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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 ...

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 Imara Holdings 2009 annual report Document Transcript

  • Imara Holdings Limited Group Annual Report Year ended 30 April 2009
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • Imara Holdings Limited Group Annual Report - 30 April 2009 CORPORATE GOVERNANCE (continued) Audit and Risk Committee (continued) The Committee has formal terms of reference, which set out its responsibilities. The Committee has satisfied its responsibilities for the year, in compliance with its terms of reference. 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. 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 Committee has formal terms of reference, which set out its responsibilities. The Committee has satisfied its responsibilities for the year, in compliance with its terms of reference. 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 Share Option Scheme and the allocation of share options and also the profit sharing scheme and the apportionment of profit shares to executives and employees. The Committee met three times during the year. 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 Committee has formal terms of reference, which set out its responsibilities. The Committee has satisfied its responsibilities for the year, in compliance with its terms of reference. 26
  • Imara Holdings Limited Group Annual Report - 30 April 2009 CORPORATE GOVERNANCE (continued) 2008/2009 Board Attendance Register Director Audit & Risk Remuneration Nominations Main AGM Committee Committee Committee PJS Gray 3/3 3/3 3/3 4/4 0/1 MJS Tunmer - 3/3 3/3 4/4 1/1 AR Fleming - - - 3/4 0/1 G E Johns 2/3 - - 1/1 JR Legat - - - 4/4 0/1 ACH Mackeurtan - 3/3 3/3 4/4 0/1 RH McLeod - - - 4/4 0/1 RR Matthews 2/3 2/3 2/3 3/4 0/1 SM Ndoro 3/3 3/3 - 4/4 1/1 DE Stone 3/3 - - 4/4 1/1 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 - 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 Group’s policy is fully compliant with the Botswana Stock Exchange requirements for listed companies. 27
  • Imara Holdings Limited Group Annual Report - 30 April 2009 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 Group’s performance and key strategic initiatives. In keeping with the Group’s commitment to continually improve communications with stakeholders, the Group has 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. 28
  • Imara Holdings Limited Consolidated Annual Financial Statements INDEPENDENT AUDITOR’S REPORT INDEPENDENT AUDITOR’S 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 30 to 93, which comprise the balance sheet as at 30 April 2009, and the income statement, statement of changes in equity and cash flow statement 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 Imara Holdings Limited group and company as at 30 April 2009, 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 25th August 2009 2nd Floor, UN Place Khama Crescent PO Box 41015 Gaborone, Botswana 29
  • Imara Holdings Limited Consolidated Annual Financial Statements CONSOLIDATED INCOME STATEMENT Year Ended 30 April Group Group Company Company 2009 2008 2009 2008 Notes Pula Pula Pula Pula CONTINUING OPERATIONS: Revenue 2 102 335 955 178 967 238 25 921 434 25 737 188 Costs of services sold (15 817 000) (16 495 102) - - Gross profit 86 518 955 162 472 136 25 921 434 25 737 188 Other income 2 5 756 530 2 399 359 2 676 191 503 782 Operating expenses 2 (82 405 161) (98 426 515) (9 293 366) (6 044 333) Finance costs 2 (758 456) (458 599) (6 746 256) (563 142) Share of profits from associates 11 139 918 92 529 - - Impairment of investment in associates (605 871) (3 470) - - Profit before taxation 8 645 915 66 075 440 12 588 003 19 633 495 Taxation (expense) / credit 3 (2 926 805) (9 692 211) 313 001 (655 222) Profit for the year from continuing operations 5 719 110 56 383 229 12 871 004 18 978 273 DISCONTINUED OPERATION: (Loss after tax) for the year from a discontinued operation 4 (45 332) (801 576) - - Profit for the year 5 673 778 55 581 653 12 871 004 18 978 273 Attributable to: Equity holders of the parent 5 769 867 56 449 140 - - Minority interest (96 089) (867 487) - - Profit for the year - as above 5 673 778 55 581 653 - - Earnings per share - (All operations): 5 - Basic Thebe 10,2 103 - - - Diluted Thebe 9,9 100 - - Earnings per share - (Continuing operations): - Basic Thebe 10.1 103 - - - Diluted Thebe 9,8 100 - - In the year ended 30 April 2008, certain revenue items previously classified as “Other Income” were re-classified as “Revenue”. The re- classification was undertaken to ensure full compliance with the accounting policies relating to revenue recognition, presentation and disclosure and to ensure consistency in reported financial information. 30
  • Imara Holdings Limited Consolidated Annual Financial Statements CONSOLIDATED BALANCE SHEET As at 30 April Group Group Company Company 2009 2008 2009 2008 Notes Pula Pula Pula Pula ASSETS Non-current assets Equipment 7 3 470 742 3 821 393 692 523 396 666 Goodwill 8 96 210 96 027 - - Intangible assets 9 615 147 804 190 428 400 571 200 Investment in subsidiaries 10 - - 19 525 933 12 483 013 Investment in associates 11 2 246 312 2 712 265 - - Available-for-sale financial assets 12 5 832 270 8 714 677 1 031 592 1 600 558 Accounts receivable - Group companies 13 - - 33 283 487 31 485 861 Deferred tax asset 3 1 176 696 857 748 310 437 - 13 437 377 17 006 300 55 272 372 46 537 298 Current assets Listed trading securities 14 3 953 387 4 116 788 - - Trade and other receivables 15 89 559 076 188 382 152 3 394 277 941 552 Cash and cash equivalents 16 101 512 702 44 884 280 49 157 365 1 579 181 Tax refundable 1 916 2 839 866 - - 195 027 081 240 223 086 52 551 642 2 520 733 TOTAL ASSETS 208 464 458 257 229 386 107 824 014 49 058 031 EQUITY AND LIABILITIES Equity Stated capital 17 44 909 348 37 111 325 44 909 348 37 111 325 Non-distributable reserves 10 312 300 9 650 370 2 649 441 2 390 022 Distributable reserves 76 946 281 92 336 185 (4 894 391) 2 479 364 Total shareholders’ equity 132 167 929 139 097 880 42 664 398 41 980 711 Minority interest 327 132 423 221 - - Total equity 132 495 061 139 521 101 42 664 398 41 980 711 Non-current liabilities Accounts payable - Group companies 13 - - 61 437 596 4 055 987 Interest bearing loans and borrowings 18 915 017 15 739 - - Deferred taxation 3 125 445 7 525 - 7 525 1 040 462 23 264 61 437 596 4 063 512 Current liabilities Trade and other payables 19 72 892 116 105 859 500 3 719 459 2 539 764 Listed trading securities – sold short 19 140 624 577 218 - - Current portion of interest bearing loans and borrowings 18 15 806 10 020 - - Taxation payable 157 933 407 866 2 561 407 866 Provisions 20 1 722 387 1 719 114 - - Bank overdraft 18 69 9 111 303 - 66 178 74 928 935 117 685 021 3 722 020 3 013 808 Total liabilities 75 969 397 117 708 285 65 159 616 7 077 320 TOTAL EQUITY & LIABILITIES 208 464 458 257 229 386 107 824 014 49 058 031 31
  • Imara Holdings Limited Consolidated Annual Financial Statements CONSOLIDATED CASH FLOW STATEMENT Year ended 30 April Group Group Company Company 2009 2008 2009 2008 Note Pula Pula Pula Pula Cash flows from operating activities Profit before tax – Continuing operations 8 645 915 66 075 440 12 558 003 19 633 495 Profit before tax – Discontinued operations (45 332) (801 576) - - Profit before tax 8 600 583 65 273 864 12 558 003 19 633 495 Adjusted for: Depreciation and amortisation 1 377 491 1 402 464 285 633 192 138 Interest received 2 (11 538 883) (10 983 858) (5 979 051) (2 758 626) Finance charges paid 758 456 458 599 6 746 256 563 142 Share of profit from associates 11 465 953 (89 059) - - Share based payment expense - Options 922 986 393 051 205 069 (333 076) Share based payment expense - BEE - 1 495 199 - - Net foreign exchange difference 2 674 198 (2 516 565) (2 533 283) (635 518) (Decrease) / Increase in provisions 3 272 (1 689 045) - - Profit from sale of investments (820 240) (1 065 377) - - Dividends received (834 670) (740 759) (15 895 850) (14 570 562) Profit on sale of equipment (3 181) (40 750) (3 003) - Operating cash inflows before working capital changes 1 605 965 51 897 764 (4 616 226) 2 090 993 (Decrease) / Increase in trading stock (273 193) 96 170 - - Decrease / (Increase) in trade and other receivables 98 823 076 (64 822 786) (2 276 525) (650 320) (Decrease) / Increase in trade and other payables (32 967 384) 37 555 181 1 179 695 971 956 Cash generated from operations 67 188 464 24 726 329 (5 713 056) 2 412 629 Income tax paid (1 828 126) (20 114 354) (410 266) - Net cash flows from / (used in ) operating activities 65 360 338 4 611 975 (6 123 322) 2 412 629 Cash flows from investing activities Interest received 2 11 538 883 10 983 858 5 979 051 2 758 626 Dividends received 834 670 740 759 15 895 850 14 570 562 Dividends received from associate - 162 861 - - Acquisition of intangible assets - (232 990) - - Investment in new subsidiary - - (325 003) - Purchase of equipment 7 (1 213 815) (1 609 987) (483 183) (414 399) Proceeds – sale of equipment 379 737 406 899 47 494 - Loans granted to Group companies - - (7 973 828) (10 224 485) Sale / (purchase) of available-for-sale-financial assets 776 576 1 255 659 - (593 130) Net cash flows from / (used in) investing activities 12 316 051 11 707 059 13 140 381 6 097 174 Cash flows from financing activities Finance costs (758 456) (458 599) (6 746 256) (563 138) Proceeds from issue of shares 1 096 376 940 049 1 096 375 940 049 Issue of additional shares in subsidiary - 1 579 804 - - Finance lease instalments - (270 697) - - Loans received from Group companies - - 57 381 609 427 915 Net increase in loans and borrowings (9 953) - - - Dividends paid – shareholders of the parent (13 543 112) (8 291 400) (13 543 111) (8 291 400) Net cash flows from financing activities (13 215 145) (6 500 843) 38 188 617 (7 486 574) Net increase in cash and cash equivalents 64 461 244 9 818 191 45 205 676 1 023 229 Net foreign exchange differences on cash and cash equivalents held in foreign currency 1 278 412 92 152 2 438 686 89 876 Cash and cash equivalents at beginning of year 35 772 977 25 862 634 1 513 003 399 898 Cash and cash equivalents at end of year 16 101 512 633 35 772 977 49 157 365 1 513 003 Comprising: Cash and equivalents and short term investments 101 512 702 44 884 280 49 157 365 1 579 181 Bank overdraft (69) (9 111 303) - (66 178) Net cash and cash equivalents 101 512 633 35 772 977 49 157 365 1 513 003 32
  • Imara Holdings Limited Consolidated Annual Financial Statements CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Total Equity: As at 30 April Non - Total Stated distributable Distributable Shareholders Minority Total capital reserves reserves Equity interest Equity (See below) 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) Total income and expense for the year recognised directly in equity - (3 600 808) - (3 600 808) - (3 600 808) Profit / (loss) for the year - - 56 449 140 56 449 140 (867 487) 55 581 653 Sub-total 29 807 821 7 762 120 106 991 036 144 560 977 (1 156 583) 143 404 394 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- BEE transaction - 1 495 197 - 1 495 197 - 1 495 197 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 Group: Balance - 1 May 2008 37 111 325 9 650 370 92 336 185 139 097 880 423 221 139 521 101 (Decrease) / Increase in foreign currency translation for the year - 3 953 325 - 3 953 325 - 3 953 325 Available-for-sale gains / (losses) recognised directly in equity - (2 105 832) - (2 105 832) - (2 105 832) Deferred taxation on available-for- sale financial asset - (1 288 309) - (1 288 309) - (1 288 309) Transfers to Income Statement on disposal - (820 240) - (820 240) - (820 240) Total income and expense for the year recognised directly in equity - (261 056) - (261 056) - (261 056) 37 111 325 9 389 314 92 336 185 138 836 824 139 260 045 Profit / (loss) for the year - - 5 769 867 5 769 867 (96 089) 5 673 778 Sub-total 37 111 325 9 389 314 98 106 052 144 606 691 327 132 144 933 823 Issue of new shares 7 798 023 - - 7 798 023 - 7 798 023 Share based payment expense- share options (net) - 922 986 - 922 986 - 922 986 Dividends paid – BEE Partners (915 012) (915 012) (915 012) Dividends paid - - (20 244 759) (20 244 759) - (20 244 759) Balance - 30 April 2009 44 909 348 10 312 300 76 946 281 132 167 929 327 132 132 495 061 33
  • 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 (See below) Company: Balance - 1 May 2007 29 807 821 2 229 193 (1 844 058) 30 192 956 Available-for-sale gains / (losses) recognised directly in equity - (232 224) - (232 224) Total income and expense for the year recognised directly in equity - (232 224) - (232 224) Profit for the year - - 18 978 273 18 978 273 Sub-total 29 807 821 1 996 969 17 134 215 48 939 005 Issue of new shares 7 303 504 - - 7 303 504 Dividends paid - - (14 654 851) (14 654 851) Share based payment expense - share options (net) - 393 053 - 393 053 Share based payment expense - employees of the Company - (333 076) - (333 076) Share based payment expense - employees of subsidiary companies - 726 129 - 726 129 Balance - 30 April 2008 37 111 325 2 390 022 2 479 364 41 980 711 Company: Balance - 1 May 2008 37 111 325 2 390 022 2 479 364 41 980 711 Available-for-sale gains / (losses) recognised directly in equity - (663 567) - (663 567) Total income and expense for the year recognised directly in equity - (663 567) - (663 567) Profit for the year - - 12 871 004 12 871 004 Sub-total 37 111 325 1 726 455 15 350 368 54 188 148 Issue of new shares 7 798 023 - - 7 798 023 Dividends paid - - (20 244 759) (20 244 759) Share based payment expense- share options (net) - 922 986 - 922 986 Share based payment expense- employees of subsidiary companies - 717 917 - 717 917 Share based payment expense – employees of the Company - 205 069 - 205 069 Balance - 30 April 2009 44 909 348 2 649 441 (4 894 391) 42 664 398 34
  • Imara Holdings Limited Consolidated Annual Financial Statements CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued) Non-distributable Reserves: As at 30 April Foreign Total currency Share based Available-for- Non-distributable translation payment sale-financial reserves reserve reserve reserve (Per above) 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 (2 561 327) - - (2 561 327) (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 (962 479) 2 791 465 7 821 384 9 650 370 Group: Balance - 1 May 2008 (962 479) 2 791 465 7 821 384 9 650 370 (Decrease) / increase in foreign currency translation for the year 3 953 325 - - 3 953 325 (Decrease) in available-for-sale reserve for the year - - (2 105 832) (2 105 832) Deferred taxation on available-for-sale financial asset - - (1 288 309) (1 288 309) Transfers to Income Statement on disposal - - (820 240) (820 240) Share based payment expense - share options - 922 986 - 922 986 Balance - 30 April 2009 2 990 846 3 714 451 3 607 003 10 312 300 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 Company: Balance - 1 May 2008 - 1 296 268 1 093 754 2 390 022 Share based payment expense - share options (net) - 922 986 - 922 986 Share based payment expense - employees of subsidiary companies - 717 917 - 717 917 Share based payment expense - employees of the company - 205 069 - 205 069 Gains / (losses) recognised directly in equity - - (663 567) (663 567) Balance - 30 April 2009 - 2 219 254 430 187 2 649 441 35
  • 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 an historical cost basis except for certain financial instruments that are carried at fair value. 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 applied 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, including in some cases, revisions to accounting policies.  IFRIC 12 Service concession arrangements  IFRIC 14 - IAS 19 The limit on a defined benefit asset, minimum funding requirements and their interaction The principal effects of these changes are as follows: IFRIC 12 - Service concession arrangements: The IFRIC issued IFRIC 12 in November 2006. This interpretation applies to service concession operators and explains how to account for the obligations undertaken and rights received in service concession arrangements. No member of the Group is an operator of concessions and, therefore, this interpretation has no impact on the Group. IFRIC 14 - IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction: IFRIC Interpretation 14 provides guidance on how to access the limit on the amount of the surplus in a defined benefit scheme that can be recognised as an asset under IAS 19 - Employee benefits. The Group does not have a defined benefit scheme, therefore this interpretation has no impact on the Group. 36
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Changes in accounting policies (continued) International Financial Reporting Standards (IFRS's) and interpretations (IFRIC’s) issued but not yet effective: Reference Name Effective date IFRS - Issue date IFRS 2 Amendments to IFRS 2 1 January 2010 June 2009 Share based Payment – Vesting Conditions and Cancellations This standard is not expected to impact the reported financial performance of the Group. IFRS 2 Amendment to IFRS 2 Group cash settled Share Based June 2009 1 January 2010 Payment Transactions This standard is not expected to impact the reported financial performance of the Group. IFRS 3 Business Combinations 1 July 2009 January 2008 This standard is not expected to impact the reported financial performance of the Group. IFRS 8 Operating Segments 1 January 2009 November 2006 This standard is not expected to impact the reported financial performance of the Group but will impact the disclosure of the financial statements when adopted by the Group. IAS 1 Presentation of Financial Statements 1 January 2009 September 2007 This standard is not expected to impact the reported financial performance of the Group but will impact the presentation and disclosure of the financial statements when adopted by the Group. IAS 23 Borrowing Costs 1 January 2009 March 2007 This standard is not expected to impact the reported financial performance of the Group. IAS 27 Consolidated and Separate Financial Statements 1 July 2009 January 2008 This standard is not expected to impact the reported financial performance of the Group. IAS 32 & IAS 1 Amendments to IAS 32: Financial Instruments: Presentation & 1 January 2009 February 2008 IAS 1 – Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation The amendment to IAS 32 requires 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 to be classified as equity. The Group does not expect these amendments to affect the financial statements of the Group. IAS 39 Amendments to IAS 39 – Financial Instruments: Recognition 1 July 2009 July 2008 and Measurement – Eligible Hedged Items This standard is not expected to impact the reported financial performance of the Group. 37
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Changes in accounting policies (continued) International Financial Reporting Standards (IFRS's) and interpretations (IFRIC’s) issued but not yet effective (continued): Reference Name Effective date IFRS- Issue date IAS 39 & IFRS 7 Reclassification of Financial Assets – Amendments to IAS 39 - 1 July 2008 October 2008 Amendments to IAS 39 – Financial Instruments: Recognition (No connection and Measurement and IFRS 7 Financial Instruments : to any specific Disclosure annual period) This standard is not expected to impact the reported financial performance of the Group but does impact the presentation and disclosure of the financial statements. IFRS 1 & IAS 27 Amendments to IFRS 1- First time Adoption of IFRS and IAS 1 January 2009 May 2008 27 Consolidated and Separate Financial Statements – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate This standard is not expected to impact the reported financial performance of the Group. IFRS 1 First-time Adoption of International Financial Reporting 1 July 2009 November 2008 Standards This standard is not expected to impact the reported financial performance of the Group. IFRIC 31 Customer Loyalty Programmes 1 July 2008 June 2007 This standard is not expected to impact the reported financial performance of the Group. IFRIC 15 Agreements for the Construction of Real Estate 1 January 2009 July 2008 This standard is not expected to impact the reported financial performance of the Group. IFRIC 16 Hedges of a net Investment in a Foreign Operation 1 October 2008 July 2008 This standard is not expected to impact the reported financial performance of the Group. IFRIC 17 Distribution of Non-cash Assets to Owners 1 July 2008 November 2008 This standard is not expected to impact the reported financial performance of the Group. IFRIC 18 Transfers of Owners from Customers 1 July 2009 January 2009 This standard is not expected to impact the reported financial performance of the Group. 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. 38
  • 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% 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 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 21) Financial instruments: Financial assets: Initial recognition Financial assets in the scope of IAS 39 are classified as either financial assets at fair value through profit or loss, loans and receivables, held to maturity investments, and available-for-sale-assets as appropriate. The Group determines the classification of its financial instruments at initial recognition. Financial assets are recognised initially at fair value, plus in the case of investments not at fair value through profit and loss, directly attributable transaction costs. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way purchases) are recognised on the trade date, being the date on which the Group commits to purchase an asset. The Group’s financial assets include listed trading securities, unlisted trading securities, trade and other receivables, loan and other receivables and cash and cash equivalents. Subsequent measurement Financial assets at fair value through profit and loss Financial assets at fair value through profit and loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit and loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that do not meet the hedge accounting criteria as defined in IAS 39. Financial assets at fair value through profit and loss are carried in the Balance Sheet at fair value, with gains and losses recognised in the Income Statement. The Group determines the classification of its financial assets after initial recognition and where appropriate re- evaluates this designation at each financial year-end. Loans and other receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such financial assets are carried at amortised cost using the effective interest rate method. Gains and losses are recognised in the Income Statement when the loans and receivables are de-recognised or impaired, as well as through the amortisation process. 39
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Financial instruments (continued) Subsequent measurement (continued) Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any of the preceding categories. Certain listed securities are classified as available for sale financial assets. After initial measurement, available-for-sale-financial assets are measured at fair value with unrealised gains or losses recognised directly in equity until the investment is de-recognised, at which time the cumulative gain or loss recorded in equity is recognised in the Income Statement. When available-for-sale-financial assets are determined to be impaired, the cumulative loss recorded in equity is recognised in the Income Statement. Listed trading securities Listed trading securities are non-derivative financial assets 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. Certain listed trading securities are classified as fair value through profit and loss financial assets. Gains and losses are recognised in the Income Statement when the listed trading securities are de-recognised or impaired. Unlisted trading securities Unlisted trading securities are non-derivative financial assets where there is no quoted market price. Unlisted trading securities are classified as fair value through profit and loss financial assets. Fair value is determined using valuation techniques. Such techniques may include using recent arm’s length market transactions, reference to the current market value of another financial instrument which is substantially the same or is based on the expected cash flow of the underlying net asset base of the investment. Gains and losses are recognised in the Income Statement when the listed trading securities are de-recognised or impaired. Trade receivables Trade receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, trade receivables are carried at amortised cost using the effective interest rate method less any allowance for impairment. Gains and losses are recognised in the Income Statement when the trade receivables are de-recognised or impaired, as well as through the amortisation process. Cash and cash equivalents 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. After initial recognition, 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. Financial liabilities: Initial recognition Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition. Financial liabilities are recognised initially at fair value and in the case of loans and borrowings, directly attributable transaction costs. 40
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Financial liabilities - Initial recognition (continued) The Group’s financial liabilities include trade and other payables, bank overdraft and loans and borrowings. Subsequent measurement The measurement of financial liabilities depends on their classification as follows: Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss includes financial liabilities held for trading, financial liabilities designated upon initial recognition as at fair value through profit or loss and option liabilities which arose as a result of the South African BEE transaction with Zingwenya Holdings (Proprietary) Limited in 2008. Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that do not meet the hedge accounting criteria as defined by IAS39. Gains or losses on liabilities held for trading are recognised in the Income Statement. The Group has not designated any financial liabilities as at fair value through profit or loss. Loans and borrowings After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the Income Statement when the liabilities are derecognised as well as through the amortisation process. Trade payables Trade payables are financial liabilities with fixed or determinable payments. After initial recognition, trade payables are carried at amortised cost using the effective interest rate method. Gains and losses are recognised in the Income Statement when the trade payables are de-recognised or impaired. Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount reported in the Balance Sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liability simultaneously. Amortised cost of financial instruments Amortised cost is computed using the effective interest method less any allowance for impairment and principle repayment or reduction. 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. Impairment of financial assets The Group assesses at each balance sheet date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measureable decrease in the estimated future cash flow, such as changes in arrears or economic conditions that correlate with defaults. 41
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Impairments of financial assets (continued) 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 assets 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. 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. Trade and other receivables For amounts due from loans and advances to customers carried at amortised cost, the Group first assesses individually whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them 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 there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the Income Statement. Interest income continues to be accrued on the reduced carrying amount based on the original effective interest rate of the asset. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is recognised in the Income Statement. The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. Available-for-sale financial investment For available-for-sale financial investments, the Group assesses at each balance sheet date whether there is objective evidence that an investment or a group of investments is impaired. In the case of equity investments classified as available-for-sale, objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. Where there is evidence of impairment, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the Income Statement – is removed from equity and recognised in the Income Statement. Impairment losses on equity investments are not reversed through the Income Statement, while increases in their fair value after impairment are recognised directly in equity. In the case of debt instruments classified as available-for-sale, impairment is assessed based on the same criteria as financial assets carried at amortised cost. Interest continues to be accrued at the original effective interest rate on the reduced carrying amount of the asset and is recorded as part of ‘Interest received’. If, in a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in the Income Statement, the impairment loss is reversed through the Income Statement. 42
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Financial instruments: (continued) Derecognition of financial instruments 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; or  the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all the risks and rewards of the asset not transferred control of the asset, a new asset is recognised to the extent of the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay. When continuing involvement takes the form of a written and/or purchased option (including a cash settled option or similar provision) on the transferred asset, the extent of the Group’s continuing involvement is the amount of the transferred asset that the Group may repurchase, except that in the case of a written put option (including a cash settled option or similar provision) on an asset measured at fair value, the extent of the Group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price. Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When 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 derecognition 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. Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating units (“CGU”) 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 inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU 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 and value of money and the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators. Impairment losses of continuing operations are recognised in the Income Statement in those expense categories consistent with the function if the impaired asset, except for property 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 any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or CGU recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor 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 re-valued amount, in which case the reversal is treated as a revaluation increase. 43
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Impairment of non-financial assets (continued) Goodwill Goodwill is tested for impairment annually (as at 30 April) and when circumstances indicate that the carrying value may be impaired. The following criteria are also applied in assessing impairment of specific assets: Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than their carrying amount an impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods. Intangible assets Intangible assets with indefinite useful lives are tested for impairment annually as at 30 April either individually or at the cash-generating unit level, as appropriate and when circumstances indicate that the carrying value may be impaired. 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. Foreign currency translation The consolidated financial statements are presented in Pula, (“P”), 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. 44
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Goodwill and business combinations Business combinations are accounted for using the purchase method. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at fair values at the date of acquisition, irrespective of the extent of any minority interest. Goodwill is initially measured at cost being the cost of the business combination over the Group’s share in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the Income Statement. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is from the acquisition date, allocated to each of the Group’s cash generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained. When the Group acquires a business, embedded derivatives separated from the host contract by the acquiree are not reassessed on a acquisition unless the business combination results in a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required under the contract. 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. 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. 45
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Income taxes (continued) 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 the 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 the 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 using the equity method of accounting. An associate is an entity in which the Group has significant influence. Under the equity method, the investment in the associate is carried in the Balance Sheet at cost plus post acquisition changes in the Group’s share of the net assets of the associate. Goodwill relating to the associate is included in the carrying amount the investment and is not ammortised or separately tested for impairment. The Income Statement reflects the share of the results of operations of the associates. Where there has been a change recognised directly in the equity of the associate, the Group recognises its share of any changes and discloses this, when applicable, in the Statement of Changes in Equity. Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate. The share of profit of associates is shown on the face of the Income Statement. This is the profit attributable to equity holders of the associate and therefore is profit after tax and minority interests in the subsidiaries of the associates. After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss to the Group’s investment in its associates. The Group determines at each balance sheet date whether there is any objective evidence that the investment in the associate is impaired. If this is the case the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in the Income Statement. 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 2008. 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 2009. 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. 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. Expenses are recognized in the Income Statement as incurred. The severance benefit is not subject to periodic actuarial valuation. 46
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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. 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. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, sales tax and duties. The following specific recognition criteria must also be met before revenue is recognised:  Asset management investment and advisory fees Revenue is recognised when the related services have been performed.  Asset management performance fees Revenue is recognised when the related services have been performed and performance fee criteria measured.  Brokerage Brokerage revenue, commissions, handling fees and sponsor broker fees are recognised upon performance of services, net of value added taxes and discounts.  Commission Commissions are recognised as revenue when the related services have been performed.  Corporate finance mandate and advisory fees Revenue is recognised when the related services have been performed except for those fees relating to transactions where fees are contingent. In such cases fees are only recognised upon the fulfilment of the contingent event.  Dividends Revenue is recognised when the shareholders’ right to receive the payment is established.  Fee income Fee income is recognised as revenue when the related services have been performed.  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.  Interest Revenue is recognised as the interest accrues (taking into account the effective yield on the asset).  Management fees - Group Revenue is recognised on an accrual basis in respect of intra-group services rendered.  Securities trading Revenue is recognised based on changes in the fair value of the listed securities traded, net of charges. Realised gains or losses are recognised when the transaction is settled. Unrealised gains and losses are recognised at the end of each monthly reporting period.  Trust fees include fees for trust registration, custodial and administration services. Trust registration and custodial fees are payable annually in advance and are recognised when the right to receive payment is established, net of value added tax and discounts. Trust administration fees are recognised upon performance of services, net of value added taxes and discounts. Share based payment 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 23. No expense is recognised for awards that do not ultimately vest except for awards where vesting is conditional upon a market condition, which is treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance and/or service conditions are satisfied. 47
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Share based payment transactions (continued) 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 share-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 5). 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 23. 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 20)  The determination of the fair value of unlisted securities using valuation techniques and referenced to recent transactions which are substantially similar. (Note 12)  Objective evidence of impairment of available-for-sale financial assets by reference to the fair value of the investment in relation to its cost. (Note 12)  Objective evidence of impairment of loans receivable by reference to the market value of collateral held as security in the related client account. (Note 13)  The estimated useful lives of equipment and their residual values are re-assessed annually. (Note 7)  Recoverability of deferred taxation based on expected future profitability. (Note 3)  Share based payments (Note 23) 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. 48
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 2 REVENUES AND EXPENSES Year ended 30 April Group Group Company Company 2009 2008 2009 2008 Pula Pula Pula Pula Revenue: Asset management – investment and advisory fees 29 012 260 28 418 105 - - Asset management – performance fees - 55 199 040 - - Brokerage 27 413 786 34 693 854 - - Commissions 1 121 872 368 860 - - Corporate finance mandate and retainer fees 5 330 254 5 740 924 - - Dividends received: From listed investments Non - group 834 670 740 759 - - From un-listed investments Group - - 15 895 850 14 570 562 Fee income – non - group 8 513 583 8 679 276 - Futures trading (commission received) 14 446 057 26 303 525 - - Interest receivable: Group - - 5 236 042 2 741 757 Non Group 11 538 883 10 983 859 743 009 16 869 Management fees receivable - Group - - 4 046 533 8 408 000 Securities trading (fair value losses or gains) 3 184 745 6 804 128 - - Trust fees 119 605 - - - Realised gains on available-for-sale-financial assets 820 240 1 034 908 - - 102 335 955 178 967 238 25 921 434 25 737 188 Other income: Exchange gains 2 766 624 - 2 438 685 89 876 Profit on disposal of equipment 3 181 40 750 3 003 - Operating lease income 73 555 - 149 928 - Fee recoveries 2 715 206 657 061 - - Sundry income 197 964 1 701 548 84 575 413 906 5 756 530 2 399 359 2 676 191 503 782 49
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 2 REVENUES AND EXPENSES (continued) Year ended 30 April Group Group Company Company 2009 2008 2009 2008 Pula Pula Pula Pula Operating expenses: Included in operating expenses are: Auditor’s remuneration 1 937 434 1 722 148 295 830 392 340 Current year 1 452 512 1 360 479 245 830 325 000 Prior year 422 016 312 517 - 67 340 Other services 62 906 49 152 50 000 - Amortisation (Note 9) 189 486 142 800 142 800 142 800 Depreciation (Note 7) 1 188 005 1 259 663 142 833 49 338 Directors remuneration 19 015 209 11 068 923 3 103 746 2 031 642 Directors’ remuneration - executive – see note below 17 501 321 10 292 194 1 602 609 1 333 347 Directors’ remuneration - non-executive 1 513 888 776 729 1 501 137 698 295 Exchange losses 1 630 245 272 081 - - Information technology expenses 1 289 882 993 014 104 737 - Insurance and licences 809 447 709 145 611 099 493 556 Management fee payable - Group - - - 338 262 Operating lease expense 2 444 058 2 215 712 113 051 16 875 Professional fees 1 612 952 3 160 267 284 457 579 675 Share based payment expense (Note 23) 922 986 393 053 205 068 (333 076) BEE share based expense - 1 532 579 - - Staff costs 27 092 094 60 289 504 1 660 196 1 215 408 Stock exchange fees 4 669 188 5 055 504 110 500 46 152 Travel 3 000 715 2 825 438 614 328 965 660 65 801 701 91 639 831 7 388 645 5 939 632 Finance costs: Interest expense: Interest payable - Group - - 5 987 800 539 916 Interest payable –non - group 736 506 - 736 506 - Bank overdraft 21 950 426 010 21 950 23 226 Loans and borrowings - 27 673 - - Finance lease charges - 4 916 - - 758 456 458 599 6 746 256 563 142 Directors’ remuneration: Directors’ remuneration includes remuneration paid to directors of subsidiary companies as well as the parent company. The detailed disclosure of directors’ remuneration in Note 13 is in respect of the parent company directors only. 50
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 3 INCOME TAX - GROUP Year ended 30 April Group Group 2009 2008 Current income tax: Pula Pula Current income tax charge 3 862 861 7 536 890 Adjustment in respect of (over) / under provision of income tax in previous year (13 980) (647 510) Secondary Tax on Companies (STC) 474 077 1 153 208 Capital gains tax - 151 789 Withholding tax 94 554 - 4 417 512 8 194 377 Deferred income tax: Relating to origination and reversal of temporary differences (868 476) 1 317 505 Changes in tax rates - 71 251 Utilisation of prior year deferred tax assets not recognised (2 842) (549 776) Adjustments in respect of deferred tax in previous years (619 389) 658 854 (1 490 707) 1 497 834 Income tax reported in the Income Statement 2 926 805 9 692 211 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% 1 296 887 9 911 319 Adjusted for: Effect of higher domestic rate in Botswana (245 979) 21 064 Effect of higher rate in South Africa 489 014 2 235 646 Effect of higher rate in United Kingdom 8 167 10 840 Effect of lower rate in British Virgin Islands (1 630 642) (6 582 858) Effect of rate change on opening deferred tax balances - 71 251 Non - deductible expenses / non - taxable income 435 444 521 438 Secondary Tax on Companies (STC) 474 077 1 153 208 Withholding tax 94 554 - Capital gains tax at lower tax rates (114 858) (146 515) Adjustment in respect of (over) / under provision of income tax in previous year (13 980) (647 510) Adjustment in respect of deferred tax in the previous year (2 166 477) 2 217 891 Utilisation of prior year deferred tax assets not recognised - (549 776) (1 373 793) 8 215 998 Deferred tax asset credit not recognised due to uncertainty of future taxable income 4 300 598 1 476 213 At effective tax rate (See reconciliation below) 2 926 805 9 692 211 During the 2008 financial 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. 51
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 3 INCOME TAX – GROUP (continued) Year ended 30 April Group Group 2009 2008 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 (2.85) 0.03 Effect of higher rate in South Africa 5.66 3.38 Effect of higher rate in United Kingdom 0.09 0.02 Effect of lower rate in British Virgin Islands (18.86) (9.96) Effect of rate change on opening deferred tax balances - 0.11 Non - deductible expenses / non - taxable income 5.04 0.79 Tax on dividends declared - - Capital gains tax (1.32) (0.22) Withholding tax 1.09 - Secondary Tax on Companies (STC) 5.48 1.75 Adjustment in respect of (over) / under provision of income tax in previous year (0.16) (0.98) Adjustment in respect of deferred tax in the previous year (25.06) 3.36 Utilisation of prior year deferred tax assets not recognised - (0.83) (15.89) 12.45 Deferred tax asset not recognised due to uncertainty of future taxable income 49.74 2.22 Effective tax rate 33.85 14.67 Deferred income tax asset: Deferred income tax liabilities: Accelerated depreciation for tax purposes (23 522) (653 216) Unrealised trading profits (30 516) (16 143) Capital gains tax (1 288 310) - Unrealised exchange losses - (4 403) (1 342 348) (673 762) Deferred tax assets: Assessable loss 2 086 237 2 054 957 Provisions 307 362 909 237 2 393 599 2 964 194 Net deferred tax asset 1 051 251 2 290 431 Deferred tax asset not recognised due to uncertainty of future taxable income - (1 440 208) Net deferred tax asset 1 051 251 850 223 Analysed as follows per balance sheet: Deferred tax assets 1 176 696 857 748 Deferred tax liabilities (125 445) (7 525) Net deferred tax per above 1 051 251 850 223 52
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 3 INCOME TAX - GROUP (continued) Year ended 30 April Group Group 2009 2008 Assessable losses: Pula Pula Balance brought forward 16 607 131 4 115 455 Prior year adjustment 14 712 10 965 815 (Increase) / decrease in current year 14 387 101 1 525 861 Balance carried forward 31 008 944 16 607 131 Expiring as follows: 30 June 2010 390 264 495 533 30 June 2011 1 095 422 1 095 422 30 June 2012 1 439 913 1 439 913 30 June 2013 2 704 967 2 704 967 30 June 2014 3 956 593 - Indefinite assessed losses 21 421 785 10 871 296 31 008 944 16 607 131 INCOME TAX - COMPANY Year ended 30 April Company Company 2009 2008 Current income tax: Pula Pula Current income tax charge - 407 866 Withholding tax 4 961 - 4 961 407 866 Deferred income tax: Relating to origination and reversal of temporary differences (312 135) 247 356 Adjustments in respect of deferred tax in previous years ( 5 827) - Income tax reported in the Income Statement (313 001) 655 222 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% 1 883 701 2 945 025 Adjusted for: Non - deductible expenses / non - deductible income (2 195 836) (2 263 286) Withholding tax 4 961 - Adjustment in respect of deferred tax in the previous year (5 827) (26 517) (313 001) 655 222 Deferred tax asset not recognised due to uncertainty of future taxable income - - At effective tax rate (See reconciliation below) (313 001) 655 222 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 (17.49) (11.53) Withholding tax 0.05 - Adjustment in respect of deferred tax in the previous year (0.05) (0.13) (2.49) 3.34 Deferred tax asset credit not recognised due to uncertainty of future taxable income - - Effective tax rate (2.49) 3.34 53
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 3 INCOME TAX - COMPANY (continued) Year ended 30 April Company Company 2009 2008 Pula Pula Deferred income tax asset: Deferred income tax liabilities: Accelerated depreciation for tax purposes (9 730) (5 653) Unrealised exchange losses - (4 403) (9 730) (10 056) Deferred tax assets: Assessable loss 317 866 - Provisions 2 301 2 531 320 167 2 531 Net deferred tax asset / (liability) 310 437 (7 525) Deferred tax asset not recognised due to uncertainty of future taxable income - - Net deferred tax asset 310 437 (7 525) Analysed as follows per balance sheet: Deferred tax assets - - Deferred tax liabilities 310 437 (7 525) Net deferred tax per above 310 437 (7 525) Assessable losses: Balance brought forward - 1 808 785 Increase / (decrease) in current year 2 119 105 (1 808 785) Balance carried forward 2 119 105 - 54
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 4 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 five 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 (Proprietary) Limited for the year are presented below: 2009 2008 Pula Pula Revenue 41 629 116 280 Cost of sales - (47 068) Gross profit 41 629 69 212 Other income 13 009 - Operating expenses (58 854) (1 483 126) Finance costs (191 885) (356 467) Loss before tax (196 101) (1 770 381) Elimination of intra Group charges 150 769 968 805 Tax - - Loss after tax (45 332) (801 576) The major classes of assets and liabilities of Imara Asset Management Botswana (Proprietary) Limited are as follows: Assets: - Accounts receivable - Group 441 335 - - Cash and short term deposits 123 588 673 785 - Accounts receivable 11 917 90 895 576 840 764 680 Liabilities: - Accounts payables - Group 1 513 687 1 436 147 - Trade and other payables 20 000 89 279 1 533 687 1 525 426 Net cash flows attributable to discontinued operations: - Operating activities (47 891) (2 292 641) - Investing activities 41 629 98 923 - Financing activities (556 944) 2 379 237 - Net increase in cash and cash equivalents 550 197 183 243 5 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. 55
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 5 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 2009 2008 Pula Pula Dilution of earnings: Profit attributable to ordinary shareholders 5 769 867 56 449 140 Adjusted profit attributable to ordinary shareholders 5 769 867 56 449 140 Attributable earnings for the year from continuing operations 5 719 110 56 383 229 Minority interest - - Profit for the year 5 719 110 56 383 229 Year ended 30 April Group Group Number Number Weighted average number of ordinary shares -basic earnings per share 56 394 055 54 876 969 Effect of dilution: Share option scheme 1 726 255 1 724 716 Weighted average number of ordinary shares for effect of dilution 58 120 310 56 601 685 Earnings per share – basic thebe 10,2 103 Earnings per share – diluted thebe 9,9 100 Earnings per share from continuing operations – basic thebe 10,1 103 Earnings per share from continuing operations – diluted thebe 9,8 100 6 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 2009 and 2008: 56
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 6 SEGMENTAL REPORTING (continued) BUSINESS SEGMENTS Year ended 30 April 2009 External customers Inter-segment revenue Total segmental revenue % of Group Revenue: Pula Pula Pula consolidated Asset Management 30 639 956 4 665 715 35 305 671 27.83 Corporate Finance 5 669 875 440 100 6 109 975 4.82 Stockbroking 65 411 279 - 65 411 279 51.57 Trust Administration 121 869 66 875 188 744 0.14 Other 492 976 19 341 999 19 834 975 15.64 102 335 955 24 514 689 126 850 644 100.00 Adjustments - (24 514 689) (24 514 689) - Group consolidated 102 335 955 - 102 335 955 100.00 Continuing Discontinued Group % of Group operations operations consolidated consolidated Profit before taxation: Pula Pula Pula Asset Management 10 467 054 (45 332) 10 421 722 121.17 Corporate Finance (5 236 508) - (5 236 508) (60.89) Stockbroking 16 037 858 - 16 037 858 186.47 Trust Administration (169 756) - (169 756) (1.97) Other (12 452 732) - (12 452 732) (144.79) 8 645 915 (45 332) 8 600 583 100.00 Year ended 30 April 2008 External customers Inter-segment revenue Total segmental revenue % of Group Revenue: Pula Pula Pula consolidated Asset Management 84 164 955 643 754 84 808 709 42.05 Corporate Finance 6 187 120 - 6 187 120 3.07 Stockbroking 83 180 648 256 442 83 437 090 41.37 Other 361 417 26 882 591 27 244 008 13.51 173 894 140 27 782 787 201 676 927 100.00 Adjustments - (27 782 787) (27 782 787) - Group consolidated 173 894 140 - 173 894 140 100.00 Continuing Discontinued Group % of Group operations operations consolidated consolidated Profit before taxation: Pula Pula Pula Asset Management 46 922 300 (801 576) 46 120 724 70.65 Corporate Finance (5 217 885) - (5 217 885) (7.99) Stockbroking 25 553 790 - 25 553 790 39.15 Other (1 182 765) - (1 182 765) (1.81) 66 075 440 (801 576) 65 273 864 100.00 57
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 6 SEGMENTAL REPORTING (continued) BUSINESS SEGMENTS (continued) Year ended 30 April Group Group 2009 2008 Pula Pula Assets: Asset Management 20 495 163 83 875 945 Corporate Finance 5 868 639 4 138 423 Stockbroking 114 034 871 147 287 870 Trust Administration 388 783 - Other – Group 67 677 002 21 349 930 Total assets 208 464 458 256 652 168 Equipment: Asset Management 182 150 170 299 Corporate Finance 813 651 1 034 987 Stockbroking 1 361 424 1 427 932 Trust administration - - Other - Group 1 113 517 1 188 175 Total equipment 3 470 742 3 821 393 Intangible assets and goodwill: Asset Management 186 747 232 989 Other - Group 524 610 667 228 Total intangible assets and goodwill 711 357 900 217 Equity accounted assets: Other - Group 2 246 312 2 712 265 Liabilities: Asset Management 6 191 149 21 991 094 Corporate Finance 442 635 385 323 Stockbroking 45 090 989 87 784 958 Trust Administration 28 902 - Other – Group 24 215 722 6 969 692 Total liabilities 75 969 397 117 131 067 Depreciation: Asset Management 53 716 43 843 Corporate Finance 254 082 284 206 Stockbroking 621 869 632 907 Other – Group 258 338 298 704 Total depreciation 1 188 005 1 259 660 Capital expenditure: Asset Management 77 889 104 740 Corporate Finance 31 018 22 680 Stockbroking 561 153 620 807 Other – Group 543 755 861 760 Total capital expenditure 1 213 815 1 609 987 Impairment losses Other – Group 605 871 3 470 58
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 6 SEGMENTAL REPORTING (continued) GEOGRAPHICAL SEGMENTS Year ended 30 April Group Group 2009 2008 Pula Pula Revenue: Botswana 5 075 907 3 647 455 British Virgin Islands 26 077 026 80 059 773 Mauritius 121 869 - South Africa 71 053 895 90 151 818 United Kingdom 7 258 35 094 Total revenue 102 335 955 173 894 140 Profit before taxation: Botswana (8 396 794) 4 096 323 British Virgin Islands 9 654 727 46 875 559 Mauritius (169 756) - South Africa 9 899 454 17 197 291 United Kingdom (2 387 048) (2 895 309) Total profit before taxation 8 600 583 65 273 864 Assets: Botswana 62 038 970 13 243 753 British Virgin Islands 16 887 966 92 630 611 Mauritius 388 783 - South Africa 128 120 688 149 723 549 United Kingdom 1 028 051 1 054 255 Total assets 208 464 458 256 652 168 Equipment: Botswana 835 264 866 419 British Virgin Islands 39 449 520 South Africa 2 575 006 2 923 413 United Kingdom 21 023 31 041 Total equipment 3 470 742 3 821 393 Intangible assets and goodwill: Botswana 428 400 571 200 South Africa 282 957 329 017 Total intangible assets and goodwill 711 357 900 217 59
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 6 SEGMENTAL REPORTING (continued) GEOGRAPHICAL SEGMENT (continued) Year ended 30 April Group Group 2009 2008 Pula Pula Depreciation: Botswana 173 793 197 421 British Virgin Islands 11 726 3 506 South Africa 991 936 1 047 326 United Kingdom 10 550 11 407 Total depreciation 1 188 005 1 259 660 Capital expenditure: Botswana 488 674 631 855 British Virgin Islands 50 581 - South Africa 661 468 956 486 United Kingdom 13 092 21 647 Total capital expenditure 1 213 815 1 609 988 Liabilities: Botswana 4 603 959 8 285 240 British Virgin Islands 5 040 474 23 553 043 Mauritius 28 902 - South Africa 66 179 481 85 129 633 United Kingdom 116 581 163 151 Total liabilities 75 969 397 117 131 067 Equity accounted assets: British Virgin Islands 2 246 312 2 712 265 Impairment losses British Virgin Islands 605 871 3 470 60
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 7 EQUIPMENT - GROUP Year ended 30 April 2009 Motor Office Electronic Total vehicles equipment library 2009 Pula Pula Pula Pula Balance at beginning 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 Exchange rate adjustment 54 (1 366) 1 407 95 Re-classification between categories 341 520 (341 520) - - Additions 236 098 977 717 - 1 213 815 Disposals (175 875) (200 681) - (376 556) Depreciation (75 476) (941 150) (171 379) (1 118 005) Balance at end of year net of accumulated depreciation 408 287 2 406 454 656 001 3 470 742 Balance at end of year At cost 559 305 6 667 834 1 663 697 8 890 836 Accumulated depreciation (151 018) (4 261 380) (1 007 696) (5 420 094) Net carrying amount 408 287 2 406 454 656 001 3 470 742 EQUIPMENT – GROUP Year ended 30 April 2008 Motor Office Electronic Total vehicles 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 61
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 7 EQUIPMENT – COMPANY Year ended 30 April 2009 Motor Office Total vehicles equipment 2009 Pula Pula Pula Balance at beginning 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 Additions 213 543 269 637 483 180 Disposals (35 898) (8 592) (44 490) Depreciation (net) (68 382) (74 451) (142 833) Balance at end of year, net of accumulated depreciation 375 627 316 896 692 523 Balance at end of year: At cost 475 011 417 836 892 847 Accumulated depreciation (99 384) (100 940) (200 324) Net carrying amount 375 627 316 896 692 523 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 266 364 130 302 396 666 depreciation 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 62
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 8 GOODWILL Year ended 30 April Group Group Company Company 2009 2008 2009 2008 Pula Pula Pula Pula Balance at the beginning of the year 96 027 100 952 - - Exchange rate adjustment 183 (4 925) - - 96 210 96 027 - - The above goodwill amount relates to Imara SP Reid (Proprietary) Limited, (“ISPR”), the South African stockbroking subsidiary, that is reported under the stockbroking segment. 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 as follows: The recoverable amount of ISPR has been determined using the value in use calculation based on the cash flow projections in financial budgets approved by senior management. A pre-tax Group specific risk adjusted discount rate of 10.68% (2008: 13.72%) was used. The projected cash flows beyond the 5 years were extrapolated using a steady average growth rate of 3.2% (2008: 5.0%) not exceeding the long term average growth rate for the market in which the business operates. The cash flows were determined based on past performance, management expectations and recent market developments. 9 INTANGIBLE ASSETS GROUP: Year ended 30 April 2009 Cost: Management shares Client data base * Total At beginning of year 714 000 232 990 946 990 Exchange rate adjustment - 443 443 At end of year 714 000 233 433 947 433 Amortisation: At beginning of year (142 800) - (142 800) Amortisation charge for the year (142 800) (46 686) (189 486) At end of year (285 600) (46 686) (332 286) Net book value 428 400 186 747 615 147 Year ended 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 *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 was raised in respect of this class of intangible asset for the 2008 financial year. Management shares are founder shares and are held primarily to secure the on-going management rights for the Imara Global 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. 63
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 9 INTANGIBLE ASSETS - COMPANY: Year ended 30 April 2009 Management Total Cost: shares At beginning of year & end of year 714 000 714 000 Amortisation: At beginning of year (142 800) (142 800) Amortisation charge for the year (142 800) (142 800) At end of year (285 600) (285 600) Net book value 428 400 428 400 Year ended 30 April 2008 Management Total Cost: 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 10 INVESTMENT IN SUBSIDIARIES Group Group Company Company 2009 2008 2009 2008 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% - - 2 819 936 1 819 936 Imara Capital Limited (1) 100% - - 5 000 006 6 Imara Trust Company (Mauritius) Ltd (4) 100% - - 325 003 - Imara Trademarks (BVI) Limited (1) 100% - - 6 6 - - 17 876 548 11 551 545 Preference shares at cost: Imara Asset Management UK Limited 100% - - 205 339 205 339 Share based payment reserve: - - 1 444 046 726 129 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. - - 19 525 933 12 483 013 Country of incorporation: (1) British Virgin Islands (2) United Kingdom (3) Botswana (4) Mauritius For ordinary shares at cost, the percentage holding equates in all instances to the voting rights attached to shares. No voting rights attach to the preference shares. 64
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 10 INVESTMENT IN SUBSIDIARIES (continued) Movement in investments in subsidiaries: Year ended 30 April Group Group Company Company 2009 2008 2009 2008 Pula Pula Pula Pula Imara Capital Botswana (Pty) Limited: At the beginning of the year - - 1 819 936 1 819 936 Movement for the year - - 1 000 000 - At the end of the year - - 2 819 936 1 819 936 On 31 January 2009, Imara Holdings Limited subscribed for 100 new ordinary shares in the capital of Imara Capital Botswana (Pty) Limited for a consideration of P 1 000 000. The total subscription price for the new shares was settled through the conversion of a loan account due to Imara Holdings Limited by Imara Capital Botswana (Pty) Limited. Year ended 30 April Group Group Company Company 2009 2008 2009 2008 Pula Pula Pula Pula Imara Capital Limited – BVI: At the beginning of the year - - 6 6 Movement for the year - - 5 000 000 - At the end of the year - - 5 000 006 6 On 31 January 2009, Imara Holdings Limited subscribed for 100 new ordinary shares in the capital of Imara Capital Limited, the British Virgin Islands registered entity, for a consideration of P 5 000 000. The total subscription price for the new shares was settled through the conversion of a loan account due by Imara Capital Botswana (Pty) Limited to Imara Holdings Limited. Imara Trust Company (Mauritius) Limited Imara Trust Company (Mauritius) Limited was incorporated in Mauritius in May 2008 and commenced business in the same month. The company is a trust and global administration services company and is licenced by the Financial Services Commission of Mauritius. 11 INVESTMENT IN ASSOCIATES Year ended 30 April 2009 Imara Capital Stockbrokers Zimbabwe Total Malawi (Private) Group Limited Limited Pula Balance at the beginning of the year 189 492 2 522 773 2 712 265 Share of profits 139 918 - 139 918 Dividends received - - - Impairment of investment - per Income Statement (329 410) (276 461) (605 871) Balance at the end of the year - 2 246 312 2 246 312 65
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 11 INVESTMENT IN ASSOCIATES (continued) Year ended 30 April 2008 Imara Capital Stockbrokers Zimbabwe Total Malawi (Private) Group Limited Limited Pula Balance at the beginning of the year 263 294 2 522 773 2 786 067 Share of profits 92 529 - 92 529 Dividends received (162 861) - (162 861) Impairment of investment per Income Statement (3 470) - (3 470) Balance at the end of the year 189 492 2 522 773 2 712 265 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 and engaged in the business of stockbroking. The financial year end of Stockbrokers Malawi Limited is 31 December. The audited financial statements of the company for the year ended 31 December 2008 have not been issued. The assessment of impairment in value in the current year is therefore based on un-audited financial statements of the company for the 12 months to 31 December 2008 and on un- audited management accounts for the four months ended 30 April 2009, which are the latest available financial statements for the company. Impairment testing in the prior year was based on the audited financial statements to 31 December 2007 and on un-audited management accounts for the four months ended 30 April 2008. Dividend remittances from Malawi are subject to Exchange Control approval. The associate recorded a profit after tax, (un-audited), for the year ended 31 December 2008 but has incurred losses in the four month period to 30 April 2009. The recorded profit after tax for the year ended 31 December 2008 may require downward adjustment as a result of final year-end audit adjustments. Due to the significant uncertainties regarding the results of the associate for the year ended 31 December 2008 audited financial statements are not available. Since the estimate of probable losses in the current year exceeded the carrying amount of the investment as at the Balance Sheet date management used their judgement to impair the investment to zero. When audited financial statements for the year ended 31 December 2008 are available at a future point in time, the position will be reviewed. The following tables give summarised information of the Group’s investment in associates, based on un-audited financial statements to 31 December 2008, (Prior year: Year ended 31 December 2007 – audited), and un-audited management accounts 30 April 2009: April 2009 April 2008 Share of associate’s balance sheet - 25%: Pula Pula Current assets 1 418 907 198 991 Non-current assets 146 866 163 327 Current liabilities (1 196 054) (127 710) Other liabilities - - Net assets 369 718 234 608 Share of associate’s revenue and profit after tax: Revenue 1 068 226 880 349 Profit after taxation 167 153 36 285 66
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 11 INVESTMENT IN ASSOCIATES (continued) 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 and engaged in the businesses of Asset Management, Corporate Finance Advisory and Stockbroking. The effective shareholding of Imara Holdings Limited in Imara Capital Zimbabwe (Private) Limited is 32,11%. The financial year end of Imara Capital Zimbabwe Limited (Private) Limited is 31 March. An independent statutory audit of Imara Capital Zimbabwe (Private) Limited, for the year ended 31 March 2009 has been carried out. The annual financial statements of Imara Capital Zimbabwe (Private) Limited, for the financial year ended 31 March 2009 have not been prepared in accordance with IAS 29. This is at variance with the previous financial year where annual financial statements of the company were 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 previous period be stated in the same terms at the Balance Sheet date. Hyperinflation over an extended period in Zimbabwe has rendered the Zimbabwe dollar currency unit a meaningless measure of value. For this reason most companies in Zimbabwe have now adopted the United States dollar (USD), as the reporting currency for their financial statements. This practice has received the tacit approval of the Zimbabwe Authorities who have implemented policy measure aimed at a “dollarization” of the Zimbabwe economy. The financial statements of Imara Capital Zimbabwe (Private) Limited for the year ended 31 March 2009 have been prepared in such a manner. Management accounts for subsequent reporting periods are also expressed in USD. The assessment of impairment in value of the investment in associate is therefore based on USD denominated audited financial statements of the company for the 12 months to 31 March 2009 and on reviewed USD denominated management accounts for the one month ended 30 April 2009. These are the latest available financial statements for the company. This basis allows for a more accurate determination of the attributable net asset value of the underlying investment compared with previous years when values were denominated in Zimbabwe dollars. 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 following tables give summarised information of the Group’s investment in this associate, based on reviewed USD denominated financial statements to 30 April 2009. 2009 2008 Share of associate’s balance sheet – 32.11%: Pula Pula Current assets 496 027 574 060 Non-current assets 1 710 474 2 506 325 Current liabilities (728 127) (842 208) Other liabilities - (447 574) Net assets 1 478 375 1 790 602 Comparatives Comparative amounts for Imara Capital Zimbabwe (Private) Limited were re-calculated from the audited inflation adjusted accounts for the year ended 31 March 2008, converted to United States dollars at the Old Mutual implied exchange rate of ZW$53 859 577. Share of associate’s revenue and profit after tax: Share of revenue and profit before tax amounts have not been disclosed on the grounds that such information cannot be accurately determined in the absence of reliable consumer price indices and exchange rate information. 67
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 12 AVAILABLE-FOR-SALE FINANCIAL ASSETS Year ended 30 April Group Group Company Company 2009 2008 2009 2008 Pula Pula Pula Pula Listed securities: JSE securities 4 728 337 7 048 367 - - Other listed securities 1 031 592 1 600 558 1 031 592 1 600 558 5 759 929 8 648 925 1 031 592 1 600 558 Unlisted securities: Imara / Investec Unit Trust Wrap Fund 4 106 4 698 - - Old Mutual Unit Trusts 68 235 61 054 - - 5 832 270 8 714 677 1 031 592 1 600 558 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. 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 2009. The fair value of Old Mutual Unit Trusts is determined by reference to the quoted bid price for this type of investment product at the close of business each day. 13 RELATED PARTY DISCLOSURES Subsidiary companies: Imara Holdings Limited is the Group parent company. It is registered in Botswana, is listed on the Venture Capital Board of the Botswana Stock Exchange and is licenced in the International Financial Services Centre (“IFSC”) – Botswana’s Offshore Centre. Imara Holdings Limited owns 100% of the issued capital of the following Group companies: - Africa Investments Limited – A British Virgin Islands registered company. - Imara Asset Management Limited – A British Virgin Islands registered company. - Imara Asset Management (UK) Limited – A United Kingdom registered company. - Imara Capital Limited – A British Virgin Islands registered company. - Imara Capital Botswana (Proprietary) Limited – A Botswana registered company. - Imara Trademarks Limited – A British Virgin Islands registered company. - Imara Trust Company (Mauritius) Limited – A Mauritius registered company. Imara Holdings Limited also has a majority shareholding in the following group companies. - CF Africa Limited (69.27% shareholding) – A British Virgin Islands registered company, which has as its sole asset, a 46.45% shareholding in Imara Capital Zimbabwe (Private) Limited, a company incorporated in Zimbabwe. - Imara Securities Angola SVM Limitada (50% shareholding) – An Angolan registered company. The company is currently dormant. 68
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 13 RELATED PARTY DISCLOSURES (continued) Subsidiary companies (continued) Imara Asset Management Botswana (Proprietary) Limited is owned 51% by Imara Capital Botswana Limited and 49% by Worxnet (Proprietary) Limited. A decision was taken in October 2007, to discontinue the operations of the company. Imara Capital South Africa (Proprietary) Limited is registered in South Africa and is wholly owned by Africa Investments Limited, a British Virgin Islands registered company. Imara Asset Management South Africa (Proprietary) Limited, Imara Corporate Finance South Africa (Proprietary) Limited and Imara SP Reid (Proprietary) Limited are subsidiaries of Imara Capital South Africa (Proprietary) Limited. Imara Botswana Limited is a wholly owned subsidiary of Imara Capital Botswana (Proprietary) Limited, which in turn is a wholly owned subsidiary of Imara Holdings Limited. Imara Asset Management (UK) Limited is registered in England, is a wholly owned subsidiary of Imara Holdings Limited and is authorised and regulated by the Financial Services Authority. Associate companies: Imara Capital Limited, the British Virgin Islands registered company, owns 25% of Stockbrokers Malawi Limited. Stockbrokers Malawi Limited is an associate company of Imara Holdings Limited. The amount due is in respect of dividends declared but not received. Imara Holdings Limited owns 69.27% of CF Africa Limited whose sole asset is a 46,45% interest in Imara Capital Zimbabwe (Private) Limited. Imara Holdings Limited therefore has an indirect shareholding in Imara Capital Zimbabwe (Private) Limited of 32.18%. Imara Capital Zimbabwe (Private) Limited is an associate company of Imara Holdings 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 now 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 Holdings Limited, which is registered in Mauritius. Etana Holdings Limited is a shareholder in Imara Holdings Limited. An executive director of Imara Holdings Limited has an indirect interest in the Etana Trust. During the year the Group entered into transactions with the directors and other related parties. These transactions along with related balances at 30 April 2009 and for the period then ended are as follows: Year ended 30 April Group Group Company Company 2009 2008 2009 2008 Pula Pula Pula Pula Professional fees paid: Beresford Trust and Corporate Services Limited 301 306 425 150 - - 301 306 425 150 - - 69
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 13 RELATED PARTY DISCLOSURES (continued) Year ended 30 April Group Group Company Company 2009 2008 2009 2008 Pula Pula Pula Pula Management fees receivable - Group: Imara Asset Management Limited - BVI - - - 2 911 914 Imara Asset Management South Africa (Proprietary) Limited - - 95 927 27 045 Imara Botswana Limited - - 45 000 - Imara Capital South Africa (Proprietary) Limited - - - 468 288 Imara Corporate Finance South Africa (Proprietary) Limited - - 1 176 185 2 386 156 Imara SP Reid (Proprietary) Limited - - 2 729 421 2 614 597 - - 4 046 533 8 408 000 Management fee payable - Group: Imara Botswana Limited - - - 338 262 Management fees receivable - Group: Imara Holdings Limited charges an annual management fee to certain of its subsidiary companies in respect of services rendered to these companies by the Imara Holdings Limited executives. Management fee payable - Group: The management fees payable to Imara Botswana Limited is in respect of management services rendered by that company to Imara Holdings Limited. Year ended 30 April Group Group Company Company 2009 2008 2009 2008 Pula Pula Pula Pula Interest receivable - Group: Africa Investments Limited - BVI - - - 131 022 CF Africa Limited - BVI - - 33 005 - Imara Asset Management (Pty) Ltd-Botswana - - - 5 450 Imara Botswana Limited - - 819 390 729 735 Imara Capital Limited - BVI - - 1 877 475 510 765 Imara Capital Botswana (Pty) Limited - - 365 260 66 640 Imara Capital South Africa (Pty) Limited - - 2 136 272 1 298 145 Imara Trust Company (Mauritius) Limited - - 4 640 - - - 5 236 042 2 741 757 70
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 13 RELATED PARTY DISCLOSURES (continued) Year ended 30 April Group Group Company Company 2009 2008 2009 2008 Pula Pula Pula Pula Interest receivable – related parties: Imara Capital Zimbabwe (Private) Limited - - 51 523 - Imara SP Limited - BVI - - 18 121 - Etana Holdings Limited - - 17 533 - - - 87 177 - Interest receivable - third parties - - 655 832 16 869 Interest receivable - non-group - - 743 009 16 869 Amounts due by related parties relate to payments made by Imara Holdings Limited to independent third parties, in respect of company secretarial and administrative fees. Interest is charged on outstanding amounts at 14.50%. Year ended 30 April Group Group Company Company 2009 2008 2009 2008 Pula Pula Pula Pula Amounts owed by Group companies: Long term: Africa Investments Limited -BVI - - - 2 355 732 CF Africa Limited- BVI - - 276 445 176 202 Imara Asset Management Limited -BVI - - - 2 365 082 Imara Asset Management (Proprietary) Limited - Botswana - - - 69 750 Imara Asset Management UK Limited - - 240 013 283 471 Imara Botswana Limited - - 6 318 227 5 554 439 Imara Capital Limited - Botswana - - 5 102 073 - Imara Capital Limited -BVI - - 5 670 273 5 329 413 Imara Capital Botswana (Proprietary) Limited - - - 1 398 650 Imara Capital South Africa (Proprietary) Limited - - 15 448 739 13 953 122 Imara Trust Company (Mauritius) Limited - - 227 717 - - - 33 283 487 31 485 861 71
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 13 RELATED PARTY DISCLOSURES (continued) Year ended 30 April Group Group Company Company 2009 2008 2009 2008 Pula Pula Pula Pula Amounts owed to Group companies: Africa Investments Limited -BVI - - 7 132 798 - Imara Asset Management Limited -BVI - - 49 275 026 - Imara Trademarks Limited - BVI - - 4 588 437 4 055 987 Imara Asset Management (Proprietary) Limited - Botswana - - 441 335 - - - 61 437 596 4 055 987 Amounts owed by related parties: (Note 15) Imara SP Limited 175 934 124 064 175 934 124 064 Etana Holdings Limited 138 450 120 917 138 450 120 917 Imara Capital Zimbabwe (Private) Limited 2 195 172 - 2 195 172 - 2 509 556 244 981 2 509 556 244 981 Amounts owed to related parties: (Note 19) Short term: Imara Capital Zimbabwe (Private) Limited 887 678 592 549 - - Imara SP Limited 19 722 19 722 - - 907 400 612 271 - - Inter-company long-term loans have no fixed term of repayment, are unsecured and attract interest at rates of 14.50% (2008: 14.00%) for Botswana, British Virgin Islands and South African incorporated companies. 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. 72
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 13 RELATED PARTY DISCLOSURES (continued) Remuneration paid to directors and key management personnel: Directors: Year ended 30 April 2009 Non- executive Executive Total Pula Pula Pula Non-executive: Fees 1 264 253 - 1 264 253 Expenses 249 635 - 249 635 Share based payment expense 38 816 - 38 816 Total non-executive 1 552 704 - 1 552 704 Executive: Salary - 7 393 663 7 393 663 Short term benefits - 313 385 313 385 Fixed remuneration - 7 707 048 7 707 048 Performance bonus - 12 914 672 12 914 672 Share based payment expense - 146 167 146 167 Total executive - 20 767 887 20 767 887 Total non-executive and executive 1 552 704 20 767 887 22 320 591 Directors: Year ended 30 April 2008 Non- executive Executive Total Pula Pula Pula Non-executive: Fees 648 436 - 648 436 Expenses 128 293 - 128 293 Share based payment expense 49 862 - 49 862 Total non-executive 826 591 - 826 591 Executive: 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 - 147 259 147 259 Total executive - 10 289 163 10 289 163 Total non-executive and executive 826 591 10 289 163 11 115 754 Directors remuneration: The directors’ remuneration disclosed in the note above includes performance bonuses in respect of the 2008 financial year which were paid in 2009. Such amounts have been charged against prior year provisions for performance bonuses and consequently are excluded from the Income Statement charge for the current year as disclosed in Note 2. 73
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 13 RELATED PARTY DISCLOSURES (continued) Remuneration paid to directors and key management personnel: (continued) Year ended 30 April 2009 Key management personnel: Pula Salary 3 863 102 Short term benefits 117 394 Fixed remuneration 3 980 496 Performance bonus 9 917 156 Share based payment expense 77 849 13 975 501 Year ended 30 April 2008 Key management personnel: Pula Salary 2 287 806 Short term benefits 26 900 Fixed remuneration 2 314 706 Performance bonus 4 760 765 Share based payment expense 49 512 7 124 983 Remuneration in respect of key management personnel relates to four employees, two of whom are employed at Imara SP Reid (Proprietary) Limited, one who is employed at Imara Asset Management, the British Virgin Islands Company and one employed by Imara Capital South Africa (Proprietary) Limited. All four employees were employed by the Group for a full 12 month period in the 2009 financial year. In the previous financial year, three of the key management personnel were employed for a full 12 month period and one employee for 1 month. Year ended 30 April Group Group Company Company 2009 2008 2009 2008 Pula Pula Pula Pula 14 LISTED TRADING SECURITIES Listed traded securities 3 953 387 4 116 788 - - In previous reporting periods listed traded securities were recorded net of listed traded sold short. Listed traded securities sold short are now included in trade and other payables. (Note 19) 15 TRADE AND OTHER RECEIVABLES Trade receivables 5 514 239 60 936 703 - - Amounts receivable in respect to broking activities 57 240 659 65 764 693 - - Collateral deposits against scrip lending 2 487 943 33 953 044 - - Amounts receivable – carry accounts 19 554 894 26 160 435 - - Sundry receivables 2 251 785 1 146 094 884 721 696 571 Related party receivables (Note 13) 2 509 556 421 183 2 509 556 244 981 89 559 076 188 382 152 3 394 277 941 552 74
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 15 TRADE AND OTHER RECEIVABLES (continued) Trade receivables are non interest bearing and are generally on 30 to 60 day terms. Amounts receivable in respect of broking activities are due on demand and do not attract interest. Collateral deposits against scrip lending attract interest on a floating rate basis at rates between 6.95% and 11.35% (2008: 14.00% and 18.00%). The repayment period for amounts due in respect of certain collateral deposits against scrip lending are contract specific. None of these balances were past due at year end. Loans receivable, in respect of carry accounts, are due on demand and attract interest at floating interest rates ranging between 12.00% and 18.50%. (2008: 14.00% and 18.00%) Impairment losses, where applicable, are charged through the use of an allowance account. Financial assets pledged as collateral: The Group had pledged cash amounting to P 2 489 190 as collateral for scrip lending transactions. No other financial assets 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 : As at 30 April 2009 Neither past due nor impaired Past due but not impaired Less than 31 to 61 to 91 to More than 30 days 60 days 90 days 120 days 120 days TOTAL Trade receivable 1 429 615 1 251 665 838 495 1 180 032 814 432 5 514 239 Other receivables 344 629 597 293 46 750 629 669 633 444 2 251 785 Related parties 274 070 439 870 76 050 265 969 1 453 597 2 509 556 As at 30 April 2008 Trade receivable 60 549 340 - - - 387 363 60 936 703 Other receivables 939 182 28 695 - - 178 217 1 146 094 Related parties - - - - 421 183 421 183 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 Group Company Company 2009 2009 2009 2008 Pula Pula Pula Pula Trade receivables 50 897 50 800 - 29 191 Other receivables 401 550 714 112 - - 452 447 764 912 - 29 191 Movements in the provision for past due trade receivables and sundry receivables were as follows: Group Company Individually Collectively Total Individually Collectively Total impaired impaired impaired impaired Pula Pula Pula Pula Pula Pula At 1 May 2007 620 152 - 620 152 29 121 - 29 121 Charge for the year 764 912 - 764 912 - - - Utilised (620 152) - (620 152) (29 121) - (29 121) At 30 April 2008 764 912 - 764 912 - - - Charge for the year - - - - - Utilised (312 465) - (312 465) - - - At 30 April 2009 452 447 - 452 447 - - - 75
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 16 CASH AND CASH EQUIVALENTS Year ended 30 April Group Group Company Company 2009 2008 2009 2008 Pula Pula Pula Pula Cash on hand and at bank 55 774 420 43 917 867 8 885 951 1 579 181 Short term deposits 5 466 868 966 413 - - Short term treasury bills 40 271 414 - 40 271 414 - 101 512 702 44 884 280 49 157 365 1 579 181 For purposes of the Cash Flow Statement, cash and cash equivalents comprise the following: Cash and cash equivalents - per above 101 512 702 44 884 280 49 157 365 1 579 181 Bank overdraft (Note 18) (69) ( 9 111 303) - (66 178) 101 512 633 35 772 977 49 157 365 1 513 003 Rand call deposits bear interest, linked to prime, of between 0.00% and 7.40% per annum (2008: 9.44% and 9.45%). Short-term deposits held with African Alliance and Stanbic Investment Management Services (Proprietary) Limited, have effective returns of between 9.82% and 11.94% per annum (2008: 11.01% and 11.52%). Foreign bank balances attracted interest during the year of between 0.00% and 3.65% per annum (2008: 2.60% and 4.50%) on US Dollar deposits, and 0.00% and 5.88% per annum (2008: 2.20% and 2.55%) on Sterling deposits. The Group’s cash which has been identified as not being immediately required for operational purposes, has since September 2008, been invested into short dated United Kingdom Treasury Bills denominated in both United States dollars and Sterling. These treasury bills, which are guaranteed by the United Kingdom government, typically have maturity dates of between 30 and 120 days, earn interest ranging between 2.6% and 4.5% and are rolled over on maturity, depending on operational cash flow requirements. There is an active market for the treasury bills and as such they can be converted into cash prior to the stated maturity date. 17 STATED CAPITAL Authorised Share Capital: 200 000 000 ordinary shares of no par value Reconciliation of the number of shares in issue: Year ended 30 April Company Company 2009 2008 Number Number In issue at beginning of the year 55 618 916 5 368 815 Shares issued resulting from share split (10 for 1) - 48 319 335 Shares in issue after share sub-division 55 618 916 53 688 150 Shares issued in respect of scrip dividend 536 135 883 810 Shares issued under the Share Option Scheme 594 420 1 046 956 Shares issued to acquire a client data base (Note 9) 28 765 - In issue at end of the year 56 778 236 55 618 916 76
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 17 STATED CAPITAL (continued) Issued capital: (See notes below) Company: Year ended 30 April 2009 Stated capital Pula Balance at beginning of year 37 111 325 Issue of ordinary shares: Scrip dividend 854 750 Share options exercised 6 701 647 Acquisition of data base 241 626 Balance at end of year 44 909 348 Company: Year ended 30 April 2008 Share Share Stated capital premium capital Pula Pula Pula Balance at beginning of year 53 688 29 754 133 Issue of ordinary shares: 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 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 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. 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 17 thebe per share and an ordinary dividend of 19 thebe were declared in August 2008 in respect of the financial year ended 30 April 2008. 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 12.50 per share. 77
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 18 INTEREST BEARING LOANS AND BORROWINGS Year ended 30 April Group Group Company Company 2009 2008 2009 2008 Pula Pula Pula Pula Current portion of interest bearing loans and borrowings: Office equipment lease 15 806 10 020 - - Bank overdraft 69 9 111 303 - 66 178 Long term portion of interest bearing loans and borrowings: Office equipment lease - 15 739 - - Shareholders’ dividends 915 017 - - 915 017 15 739 - - Dividends due to the Group’s South African empowerment partner, Zingwenya Holdings Limited (Proprietary) Limited, are in terms of the Share Loan Agreements, withheld pending settlement of the BEE transaction, as described in Note 23. Bank overdrafts are unsecured and attract interest at rates varying between 13.00 % and 15.50 % (2008: 12,5 and 15.0 %) 19 TRADE AND OTHER PAYABLES Year ended 30 April Group Group Company Company 2009 2008 2009 2008 Pula Pula Pula Pula Trade payables 12 832 196 11 584 940 - - Amounts payable in respect of broking activities 50 312 114 58 091 683 - - Other payables 1 634 981 570 463 298 221 270 444 Accruals 7 205 425 35 000 143 3 421 238 2 269 320 Related party payables (Note 14) 907 400 612 271 - - 72 892 116 105 859 500 3 719 459 2 539 764 Listed traded securities sold short 140 624 577 218 - - 73 032 740 106 436 718 3 719 459 2 539 764 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. 20 PROVISIONS Group Group Company Company 2009 2008 2009 2008 Pula Pula Pula Pula Balance - beginning of year 1 719 114 3 408 159 - - Revision of estimate following settlement by a co- defendant. - (1 522 798) - - Exchange rate adjustment 3 272 (166 247) - - Balance - end of year 1 722 386 1 719 114 - - The above represents provisions to cover potential claims arising from a civil case against Imara SP Reid (Pty) Limited, where it is a defendant relating to the operation of its former branch in Nelspruit. 78
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 21 FUNDS UNDER MANAGEMENT Year ended 30 April Group Group 2009 2008 Pula Pula Funds under management – Group companies 1 296 249 203 2 481 304 042 Funds under management – associate companies 597 567 687 975 318 000 1 893 816 890 3 456 622 042 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. 22 COMMITMENTS AND CONTINGENCIES Year ended 30 April Group Group Company Company 2009 2008 2009 2008 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 17 211 13 213 - - After one year but not more than five years - 17 091 - - 17 211 30 304 - - Less: Future finance charges (1 405) (4 545) - - Present value of hire purchase liabilities 15 806 25 759 - - 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 9 months 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 34 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 2009 2008 2009 2008 Pula Pula Pula Pula Within one year 1 762 700 1 697 674 147 015 182 655 After one year but not more than five years 3 273 5 222 916 - 147 015 1 722 387 6 920 590 147 015 329 670 79
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 22 COMMITMENTS AND CONTINGENCIES (continued) Operating leases - Company as lessor: The Group has entered into commercial property sub-lease agreements with subsidiary companies, in relation to the rental of office space in both Botswana and South Africa. These non-cancellable leases are on terms similar to the head lease agreement, and have remaining terms of 9 months in relation to Botswana and 34 months in relation to South Africa. 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 a Group consolidated basis the financial amounts are eliminated. Capital commitments: At 30 April 2009 the Group has the following capital commitments: Pula Stockbrokers Zambia Limited – see note below 1 779 451 Imara Securities Angola SVM Limitada – see note below 1 853 595 3 633 046 Stockbrokers Zambia Limited: Imara Holdings Limited has signed an agreement in terms of which it will acquire 25% of the share capital of Stockbrokers Zambia Limited, a company registered in Zambia and engaged in stockbroking. The purchase price for the acquisition of the 25% stake is to be funded partly in cash and partly through the issuance of Imara Holdings Limited shares. Imara Securities Angola SVM Limitada: Imara Holdings Limited owns 50% of Imara Securities Angola SVM Limitada, a company registered in Angola. The company is currently dormant. A licence application to operate a stockbroking business in Angola is currently under consideration by the Angola Authorities. Upon issuance of the licence, the company is required to subscribe the minimum capital requirement for a stockbroking company of USD 500 000. The capital commitment reflected above represents Imara’s 50% share of this capitalisation. 80
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 23 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. During the year, the following options were granted: 30 April 2009 Expiry date Number of Option price Grant date options Pula 1 August 2008 31 July 2013 300 000 12.50 30 April 2008 Expiry date Number of Option price Grant date options Pula 18 July 2007 17 July 2012 150 000 6.00 The range of exercise prices for options outstanding at the end of the year was P 0.4364 to P 12.50. (2008: 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: 2009 2008 Pula Pula Imara Holdings Limited 205 068 (333 076) Imara Asset Management South Africa (Proprietary) 109 593 122 458 Limited Imara Asset Management Limited - BVI 139 014 150 495 Imara Asset Management (Proprietary) Limited - - 11 920 Botswana Imara Capital South Africa Limited 67 023 98 921 Imara Corporate Finance South Africa (Pty) Limited 42 667 20 670 Imara SP Reid (Proprietary) Limited 305 709 321 665 Imara Africa Securities (Proprietary) Limited 53 912 - 922 986 393 053 81
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 23 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. 2009 2009 2008 2008 Number WAEP Number WAEP Outstanding - beginning of year 2 197 010 0.94260 3 127 230 0,85127 Granted during the year 300 000 12.50000 150 000 6,00000 Forfeited during the year - - (33 270) 1,96011 Exercised during the year (594 420) 1.43796 (1 046 950) 0,89790 Outstanding and exercisable - end of the year 1 902 590 1.68034 2 197 010 0,94260 The following table lists the inputs to the binomial valuation model used for the year. 2009 2008 Dividend yield % 0.75 4.66 Expected volatility % 40.99 43.45 Risk free interest rate % 11.42 12.00 Weighted average share price - exercisable options Pula 2.81201 1.19890 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 (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 Number of shares loaned to Zingwenya loan loan 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 82
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 23 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 R 17 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 November 2007. The deposits were subsequently refunded to Zingwenya in December 2008 and replaced with personal guarantees issued by Zingwenya’s three shareholders. In addition to the share loan agreements 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 61 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 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 (Rand: 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: Rand Pula equivalent Imara Asset Management - - Imara Corporate Finance - - Imara SP Reid 1 739 500 1 494 770 1 739 500 1 494 770 The Pula equivalent of the share based expense is based on the exchange rate ruling at 1 October 2007. The value of the options granted on Imara Asset Management (Proprietary) Limited and Imara Corporate Finance South Africa (Proprietary) Limited shares were determined to be nil on the grant date. The value of the options was determined in terms of a binomial option pricing model. The key inputs into the model were as follows: 2009 2008 Dividend cover 2 times 2 times Expected volatility 46% 32% Risk free rate of return 7.46% 9.01% 83
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 24 FINANCIAL INSTRUMENTS The tables below summaries the classification of the Group’s financial instruments: As at 30 April 2009 Financial Available- liabilities for-sale at Non- Loan financial amortised financial and AFVTPL* instruments cost instruments receivables TOTAL ASSETS: Equipment - - - 3 470 742 - 3 470 742 Goodwill - - - 96 210 - 96 210 Intangible assets - - - 615 147 - 615 147 Investment in associates - - - 2 246 312 - 2 246 312 Available-for-sale financial instruments - 5 832 270 - - - 5 832 270 Deferred tax asset - - - 1 176 696 - 1 176 696 Listed traded securities 3 953 387 - - - - 3 953 387 Trade and other receivables - - - - 89 559 076 89 559 076 Cash and cash equivalents - - - - 101 512 702 101 512 702 Tax refundable - - - 1 916 - 1 916 3 953 387 5 832 270 - 7 607 023 191 071 778 208 464 458 LIABILITIES: Interest bearing borrowings - long term - - 915 017 - - 915 017 Interest bearing borrowings - short term - - 15 806 - - 15 806 Listed trading securities – sold 140 624 - - - - 140 624 short Trade and other payables - - 65 686 691 7 205 425 - 72 892 116 Provisions - - 1 722 387 - 1 722 387 Bank overdraft - - 69 - - 69 140 624 - 66 617 583 8 927 812 - 75 686 019 * Financial instruments classified as trading securities are carried at fair value through profit and loss. 84
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 24 FINANCIAL INSTRUMENTS (continued) The tables below summaries the classification of the Group’s financial instruments: As at 30 April 2008 Financial Available- liabilities for-sale at Non- Loans financial amortised financial and AFVTPL* instruments cost instruments receivables TOTAL ASSETS: Equipment - - - 3 821 393 - 3 821 393 Goodwill - - - 96 027 - 96 027 Intangible assets - - - 804 190 - 804 190 Investment in associates - - - 2 712 265 - 2 712 265 Available-for-sale financial instruments - 8 714 677 - - - 8 714 677 Deferred tax asset - - - 857 748 - 857 748 Listed traded securities 4 116 788 - - - - 4 116 788 Trade and other receivables - - - - 188 382 152 188 382 152 Cash and cash equivalents - - - - 44 884 280 44 884 280 Tax refundable - - - 2 839 866 - 2 839 866 4 116 788 8 714 677 - 11 131 489 233 266 432 257 229 386 LIABILITIES: Interest bearing borrowings - long term - - 15 739 - - 15 739 Interest bearing borrowings - short term - - 10 020 - - 10 020 Listed trading securities – sold 577 218 - - - - 577 218 short Trade and other payables - - 70 859 357 35 000 143 - 105 859 500 Provisions - - 1 719 114 - 1 719 114 Bank overdraft - - 9 111 303 - - 9 111 303 577 218 - 79 996 419 36 719 257 - 117 292 894 * Financial instruments classified as trading securities are carried at fair value through profit and loss. 85
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 24 FINANCIAL INSTRUMENTS (continued) The tables below summaries the classification of the Company’s financial instruments: As at 30 April 2009 Available- Financial for-sale liabilities at Non- Loans financial amortised financial and instruments cost instruments receivables TOTAL ASSETS: Equipment - - 692 523 - 692 523 Intangible asset - - 428 400 - 428 400 Investment in subsidiaries - - 19 525 933 - 19 525 933 Available-for-sale financial instruments 1 031 592 - - - 1 031 592 Deferred tax asset - - 310 437 - 310 437 Trade and other receivables - - - 3 394 277 3 394 277 Cash and cash equivalents - - - 49 157 365 49 157 365 1 031 592 - 20 957 293 52 551 642 74 540 527 LIABILITIES: Interest bearing borrowings - long term - 61 437 596 - - 61 437 596 Trade and other payables - 298 221 3 421 238 - 3 719 459 - 61 735 817 3 421 238 - 65 157 055 As at 30 April 2008 ASSETS: Equipment - - 396 666 - 396 666 Intangible assets - - 571 200 - 571 200 Investment in subsidiaries - - 12 483 013 - 12 483 013 Available-for-sale financial instruments 1 600 558 - - - 1 600 558 Trade and other receivables - - - 941 552 941 552 Cash and cash equivalents - - - 1 579 181 1 579 181 1 600 558 - 13 450 879 2 520 733 17 572 170 LIABILITIES: Interest bearing borrowings - long term - 4 055 987 - - 4 055 987 Trade and other payables - 270 444 2 269 320 - 2 539 764 Deferred tax - - 7 525 - 7 525 Bank overdraft - 66 178 - - 66 178 - 4 392 609 2 276 845 - 6 669 454 86
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 24 FINANCIAL INSTRUMENTS (continued) The table below summaries by class of financial instruments, the net gains and losses, relating to these instruments. Net gains and losses Group: As at 30 April 2009 Interest Interest paid Fair value Impairment Total received movements losses Loans and receivables 11 583 883 - - - 11 583 883 Financial assets held at fair value through profit and loss - - 3 184 745 - 3 184 745 Financial liabilities at amortised cost - (758 456) - - (758 456) Total 11 583 883 (758 456) 3 184 745 - 14 010 172 Group: As at 30 April 2008 Loans and receivables 10 983 859 - - (764 912) 10 218 947 Financial assets held at fair value through profit and loss - - 6 804 128 - 6 804 128 Financial liabilities at amortised cost - (458 599) - - (458 599) Total 10 983 859 (458 599) 6 804 128 (764 912) 16 564 476 Company: As at 30 April 2009 Loans and receivables 10 025 584 - - - 10 025 584 Financial liabilities at amortised cost - (6 746 256) - - (6 746 256) 10 025 584 (6 746 256) - - 3 279 328 Company: As at 30 April 2008 Loans and receivables 11 166 626 (29 121) 11 137 505 Financial liabilities at amortised cost (563 142) (563 142) 11 166 626 (563 142) (29 121) 10 574 363 Financial risk management objectives and policies The Group’s principal financial instruments are detailed in the table above. The main purpose of these financial instruments is to finance the Group’s 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 receivables, 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. There are no significant concentrations of credit risk. 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 sensitivities are calculated by multiplying the year end balances with the reasonable possible changes. 87
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 24 FINANCIAL INSTRUMENTS (continued) Equity price risk (continued) 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 and Zimbabwe Stock Exchange All Share Index, with all other variables held constant, is as follows: Group Group 2009 2008 Change in Effect on Change in Effect on equity price equity value equity price equity value Available-for-sale financial assets: % Pula % Pula Market indices: Zimbabwe Stock Exchange 30% 309 478 12% 192 067 Johannesburg Stock Exchange 30% 1 036 947 12% 1 270 552 Market indices: Zimbabwe Stock Exchange (15%) (154 739) (6%) (96 033) Johannesburg Stock Exchange (15%) (518 473) (6%) (635 276) The effect on profit before tax 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 and the Zimbabwe Stock Exchange All Share Index, with all other variables held constant, is as follows: Group Group 2009 2008 Assets and liabilities held at fair value Change in Effect on profit Change in Effect on profit through profit and loss (Listed trading equity price before tax equity price before tax securities): % Pula % Pula Market indices: Zimbabwe Stock Exchange 30% - 12% - Johannesburg Stock Exchange 30% 1 143 829 12% 424 748 Market indices: Zimbabwe Stock Exchange (15%) - (6%) - Johannesburg Stock Exchange (15%) (571 914) (6%) (212 374) The effect of equity price risk on profit before tax of the company is Nil (2008: Nil). 88
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 24 FINANCIAL INSTRUMENTS (continued) Interest rate risk The Group’s exposure to market risk for changes in interest rates, relate primarily to its bank and cash balances, collateral deposits against scrip lending and loans receivable on carry accounts. The Group’s policy is to manage interest receivable through a mix of demand and short term investment products using both fixed rate variable rate. The Company’s exposure to market risk for changes in interest rates, relate primarily to its bank and cash balances. The Group has only limited interest bearing borrowings. Its policy to manage interest payable is by using a mix of demand and short term borrowings, and also a mix of fixed and variable interest rates. Demand borrowings, such as bank overdrafts, are managed on a daily basis and are repaid whenever the Group has surplus operational cash resources. The parameters for managing the mix between demand and short-term borrowings, and between fixed rate and variable rate debt have not been formalised into a Group policy. Interest rate risk table The following table demonstrates the sensitivity to a reasonably possible change in interest rates on the Group’s profit after tax (through the impact of variable rate call deposits), with all other variables held constant. Percentage Effect on profit Effect on profit increase before tax before tax 2009 2008 Group: 0.75% 452 578 169 021 1.25% 754 297 281 701 Company: 0.75% 66 192 11 272 1.25% 110 636 18 769 Foreign currency risk As a result of the investment in subsidiary company operations in British Virgin Islands, Mauritius, South Africa and the United Kingdom, and investments in associate companies in Malawi and Zimbabwe, the Group’s Balance Sheet can be affected by movements in the USD/ Pula, Rand/Pula, USD / Rand and Sterling/Pula exchange rates. The balance sheet items which are most susceptible to foreign currency risk are “Cash and cash equivalents” and “Group company receivables and payables”. The Group also has transactional currency exposures which occur in the normal course of business. Such exposures arise from sales or purchase by an operating unit in currencies other than the unit’s measurement currency. Steps have been taken during the current financial year to formalise the management of foreign currency risk through the formation of a FX Committee and the issuance of a draft foreign currency risk management policy. The terms of reference of the FX Committee and the foreign currency risk management policy document are both subject to ongoing review and refinement. Cash and cash equivalents which are surplus to operational working capital requirements are actively managed and invested in a mix of foreign currencies comprising Pula, Rand, USD and Sterling. Intra-group loans are settled as and when cash flows permit and are reviewed monthly. The following table demonstrates the sensitivity to a reasonably possible change in the Rand, USD and Sterling exchange rates with the Pula, 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 Group’s equity. Group: Rand USD Sterling Increase / Effect on Increase / Effect on Increase / Effect on (decrease) in profit before (decrease) in profit before (decrease) in profit before exchange rate tax exchange rate tax exchange rate tax 2009: 2.5% - 7.0% 3 433 864 2.5% 23 892 (1.25%) - (3.0%) 1 471 656 (1.25%) 11 946 2008: 2.5% - 7.0% 113 978 2.5% 225 949 (1.25%) - (3.0%) (48 848) (1.25%) (112 975) 89
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 24 FINANCIAL INSTRUMENTS (continued) Foreign currency risk (continued) Company: Rand USD Sterling Increase / Effect on Increase / Effect on Increase / Effect on (decrease) in profit before (decrease) in profit before (decrease) in profit before exchange rate tax exchange rate tax exchange rate tax 2009: 2.5% - 7.0% 3 369 895 2.5% 23 892 (1.25%) - (3.0%) 1 444 241 (1.25%) 11 946 2008: 2.5% - 7.0% 107 484 2.5% 806 (1.25%) - (3.0%) (46 064) (1.25%) (403) The following table demonstrates the sensitivity to a reasonably possible change in the Rand and USD exchange rates with the Pula, with all other variables held constant, on the Group’s and Company equity. The exchange rate risk arises primarily from intra-group loans that are treated as a part of the net investment in subsidiary and any exchange rate differences are taken to equity. Group : Rand USD Increase / Effect on Effect on Increase / Effect on Effect on (decrease) in equity equity (decrease) in equity equity exchange rate 2009 2008 exchange rate 2009 2008 2.5% 386 218 348 828 7.0% 169 602 - (1.25%) (193 109) (174 414) (3.0%) 72 687 - 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 2009 and 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 2009: Interest bearing loans and - - - 915 017 - 915 017 borrowings Trade and other payables - 65 686 691 - - - 65 686 691 Current portion of loans and - - 15 805 - - 15 805 borrowings Bank overdraft 69 - - - - 69 At 30 April 2008: Interest bearing loans and borrowings - - 13 213 - - 13 213 Trade and other payables - 70 859 357 - - - 70 859 357 Current portion of loans and borrowings - - 17 091 - - 17 091 Bank overdraft 9 111 303 - - - - 9 111 303 90
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 24 FINANCIAL INSTRUMENTS (continued) Liquidity risk (continued) The table below summarises the maturity profile of the Company’s financial liabilities at 30 April 2008 and 2009, 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 2009: Trade and other payables - 298 221 - - - 298 221 At 30 April 2008: Trade and other payables - 270 444 - - - 270 444 Bank overdraft 66 178 - - - - 66 178 Accounts payable - Group Accounts payable - Group have no fixed repayment terms and are therefore excluded from the table above. 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 dealer and trading limits are in place, trading risks are properly identified, measured, reported and monitored on a daily basis. 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 Stockbroking 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 respective Risk and Compliance Committees, which meet on a regular basis. 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 capitalise intra-Group loan accounts, adjust the dividend payments to shareholders, offer scrip in lieu of dividends, buy back its shares, issue new shares, adjust gearing ratios or negotiate borrowings. The Group’s capital management is measured monthly against a selected range of industry benchmarks. 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. 91
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 24 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 for 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 trade and other receivables, cash and cash equivalents, trade and other payables 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 financial instruments for the Group. Carrying amount Fair value Group Group Group Group 2009 2008 2009 2008 Pula Pula Pula Pula Financial assets: Available-for-sale-financial assets 5 832 270 8 714 677 5 832 270 8 714 677 Trade and other receivables 89 559 076 188 382 152 89 559 076 188 382 152 Listed trading securities 3 953 387 4 116 788 3 953 387 4 116 788 Cash and cash equivalents 101 512 702 44 884 280 101 512 702 44 884 280 Financial liabilities: Interest bearing loans and borrowings 915 017 15 739 915 017 15 739 Trade and other payables 72 892 116 105 859 500 72 892 116 105 859 500 Listed trading securities sold short 140 624 577 218 140 624 577 218 Current portion of loans and other borrowings 15 806 10 020 15 806 10 020 Set out in the table below is a comparison by category of carrying amounts and fair values of financial instruments of the Company. Carrying amount Fair value Company Company Company Company 2009 2008 2009 2008 Pula Pula Pula Pula Financial assets: Available-for-sale-financial assets 1 031 592 1 600 558 1 031 592 1 600 558 Trade and other receivables 3 394 277 941 552 3 394 277 941 552 Listed trading securities - - - - Cash and cash equivalents 49 157 365 1 579 181 49 157 365 1 579 181 Financial liabilities: Interest bearing loans and borrowings - - - - Trade and other payables 3 719 459 2 539 764 3 719 459 2 539 764 Current portion of loans and other borrowings - - - - 92
  • Imara Holdings Limited Consolidated Annual Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued) 25 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. 26 EVENTS AFTER THE BALANCE SHEET DATE There have been no events, facts or circumstances of a material nature that have occurred subsequent to the Balance Sheet date which necessitate an adjustment to the disclosure in these Annual Financial Statements or the notes thereto. 27 FOREIGN CURRENCY TRANSLATION RATES 2009 2008 2007 2006 2005 Pula : US Dollar 7.414 6.502 6.313 5.625 4.550 Pula : British Sterling 10.910 12.885 12.608 10.267 8.674 Pula : South African Rand 0.861 0.860 0.904 0.929 0.740 Pula : Malawi Kwacha 0.0496 0.0473 0.0463 0.0014 0.0021 Pula : Mauritian Rupee 0.205 0.239 0.181 0.169 0.156 South African Rand : Pula 1.161 1.163 1.107 1.076 1.351 Malawi Kwacha : Pula 20.17 21.13 21.58 740 485 Mauritian Rupee : Pula 4.879 4.190 5.533 5.928 6.409 South African Rand : US Dollar 8.609 7.564 6.986 6.052 6.148 93
  • Imara Holdings Limited Group Annual Report - 30 April 2009 SHAREHOLDER INFORMATION AT 30 APRIL 2009 Top 20 shareholders of Imara Holdings Limited Total shares % Rank Name Reference Country held interest 1 Etana Holdings Limited RET 01 Mauritius 5 735 869 10,10 2 First National Nominees (Pty) Limited South Africa 3 751 453 6,61 3 Imara S P Limited Mauritius 3 613 450 6,36 4 Ian Charles Hannam United Kingdom 3 300 190 5,81 5 BTCS Nominees Limited RC 0008 United Kingdom 3 028 521 5,33 6 Barclays Botswana Nominees (Pty) Limited 067/001 Mauritius 2 870 829 5,06 7 Fahris Limited Isle of Man 2 667 397 4,70 8 Barclays Botswana Nominees (Pty) Limited SSB 001/1 United States 2 637 860 4,65 9 Elsingham Investments Limited Guernsey 2 574 576 4,53 10 Cannon International Limited Guernsey 2 070 000 3,65 11 Rhodora Limited Jersey 1 910 830 3,37 12 Idlewild Investments Limited Switzerland 1 383 159 2,44 13 Basfour 883 (Pty) Limited South Africa 1 356 564 2,39 14 Neil Mark Ostrer United Kingdom 1 174 300 2,07 15 Stock Market Investments Limited France 1 020 800 1,80 16 Neil Ramsay Burnett South Africa 1 000 000 1,76 17 BTCS Nominees Limited RT 0001 United Kingdom 938 650 1,65 18 Etana Holdings Limited RET 02 Mauritius 900 000 1,59 19 BTCS Nominees Limited RC 0001 United Kingdom 877 423 1,55 20 BTCS Nominees Limited RC 0068 United Kingdom 854 426 1,50 Total shares held by top 20 shareholders 43 666 297 76,91 Number of Legal status of shareholders shareholders Local Foreign % interest Individual Residents 157 963 479 - 1,70 Individual Residents 29 - 6 353 043 11,19 Companies 15 218 255 - 0,38 Companies 13 - 16 345 082 28,79 Nominees 8 1 048 458 - 1,85 Nominees 63 - 30 037 118 52,90 Investment Companies and Trusts 6 24 936 - 0,04 Investment Companies and Trusts 6 - 1 787 165 3,15 Other Organisations 1 700 - 0,00 298 2 255 828 54 522 408 100,00 94
  • Imara Holdings Limited Group Annual Report - 30 April 2009 SHAREHOLDER INFORMATION (continued) Shareholder spread No of shareholders Total shares held % interest 0 – 100 000 240 2 217 149 3,90 100 001 – 250 000 24 3 940 437 6.94 250 001 – 500 000 8 2 772 116 4,88 500 001 – 750 000 5 3 406 971 6,00 750 001 – 1 000 000 6 5 345 765 9,42 1 000 001 – 2 000 000 5 6 845 653 12,06 2 000 001 – 3 000 000 5 12 820 662 22,58 3 000 001 – 5 000 000 4 13 693 614 24,12 5 000 001 – 10 000 000 1 5 735 869 10,10 298 56 778 236 100,00 Director, employee and public shareholder analysis Total shares held No of shareholders % interest Directors of the company and its subsidiaries 22 345 494 15 39,36 Employees of the company and its subsidiaries 3 598 693 32 6,34 Public shareholders 30 834 049 251 54,30 Total 56 778 236 298 100,00 Geographical spread of shareholders No. of shareholders No. of shares held % interest Mauritius 26 16 885 224 29.74 United Kingdom 19 12 393 643 21.83 South Africa 32 8 215 896 14.47 Guernsey 5 5 048 166 8.89 United States of America 12 4 213 348 7.42 Isle of Man 1 2 667 397 4.70 Botswana 191 2 493 146 4.39 Jersey 1 1 910 830 3.37 Switzerland 3 1 549 163 2.73 France 2 1 032 800 1.82 Australia 2 340 800 0.60 Zimbabwe 3 22 823 0.04 Germany 1 5 000 0.01 298 56 778 236 100.00 95
  • Imara Holdings Limited Group Annual Report - 30 April 2009 SHAREHOLDERS’ DIARY The following dates are important for shareholders: 22 July 2009 Board approval of the audited Group results for the year ended 30 April 2009 30 July 2009 Announcement of audited Group results for the year ended 30 April 2009 and dividend declaration 4 August 2009 Analyst briefing – Botswana 21 August 2009 Closure of share register and last date to register for dividend 28 August 2009 Details of Scrip Dividend Offer and Form of Election circulated to shareholders 18 September 2009 Latest date for receipt of Forms of Election regarding the scrip dividend 2 October 2009 Share certificates or cheques and dividend warrants mailed to shareholders 4 September 2009 Notice of Annual General Meeting and Annual Report posted to shareholders 29 September 2009 Annual General Meeting – Gaborone, Botswana 96
  • Imara Holdings Limited Group Annual Report - 30 April 2009 NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the seventh Annual General Meeting of members of the Company will be held at the Gaborone Sun Hotel, Gaborone, Botswana on Tuesday, 29 September 2009 at 1600 hours for the following purpose: ORDINARY BUSINESS 1. APPROVAL OF MINUTES To approve the minutes of the previous Annual General Meeting of members held on 8 October 2008 at the Gaborone Sun Hotel, Gaborone, Botswana. 2. APPROVAL OF ANNUAL FINANCIAL STATEMENTS Resolution 1: To receive, consider and if deemed fit, approve and adopt the audited Annual Financial Statements for the year ended 30 April 2009, together with the Report of the Directors and Independent Auditors thereon. 3. ELECTION OF DIRECTORS Resolution 2: To elect Directors in place of those retiring in accordance with the provisions of the company’s Constitution. Mrs ACH Mackeurtan and Messrs RH Macleod and PJS Gray retire as directors in terms of Clause 20 of the Constitution. Being available and eligible, they offer themselves for re-election. PJS 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 SM Ndoro. RR Matthew, who has been a director of the company since 30 July 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. 4. DIRECTORS REMUNERATION Resolution 3: To approve the remuneration of Directors for the year ended 30 April 2009. Directors’ remuneration for the year ended 30 April 2009 amounted to P 22 320 591, (2008: P 11 115 754 ). 5. ORDINARY DIVIDEND Resolution 4: To approve the payment of an ordinary dividend of 3 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 21 August 2009. The directors have recommended the payment of a dividend of 3 thebe per share in respect of the year ended 30 April 2009. 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 will be mailed to shareholders on 28 August 2009. 6. AUDITORS REMUNERATION Resolution 5: To approve the remuneration of the Independent Auditors for the year ended 30 April 2009. Auditors remuneration for the year ended 30 April 2009 amounted to P1 937 434, (2008: P 1 722 148). The current year fee includes an amount of P 442 016 which relates to the prior year. 97
  • Imara Holdings Limited Group Annual Report - 30 April 2009 NOTICE OF ANNUAL GENERAL MEETING (continued) ORDINARY BUSINESS (continued) 7. APPOINTMENT OF INDEPENDENT AUDITORS Resolution 6: To appoint Independent Auditors for the ensuing year ending 30 April 2010. Messrs Ernst & Young have indicated a willingness to continue as Independent Auditors to the company for the ensuing year. 8. 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 25 August 2009 98
  • IMARA HOLDINGS LIMITED Form of Proxy For use at the seventh Annual General Meeting of members of the company to be held at the Gaborone Sun Hotel, Gaborone, Botswana on Tuesday, 29 September 2009 at 1600 hours 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 Ordinary Resolution 1 Ordinary Resolution 2 Ordinary Resolution 3 Ordinary Resolution 4 Ordinary Resolution 5 Ordinary Resolution 6 Signed at _____________________ on ___________________________ 2009 Signature_________________________________________________________ Assisted by (if applicable) ____________________________________________ Assisted by (if applicable) ____________________________________________ 99
  • 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 authorised 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 previously been recorded by the Company Secretary or is waived by 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. 100