Imara annual 2010 report


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Our performance this year is a sober reminder that African capital markets have not yet fully recovered from the impact of the global crisis. The period under review has produced disappointing results and our financial performance has been difficult to accurately forecast. Revenue for the year declined by 9% to P 92.81 million, whilst attributable earnings decreased by 96% to P 246 765...

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Imara annual 2010 report

  2. 2. CONTENTS ‘Investing in Africa’ Essay 8 Group Profile 14 Directorate and Group Management 15 International Footprint and Regional Offices 16 Divisional Structure 17 Group Organisational Structure 18 Chairman’s Statement 22 Chief Executive Officer’s Review of Operations 24 Report of the Directors 30 Corporate Governance 36 Glossary 42 Five Year Financial Highlights and Ratios 44 Graphical Five Year Financial Highlights and Ratios 46 Independent Auditor’s Report 49 Consolidated Income Statement 50 Consolidated Statement of Comprehensive Income 51 Consolidated Statement of Financial Position 52 Consolidated Statement of Cash Flows 53 Consolidated Statement of Changes in Equity 54 Notes to the Consolidated Financial Statements 57 Shareholder Information 121 Notice of Annual General Meeting 123 Form of Proxy Attached
  3. 3. Developing the theme established in our new corporate identity, this Annual Report features six original compositions, created for Imara, by renowned South African artist Athol Moult. The series considers African traditions of counting, currency and trade. These pieces are the first acquisi- tions by The Imara Collection, a compendium of photographic work which, year-by-year, will illustrate ‘Investing in Africa’ through different lenses. Photographs from The Imara Collection will be published exclusively in our Annual Report.
  4. 4. Trading in Africa Challenged by the lack of infrastructure and the natural environment, early traders frequently had to make use of rather unusual modes of transport in order to reach their destinations. Versatility has long been a vital part of exploration and commerce in Africa.
  5. 5. To accompany the series of compositions commissioned from Athol Moult for this Report, Imara asked James Retief, editor of JSE Magazine, to explore Africa’s investment heritage and potential in words. This is his account. Investing in Africa Now the darling of the global investment community, Africa’s long and rich trade and investment history has provided an excellent foundation for its position as a world-class manufacturer and consumer and investment destination Trade history Early European explorers regarded expansive tracts of Africa, particularly those south of the Sahara, as devoid of civilization, yet little did they realise that this was the very land from which their forebears had originated, some 40 000 years ago. These forefathers had been very active, busying themselves with the development of sound agricultural skills; cultivating crops such as wheat and barley and raising livestock. As they travelled around the continent and came into contact with tribes from other regions, they bartered these goods – thus starting the rich history of trade in Africa. Despite barter of agricultural goods being the predominant means of trade in ancient Africa, the continent holds pride of place in the history of money with Egypt having used metal rings as currency 2 500 years BC. Later, this evolved to include the use of items that enjoyed special advantages as stores of value, including livestock, salt bars, jewellery, beads, manilla currency (X-shaped rings of bronze), textiles and shells. The rise of cities and empires was not only stimulated by this trade, but also helped strengthen the African economy. Consider the strong trade relations formed between Egypt and the Mediterranean region as well as the Ethiopian and Eritrean trade links reaching as far as the Byzantine Empire and India where iron, copper and ivory were traded for Indian fabrics. The Swahili kingdoms of south-east Africa also provided important trading ports for commerce with the Middle and Far East while Central Africa traded gold and bronze for Chinese pottery. PAGE | 8
  6. 6. African currency Africa boasts a great variety of currencies in many different sizes, colours and denominations, with several reflecting the colonial history of the continent. The copper Katanga cross was a form of money used in and around the Congo in the 19th and early 20th centuries.
  7. 7. The best investment opportunities are found where perception differs from reality and Africa often fits that bill perfectly. But it was the arrival of small and relatively fast ships that facilitated business ties between Europe and Africa. Portugal was first up, with slaves being traded for gems and spices. Soon, other European powers such as France, Denmark, Holland, Belgium and Britain developed their own links with the continent. The Europeans quickly realised the potential profits that could be made by colonising large portions of Africa, cultivating cash crops and exploiting the region’s mineral resources and cheap labour. This quick-buck mentality resulted in widespread environmental degradation and poor infrastructure development, something the region has worked very hard at rectifying. While there are still numerous challenges regarding the legacy of colonialism, the continent has made great strides in developing sound infrastructure, including good road and rail networks, ports and airports, telecommunications, and banking services to name a few. A matter of attraction While the socio-political landscape of Africa has changed significantly over the last century, the continent can still thank its fertile lands and rich resources for the continued attraction of trade and investment. The biggest news in recent years has been the discovery of enormous oil reserves, which have resulted in Africa becoming the third most attractive investment destination following south-east Asia and India. Agriculture has always formed an integral part of Africa’s economy with large-scale farming of cash crops such as coffee, cotton, cocoa and rubber generating income worth millions of dollars. Exchange programmes with countries such as Brazil have focused on sharing technical advances and agricultural knowledge and have resulted in increased production. Africa is now a viable agricultural trading partner and source of much of the world’s food resources. But Africa is not just about abundant arable land and what can grow in it or graze off it. The continent is also blessed with vast mineral resources and more than its fair share of gifted industrialists and entrepreneurs. Minerals are one of the continent’s most valuable commodities and are concentrated in the gold, diamond and copper reserves of the southern nations. Oil, another big earner for the continent, is concentrated in Nigeria, Libya, Algeria, Equatorial Guinea, Sudan, Chad, Uganda, Ghana and Gabon. In 2008, Angola surpassed Nigeria as Africa’s largest, and the world’s eighth largest, producer of oil. With deep reserves and the world’s seemingly unquenchable thirst for ‘black gold’, Africa’s oil producers are well positioned to extract maximum benefit from this valuable resource. While Africa may be the least industrialised continent, abundant and inexpensive labour and the general improvement of political conditions have enhanced its manufacturing potential, resulting in economic and technological growth. This growth is further advanced by the boom in the information and communications technology (ICT) sector as well as the mining industry, with countries such as South Africa offering tax incentives in order to attract foreign direct investment in manufacturing projects. Zimbabwe is also in the process of formulating an ICT bill that will facilitate further investment in the country’s ICT sector and many new investment opportunities, including improvement of the country’s fibre optic infrastructure and connection to various undersea cable landing stations. PAGE | 10
  8. 8. The world’s growing demand for ‘green’ technologies has resulted in African countries such as Mauritius, developing new ecologically focused manufacturing processes. This approach includes using renewable sources of electricity to power the manufacture of goods, the use of recycled or recyclable raw materials and the responsible management of waste and emissions. As an emerging market, with only basic legacy infrastructure, Africa is perfectly positioned to widely apply green technologies in its industrial and manufacturing processes. By doing so, the continent has the potential to actually show a lead to the established commodity-producing nations that are bogged down by outdated technologies, thereby opening new markets for African goods. The stratospheric growth of mobile technology in Africa cannot be overemphasised. As a result of the previously poor terrestrial ICT infrastructure, the availability of mobile technology in Africa in the last two decades has led to the continent sporting the highest growth rate of cellular subscribers in the world. In Zimbabwe, the mobile subscriber base more than doubled in 2009 and currently stands at close to four million subscribers – a clear indication of the huge latent market and the renewed faith of mobile operators in the country. In addition to offering a means of communication to millions of previously disconnected Africans, mobile technology has also facilitated access to the internet, mobile banking, mobile TV in select markets, mobile health and agricultural services and even real time commodities market updates. Besides the manner in which this technology has facilitated and promoted being able to do business in Africa, a slew of very favourable investment opportunities has arisen out of this particularly promising and profitable sector. Current affairs While many analysts rank the continent’s investment opportunities highly, the appeal of Africa is constantly under threat from political instability and poor regulatory practice. Importantly though, there have been a number of positive developments aimed at improving the appeal of the region as an investment destination, including the continued democratisation of dictatorial governments, market liberalisation, better governance, real economic growth and a progressive approach to social issues. Figures released by the International Monetary Fund (IMF) in January 2010 indicated that Africa’s economy had grown in 2009 – while most other economies were shrinking. The IMF has raised its growth forecast for Africa for this year (4.3%) and 2011 (5.3%) – far above the projected figures expected for Europe and the United States. While there are pockets of political instability, most African nations have managed to maintain sustained political stability. This goes a long way to improving the investment potential of the region, particularly in the eyes of foreign investors who frequently perceive the continent to be wracked by strife. The best investment opportunities are found where perception differs from reality and Africa often fits that bill perfectly. Extensive business and, by association, investment opportunities exist in many sectors including ICT and financial services, agriculture, infrastructure development such as dams, road and rail networks, renewable energy such a hydro-electric and nuclear power plants, manufacturing consumer goods, pharmaceuticals and, of course, tourism. Botswana, for example, has numerous investment opportunities in the tourism sector, from the development of high-end lodges to the establishment of public-private partnerships with the country’s national parks authority. Opportunities also exist in the development of water transfer infrastructure and the manufacture of leather goods such as belts, handbags and shoes. PAGE | 11
  9. 9. The hosting of the 2010 FIFA World Cup in South Africa firmly placed the continent in the global limelight. What surprised many, particularly the continent’s now red-faced detractors, was the hugely successful and capable manner in which the event was managed. This caused many investors to sit up and take notice and has definitely contributed to positioning South Africa, and Africa as a whole, as a viable and attractive investment alternative. The recently published Doing Business 2010 survey produced by the World Bank reported a boom in regulatory reforms, with 67 being recorded in 29 of the 46 sub-Saharan countries. The survey ranks economies based on 10 indicators of business regulation, in effect rating the business-friendliness of nations. Rwanda took the laurels as the world’s top reformer, a first for a sub-Saharan African country. Rwanda’s success is largely due to reforms in seven of the 10 regulatory areas surveyed, which now make it much quicker and easier for entrepreneurs to set up businesses. Thanks to the country’s reorganised registry and statutory time limits, property transfers are now conducted more expeditiously. In addition, imports and exports are now handled in a more efficient manner, investors are offered better protection, a wider range of assets can be used as security for accessing loans, and insolvency reorganisation has been streamlined. These regulatory reforms are of cardinal importance not only in helping businesses survive during times of economic crisis and uncertainty, but also aiding to rebuild businesses when the economy becomes more favourable. In post-conflict regions, reforms are actively improving the regulatory framework for private sector-led development as illustrated by Liberia where eased procedures for business start-up and reduced fees for construction permits have been introduced. Sierra Leone has drafted legislation to improve investor protection and access to credit, as well as made provision for a one-stop centre for business registration. Other leading African reformers include Burkina Faso, Mali, Angola, Cameroon, Ethiopia and South Africa, with Liberia and Egypt also featuring among the top-10 regional reformers. All of these efforts point to the willingness of the region to facilitate and provide a secure trade and investment location. People, planet and profit Gone are the days when business was focused merely on extracting maximum profit. Responsible investing is a significant theme in the world today with the focus firmly on the triple bottom line of people, planet and profit. By following these sustainable business strategies, African companies and their investors alike are playing a fundamental role in furthering the success of the continent. Today’s investors want their investment choices to be backed by a degree of social integrity. It is with this in mind that reforms are being made in terms of corporate governance and the way companies report. In South Africa, reporting requirements already focus on more than merely financials and many companies are already reporting on issues related to sustainability and their social and environmental impact. By advancing this approach to business, issues of community involvement and community development, improvement of education and healthcare, promotion of clean and renewable energy and sustainable infrastructure development will become embedded in the way companies operate. PAGE | 12
  10. 10. Responsible investing is a significant theme in the world today with the focus firmly on the triple bottom line of people, planet and profit. In 2004 the Johannesburg Stock Exchange (JSE) in South Africa launched the Socially Responsible Investment (SRI) Index with the aim of measuring compliance by companies with triple bottom line criteria around economic, environmental and social sustainability. The SRI Index acts as a tool for investors to select certified good corporate citizens and provide a benchmark for companies looking to improve their corporate responsibility. The SRI index was the first index of this nature in an emerging market and the first in the world to be launched by a securities exchange. Many investors now use the index to inform their investment decisions and, as the approach gains popularity, it is inevitable that the concept will be replicated by other African exchanges. Challenges One of Africa’s biggest challenges is finding the requisite degree of liquidity to ensure suitable levels of investment. The establishment of common markets and pooling resources is one possible solution to providing such liquidity. These markets will also ultimately make it possible to trade shares and bonds across borders, move capital, goods and services, and labour between partner countries, and provide for the establishment of shared trading platforms and exchanges. The official agreement establishing the East African Community was signed on 1 July 2010 and while it may take a while for all the partners to amend their legislation to fully implement all aspects of the scheme, citizens of some countries are already able to move freely from one member state to the other. One of the critical challenges facing the African investment environment is the availability and speed at which information is made available to investors and analysts. The current asymmetrical flow of information is not conducive to formulating accurate and useful market analysis and many investment opportunities are being lost as a result. However, many African stock markets are investigating the possibility of sharing infrastructure and systems which should go some way to improving the flow and speed of information. One example of this is the use by the Namibian Stock Exchange of the same trading platform as the JSE. The harmonisation of laws and listing and reporting requirements between neighbouring countries will further facilitate the trading process, resulting in virtually endless investment opportunities. Africa’s time Having for a long time been considered the delinquent continent, Africa has transformed itself into one of the fastest-growing regions in the world, featuring robust and resilient economies, a stable banking sector, strong markets, liberalising policies and undiscovered, high-quality and fast-growing companies. With economic growth figures of between 5% and 8%, returns on investment frequently surpassing those of developed economies and the income levels of the one billion-strong population ever rising (thanks largely to globalisation and the unabated demand for goods from countries such as China), the investment potential is huge. Investors can choose from banks, mining, retail, manufacturing and mobile phone companies, all with good prospects, healthy balance sheets and respectable price earnings ratios. Africa is now a global competitor and a premium investment destination. Now is Africa’s time. PAGE | 13
  11. 11. 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 First Floor, Time Square Plot 134, Independence Avenue, Gaborone, Botswana 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) Standard Bank Limited (Mauritius) Reporting currency Botswana Pula (P) Botswana Stock Exchange code IMARA Reuters code IMRA.BT Transfer Secretaries Corpserve Botswana First Floor, Unit 3, Block A, Plot 117 Millennium Office Park, Kgale Hill, Gaborone Telephone: +267 393 2244, Facsimile: +267 393 2243 email: Business addresses & contact details Botswana Second Floor, Unit 3, Block A, Plot 117 Millennium Office Park, Kgale Hill, Gaborone Telephone: +267 318 8708, Facsimile: +267 319 1767 South Africa Imara House, Block 3 257 Oxford Road, Illovo 2116, Johannesburg Telephone: +27 11 550 6100, Facsimile: +27 11 550 6110 PAGE | 14
  12. 12. DIRECTORATE AND GROUP MANAGEMENT Directorate Imara Holdings Limited SM Ndoro Chairman Zimbabwe Non Executive Appointed 29 September 2009 PJS Gray Chairman United Kingdom Non Executive Retired 29 September 2009 PJS Gray United Kingdom Non Executive Resigned 14 March 2010 MJS Tunmer Chief Executive South Africa Executive AR Fleming United Kingdom Non Executive GE Johns Botswana Non Executive JR Legat United Kingdom Executive ACH Mackeurtan South Africa Executive RH Macleod ** South Africa Executive L Maine ** Botswana Non Executive Appointed 1 December 2009 RR Matthews United Kingdom Non Executive Resigned 29 September 2009 DE Stone South Africa Executive ** Subject to Non Bank Financial Institutions Regulatory Authority, (“NBFIRA”) formal approval. Company Secretary DE Stone Botswana Stock Exchange Compliance Officer DE Stone Audit Committee GE Johns Interim Chairman Non Executive Appointed 14 March 2010 L Maine Non Executive Appointed 1 December 2009 RR Matthews Non Executive Resigned 29 September 2009 PJS Gray Chairman Non Executive Resigned 14 March 2010 SM Ndoro By invitation Non Executive DE Stone By invitation Executive Remuneration Committee GE Johns Chairman Non Executive Appointed 14 March 2010 SM Ndoro Non Executive L Maine Non Executive Appointed 1 December 2009 PJS Gray Non Executive Resigned 14 March 2010 RR Matthews Non Executive Resigned 29 September 2009 Nominations Committee SM Ndoro Chairman Non Executive Appointed 14 March 2010 PJS Gray Chairman Non Executive Resigned 14 March 2010 ACH Mackeurtan Executive MJS Tunmer Executive Management MJS Tunmer Chief Executive Officer DE Stone Chief Financial Officer JR Legat Head of Asset Management RH Macleod Head of Corporate Finance MJS Tunmer Head of Stockbroking PAGE | 15
  13. 13. INTERNATIONAL FOOTPRINT AND REGIONAL OFFICES SCOTLAND UAE NIGERIA KENYA MALAWI ANGOLA ZAMBIA ZIMBABWE MAURITIUS BOTSWANA SOUTH AFRICA OFFICES (including Associates, Partners and Representatives) Angola Scotland Luanda +244 222 372 029 Edinburgh +44 131 550 3737 Botswana South Africa Gaborone +267 318 8708 Johannesburg +27 11 550 6100 Kenya United Arab Emirates Nairobi +254-20342756 Dubai +971 566 019 024 Malawi Zambia Blantyre +265 1 822 803 Lusaka +260 211 232 455 Mauritius Zimbabwe Mauritius +230 464 9799 Harare +263 4 790 090 Nigeria Lagos +234 1 4610691 PAGE | 16
  14. 14. DIVISIONAL STRUCTURE Imara Group Asset Management Corporate Finance Stockbroking Trust Administration Imara Asset Imara Corporate Imara SP Reid Imara Beresford Imara Holdings Management Finance South (Pty) Ltd International Limited Limited Limited Africa (Pty) Ltd *BVI *South Africa *South Africa *Botswana *Mauritius Imara Asset Imara Botswana Imara Africa Securities Associate Africa Investments Management UK Limited (Pty) Limited Limited Limited *United Kingdom *Botswana *Botswana *BVI Imara Asset Imara Corporate Imara Securities Imara Capital Management South Finance (Pvt) Limited Angola SVM Limitada South Africa (Pty) Ltd Africa (Pty) Ltd *South Africa *Zimbabwe *Angola *South Africa Associate Imara Asset Stockbrokers Imara Capital Management (Pty) Malawi Limited Limited Limited *Botswana *Malawi *Botswana Associate Imara Asset C F Africa Limited Management (Pvt) Imara Edwards Limited Securities *Zimbabwe (Pvt) Limited *BVI Associate *Zimbabwe Associate Imara Trademarks Limited Captial Securities (Pty) Ltd *BVI *Botswana Imara Capital Limited *BVI Imara Capital Kenya Limited *Kenya Imara Capital Limited Zambia *Zambia Capital Group (Pty) Ltd *Botswana Imara Capital Zimbabwe Legend (Pvt) Limited Active Trading Company *Zimbabwe Associate Investment Holding or Group Parent Company Imara Capital Botswana (Pty) Ltd Dormant or Non Trading Company *Country of Registration *Botswana PAGE | 17
  15. 15. GROUP ORGANISATIONAL STRUCTURE Group Holding Company, incorporated in Botswana and a registered Imara Holdings Limited International Financial Services Company (Offshore Investment Status) 100% 100% 100% 100% 100% Imara Imara Africa Investments Imara Asset Management Limited Capital Limited Imara Capital Asset Management Limited Botswana (Pty) Ltd UK Limited *BVI *BVI *BVI 100% 25% Imara Management Stockbrokers 100% Africa Securities Contracts Malawi Limited (Pty) Limited Imara Global Fund Imara 100% Botswana Limited Imara African Opportunities Fund Imara 100% Capital Limited Imara (Dormant) Africa Series Fund Imara 51% Asset Management Sub Funds: (Pty) Limited – Zimbabwe Fund – Nigeria Fund – East Africa Fund – African Resources Fund Imara Capital Zingwenya Capital Group South Africa Holdings 100% (Pty) Limited (Pty) Ltd (Pty) Ltd 80% 20% 50.10% Imara Imara Asset Imara SP Reid Corporate Finance Management Capital Securities (Pty) Ltd South Africa South Africa (Pty) Limited (Stockbroking) (Pty) Ltd (Pty) Ltd PAGE | 18
  16. 16. 69.3% 100% 25.01% 100% Imara Trademarks Imara Beresford Imara CF Africa Limited Limited International Limited Capital Limited Non Trading Zambia Companies *BVI *BVI *Mauritius 47.2% 100% 25% Imara Beresford Imara Trust Company Stockbrokers Imara Capital 100% Capital Zimbabwe Trust and Corporate Zambia Limited (Pvt) Limited Services (Mauritius) Kenya Limited Limited 100% 100% 100% Imara African Private Equity 100% Fund Managers (Pty) Ltd Imara Imara Beresford Nominees Edwards Securities One Limited (Pvt) Limited Limited Imara Securities Angola 50% SVM Limitada Imara Beresford Imara Asset Management Two Limited One (Pvt) Limited Limited Imara Imara Corporate Finance Directors Zimbabwe Limited (Pvt) Limited Legend Botswana Kenya South Africa Angola British Virgin Islands United Kingdom Zimbabwe Zambia Malawi Mauritius PAGE | 19
  17. 17. Mokorro boys The rivers of Africa became natural trading routes and were used to transport goods such as maize, pumpkins, animal skins and precious metals. The many African banknotes used to pay for these goods nowadays depict the continent’s trade heritage and rich bounty, including images of tobacco farming, gold mining and industry.
  18. 18. CHAIRMAN’S STATEMENT Our performance this year is a sober reminder It is encouraging to report that income from that African capital markets have not yet fully associates has grown more than 12 fold in the recovered from the impact of the global crisis. year to P 1.92 million, a clear indication that The period under review has produced our acquisition strategy is working and yielding disappointing results and our financial positive momentum. In line with longer term performance has been difficult to accurately strategic objectives, the Group has options forecast. Revenue for the year declined by 9% to increase our equity stakes in these entities to P 92.81 million, whilst attributable earnings going forward and we will continue to look decreased by 96% to P 246 765. Although the for other expansion opportunities. Income Statement is below expectation, the Group remains resilient and the Statement of Financial Position has strengthened with cash and Our people cash equivalents improving by P 21.89 million to P 123.40 million, and with no gearing. This Our remuneration policies are designed to creates a strong foundation for a more retain and incentivise our staff, whilst also profitable company going forward. In this attracting the best talent available in the respect, we have been able to protect markets where we operate. Despite the shareholder wealth with shareholders’ equity austerity measures which have been in place having grown by P 8.64 million during the year. throughout most of the year, in the form of salary reductions at director and senior In addition, we have been able to contain management level, I am pleased to report that operating expenses in a difficult trading we have been able to retain all key personnel environment. Operating expenses at P 82.27 and skill sets and are therefore well positioned million, are almost P 200 000 lower than the to take advantage of any improvement in previous year. Although not immediately trading conditions in the future. apparent in the Income Statement, the Stockbroking and Asset Management Divisions The current Share Option Scheme is nearing have generated strong revenue streams and the end of its life cycle and we plan to profits, whilst funds under management have implement a new scheme in its place. recovered significantly during the past year. Share options are seen as a key component Unfortunately, this improved performance has of overall remuneration packages and been partially reversed by a poor performance in the Corporate Finance Division, which is shareholders will be asked to approve a partly attributable to timing issues on significant new Share Option Scheme at the forthcoming mandates that were not closed in the year under Annual General Meeting. review. However, it is anticipated that these will start to come through this year. The Group will also benefit from the cost cutting measures Outlook introduced in the Corporate Finance Division during the second half of the year. We remain cautiously optimistic about our future prospects. Annuity income streams On the positive side, the Imara Funds have continue to improve, albeit slowly. Our continued to grow with good inflows and with acquisition strategy remains robust and is limited redemptions. The Asset Management yielding positive returns, and the Group company in South Africa has become profitable footprint continues to expand. Using our this year and our South African flagship fund, strong Statement of Financial Position as the Imara Equity Fund, has been favorably a springboard, we will continue to focus received and continues to perform well. on improving performance in our existing We believe that the Asset Management businesses by extending our services and business in South Africa is now set to deliver product range, whilst looking for opportunities long term growth and profits. in new markets. PAGE | 22
  19. 19. We do however recognise that current Lethebe Maine was appointed as a non uncertainties in world economies and the executive director of the Company on possibility of a further slow down in economic 1 December 2009. His appointment is still activity could continue to negatively impact subject to formal approval by the Non Bank our financial performance in 2011. Financial Institutions Regulatory Authority, (“NBFIRA”), and the application is pending. As you have already witnessed in this Annual As a former Ombudsman of Botswana, his Report, Imara has new clothing! The Group appointment will further strengthen the Board, has recently embarked on an extensive and will improve the balance between executive re-branding exercise, strengthening the image and non executive directors. and re-positioning the Group. We hope that this will herald a new beginning for our Group and coincide with improved financial performance. Dividend I hope that you like it. The story behind this new imagery is exciting and is based on our African Despite the Group’s strong cash position, your heritage and aspirations for the continent. Board felt it prudent not to pay a dividend for We believe it will inspire our stakeholders as we the year. It is, however, important to note that continue to build a unified and cohesive entity since inception and the first dividend paid in in a seemingly diverse continent. August 2006, Imara has paid its shareholders a cumulative total dividend of P 38.90 million of which P 23.07 million has been paid in cash Governance and Directorate and P 15.83 million in the form of scrip dividends, which translates to the allotment of 1.81 million Strong corporate governance and financial new shares. sustainability are essential for all shareholders in Imara. Your Board of Directors strives to ensure that the Company conducts business Vote of thanks with integrity, the highest ethical standards and complies fully with applicable legislation and Finally, I would like to thank our clients for regulations. The Board is also committed to entrusting us with their wealth management, the adoption and implementation of govern- all of our staff for their hard work over the past ance policies outlined in the King III Code on Corporate Governance. year and my fellow directors for their guidance and continued support. In addition, the Group Philip Gray who served as Chairman of the benefits greatly from the commitment of the Board since 2004, retired as Chairman at the Chief Executive, Mark Tunmer, who continues to Annual General Meeting of the Company on demonstrate resilience and innovation in driving 29 September 2009. He subsequently resigned and implementing our strategy. I appreciate his as a non executive director on 14 March 2010. commitment. Philip has a thorough and comprehensive understanding of governance issues and was largely instrumental in developing and imple- menting the governance policies and practices which exist within the Imara Group today. His contribution in this area has been immense. SM NDORO Roger Matthews also retired as a non executive Chairman director at the Annual General Meeting of the 18 August 2010 Company on 29 September 2009. He has served on the Board since the formation of the Group in 2003 and has also made a valued contribution. PAGE | 23
  20. 20. CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS Group Review inflows were received into all products including those launched during the year, The year ended 30 April 2010 was again a while the redemptions of the previous year year of contrasting halves. Despite the global reversed to net subscriptions early on in the upswing, sub-Saharan African markets financial year. (excluding South Africa) lagged their larger peers in the more developed emerging The South African business, which was not markets. This was similar to their delayed affected by the global credit crunch to the downturn in early 2008, when emerging same extent as the rest of the operations, markets began to ease as the early signs of put in another credible year growing funds the credit crunch became apparent. In the under management by 28,3% in Rand terms, second half of the year African markets rose surpassing the peak set in 2008. The flagship more strongly closing the gap with the larger Imara Equity Fund has been well received markets, whilst the uncertainty created by the and continues to perform well. problems in Greece and the Eurozone left African markets largely unaffected. In Zimbabwe, the economy and stock market took on a whole new life under the US dollar Against this background the Group produced bringing to an end the destructive years of disappointing attributable earnings of hyperinflation. As a result, the Zimbabwe P 246 765, which is 96% below the 2009 business, an associate, rebounded and earnings, despite only a 9% decline in produced credible results in its first year revenue to P 92.8 million. It is, however, of a new environment. pleasing to note that the Group’s cash position Whilst the level of funds under management grew by P 21.89 million to P 123.40 million ended the year substantially up, average despite low profitability and acquisitions funds under management for the year were made during the year. Shareholders’ equity below the average for the financial year increased by P 8.64 million to P 140.82 million. ending 2009. As a result, revenues and The reclassification of the South African BEE profits for the full year were below those related interest bearing borrowings from achieved in 2009. Since the African markets long to short term also reduced gearing to have not yet recovered to their peak levels zero. Cost containment initiatives resulted of April 2008, the offshore funds traded at in a marginal reduction in total operating levels below their high water marks. As such, expenses at P 82.27 million, while staff costs no performance fees were earned this year which comprise 40% of total expenses, as was the case in 2009. fell by 11,5%. Strong contributions were again made by the Asset Management and In Mauritius, it is pleasing to report the Stockbroking Divisions, while the Corporate successful merger in October 2009 of Imara Finance Division registered a loss as it Trust Company Mauritius Limited and rebuilt the pipeline of mandates. Beresford Trust and Corporate Services (Mauritius) Limited under a new holding company, Imara Beresford International Asset Management Limited (“Imara Beresford”). Imara’s initial shareholding is 25% with an option to In the Asset Management Division, funds increase this to 51% over five years. under management bounced back ending The merged business has a strong and the year up by P 874.2 million at P 2.76 billion. growing client base and it continues to Although this was lower than the peak level of introduce new services. For instance, P 3.63 billion the previous year, it represents Beresford Pension Trust Limited has been a credible recovery in a difficult and uncertain licensed by the Financial Services Commis- global macro environment. Encouraging sion as a Pension Fund Administrator. PAGE | 24
  21. 21. Trading beads Early African traders established trade routes across the length and breadth of the continent, buying and selling basic goods such as fish and grains, as well as exotic products such as ivory and beads. Trading beads, brought to Africa’s shores as ballast on ships, were used as currency for African commodities.
  22. 22. CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS Our Pension Scheme, the Beresford increased volatility in the market. Proprietary International Pension Plan, has also been trading continued to be slow and as the approved by Her Majesty’s Revenue and market moved sideways with movements Customs (HMRC) in the UK as a Qualifying occurring randomly, traders became more Recognised Overseas Pension Scheme cautious, looking for trading opportunities in (QROPS) in Mauritius. A number of pension a mix of contrary signals. trusts for UK citizens, who have become non- resident to the UK, have already been set up The slower recovery of African markets in the and this line of business looks promising as first half of the year, impacted negatively on the legislative framework for trusts and the tax the performance of Imara Africa Securities environment in Mauritius is very favourable in Botswana. However, towards the end of compared to other traditional jurisdictions. the year, as markets improved, volumes were better. Work is underway to significantly Imara Beresford has also been admitted as reposition this business to ensure that it is the sole Mauritius member of MGI, which is well placed to service the increasing one of the largest associations of independent international interest in Africa. With this in auditing, accounting and consulting firms in mind, a head of research and a marketing the world. Founded in 1947, the association team have been put in place and a number has 283 offices located in 80 countries. As a of new products are being investigated in an member of the association, Imara Beresford effort to augment the product offering. This will have access to a global network of will position the business as a truly “one- professionals which can be an important stop shop” African securities business. source of business referrals. The outlook for this business is most encouraging. Turning to our associates, Stockbrokers Malawi had a disappointing year resulting in the company having to be recapitalised by Stockbroking Imara and our partners, the National Bank of Malawi. However, new management is in Imara SP Reid made a significant contribution place and it is anticipated that the business to the Group and was the highest profit should register a small profit this year. contributor on a pre-tax basis accounting Stockbrokers Zambia also returned a small for P 12.29 million of profit before tax. loss with volumes on the Lusaka Stock This was against a backdrop of volatile Exchange remaining subdued. The first six market conditions and a strong Rand. months of 2010 are encouraging and this Although turnover was down, clients business is expected to return to profit this remained resilient and trading volumes, year. Capital Securities in Botswana, which in general were ahead of conservative became a 51% subsidiary as at 1 November expectations, despite having declined on an 2009, also had a difficult year as volumes on annual basis. Brokerage was under pressure the Botswana Stock Exchange remained due not only to market conditions, but also depressed. Fortunately this has turned around increased competition from the banks, which in 2010 and the company has traded well so have stepped up their marketing campaigns far this year. and cut brokerage rates. Despite these conditions, average brokerage per month In Zimbabwe, Imara Edwards Securities was only marginally lower while at year end, traded very strongly for the first half of assets under administration had risen the year. The political impasse that started considerably to in excess of R 10 billion. in September 2009 slowed foreign interest and this was dramatically increased by the Turnover from the derivates desk grew against gazetting in February 2010 of the regulations expectation, but with increased risk due to the relating to the Indigenisation and Economic PAGE | 26
  23. 23. Empowerment Act. These mandated the rebuilding the pipeline lost in 2008/2009 and transfer of 51% ownership of all businesses working on mandates, a number of which valued at over USD 500,000 within five years were expected to be complete by year end to indigenous Zimbabweans. In addition, but carried over to the new financial year. brokerage rates, which are legislated in Of note was the final completion of the Zimbabwe, were reduced from 2% to 1% in disposal of a 50% shareholding in Botswana January 2010. Despite this environment the Soda Ash on behalf of a grouping led by company generated profits, although so far Anglo American. This was one of our longest this year volumes are significantly down mandates as work on it began in 2006. resulting in the company showing a small Currently a number of mandates are being loss for the first four months. worked on in Botswana, South Africa, Tanzania, Zambia and Zimbabwe. Post year- The Imara Securities Angola SCVM Limitada end we were the lead advisers on the very office was established in September 2009. successful listing of Cresta Marakanelo on However, progress towards the establishment the Botswana Stock Exchange in June 2010. of the market has been slow due to several There are also a number of exciting mandates macro factors, the most important of which being pursued, which involve privatisations included a sharp contraction in liquidity as well as listings on regional exchanges. levels due to a lower oil price and a Against this background it is planned to look contraction of foreign investment capital at resurrecting the Imara Participating inflows, primarily due to the still ailing Underwriting Programme, which was Eurozone capital markets. On the positive successfully launched in May 2008 but side, a B+ sovereign credit rating from S&P shelved later that year. In addition to this it is proposed to launch a Private Equity product and Fitch was recently achieved, which will later in the year. enable the country to tap into international capital markets to alleviate liquidity Although the Corporate Finance Division has bottlenecks. We intend to hit the ground been through very testing times we remain running when the market opens to ensure cautiously optimistic that it will make a positive that we are the broker of choice to the contribution to Group earnings this year. international investor. To achieve this, bottom-up research coverage of local Looking at our Zimbabwe Corporate Finance companies, as well comprehensive top- associate, the economics of Zimbabwe under down research, covering the broader dollarization have resulted in corporate economic developments has also begun. management generally having to contemplate Efforts are also constantly made to pre- capital raisings and other transactions that emptively market Angola to international they previously were hoping to avoid. investors, reiterating our position as the This resulted in a lot of work being undertaken forerunner in what is expected to be one with not too much closure. However, on the of sub-Saharan Africa’s larger markets. positive side, the company returned to profits for the first time in a number of years and work in progress indicates a much Corporate Finance improved year. The Corporate Finance Division was restructured in June 2009 when it became Associates apparent that costs needed to be reduced to assist its return to profitability. Staff Imara Capital Zimbabwe completed its first remuneration was reduced, on the basis that full year trading with US dollars as the an enhanced share of the fees earned would functional currency of the economy. go to staff. The year has largely been spent The ‘death’ of the Zimbabwe dollar brought PAGE | 27
  24. 24. CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONS an immediate end to the hyperinflation, equity market valuations and continues to which dominated the last few years, and attract new funds, both inside and out of allowed businesses to more accurately Zimbabwe, and to develop new products budget and measure performance. The year such as corporate debentures. It is was characterised by two halves. The anticipated that outside of simple market period from March to September 2009 appreciation there will be a relaxation of saw a rapid growth in industrial capacity exchange control, allowing us to place utilisation, significant restocking of the supply Zimbabwean institutional funds with Imara’s side of the economy and strong growth in suite of funds. banking deposits. The period following September 2009 has been characterised by The Memorandum of Understanding a levelling off of growth as liquidity constraints concluded in December 2008 with Chapel impacted on working capital. This coincided Hill Denham in Nigeria to work together, is with disagreements in the unity Government. beginning to show results against a much improved macro environment post the The Zimbabwe Stock Exchange made the banking crisis. A Memorandum of transfer to US dollars painlessly. The market Understanding was also signed with NIC traded at capitalisation levels of around Capital in Nairobi with regard to Corporate USD 3.5 - USD 4 billion for much of the year, Finance and Stockbroking. Results of this largely in line with levels in the previous few to date have been disappointing but we years. Foreign investors were net buyers and remain optimistic. The Asset Management local investors, net sellers, in reasonable Division however, continues to work volumes of, on average, USD 2 - USD 3 million well with ICEA Asset Management, who per day. In mid February 2010 new local are the co-managers of the Imara East ownership legislation impacted on foreign Africa Fund. We continue to look for inflows negatively effecting trading volumes. opportunities to grow and strengthen the business in Africa. Although the operating environment in Zimbabwe showed vast improvement over Imara Holdings remained listed on the the period prior to dollarization, significant Venture Capital Market of the Botswana constraints remain in place. The political Stock Exchange and it is still intended to outlook is uncertain, with the constitution apply to move to the main board once the drafting process slow in starting and minimum requirement of 300 public share- lacking in direction. The indigenisation holders is achieved. At present the Company legislation has put a dampener on foreign has 318 shareholders in total, with 275 investment and added a further layer of red deemed as public shareholders by the BSE. tape to local deal making. However, the recent amendments to the Act, are encour- Following the South African empowerment aging, and it is expected that investors’ transaction in 2007, in terms of which confidence will grow again as they see Zingwenya Holdings holds a 20% interest the practical application. While the in each of the South African operating Zimbabwe Stock Exchange is currently subsidiaries, the Imara South Africa Trust was trading on volumes too thin to sustain all established this year. The broad based Trust the brokers, Imara continues to enjoy a owns an effective 5% of the subsidiaries of reasonable market share. We remain Imara Capital South Africa (Pty) Limited and, confident that we have a viable business with this now in place, Imara South Africa and are well positioned for any upside. has achieved the recommended ownership Asset Management trades positively, requirements in terms of the Codes of Good even at current relatively depressed Practice on Black Economic Empowerment. PAGE | 28
  25. 25. Outlook in September 2009 and as a non executive director in March 2010. Philip was an active We are cautiously optimistic, despite the member of the Board from the formation of continuing uncertainty surrounding the Imara in 2003 and his knowledge of capital strength of the global recovery. markets and corporate governance has had The increasing interest in Africa is encour- a significant influence on what Imara is aging and should provide greater impetus today. I would also like to acknowledge the going forward. Most African markets have contribution made by Roger Matthews, who registered positive growth this calendar retired as a founder director at the AGM in year and this is expected to continue. September 2009. I am pleased to welcome Liquidity does, however, remain a constraint Lethebe Maine to the Board, whose legal in most markets. As always, we look and social knowledge will be most valuable. forward to the continuing recovery in Finally, I must thank the Imara team who have Zimbabwe where our associate is well worked extremely hard in what was a most placed to take advantage of an improving difficult year to ensure that Imara is well environment. Our new associates in Mauritius placed to go forward in a stronger Africa. and Zambia, and subsidiary in Botswana, are also well positioned to contribute to Group earnings. We also look forward to the launch of the stock exchange in Angola this year. Against this background of a stronger Africa, it is anticipated that Imara will produce improved earnings this year MJS TUNMER but as always this will be dependent on CHIEF EXECUTIVE OFFICER market conditions. 18 August 2010 During the course of 2010 we have been reviewing our corporate Vision and Purpose to provide a solid foundation for the future growth of the Group. ‘Investing in Africa’ is our new communications theme, which we have introduced in this Annual Report, and around which we will position and manage our brand going forward. Underpinned by a set of shared Values and our Mission to become the leader in wealth management in a successful Africa, we will be orienting our whole Group behind this rich idea. Imara is strong in name and resolute by nature. Our new corporate identity expresses this strategy inspirationally and equips each of the divisions and country operations with a brand of which they can truly be proud. In closing, I would like to thank my Chairman, Mike Ndoro, and the Board for their support and guidance. Special mention must be made of the tremendous contribution made by Philip Gray, who stood down as Chairman PAGE | 29
  26. 26. REPORT OF THE DIRECTORS The directors of Imara Holdings Limited have The holders of ordinary shares are entitled pleasure in presenting their report for the year to receive dividends as and when declared ended 30 April 2010. by the Company. All ordinary shares carry one vote per share without restriction. Nature of Business In respect of the year ended 30 April 2009, shareholders were given the option to Imara Holdings Limited is a Botswana registered receive their ordinary dividend of 3 thebe company, licenced by the International Financial per share, either in cash or to receive Services Centre (IFSC), and is the holding ordinary shares in lieu of the dividend company for a group of companies conducting entitlement. Shareholders electing to the following types of business, primarily for receive ordinary shares in lieu of their institutional and private clients: dividend were allotted shares at a price of P 4.25 per share. A total of 146 shareholders, - Asset Management holding 37 658 368 of the issued ordinary - Corporate Finance shares in the Company and representing - Stockbroking 66,09% of the total issued share capital of - Trust Administration and Custodial Services the Company, elected to receive shares in lieu of dividend, resulting in the allotment of There has been no significant change to the 240 061 new shares in the Company. nature of business from previous years. Authorised and Stated Capital Botswana Stock Exchange Authorised capital The Imara share was listed on the Venture The authorised share capital of the Company is Capital Market of the Botswana Stock 200 000 000 ordinary shares of no par value. Exchange on 4 October 2006. A minimum There has been no change in the authorised of 300 public shareholders is required for capital of the Company in the current year. a company to be listed on the main board of the Botswana Stock Exchange. It remains The un-issued ordinary shares are under the the Company’s intention to seek a listing control of the directors. on the main board once the minimum number of shareholders has been achieved. Stated capital As at 30 April 2010, Imara had a total of A summary of the movement in the stated 318 shareholders of which 275 were public capital of the Company as at 30 April 2010 and shareholders (2009 Total: 298 shareholders 2009 is as follows: of which 251 were public shareholders). Number of shares Stated capital 2010 2009 2010 2009 Balance at the beginning of the year 56 778 236 55 618 916 44 909 348 37 111 325 New shares issued : Scrip dividend 240 061 536 135 1 020 260 6 701 647 Share option scheme 857 934 594 420 758 040 854 750 Acquisition of client data base - 28 765 - 241 626 Acquisition of associate companies 286 188 - 1 845 333 - Balance at the end of the year 58 162 419 56 778 236 48 532 981 44 909 348 PAGE | 30
  27. 27. Trading shells Early traders used strings of shells to keep a record of cargo leaving and arriving from ports and other trading centres. The influence of tribes and races from other parts of the world can be seen in the faces of Africa’s people and by the many religions now practised on the continent.
  28. 28. REPORT OF THE DIRECTORS Accounting Policies and Disclosure statements were approved and adopted by the Board of Directors on 28 July 2010, and Messrs. The consolidated financial statements of the Group MJS Tunmer and DE Stone were authorised to and Company have been prepared on a going sign these statements on behalf of the Board. concern basis in accordance with International They have discharged their responsibility for the Financial Reporting Standards (IFRS), which signing of these financial statements by jointly comprise standards and interpretations signing the Report of the Directors. approved by the International Financial Reporting Standards Board and interpretations approved The un-audited financial statements for the Group by the International Financial Reporting for the six months ended 31 October 2009 were Interpretations Committee (IFRIC), and the announced on 4 December 2009 and reflected applicable requirements of the Botswana profit after tax for the Group of P 388 207. Companies Act (Companies Act, 2003). The audited results of the Group for the year The financial statements have been prepared on ended 30 April 2010, announced on 28 July 2010, an historical cost basis except for certain financial reflect profit after tax of P 500 729. Profit after instruments that are carried at fair value. tax for the second half of the year, therefore amounted of P 112 522. The accounting policies adopted in the preparation of the Group’s and the Company’s financial statements are consistent with those of the Cautionary Announcement previous financial year. The Group traded under a Cautionary Announcement from 31 July 2009 to 26 February Directors’ Responsibility Statement 2010. The Cautionary Announcement related to a possible regional acquisition and was The directors are responsible for the preparation withdrawn after the parties to the transaction and fair presentation of the financial statements agreed to terminate their discussions, due to of the Group and Company in accordance with the lack of unconditional regulatory approval International Financial Reporting Standards and for the proposed transaction. in a manner required by the Companies Act of Botswana (Companies Act, 2003). Change in Regulator This responsibility includes designing, implementing and maintaining internal controls With effect from 8 September 2009, the Group’s relevant to the preparation and fair presenta- primary regulator changed from the Bank of tion of financial statements that are free from Botswana to the newly constituted Non Bank material misstatement, whether due to fraud Financial Institutions Regulatory Authority, or error; selecting and consistently applying (“NBFIRA”). The regulatory reporting require- appropriate accounting policies and making ments of NBFIRA are the same as those that accounting estimates that are reasonable in applied previously. the circumstances. Audit and Risk Committee Financial Results In accordance with the recommendations of The audited results of the Group and Company the King Committee on corporate governance, are set out in the annual financial statements (King III), the composition of the Audit and Risk and accompanying notes. These financial Committee was changed during the year to PAGE | 32
  29. 29. comprise non executive directors only. The Audit and Risk Committee 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, compliance and internal control. The Audit and Risk Committee is also responsible for reviewing the financial statements of the Group and ensuring that such statements are presented in an IFRS compliant manner. 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. Directors and Company Secretary Details of the directors and Company Secretary are reflected on page 15 of this Annual Report. Lethebe Maine was appointed as a non executive director on 1 December 2009. His appointment is still subject to formal approval by NBFIRA. Philip Gray, who had been Chairman of the Board since 2004, retired as Chairman at the seventh Annual General Meeting on 29 September 2009. He was replaced as Chairman by Mike Ndoro. Mr Gray subsequently resigned as a non executive director of the Company on 14 March 2010. Roger Matthews, who had been a director of the Company since 2003, retired as a director of the Company at the end of the seventh Annual General Meeting on 29 September 2009. It remains the Directors’ Shareholding Company’s intention to seek a listing on Directors are not required, in terms of the Company’s Constitution, to hold shares in the the main board of the Company but the majority of directors have Botswana Stock independently elected to do so. Exchange once the As at 30 April 2010 and 31 July 2010 (the last practical minimum number of date prior to the publication of this Annual Report), the directors, directly and indirectly, held the shareholders has following shares in the Company: been achieved. PAGE | 33
  30. 30. REPORT OF THE DIRECTORS 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 2010 post year end 31 July 2010 30 April 2010 31 July 2010 AR Fleming 5 664 120 - 5 664 120 250 000 250 000 GE Johns 63 122 - 63 122 - - JR Legat 2 586 819 - 2 586 819 50 000 50 000 ACH Mackeurtan 2 549 119 - 2 549 119 33 333 33 333 RH Macleod 1 399 826 - 1 399 826 33 333 33 333 SM Ndoro - - - 50 000 50 000 DE Stone 110 850 - 110 850 140 000 140 000 MJS Tunmer 5 754 859 - 5 754 859 50 000 50 000 Total 18 128 715 - 18 128 715 606 666 606 666 Comparative information relating to directors’ shareholding as at 30 April 2009 and 31 July 2009 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 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 Directors’ Interest in Contracts Directors’ Remuneration None of the directors or officers of the Shareholders will be asked to approve, at Company had an interest in any contract of the Company’s Annual General Meeting, the significance during the financial year ended remuneration paid to the directors for the year 30 April 2010. amounting to P 11 226 545 (2009: P 22 320 591). PAGE | 34
  31. 31. Dividend Declaration related costs. The special plea however constitutes only part of the overall arbitration The Board have decided not to pay a dividend process and it is likely that these proceedings in respect of the year ended 30 April 2010. will continue well into the financial year ending 30 April 2011. The Company is continuing with its endeavours to have the matter expedited in Black Empowerment Transaction a timely manner. On 1 October 2007, the Group entered into a No new facts have emerged during the current Black Economic Empowerment (BEE) Transac- year, which have caused the Board to change tion in terms of which 20% of the Group’s South the original view taken in July 2007 that the African operating entities were transferred likelihood of a successful claim is remote. to Zingwenya Holdings (Pty) Limited. Entities This view continues to be supported by written covered by the transaction comprised: opinion from the Company’s legal advisors. Total costs incurred to 30 April 2010 in - Imara Asset Management South Africa defending the action brought against Imara (Pty) Limited Botswana Limited amount to P 1 861 799 - Imara Corporate Finance South Africa (April 2009: P 859 803). These costs have (Pty) Limited been fully expensed in the Income Statement - Imara SP Reid (Pty) Limited of the Company in either the current or previous financial years. The Group has now extended the empowerment shareholding in the South Africa entities through the establishment of a broadly based empower- Post Balance Sheet Events ment Trust, (Imara South Africa Trust), which now effectively holds a further 5% of the equity of the No events or transactions have occurred since above-named entities. The establishment of the 30 April 2010 or are pending, that would have Trust was completed on 20 May 2010. The Trustees a material effect on the financial statements at of the Trust are Messrs JPS O’Leary and TJ Matsau. that date or for the year then ended, or that are of such significance in relation to the Company’s or Group’s affairs as to require mention in a Litigation note to the financial statements in order to not make them misleading regarding the financial As reported in the previous Directors’ Report position, results of operations, or statement of in August 2009, the legal claim against Imara cash flows of the Group or Company. Botswana Limited for damages and alleged breach of contract by NBS Bank Limited of By order of the Board Malawi, (“NBS”) relating to an advisory mandate executed on behalf of the Privatisation Commis- sion of Malawi in the 2007 financial year, has been referred to an Arbitration Panel for resolution. The amount of the claim is DE Stone for Malawi Kwacha 757.3 million, equivalent Chief Financial Officer to approximately P 33.06 million. Arbitration proceedings have been in process since November 2007 and progress during the past year has been slow. An order was handed down in December 2009 in favour of Imara MJS Tunmer Botswana Limited relating to the special plea Chief Executive Officer introduced by NBS and included an award of 28 July 2010 PAGE | 35
  32. 32. CORPORATE GOVERNANCE Corporate Governance Principles In appointing directors, emphasis is placed on achieving a balance of skills, experience, The Board of Imara Holdings Limited remains and professional and industry knowledge committed in its stewardship of the Group’s necessary to meet the Group’s strategic affairs, to applying the highest standards of objectives. The selection and appointment of corporate governance and international best directors is a formal and transparent process, practice. Corporate governance policies and involving the Board as a whole, assisted by practices are based on the seven characteris- the Nominations Committee. tics of good corporate governance, as set out in the King Report on Corporate Governance, The Board composition is balanced so that (King II), namely: no individual board member or small group of members has unfettered control over – Discipline decision making. The appointment of an – Transparency additional independent, non executive – Responsibility director is currently under consideration by – Independence the Nominations Committee. – Fairness – Accountability The Board is responsible to shareholders for – Social Responsibility setting the strategic direction of the Company, for the monitoring of operational performance The directors endorse the Code of Corporate and management and for ensuring that succession planning is in place. The Board Practices and Conduct contained in the King is also responsible for the integrity and quality II Report and the recommendations contained of communications with stakeholders, in the subsequent King Report on Governance regulators, shareholders and employees. for South Africa 2009, (King III), which is effective for financial years commencing after In terms of the Company’s constitution, 1 March 2010. The implementation of the King III directors are appointed for three years. recommendations, which broadly advocate a At least one third of the directors, (rounded policy of “comply or explain”, are already in down), retire by rotation annually, and if process, with the objective of compliance by available, can offer themselves for re- April 2011. By supporting the King Reports, Imara election at the Company’s Annual General Holdings Limited demonstrates its commitment Meeting. Non executive directors are not to the highest standards of integrity and ethical required to hold shares in the Company but conduct in its dealings with stakeholders. the majority have independently elected to do so. Remuneration levels of non executive directors are reviewed annually and Board of Directors benchmarked against Botswana financial services sector companies and proxy financial The Group is governed by a unitary Board services groups with a regional presence. of Directors, which in terms of the Company’s Constitution, may not comprise fewer than All directors have direct access to the four nor more than 20 directors, at least Company Secretary and to information one of whom shall be ordinarily resident in regarding the Group’s affairs. They are Botswana. The Board of Directors is chaired entitled to make use of independent profes- by Michael Ndoro an independent, non sional advisors, at company expense, when executive director and comprises nine necessary to discharge specific tasks and directors, four of whom are non executive. duties and have access to the Chief Details of the composition of the Board are Executive Officer and senior executives detailed on page 15 of this Annual Report. where required. PAGE | 36
  33. 33. The game of trading Used as a way of counting, the board game known as Bao became a trading game where players sometimes played with diamonds. The stones and seeds used by some tribes represented cattle which were won and lost.
  34. 34. CORPORATE GOVERNANCE The Board meets at least four times a year for ensuring compliance with regulations to review the financial performance of the imposed by regulators and supervisory Group, its strategic direction and key policies. authorities and for assessing, managing and It approves budgets and reviews the overall monitoring risks. It also monitors financial effectiveness of systems of internal controls, controls and reporting, compliance with risk management and statutory and International Financial Reporting Standards, regulatory compliance. It also monitors (IFRS), the appointment and effectiveness the implementation of strategy and policy of the independent external auditors and through a structured approach to reporting evaluates risk management procedures in and consequent accountability of executive subsidiary companies and other internal management. systems of control. It also monitors statutory and regulatory compliance at both Group and subsidiary company level. Board Committees The Committee has formal terms of reference The Board is assisted in the discharge of which set out its responsibilities. The Committee its duties and responsibilities by three has satisfied its responsibilities for the year, Board Committees: in compliance with its terms of reference. – Audit and Risk Committee Meetings are held at least three times per – Remuneration Committee annum and are attended by the independent – Nominations Committee external auditors, who have unrestricted access to the Chairman of the Committee. These Committees are accountable to the Meetings are also attended by internal main Board and are chaired by non executive auditors, compliance officers and senior directors. Terms of reference of the management, on an as required basis. Committees have been agreed by the main At least once in each calendar year, the Board and are reviewed periodically. Minutes Committee meet with the external auditors, of committee meetings are circulated and without a member of executive management reported on at subsequent board meetings. being present. Senior executives are invited to attend meetings of the Committees by invitation, The Committee has considered and recorded where considered appropriate. the facts and assumptions on which it has concluded that the Company and the Group are going concerns and will continue as such Audit and Risk Committee in the year ahead. It has recommended that the Board endorse a statement to this effect. The Audit and Risk Committee is chaired by The Committee has also recommended to the Gary Johns, a non executive director, and main Board that the financial statements of currently comprises two members, both the Company and the consolidated financial of whom are non executive. Details of the statements of the Group, be approved composition of the Committee are provided and adopted. on page 15. It is the intention to increase the composition of this Committee to three members through the appointment of an Remuneration Committee additional non executive director. The Remuneration Committee is chaired by The main responsibility of the Committee is Gary Johns, a non executive director, and to assist the Board in discharging its comprises three members all of whom are non responsibilities under the Companies Act, executive directors. PAGE | 38