Imara Holdings 2011 annual report


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Imara Holdings 2011 annual report for the year ended 30 April 2011

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Imara Holdings 2011 annual report

  2. 2. CONTENTSVision, Purpose and Core Values 1‘Educational Focus. Quality Development’ Essay 5Group Profile 11Directorate and Group Management 12International Footprint and Regional Offices 13Divisional Structure 14Group Organisational Structure 15Chairman’s Statement 19Chief Executive Officer’s Review of Operations 23Corporate Governance Report 29Glossary 39Five-Year Financial Highlights and Ratios 41Graphical Five-Year Financial Highlights and Ratios 43Independent Auditor’s Report 46Consolidated Income Statement 47Consolidated Statement of Comprehensive Income 48Consolidated Statement of Financial Position 49Consolidated Statement of Cash Flows 50Consolidated Statement of Changes in Equity 51Notes to the Consolidated Financial Statements 54Shareholder Information 118Notice of Annual General Meeting 120Form of Proxy Attached
  3. 3. VISION, PURPOSE AND CORE VALUES VISION “A successful Africa” We are Africans, confident in the future of Africa. We view Africa as the continent of opportunity and are passionate about its potential. We believe that Africa’s influence will grow as its economies continue to develop. We understand African markets and know how to harness their unique investment opportunities. PURPOSE “To accelerate the prosperity of Africa” The key to unlocking Africa’s success is through economic growth and prosperity. As a leading investment banking group, we facilitate growth by offering a full range of financial products and solutions for institutional, corporate and high net worth clients investing in Africa.PAGE | 1
  4. 4. CORE VALUESIntegrityWe are honest, ethical and transparent in our dealings with clients,our investors and with each other.We demonstrate genuine structural integrity, being unified inoperation, sound in construction and robust in our management ofrisk and compliance.KnowledgeOver 5o years of operation in Africa has equipped us with an unrivalledreserve of expertise and experience. This wealth of understandingenables us to advise and invest more astutely than our competitors.Our clients benefit from our in-depth research.We are uniquely qualified to develop African solutions for Africa.DisciplineDiscipline governs the processes through which we control and conductbusiness; it transforms our knowledge and competence into results.We focus our efforts through efficient and reliable systems.We promote a culture of ownership and accountability.EnterpriseEnterprise is the combination of initiative and resourcefulness that fuelseconomic development.We encourage African entrepreneurship to create prosperity in Africa.We develop dynamic and innovative investment solutions.ResolutenessResoluteness is the quality of being purposeful, determinedand unwavering.To be resolute is to be focused and committed - attributes to whichwe aspire.Our strong character helps us to fulfil our purpose and concentrate onachieving our goals. PAGE | 2
  5. 5. Blue Line Through Time:The Zambezi River by Athol MoultIn keeping with the establishedtheme of ‘Investing in Africa’, thisyear’s Annual Report features thesecond acquisition of artworkscreated exclusively for The ImaraCollection by renowned SouthAfrican artist Athol Moult. Inspiredby the historic paintings and maps ofartist and explorer Thomas Baines,each photographic compositionretraces his journey along the mightyZambezi River, offering a modernperspective on this timeless traderoute through Africa.
  6. 6. The River of LifeThe Zambezi entersa stretch of rapids thatextends from Ngonye Falls tothe Katima Mulilo Rapids,flowing onwards to form theborder between Zambia andNamibia. Called “the river oflife” by locals, it is believedthat the Zambezi harboursthe Nyami Nyami, a powerfulriver god that brings water togrow crops and fish to eat sothat the people of the areamay thrive.
  7. 7. Educational Focus. Quality Development. Internationally, there has been a shift of consciousness as to what constitutes Corporate Social Responsibility. Going into the second decade of the 21st century, the process of qualifying as a good corporate citizen has become increasingly complex and more comprehensive. This change necessitates a synthesis of long-term sustainability practices across the three paradigms of economy, environment and society. This so-called “fourth wave” sustainability model asks that corporations truly embrace the triple bottom line, emphasising the breadth and depth of their Corporate Social Initiatives (“CSIs”) rather than simply ticking the correct boxes. These days, a quality CSI is seen as a collaborative undertaking in which decisions are reached by consensus with all parties involved. These include the company itself, the community whose actions the company impacts and the strategic partnerships that are needed to help facilitate programmes of community upliftment. The JSE, together with its Social Responsibility Index (“SRI”), was a leader in rendering the international corporate sustainable development agenda as one that Africa was ready to align with. However, recent figures on South African numeracy and literacy are a stark reminder of the crucial and immediate need for the private sector to roll up its sleeves and work to implement intelligent initiatives with an educational focus. Imara is a modern African economic entity with the interests of its financial stakeholders at heart. Nevertheless, as a listed company, we also have a responsibility to identify ourselves across a broad range of stewardship. Imara must therefore remain conscious of its ecological, political and societal effectiveness at every level, including individual communities in an African context.PAGE | 5
  8. 8. The Slender BluetAfter flowing past Botswanato the south, the Zambeziturns east to form thefrontier between Zambiaand Zimbabwe. Numeroustributaries feed into the riveralong the way, providing vastwetlands for a rich diversityof dragonflies to flourish.The Zambezi alone is home to210 different species, includingthe elegant Slender Bluet,which live and thrive alongits tranquil headwaters.
  9. 9. The Imara Lightwarriors is a CSI that combines long-term investment thinking with an educational focus in the creative vein. Accordingly, an in-depth understanding of African financial markets must be married with sensitivity to the social and educational inequities that largely define a continent in development. If Imara is to have a positive impact on disadvantaged communities, awareness of African socio-economic issues must translate into meaningful action. Furthermore, such action should not be tokenistic or short- term but should rather endure decades into the future. Through CSIs, we must therefore be resolute in our assurance that seeds are not only planted, but also nurtured into maturity for the benefit of ensuing generations. The International Organisation for Standardisation of Social Responsibility (ISO26000), which in November 2010 resolved to encourage organisations to discuss their social responsibility with stakeholders, puts a clear emphasis on creativity and development. The Imara Lightwarriors is a CSI that combines long- term investment thinking with an educational focus in the creative vein. This is the story of its development. The Creation of The Imara Trust In 2008, mindful of Africa’s political climate, Imara identified the need for an empowerment partner. It had become important to us, as a listed company with a regional presence, to develop and promote a formal Corporate Social Responsibility Programme, and black economic empowerment was identified as being central to this process. Prior to 2008, Imara’s CSIs had comprised a relatively unstructured mix of sponsorships, funding of conferences and ad-hoc donations to worthy causes. An empowerment partner was identified in South Africa in 2009 in terms of which 20% of the South African businesses were sold to Zingwenya Holdings (Pty) Limited (“Zingwenya”). Initially it had been intended to sell a 25% equity stake to Zingwenya, but on reflection, the Imara Board felt it wiser to reserve 5% for a more broadly based trust with wider benefaction. The Imara Trust was formed in 2010 and launched on the 1st of May 2011. Its trustees comprise Joe Matsau, an empowerment partner through Zingwenya, and independent consultant, Sam O’Leary. Funding for The Imara Trust comes from the dividend flows of Imara’s South African businesses, as well as donations from The Imara Group. The Imara Trust reflects an expansion of Imara’s Corporate Social Responsibility programmes. Its broad objective is to facilitate educational assistance to people from previously disadvantaged backgrounds. In 2010, during our search for opportunities that match The Imara Trust’s objectives and fall within its budgetary parameters, The Imara Lightwarriors initiative was identified. The Imara Collection Comes to Light Athol Moult is a prominent Cape Town artist and photographer with valuable experience in using the mastery of his art as a catalyst for community outreach. Some examples of his work include the MvezoPAGE | 7
  10. 10. Soccer World Cup Project and a community-based craft project called Barefootball. Pitchblack, Athol’s creative studio, was founded around the essence of change through design. In the creative design industry, a proper bridging process for candidates to enter the design and advertising sector with sufficient vocational preparation is essential. Therefore, the driving motivation behind Pitchblack was to find funding for a mentorship programme that identified and effectively cultivated talented young photographers, designers and journalists prior to industry placement. Unfortunately, the initiative was initially stymied by a lack of funding. This changed in 2010 when, as part of Imara’s rebranding exercise, we commissioned Athol to create six artworks for The Imara Annual Report. It was proposed that these first commissions be used as the basis for an independent art collection to be owned by Imara. This would feature local artists and be titled “The Imara Collection”. The theme of African trade history and a study of the early explorers who documented trade routes emerged. In the 19th century, English artist and explorer Thomas Baines had pictorially documented aspects of British colonial southern Africa in his journals. As Imara saw it, a modern way of fusing the growth of The Imara Collection with Imara’s new Corporate Social Responsibility agenda was to offer a photographic internship or mentorship programme. Serendipitously, this vision was aligned with the one that Athol had hitherto been trying to promote. Investing in photography as a profession in a digital age where cameras are commonplace requires an awareness that it remains a commercially viable means through which to tell a powerful story. Furthermore, photography is a medium which works beautifully in concert with mutually re-enforcing disciplines such as design, journalism and videography. When Imara saw the potential for a photographic bursary, The Imara Lightwarriors came into being. As Baines had done over a hundred years before, we decided that The Imara Lightwarriors could venture into Africa to document their experiences, this time using photographic equipment instead of paints and brushes. The First Generation In the context of a modern, balanced and well-equipped institution, a talented student of photography can gravitate to a niche amongst a wide range of photographic specialisations, including commercial, wildlife and fashion photography or photo journalism to name a few. Moreover, a student given this opportunity is also afforded a module where she or he can develop the business skills necessary to set up a studio. The first Imara Lightwarrior to be chosen and enrolled for such a programme is Teddy Sambu from Khayelitsha. After the death of his mother, Teddy started taking photographs of children playing football on the N2 using whatever equipment he could get his hands on. With limited education, photography was his chosen means of expression but his talent, for any commercial intent or purpose, was stuck in neutral. However, with the support of community outreach programmes, Teddy has been able to set up aPAGE | 8
  11. 11. The Imara Lightwarriors’ distinctly African roots provide the link between Imara and disadvantaged communities. photography and framing shop in Khayelitsha. Specialising in weddings and other events, he also employed some of his township friends at the studio. As an Imara Lightwarrior, the next leg of Teddy’s professional journey will progress along three trajectories. First, Imara will provide a bursary for him at the Cape Town School of Photography where he will receive technical training and the business skills essential to manage his own studio. There he will have access to state-of-the-art technology and learn how best to use it. The curriculum at the Cape Town School of Photography is comprehensive, the classes are small and Teddy will leave with either a Diploma (one full year of training) or an Advanced Diploma (two full years of study). Furthermore, the mentorship Teddy receives from professional photographers will ensure that his specific educational needs are met, and that he is guided beyond the course of study towards relevant contacts and photographic apprenticeship opportunities in the industry. It is vital that The Imara Lightwarriors’ field-specific aptitudes and interests be cultivated within a network of sustained support. Second, Teddy will be encouraged by his mentors to go back into his community as an Imara Lightwarrior ambassador. There he can establish connectivity with other aspiring photographers, offering them the benefit of his experience and working in the capacity of mentor for the next generation. Third will be Teddy’s potential future involvement in The Imara Collection itself. The Imara Lightwarrior Journey To generate more images for future editions of The Imara Annual Report, Teddy, as an Imara Lightwarrior, will accompany Athol on a photographic field trip. We have identified several historically significant African locations over the next three years for potential field trips during which an abundance of rich material can be obtained. A recent expedition undertaken by Athol down the Zambezi River resulted in the six artworks featured in this Annual Report, the second installment of The Imara Collection. The first acquisition by The Imara Collection, published exclusively in the 2010 Imara Annual Report, is a series of photographic pieces by Athol that offer striking perspectives on the evolution of currency and trade in Africa. They are currently located at the Imara offices in Johannesburg. As The Imara Collection continues to grow, it is possible that we may fund an exhibition to display work by The Imara Lightwarriors themselves. From this, a prestigious printed journal could be compiled to relate the stories of these annual expeditions and the African trade routes they followed. Successful photographic field trips may form part of the return on Imara’s investment through the development of a range of sought-after publications. In the future, the body of work that is generated from The Imara Lightwarrior journeys may also be experienced as a narrative record of Imara’s CSI. Inspiring experiences and the fruits of candidates’ professional development can only have a positivePAGE | 9
  12. 12. impact on our corporate culture. Potentially, in published form, the work of The Imara Lightwarriors could be shared amongst Imara’s clients, as well as throughout the public domain. While the initial budgetary commitment is to launch the project in the first year with one Lightwarrior, it is Imara’s intention that this number will grow. If The Imara Lightwarriors project meets the criteria set by The Imara Trust, our commitment to The Imara Lightwarriors and its educational objectives will be indefinite. Rooted in the Community, Partnered for Success. The Imara Lightwarriors’ distinctly African roots provide the link between Imara and disadvantaged communities. Over three-year cycles, Imara will ensure the integrity and development of this programme by sustaining the network of key players. Strategic partnerships with existing community programmes were needed to find Imara Lightwarriors such as Teddy Sambu, and will continue to act as a feeder for a core of future Lightwarriors. The Imara Lightwarriors bursary consists of an educational core, including the financing and mentoring of a candidate through a course of study, and an outer ring comprising projects that extend from this core. These will include the annual field trips, the community outreach programmes and social media networking sites for wide exposure and up-to-date documentation. Amongst our success markers for this CSI are an awareness of the project itself, the development of The Imara Collection, demand for enrollment in the bursaries, and the future business success of graduates. The Imara Lightwarriors programme, together with The Imara Collection, forms part of a renewed corporate identity that symbolises our growing presence in African communities, and Imara’s potentially significant contribution to the enhancement of the Arts in Africa.PAGE | 10
  13. 13. GROUP PROFILEGeneral InformationCountry of incorporation BotswanaPrincipal activities Holding company for a Pan-African Financial Services GroupCompany registration number CO -2002 / 3377Tax registration number CO - 65018-01-01-9Registered office Union Provident Trust First Floor, Time Square Plot 134, Independence Avenue, Gaborone, Botswana P.O. Box 46699, Village, GaboroneRegistration status Registered in the Botswana International Financial Services Centre (IFSC) Tax Certificate Number 22 - Effective date 28 July 2003Independent auditors Ernst & YoungBankers 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 IMARAReuters code IMRA.BTTransfer 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: corpserve@info.bwBusiness addresses & contact details Botswana Second Floor, Block A, Unit 3, Plot 117 Millennium Office Park, Kgale Hill, Gaborone Telephone: +267 318 8708, Facsimile: +267 319 1767 Website: South Africa Imara House, Block 3 257 Oxford Road, Illovo 2116, Johannesburg Telephone: +27 11 550 6100, Facsimile: +27 11 550 6110 PAGE | 11
  14. 14. DIRECTORATE AND GROUP MANAGEMENTDirectorateImara Holdings LimitedSM Ndoro Chairman Zimbabwe Non-executiveMJS Tunmer Chief Executive South Africa ExecutiveAR Fleming United Kingdom Non-executiveGE Johns Botswana Non-executiveJR Legat United Kingdom ExecutiveACH Mackeurtan South Africa ExecutiveRH Macleod * South Africa ExecutiveL Maine Botswana Non-executive Resigned 20 April 2011TJ Matsau * South Africa Non-executive Appointed 1 December 2010GZ Steffens * Germany Non-executive Appointed 1 December 2010DE Stone South Africa Executive* Subject to Non Bank Financial Institutions Regulatory Authority (“NBFIRA”) formal approval.Company SecretaryDE StoneBotswana Stock Exchange Compliance OfficerDE StoneAudit CommitteeGZ Steffens Chairman Non-executive Appointed 9 March 2011GE Johns ** Non-executiveTJ Matsau Non-executive Appointed 9 March 2011SM Ndoro By invitation Non-executiveDE Stone By invitation Executive** Interim Chairman until 9 March 2011Remuneration CommitteeGE Johns Chairman Non-executiveTJ Matsau Non-executive Appointed 9 March 2011SM Ndoro Non-executiveMJS Tunmer By invitation ExecutiveACH Mackeurtan By invitation ExecutiveNominations CommitteeSM Ndoro Chairman Non-executiveGE Johns Non-executiveACH Mackeurtan ExecutiveMJS Tunmer ExecutiveManagementMJS Tunmer Chief Executive OfficerDE Stone Chief Financial OfficerJR Legat Head of Asset ManagementRH Macleod Head of Corporate FinanceMJS Tunmer Head of Stockbroking PAGE | 12
  15. 15. INTERNATIONAL FOOTPRINT AND REGIONAL OFFICES SCOTLAND UAE NIGERIA KENYA MALAWI ANGOLA ZAMBIA ZIMBABWE MAURITIUS BOTSWANA SOUTH AFRICA OFFICES (including Associates, Partners and Representatives)Angola ScotlandLuanda +244 222 372 029 Edinburgh +44 131 550 3737Botswana South AfricaGaborone +267 318 8708 Johannesburg +27 11 550 6100Kenya United Arab EmiratesNairobi +254-20342756 Dubai +971 566 019 024Malawi ZambiaBlantyre +265 1 822 803 Lusaka +260 211 232 455Mauritius ZimbabweMauritius +230 464 9799 Harare +263 4 790 090NigeriaLagos +234 1 4610691 PAGE | 13
  16. 16. DIVISIONAL STRUCTURE Imara GroupAsset 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 Capital Securities Imara Capital Management South Finance (Pvt) Limited (Pty) Ltd South Africa (Pty) Ltd Africa (Pty) Ltd *South Africa *Zimbabwe *Botswana *South Africa Associate Imara Asset Imara Securities Imara Capital Management (Pty) Angola SVM Limitada Limited Limited (Dormant) (Dormant) (Dormant) *Angola *Botswana *Botswana Stockbrokers CF Africa Limited Imara Asset Malawi Limited Management (Pvt) Limited *Malawi *BVI *Zimbabwe Associate Associate Imara Trademarks Imara Edwards Limited Securities (Pvt) Limited *BVI *Zimbabwe Associate Imara Capital Limited Stockbrokers Zambia Limited *BVI *Zimbabwe Associate Imara Capital Kenya Limited (Dormant) *Kenya Imara Capital Limited Zambia *Zambia Imara Capital Botswana (Pty) Ltd *Botswana Imara Private Equity Legend Fund Managers (Pty) Ltd Active Trading Company *Botswana Investment Holding or Group Parent Company Imara Capital Zimbabwe Dormant or Non-Trading Company (Pvt) Limited *Country of Registration *Zimbabwe Associate PAGE | 14
  17. 17. 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% Management Contracts Imara Stockbrokers 100% Africa Securities Malawi Limited (Pty) Limited Imara Global Fund Imara 100% Botswana Imara African Limited Opportunities Fund Imara Portfolio Selector Imara Protected Cell Capital Limited Company (PCC) 100% (Dormant) Imara Africa Series Fund Imara Africa 100% Private Equity Fund Managers (Pty) Limited Sub Funds: – Zimbabwe Fund – Nigeria Fund Imara Capital Zingwenya – East Africa Fund South Africa Holdings (Pty) Ltd (Pty) Ltd – African Resources Fund Imara 51% Asset Management (Pty) Limited (Dormant) 80% 20% 50.10% Capital Securities Imara Imara Asset (Pty) Limited Imara SP ReidCorporate Finance Management (Pty) Ltd South Africa South Africa (Stockbroking) (Pty) Ltd (Pty) Ltd Management Contract Imara Equity Fund PAGE | 15
  18. 18. 69.3% 100% 30.01% 100% Imara Trademarks Imara Beresford ImaraCF 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 Securities Angola 50% SVM Limitada Imara Imara * In the process Beresford Nominees of formation Edwards Securities One Limited (Pvt) Limited Limited Imara Beresford Imara Asset Management Two Limited One (Pvt) Limited Limited Imara Beresford Imara Corporate Finance Pension Trust Directors Zimbabwe Limited Limited (Pvt) Limited Legend Botswana Kenya South Africa Angola British Virgin Islands United Kingdom Zimbabwe Zambia Malawi Mauritius PAGE | 16
  19. 19. The Lilac-Breasted RollerFrom Victoria Falls to the vastexpanse of Lake Cahora Bassain Mozambique, the rivercontinues its cross-countryjourney. The Lilac-BreastedRoller is native to these parts,and can be spotted by itsmulti-coloured plumage.Legend has it that when Godhanded out colours, the Rollerwas first in line, but forgot toask for a call. When itremembered, all of the goodcalls were taken, and thebeautiful bird had to settle fora discordant squawk instead.
  20. 20. CHAIRMAN’S STATEMENTFinancial Performance and assessed, particularly so in the current year where the contribution to GroupThe financial results for the year ending April earnings from associate companies has declined2011 are most disappointing and fall someway by P 1.28 million from the prior year. Your Boardshort of the positive earnings which had been continues to hold the view that this strategy isforecast for the year. The Asset Management still appropriate but needs to be carefullydivision, on the back of a 10% increase in managed from a cash management and cashfunds under management, again made a flow perspective.strong contribution to Group earnings andrecorded profit after tax of P 11.1 million.This was broadly in line with their prior year Cash Flow and Treasury Managementperformance and the current year budget.Stockbroking ended the year with profits With the decline in the earnings performance ofafter tax of P 3.4 million, down on the the Group, and the net decrease in cash and cashprevious year, and also below budget. equivalents for the year, cash flow managementIn light of the difficult trading conditions, has continued to be a key focus. The cash flowwhich prevailed for most of the year and the cycle as presented in the Statement of Cashsharply lower volumes traded on African Flows is not as dire as it first appears and isstock exchanges, this was a commendable significantly affected by the working capitalachievement. The Corporate Finance division requirements of our South African stockbroker,again had disappointing results and recorded Imara SP Reid, that change on a daily basis in linea loss after tax of P 6.1 million. The increasing with trading volumes. On any other day, thelead time in mandate execution, often for working capital position may have looked quitereasons beyond our immediate control, different. To illustrate this point, working capitalcoupled with the current industry practice of changes in 2011, most of which are attributable tofees being solely based on the successful Imara SP Reid, accounted for cash “outflows”outcome and conclusion of mandates, means of P 18.9 million, while in the 2010 financial yearthat revenue flows are difficult to predict with these accounted for cash “inflows” ofconsequent volatility in earnings. P 25.3 million.Over the past decade the Pula has tended Exchange rate losses from the holding of cashto weaken against currencies such as the reserves in hard currencies and adverse cashUSD and Sterling and this has prompted the flow movements have increased management’sGroup to hold certain of its cash reserves in focus on the Group treasury managementthese currencies. In the past two years, and function and its longer-term strategies. Theparticularly so in the 2011 financial year, this objective of mitigating against further exchangetrend has reversed, resulting in exchange rate losses continues to receive regularrate losses from these offshore cash consideration but the view taken is that theholdings. Such losses are unrealised but current policy of holding surplus cash in a mix ofare nevertheless charged to the Income Pula and foreign denominated currencies shouldStatement and account for P 3.2 million continue, but with minor modifications to strategyof the current year loss. from time to time. A decision to switch some of the offshore cash holding into Swiss Francs for example, has already been implemented.AssociatesThe structured acquisition of equity stakes in Key Lessonsassociate companies remains a key part ofthe Group’s longer-term growth strategy. It is important to summarise the lessons learntThis strategy is continually being evaluated during the year. Firstly, markets have and are PAGE | 19
  21. 21. Barotse Fishing VillageThe great Zambezi River risesout of a marshy wetland innorth-western Zambia. In thisfirst length of its journey toAngola, the river is met bymany tributaries of varyingsizes. After returning toZambia, it rushes overChavuma Falls and into thefloodplains. In summer, thisregion becomes a vast lakewhere over 80 species of fishprovide a major source oflivelihood for local fishermen.
  22. 22. CHAIRMAN’S STATEMENTrecovering across the region as evident concluded, giving this broadly based Trust aby the growth in funds under management 6.25% equity stake in Imara Capital South Africaand the Asset Management division’s (Pty) Limited. The Trust has only recently begunperformance. However, despite the upward to accumulate funds to support its keytrend in capital markets on the continent, objectives but in conjunction with the Group,volatility has constrained turnover as will be instrumental in supporting The Imarainvestors remain cautious. As Imara is mostly Lightwarriors Project. The launch of The Imarafocused on high net worth individual Lightwarriors Project is outlined in more detailinvestors, the global private sector debt is a elsewhere in this Annual Report.key indicator to the level of activities in ourstockbroking businesses. Unfortunately,these have persisted at a high level resulting Outlookin overly cautious investors. Secondly, thecorporate advisory paradigm has shifted For the year under review, we have continuedsignificantly and despite a strong pipeline, to roll out our Pan-African strategy whilstour ability to close mandates has been limited building up our underlying deals take longer to execute. We believe opportunities continue to exist in East and West African markets in particular. However, Board and management focus is toGroup Structure return to sustainable profits by capturing growth from existing businesses throughIt has become increasingly apparent that the consolidation. Greater attention is beingcurrent Group structure is overly complex placed on “return on invested capital” toand costly to administer. The original ensure that shareholder returns are maximisedstructure, which was implemented in 2002 and as such non-performing businesses will bewhen the Group was set up in Botswana, was critically reviewed for strategic fit andappropriate at the time but this is no longer sustainable profitability. We anticipate furtherthe case and acquisitions post 2002 have growth in the Asset Management division withtended to be added to the original structure. a number of exciting new partnerships in theAn exercise to re-structure the operations of pipeline that will increase our profile.the Group, in order to improve efficiencies We further hope that continued goodand reduce costs has been undertaken and performance in our Funds will attract newwill be implemented in the 2011/2012 financial inflows, enhancing annuity income and enablingyear. It is important to note that the new the division to earn additional performancestructure will to some extent be determined fees during the year. Within Stockbroking weby regulatory and supervisory requirements. are looking to grow our trading volumes in African markets by utilising the infrastructure that is in place at Imara SP Reid. In line with thisEmpowerment and Imara Trust we have relocated the Africa Desk to Imara SP Reid and have invested significant resourcesThe third anniversary of the SA empowerment into the research function to better service thedeal with Zingwenya Holdings (Pty) Limited institutional market in South Africa and the restwas achieved during the year. This is a of Africa. The Corporate Finance division has asignificant milestone in terms of the number of exciting new mandates on its books,accreditation of our SA BEE credentials. whilst certain of the existing mandates areThis agreement has been renegotiated for a nearing completion, allowing us to earn feesfurther three years to 30 April 2014 to take for work that has largely been undertakenaccount of changed market conditions. during the previous financial year. Further,Arrangements for the establishment of management in this division has worked hard toThe Imara South Africa Trust have also been reduce costs through rationalisation and PAGE | 21
  23. 23. efficiencies allowing a significant drop in the For the year underbreak-even level of the division. Despite thebelow-expected performance of our associate review, we havecompanies in 2011, we remain positive about their continued to roll outfuture prospects and will, in the year ahead, belooking to make further investments into our our Pan-Africanexisting regional “footprint”. We will also shortly strategy whilst buildingbe launching a new private equity initiative whichwill add to the Group’s service offering. up our underlying businesses. We believeDirectorate opportunities continue to exist in East andMr Gunter Steffens OBE and Mr Joe Matsau,a member of the BEE partner consortium in West African marketsSouth Africa, were invited to join the Board in in particular.December 2010. Both appointments are stillsubject to formal approval by Non Bank FinancialInstitutions Regulatory Authority, (“NBFIRA”), andthe applications are pending. These additions willgo a long way in strengthening our Board andBoard Committees, as well as bringing freshinsights to our deliberations.I, however, regret to advise that Mr LethebeMaine resigned as a non-executive directoron 20 April 2011 due to personal reasons.DividendIn view of the loss for the year, the Board hasopted to pass the dividend.Vote of thanksMy gratitude goes to our clients for theircontinued support this year, our members of stafffor their hard work and individual contributions,and my fellow directors for their guidance.A strong team of executives led by Mark Tunmerhas done its best this year to minimise our losses ina difficult year. The Board appreciates the effortsand commitment of all stakeholders.SM NDOROChairman18 August 2011 PAGE | 22
  24. 24. CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONSGroup Review Turning to the cash flow statement, there was a net outflow of cash of P 22.5 millionThe year ended 30 April 2011 was very during the course of the year. However,disappointing. The increased international this does not reflect the ‘true’ position ofinterest in Africa did not translate into the Group as the reported numbers aresignificant new inflows into the equity distorted by the working capitalmarkets as volumes decreased significantly requirements of our South Africanduring the year to less than 25% of where stockbroker, Imara SP Reid. These changethey were a year ago. Further, the larger on a daily basis in line with their clients’African markets, excluding South Africa, trading volumes, and had a beneficial impactperformed poorly with Egypt alone falling by on cash flows in 2010. Aside from the37%, followed by a fall of 12% in Kenya’s operating loss, the major cash outflowsstock market. In line with this it remained relate to investing activities P 1.6 million,difficult to attract new money into the Africa (primarily acquisitions), tax payments andFunds despite the strong US dollar returns unrealised exchange losses on cashrecorded in all of our Funds over the year. holdings denominated in Sterling or USD.Towards year end and more recently, the The Group’s “free” cash position remainsuncertainty created by the problems in strong with no Group debt. It should beGreece and the Eurozone as well as US noted that the short-term borrowingsdebt concerns, negatively affected reflected in the Statement of Financialinvestor appetite. Position relate to dividends declared in favour of our South Africa EmpowermentAgainst this background, the year ended partners that are being withheld pendingwith an after-tax loss of P 7.69 million settlement of their obligations in terms of(2010: After-tax profit-P 500 729) and the BEE transaction.attributable losses of P 8.2 million (2010:Attributable profit-P 246 765). The Groupmade an after-tax operating loss of Asset Management DivisionP 2.1 million, whilst a reduction in netearnings from our associates, together with The Asset Management division registeredsuch non-cash items as foreign exchange a strong increase in the Funds underlosses, primarily on offshore cash holdings, management, closing the year at P 3.04 billionand share option valuation expenses, added (up 10%) and following the trend set in the net loss. Total income increased 5% The performance of the Funds in the offshoreon a year-on-year basis, operating fund division, in South Africa and inexpenses increased by 9% and the tax Zimbabwe, was excellent in absolute termscharge declined by 11%. Shareholders’ equity and relative to their respective benchmarks.declined by 6% to P 133 million while total The Imara Global Fund, which invests primarilyassets at P 242 million remained relatively in the developed markets, had an exceptionalstatic. A strong contribution was again made year rising by 25% in US dollar terms, whilstby the Asset Management division while the the Imara Zimbabwe Fund achieved similarStockbroking division recorded reduced returns. The best performing Fund, althoughearnings due to lower than expected small in terms of assets under management,volumes. The Corporate Finance division was The Imara African Resources Fund whichregistered a loss, as the time taken to rose by 35%. In South Africa, the Rand-execute mandates continued to lengthen, denominated Imara Equity Fund gainedoften for reasons beyond our control. 17% in Rand terms (28% in US dollars)Most of the transactions are now success outperforming the local benchmark anddriven meaning that billings can only be ending in the top quartile of similar funds indone on final completion of the mandate. South Africa. The problems besetting North PAGE | 23
  25. 25. Africa during the first quarter of 2011, and in The division has a number of excitingparticular Egypt, did not affect the business new mandates on its books, involvingor the Funds, as Imara’s exposure to these privatisations, M & A, capital raisings andmarkets was small. By contrast, the listings in a number of countries includingperformance of markets in Sub-Saharan Angola, Botswana, Kenya, South Africa,Africa, such as Zambia, Mauritius and Zambia and Zimbabwe. Certain of theZimbabwe, have produced strong returns in existing mandates are also nearing2010 and 2011, which has helped to boost completion, allowing us to earn fees forour Funds’ returns. work that has largely been undertaken during the year under review. We are alsoDespite this good performance, the level working on two transactions which ifof new subscriptions was below anticipated successful will provide long-term securelevels, in part reflecting investor concerns annuity income which will help to smoothand increased risk aversion post the Global earnings going forward. Management hasCredit Crunch. Redemptions in the offshore worked hard to reduce costs throughfund division were also higher than rationalisation and efficiencies resulting inexpected, reflecting demands on clients’ a significant drop in the break-even level ofliquidity. However, there has recently been a the division. Although the division has beenmore positive and encouraging increase in through very testing times, we remaininterest in Africa and in our Funds generally. cautiously optimistic that it will make aIt is hoped that this will lead to new positive contribution to Group earningssubscriptions in the current year and future this year.years especially as Africa becomes moreaccepted as a long-term investment A tremendous amount of work has beendestination. In this regard, a number of new done by the Corporate Finance division thisinitiatives are underway which, if successful, past year into the launch of a Private Equitywill add significantly to funds under Fund. We are extremely pleased that wemanagement. The new financial year has have been able to partner with Norfund andbegun well and further growth in funds our Kenyan partners, the Insuranceunder management and a credible increase Company of East Africa, in this excitingin revenues and net profits is expected. project to be named the Batian Fund. The Fund, which is targeted at the SME space, is scheduled for launch in September 2011.Corporate Finance Division Turning to our Corporate Finance associateCorporate Finance had another trying year in Zimbabwe, the year was much improvedand recorded losses of P 6.1 million, which with the successful completion of fivewas disappointing compared with the profits mandates. The most high profile was thethat were budgeted for the financial year. This listing on the Zimbabwe Stock Exchange ofdoes not reflect a lack of work or mandates, Padenga Holdings, the crocodile ranchingbut rather a longer execution and billing business previously wholly owned bycycle. In line with current industry practice, Innscor. In addition to this, incomemost of the fees in this division are now continued to be generated through thesuccess driven and as such the determination issuing and placing of approximatelyof completion dates for mandates and the USD 20 million of corporate debentures.related revenue flows are difficult to predict, Although business activity was encouraging,as has been the case this year. The highlight of a number of large-ticket mandates were notthe year was the very successful privatisation completed for a variety of reasons. Whilstand listing of Cresta Marakanelo on the the need for many Zimbabwean businessesBotswana Stock Exchange in June 2010. to restructure and recapitalise remains PAGE | 24
  26. 26. CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONSacute across the economy, the looked for direction in the market.indigenisation legislation as currently Despite the lower volumes in the Africanpromulgated makes execution of any markets, Imara Africa Securities registeredmaterial capital transaction difficult. an increase in commissions of 154% over theThis has been compounded by the previous year. Regrettably this waswillingness of many company executives insufficient to move the company into theand shareholders to try and muddle through black. An initiative to reposition thisrather than accept the consequences of business, to ensure that it is better placed todilution. An acceptable profit was recorded service the increasing international andfor the financial year, which compares South African interest in Africa, has resultedfavourably with the small loss the prior year. in the business being relocated to withinThe company has a reasonable pipeline of Imara SP Reid, effective 1 July. Each individualactive mandates and a number of potential territory remains responsible for theirdeals that should translate to further growth day-to-day operations with Imara SP Reidin profitability in the coming year. The team providing a central dealing and settlementhas also been strengthened by adding both platform thereby enabling global and Southfinancial and legal skills thus enhancing African institutional clients to access Africanexecution capacity. markets through a central location. Mandates, custody and systems that meet the needs of the market are now in place.Stockbroking Division A new substantive head of the business is in place and he is supported by two dealers.Stockbroking ended the year with profits of The research offering has been revampedP 3.4 million, down on previous years, and and work has begun to build a team, whichindicative of a fall in volumes traded in South will work in conjunction with the analysts inAfrica and in the major African stock the associate offices. It is believed that weexchanges. Imara SP Reid returned profits of are now well positioned to participateR 3.6 million, which was significantly down more actively in African equity trade flowson last year. This was exacerbated by a and furthermore, it allows us to build astrong decline in turnover during the World presence in the domestic South AfricanCup in June and July 2010, a situation which institutional space.only reversed in October. The last fewmonths of the year were also characterised Capital Securities in Botswana had anby difficult trading conditions resulting in improved year, turning in profits of justlower than expected profitability. Margins under P 1 million against a small loss lastremain under pressure due to increased year. The new year there has alsocompetition from the banks, which continued begun cut brokerage rates. This led to a declinein monthly average brokerage of 8.7% andan 18.8% drop in the average number of Associate Companiestrades per month. Despite this, assets underadministration rose 20% to end the financial Turning to our associates, Stockbrokersyear in excess of R 15 billion. Malawi Limited had a difficult year, although a small operating profit for theirThis increased volatility impacted negatively financial year ended 31 December 2010on the contribution to revenue from the was registered. However, the deterioratingderivates desk, which was down in excess of economic environment did lead to an30% on the prior year and 15% on budget. increased loss for the year under review.Proprietary trading also continued to be Additionally, an impairment charge ofslow as traders remained cautious as they P 122 767 was necessary against the carrying PAGE | 25
  27. 27. cost of this investment. During the year, Government, uncertainty emanating fromthe statutory minimum capital adequacy possible elections and the imposition of therequirements for Malawian stockbrokers Indigenisation and Economic Empowermentwere increased, requiring a further capital Act have likely resulted in slower growthcontribution of P 382 039 by Imara. than might have been expected. Nevertheless, growth of over 9% isStockbrokers Zambia Limited showed a currently forecast for 2011. The Zimbabwesmall loss for the period under review, Stock Exchange outperformed the broaderwith volumes on the Lusaka Stock Exchange economy, and with a market capitalisationremaining subdued despite a strong market of USD 4.6 billion is currently less than 50%upturn. In addition to this, Zain’s delisting of GDP allowing for further upside.also had a marked effect on trading volumes,as this counter had previously provided The year has started well in Zimbabwesignificant market liquidity. The new financial and a growth in profit after taxation foryear has begun well and strong profits have the coming year is anticipated. A numberbeen returned in the first quarter. Imara has of new business ventures that could addan option to increase its equity stake from further value to the business are alsothe present level of 25% to 51% and this is being explored by management.currently under consideration. Imara Beresford International Limited (“IBI”)In Zimbabwe, Imara Edwards had a difficult in Mauritius had a difficult year turning inyear as brokerage declined some 40% on profits some 28% below the previous year.the previous year although this was in line This was primarily due to the loss of awith budget. Two main factors accounted number of clients at the Beresford Trust &for this decline. Legislated brokerage rates Corporate Services Limited level, whichwere halved in January 2010 from 2% to 1% affected the annual fees and administrativeand this naturally impacted on income. time charges, as well as impairment chargesMore significant, however, has been the for aged debtors. In addition to this, Imaraimpact of the Indigenisation and Economic Trust Company (Mauritius) Limited andEmpowerment Act, promulgated in February Beresford Pension Trust Limited, did not2010, which saw an approximate halving quite achieve the expected levels of newof average daily trade on the ZSE. business. Although during the latter part ofThat brokerage fell just 40% in the face of the year business picked up and monthlyan average quartering of market brokerage, work in progress increased, expensesindicates an expanded market share. were also higher.This brokerage comfortably covered totalcosts generating an acceptable A change in back-office administration at IBI,after-tax profit. which will result in annual savings of up to USD 100 000, has been implemented.Our associate, Imara Capital Zimbabwe This primarily involves the preparation of(Private) Limited, recorded above-budget financial statements for most companiesprofits despite them being lower than the under administration, which was previouslyprevious year. The economy experienced outsourced but which will now be performedongoing growth on the back of mining in-house. Other cost savings and efficiencyexpansion and agriculture. Real GDP growth measures have also been introduced, whichaccelerated to over 8% from 6% in 2009, are already having a positive impact. The newand the officially reported 12-month financial year has begun well with a numberconsumer price index in US dollar terms of new companies and trusts beingremained contained at 3%. Recent policy established on behalf of clients togetherimpasses between the members of the Unity with an improvement on work in progress. PAGE | 26
  28. 28. CHIEF EXECUTIVE OFFICER’S REVIEW OF OPERATIONSAgainst this background, IBI is expected to Litigationrecord stronger profits this year. Imara hasexercised its option to acquire a further As reported in the 2010 Annual Report,5% of the company which will increase the the legal claim against Imara Botswanaholding to 35%. Limited for damages and alleged breach of contract by NBS Bank Limited of Malawi, (“NBS”) relating to an advisoryAngola mandate executed on behalf of the Privatisation Commission of Malawi in theIn Angola, progress towards the 2007 financial year, has been referred toestablishment of the stock market remained an Arbitration Panel for resolution.slow. In January 2011, a Presidential Decree The amount of the claim is for Malawiwas published, which dissolved the Capital Kwacha 757.3 million, equivalent toMarkets Commission and announced the approximately P 31.06 million. Arbitrationrestructuring of the regulator. At the same proceedings have been in process sincetime, the opening of the Bolsa de Valores e November 2007 and progress during theMobiliarios de Angola (“BVDA”), the past year has again been slow. An orderAngolan Stock Exchange, was postponed to was handed down in December 2009 in2012. Despite the disappointment, this favour of Imara Botswana Limited relatingdevelopment has had little impact on our to the special plea introduced by NBSbusiness as a decision was made in October and included an award of related costs.2010 to concentrate on developing Recovery of the costs award is currentlyCorporate Advisory, until the BVDA opens. in progress. The special plea howeverTo this end a number of exciting mandates, constitutes only part of the overallparticularly in the property sector, have arbitration process and it is likely thatbeen signed and work is underway. these proceedings will continue well intoAlongside this initiative, bottom-up research the financial year ending 30 April 2012.coverage of local companies, combined The next meeting of the Arbitration Panelwith comprehensive top-down research has been set for September 2011.covering the broader economic The company is continuing with itsdevelopments, continues to ensure that endeavours to have the matter expeditedwe are well placed when the market in a timely manner, but legal costs infinally opens. defending this matter continue to escalate. Total costs incurred to 30 April 2011 in defending the action broughtKenya/Nigeria against Imara Botswana Limited amount to P 2 153 607 (April 2010: P 1 861 799).The Memoranda of Understanding to work These costs have been fully expensedtogether with Chapel Hill Denham in in the Income Statement of the companyNigeria and NIC Capital in Kenya have in either the current or previousto date not shown much return. financial yearsHowever, efforts continue to move theserelationships to a level where they will No new facts have emerged duringyield positive returns to all parties. We the current year, which have causedcontinue to explore other opportunities to the Board to change the original viewincrease our coverage in East and West taken in July 2007 that the likelihood ofAfrica. The Asset Management relationship a successful claim is remote. Thiswith ICEA Asset Management, who are the view continues to be supported byco-managers of the Imara East Africa Fund, written opinion from the company’sis still working positively. legal advisors. PAGE | 27
  29. 29. Group Restructuring Over the shorter term,An exercise to rationalise the structure of the Group management remainsis largely complete and should be implemented cautious but equallyduring the first half of the new financial year.The current structure of the Group, as a result of optimistic given thehistory, is not as administratively efficient as it could positive and growingbe and this exercise will eliminate these inefficiencieswith a resultant saving in operating expenses. interest in Africa and its capital markets.BSE ListingImara Holdings remains listed on the VentureCapital Market of the Botswana Stock Exchange(“BSE”). It is still intended to apply to move to themain board once the minimum requirement of 300“public” shareholders is achieved. At present thecompany has 309 shareholders in total, of which 266are deemed as “public” shareholders by the BSE.OutlookOver the shorter term, management remains cautiousbut equally optimistic given the positive and growinginterest in Africa and its capital markets. It is hopedthat this will translate into real inflows, despiteliquidity constraints, which will benefit all Imarabusinesses. Despite a disappointing out turn thisyear, it is believed that the Group is well placed toregister a return to profit in the year ahead.In closing, I would like to thank my Chairman,Mike Ndoro, and the Board for their support andguidance. I am pleased to welcome Gunter Steffensand Joe Matsau to the board. Gunter has many yearsof banking experience in Africa and Europe, whileJoe has very strong African corporate experienceboth of which will be most valuable. Finally, I mustthank the Imara team who continue to workextremely hard in difficult conditions to ensure thatImara remains positioned to go forward in Africa.MJS TUNMERChief Executive Officer18 August 2011 PAGE | 28
  30. 30. CORPORATE GOVERNANCE REPORTNature of Business effective for financial years commencing after 1 March 2010. The implementation ofImara Holdings Limited is a Botswana the King III recommendations, which broadlyregistered company, licenced by the advocate a policy of “comply or explain”,International Financial Services Centre are already in process, with the objective(“IFSC”), under Tax Certificate Number 22, of attaining full compliance as soon as isand is the holding company for a group of practicable. By supporting the King Reports,companies conducting the following types Imara Holdings Limited demonstrates itsof business, primarily for institutional and commitment to the highest standards ofprivate clients: integrity and ethical conduct in its dealings with stakeholders.- Asset management- Corporate finance The Board also acknowledges the- Stockbroking relationship between corporate governance- Trust administration and and risk management practices, equity custodial services performance and corporate profitability. Sound corporate governance principlesThere has been no significant change to the remain a top priority for the Board andnature of business from previous years. executive management.Corporate Governance Principles and Board CharterStatement of Compliance The Board Charter outlines the role of theThe Board of Imara Holdings Limited Board and its responsibilities. It recognisesremains committed in its stewardship of that the Board of Directors is accountablethe Group’s affairs, to applying the highest to shareholders for the performance ofstandards of corporate governance and The Imara best practice. Corporategovernance policies and practices are Key responsibilities of the Board include:based on the characteristics of goodcorporate governance, as set out in the - the setting of the strategic direction ofKing Reports on Corporate Governance, the Group and monitoring management’s(“King II & King III”), namely: implementation of that strategy - ensuring an effective corporate- Discipline governance structure- Transparency - ensuring that effective- Responsibility audit, risk management, information- Independence technology, internal control and- Fairness compliance systems are in place to- Accountability protect the Group’s assets, so as to- Social responsibility minimise the possibility of operating- Sustainability beyond legal requirements or beyond acceptable risk parametersThe directors endorse the Code of - monitoring of operational performanceCorporate Practices and Conduct - ensuring that succession planningcontained in the King II Report and the is in placerecommendations contained in the - the integrity and qualitysubsequent King Report on Governance of communications with stakeholders,for South Africa 2009, (“King III”), which are regulators, shareholders and employees PAGE | 29
  31. 31. Cahora Bassa and Kapenta Fisherman Halfway through its journey, the Zambezi flows into two large man-made lakes, Kariba and Cahora Bassa. Here, a thriving Kapenta fish trade takes place, with over 10 000 tonnes being caught and consumed by locals each year. The fishing takes place at night with lights to attract thousands of the tiny fish into hanging nets. These are then dried, salted and exported throughout East Africa.PAGE | 30
  32. 32. CORPORATE GOVERNANCE REPORTThe roles of the Chairman and the Group required to hold shares in the companyChief Executive Officer are separate with but the majority have independentlyclear divisions of their responsibilities to elected to do so. Remuneration levels ofensure a balance of power and authority non-executive directors are reviewedbetween them. The Chairman has no annually and benchmarked against Botswanaexecutive function. financial services sector companies and proxy financial services groups with aThe Board delegates to the Group Chief regional presence.Executive Officer responsibility forimplementing the strategic direction, and for The Company Secretary is appointed by themanaging the day-to-day operations of the Board of Directors. All directors have directGroup. The Chief Executive Officer consults access to the Company Secretary and towith the Chairman in the first place, on information regarding the Group’s affairs.matters which are sensitive, extraordinary They are entitled to make use of independentor of a strategic nature. professional advisors, at the company’s expense, when necessary to discharge specific tasks and duties and have accessRole and Functions of the Board to the Chief Executive Officer and senior executives where required.The Group is governed by a unitary Boardof Directors, which in terms of the company’s The Board meets at least four times a yearConstitution, may not comprise fewer to review the financial performance ofthan 4 or more than 20 directors, at least the Group, its strategic direction and keyone of whom shall be ordinarily resident policies. It approves budgets and reviewsin Botswana. The Board of Directors is the overall effectiveness of systems ofchaired by Michael Ndoro, an independent, internal controls, risk management andnon-executive director and comprises ten statutory and regulatory compliance. It alsodirectors, five of whom are non-executive. monitors the implementation of strategy andDetails of the composition of the Board are policy through a structured approach todetailed on page 12 of this Annual Report. reporting and consequent accountabilityIn appointing directors, emphasis is placed of executive management.on achieving a balance of skills, experience,professionalism and industry knowledgenecessary to meet the Group’s strategic Directors’ Declaration of Interestsobjectives. The selection and appointmentof directors is a formal and transparent Directors and executive management areprocess, involving the Board as a whole required to make an annual declaration ofand assisted by the Nominations Committee. their interests, and a register of interestsThe Board composition is balanced so that is maintained by the Company individual board member or small group Directors and management are also requiredof members has unfettered control over to disclose any material interests in contractsdecision making. and business transactions relating to the Group, which occur during the ordinaryIn terms of the company’s Constitution, course of business and to recuse themselvesdirectors are appointed for three years. from any discussions relating thereto.At least one third of the directors, (roundeddown), retire by rotation annually, and None of the directors or officers of theif available, can offer themselves for company had an interest in any contract ofre-election at the company’s Annual General significance during the financial year endedMeeting. Non-executive directors are not 30 April 2011. PAGE | 31
  33. 33. Director Evaluations Group and company were approved and adopted by the Board on 28 July 2011 andDirectors are required to complete Messrs MJS Tunmer and DE Stone werequestionnaires on an annual basis to authorised to sign these financial statements.evaluate the effectiveness of the Board asa whole and also its members. This process The unaudited financial statements for theis used to ensure that the responsibilities Group for the six months ended 31 Octoberdetailed in the Board Charter are being 2010 were announced on 17 December 2010complied with and that in discharging their and reflected a loss after tax of P 4 442 381.fiduciary responsibilities, directors haveadhered to best practice. The results of The audited results of the Group for thethe evaluation are collated by the year ended 30 April 2011 were announced onChairman and discussed with the Board 29 July 2011, and reflected a loss after tax ofwith the purpose of performance P 7 692 561. The loss after tax for the secondimprovement. The evaluation process half of the year, therefore amounted toincludes a review of the performance of P 3 250 180.individual directors as well as the Chairman.The most recent evaluation exerciseindicates that the directors are satisfied Board Committeeswith the effectiveness of the Board andthat of its individual members. The Board is assisted in the discharge of its duties and responsibilities by a number of Board Committees, which comprise:Directors’ Responsibility for theFinancial Statements - Audit and Risk Committee - Remuneration CommitteeThe directors are responsible for the - Nominations Committeepreparation and fair presentation of the - Executive Committeefinancial statements of the Group andcompany in accordance with International These Committees are accountable to theFinancial Reporting Standards and in a main board and, with the exception of themanner required by the Companies Act of Executive Committee which is chaired byBotswana (Companies Act, 2003). the Group Chief Executive Officer, are chaired by non-executive directors.This responsibility includes designing, Board Committees make recommendationsimplementing and maintaining internal to the main board for its approval orcontrols relevant to the preparation and fair final decision. Terms of reference of thepresentation of financial statements that are Committees have been agreed by the mainfree from material misstatement, whether due board and are reviewed annually. Minutesto fraud or error; selecting and consistently of Committee meetings are circulatedapplying appropriate accounting policies, and reported on at subsequent Boardand making accounting estimates that are meetings. Senior executives are invited toreasonable in the circumstances. attend meetings of the Committees, where considered appropriate.The directors have satisfactorily dischargedtheir responsibility in respect of the financialstatements of the Group and company for Audit and Risk Committeethe year ended 30 April 2011. The Audit and Risk Committee is chairedThe audited financial statements of the by Gunter Steffens, an independent PAGE | 32
  34. 34. CORPORATE GOVERNANCE REPORTnon-executive director, and comprises three in the year ahead. The recommendation tomembers, all of whom are non-executive. the Board that it endorses a statement to thisGary Johns, an independent non-executive effect has been adopted and implemented.director, was the interim Chairman of the The recommendation to the Board that theCommittee from 1 May 2010 to 9 March 2011. financial statements of the company and theDetails of the composition of the Committee consolidated financial statements of theare detailed on page 12. The Group Chief Group be approved and adopted has alsoFinancial Officer and the Chairman of the been agreed and implemented.Board attend meetings of the Committeeby invitation. Remuneration CommitteeThe main responsibility of the Committeeis to assist the Board in discharging its The Remuneration Committee is chaired byresponsibilities under the Companies Act, Gary Johns, an independent non-executivefor ensuring compliance with regulations director, and comprises three members all ofimposed by regulators and supervisory whom are non-executive directors. Details ofauthorities and for assessing, managing and the composition of the Committee are detailedmonitoring risks. It also monitors financial on page 12. The Chief Executive Officer andcontrols and reporting, compliance with one other executive director attend meetingsInternational Financial Reporting Standards, of the Committee by invitation.(“IFRS”), the appointment and effectivenessof the independent external auditors and The Committee has formal terms of referenceevaluates risk management procedures in which set out its responsibilities. Thesubsidiary companies and other internal Committee has satisfied its responsibilitiessystems of control. It also monitors statutory for the year, in compliance with its termsand regulatory compliance at both Group of reference.and subsidiary company level. The Remuneration Committee is responsible forThe Committee has formal terms of reference setting remuneration policies for the Group.which set out its responsibilities. The It aims to ensure that the financial rewardsCommittee has satisfied its responsibilities offered to employees are sufficient to attractfor the year, in compliance with its terms people of the calibre required to effectivelyof reference. implement strategy, and manage the Group’s affairs in order to produce the requiredMeetings are held at least three times per returns for shareholders. It also seeks toannum and are attended by the independent ensure that directors and executives are fairlyexternal auditors, who have unrestricted rewarded for their respective contributions toaccess to the Chairman of the Committee. the Group. Annually, the Committee reviewsMeetings are also attended by internal the Employee Share Option Scheme and theauditors, compliance officers and senior allocation of share options, the profit sharingmanagement, on an as-required basis. scheme and the apportionment of profit shareAt least once in each calendar year, the to executives and employees.Committee meets with the external auditors,without a member of executive managementbeing present. Nominations CommitteeThe Committee has considered and recorded The Nominations Committee is chaired bythe facts and assumptions on which it has Michael Ndoro and comprises four members,concluded that the company and the Group two of whom are non-executive directors.are going concerns and will continue as such The Committee includes the Chief Executive PAGE | 33
  35. 35. Officer, and is responsible for making statutory limits and any other limitations onrecommendations to the Board on all new the delegation of authority determined byappointments to the main board and also the Board from time to time. It also acts as areviews the appointment of directors to medium of communication and co-ordinationsubsidiary company boards. A formal and between business units, Group companies,transparent process is in place in terms of and the Board.which the requisite skills needed on theBoard are identified and those individuals The Committee has formal terms of reference,who are best suited for the position and which set out its responsibilities.who are able to assist the Board in theirendeavours are recruited. The Committeemeets on an as-required basis. Appointments to the BoardThe Committee has formal terms of Messrs Joe Matsau and Gunter Steffens werereference, which set out its responsibilities. invited to join the Board of Directors onThe Committee has satisfied its 1 December 2010. Their formal appointmentresponsibilities for the year, in compliance as directors is subject to approval by thewith its terms of reference. Group’s regulator, Non Bank Financial Institutions Regulatory Authority (“NBFIRA”). Applications have been lodged with NBFIRAExecutive Committee and are pending.The Executive Committee is chaired by theGroup Chief Executive Officer and comprises Resignation from the Boardthe senior executives of the Group. TheCommittee meets monthly and is responsible Mr Lethebe Maine resigned as a director onfor managing the business of the Group 20 April 2011.when the Board is not in session, subject to 2010/2011 Board Attendance Register Director Audit and Risk Remuneration Nominations Main AGM Committee Committee Committee SM Ndoro 3/3* 3/3 3/3 4/4 1/1 MJS Tunmer - 3/3* 3/3 4/4 1/1 AR Fleming - - - 2/4 0/1 GE Johns 3/3 3/3 - 4/4 1/1 JR Legat - - - 4/4 0/1 ACH Mackeurtan - 1/3* 2/3 4/4 0/1 RH Macleod - - - 3/4 0/1 TJ Matsau 1/1 - - 2/2 0/1 L Maine 0/3 0/3 - 0/4 0/1 GZ Steffens 1/1 - - 2/2 0/1 DE Stone 3/3* - - 4/4 1/1 * By invitation. PAGE | 34