increasing returns. Indeed, in the early months of the global crash, African markets held up reasonably well before succumbing to global influences with awe
inspiring vengeance. The principle transmission mechanism turned out to be quite simple as falling commodity prices
seriously impacted on several commodity dependent African economies such as Zambia and Nigeria. This in turn caused their currencies to weaken precipitously spooking local and international investors alike, resulting in a market derating notwithstanding a reasonable stable earnings outlook...

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Imara Holdings 2009 annual report

  1. 1. Imara Holdings Limited Group Annual Report Year ended 30 April 2009
  2. 2. CONTENTS Page/s Group Profile ........................................................................................................................................................... 2 Directorate and Group Management ...................................................................................................................... 3 Glossary of Terms and Definitions ...................................................................................................................... 4-5 Five Year Financial Highlights ............................................................................................................................ 6-7 Graphical Five Year Financial Highlights ........................................................................................................... 8-9 Chairman’s Statement ...................................................................................................................................... 10-11 Chief Executive Officer’s Review of Operations ........................................................................................... 12-15 Report of the Directors ..................................................................................................................................... 16-20 International Footprint and Regional Offices ....................................................................................................... 21 Group Organisational Structure ............................................................................................................................ 22 Divisional Structure ............................................................................................................................................... 23 Corporate Governance...................................................................................................................................... 24-28 Independent Auditor’s Report .............................................................................................................................. 29 Consolidated Income Statement ........................................................................................................................... 30 Consolidated Balance Sheet .................................................................................................................................. 31 Consolidated Cash Flow Statement ...................................................................................................................... 32 Consolidated Statement of Changes in Equity ................................................................................................ 33-35 Notes to the Consolidated Financial Statements ............................................................................................. 36-93 Shareholder Information................................................................................................................................... 94-95 Shareholders’ Diary ............................................................................................................................................... 96 Notice of Annual General Meeting.................................................................................................................. 97-98 Form of Proxy ................................................................................................................................................. 99-100 1
  3. 3. Imara Holdings Limited Group Annual Report - 30 April 2009 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: Barclays Bank of Botswana Barclays Bank of Mauritius Close Bank Guernsey Limited First National Bank Limited (Botswana) First National Bank Limited (South Africa) Reporting currency: Botswana Pula (P) Botswana Stock Exchange code: IMARA Reuters code: IMRA.BT Transfer Secretaries: Corpserve Botswana First Floor, Unit 3, Block A, Plot117 Millennium Office Park, Gaborone Telephone: +267 393 2244 Facsimile: +267 393 2243 email: corpserve@info.bw Business addresses & contact details: Botswana: Second Floor; Block A, Unit 3, Plot 117, Millennium Office Park, Kgale Hill, Gaborone. Telephone: +267 3188 708 Facsimile: +267 3191 767 Website: www.imaraholdings.com South Africa: Imara House, Block 3, 257 Oxford Road, Illovo 2116 Johannesburg. Telephone: +27 11 550 6100 Facsimile: +27 11 550 6110 2
  4. 4. Imara Holdings Limited Group Annual Report - 30 April 2009 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 GE Johns ** Motswana Non-executive Appointed 26 November 2008 JR Legat British Executive ACH Mackeurtan South African Executive RH Macleod ** South African Executive RR Matthews British Non-executive M Mothibatsela Motswana Non-executive Resigned 7 August 2008 SM Ndoro Zimbabwean Non-executive DE Stone South African Executive ** Subject to Bank of Botswana formal approval. Company Secretary: DE Stone Botswana Stock Exchange Compliance Officer: DE Stone Audit Committee: RR Matthews Chairman Non-executive PJS Gray Non-executive GE Johns 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 RH Macleod Head: Corporate Finance MJS Tunmer Head: Stockbroking 3
  5. 5. Imara Holdings Limited Group Annual Report - 30 April 2009 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 Capital employed the sum of total equity plus non-current liabilities Closed period the period from the end of a designated financial reporting period to the date of the announcement of the results for that period, during which directors, officers and employees of the company are prohibited from dealing in the company’s shares 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 the weighted average number of shares increased by the number of shares that may be number of 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 cover the number of times that the company’s dividend to ordinary shareholders’ could be paid out of its profit after tax in the same accounting period. 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 share. EBITDA earnings before interest, taxation, depreciation, amortisation. Effective tax rate the tax (charge)/credit as a percentage of profit before taxation. 4
  6. 6. Imara Holdings Limited Group Annual Report - 30 April 2009 GLOSSARY OF TERMS AND DEFINITIONS (continued) Term Meaning or Definition 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. Gearing ratio long term interest bearing loans and borrowings divided by shareholders’ equity IFSC International Financial Services Centre, the Botswana offshore centre Liquid assets assets held in cash or which can be readily turned into cash with minimal capital loss MK Malawi Kwacha, the standard monetary unit of Malawi. Market capitalisation the value of a company obtained by multiplying the number of ordinary shares in issue by their market value. Net asset value per share shareholders’ equity divided by the number of ordinary shares in issue at year end Operating earnings after attributable earnings less “special” items (i.e. asset management performance fees and adjusting for “special” items other non-recurring profit items) Price earnings ratio the price of the Company’s ordinary shares divided by earnings per share Pula or P 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 capital employed attributable earnings as a percentage of capital employed 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 the number of ordinary shares in issue at the beginning of the year, increased by of shares 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 5
  7. 7. Imara Holdings Limited Group Annual Report - 30 April 2009 FIVE YEAR FINANCIAL HIGHLIGHTS Years ended 30 April 2009 2008 2007 2006 2005 Re-stated Re-stated Re-stated Re-stated Salient financial results and data: Revenue P 000’s 102 336 178 967 127 481 57 680 30 368 EBITDA P 000’s 10 782 67 936 59 487 13 280 2 099 Gross profit P 000’s 86 519 162 472 119 395 48 907 24 626 Operating expenses P 000’s 82 405 98 427 65 613 41 012 24 035 Profit before taxation P 000’s 8 646 66 075 58 460 12 174 1 202 Loss from discontinued operations P 000’s (45) (802) (176) - - Taxation P 000’s 2 927 9 692 10 847 2 716 1 155 Profit after taxation P 000’s 5 674 55 582 47 437 9 457 47 Attributable earnings P 000’s 5 770 56 449 48 143 9 816 47 Operating earnings after adjusting for “special” items P 000’s 5 770 1 250 29 507 9 816 47 Shareholders’ equity P 000’s 132 168 139 098 91 713 55 983 21 537 Capital employed P 000’s 133 536 139 544 91 550 58 824 25 593 Total assets P 000’s 208 464 257 229 172 683 106 330 37 829 Free cash flows for the year P 000’s 65 740 9 910 7 563 13 431 (4 828) Funds under management at year end P m’s 1 894 3 457 2 058 1 128 217 Number of employees – average for the year Number 90 87 85 81 79 Key financial ratios: Return on equity % 4,37 40,58 52,49 17,53 0,22 Return on capital employed % 4,32 40,45 52,59 16,69 0,18 Return on average assets % 2,44 25,86 34,00 13,12 0,15 Gearing ratio % 0,69 0,01 0,14 4,33 18,84 Revenue growth % (42,82) 40,39 121,01 89,94 113,66 Effective tax rate % 33,85 14,67 18,55 22,31 96,07 Cost to income % 92,01 63,59 55,84 80,50 96,17 EBITA – year on year change % (84,13) 14.20 347,94 532,56 (112,25) Gross profit – year on year change % (46,75) 36,08 144,13 98,60 131,67 Operating expenses – year on year change % (16,28) 50,01 59,99 70,63 35,46 Profit before tax – year on year change % (86,92) 13,03 380,22 912,61 (106,78) Profit after tax – year on year change % (89,79) 17,17 401,61 200 times (100,29) Attributable earnings growth % (89,78) 17,25 390,46 200 times 100,83 Operating earnings after adjusting for “special” items – year on year change % 361,55 (95,76) 200,60 200 times 100,83 Shareholders’ equity- year on year change % (4,98) 51,67 63,82 159,94 26,84 Total assets – year on year change % (18,96) 48,96 62,40 181,08 30,66 Current assets to current liabilities times 2,60 2,04 2,00 1,68 2,57 Liquid assets to current liabilities times 2,52 1,69 1,54 0,86 2,06 Revenue per employee P 000’s 1 143 2 057 1 500 712 389 Profit after tax per employee P 000’s 63 639 558 117 1 6
  8. 8. Imara Holdings Limited Group Annual Report - 30 April 2009 FIVE YEAR FINANCIAL HIGHLIGHTS (continued) Years ended 30 April 2009 2008 2007 2006 2005 Re-stated Re-stated Re-stated Re-stated Market and per share data: Number of shares in issue at year end 000’s 56 778 55 619 53 688 47 438 44 139 Weighted average shares in issue 000’s 56 394 54 877 51 700 46 613 41 789 Diluted weighted average shares in issue 000’s 58 120 56 602 53 678 53 569 50 731 Quoted share price at year end thebe 450 840 300 90 - Share price- high for the year thebe 1 375 840 300 90 - Share price - low for the year thebe 450 300 90 78 - Market capitalisation at year end P m’s 255,50 467,20 161,06 42,69 - Number of shareholders at year end Number 298 261 116 - - Key market and per share ratios: EPS - basic (All operations) thebe 10,2 103 93 21 0,01 EPS - basic (Continuing operations) thebe 10,1 103 92 21 0,01 EPS - diluted (All operations) thebe 9,9 100 90 19 0,04 EPS - diluted (Continuing operations) thebe 9,8 100 89 19 0,04 Dividend per share - ordinary thebe 3,00 19,00 17,00 6,00 - Dividend per share - special thebe - 17,00 10,00 - - Dividend per share - total thebe 3,00 36,00 27,00 6,00 - Dividend yield - ordinary dividend % 0,67 2,26 5,67 6,67 - Dividend yield - total dividend % 0,67 4,29 9,00 6,67 - Dividend cover - total dividend times 3,33 2,78 3,27 3,32 - Price earnings ratio times 43,98 8,17 3,22 4,27 - Net asset value per share Pula 2,34 2,53 1,77 1,20 0,52 Free cash flow per share Pula 1.20 0,18 0,15 0,29 (1,16) Re-statement of prior year comparatives: Comparative information for prior years has been re-stated, where applicable, to take account of the following: 1. A re-classification to “Revenue” of certain revenue items previously classified as “Other Income”. The re-classification was undertaken in the 2008 financial year to ensure full compliance with the accounting policies relating to revenue recognition, presentation and disclosure and to ensure consistency in reported financial information. 2. An adjustment relating to Value Added Tax, (VAT), at the South African stockbroker Imara SP Reid in the 2007 financial year. 3. A sub-division of the share capital of the company on a 10 for 1 basis was implemented in August 2007.Comparative financial data and ratios have been re-stated where applicable. Comparative financial data: The Imara share was listed on the Venture Capital Market board of the Botswana Stock Exchange on 4 October 2006. Comparative financial and market data relating to the period prior to this date is therefore not available. 7
  9. 9. Imara Holdings Limited Group Annual Report - 30 April 2009 GRAPHICAL FIVE YEAR FINANCIAL HIGHLIGHTS Revenue - P'm EBITDA - P 000's 200 80 000 150 60 000 100 40 000 50 20 000 0 - 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Operating expenses - P 000's Profit after taxation - P 000's 100 000 60 000 80 000 40 000 60 000 40 000 20 000 20 000 0 - 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Dividend per share - Thebe Earnings per share (diluted) - Thebe 40.00 100 30.00 80 20.00 60 40 10.00 20 - 0 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Ordinary Special Revenue per employee - P 000's Profit after tax per employee - P 000's 2 500 2 000 800 1 500 600 1 000 400 500 200 - 0 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 8
  10. 10. Imara Holdings Limited Group Annual Report - 30 April 2009 GRAPHICAL FIVE YEAR FINANCIAL HIGHLIGHTS (continued) Shareholders' equity - P'm Capital employed - P 000's 150 300 000 250 000 100 200 000 150 000 50 100 000 50 000 0 0 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Total assets - P'm Return on equity - % 300 60 200 40 100 20 0 0 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Return on capital employed - % Return on average assets - % 30 25 40 20 30 15 10 20 5 10 0 0 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Market capitalisation at year end - P'm Funds under management - P'm 500 4 000 400 3 000 300 200 2 000 100 1 000 0 - 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 9
  11. 11. Imara Holdings Limited Group Annual Report - 30 April 2009 CHAIRMAN`S STATEMENT Savage bear markets have an uncanny ability to expose myths and challenge long held beliefs. In our case, two fundamental premises underpinning our business model proved to be flawed - both negatively and positively. Prior to the recent period of extreme market turbulence, years of statistical evidence confirmed that African stockmarkets had low correlations with global stock market indices, thereby offering a unique diversification opportunity and offering the ultimate investors’ dream of reducing risk while increasing returns. Indeed, in the early months of the global crash, African markets held up reasonably well before succumbing to global influences with awe inspiring vengeance. The principle transmission mechanism turned out to be quite simple as falling commodity prices seriously impacted on several commodity dependent African economies such as Zambia and Nigeria. This in turn caused their currencies to weaken precipitously spooking local and international investors alike, resulting in a market derating notwithstanding a reasonable stable earnings outlook. The second mechanism was the global "dash for cash" as investors attempted to redeem their holdings in mutual funds, hedge funds and the like. In our case, we were particularly vulnerable as Funds of Funds held a portion of our flagship fund and were being forced to redeem our fund as a result of redemptions in their own funds. Thus we were forced to sell in narrow and declining markets to meet those redemptions (as other Frontier and African funds were also doing) contributing to the downward pressure on local markets. Given these factors, which were completely out of our control, our funds under management in our offshore fund unit fell from USD 297 million to less than USD 100 million between September 2008 and February 2009, nearly destroying our long held belief, indeed conviction, that our Investment Management business was inherently more stable than our other two businesses namely Stockbroking and Corporate Finance. To rub it in, our South African stockbroking business held up surprisingly well in a relative sense, again corrupting our collective belief that stockbroking was a notoriously volatile revenue stream. In any event, and notwithstanding the unexpected disappointing performance of our Investment Management business, our core earnings (excluding performance fees) actually increased by some 362% in 2008 - 2009. The second facet of a vicious bear market is to expose flaws or weaknesses in risk management systems, especially in stockbroking, which often can remain unexposed for years. In this instance, shareholders should be particularly relieved and indeed pleased that our risk management procedures and processes proved to be remarkably robust and trading remained incident free. Specific to the Asset Management side, shareholders should also be pleased or proud of the fact that, notwithstanding the unprecedented volume of redemptions we were, in sharp contrast to certain of our competitors, able to meet these without resorting to suspending dealing, rationing redemptions, or resorting to financial slight of hand devices such as side pockets. This has had a profoundly positive impact on investor's perceptions of Imara as a trustworthy, robust and reliable provider of financial services which is already standing us in very good stead. The third facet of financial crises and crashes is to expose weaknesses in financial management and systems and more importantly balance sheets. In this regard, shareholders can also be comforted by the fact that our balance sheet is in particularly good shape and cash and cash equivalents actually increased by P 64 million to P 102 million, with virtually no debt to speak of. One particularly gratifying aspect of Imara's overall resilience is that management's attention has not been diverted or distracted by fighting fires on several fronts. Instead we have been able to concentrate on our long-term core strategy of expanding our geographic footprint in Africa and expanding our range of financial services and products. In this respect, we have made several significant advances in Angola, Mauritius, Nigeria and Zambia for example. 10
  12. 12. Imara Holdings Limited Group Annual Report - 30 April 2009 CHAIRMAN`S STATEMENT (continued) Reverting to the short term, the cyclical picture has improved significantly and we are already substantially ahead of budget. Notwithstanding the short savage bear market, the positive long term outlook for Africa is surprisingly intact. This combined with, or compounded by, low valuations and an attractive earnings picture has caused institutional investors to return to our stable of African Funds and funds under management are already above our budgeted figure for April 2010. In the meantime, the improvement in investors' perception of the outlook for South Africa, in part helped by a strong Rand, has resulted in a significant improvement in our stockbroking division. Our Corporate Finance business remains problematic, but given the feast or famine nature of the business, it's possibly about time that some decent meals appeared on the table. The wild card remains our Zimbabwe business and, notwithstanding the continued political stalemate, business conditions continue to improve dramatically, following the "overnight" dollarisation of the economy. Finally, I would like to thank Imara's CEO, Mark Tunmer, and his management team for leading our company successfully through the worst financial crisis for 80 years and leaving us in particularly good shape to take advantage of the next upturn. P GRAY CHAIRMAN 25 August 2009 11
  13. 13. Imara Holdings Limited Group Annual Report - 30 April 2009 CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS GROUP REVIEW The year ended 30 April 2009 was extraordinary and can best be described as a year of two halves. The first half of the year was acceptable as the difficulties in the credit markets globally that had started in 2007 had little effect on African markets as they maintained their lack of correlation. The downturn began in October when the global credit crunch post Lehman’s bankruptcy finally impacted all the more liquid African markets. The flight to cash by many investors worldwide at that time led to a wave of redemptions in our flagship fund, the Imara African Opportunities Fund. This was against a scenario of significantly weaker African markets and currencies resulting in a substantial downturn in volumes in most of our markets. Not surprisingly many corporate advisory mandates were also either suspended or cancelled altogether. Against this background the Imara group has produced attributable earnings of P5.67 million after tax, which is some 361% ahead of 2008 earnings before performance fees earned on the Africa Funds. It is also pleasing to note that strong cash flow has resulted in a significant increase in cash and cash equivalents from P35.8 million last year to P101.5 million in 2009. Imara SP Reid was the largest contributor to group profit, based primarily on the strong relative performance of the South African market and the Rand. The Imara Asset Management Division did well, despite redemptions, which reduced the number of units in issue in the African Opportunities Fund by as much as 30%. The Corporate Finance Division recorded a loss as the operating environment deteriorated throughout the year. The Asset Management Division saw funds under management including associates, peak on 30 September 2008 at P3.37 billion. This was significantly up from the P2.5 billion at the end of April 2008. Thereafter redemptions and weak markets reduced funds under management to close the year at P1.9 billion from a low of P1.7 billion in March. Revenues were down, accounting for 31% of Group revenues. The net asset values of the Funds ended the financial year below the previous high water mark and as such there were no performance fees payable. We can however take great pride that despite the relative illiquidity of African markets, we were not obliged to close the funds, impose gates or create side-pockets and as such all our investors were able to trade freely in our products. The Imara Global Fund could also not escape the collapse in global markets and it ended the financial year some 34% lower. Effective 1 January 2009 a decision was taken to move the administration of the Funds to Mauritius so that the custodian, administrator and operational headquarters are now all located in the same place and time zone. This has improved efficiency and service. The South African business by contrast was little impacted by the global credit crunch. It suffered minimal cash withdrawals and funds under management ended the year down just 14% in Rand terms despite the fall in the local index by 38%. At the beginning of the year under review the Imara Equity Fund Unit Trust and the Imara International Growth Fund, a Fund of Funds product were launched in South Africa. Both have been well received and the Imara Equity Fund has been a top-rated fund during its first year having achieved a top decile performance out of 101funds. Our associate operation in Zimbabwe was put under severe pressure when the stock market was closed in November, and did not reopen until the middle of February 2009. Having coped with record hyperinflation up until that time, business effectively resumed in March in United States dollars. The Zimbabwean operation is now on a sound footing. Subsequent to year end the Imara Africa Resources Fund was launched in June as a sub-fund of the Imara Africa Series. The fund had been seeded internally at the end of December 2008. Imara SP Reid again made a significant contribution to the Group accounting for approximately 52% of revenues. This was despite the uncertain market conditions and slowing world and domestic economic activity. Although assets under management have declined, this has been due to the weaker market and not the loss of client accounts. We had expected private clients to hold back until there was further certainty in the markets, but although there was initially a wait and see attitude, they by and large continued trading and investing, albeit with a reduced risk profile. This is well illustrated in that the average number of monthly trades only fell by 6%. 12
  14. 14. Imara Holdings Limited Group Annual Report - 30 April 2009 CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS (continued) GROUP REVIEW (continued) Average monthly brokerage declined by 20%, which is commendable in what was perhaps the worst year for global markets since the 1930`s. Derivates had a difficult year while the new YieldX division, despite being in its infancy, performed well. The performance of our Malawi associate, Stockbrokers Malawi Limited, recovered strongly in the second half of the year to 31 December 2008. The Company acted as Sponsoring Brokers to a Rights Offer by Press Corporation and the IPO and listing of Real Insurance Company Limited and TNM Limited, all of which were successful. Performance this year to May has been disappointing as volumes have been very low with both local and international investors remaining on the sidelines ahead of the elections in May. Fortunately these elections went off without a hitch which, together with the record maize crop, has resulted in some incremental activity returning. In Zimbabwe, our associate stockbroker Imara Edwards Securities (Private) Limited had a year characterised by strong trade up until mid-November 2008. Hyperinflation increased trading significantly as local Institutional and Individual investors became aware of the Stock Market being the sole store of value. Difficulties arose as a result of both the increase in volumes and the sheer size of the numbers as a result of hyperinflation. This lead to a collapse of the settlement processes, as the banks struggled to keep up, which resulted in trading being suspended from mid-November 2008 to mid-February 2009 when Zimbabwe was officially dollarized. Since then volumes have picked up, largely driven by international investors as locals struggle with a lack of US$. The market itself has risen strongly and value traded has increased dramatically. The down turn experienced in African markets in the second half of the year under review, impacted negatively on the performance of Imara Africa Securities, despite it continuing to receive a positive response from international investors. Commissions earned in the first six months of the year accounted for roughly 70% of those earned in the year. It is however positive to note that several of the key markets we service have begun to turn around as positive trends appear to be emerging in Kenya, Mauritius and Nigeria. Zimbabwe and the dramatic gains since March 2009 have also caught investors’ attention. Many sub Saharan companies have strong fundamentals, continue to report good earnings growth and have very satisfactory dividend yields. This should attract more interest going forward. The Corporate Advisory Division has had another very difficult year despite starting well in terms of staffing and a good forward book. Certain early successes were achieved including the privatisation and listing of the Zambia National Commercial Bank (ZANACO) on the Lusaka Stock Exchange and the IPO and listing of Real Insurance on the Malawi Stock Exchange. However, the credit crisis in the major markets eventually overflowed in part to our markets causing some nervousness in the IPO and M&A markets. Terminated transactions initially increased in accordance with this trend, but terminations slowed in February and March this year as market participants adopted a wait and see attitude. This was reflected in the shrinkage experienced in the pipeline and the growth in the list of cancelled mandates despite considerable marketing efforts. On the positive side, two significant transactions arising from the marketing program remain active. Despite the successful launch of the Imara Participating Underwriting Programme in May 2008 it became necessary to shelve this project as capital raisings became more difficult and infrequent. It is hoped that as the markets improve this exciting programme can be resurrected. The Imara African Private Equity Fund was launched in September 2008 and, although it was generally well received, it became obvious that it would not be possible to close the Fund with sufficient funds to make it viable and it was shelved in March 2009. In Zimbabwe deal flow outside of some due diligence and valuation work was limited during the period under review, to assisting the South African team in their regional mandates. While a number of projects within Zimbabwe were pursued, these did not generate solid mandates. The team has been strengthened by the addition of a very senior consultant and we anticipate recruiting further mid level expertise as the business picks up under the new Inclusive Government. At present a number of mandates, primarily capital raisings, are being worked on and it is expected that this trend will continue. 13
  15. 15. Imara Holdings Limited Group Annual Report - 30 April 2009 CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS (continued) GROUP REVIEW (continued) The very difficult operating environment in Zimbabwe during 2008 has been well chronicled. Our associate Imara Capital Zimbabwe performed well and indeed was a viable business model for the first half of the financial year. Towards the end of 2008 the Zimbabwe dollar business model collapsed, with the suspension of trading on the Zimbabwe Stock Exchange in mid November 2008 to mid February 2009. This blockage came about following very heavy trading at the peak of hyperinflation and it is likely that this blockage arose from a number of sources, including failed trades as a result of banking systemic weakness, Reserve Bank of Zimbabwe interference in the trading and settlement systems, and a speculative bubble. The net effect was a settlement gridlock that effectively rendered the entire industry technically insolvent and lead to a complete cessation of trading. At this point it was necessary to downsize the staff complement by 30%. This impasse was reversed following Dollarization in February under the new Inclusive Government, which rapidly restored the market to viability, although too late to contribute to the year under review. Going forward we remain cautiously optimistic on Zimbabwe due to the liberalisation of the economy and relaxation of exchange controls. Dollarization has facilitated significant improvements in capacity utilisation and domestic demand has begun to increase. At present with a daily liquidity of US$2 – US$2.5m the Zimbabwe Stock Exchange is now one of the most liquid in Africa rivalling Mauritius and Kenya. The size of the market should ensure further upside particularly as Zimbabwe could become an important part of any Fund launched to take advantage of the new Africa asset class. This should ensure further improvement in stock prices and hence increased brokerage, funds under management and management fees. Politics remains an area of concern but the economy is now the driving force and the retraction of economic liberalisation would be very difficult to undertake. It is pleasing to note that some success was achieved in growing the Imara business and increasing its geographical spread. Imara Trust Company Mauritius Limited, which provides a full trust and offshore service to our African clients, was established in Mauritius in September. In December, a Memorandum of Understanding was concluded with Chapel Hill Denham in Nigeria to work together, and it is hoped that this relationship will grow into something more substantial. A great deal of work has gone in to establishing a presence in Angola and we anticipate establishing an office on the ground in Luanda this calendar year together with our Angolan partners. This will position Imara to take advantage of the significant upside presented by the anticipated launch of the Stock Exchange, the Bolsa de Valores e Derivatives de Angola. Discussions are ongoing to strengthen our relationship in East Africa with regard to Corporate Advisory and Stockbroking and agreement has been reached in principle for an investment in Zambia. We continue to look for opportunities to grow and strengthen the business in Africa. Imara Holdings Limited remained listed on the Venture Capital Market of the Botswana Stock Exchange and it is still intended to apply to move to the Main Board once the minimum requirement of 300 shareholders is achieved. At present we have 298. In the year under review there were no material changes to the shareholders while 2.78m shares, with a value of P33.45m (2008 - P43.65m) traded. In March 2009, your Directors published a Trading Update, to advise shareholders of the possible negative effect that the downturn in world and African markets could have on the results for the year ending 30 April 2009. Following the South African empowerment transaction last year, in terms of which Zingwenya Holdings holds a 20% interest in each of the South African operating subsidiaries, the Imara South Africa Trust will be established this year. The broad based Trust will own 5% of the three operating subsidiaries and with this in place Imara will have achieved the recommended ownership requirements in terms of the Codes of Good Practice on Black Economic Empowerment. The staff training programme initiated by Imara Capital Zimbabwe for analysts and administrative staff, which was put on hold due to the difficult operating environment in Zimbabwe, will be resurrected as the situation improves there. A similar programme will be considered for the Imara Group. 14
  16. 16. Imara Holdings Limited Group Annual Report - 30 April 2009 CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS (continued) OUTLOOK Despite the improvement in global markets in recent months the world macro-economic position remains tenuous and it is felt that sustained recovery is still some way off. On the positive side, most African markets appear to have bottomed out although volumes are still low. Foreign interest in Africa remains strong and it is believed that an improvement in foreign participation in these markets will be seen this year. In addition to this the prospects for a sustained recovery in Zimbabwe appear better everyday as stability returns under the Inclusive Government. Our Zimbabwe associate is well positioned to take full advantage of this. Against this background the Imara Group is expected to produce acceptable earnings in the current year but as ever this will be dependant on market conditions. In closing, I would like to thank my Chairman, Philip Gray, and the Board for their support and guidance during what was a very difficult year. Special mention must be made of the tremendous contribution made by Philip Gray as Chairman since 2004. He stands down as Chairman at the forthcoming Annual General Meeting (“AGM”) in favour of Mike Ndoro, but fortunately remains on the Board as a non-executive Director. I would also like to register my special thanks to Roger Matthews, who has been on the Board since Imara’s inception in 2003. Roger will be retiring from the Board at the AGM but will remain an active member on the Boards of the Africa Funds. I would also like to welcome Gary Johns who brings a wealth of financial sector expertise from Botswana and Zimbabwe. Finally, I would like to acknowledge the tremendous effort of the Imara staff in what was a most difficult year. They have all contributed to the success of the group. MJS TUNMER CHIEF EXECUTIVE OFFICER 25 August 2009 15
  17. 17. Imara Holdings Limited Group Annual Report - 30 April 2009 REPORT OF THE DIRECTORS The directors of Imara Holdings Limited have pleasure in presenting their report for the year ended 30 April 2009. NATURE OF BUSINESS Imara Holdings Limited is a Botswana registered company, licenced by the International Financial Services Centre (IFSC), and is the holding company for a group of companies conducting the following types of business, primarily for Institutional and Private Clients: - Asset Management; - Corporate Finance; - Stockbroking; - Trust Administration and Custodial Services. With the exception of trust administration and custodial services, which were introduced in the current financial year, there have been no significant changes to the nature of business from previous years. ADOPTION OF A NEW CONSTITUTION The new Botswana Companies Act, 2003, which came into effect on 3 July 2007 permits companies to substitute their Memorandum and Articles of Association with a new Constitution. At the Annual General Meeting of the company held on 8 October 2008, members unanimously voted to adopt a new Constitution for the company to replace its previous Memorandum and Articles of Association. AUTHORISED AND STATED CAPITAL Authorised Capital: The authorised share capital of the company is 200 000 000 ordinary shares of no par value. There has been no change in the authorised capital of the company in the current year. The un-issued ordinary shares are under the control of the directors. Stated Capital: A summary of the movement in the stated capital of the company as at 30 April 2009 and 2008 is as follows: Number of shares Stated capital 2009 2008 2009 2008 Balance at the beginning of the year 55 618 916 53 688 150 37 111 325 29 807 821 New shares issued : Scrip dividend 536 135 883 810 854 750 6 363 451 Share option scheme 594 420 1 046 956 6 701 647 940 053 Acquisition of client data base 28 765 - 241 626 - Balance at the end of the year 56 778 236 55 618 916 44 909 348 37 111 325 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. In respect of the year ended 30 April 2008, shareholders were given the option to receive their ordinary dividend of 19 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 their dividend were allotted shares at a price of P12.50 per share. A total of 143 shareholders, holding 35 663 288 of the issued ordinary shares in the company and representing 63.4% of the total issued share capital of the company, elected to receive shares in lieu of dividend, resulting in the allotment of 536 135 new shares in the company. 16
  18. 18. Imara Holdings Limited Group Annual Report - 30 April 2009 REPORT OF THE DIRECTORS (continued) BOTSWANA STOCK EXCHANGE The Imara share was listed on the Venture Capital Market of the Botswana Stock Exchange on 4 October 2006. A minimum of 300 shareholders is required for a company to be listed on the main board of the Botswana Stock Exchange. It remains the company’s intention to seek a listing on the main board once the minimum number of shareholders has been achieved. As at 30 April 2009, Imara had 298 shareholders (2008: 261 shareholders). 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, 2003. 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 the Company’s financial statements are consistent with those of the previous financial year. DIRECTORS’RESPONSIBILITY STATEMENT The directors are responsible for the preparation and fair presentation of the financial statements of the Group and Company in accordance with International Financial Reporting Standards and in a manner required by the Botswana Companies Act, 2003. This responsibility includes, designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and consistently applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. FINANCIAL RESULTS 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 22 July 2009, and Messrs. MJS Tunmer and DE Stone were authorised to sign these statements on behalf of the board. They have discharged their responsibility for the signing of these statements by jointly signing the report of the directors. The un-audited financial statements for the Group for the six months ended 31 October 2008 were announced on 30 November 2008 and reflected profit after tax for the group of P6.10 million. On 8 March 2009, the company issued a Trading Statement highlighting an earnings downgrade for the 2009 financial year. This Statement stated that due to the deterioration in global financial markets and the resultant difficult trading conditions, the Group would not earn a performance fee from its asset management division in the 2009 financial year and that the second half performance of the Group would be particularly disappointing when compared to the previous year. The audited results of the Group for the year ended 30 April 2009 reflect profit after tax of P 5.67 million, and therefore a loss after tax for the second half year of P 43 000. 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 those audit reviews. 17
  19. 19. Imara Holdings Limited Group Annual Report - 30 April 2009 REPORT OF THE DIRECTORS (continued) DIRECTORS AND COMPANY SECRETARY Details of the Directors and Company Secretary are reflected on page 3 of this Annual Report. Gary Johns was appointed as a non-executive director on 26 November 2008. Maleho Mothibatsela resigned as a non- executive director on 7 August 2008. Philip Gray, who has been Chairman of the board since 2004, has indicated that he wishes to stand down as Chairman with effect from end of the seventh Annual General Meeting. He will however continue as a non-executive director of the company. He will be replaced as Chairman of the board by Mike Ndoro. Roger Matthews, who has been a director of the company since 2003, has indicated that he wishes to retire as a director of the Company with effect from the end of the seventh Annual General Meeting. There is currently no nomination to replace Mr. Matthews. DIRECTORS’ SHAREHOLDING Directors are not required, in terms of the company’s Constitution, to hold shares in the company but the majority of directors have independently elected to do so. As at 30 April 2009 and 31 July 2009 (the last practical date prior to the publication of this Annual Report), the directors, directly and indirectly, held the following shares in the company: Number of Number of Share options Share options shares held Movement in shares held held under the held under the directly and directors directly and Imara Share Imara Share indirectly at shareholding indirectly at Option Scheme Option Scheme Director 30 April 2009 post year end 31 July 2009 30 April 2009 31 July 2009 AR Fleming 5 662 283 - 5 662 283 250 000 250 000 PJS Gray 938 650 - 938 650 - - GE Johns 62 746 - 62 746 - - JR Legat 2 368 687 - 2 368 687 200 000 250 000 ACH Mackeurtan 2 531 251 - 2 531 251 - 50 000 RH Macleod 1 383 159 - 1 383 159 - 50 000 RR Matthews 1 020 800 - 1 020 800 - - SM Ndoro - - - - 50 000 DE Stone 110 073 - 110 073 90 000 140 000 MJS Tunmer 5 735 869 (31 500) 5 704 369 - 50 000 Total 19 813 518 (31 500) 19 782 018 540 000 840 000 Comparative information relating to directors’ shareholding as at 30 April 2008 and 31 August 2008 are as follows: Number of Number of Share options Share options shares held Movement in shares held held under the held under the directly and directors directly and Imara Share Imara Share indirectly at shareholding indirectly at Option Scheme Option Scheme Director 30 April 2008 post year end 31August 2008 30 April 2008 31August 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 - Total 18 359 098 138 643 18 457 561 919 930 540 000 18
  20. 20. Imara Holdings Limited Group Annual Report - 30 April 2009 REPORT OF THE DIRECTORS (continued) DIRECTORS’ INTERESTS IN CONTRACTS None of the directors or officers of the company had an interest in any contract of significance during the financial year ended 30 April 2009. 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 P 22 320 591. (2008 – P 11 175 754) DIVIDEND DECLARATION The Board has decided that for dividend distribution purposes, Group annual earnings should be split between profits arising from exceptional or non-recurring items and those from core business activities. A special dividend is declared in respect of exceptional or non-recurring items and an ordinary dividend declared in respect of core earnings. A special dividend was declared in respect of both the 2007 and 2008 financial years but no special dividend will be declared in respect of the year ended 30 April 2009. Notice is hereby given that the Board has declared an ordinary dividend, in respect of the year ended 30 April 2009 of 3 thebe per share, payable to all shareholders registered in the share register of the company on 21 August 2009. The ordinary dividend is payable either in cash or scrip at the election of each shareholder. A Form of Election containing details of the scrip offer will be sent to shareholders’ by no later than 28 August 2009. In compliance with Botswana Stock Exchange reporting requirements, an announcement relating to the scrip dividend will be made in the press, outlining the potential dilution effect of the scrip dividend and the cash equivalent underpin. In terms of the Botswana Income Tax Act (Chapter 50:01) 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 the ordinary dividend, to either the cash or scrip dividend payment. BLACK EMPOWERMENT TRANSACTION On 1 October 2007, the Group entered into a Black Empowerment (BEE) Transaction in terms of which 20% of the Group’s South African operating entities were transferred to Zingwenya Holdings (Proprietary) Limited. Entities covered by the transaction comprised: - Imara Asset Management South Africa (Proprietary) Limited, - Imara Corporate Finance South Africa (Proprietary) Limited, - Imara SP Reid (Proprietary) Limited. It is the intention of the Group to now extend the empowerment shareholding in the South Africa entities through the establishment of a broadly based empowerment Trust which will hold a further 5 % of the equity of the above-named entities. The establishment of the Trust and the transferring of the additional shareholding to this Trust are planned to be completed by 30 September 2009. LITIGATION As reported in the previous Directors’ Report in September 2008, the legal claim against Imara Botswana Limited for damages and alleged breach of contract by NBS Bank Limited of Malawi, relating to an advisory mandate executed on behalf of the Privatisation Commission of Malawi, has been referred to an Arbitration Panel for resolution. The amount of the claim is for Malawi Kwacha 757, 3 million, equivalent to approximately P 37,54 million. Arbitration proceedings have been in process since November 2007 and are likely to be concluded by December 2009. No new facts have emerged during the current year, which have caused the Board to change the original view taken in July 2007 that the likelihood of a successful claim is remote. This view continues to be supported by written opinion from the company’s legal advisors. Costs incurred to 30 April 2009 in defending the action brought against Imara Botswana Limited amount to P 859 803. These costs have been fully expensed in the Income Statement of the company in either the current or previous financial years. 19
  21. 21. Imara Holdings Limited Group Annual Report - 30 April 2009 REPORT OF THE DIRECTORS (continued) POST BALANCE SHEET EVENTS On 31 July 2009, the company published a cautionary announcement advising shareholders of negotiations on a possible acquisition. As at the date of this Annual Report the company is still trading under this cautionary announcement. Other than the above, no events or transactions have occurred since 30 April 2009 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 MJS TUNMER DE STONE CHIEF EXECUTIVE OFFICER COMPANY SECRETARY 25 August 2009 25 August 2009 20
  22. 22. Imara Holdings Limited Group Annual Report - 30 April 2009 INTERNATIONAL FOOTPRINT AND REGIONAL OFFICES .. Scotland England . UAE Nigeria . . .. . . Kenya Malawi . Angola Zambia Zimbabwe . Namibia • Mauritius Botswana South Africa  Offices (including Associates, Partners and Representatives) 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 Fax: +230 464 9798 Tel: +265 08 824 327, 09 824 327 Fax: +265 01 624 353 21
  23. 23. Imara Holdings Limited Group Annual Report - 30 April 2009 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% 100% 69.3% 100% 100% Imara Africa Imara Asset Imara Asset Imara Trust Imara Capital C F Africa Imara Non Investments Management Management Company Capital Botswana Limited Trademarks Trading Limited Limited UK Limited Mauritius Limited (Pty) Ltd Limited Companies 100% 47.2% Management 25% Contracts Imara Imara Capital Holdings Imara Africa Zimbabwe Namibia Stockbrokers Securities 100% (Pvt) (Pty) Malawi (Pty) Imara Limited Limited Limited Limited Global Fund 100% Imara Imara Edwards Capital Imara Imara Securities Limited African Botswana 100% (Pvt) Zambia Opportunities Limited Limited Fund Imara Asset Imara Imara Management Capital Capital Imara Africa (Pvt) Kenya 100% Limited Series Fund Limited Limited (Dormant) Sub Funds:  Zimbabwe Fund  Nigeria Fund Imara Imara  East Africa Fund Imara Asset Corporate Securities  African Resources Fund Management Finance Angola 51% (Pty) (Pvt) SVM Limited Limited Limitada Imara Capital Zingwenya South Africa Holdings (Pty) Ltd (Pty) Ltd LEGEND: Botswana Kenya 80% 20% South Africa Namibia British Virgin Islands Imara United Kingdom Corporate Imara SP Imara Asset Zimbabwe Finance Reid (Pty) Management South Africa Ltd South Africa Zambia (Pty) Ltd (Stockbroking) (Pty) Ltd Malawi Mauritius Angola 22
  24. 24. Imara Holdings Limited Group Annual Report - 30 April 2009 DIVISIONAL STRUCTURE Imara Group Asset Management Corporate Finance Stockbroking Trust Administration Imara Corporate Imara SP Reid (Pty) Imara Trust Imara Asset Finance South Africa Ltd Company Africa Investments Management Limited (Pty) Ltd Mauritius Limited * BVI *South Africa *South Africa *Mauritius *BVI Imara Capital South Imara Asset Africa (Pty) Ltd Imara Botswana Imara Africa Management UK Limited Securities (Pty) Limited *South Africa Limited *United Kingdom *Botswana *Botswana Imara Capital Botswana (Pty) Ltd Imara Asset *Botswana Imara Corporate Imara Securities Management South Finance (Pvt) Angola SVM Africa (Pty) Ltd Limited Limitada *South Africa C F Africa Limited *Zimbabwe *Angola Associate Imara Asset *BVI Management (Pty) Stockbrokers Malawi Limited Limited Imara Trademarks *Botswana *Malawi Limited *BVI Associate Imara Asset Management (Pvt) Imara Capital Limited Limited Imara Edwards *Zimbabwe Securities (Pvt) *BVI Limited Associate *Zimbabwe Imara Capital Kenya Limited Associate *Kenya Imara Capital Limited Zambia LEGEND: Active Trading Company *Zambia Imara Holdings Investment Holding or Group Parent Company Namibia (Pty) Limited *Namibia Dormant or Non Trading Company Imara Capital *Country of Registration Zimbabwe (Pvt) Limited *Zimbabwe Associate 23
  25. 25. Imara Holdings Limited Group Annual Report - 30 April 2009 CORPORATE GOVERNANCE Imara Holdings Limited Main Board Board Sub-Committees Group Audit & Risk Remuneration Nominations Committee Committee Committee RR Matthews* (Chairman) PJS Gray* (Chairman) PJS Gray* (Chairman) PJS Gray* SM Ndoro* RR Matthews* MJS Tunmer GE Johns* DE Stone SM Ndoro* ACH Mackeurtan Imara Capital South Africa (Pty) Ltd Audit & Risk Committee V Raseroka* (Chairman) DE Stone Imara S P Reid (Pty) Ltd Audit & Risk Committee PJS Gray* (Chairman) DE Stone S O’Leary* M Moodie* Imara Capital Zimbabwe (Pvt) Ltd Audit & Risk Committee P Bailey* (Chairman) DE Stone RR Matthews* SM Ndoro* Associate * Non-executive Corporate Governance Principles 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 - Social responsibility. The directors endorse the Code of Corporate Practices and Conduct contained in the 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. 24
  26. 26. Imara Holdings Limited Group Annual Report - 30 April 2009 CORPORATE GOVERNANCE (continued) Corporate Governance Principles (continued) The Board also recognises the significance and evolving nature of corporate governance and endorses the recommendations contained in the Code of Governance Principles for South Africa 2009- colloquially known as King III. It is the intention of the Group to move towards adopting these latest recommendations and to continually assess the Group’s compliance with sound corporate governance practices through its Board Committees. 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. Details of the composition of the Board are detailed on page 3 of this Annual Report. 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 Constitution, 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 financial services 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 four 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 the audit and risk, remuneration and nominations committees. 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. Audit and Risk Committee The Audit and Risk Committee is chaired by Roger Matthews, an independent non-executive director, and comprises five members, four of whom are non-executive. 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. 25

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