Annual Report Turnstar annual report... · 2016-03-21 · to develop. Mlimani has been a huge success and demand for the units is high. The Turnstar Group is bullish regarding growth

2014Annual ReportProperty Investment Sustainability

Game City Phase 4 artist impression - office


Contents Page

Highlights for the year 2 Board of Directors 3Summary of Board CV’s 4 - 5Director’s report 6 - 11Corporate Governance 12 - 13 Turnstar Property Portfolio 14 - 20Valuation Report 21 - 25Turnstar Holdings Limited Consolidated Annual Financial Statements for Year Ended 31 January 2014 General Information 27

Director’s Responsibilities and approval 28Independent Auditor’s Report 29Statement of Financial Position 30Statement of Comprehensive Income 31 Statement of Changes in Equity 32 - 35Statement of Cash Flows 36Accounting Policies 37 - 47Notes to the Consolidated Annual Financial Statements 48 - 91

Notice of the 2014 AGM 92Form of Proxy 93

Turnstar Holdings LimitedAnnual Report 2014


Highlights for the year

• 31.3%totalreturntoinvestorsfortheyearunderreview• Grouprevenueincomeup 16.0%fromtheprioryeartoP223.1m• Groupoperatingprofitup 26.9%fromtheprioryeartoP152.0m• Groupprofitbeforetaxup 164.5%fromtheprioryeartoP383.0m• Groupprofitaftertaxup 137.4%fromtheprioryeartoP312.2m• GroupdistributableincomeofP97.3mfortheyear• Fullyeardistributionperlinkedunitup6.5% fromprioryeartoP17.0

perlinkedunit• Netassetvalueperlinkedunitup 29.4%fromprioryeartoP2.32per

linkedunit• Reducedportfoliovacancy of 1.1%from2.7%inFY2013

2


1 Pierre Bezuidenhout Director 2 Michelle Adelman Director 3 Gulaam Husain Abdoola Managing Director4 Mokgadi K Nteta Director5 Ishmael Nshakazhogwe Director6 Peo Pillar Director7 Cuthbert M. Lekaukau Chairman

1 2 3 4 5 6 7

Board of Directors

3


Summary of Board CV’s

Chairman Cuthbert Moshe Lekaukau

MrLekaukau,who is thechairmanofTurnstar ,previously servedtheGovernmentofBotswanaasaSeniorPublicOfficerinvariouscapacities from1973to1996.HestaredhispublicservicecareerasaStateCounsel,SeniorStateCounsel,PrincipalStateCounselinAttorneyGeneral’sChambersuntil his appointment as aDeputyPermanent Secretary in 1980. Following his appointment asPermanentSecretaryin1984heservedinthatpositionfor12yearsin the thenMinistriesofWorks,Transport andCommunications;Mineral Resources andWaterAffairs as well as the Ministry ofAgriculture.Hewas awarded a PresidentialOrder ofHonour in1996 in recognition of his efficient and devoted service to thecountry.InDecember1996,hewasappointedfoundingExecutiveChairmanoftheBotswanaTelecommunicationsAuthority(nowtheBotswanaCommunicationsRegulatoryAuthority) and laterChiefExecutive, in which capacities he served the telecommunicationsregulatorybodyfortenyearsuntilheretiredinDecember2006.

He re-joined the Public Service in May 2007 to start theGovernment ImplementationCoordinationOffice (GICO) in theOfficeofthePresidentwherehewasheadofanorganisationwithresponsibilities to coordinate the implementation of projects toensuretimelydeliveryofservicesinthecountryuntil2009.

Mr Lekaukau is also a director of Letshego Financial ServicesBotswana(Pty)Ltd,a subsidiaryofLetshegoHoldingsLimited,aconsumerfinanceentity.

MrLekaukauhasservedasaboardmemberordirectorforvariouscorporateinstitutionsincludingasChairmanofLetshegoHoldingsLimited, Botswana Telecommunications Corporation, BotswanaDiamondValuing Company (Proprietary) Limited,Water UtilitiesCorporation,Air Botswana, Botswana Railways, BotswanaVaccineInstitute,BotswanaAgriculturalResourcesBoard,BotswanaPowercorporationandtheGoverningCounciloftheBotswanaCollegeofAgriculture.HehasalsoservedasViceChairmanfortheBotswanaMeat Commission, Debswana Diamond Company (Proprietary)LimitedandSodaAshBotswana(Proprietary)Limited.MrLekaukau

hasbeenaDirectorof theBotswanaDevelopmentCorporationLimited,De BeersCentenaryAG,De BeersConsolidatedMinesLimited, DiamondTrading Company (Proprietary) Limited, BMC(UK) Holdings Limited, Table Bay Cold Storage (Proprietary)Limited (RSA), Klopper and Gluckman (Pty) Ltd (RSA) NationalDevelopmentBankLimitedandaMemberof theCouncilof theUniversityofBotswana.

MrLekaukau,whoisanAttorney-at-law,holdsaBachelorofLaws(UniversityofBotswana,LesothoandSwazilandinconjunctionwithEdinburgh University), a Master of Laws (Columbia University –NYC)andaCommonwealthCertificateinLegislativeDrafting.

Managing Director Gulaam Husain Abdoola

GulaamAbdoolaisafoundingmemberofTurnstarHoldingsLimitedandManaging Director since the inception of the Company. He isthe ExecutiveChairman ofGHGroup, a group of companieswithbusinessesinterestsinproperty,retail,wholesale,restaurants,boutiques,tyres,spareparts,andpetroleumretail.HehasservedasNon-ExecutiveDirector on various company Boards and as Chairman of StanbicBankBotswana,McCarthyRetailBotswana (whichcomprisesGameDiscountWorld,BeeGee,Savelles,HappyHomes,Bears,Guys&GirlsandBonusBuildingSupplies)andPrefsure Insurance.MrAbdoola iscurrentlytheChairmanoftheMasielaTrustFund.

Director Ishmael Nshakazhogwe

IshmaelNshakazhogweistheChairmanandManagingDirectoroftheZambeziGroupofCompanieswhichembraces industry,petroleum,hospitality,property,farmingandinternationaltrade.Heisasuccessfulbusinessmanwho has received the highest award from the FrenchGovernment, theNationalOrderofMerit“Chevailer de l’ordre duMerite”,aswellasPresidentialOrdersforMeritoriousServicebythePresidentofBotswana.MrNshakazhogweisamemberoftheBotswanaConfederationofCommerce,IndustryandManpower(BOCCIM),theBotswana Investment andTrade Centre and a committeemember

4


of theCivil Justice Forum,A.G.Chambers.He is also amemberoftheHighLevelConsultativeCommitteeon JusticeandGovernance,a Public/PrivateGovernance Body.He received an honorary awardandanappointmentbytheThaiGovernmentasThailand’sConsulateGeneraltotheRepublicofBotswana.

Director Peo Pillar

PeoPillargraduatedfromtheUniversityofBotswanawithaBachelorofCommerce(Accounting)in1995andattainedACCAqualificationsin1998.In2010shecompletedanMBAinFinancialServicesthroughtheLondonSchoolofBusiness andFinance.MsPillarholds variousprofessionalmembershipsandisaFellowMemberofACCA,AssociateMemberoftheBotswanaInstituteofCharteredAccountants(BICA)and Alumni of UNISA. She is a qualified Chartered Accountantwithextensiveexperience in internal auditing, external auditing andfinancial accounting; having worked in audit for five years and infinancialaccounting for13years.She iscurrently theChiefBusinessRiskManagementOfficeratMascomWireless.

Director Pierre Bezuidenhout

PierreBezuidenhouthasaBComHonsandaBCom(Law)fromRandAfrikaansUniversity inSouthAfrica.Hehas22years’experience ininvestmentbankingandiscurrentlytheManagingDirectorofCollectus(Pty)Ltd.

DirectorMichelle Adelman

Michelle Adelman, who has a BSc in Engineering from CornellUniversity in NewYork, has been the global Managing Director ofAccenture plc, the CEO ofAccelion Inc., and serves as a strategicconsultant on Boards of regional companies. She is currently theManaging Director of Accite Holdings. Ms Adelman has extensiveexperience in investment analysis, investor relations and operationsmanagementandasadirectorofcompanies.

DirectorMokgadi K Nteta

MokgadiKNtetahasaBSc(Honours)degreeinAppliedPsychologyfrom the University ofWales Institute of Science andTechnology,anMBA inHumanResources fromCityUniversityBusinessSchoolin London and is a Fellow of theCIPD andmember of BOCCIM.Her experience in HR spans over 20 years and she has workedfor Debswana, Barclays Bank of Botswana, Sefalana sa Botswanaand Kgalagadi Breweries holding a number of senior HR positions,culminatinginthepostofHumanResourcesDirectorbeforeformingherownconsultancybusiness.Shehasanumberofbusinessinterestsandcorporatedirectorshipsaswellasservingsocietythroughvariouscharitableavenues.

Jacob Motlhabane

TheformerManagingDirector,MrJacobMotlhabane,leftthecompanyonthe31stMay2013.

Neill Armstrong

Mr.NWArmstrongresignedfromtheBoardonthe16thApril2014,subsequenttotheperiodunderreview.

Summary of Board CV’s

5

Game City Phase 4 artist impression - officeGame City Phase 4 artist impression - office

“The year ending January 2014, has been an exciting year for Turnstar. The company has repositioned itself in terms of management, value, earning and growth potential. ”

Dear Unit holders,

TheyearendedJanuary2014hasbeenanexcitingyearforTurnstar.The company has repositioned itself in terms of management,value,earningandgrowthpotential.

Ourresultsareimpressiveandspeakforthemselves.TurnstarisinafavourablepositionduetoitsacquisitionofMlimaniHoldingsinTanzania.Theresultsandbenefitsofthisacquisitionarereflectedinthefinancialstatements.

There has been a change in management strategy under theguidanceofMrGulaamAbdoola.Increasedfocushasbeenplacedoncontrollingcosts,andmaximisingincome.Maintenanceofthepropertieshasbeenprioritised,andaspartofthisstrategy,specialemphasishasbeenplacedonensuringmaximumvalueisderivedfromfundsspentonmaintenance.

TurnstaristradingwellbelowitsN.A.Vandwebelievethatintimeinvestorswillrecognisethisandthepriceshouldimprovebasedonourconsistentperformance.

Growth inthepropertysectorworldwide, isdifficult toachieve.RealprofitablegrowthcanbeachievedincertainAfricancountries.However, these opportunities come with their own uniquechallenges. Although there are many opportunities in Africa,one has to be very careful about managing the potential risks.ObtainingfundingforprojectsinAfricaisalsoaccompaniedbyitsownchallenges.

Turnstar is fortunate in that it stillhasbulk landatMlimaniCitytodevelop.Mlimanihasbeenahugesuccessanddemandfortheunitsishigh.

The Turnstar Group is bullish regarding growth in Africa.Managementwillexaminevariousfundinginstruments,inadditiontobankloanstofuelitsfutureAfricangrowth.Duringthecurrentyear, the Company intends to have discussions with financialInstitutions, Consultants, and Investment bankers to find a longtermsolutiontofunditsAfricangrowth

AlthoughtheyaremanythatarescepticalaboutpropertymarketsintherestofAfrica,weatTurnstarareextremelyexcitedbythepotentialofthesemarkets.

THE PROPERTY MARKET

TheoverallpropertymarketinBotswanaisflatacrossallsectors,withacautionaryindicationofanoversupplyofofficeandretailspaceinGaborone.There is already evidence of declining base rentals andhardeninginvestmentyieldsduetoanoversupplyofofficespaceandshoppingcentresaroundthecity.

Tanzania’seconomyiscurrentlythe3rdfastestgrowingeconomyintheAfricancontinent.Thisgrowthhasledtoanincreasingnumberofthemiddleincomegroupandagrowingsophisticatedconsumermarket.As a result there is a high demand for quality office and purposebuilt retail centres.Turnstar is uniquely positioned in geographicaldiversificationacrossBotswanaandTanzania.

Director’s Report

6

Game City Phase 4 artist impression - officeGame City Phase 4 artist impression - office

Director’s Report

Geographic spread by value

TheTurnstar flagship property in Botswana, Game City, is still thelargestandonlyregionalshoppingcentreinBotswanawhileMlimaniCitymallisthelargestpurposebuiltindoorshoppingcentreinTanzania.Turnstar’sportfoliohaslimitedexposuretotheBotswanaofficesector.The Botswana portfolio constitutes of approx. 60% of tenants (byGLA) comprising of large listed or large national companies, whiletheTanzaniaportfolioconstitutesofapprox67%retailexposurebyrevenue.

Sectorial Spread by Value

Theportfoliocomprisesofasuperiorweightedaverageleaseexpiryprofileof3.1yrs,meaningahealthy leaseexpiryprofilewith46%ofleasesexpiringinfinancialyear2018andbeyond.Thecurrentfinancialyear ended Jan’14 had a total vacancy across the portfolio of only1.1%(byGLA).Thestrategyadoptedto furtherreducevacancies is

entering intoshortterm leases.Thehighest leaseexpirypercentageis expected in 2016, comprising of leases inMlimani offices, GameCityandFairgroundsOfficePark.Thevastmajorityoftheseleasesareexpectedtoberenewed.

Lease Expiry Profile

Contractualleaseescalationsarewellinexcessoflongterminflationexpectations.

Theportfoliohasa95%leaserenewalsuccessratewithrentalarrearsreducedtoP1.3mfromP1.7m.

Rental Escalation Profile

7


Property Expansion, Upgrading and Refurbishment

BotswanaGameCitywillbeexpandedbyapprox.8,000sq.m.Thenewareawillcompriseofa foodcourtandrestaurants, fashionavenue,exhibitionarea, entertainment and kidsplay area and a3-level parkade.Majorrefurbishment works of the existing shopping centre will includeupgrades to entrances, toilets, ceilings and floors. The works areplannedtocommenceshortlyandbecompletedin18months.Major works comprising repairs to roof leaks, replacement andupgrading of sewerage pumps and a new CCTV system, werecompletedatGameCity.

CosmeticworktofaceliftCommercePark,SupersaveMall,FairgroundsOfficeParkandNzanoMallwillbeundertakenshortly.TheresidentialpropertiesinMogoditshaneandTapologoEstateareintheprocessofundergoingcyclicalmaintenance.

TanzaniaTheMlimaniCityretailMallwillbeexpandedbyapprox.10,000sq.mwithbasementparking.FurtheradditionsincludemeetingroomstotheConferenceCentreofapprox.4,000sq.mandtwoadditionalOfficeBlocksofapprox.5,000sq.m.OtherancillaryworksareafencedanddevelopedBotanical gardenwithwalkways, demarcatedpicnic areasandadminblockwithablutions.Theworkisplannedtocommenceinthethirdquarterof2014andtakeaperiodof18months.

Therefurbishmentoftheexistingpropertywillcompriseofupgradesto toilets and common areas, additional parking for the conferencefacilityandafaceliftofthefrontageoftheretailmall.

Currentmajorworks being completed is installation of a new paidparkingsystemwhichwillbeoperationbythethirdquarteroftheyear.

Financial and Operating Review

The group posted pleasing results for the year, despite marketconditions.

TurnstarremainsthemostdiversifiedpropertycompanyontheBSE,with property assets valued at over P1.7 bn.TheGroup’sTanzaniansubsidiary,MlimaniHoldingsLimited,generatesUSDollarrevenue.

Turnstar is a fully integrated internally managed property company,employing125staff.

Group RevenueGrouprevenueincreasedby16%fromtheprioryear,toP223.1m.Therental income from the company’s Botswana portfolio increased by10%whilsttherental incomefromtheTanzanianportfolio increasedby25%

Approx.43%ofthetotalrentalincomeisinUSDollars

Director’s Report

8


Profits The Group’s Operating Profit increased by 26.9% from theprioryear,toP152m.

TheGroup’sProfitbeforeTaxincreasedbyP164.5%fromtheprioryear,toP383m.

TheGroup’sProfitafterTaxincreasedby137.4%fromtheprioryeartoP312m.

DISTRIBUTIONThefullyeardistributionperlinkedunitincreasedby6.5%fromthepreviousyearto17tperlinkedunit.

TheGroupdistributedP97.3Mfortheyear

NetAssetvalueperlinkedunitisup29.4%fromprioryeartoP2.32perlinkedunit.

Capital Management USD5.6mofloanswererepaidduringtheyear,inaccordancewiththetermsoftheloans,fromcashreserves.

Interest and loan repayments on the USD loan facility aremade from USD rentals earned from the Group’sTanzanianproperties.Hence,thereisnoforeigncurrencyexposureontheloanandinterestrepayments.

The loan to value ratio (borrowings as a percentage ofinvestment property) is 19.5%.The interest cover ratio hasincreasedto11.1x.

Director’s Report

9


Consolidated earnings and distribution for the year

Description January 2014 (P’m)

January 2013 (P’m) Increase/(Decrease)

Gross property revenue 223.1 192.3 16.0%

Botswana 128.2 116.4 10.2%

Tanzania 94.9 75.9 25.0%

Property operating expenses (120.0) (112.1) 7.0%

Botswana (87.0) (85.4) 1.9%

Tanzania (33) (26.7) 23.6%

Net property income 103.1 80.2 28.6%

Other income 48.9 52.1 (6.1%)

Onceoff–professionalfeestowardsacquisition - (12.5) -

Operation Profit 152.0 119.8 26.9%

Net finance costs Botswana (13.6) (15.4) (12.0%)

Fairvalueadjustments 244.6 40.5 504.2%

Taxation (70.8) (13.3) 432.0%

Profit after taxation 312.2 131.5 137.4%

Distribution for the year including appropriation 97.3 91.3 6.5%

Director’s Report

10


Director’s Report

Consolidated Balance sheet (extracts)

Description January 2014 (P’m) January 2013 (P’m) Increase/(Decrease)

Property portfolio 1,721.5 1,404.2 22.6%

Botswana 981.7 781.5 25.6%

Tanzania1 739.9 622.7 18.8%

Othernon-currentassets2 90.2 76.3 18.1%

Currentassets 93.3 100.3 (7.0%)

Borrowings3 (336.1) (341.7) (1.6%)

FNBPulaloanfacility - (100.0) -

BarclaysPulaloanfacility (100.0) - -

BarclaysUSdollarloanfacility (236.1) (241.7) (2.3%)

Othernon-currentliabilities (215.1) (128.8) 67.1%

Currentliabilities (28.6) (27.7) 3.1%

Linked unit holders interest (net asset value) 1,325.1 1,082.6 22.4%

Loan to value (borrowings as a % of property value) 19.5% 24.3% (4.8%)

Interest cover ratio4 11.1x 7.5x -

Sharesinissueatyearend 572.2 572.2 -

Soundbalancesheet:- Netassetvalueup22.4%fromprioryear- Loantovalueratioreducedtoconservativelevelof19.5%- Interestcoverratioincreasedto11.1x

1 Exchange rate used for conversion of foreign items is P1 = U$0.11 (FY13: P1 = U$0.14) 2 Comprises PPE, goodwill, deferred tax, operating lease asset3 Borrowings are held at amortised cost4 Netdistributableincomeafterexpensesdividedbyfinancecosts

11


Corporate Governance

TurnstarstrivestomaintainahighstandardofCorporateGovernanceandiscommittedtotheprinciplesoftransparency,accountabilityandintegrity.The Board of Directors continually endeavour to ensurethat the company policies on corporate governance meet bestpractice.TheBoardhasadoptedchartersfor itself, inrespectoftheAudit Committee andAsset Management Committee by adoptingtheBotswanaStockExchangeCodeofBest Practiceon corporategovernance.The controls encompass responsibilities in compliancewithprinciplesofgoodgovernance,accountability,arms’lengthdealingsandtheapplicablelaw.

BOARD OF DIRECTORSThe Board of Directors during the year under review comprisedofnineDirectors,whoare independent,non–executiveDirectors,with the exceptionof theManagingDirector.TheChairmanof theBoardisanon-executiveDirector.TheBoardofDirectorstogetherbring awealthofexpertise andexperience from their variedfieldsofoperationandensure thatdebatesonmattersof strategy,policy,business development and performance are robust, informed andconstructive. The Board meets at least four times a year and isresponsible for, inter alia, reviewing and guiding corporate strategy,acquisitionsandperformance.Allnon-executiveDirectorsaresubjecttoretirementbyrotationandre-electionbyshareholdersperiodically,inaccordancewiththeconstitutionofthecompany.

ThenumberofBoardMeetingsheldandthegrossfeespaidtotheexecutiveDirectorsareasfollows:

Board Meetings Fees Meetings AttendedCMLekaukau 178000 9PPillar 164000 9NWArmstrong 152000 8INshakazhogwe 128000 6MNteta 164000 9PBezuidenhout 126000 7MAdelman 138000 8GHAbdoola 50000 3 1 100 000

TheformerManagingDirectorMr.JacobMotlhabaneleftthecompanyonthe31stMay2013.

MrGulaamAbdoolawasappointedastheManagingDirectoronthe1stJune2013.

MrPierreBezuidenhoutandMrsMichelleAdelmanjoinedtheBoardofDirectorsinApril2013.

Mr.NWArmstrongresignedfromtheBoardonthe16thApril2014,subsequenttotheperiodunderreview.

BOARD COMMITTEES

Audit CommitteeTheBoardhasestablishedanAuditCommittee,whichcomprisesof2non-executiveDirectors.Thecommitteemeetsindependentlyatleasttwiceayear.Theexternalauditors,representativesofManagementandtheManagingDirectorattendbyinvitation.TheCommitteeistaskedwithplanning the statutory annual audit and themid - year review,at which detailed risk assessments are performed.The CommitteereviewstheAnnualFinancialStatementsandmakesrecommendationstotheBoardofDirectorspriortotheirpublication.TheCommitteealsoreceivesadirectreportfromtheexternalauditorsontheresultsandfindingsoftheauditprocess.

Attendancebytheauditcommitteemembersatmeetingsheldduringthisfinancialyearissummarisedbelow

Fees Meetings AttendedPPillar 23000 2NWArmstrong 33000 3GHAbdoola 16000 1PBezuidenhout 8000 2 80 000

12


Corporate Governance

ThemainresponsibilitiesofthiscommitteearetoprovidetheBoardwiththefollowing:• additionalassuranceregardingtheaccuracyandreliabilityofthe

AnnualFinancialstatements,• satisfactionthatappropriatefinancialandoperatingcontrolsarein

place,• assurance that significantoperatingandfinancial riskshavebeen

identified,evaluatedandmitigated,• confirmation of compliance by the company with legal and

regulatoryrequirements,and• areviewoftheindependenceandperformanceofthecompany’s

externalauditors.

Considering the size and current structure of the company, adedicatedinternalauditfunctionisnotrequiredatthisstage.Thisneedisreviewedbythecommitteeonaregularbasis.

Human Resources CommitteeTheHumanResourcesCommittee is responsible for reviewing theremunerationpoliciesofthecompanyforapprovalbytheBoardandis constituted of three non-executive Directors.The committee isresponsibleforensuringthatthecompany’sexecutives,managementandstaffarerewardedequitablybasedontheircontributiontothecompany. Fees Meetings AttendedNWArmstrong 16000 2INshakazhogwe 80000 7MNteta 48000 6MAlderman 32000 4GHAbdoola 16000 2 192 000

Asset Management CommitteeTheAssetManagementCommitteereviewsthepotentialacquisitions,expansion, developments or disposals brought before it bymanagement,andmakesrecommendationtotheBoard.

Thecommitteecomprisesofthreenon-executiveDirectors.TheManagingDirectorandseniormanagementattendbyinvitation.

Thiscommitteemeetsasandwhenrequired

Fees Meetings AttendedCMLekaukau 8000 1NWArmstrong 8000 1PBezuidenhout 8000 1MAdelman 10000 1 34 000

Directors’ DealingsThecompanyoperatesapolicyofprohibitingdealingsbyDirectorsinperiodsimmediatelyprecedingtheannouncementsofitsinterimandyear–endfinancialresults,distributionnoticesandanyperiodwhenthecompanyistradingunderacautionaryannouncement.

Company Secretary and Professional AdviceThe Company Secretary acts as the secretary of the Board andattendsallmeetingsfortheyear.AllDirectorshaveunlimitedaccesstotheservicesoftheCompanySecretary,whoensurescompliancewithapplicableproceduresandlegislation.

All Directors are entitled to seek independent professional adviceconcerningtheaffairsofthecompany,atthecompany’sexpense.

13


Gaborone International Commerce Park

Salient information

Location Plot63,CommercePark,Gaborone

GLA(m2) 2,600

Lease/freehold Leasehold

Independentvaluer’svaluation P11,400,000

Caprate 10%

Tenancy Multi-tenanted

Occupancy 84.8%

Majortenants P1Various

Turnstar House

Salient information

Location Plot1131-7MainMall,Gaborone

GLA(m2) 3,117



Caprate 9.5%


Occupancy 87.6%

Majortenants Nandos,Orange,Turnstar

Turnstar Property Portfolio

14



Tapologo Estate

Salient information

Location Plot13093,16397/8,TapologoEstate,Gaborone

GLA(m2) 4,472



Caprate 8%


Occupancy 100%

Majortenants Various

Citroen/Hyundai Warehouse

Salient information

Location lot1444,Citroen/HyundaiShowroom,Gabarone

GLA(m2) 1,802



Caprate 9%

Tenancy Single-tenanted

Occupancy 100%

Majortenants HyundaiAutomotiveBotswanad

15



Fairgrounds Office Park

Salient information

Location Plot66458,FairgroundsOfficePark,Gaborone

GLA(m2) 9,375



Caprate 9%


Occupancy 96.4%

Majortenants BotswanaLife,MomentumHealth,BotswanaInsuranceFundManager,Botswana

TourismOrganisatio

Game City Shopping Complex

Salient information

Location Leasearea975-KO,GameCity,Gaborone

GLA(m2) 51,116



Caprate 8.25%


Occupancy 99.9%

Majortenants Game,Choppies,NewCap-itolCinemas,Woolworths,Edgars,Shoprite,MrPrice

16



Mogoditshane Townhouses

Salient information

Location Triballot1023,ResidentialComplex,Mogoditshane

GLA(m2) 2,880



Caprate 5%


Occupancy 93.3%


Supa Save Mall

Salient information

Location Triballot6670,SupaSaveMall,Mogoditshane

GLA(m2) 3,402


Independentvaluer’svaluation P23,800,000s

Caprate 12%


Occupancy 100%

Majortenants Choppies

17



Nzano Shopping Centre

Salient information

Location Plot904,NzanoComplex,Francistown

GLA(m2) 13,076



Caprate 9.5%


Occupancy 100%

Majortenants Game,Spar,MrPrice

Mlimani City – Conference Centre

Salient information

Location SamNujomaRoad,DaresSalaam,Tanzania

GLA(m2) 4,403


Independentvaluer’svaluation US$3,500,000

Rentmultiple 13

Tenancy n/a

Occupancy n/a

Majortenants Variousevent

18



Mlimani City – Retail Shopping Centre

Salient information

Location SamNujomaRoad,DaesSalaam,Tanzania

GLA(m2) 18,607



Caprate 8.25%


Occupancy 99.5%

Majortenants Shoprite,Game,MrPrice,CenturyCinemax

Mlimani City – Office Park

Salient information


GLA(m2) 11,308



Caprate 9%


Occupancy 100%

Majortenants VodacomTanzaniaHeadof-ficeTanzaniaInvestmentBank

Headoffice

19



Mlimani City – Residential Estate

Salient information


GLA(m2) 7,451



Caprate 10.5%


Occupancy 100%


Mlimani City – undeveloped land

Salient information


GLA(m2) 75,969



Caprate n/a

Tenancy n/a

Occupancy n/a

Majortenants Earmarkedfordevelopmentofoffices,avalueshopping

centreand3-starhotel

20


Valuation Report

Executive summaryScope of WorkTovalueonthebasisofMarketValueinterestinthePropertyPortfolioasatValuationDateinaccordancewithyourinstruction.

Purpose of ValuationAccountingPurposes

Inspection DateJanuary2014

Property DescriptionValuationofTurnstarHoldingsPropertyPortfolio

Valuation date31January2014

Addressee: TurnstarHoldings1131-1137QueensRoadMainMallGaborone

RelevanceThisreportisonlyfortheusebytheaddresseeandnoresponsibilityisacceptedfromthirdpartiesforanypartortheentirereport.

StandardsThe valuation report has been prepared in accordance with theInternational Valuation Standards and Royal Institution CharteredSurveyors Valuation Standards (Sixth edition), unless there are anydepartureswhichwillannexedtothisreport.

Market value (Aggregate)P1,025,900,000 (One billion and twenty five million nine hundredthousandpula)

Assumptionswehaveassumedtownandregionalplanningissues,stateofrepairandconditionoftheproperty,soil+environment issues, tenureaspertheDeeds Registry office or as provided in the furnished title deed.Anyvariation to the above might render the values in this report to beincorrect,henceareappraisalshouldbeconsidered

VerificationWerecommendthatbeforeanyfinancialtransactionisenteredintobaseduponthisvaluation,youobtainverificationoftheinformationcontainedwithinourreportandthevalidityoftheassumptionswehaveadopted

PublicationNeitherthewholenoranypartofourreportnoranyreferencestheretomaybe included inanypublisheddocument,circularorstatementnorpublishedinanywaywithoutourpriorwrittenapproval

Report Date14April2014

Valuer Yoursfaithfully

BenedictKgosilentsweBsc(Hons)MRICSMREIBForandonbehalfofRiberry(Pty)Ltd

Cell:73302777Tel:3188830Fax:3188831Email:[email protected]:[email protected]

Thevaluerhassufficientlocal/nationalpropertymarketknowledge,skillsandunderstandingtoundertakevaluationcompetently

Qualifications and credentials of the valuerProfessionalMemberoftheRoyalInstitutionofCharteredSurveyors

ProfessionalMemberoftheRealEstateInstituteofBotswana

Bsc(Hons)Estatemanagement

21


Valuation Report

Turnstar Holdings 31st January 2014

Property Lot No Location Name Open Market Value (P)

LeaseAreas975-KOand976-KO

Gaborone GameCityShoppingComplex

680000000

Lots1131-1137 Gaborone TurnStarHouse 31700000Lot14444 Gaborone CitroenHyundai

Showroom8500000

Portion63Ptn35,(PtnofPtn3)

FarmForestHillNo.9-Ko

Gaboroneinternationalcommercepark

11400000

Lot66458(PortionofPortion50676)

Gaborone FairgroundsOfficePark

136000000

Lots13093,16397and16398

Gaborone Tapologoestate 29500000

TribalLot1203 Mogoditshane 11700000

TribalLot6670 Mogoditshane SupaSaveMall 23800000Lot904 Francistown NzanoShopping

Centre93300000

Total 1,025,900 000

GLOSSARY OF STANDARD TERMS USED

This table defines various standard terms used in valuation reports. Where a term is used as defined it will be identified in the text with an italic font

AppraisalSeevaluation

AssetsRealandpersonalproperty

AssumptionA supposition taken tobe true. It involves facts, conditionsor situationsaffectingthesubjectof,orapproachto,avaluationthat,byagreement,neednotbe verifiedby themember as partof the valuation process.Typically,assumptions are made where specific investigation by the valuer is notrequiredinordertoprovethatsomethingistrue

Basis of value A statement of fundamental measurement principles of a valuation onspecifieddate.

Date of reportThedateonwhichthevaluersignsthereport

Date of valuationThedateagreedwiththeclientasbeingthedateonwhichthevalue isassessed.Thisdatemaybebefore,orthesameas,thedate of report butitcannotbeafterthatdate.

DepartureSpecialcircumstanceswherethemember considersthatitisinappropriate,orimpractical,forthevaluationtobemadewhollyinaccordwithapractice statementinthesestandards.

Depreciated Replacement Cost ThecurrentcostofreplacinganassetwithitsmodernequivalentassetslessdeductionsforphysicaldeteriorationAndallrelevantformsofobsolescenceandoptimisation.

DirectorsThe individual(s) responsible for themanagementof acompany,firmorentity.Thisalso includes,where thecontextsoadmits, thecorrespondingofficers,chargedwithsimilarduties(forexampletrustees)ofanundertaking,enterpriseorotherorganisation,whichdoesnothavedirectors

External Valuer Avaluerwho,togetherwithanyassociates,hasnomateriallinkswiththeclient,anagentactingonbehalfoftheclient,orthesubjectoftheassignment..

InspectionAvisittoapropertytoexamineitandobtainrelevantinformation,inordertoexpressaprofessionalopinionofitsvalue.Unlessotherwiseagreedwiththeclientthetermassumesthatthememberwillinspecttheproperty bothinternallyandexternally,whereveraccessispossible.(seealsosurvey).

Investment Value or WorthThevalueofapropertytoaparticularinvestor,oraclassofinvestors,foridentified investment objectives.This subjective concept relates specificpropertytoaspecificinvestor,groupofinvestors,orentitywithidentifiableinvestmentoroperationalobjectivesand/orcriteria.

22


Valuation Report

Market Rent (MR)Theestimatedamountforwhichaproperty,orspacewithinaproperty, shouldleaseonthedate of valuationbetweenawillinglessorandawillinglesseeon appropriate lease terms, in an arm’s length transaction, afterpropermarketing wherein the parties had each acted knowledgeably,prudentlyandwithoutcompulsion.

Market Value( MV) Theestimatedamountforwhichapropertyshouldexchangeonthedate of valuationbetweenawillingseller inanarms’-length transactionafterpropermarketing wherein the parties had each acted knowledgeably,prudentlyandwithoutcompulsion.

Member AFellow,ProfessionalMember,TechnicalMemberorHonoraryMember oftheRoyalInstitutionofCharteredSurveyors(RICS)

Method of valuationAprocedureortechniqueusedtoarriveatthevaluedescribedbyabasis of value.

Open Market Value (OMV)ItsapplicationprovidesthesameresultasMarket Value.

PortfolioAcollectionoraggregationofpropertiesheldbyasingleentity.

Practice Statement (PS)Astatementofthehighestprofessionalstandardsthatapplymandatorilytomemberswhenprovidingwritten valuations of propertyinallstatues,forallpurposestowhichthesestandardsapply.

PropertyAllrightsandinterestinland(withandwithoutbuildings),plant & equipment andwastingassetsunless thecontextclearly impliesamorerestrictivedefinition.Thetermappliesalsotootherassetsheldastradingstockorworkinprogress,whenthevaluationisforthepurposesofinclusionofafigure(s)inafinancialstatement.‘Property’willinclude‘properties’intheappropriatecontext.ReportThewrittenmeansofprovidingtheclientwiththevaluation, appraisal,orassessmentofworth.

Special Assumption An assumption that either: + requires the valuation to be based on

factsthatdiffermaterially fromthosethatexistatthedate of valuation;or+isonethataprospectivepurchaser(excludingapurchaserwithaspecialinterest)couldnotreasonablybeexpectedtomakeatthedate of valuation,havingregardtoprevailingmarketcircumstances.

Special PropertyProperty thatisrarelyifeversoldinthemarket,exceptbywayofasaleof thebusinessorentityofwhich it ispart, due touniqueness arisingfromitsspecialisednatureanddesign, itsconfiguration,size, location,orotherwise.Examplesincluderefineries,powerstations,docks,specialisedmanufacturingfacilities,publicfacilities,churches,museums.

Special ValueAnamountabovetheMarket Valuethatreflectsparticularattributesofanassetthatareonlyofvaluetoaspecial purchaser.

SurveyAninspectionofapropertyorlandforthepurposeofrecordingspecificinformation.Surveysmayberequiredforavarietyofpurposes,suchastoassessstructuralcondition,dimensions,soilcondition,quality,etc.

Synergistic Value Anadditionalelementofvaluecreatedbythecombinationof twoormoreinterestswherethevalueofthecombinedinterestisworthmorethanthesumoftheoriginalinterests.(Mayalsobeknownas‘marriagevalue’).

Terms of EngagementWrittenconfirmationoftheconditionsthatthemembereitherproposes,orthatthemember andclienthaveagreedshallapplytotheundertakingandreportingofthevaluations, appraisaloropinionofworth.

Third partyAnyparty,otherthantheclient,whomayhaveaninterestinthevaluation oritsoutcome.

Trade Related Property Propertywithtradingpotential,suchashotels,fuelstations,restaurants,orthe likes,theMarket Valueofwhichmayincludeassetsotherthanlandandbuildingsalone.Thesepropertiesarecommonlysold in themarketasoperatingassetsandwithregardtotheirtradingpotential.Alsocalledproperty withtradingpotential.

Valuation Amember’sopinionofthevalueofaspecified interestor interests inaproperty,atthedate of valuation,givenin writing.Unlesslimitationsare

23


Valuation Report

agreedintheterms of engagement thiswillbeprovidedafteraninspection,andanyfurther investigationsandenquiresthatareappropriate,havingregardstothenatureofthepropertyandthepurposesofthevaluation.

WorthSee investment value.

Written/in writingWrittenverificationincludingmaterialtransmittedbyelectronicmeans

SCOPE OF WORK

Sources of informationThevaluationcertificatereporthasbeenpreparedinaccordanceWiththe InternationalValuation Standards and Royal Institution CharteredSurveyors Valuation Standards (sixth edition) unless there are anydepartures which will be annexed to this report. Also the terms ofengagement, informationsupplied tousbyyourselves,an inspectionofproperty and a research carriedout in respectof tenure and currentmarketconditions.

Terms of engagementThe terms of engagement are as specified in the executive summaryunderscopeofworkasfollows;TovalueonthebasisofMarketValuetheinterestinThePropertyasatValuationDate.

InspectionWe undertook a visit to the properties to examine and then obtainrelevantinformation.Weinspectedthepropertiesvisuallybothinternallyandexternally.Allmeasurements and areas thatmaybequoted inourreportareapproximate.Wedidnotundertakeabuilding,structural,soiloranyotherspecialistsurveyoftheproperty.Standardfixturesandothernormalserviceinstallationsincludingair-conditioninghavebeentreatedasanintegralpartofthebuilding,henceincludedinourvaluation.

Inspection dateJanuary2014

Repair and ConditionAtthetimeofoursurveythepropertieswereinasatisfactorystateofrepairandcondition

Tiles and tenureDetailsoftile/tenureunderwhichthepropertyisheldhavebeenobtainedeitherfromDeedsRegistryOfficeorfromtheclient.Weshouldemphasis,however, that the interpretation of the documents of title (including

relevanttitledeeds,leases,restrictivecovenantsandplanningconsents)istheresponsibilityofyourlegaladvisor.

We have notmeasured the site but relied on the Surveyed diagramdetailsasobtainedfromtheDeedsRegistry

Environmental MattersWe have not undertaken, nor are we aware of the content of, anyenvironmentalauditorotherenvironmental investigationorsoilsurveywhichmayhavebeencarriedoutonthepropertyandwhichmaydrawattentiontoanycontaminationorthepossibilityofanysuchcontamination.WehavenotcarriedoutanyinvestigationintopastorpresentusesofthepropertynorofanyneighbouringlandtoestablishwhetherthereisanypotentialforcontaminationfromtheseusesorsitesadjacenttotheSubjectpropertyandhavethereforeassumedthatnoneexists.We have not factored in any environmental issues, that are either aninherent feature of the property itself, or the surrounding area,whichcould impact on the value of the property interest. i.e environmentallegislation, soil conditions, historicmining, archaeological sites, electricitytransmissionequipmentetc.

Town PlanningWehavenotundertakenplanningenquiriesbutreliedontheinformationobtained from theTitleDeed and/or lease and/or certificate.Andweassumedthat;Thepropertypossessesagoodandmarketabletitlefreefromanyonerousor hampering restrictionsor conditions; all buildingshave been erected either prior to planning control or in accordancewithplanningpermissionsandhave thebenefitofpermanentplanningconsentsorexistinguserightsfortheircurrentuse;thepropertyisnotadverselyeffectedbytownplanningorroadproposals;allbuildingscomplywithallstatutoryandlocalauthorityrequirementsincludingbuilding,fireandhealthandsafetyregulations.

STANDARD VALUATION ASSUMPTIONS

Market valueMarketvalueisdefinedas:“Theestimatedamountforwhichapropertyshouldexchangeonthedateofvaluationbetweenawillingbuyerandawillingseller inarm’s-lengthtransactionafterpropermarketingwhereinthe parties had each acted knowledgeably, prudently and withoutcompulsion.”Marketvalueisunderstoodasthevalueofapropertyestimatedwithoutregardtocostsofsaleorpurchase,andwithoutoffsetforanyassociatedtaxes.

24


Valuation Report

Definitions of the above market value statements are as below

‘The estimated amount...’Refers to a price expressed in terms ofmoney (normally in a localcurrency)payableforthepropertyinanarm’s-lengthmarkettransaction.MarketValueismeasuredasthemostprobablepricereasonablyobtainableinthemarketatthedateofvaluationinkeepingwiththeMarketValuedefinition.Itisthebestpricereasonablyobtainablebythesellerandthemostadvantageouspricereasonablyobtainablebythebuyer.Thisestimatespecifically excludes an estimated price inflated or deflated by specialtermsor circumstances such as a typical financing, sale and leasebackarrangements, specialconsiderationsorconcessionsgrantedbyanyoneassociatedwiththesale,oranyelementofSpecialValue.

‘...a property should exchange...’ Referstothefactthatthevalueofapropertyisanestimatedamount,ratherthanapredeterminedoractualsaleprice.ItisthepriceatwhichthemarketexpectsatransactionthatmeetsallotherelementsoftheMarketValuedefinitionshouldbecompletedonthedateofvaluation.

‘...on the date of valuation...’RequiresthattheestimatedMarketValueistime-specificasofagivendate.Becausemarketsandmarketconditionsmaychange,theestimatedvaluemaybeincorrectorinappropriateatanothertime.Thevaluationamountwillreflecttheactualmarketstateandcircumstancesasoftheeffectivevaluation,datenotasofeitherapastorfuturedate.Thedefinitionalsoassumessimultaneousexchangeandcompletionofthecontractforsalewithoutanyvariationinpricethatmightotherwisebemade.

‘...between a willing buyer...’Refers toonewho ismotivated,butnotcompelled tobuy.Thisbuyerisneitherover-eagernordeterminedtobuyatanyprice.Thisbuyer isalsoonewhopurchasesinaccordancewiththerealitiesofthecurrentmarketandwithcurrentmarketexpectations,ratherthanonanimaginaryorhypotheticalmarketwhichcannotbedemonstratedoranticipatedtoexistTheassumedbuyerwouldnotpayahigherpricethanthemarketrequires.The present property owner is included among those whoconstitute“themarket”.Avaluermustnotmakeunrealisticassumptionsaboutmarketconditionsorassumea levelofMarketValueabovethatwhichisreasonablyobtainable.

‘...a willing seller...’Isneitheranover-eagernoraforcedsellerpreparedtosellatanyprice,noronepreparedtoholdoutforapricenotconsideredreasonableinthe currentmarket.Thewilling seller ismotivated to sell thepropertyatmarkettermsforthebestpriceattainableinthe(open)marketafter

propermarketing,whateverthatpricemaybe.Thefactualcircumstancesoftheactualpropertyownerarenotapartofthisconsiderationbecausethe“willingseller”isahypotheticalowner.

‘...in arms length transaction...’Isonebetweenpartieswhodonothaveaparticularorspecialrelationship(forexample,parentandsubsidiarycompaniesor landlordandtenant)whichmaymakethepriceleveluncharacteristicofthemarketorinflatedbecause of element of SpecialValue.The MarketValue transaction ispresumedtobebetweenunrelatedpartieseachactingindependently.

‘...after proper marketing...’Meansthatthepropertywouldbeexposedtothemarketinthemostappropriatemanner to effect its disposal at the best price reasonablyobtainableinaccordancewiththeMarketValuedefinition.Thelengthofexposuretimemayvarywithmarketconditions,butmustbesufficienttoallowthepropertytobebroughttotheattentionofanadequatenumberofpotentialpurchasers.Theexposureperiodoccurspriortothevaluationdate.

‘...wherein the parties had acted knowledgeably, prudently...’Presumesthatboththewillingbuyerandthewillingsellerarereasonablyinformedaboutthenatureandcharacteristicsoftheproperty,itsactualandpotentialuses,andthestateofthemarketasofthedateofvaluation.Each is further presumed to act for self-interestwith that knowledge,andprudentlytoseekthebestpricefortheirrespectivepositionsinthetransaction.Prudenceisassessedbyreferringtothestateofthemarketatthedateofvaluation,notwithbenefitofhindsightatsomelaterdate.Itisnotnecessarilyimprudentforasellertosellpropertyinamarketwithfallingpricesatapricewhichislowerthanpreviousmarketlevels.Insuchcases, as is true forotherpurchaseandsale situations inmarketswithchangingprices,theprudentbuyerorsellerwillactinaccordancewiththebestmarketinformationavailableatthetime.

‘...and without compulsion.’ Establishesthateachpartyismotivatedtoundertakethetransaction,butneitherisforcedorundulycoercedtocompleteit.

Market RentTheestimatedamountforwhichaproperty,orspacewithinaproperty,shouldlease(let)onthedateofvaluationbetweenawillinglessorandawillinglesseeonappropriateleasetermsinarm’s-lengthtransactionsafterpropermarketingwhereinthepartieshadactedknowledgeably,prudentlyandwithoutcompulsion

25


Turnstar Holdings LimitedConsolidated Annual Financial Statementsfor the year ended 31 January 2014

The reports and statements set out below comprise the consolidated annual financial statements presented to the shareholders:

Index Page

General Information 27 Director’s Responsibility and approval 28Independent Auditor’s Report 29Statements of Financial Position 30Statement of Profit or Loss and Other Comprehensive Income 31 Statement of Changes in Equity 32 - 35Statement of Cash Flows 36Accounting Policies 37 - 47Notes to the Consolidated Annual Financial Statements 48 - 91

Notice of the 2014 AGM 92Form of Proxy 93

26


Country of incorporation and domicile Botswana

Nature of business and principal activities PropertyInvestment

Directors CMLekaukau(Chairman)JMMotlhabane(ManagingDirectorresignedon31May2013)GHAbdoola(ManagingDirectorappointedon1June2013)NWArmstrong(resigned16April2014)INshakazhogwePPillarMAldelman(appointed2/4/2013)PBezuidenhout(appointed2/4/13)MNteta

Registered office Plot50370 Fairgrounds Gaborone BotswanaBusiness address 4thFloor,TurnstarHouse Plot1131/37,QueensRoad MainMall

GaboroneBotswana

Postal address POBox26012 GameCity Gaborone BotswanaBankers FirstNationalBankofBotswanaLimited BarclaysBankofBotswanaLimited EximBankTanzaniaLimited BarclaysBankTanzaniaLimitedInvestment Bankers StannicMoneyMarketFund AfricanAllianceBotswanaAuditors GrantThornton CharteredAccountants AmemberfirmofGrantThorntonInternationalSecretary LeoBusinessServices(Proprietary)LimitedTransfer secretaries GrantThorntonBusinessServices(Proprietary)LimitedCompany registration number 2000/5302Functional currency BotswanaPula“P”

General Information

27

Directors’ Responsibilities and Approval

ThedirectorsarerequiredintermsofthecompaniesAct(Cap42:01)tomaintainadequateaccountingrecordsandareresponsibleforthecontentandintegrityoftheconsolidatedannualfinancialstatementsandrelatedfinancialinformationincludedinthisreport.Itistheirresponsibilitytoensurethattheconsolidatedannualfinancialstatementsfairlypresenttheaffairsofthegroupasattheendofthefinancialyearandtheresultsofitsoperationsandcashflowsfortheperiodthenended,inconformitywithInternationalFinancialReportingStandards.Theexternalauditorsareengagedtoexpressanindependentopiniononthefinancialstatements.Theexternalauditorsareengagedtoexpressanindependentopinionontheconsolidatedannualfinancialstatements.TheconsolidatedannualfinancialstatementsarepreparedinaccordancewithInternationalFinancialReportingStandardsandarebaseduponappropriateaccountingpoliciesconsistentlyappliedandsupportedbyreasonableandprudentjudgmentsandestimates.

Thedirectorsacknowledgethattheyareultimatelyresponsibleforthesystemofinternalfinancialcontrolestablishedbythegroupandplaceconsiderableimportanceonmaintainingastrongcontrolenvironment.Toenablethedirectorstomeettheseresponsibilities,theboardsetsstandardsforinternalcontrolaimedatreducingtheriskoferrororlossinacosteffectivemanner.Thestandardsincludetheproperdelegationofresponsibilitieswithinaclearlydefinedframework,effectiveaccountingproceduresandadequatesegregationofdutiestoensureanacceptablelevelofrisk.Thesecontrolsaremonitoredthroughoutthegroupandallemployeesarerequiredtomaintainthehighestethicalstandardsinensuringthegroup’sbusinessisconductedinamannerthatinallreasonablecircumstancesisabovereproach.Thefocusofriskmanagementinthegroupisonidentifying,assessing,managingandmonitoringallknownformsofriskacrossthegroup.Whileoperatingriskcannotbefullyeliminated,thegroupendeavourstominimiseitbyensuringthatappropriateinfrastructure,controls,systemsandethicalbehaviourareappliedandmanagedwithinpredeterminedproceduresandconstraints.

Thedirectorsareoftheopinion,basedontheinformationandexplanationsgivenbymanagementthatthesystemofinternalcontrolprovidesreasonableassurancethatthefinancialrecordsmaybereliedonforthepreparationoftheconsolidatedannualfinancialstatements.However,anysystemofinternalcontrolcanprovideonlyreasonable,andnotabsolute,assuranceagainstmaterialmisstatementsorloss.

Thedirectorshavereviewedthegroup’scashflowforecastfortheyeartoend31January2015and,inthelightofthisreviewandthecurrentfinancialstatementsposition,theyaresatisfiedthatthegrouphasaccesstoadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.

Theexternalauditorsareresponsibleforindependentlyreviewingandreportingonthegroup’sconsolidatedannualfinancialstatements.Theconsolidatedannualfinancialstatementshavebeenexaminedbythegroup’sexternalauditorsandtheirreportispresentedonpage29.

Theconsolidatedannualfinancialstatementssetoutonpages30to91,whichhavebeenpreparedonthegoingconcernbasis,wereapprovedbytheboardon16April2014andweresignedonitsbehalfby:

Director Director

PlaceofsignatureGaborone

28

Chartered AccountantsGrant ThorntonAcumenParkPlot50370FairgroundsP.O.Box1157GaboroneBotswanaT:+267395-2313F:+267397-2357www.gt.co.bw

Independent Auditor’s Report To the shareholders of Turnstar Holdings Limited WehaveauditedtheaccompanyingconsolidatedannualfinancialstatementsandannualfinancialstatementsofTurnstarHoldingsLimited,whichcomprisetheconsolidatedandseparatestatementoffinancialpositionasat31January2014,andtheconsolidatedandseparatestatementsofprofitorlossandothercomprehensiveincome,statementofchangesinequityandstatementofcashflowfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatorynotes,assetoutonpage30to91.

Directors’ Responsibility for the Annual Financial StatementsThecompany’sdirectorsareresponsibleforthepreparationandfairrepresentationoftheseannualfinancialstatementsinaccordancewithInternationalFinancialReportingStandards,andforsuchinternalcontrolasthedirectorsdetermineisnecessarytoenablethepreparationofannualfinancialstatementsthatarefreefrommaterialmisstatements,whetherduetofraudorerror.

Auditor’s ResponsibilityOurresponsibilityistoexpressanopinionontheseannualfinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithInternationalStandardsonAuditing.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhethertheannualfinancialstatementsarefreefrommaterialmisstatement.

Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresintheannualfinancialstatements.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentoftherisksofmaterialmisstatementoftheannualfinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationandfairpresentationoftheannualfinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationoftheannualfinancialstatements.

Webelievethattheauditevidenceweobtainedissufficientandappropriatetoprovideabasisforourauditopinion.

OpinionInouropinion,theannualfinancialstatementsgiveatrueandfairviewof,theconsolidatedandseparatefinancialpositionofTurnstarHoldingsLimitedasat31January2014,anditsconsolidatedandseparatefinancialperformanceanditsconsolidatedandseparatecashflowsfortheyearthenendedinaccordancewithInternationalFinancialReportingStandards.

Chartered Accountants 16 April 2014 Certified Auditor: Aswin Vaidyanathan (Memb No: 19980110) Gaborone

PartnersRajaRamJayRamesh(Managing)DineshMallan*VijayKalyanaraman*AswinVaidyanathan*MadhavanVenkatachary*RajeshNarasimhan*(*Indian)

Member of Grant Thorton International LtdOfficesinGaborone&Francistown

29

Statement of Financial Position as at 31 January 2014

Group Company

Figures in Pula Note 2014 2013 2014 2013

ASSETS Non-current assetsInvestmentproperty 4 1721543918 1404194076 981653658 781480702Property,plantandequipment 5 4418957 4662180 1436342 1606762Goodwill 6 55172085 49565565 - -Investmentinsubsidiary 7 - - 198399518 198399518Otherfinancialassets 8 - - 356922311 345742124Deferredtax 10 4131919 1668720 4131919 1668720Operatingleaseasset 11 26449748 20436694 21089380 13438970 1 811 716 627 1 480 527 235 1 563 633 128 1 342 336 796Current AssetsCurrenttaxreceivable 28 2057548 2325082 606970 340700Operatingleaseasset 11 5144173 4733819 2638963 4610328Tradeandotherreceivables 12 11836387 10324840 7899643 7965026Cashandcashequivalents 13 74239026 82936100 66040234 69451972 93 277 134 100 319 841 77 185 810 82 368 026Total Assets 1 904 993 761 1 580 847 076 1 640 818 938 1 424 704 822

Equity and Liabilities EquityStatedcapitalandlinkedunitdebentures 14 632497357 632497357 632497357 632497357Foreigncurrencytranslationreserve 25 55822279 34791243 - -Retainedincomeandreserves 636774675 415362401 569204958 390876308 1 325 094 311 1 082 651 001 1 201 702 315 1 023 373 665Liabilities Non-Current LiabilitiesBorrowings 15 319094691 298713642 319094691 298713642Deferredtax 10 215136473 128766066 88857671 43504781 534 231 164 427 479 708 407 952 362 342 218 423Current LiabilitiesBorrowings 15 17053767 42996446 17053767 42996446Tradeandotherpayables 16 28166373 27308776 13662348 15705143Unclaimeddebentureinterestanddividendpayable 448146 411145 448146 411145 45 668 286 70 716 367 31 164 261 59 112 734Total Liabilities 579 899 450 498 196 075 439 116 623 401 331 157Total Equity and Liabilities 1 904 993 761 1 580 847 076 1 640 818 938 1 424 704 822

30

Group Company


Revenue 18 223103272 192296474 128192965 116364311Otherincome 48918651 52087167 48003928 51554535Dividendincomefromsubsidiary - - 15845193 6130890Professionalfeestowardsacquisition - (12470310) - (12470310)Operatingexpenses (120021705) (112133268) (86970583) (85384028)Operating profit 19 152 000 218 119 780 063 105 071 503 76 195 398

FinanceIncome 20 69295 428908 20448628 20637082Fairvalueadjustments 21 244605155 40481629 200121286 29265321Financecosts 22 (13663959) (15869309) (13663959) (15869309)Profit before taxation 383 010 709 144 821 291 311 977 458 110 228 492

Taxation 23 (70839319) (13315104) (42889692) (3208398)Profit from continuing operations 312 171 390 131 506 187 269 087 766 107 020 094

Other comprehensive income: Exchangedifferencesarisingontranslationofforeign 21031036 34791243 - -operations Total comprehensive income for the year 333 202 426 166 297 430 269 087 766 107 020 094

Profit for the year attributable to linked unit holders Ownersoftheparent 312171390 131506187 269087766 107020094 312 171 390 131 506 187 269 087 766 107 020 094

Earnings per linked unit Per linked unit information Basicearningsperlinkedunit(inPula) 30 0.546 0.234 0.470 0.191Dilutedearningspershare(inPula) 30 0.546 0.234 0.470 0.191

Statement of Profit Or Loss and Other ComprehensiveIncome for the year ended 31 January 2014

31

Statement of Changes in Equity for the year ended 31 January 2014

Stated capital Linked unit Total Stated Foreign Retained Fair value Dividend and Sinking fund Total equity

debentures capital and currency earnings surplus debenture reserve and reserves

linked unit translation interest reserve

Figures in Pula debentures reserve

Group Opening balance at 01 February 2012 121 847 049 192 905 290 314 752 339 - 16 115 035 310 777 941 25 645 861 1 591 219 668 882 395

Profitfortheyear - - - - 131506187 - - - 131506187Othercomprehensiveincome - - - 34791243 - - - - 34791243Totalcomprehensiveincomefortheyear - - - 34 791 243 131 506 187 - - - 166 297 430

Issueofsharesandlinkedunitdebentures 227338489 93171512 320510001 - - - - - 320510001towardsrightsissueandbusinesscombinations Shareissuecosts (2764983) - (2764983) - - - - - (2764983)Fairvaluesurplustransferred(TurnstarProperties) - - - - (31503736) 31503736 - - -Fairvaluesurplustransferred(MlimaniProperties) - - - - (5055118) 5055118 - - -Transfertosinkingfund - - - - (1508057) - - 1508057 -Sinkingfundutilised - - - - 1530531 - - (1530531) -Finaldebentureinterestanddividendspaid31January2012 - - - - - - (25645861) - (25645861)Dividendsanddebentureinteresttransferred - - - - (91331271) - 91331271 - -todividendsanddebentureinterestreserve Interimdebentureinterestanddividendspaid31July2012 - - - - - - (44627981) - (44627981)Transactions with unit holders recognised 224 573 506 93 171 512 317 745 018 - (127 867 651 ) 36 558 854 21 057 429 (22 474 ) 247 471 176

in statement of changes in equity

32





Balance at 31 January 2013 346 420 555 286 076 802 632 497 357 34 791 243 19 753 571 347 336 795 46 703 290 1 568 745 1 082 651 001 Profitfortheyear - - - - 312171390 - - - 312171390

Othercomprehensiveincome - - - 21031036 - - - - 21031036

Total comprehensive income for the year - - - 21 031 036 312 171 390 - - - 333 202 426

Fairvaluesurplustransferred(TurnstarProperties) - - - - (160376463) 160376463 - - -Fairvaluesurplustransferred(MlimaniProperties) - - - - (15030521) 15030521 - - -Balanceinsinkingfundreservetransferredto - - - - 1568745 - - (1568745 ) -retainedearnings Finaldebentureinterestanddividendspaid31January2013 - - - - - - (46703290) - (46703290)Dividendsanddebentureinteresttransferredto - - - - (97266113) - 97266113 - -dividendsanddebentureinterestreserve Interimdebentureinterestanddividendspaid31July2013 - - - - - - (44055826) - (44055826)Transactions with unit holders recognised in - - - - (271 104 352 ) 175 406 984 6 506 997 (1 568 745 ) (90 759 116 )

statement of changes in equity Balance at 31 January 2014 346 420 555 286 076 802 632 497 357 55 822 279 60 820 609 522 743 779 53 210 287 - 1 325 094 311

Note 14 14 14 25


33





Company Balance at 01 February 2012 121 847 049 192 905 290 314 752 339 - 16 115 035 310 777 941 25 645 861 1 591 219 668 882 395

Profitfortheyear - - - - 107020094 - - - 107020094Total comprehensive income for the year - - - - 107 020 094 - - - 107 020 094

Issueofsharesandlinkedunit 227338489 93171512 320510001 - - - - - 320510001debenturestowardsrightsissueandbusinesscombinations Shareissuecosts (2764983) - (2764983) - - - - - (2764983)Fairvaluesurplustransferred - - - - (31503736) 31503736 - - -Finaldebentureinterestanddividendpaidfor31January2012 - - - - - - (25645861) - (25645861)Transfertosinkingfund - - - - (1508057) - - 1508057 -Sinkingfundutilised - - - - 1530531 - - (1530531) -Dividendsanddebentureinteresttransferredto - - - - (91331271) - 91331271 - -dividendsanddebentureinterestreserve Interimdebentureinterestanddividendspaid31July2012 - - - - - - (44627981) - (44627981) Transactions with unit holders recognised

in statement of changes in equity 224 573 506 93 171 512 317 745 018 - (15 792 439 ) 31 503 736 21 057 429 (22 474 ) 354 491270


34





Company Balance at 01 February 2012 121 847 049 192 905 290 314 752 339 - 16 115 035 310 777 941 25 645 861 1 591 219 668 882 395


Issueofsharesandlinkedunit 227338489 93171512 320510001 - - - - - 320510001debenturestowardsrightsissueandbusinesscombinations Shareissuecosts (2764983) - (2764983) - - - - - (2764983)Fairvaluesurplustransferred - - - - (31503736) 31503736 - - -Finaldebentureinterestanddividendpaidfor31January2012 - - - - - - (25645861) - (25645861)Transfertosinkingfund - - - - (1508057) - - 1508057 -Sinkingfundutilised - - - - 1530531 - - (1530531) -Dividendsanddebentureinteresttransferredto - - - - (91331271) - 91331271 - -dividendsanddebentureinterestreserve Interimdebentureinterestanddividendspaid31July2012 - - - - - - (44627981) - (44627981) Transactions with unit holders recognised

in statement of changes in equity 224 573 506 93 171 512 317 745 018 - (15 792 439 ) 31 503 736 21 057 429 (22 474 ) 354 491270

Stated capital Linked unit Total Stated Foreign Retained Fair value Dividend and Sinking fund Total equity debentures capital and currency earnings surplus debenture reserve and reserves



Balanceat31January2013 346 420 555 286 076 802 632 497 357 - 322 596 342 281 677 46 703 290 1 568 745 1 023 373 665


Fairvaluesurplustransferred - - - - (160376463)160376463 - - -Finaldebentureinterestanddividendspaid31January2013 - - - - - - (46703290) - (46703290)Balanceinsinkingfundreserve - - - - 1568745 - - (1568745) -transferredtoretainedearnings Dividendsanddebentureinteresttransferredto - - - - (97266113) - 97266113 - -dividendsanddebentureinterestreserve Interimdebentureinterestanddividends - - - - - - (44055826) - (44055826)paid31July2013 Transactions with unit holders recognised in - - - - 13 013 935 160 376 463 6 506 997 (1 568 745) 178 328 650

statement of changes in equity

Balance at 31 January 2014 346 420 555 286 076 802 632 497 357 - 13 336 531 502 658 140 53 210 287 - 1 201 702 315

Note 14 14 14 25 Sinkingfundreserveiscreatedbyappropriatingpartoftheoperatingprofitsoftheproperties.Thefundisutilisedtowardsmajorexpensesoftheseproperties.FairValueReserveistheaccumulatedgainorlossarisingfromthemovementinfairvalueofinvestmentpropertynetoftax.Duringtheyeartheboardofdirectorsdecidedtonothaveaseperateappropriationinreservetowardssinkingfundsincethecompanydoesrepairsonaregularbasisandanymajorimprovementsarealwaysfunded.Thetheappropriationofsinkingfundduringtheyearwastransferredbacktoretainedincome.


35

Group Company


Cash flows from operating activities

Cashgeneratedfromoperations 27 138291355 123476972 74132705 66741128Financeincome 69295 428908 20448628 20637082Taxpaid 28 (2174253) (973448) (266270) 1010934

Net cash from operating activities 136 186 397 122 932 432 94 315 063 88 389 144

Cash flows from investing activities Purchaseofplantandequipment 5 (686621) (549911) (202680) (218066)Additionstoinvestmentproperties 4 (51670) (3070587) (51670) (3070587)Businesscombinations 33 - (510460110) - -Movementininvestmentinsubsidiary - - - (198399518)

Movementinotherfinancialassetsnetofforeignexchangegains - - 30827536 (297464167)Acquisitioncostsinrelationtobusinesscombination - (12470310) - (12470310)Dividendreceivedfromsubsidiary - - 15845193 6130890

Net cash from investing activities (738 291 ) (526 550 918 ) 46 418 379 (505 491 758 )

Cash flows from financing activities Proceedsonsharesandlinkedunitsdebentures 14 - 317745018 - 317745018(netofrelatedissuecosts) Proceedsfromborrowings(netofforeignexchangeloss) - 211975049 - 211975049Repaymentofborrowings (39629309) (186827143) (39629309) (186827143)Debentureinterestanddividendspaid 29 (90759118) (70273850) (90759118) (70273850)Financecosts (13663959) (15869309) (13663959) (15869309)

Net cash from financing activities (144 052 386 ) 256 749 76 5 (144 052 386 ) 256 749 765

Total cash and cash equivalents movement (8 604 280 ) (146 868 721 ) (3 318 944 ) (160 352 849 )Cashandcashequivalentsatthebeginning 82936100 229202226 69451972 229202226Effectofexchangeratemovementoncashbalances (92794) 602595 (92794) 602595Total cash and cash equivalents 13 74 239 026 82 936 100 66 040 234 69 451 972

Statement of Cash Flows for the year ended 31 January 2014

36

Accounting Policies

1. Presentation of Consolidated Annual Financial Statements

Theconsolidatedannualfinancialstatementshavebeenpreparedonagoingconcernbasis, inaccordancewithInternationalFinancialReportingStandards.Theconsolidatedannualfinancialstatementshavebeenpreparedonthehistoricalcostbasis,exceptforthemeasurementofinvestmentpropertiesandcertainfinancialinstrumentsatfairvalue,andincorporatetheprincipalaccountingpoliciessetoutbelow.Theyarepresentedinthegroup’sfunctionalcurrency,BotswanaPula.

Theseaccountingpoliciesareconsistentwiththepreviousperiod,exceptforthechangessetoutinnote2Changesinaccountingpolicy

1.1 Nature of operations

Theprincipalactivitiesofthecompanyanditssubsidiaries includeproperty investmentspreadacrossretail,commercial,residentialandindustrialsectors.ThecompanyisaVariableLoansStockcompanylistedontheBotswanaStockExchange.

1.2 Consolidation

Basis of consolidationTheGroupfinancialstatementsconsolidatethoseoftheparentcompanyandallofitssubsidiariesasof31January2014.Theparentcontrolsasubsidiaryifitisexposed,orhasrights,tovariablereturnsfromitsinvolvementwiththesubsidiaryandhastheabilitytoaffectthosereturnsthroughitspoweroverthesubsidiary.Allsubsidiarieshaveareportingdateof31January.

AlltransactionsandbalancesbetweenGroupcompaniesareeliminatedonconsolidation,includingunrealisedgainsandlossesontransactionsbetweenGroupcompanies.Whereunrealisedlossesonintra-groupassetsalesarereversedonconsolidation,theunderlyingassetisalsotestedforimpairmentfromagroupperspective.AmountsreportedinthefinancialstatementsofsubsidiarieshavebeenadjustedwherenecessarytoensureconsistencywiththeaccountingpoliciesadoptedbytheGroup.

Profitorlossandothercomprehensiveincomeofsubsidiariesacquiredordisposedofduringtheyeararerecognisedfromtheeffectivedateofacquisition,oruptotheeffectivedateofdisposal,asapplicable.

Non-controllinginterests,presentedaspartofequity,representtheportionofasubsidiary’sprofitorlossandnetassetsthatisnotheldbytheGroup.TheGroupattributestotalcomprehensiveincomeorlossofsubsidiariesbetweentheownersoftheparentandthenon-controllinginterestsbasedontheirrespectiveownershipinterests.

Business combinationsThegroupaccountsforbusinesscombinationsusingtheacquisitionmethodofaccounting.Thecostofthebusinesscombinationismeasuredastheaggregateofthefairvaluesofassetstakenover,liabilitiesincurredorassumedandequityinstrumentsissued.Costsdirectlyattributabletothebusinesscombinationareexpensedasincurred,exceptthecoststoissuedebtwhichareamortisedaspartoftheeffectiveinterestandcoststoissueequitywhichareincludedinequity.

Contingentconsiderationisincludedinthecostofthecombinationatfairvalueasatthedateofacquisition.Subsequentchangestotheassets,liabilityorequitywhichariseasaresultofthecontingentconsiderationarenotadjustedagainstgoodwill,unlesstheyarevalidmeasurementperiodadjustments.

The acquiree’s identifiable assets, liabilities and contingent liabilitieswhichmeet the recognition conditionsof IFRS3Business combinations arerecognisedattheirfairvaluesatacquisitiondate,exceptfornon-currentassets(ordisposalgroup)thatareclassifiedasheld-for-saleinaccordancewithIFRS5Non-currentassetsheld-for-saleanddiscontinuedoperations,whicharerecognisedatfairvaluelesscoststosell.

37

Contingentliabilitiesareonlyincludedintheidentifiableassetsandliabilitiesoftheacquireewherethereisapresentobligationatacquisitiondate.

Onacquisition,thegroupassessestheclassificationoftheacquiree’sassetsandliabilitiesandreclassifiesthemwheretheclassificationisinappropriateforgrouppurposes.Thisexcludesleaseagreementsandinsurancecontracts,whoseclassificationremainsaspertheirinceptiondate.Non-controllinginterestarisingfromabusinesscombinationismeasuredeitherattheirshareofthefairvalueoftheassetsandliabilitiesoftheacquireeoratfairvalue.Thetreatmentisnotanaccountingpolicychoicebutisselectedforeachindividualbusinesscombination,anddisclosedinthenoteforbusinesscombinations.

Incaseswherethegroupheldanon-controllingshareholdingintheacquireepriortoobtainingcontrol,thatinterestismeasuredtofairvalueasatacquisitiondate.Themeasurementtofairvalueisincludedinprofitorlossfortheyear.Wheretheexistingshareholdingwasclassifiedasanavailable-for-salefinancialasset,thecumulativefairvalueadjustmentsrecognisedpreviouslytoothercomprehensiveincomeandaccumulatedinequityarerecognisedinprofitorlossasareclassificationadjustment.

Goodwillisdeterminedastheconsiderationpaid,plusthefairvalueofanyshareholdingheldpriortoobtainingcontrol,plusnon-controllinginterestandlessthefairvalueoftheidentifiableassetsandliabilitiesoftheacquiree.

Goodwillisnotamortisedbutistestedonanannualbasisforimpairment.Ifgoodwillisassessedtobeimpaired,thatimpairmentisnotsubsequentlyreversed.

Goodwillarisingonacquisitionofforeignentitiesisconsideredanassetoftheforeignentity.Insuchcasesthegoodwillistranslatedtothefunctionalcurrencyofthegroupattheendofeachreportingperiodwiththeadjustmentrecognisedinequitythroughtoothercomprehensiveincome.

1.3 Significant judgements and sources of estimation uncertainty

Inpreparing theconsolidatedannualfinancial statements,management is required tomakeestimatesandassumptions thataffect theamountsrepresentedintheconsolidatedannualfinancialstatementsandrelateddisclosures.Useofavailableinformationandtheapplicationofjudgementisinherentintheformationofestimates.Actualresultsinthefuturecoulddifferfromtheseestimateswhichmaybematerialtotheconsolidatedannualfinancialstatements.Significantjudgementsinclude:

Trade and other receivablesThegroupassessesitsTradeandotherreceivablesforimpairmentattheendofeachreportingperiod.Indeterminingwhetheranimpairmentlossshouldberecordedinprofitorloss,thegroupmakesjudgementsastowhetherthereisobservabledataindicatingameasurabledecreaseintheestimatedfuturecashflowsfromafinancialasset.

TheimpairmentforTradeandotherreceivablesiscalculatedonaportfoliobasis,basedonhistoricallossratios,adjustedfornationalandindustry-specificeconomicconditionsandotherindicatorspresentatthereportingdatethatcorrelatewithdefaultsontheportfolio.

Fair value estimationThecarryingvaluelessimpairmentprovisionoftradeandotherreceivablesandpayablesareassumedtoapproximatetheirfairvalues.Thefairvalueoffinancialliabilitiesfordisclosurepurposesisestimatedbydiscountingthefuturecontractualcashflowsatthecurrentmarketinterestratethatisavailabletothecompanyforsimilarfinancialinstruments.

Thefairvalueofinvestmentpropertyisdeterminedusingdiscountedcashflowvaluationandcapitalisationapproach(mainlyonresidentialproperties),usingassumptionsthatarebasedonmarketconditionsexistingatthebalancesheetdate.Theproperty’scurrentretailrentalratesareconsideredtobemarketrelatedanditisassumedthattheexistingtenantswillrenewtheirleasesonterminationoftheexistingperiod.Keyvaluationparameterssuchascapitalisationrate,growthinmarketrentalanddiscountrateareusedtoarriveatthefairvalue.

Accounting Policies

38

Impairment Testing Therecoverableamountsofcash-generatingunitsandindividualassetshavebeendeterminedbasedonthehigherofvalue-in-usecalculationsandfairvalueslesscoststosell.Thesecalculationsrequiretheuseofestimatesandassumptions.Itisreasonablypossiblethattheassumptionbymanagementmaychangewhichmaythenimpactourestimationsandmaythenrequireamaterialadjustmenttothecarryingvalueofgoodwillandtheassets.

Thegroupreviewsandteststhecarryingvalueofassetswheneventsorchangesincircumstancessuggestthatthecarryingamountmaynotberecoverable.Inaddition,goodwillistestedonanannualbasisforimpairment.Assetsaregroupedatthelowestlevelforwhichidentifiablecashflowsarelargelyindependentofcashflowsofotherassetsandliabilities.Ifthereareindicationsthatimpairmentmayhaveoccurred,estimatesarepreparedofexpectedfuturecashflowsforeachgroupofassets.Expectedfuturecashflowsusedtodeterminethevalueinuseofgoodwillandtheassetsareinherentlyuncertainandcouldmateriallychangeovertime.Theyaresignificantlyaffectedbyanumberoffactorsincludingproductionestimates,supplydemand,togetherwitheconomicfactorssuchasexchangerates,inflationandinterestrates.

ProvisionsProvisionswereraisedandmanagementdeterminedanestimatebasedontheinformationavailable.

Expected manner of realisation for deferred taxDeferredtaxisprovidedforonthefairvalueadjustmentsofinvestmentpropertiesbasedontheexpectedmannerofrecovery,i.e.saleoruse.Thismannerofrecoveryaffectstherateusedtodeterminethedeferredtaxliability.Refernote10–Deferredtax.

TaxationJudgementisrequiredindeterminingtheprovisionforincometaxesduetothecomplexityoflegislation.Therearemanytransactionsandcalculationsforwhichtheultimatetaxdeterminationisuncertainduringtheordinarycourseofbusiness.Thegrouprecognisesliabilitiesforanticipatedtaxauditissuesbasedonestimatesofwhetheradditionaltaxeswillbedue.Wherethefinaltaxoutcomeofthesemattersisdifferentfromtheamountsthatwereinitiallyrecorded,suchdifferenceswillimpacttheincometaxanddeferredtaxprovisionsintheperiodinwhichsuchdeterminationismade.

Thegrouprecognisesthenetfuturetaxbenefitrelatedtodeferredincometaxassetstotheextentthatitisprobablethatthedeductibletemporarydifferenceswillreverseintheforeseeablefuture.Assessingtherecoverabilityofdeferredincometaxassetsrequiresthegrouptomakesignificantestimatesrelatedtoexpectationsoffuturetaxableincome.Estimatesoffuturetaxableincomearebasedonforecastcashflowsfromoperationsandtheapplicationofexistingtaxlaws.Totheextentthatfuturecashflowsandtaxableincomediffersignificantlyfromestimates,theabilityofthegrouptorealisethenetdeferredtaxassetsrecordedattheendofthereportingperiodcouldbeimpacted.

Contingent liabilitiesManagementappliesitsjudgementtofactsandadviceitreceivesfromitsattorneys,advocatesandotheradvisorsinassessingifanobligationisprobable,morelikelythannot,orremote.Thisjudgementapplicationisusedtodetermineiftheobligationisrecognisedasaliabilityordisclosedasacontingentliability.

Useful life and residual value of property, plant and equipmentTheestimatesofusefullivesastranslatedintodepreciationratesaredetailedinproperty,plantandequipmentpolicyontheannualfinancialstatements.Theseratesandresiduallivesoftheassetsarereviewedannuallytakingcognisanceoftheforecastedcommercialandeconomicrealitiesandthroughbenchmarkingofaccountingtreatmentsintheindustry.

1.4 Investment property

Investmentpropertyisrecognisedasanassetwhen,andonlywhen,itisprobablethatthefutureeconomicbenefitsthatareassociatedwiththeinvestmentpropertywillflowtotheenterprise,andthecostoftheinvestmentpropertycanbemeasuredreliably.

Accounting Policies

39

Investmentpropertyisinitiallyrecognisedatcost.Transactioncostsareincludedintheinitialmeasurement.

Costsincludecostsincurredinitiallyandcostsincurredsubsequentlytoaddto,ortoreplaceapartof,orserviceaproperty.Ifareplacementpartisrecognisedinthecarryingamountoftheinvestmentproperty,thecarryingamountofthereplacedpartisderecognised.Investmentpropertyisapropertyheldtoearnrentalsand/orforcapitalappreciation,andareaccountedforusingthefairvaluemodel.

Investmentpropertyisvaluedannuallyandareincludedinthestatementoffinancialpositionattheiropenmarketvalues.Thesevaluesaresupportedbymarketevidenceandaredeterminedbyexternalprofessionalvaluerswithsufficientexperiencewithrespecttoboththelocationandthenatureoftheinvestmentproperty.

Anygainorlossresultingfromeitherachangeinthefairvalueorthesaleofinvestmentpropertyisimmediatelyrecognisedinprofitorlosswithinchangeinthefairvalueoftheinvestmentproperty

Rentalincomeandexpensesfrominvestmentpropertyarereportedwithinrevenueandoperatingexpensesrespectively,andarerecognisedinthestatementofcomprehensiveincome.

Fair valueSubsequenttoinitialmeasurementinvestmentpropertyismeasuredatfairvalue.

Againorlossarisingfromachangeinfairvalueisincludedinnetprofitorlossfortheperiodinwhichitarises.

1.5 Property, plant and equipment

Thecostofanitemofproperty,plantandequipmentisrecognisedasanassetwhen:• Itisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtothecompany;and• Thecostoftheitemcanbemeasuredreliably.

Property,plantandequipmentisinitiallymeasuredatcost.

Costsincludecostsincurredinitiallytoacquireorconstructanitemofproperty,plantandequipmentandcostsincurredsubsequentlytoaddto,replacepartof,orserviceit.Ifareplacementcostisrecognisedinthecarryingamountofanitemofproperty,plantandequipment,thecarryingamountofthereplacedpartisderecognised.

Property,plantandequipmentaredepreciatedonthestraightlinebasisovertheirexpectedusefullivestotheirestimatedresidualvalue.Property,plantandequipmentiscarriedatcostlessaccumulateddepreciationandanyimpairmentlosses.

Theusefullivesofitemsofproperty,plantandequipmenthavebeenassessedasfollows:

Item Average useful life

Plantandmachinery 8yearsFurnitureandfixtures 8-10yearsMotorvehicles 4yearsOfficeequipment 8-10yearsITequipment 3-4years

Accounting Policies

40

Theresidualvalue,usefullifeanddepreciationmethodofeachassetarereviewedattheendofeachreportingperiod.Iftheexpectationsdifferfrompreviousestimates,thechangeisaccountedforasachangeinaccountingestimate.

Thedepreciationchargeforeachperiodisrecognisedinprofitorlossunlessitisincludedinthecarryingamountofanotherasset.

Thegainorlossarisingfromthederecognitionofanitemofproperty,plantandequipmentisincludedinprofitorlosswhentheitemisderecognised.

Thegainorlossarisingfromthederecognitionofanitemofproperty,plantandequipmentisdeterminedasthedifferencebetweenthenetdisposalproceeds,ifany,andthecarryingamountoftheitem.

1.6 Goodwil

Goodwillisinitiallymeasuredatcost,beingtheexcessofthecostofthebusinesscombinationovercompany’sinterestinthenetfairvalueoftheidentifiableassets,liabilitiesandcontingentliabilities.

Subsequentlygoodwill,acquiredinabusinesscombinationiscarriedatcostlessanyaccumulatedimpairment.Goodwillisassessedateachstatementsoffinancialpositiondateforimpairment.

Theexcessofthecompany’sinterestinthenetfairvalueoftheidentifiableassets,liabilitiesandcontingentliabilitiesoverthecostofthebusinesscombinationisimmediatelyrecognisedinthestatementsofcomprehensiveincome.

Theexcessofthecompany’sinterestinthenetfairvalueoftheidentifiableassets,liabilitiesandcontingentliabilitiesoverthecostofthebusinesscombinationisimmediatelyrecognisedinthestatementsofcomprehensiveincome.

Internallygeneratedgoodwillisnotrecognisedasanasset.

1.7 Investment in subsidiary

Company consolidated annual financial statementsInthecompany’sseparateconsolidatedannualfinancialstatements,investmentinsubsidiaryarecarriedatcostlessanyaccumulatedimpairment.

Thecostofaninvestmentinasubsidiaryistheaggregateof:• thefairvalue,atthedateofexchange,ofassetsgiven,liabilitiesincurredorassumed,andequityinstrumentsissuedbythecompany;plus• anycostsdirectlyattributabletothepurchaseofthesubsidiary.

1.8 Financial instruments

ClassificationThegroupclassifiesfinancialassetsandfinancialliabilitiesintothefollowingcategories:• Held-to-maturityinvestment• Loansandreceivables• Financialliabilitiesmeasuredatamortisedcost

Classificationdependsonthepurposeforwhichthefinancialinstrumentswereobtained/incurredandtakesplaceatinitialrecognition.Classificationisre-assessedonanannualbasis.

Accounting Policies

41

Initial recognition and measurementFinancialinstrumentsarerecognisedinitiallywhenthegroupbecomesapartytothecontractualprovisionsoftheinstruments.

Thegroupclassifiesfinancialinstruments,ortheircomponentparts,oninitialrecognitionasafinancialasset,afinancialliabilityoranequityinstrumentinaccordancewiththesubstanceofthecontractualarrangement.

Financialinstrumentsaremeasuredinitiallyatfairvalue,exceptforequityinvestmentsforwhichafairvalueisnotdeterminable,whicharemeasuredatcostandareclassifiedasavailable-for-salefinancialassets.

Subsequent measurementDividendincomeisrecognisedinprofitorlossaspartofotherincomewhenthegroup’srighttoreceivepaymentisestablished.Loansandreceivablesaresubsequentlymeasuredatamortisedcost,usingtheeffectiveinterestmethod,lessaccumulatedimpairmentlosses.Held-to-maturityinvestmentsaresubsequentlymeasuredatamortisedcost,usingtheeffectiveinterestmethod,lessaccumulatedimpairmentlosses.Financialliabilitiesatamortisedcostaresubsequentlymeasuredatamortisedcost,usingtheeffectiveinterestmethod.

Derecognition

Financialassetsarederecognisedwhentherightstoreceivecashflowsfromtheinvestmentshaveexpiredorhavebeentransferredandthegrouphastransferredsubstantiallyallrisksandrewardsofownership.

Impairment of financial assetsAteachreportingdatethegroupassessesallfinancialassets,otherthanthoseatfairvaluethroughprofitorloss,todeterminewhetherthereisobjectiveevidencethatafinancialassetorgroupoffinancialassetshasbeenimpaired.

Foramountsduetothegroup,significantfinancialdifficultiesofthedebtor,probabilitythatthedebtorwillenterbankruptcyanddefaultofpaymentsareallconsideredindicatorsofimpairment.

Impairmentlossesarerecognisedinprofitorloss.

Impairmentlossesarereversedwhenanincreaseinthefinancialasset’srecoverableamountcanberelatedobjectivelytoaneventoccurringaftertheimpairmentwasrecognised,subjecttotherestrictionthatthecarryingamountofthefinancialassetatthedatethattheimpairmentisreversedshallnotexceedwhatthecarryingamountwouldhavebeenhadtheimpairmentnotbeenrecognised.

Reversalsofimpairmentlossesarerecognisedinprofitorlossexceptforequityinvestmentsclassifiedasavailable-for-sale.

Wherefinancialassetsareimpairedthroughuseofanallowanceaccount,theamountofthelossisrecognisedinprofitorlosswithinoperatingexpenses.Whensuchassetsarewrittenoff,thewriteoffismadeagainsttherelevantallowanceaccount.Subsequentrecoveriesofamountspreviouslywrittenoffarecreditedagainstoperatingexpenses.

Trade and other receivablesTradeandotherreceivablesaremeasuredatinitialrecognitionatfairvalue,andaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterestratemethod.Appropriateallowancesforestimatedirrecoverableamountsarerecognisedinprofitorlosswhenthereisobjectiveevidencethattheassetisimpaired.Significantfinancialdifficultiesofthedebtor,probabilitythatthedebtorwillenterbankruptcyorfinancialreorganisation,anddefaultordelinquencyinpaymentsareconsideredindicatorsthatthetradereceivableisimpaired.Theallowancerecognisedismeasuredasthedifferencebetweentheasset’scarryingamountandthepresentvalueofestimatedfuturecashflowsdiscountedattheeffectiveinterestratecomputedatinitialrecognition.

Accounting Policies

42

Thecarryingamountoftheassetisreducedthroughtheuseofanallowanceaccount,andtheamountofthelossisrecognisedinprofitorlosswithinoperatingexpenses.Whenatradereceivableisuncollectable,itiswrittenoffagainsttheallowanceaccountfortradereceivables.Subsequentrecoveriesofamountspreviouslywrittenoffarecreditedagainstoperatingexpensesinprofitorloss.

Tradeandotherreceivablesareclassifiedasloansandreceivables.

Trade and other payablesTradeandotherpayablesareinitiallymeasuredatfairvalue,andaresubsequentlymeasuredatamortisedcost,usingtheeffectiveinterestratemethod.

Cash and cash equivalentsCashandcashequivalentscomprisecashonhandanddemanddeposits,andothershort-termhighlyliquidinvestmentsthatarereadilyconvertibletoaknownamountofcashandaresubjecttoaninsignificantriskofchangesinvalue.Theseareinitiallyandsubsequentlyrecordedatfairvalue.

Bank overdraft and borrowingsBankoverdraftsandborrowingsareinitiallymeasuredatfairvalue,andaresubsequentlymeasuredatamortisedcost,usingtheeffectiveinterestratemethod.Anydifferencebetweentheproceeds(netoftransactioncosts)andthesettlementorredemptionofborrowingsisrecognisedoverthetermoftheborrowingsinaccordancewiththegroup’saccountingpolicyforborrowingcosts.

1.9 Tax

Current tax assets and liabilitiesCurrenttaxforcurrentandpriorperiodsis,totheextentunpaid,recognisedasaliability.Iftheamountalreadypaidinrespectofcurrentandpriorperiodsexceedstheamountdueforthoseperiods,theexcessisrecognisedasanasset.

Currenttax liabilities(assets) forthecurrentandpriorperiodsaremeasuredat theamountexpectedtobepaidto(recovered from)thetaxauthorities,usingthetaxratesthathavebeenenactedbytheendofthereportingperiod.

Deferred tax assets and liabilitiesAdeferredtaxliabilityisrecognisedforalltaxabletemporarydifferences,excepttotheextentthatthedeferredtaxliabilityarisesfromtheinitialrecognitionofanassetorliabilityinatransactionwhichatthetimeofthetransaction,affectsneitheraccountingprofitnortaxableprofit(taxloss).

Adeferredtaxassetisrecognisedforalldeductibletemporarydifferencestotheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthedeductibletemporarydifferencecanbeutilised.Adeferredtaxassetisnotrecognisedwhenitarisesfromtheinitialrecognitionofanassetorliabilityinatransactionatthetimeofthetransaction,affectsneitheraccountingprofitnortaxableprofit(taxloss).

Adeferredtaxassetisrecognisedforthecarryforwardofunusedtaxlossestotheextentthatitisprobablethatfuturetaxableprofitwillbeavailableagainstwhichtheunusedtaxlossescanbeutilised.

Deferredtaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplytotheperiodwhentheassetisrealisedortheliabilityissettled,basedontaxratesthathavebeenenactedbytheendofthereportingperiod.

Tax expensesCurrentanddeferredtaxesarerecognisedasincomeoranexpenseandincludedinprofitorlossfortheperiod,excepttotheextentthatthetaxarisesfrom:• atransactionoreventwhichisrecognised,inthesameoradifferentperiod,toothercomprehensiveincome,or• abusinesscombination.

Accounting Policies

43

Currenttaxanddeferredtaxesarechargedorcreditedtoothercomprehensiveincomeifthetaxrelatestoitemsthatarecreditedorcharged,inthesameoradifferentperiod,toothercomprehensiveincome.

Currenttaxanddeferredtaxesarechargedorcrediteddirectlytoequityifthetaxrelatestoitemsthatarecreditedorcharged,inthesameoradifferentperiod,directlyinequity.

1.10 Leases

Aleaseisclassifiedasafinanceleaseifittransferssubstantiallyalltherisksandrewardsincidentaltoownership.Aleaseisclassifiedasanoperatingleaseifitdoesnottransfersubstantiallyalltherisksandrewardsincidentaltoownership.

Operating leases - lessorOperatingleaseincomeisrecognisedasanincomeonastraight-linebasisovertheleaseterm.

Incomeforleasesisdisclosedunderrevenueinprofitorloss.

Operating leases – lesseeOperatingleasepaymentsarerecognisedasanexpenseonastraight-linebasisovertheleaseterm.Thedifferencebetweentheamountsrecognisedasanexpenseandthecontractualpaymentsarerecognisedasanoperatingleaseliability.Thisliabilityisnotdiscounted.Anycontingentrentsareexpensedintheperiodtheyareincurred.

1.11 Impairment of assets

Thegroupassessesateachendofthereportingperiodwhetherthereisanyindicationthatanassetmaybeimpaired.Ifanysuchindicationexists,thegroupestimatestherecoverableamountoftheasset.

Irrespectiveofwhetherthereisanyindicationofimpairment,thegroupalso:• testsgoodwillacquiredinabusinesscombinationforimpairmentannually.

Ifthereisanyindicationthatanassetmaybeimpaired,therecoverableamountisestimatedfortheindividualasset.Ifitisnotpossibletoestimatetherecoverableamountoftheindividualasset,therecoverableamountofthecash-generatingunittowhichtheassetbelongsisdetermined.Therecoverableamountofanassetoracash-generatingunitisthehigherofitsfairvaluelesscoststosellanditsvalueinuse.

Iftherecoverableamountofanassetislessthanitscarryingamount,thecarryingamountoftheassetisreducedtoitsrecoverableamount.Thatreductionisanimpairmentloss.

An impairment lossofassetscarriedatcost lessanyaccumulateddepreciationoramortisation is recognised immediately inprofitor loss.Anyimpairmentlossofarevaluedassetistreatedasarevaluationdecrease.

Goodwillacquiredinabusinesscombinationis,fromtheacquisitiondate,allocatedtoeachofthecash-generatingunits,orgroupsofcash-generatingunits,thatareexpectedtobenefitfromthesynergiesofthecombination,irrespectiveofwhetherotherassetsorliabilitiesoftheacquireeareassignedtothoseunitsorgroupsofunits.

Accounting Policies

44

Eachunitorgroupofunitstowhichthegoodwillissoallocatedrepresentsthelowestlevelwithintheentityatwhichthegoodwillismonitoredforinternalmanagementpurposes,andisnotlargerthananoperatingsegmentasdefinedbyparagraph5ofIFRS8OperatingSegmentsbeforeaggregation.

Animpairmentlossisrecognisedforcash-generatingunitsiftherecoverableamountoftheunitislessthanthecarryingamountoftheunits.Theimpairmentlossisallocatedtoreducethecarryingamountoftheassetsoftheunitinthefollowingorder:

• first,toreducethecarryingamountofanygoodwillallocatedtothecash-generatingunitand• then,totheotherassetsoftheunit,prorataonthebasisofthecarryingamountofeachassetintheunit.

Anentityassessesateachreportingdatewhetherthereisanyindicationthatanimpairmentlossrecognisedinpriorperiodsforassetsotherthangoodwillmaynolongerexistormayhavedecreased.Ifanysuchindicationexists,therecoverableamountsofthoseassetsareestimated.

Theincreasedcarryingamountofanassetotherthangoodwillattributabletoareversalofanimpairmentlossdoesnotexceedthecarryingamountthatwouldhavebeendeterminedhadnoimpairmentlossbeenrecognisedfortheassetinpriorperiods.

Areversalofanimpairmentlossofassetscarriedatcostlessaccumulateddepreciationoramortisationotherthangoodwillisrecognisedimmediatelyinprofitorloss.Anyreversalofanimpairmentlossofarevaluedassetistreatedasarevaluationincrease.

1.12 Stated capital and equity

Anequityinstrumentisanycontractthatevidencesaresidualinterestintheassetsofanentityafterdeductingallofitsliabilities.

1.13 Employee benefits

Short-term employee benefitsThecostofshort-termemployeebenefits,(thosepayablewithin12monthsaftertheserviceisrendered,suchaspaidvacationleaveandsickleave,bonuses,andnon-monetarybenefitssuchasmedicalaid),arerecognisedintheperiodinwhichtheserviceisrenderedandarenotdiscounted.

Theexpectedcostofcompensatedabsencesisrecognisedasanexpenseastheemployeesrenderservicesthatincreasetheirentitlementor,inthecaseofnon-accumulatingabsences,whentheabsenceoccurs.

Theexpectedcostofprofitsharingandbonuspaymentsisrecognisedasanexpensewhenthereisalegalorconstructiveobligationtomakesuchpaymentsasaresultofpastperformance.

Defined contribution plansPaymentstodefinedcontributionplansischargedasanexpenseastheyfalldue.

1.14 Provisions and contingencies

Provisionsarerecognisedwhen:• thegrouphasapresentobligationasaresultofapastevent;• itisprobablethatanoutflowofresourcesembodyingeconomicbenefitswillberequiredtosettletheobligation;and• areliableestimatecanbemadeoftheobligation.

Theamountofaprovisionisthepresentvalueoftheexpenditureexpectedtoberequiredtosettletheobligation.

Accounting Policies

45

Wheresomeoralloftheexpenditurerequiredtosettleaprovisionisexpectedtobereimbursedbyanotherparty,thereimbursementshallberecognisedwhen,andonlywhen,itisvirtuallycertainthatreimbursementwillbereceivediftheentitysettlestheobligation.Thereimbursementshallbetreatedasaseparateasset.Theamountrecognisedforthereimbursementshallnotexceedtheamountoftheprovision.

Provisionsarenotrecognisedforfutureoperatinglosses.

1.15 Revenue

Revenueismeasuredatthefairvalueoftheconsiderationreceivedorreceivableandrepresentstheamountsreceivableforservicesprovidedinthenormalcourseofbusiness,netofvalueaddedtax.Revenueisrentalincomefromtheinvestmentpropertiesandrecoveriesasperthetermsofcontract.Rentalincomefromoperatingleasesisrecognisedonastraight-linebasisoverthetermoftherelevantlease.

Interestincomeisrecognised,inprofitorloss,usingtheeffectiveinterestratemethod.Servicesandrecoveriesarerecognisedinaccountingperiodinwhichservicesarerendered.

1.16 Borrowing costs

Borrowingcoststhataredirectlyattributabletotheacquisition,constructionorproductionofaqualifyingassetarecapitalisedaspartofthecostofthatassetuntilsuchtimeastheassetisreadyforitsintendeduse.Theamountofborrowingcostseligibleforcapitalisationisdeterminedasfollows:• Actualborrowingcostsonfundsspecificallyborrowedforthepurposeofobtainingaqualifyingassetlessanytemporaryinvestmentofthose

borrowings.• Weightedaverageoftheborrowingcostsapplicabletotheentityonfundsgenerallyborrowedforthepurposeofobtainingaqualifyingasset.

Theborrowingcostscapitaliseddonotexceedthetotalborrowingcostsincurred.

Thecapitalisationofborrowingcostscommenceswhen:• expendituresfortheassethaveoccurred;• borrowingcostshavebeenincurred,and• activitiesthatarenecessarytopreparetheassetforitsintendeduseorsaleareinprogress.

Capitalisationissuspendedduringextendedperiodsinwhichactivedevelopmentisinterrupted.

Capitalisationceaseswhensubstantiallyalltheactivitiesnecessarytopreparethequalifyingassetforitsintendeduseorsalearecomplete.

Allotherborrowingcostsarerecognisedasanexpenseintheperiodinwhichtheyareincurred.

1.17 Translation of foreign currencies

Functional and presentation currencyItemsincludedintheconsolidatedannualfinancialstatementsofeachofthegroupentitiesaremeasuredusingthecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates(functionalcurrency).

TheconsolidatedannualfinancialstatementsarepresentedinPulawhichisthegroupfunctionalandpresentationcurrency.

Accounting Policies

46

Foreign currency transactionsAforeigncurrencytransactionisrecorded,oninitialrecognitioninPula,byapplyingtotheforeigncurrencyamountthespotexchangeratebetweenthefunctionalcurrencyandtheforeigncurrencyatthedateofthetransaction.

Attheendofthereportingperiod:• foreigncurrencymonetaryitemsaretranslatedusingtheclosingrate;• non-monetaryitemsthataremeasuredintermsofhistoricalcostinaforeigncurrencyaretranslatedusingtheexchangerateatthe dateofthetransaction;and• non-monetaryitemsthataremeasuredatfairvalueinaforeigncurrencyaretranslatedusingtheexchangeratesatthedatewhenthe fairvaluewasdetermined.

Exchangedifferencesarisingonthesettlementofmonetaryitemsorontranslatingmonetaryitemsatratesdifferentfromthoseatwhichtheyweretranslatedoninitialrecognitionduringtheperiodorinpreviousconsolidatedannualfinancialstatementsarerecognisedinprofitorlossintheperiodinwhichtheyarise.

Whenagainorlossonanon-monetaryitemisrecognisedtoothercomprehensiveincomeandaccumulatedinequity,anyexchangecomponentofthatgainorlossisrecognisedtoothercomprehensiveincomeandaccumulatedinequity.Whenagainorlossonanon-monetaryitemisrecognisedinprofitorloss,anyexchangecomponentofthatgainorlossisrecognisedinprofitorloss.

CashflowsarisingfromtransactionsinaforeigncurrencyarerecordedinPulabyapplyingtotheforeigncurrencyamounttheexchangeratebetweenthePulaandtheforeigncurrencyatthedateofthecashflow.

Investments in subsidiaries, joint ventures and associatesTheresultsandfinancialpositionofaforeignoperationaretranslatedintothefunctionalcurrencyusingthefollowingprocedures:• assetsandliabilitiesforeachstatementoffinancialpositionpresentedaretranslatedattheclosingrateatthedateofthatstatementof financialposition;• incomeandexpensesforeachitemofprofitorlossaretranslatedatexchangeratesatthedatesofthetransactions;and• allresultingexchangedifferencesarerecognisedtoothercomprehensiveincomeandaccumulatedasaseparatecomponentofequity.

Exchangedifferencesarisingonamonetaryitemthatformspartofanetinvestmentinaforeignoperationarerecognisedinitiallytoothercomprehensiveincomeandaccumulatedinthetranslationreserve.Theyarerecognisedinprofitorlossasareclassificationadjustmentthroughtoothercomprehensiveincomeondisposalofnetinvestment.

Anygoodwillarisingontheacquisitionofaforeignoperationandanyfairvalueadjustmentstothecarryingamountsofassetsandliabilitiesarisingontheacquisitionofthatforeignoperationaretreatedasassetsandliabilitiesoftheforeignoperation.Thecashflowsofaforeignsubsidiaryaretranslatedattheexchangeratesbetweenthefunctionalcurrencyandtheforeigncurrencyatthedatesofthecashflows.

1.18 Operating segment

Operatingsegmentsarereportedinamannerconsistentwiththeinternalreportingprovidedbymanagement.

Accounting Policies

47

2. Changes in accounting policy

TheconsolidatedannualfinancialstatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandardsonabasisconsistentwiththeprioryearexceptfortheadoptionofthefollowingneworrevisedstandards.

IFRS 10 Consolidated Financial StatementsStandardreplacestheconsolidationsectionsofIAS27ConsolidatedandSeparateFinancialStatementsandSIC12Consolidation–SpecialPurposeEntities.Thestandardsetsoutanewdefinitionofcontrol,whichexistsonlywhenanentityisexposedto,orhasrightsto,variablereturnsfromitsinvolvementwiththeentity,andhastheabilitytoeffectthosereturnsthroughpowerovertheinvestee.

Theeffectivedateofthestandardisforyearsbeginningonorafter1January2013.

Thegrouphasadoptedthestandardforthefirsttimeinthe2014consolidatedannualfinancialstatements.

ThemanagementhasrevieweditscontrolassessmentinaccordancewithIFRS10andconcludedthattheeffectontheclassification(assubsidiariesorotherwise)ofanyofgroup’sinvesteesheldduringtheperiodorcomparativeperiodscoveredthesefinancialstatements.

3. New Standards and Interpretations

Atthedateofapprovaloftheseconsolidatedannualfinancialstatements,certainnewaccountingstandards,amendmentsandinterpretationstoexistingstandardshavebeenpublished.

Managementanticipatesthatallrelevantpronouncementswillbeadoptedinthegroup’saccountingpoliciesforthefirstperiodbeginningaftertheeffectivedateofthepronouncement.Informationonnewstandards,amendmentsandinterpretationsthatareexpectedtoberelevanttotheentity’sfinancialstatementsisprovidedbelow.Certainothernewstandardsandinterpretationshavebeenissuedbutarenotexpectedtohaveamaterialimpactontheentity’sfinancialstatements.

3.1 Standards and interpretations effective and adopted in the current year

Inthecurrentyear,thegrouphasadoptedthefollowingstandardsandinterpretationsthatareeffectiveforthecurrentfinancialyearandthatarerelevanttoitsoperations:

IFRS 10 Consolidated Financial StatementsStandardreplacestheconsolidationsectionsofIAS27ConsolidatedandSeparateFinancialStatementsandSIC12Consolidation–SpecialPurposeEntities.Thestandardsetsoutanewdefinitionofcontrol,whichexistsonlywhenanentityisexposedto,orhasrightsto,variablereturnsfromitsinvolvementwiththeentity,andhastheabilitytoeffectthosereturnsthroughpowerovertheinvestee.



Refertochangesinaccountingpolicy,note2,fortheimpact.

Notes to the Consolidated Annual Financial Statements

48

IAS 27 Separate Financial StatementsConsequentialamendmentasaresultofIFRS10.TheamendedStandardnowonlydealswithseparatefinancialstatements.Theeffectivedateoftheamendmentisforyearsbeginningonorafter1January2013.

Thegrouphasadoptedtheamendmentforthefirsttimeinthe2014consolidatedannualfinancialstatements.

TheseparatefinancialstatementsofthecompanyhavebeenpreparedinlinewiththerevisedIAS27.

IFRS 12 Disclosure of Interests in Other EntitiesThestandardsetsoutdisclosurerequirementsforinvestmentsinSubsidiaries,associates,jointventuresandunconsolidatedstructuredentities.Thedisclosuresareaimedtoprovideinformationaboutthesignificanceandexposuretorisksofsuchinterests.Themostsignificantimpactisthedisclosurerequirementforunconsolidatedstructuredentitiesoroffbalancesheetvehicles.



Theadoptionofthisstandardhasnothadamaterialimpactontheresultsofthecompany,buthasresultedinmoredisclosurethanwouldhavepreviouslybeenprovidedintheconsolidatedannualfinancialstatements.

IFRS 13 Fair Value MeasurementNewstandardsettingoutguidanceonthemeasurementanddisclosureofitemsmeasuredatfairvalueorrequiredtobedisclosedatfairvalueintermsofotherIFRS’s.



Theadoptionofthisstandardhasnothadamaterial impactontheresultsofthecompany,buthasresulted inmoredisclosureon investmentpropertiesmeasuredatfairvalue,thanwouldhavepreviouslybeenprovidedintheconsolidatedannualfinancialstatements.

IAS 1 Presentation of Financial Statements

Theamendmentnowrequiresitemsofothercomprehensiveincometobepresentedas:• Thosewhichwillbereclassifiedtoprofitorloss• Thosewhichwillnotbereclassifiedtoprofitorloss.

Therelatedtaxdisclosuresarealsorequiredtofollowthepresentationallocation.Inaddition,theamendmentchangedthenameofthestatementofcomprehensiveincometothestatementofprofitorlossandothercomprehensiveincome.

Theeffectivedateoftheamendmentisforyearsbeginningonorafter1July2012.

Thegrouphasadoptedtheamendmentforthefirsttimeinthe2014consolidatedannualfinancialstatements.

Theimpactofthisamendmenthasresultedinchangeofnamefromthe“statementofcomprehensiveincome”tothe“statementofprofitorlossandothercomprehensiveincome”.


49

3.2 Standards and interpretations not yet effectiveThegrouphaschosennottoearlyadoptthefollowingstandardsandinterpretations,whichhavebeenpublishedandaremandatoryforthegroup’saccountingperiodsbeginningonorafter1February2014or laterperiods.The impactoftheannual improvements2010-2012/2011-2013andnewstandardsissuedarecurrentlybeingassessed.

Effective date: Standard/ Interpretation: Years beginning on or after

• IFRS3BusinessCombinations:Accountingforcontingentconsiderationinabusinesscombination 1July2014• IFRS8OperatingSegments:Aggregationofoperatingsegments,reconciliationofthetotal reportablesegments,’assetstotheentity’sassets 1July2014• IFRS13FairValueMeasurements:Short–termreceivablesandpayable 1July2014• IFRS3BusinessCombinations:Scopeofexceptionsforjointventures 1July2014• IFRS13FairValueMeasurement:Scopeofparagraph52(portfolioexception) 1July2014• IAS40InvestmentProperty:ClarifyingtheinterrelationshipbetweenIFRS3and• IAS40whenclassifyingpropertyorowner–occupiedproperty 1July2014• IFRS9FinancialInstruments(NewStandards) 1January2015

Figures in Pula 2014 2013 Valuation Accumulated Carrying value Valuation Accumulated Carrying value

depreciation depreciation 4. Investment property

Group

Investmentproperty 1721543918 - 1721543918 1404194076 - 1404194076

Company 2014 2013 Valuation Impairment Carrying value Valuation Impairment Carrying value

Investmentproperty 981653658 - 981653658 781480702 - 781480702

Reconciliation of investment property - Group - 2014

Opening Additions Foreign Fair value Carrying value carrying value exchange adjustments movements Investmentproperty 1404194076 51670 72693017 244605155 1721543918

Reconciliation of investment property - Group - 2013

Opening Additions Additions Foreign Impairments Fair value Carrying value carrying value through exchange adjustments business movements combinations Investmentproperty 749144794 3070587 525071027 86426034 (1800000) 42281634 1404194076


50

Group Company

Figures in Pula 2014 2013 2014 2013

Reconciliation of investment property - Company - 2014

Opening Additions Fair value Carrying value carrying value adjustments Investmentproperty 781480702 51670 200121286 981653658

Reconciliation of investment property - Company - 2013

Opening Additions Impairments Fair value Carrying value carrying value adjustments

Investmentproperty 749144794 3070587 (1800000) 31065321 781480702

Pledged as securityCarryingvalueofassetspledgedassecurity: GameCityShoppingCentre,Portion3ofForestFarmHillLA 664418108 516322046 664418108 516322044975KO NzanoShoppingCentre,Lot904Francistown 89438399 66435122 89438399 66435122FairgroundsOfficePark,Lot50676,Gaborone 113248737 112902371 113248737 112902371Lot6670,Mogoditshane,SupaSaveMall,Gaborone 22348093 16201156 22348093 16201156Lot1131-1137,TurnstarHouse,MainMall,Gaborone 31372265 29848945 31372265 29848945Lots16398&13093TapologoEstates,Gaborone 29473803 16703950 29473803 16703950Lot63CommercePark,Gaborone 11270302 10825649 11270302 10825649Lot1203MogoditshaneFlats,Gaborone 11693968 7084945 11693968 7084945Lot14444Hyundai,Gaborone 8389983 5136519 8389985 5136519Thepropertyispledgedassecuritytowardsbankfacilitiesas detailedinNote15


51

Group Company

Figures in Pula 2014 2013 2014 2013

4. Investment property (continued) Details of property Game City Shopping Centre ForestFarmHillLA975KO, NotarialLeasewithRomanCatholicChurch Leasefrom1April2001for75Years -Costoftheproperty 237168091 234097505 237168091 234097505-Additionsduringtheyear 51670 3070586 51670 3070586-FairValuesurplus(Netofstraightliningadjustment) 427198347 279163955 427198347 279163953

664 418 108 516 332 046 664 418 108 516 332 044Nzano Shopping Centre Lot904,Francistown Freehold -Costoftheproperty 42509893 42509893 42509893 42509893-FairValuesurplus(Netofstraightliningadjustment) 46928506 23925229 46928506 23925229

89 438 399 66 435 122 89 438 399 66 435 122Supa Save Mall Lot6670,Mogoditshane Leasehold Leasefrom12January1982for50Years -Costoftheproperty 13001621 13001621 13001621 13001621-FairValuesurplus(Netofstraightliningadjustment) 9346472 3199535 9346472 3199535

22 348 09 3 16 201 156 22 348 093 16 201 156Fairgrounds Office Park Lot50676,Gaborone Fixedyearstategrant Leasefrom04February1994for50Years -Costoftheproperty 66468635 66468635 66468635 66468635-FairValuesurplus(Netofstraightliningadjustment) 46780102 46433736 46780102 46433736

113 248 737 112 902 371 113 248 737 112 902 371Plot 63 Commerce Park Portion 63 Forest Hill, No. 9 KO LeaseholdunderaNotarialDeedofCessionandDelegation Leasefrom04February1994for99Years -Costoftheproperty13September1999 6218956 6218956 6218956 6218956-FairValueadjustment(Netofstraightliningadjustment) 5051346 4606693 5051346 4606693

11 270 302 10 825 649 11 270 302 10 825 649


52

Group Company

Figures in Pula 2014 2013 2014 2013

4. Investment property (continued) Main Mall Offices Lot1131-1137,Gaborone Fixedyearstategrant Leasefrom15December1979for99Years -Costoftheproperty 36006666 36006666 36006666 36006666-FairValueadjustment(Netofstraightliningadjustment) (4634401) (6157721) (4634401) (6157721)

31 372 265 29 848 945 31 372 265 29 848 945 Lot 14444

Fixed year state grant Lease from 03 September 1985 for 50 years -Costoftheproperty 3559404 3559404 3559404 3559404-FairValuesurplus(Netofstraightliningadjustment) 4830581 1587115 4830581 1587115

8 389 985 5 146 519 8 389 985 5 146 519Tapologo Estates Lot 13093 and 16398, Gaborone Ext 40 Fixed year state grant -Costoftheproperty 9466456 9466456 9466456 9466456-FairValuesurplus(Netofstraightliningadjustment) 20007347 7237494 20007347 7237494

29 473 803 16 703 950 29 473 803 16 703 950Mogoditshane Town Houses Tribal Lot 1293, Mogoditshane -Costoftheproperty 3912365 3912365 3912365 3912365-FairValuesurplus(Netofstraightliningadjustment) 7781603 3172580 7781603 3172580

11 693 968 7 084 945 11 693 968 7 084 945Mlimani city, Plot 2, Block L, situated in Ubungo, Dar es Salaam, Tanzania -Costoftheproperty 467971032 467971032 - --FairValuesurplus(Netofstraightliningadjustmentincluding 271919228 154742341 - -foreignexchangemovements)

739 890 260 622 713 373 - -

TurnstarHoldingsLimitedhaveoccupied285sqminGameCityshoppingcomplex,oneofthepropertiesforthepurposesofcentremanagementoffice.ThecompanyhasalsooccupiedUnitNo.401and402ofMainMallProperty,Lot1131-1137towardstheiradministrativepurposes.Theowneroccupiedportionisnotsignificanttotheportfolioofinvestmentsheldbythecompanyandthusnotransferoftheowneroccupied portion hasbeenmadetoproperty,plantandequipment.


53

Group Company

Figures in Pula 2014 2013 2014 2013

4. Investment property (continued)Details of valuation Turnstar Holdings Limited TheinvestmentpropertieswerevaluedbyRiberry(Proprietary)Limited,representedbyBenedictKgosilentswe(BSc(Hons)EstateManagement,MRICS,MREIB,independentvaluers.ThevaluerhascarriedoutphysicalinspectionofthepropertiesinJanuary2014,theeffectivedateofvaluationis31January2014,thereportisdated14April2014.Thevaluer’shaveassessedthatthesepropertieshavebeenmaintainedinareasonablestateofrepairandcondition.Aspertheexpertvaluation,P1025900000representingtheopenmarketvalueofthepropertieshasbeenarrivedusingdiscountedcashflowmethod.Thecapitalisationrateusedforthepurposesofvaluationvariesfrom5.5%to12.5%forretail,commercialandresidentialproperties.NeitherKgosilentswenorRiberry(Proprietary)Limitedareconnectedtothecompany.Theyhaveadequateexperienceinlocationandcategoryoftheinvestmentpropertybeingvalued.Thevaluationwasperformedonbehalfofthedirectorsofthecompany.Thedirectorshavetakenintoaccounttheindependentfairvaluationoftheproperties,andhaveconsideredfuturevacancyallowanceof2%onthefairvaluesreportedbytheexternalvaluer,expectingfuturevolatilityinthemarketconditions.Theimpactoffuturevacancyallowancehasbeenadjustedaspartofmovementoffairvaluesreportedduringtheyear.

Mlimani Holdings Limited Theeffectivedateoftherevaluationswas01February2014.TheserevaluationswereperformedbyIndependentValuers,ErisPropertyGroupbasedinCapeTownSouthAfrica.Mr.IanGrant,MA(Hons),MRICSCharteredValuationSurveyorandMr.ClaireEveratt,MRICS,MIVSAProfessionalAssociatedValuerCharteredValuationSurveyorsignedthefairvaluationreport.Thevaluationwascarriedoutusingadiscountedcashflowmodel,whichinvolvedprojectingincomeandexpenditureforaperiodof5yearsanddiscountingatalongterminvestmentratetoarriveatnetpresentvalue.Securedleaseincomewasreflectedwiththeunderlyingassumptionthatonexpiry,arenewalwouldoccur.However,onavacancyoccurring,therewouldbeaninterruptioninthecashflowforthatperiodtosecureanewtenant.Inviewofthefactthatthefairvalueoftheassetwasarrivedattakingintoaccountthepresentvalueoffuturerevenues,thefairvaluegainwasreducedbytheoperatingleaseassetamountinordertoavoidovervaluation. Valuations Assumptions: Theassumptionswerebasedoncurrentmarketconditions. Againorlossarisingfromachangeinfairvalueisincludedinnetprofitorlossfortheperiodinwhichitarises.Refertonote39forIFRS13disclosureforinvestmentpropertiesvaluedatfairvalue.

Amounts recognised in profit and loss for the year Rentalincomefrominvestmentproperty(includingrecoveries 197329305 189376783 122095561 114638448withoutstraightliningadjustment) Directoperatingexpensesfromrentalgeneratingproperty (60325129) (53653043) (34836357) (33119970) 137 004 176 135 723 740 87 259 204 81 518 478Adjusted valuations Thefollowingvaluationswereadjustedforconsolidatedannualfinancialstatementspurposestoavoiddoublecounting:

Valuation as per financial statements Fairvalueofinvestmentpropertyperindependentvaluer 1753137839 1429364589 1005382000 799530000Less:operatingleasereceivable (31593921) (25170513) (23728342) (18049298) 1 721 543 918 1 404 194 076 981 653 658 781 480 702


54

Group Company

Figures in Pula 2014 2013 2014 2013

5. Property, plant and equipmentGroup 2014 2013

Cost Accumulated Carrying value Cost Accumulated Carrying value depreciation depreciation

Furnitureandfixtures 3283092 (1349073) 1934019 3015801 (865053) 2150748ITequipment 1623618 (926889) 696729 1419018 (617936) 801082Motorvehicles 215347 (180041) 35306 205085 (141535) 63550Officeequipment 263628 (134430) 129198 258391 (108423) 149968Plantandmachinery 4560811 (2937106) 1623705 3717520 (2220688) 1496832Total 9 946 496 (5 527 539 ) 4 418 957 8 615 815 (3 953 635 ) 4 662 180

Company 2014 2013 Cost Accumulated Carrying value Cost Accumulated Carrying value depreciation depreciation

Furnitureandfixtures 1205167 (417449) 787718 1168463 (308732) 859731ITequipment 911547 (587566) 323981 900478 (393773) 506705Motorvehicles 114360 (79054) 35306 114360 (50810) 63550Officeequipment 212091 (96292) 115799 212091 (80369) 131722Plantandmachinery 681335 (507797) 173538 526428 (481374) 45054Total 3 124 500 (1 688 158 ) 1 436 342 2 921 820 (1 315 058 ) 1 606 762

Reconciliation of property, plant and equipment - Group - 2014

Opening Additions Foreign Depreciation Total carrying carrying value exchange value movements

Furnitureandfixtures 2150748 58334 114056 (389119) 1934019ITequipment 801082 145950 23948 (274251) 696729Motorvehicles 63550 - - (28244) 35306Officeequipment 149968 - 1283 (22053) 129198Plantandmachinery 1496832 482337 109612 (465076) 1623705 4 662 180 686 621 248 899 (1 178 743 ) 4 418 957


55

Group Company

Figures in Pula 2014 2013 2014 2013

5. Property, plant and equipment (continued) Reconciliation of property, plant and equipment - Group - 2013

Opening Additions Additions Foreign Depreciation Total carrying carrying value through exchange value business movements combinations

Furnitureandfixtures 933519 352138 1000000 164948 (299857) 2150748ITequipment 474921 185942 299963 51897 (211641) 801082Motorvehicles 91796 - - - (28246) 63550Officeequipment 147643 - 20684 2687 (21046) 149968Plantandmachinery 92105 11831 1524236 269289 (400629) 1496832 1 739 984 549 911 2 844 883 488 821 (961 419 ) 4 662 180

Reconciliation of property, plant and equipment - Company- 2014 Opening Additions Depreciation Total carrying carrying value value

Furnitureandfixtures 859731 36704 (108717) 787718ITequipment 506705 11069 (193793) 323981Motorvehicles 63550 - (28244) 35306Officeequipment 131722 - (15923) 115799Plantandmachinery 45054 154907 (26423) 173538 1 606 762 202 680 (373 100 ) 1 436 342

Reconciliation of property, plant and equipment - Company - 2013 Opening Additions Depreciation Total carrying carrying value valueFurnitureandfixtures 933519 32124 (105912) 859731ITequipment 474921 185942 (154158) 506705Motorvehicles 91796 - (28246) 63550Officeequipment 147643 - (15921) 131722Plantandmachinery 92105 - (47051) 45054 1 739 984 218 066 (351 288 ) 1 606 762


56

Group Company

Figures in Pula 2014 2013 2014 2013

6. Goodwill Group 2014 2013

Cost Accumulated Carrying value Cost Accumulated Carrying value impairment impairment

Goodwill 55172085 - 55172085 49565565 - 49565565

Reconciliation of goodwill - Group - 2014 Opening Foreign Carrying value carrying value exchange movements

Goodwill 49565565 5606520 55172085

Reconciliation of goodwill - Group - 2013 Opening Additions Foreign Carrying value carrying value through exchange business movements combinations

Goodwill - 42762109 6803456 49565565

Intheprioryearthecompanyacquired100%ofdirect/indirectvotingequityinterestofIslandView(Proprietary)Limitedandits100%whollyownedsubsidiaryMlimaniHoldingsLimited. ThegoodwillofUSD6146170(P55172085)arisingfromtheacquisitionisattributabletoacquiredinvestmentpropertyfromcombiningtheoperationsof thecompany with IslandView (Proprietary)LimitedandMlimaniHoldingsLimited.Goodwill recognised isnotexpected tobedeductibleforincometaxpurposes.Goodwillhasbeenconvertedtofunctionalcurrencyofthegroupatclosingexchangerateprevailingattheofreportingperiod.

Impairment assessment on carrying value of goodwill ThegrouphasallocatedthecarryingvalueofgoodwillreportedatP55172085(USD6146170)tothesubsidiary,MlimaniHoldingsLimitedacquiredduringtheprioryear.Thissubsidiaryisthecashgeneratingunit.Forpurposesoftestingimpairmentonthecarryingvalueofgoodwill,thegrouphasconsidered5yearbudgetedcashflowprojectionsofthesubsidiary’soperationstodeterminethevalueinuse.Thesefuturecashflowprojectionsarepreparedinfunctionalcurrencyofthesubsidiary(UnitedStatesDollar).

Thefollowingarethekeyassumptionsusedindeterminingthevalueinuse:a) Rentalincomehasbeenassumedtogrowatarateof5-8%perannum,basedonthecontractedleaseagreementswiththetenants.b)Operatingexpenseshasbeenassumedtogrowat3%,basedontheUSDinflationratec) Themanagementhasconsideredapre-taxcostofcapitalrateof2.01%,whichisLIBORplus1.85%.Thisdiscountrateisbasedoncostofcapitalforborrowingsobtainedbythecompanyfromitsbankers.

d) Residentialandconferencecentrewerenotconsideredaspartofthecashflowprojectionsduetonatureoftheleaseperiod,whichinmostcasesis1year.

Basedonsuchcashflowprojections,estimatedrecoverableamountfromthevalueinuseworkingsarehigherthanthecarryingvalueofgoodwill,thus,thereisnoimpairmentofgoodwill.


57

Group Company

Figures in Pula 2014 2013 2014 2013 7. Investment in subsidiary

Name of company % voting % voting % holding % holding Carrying Carrying power 2014 power 2013 2014 2013 amount 2014 amount 2013

IslandView(Proprietary)Limited(anIFSC 100.00% 100.00% 100.00% 100.00% 198399513 198399513companyincorporatedinBotswanawith 1000sharesofnoparvalue) MlimaniHoldingsLimited-Thecompany 100.00% 100.00% 0.01% 0.01% 5 5subscribedon22February2012,1ordinary shareof1000TanzanianShillings. 198399518 198399518Thecarryingamountsofsubsidiariesareshownnetofimpairmentlosses,ifany. Interest in subsidiariesComposition of the group SetoutbelowdetailsofthesubsidiarieshelddirectlybytheGroup:

Name of the Subsidiary Country of incorporation Principal activity Proportion of ownership and principal place of business interests held by the Group

IslandView(Proprietary)Limited Botswana IFSCregistered 100% 100% Investmentcompany MlimaniHoldingsLimited Tanzania PropertyInvestment 100% 100%

Interests in unconsolidated structured entities TheGrouphasnointerestsinunconsolidatedstructuredentities.

ThecompanythroughitssubsidiaryIslandView(Proprietary)LimitedexercisescontroloveritswhollyownedsubsidiaryMlimaniHoldingsLimited.Consolidationofthesubsidiariesarecarriedoutattheultimateparentlevel.

8. Other financial assets Held to maturity Investmentindebentures-MlimaniHoldingsLimited - - 356922311 345742124Thesedebenturesareunsecured,repayablewithin10years fromthedateofacquisitionandcarriesinterestatarateequalto6monthsLIBORplusanmarginofnotlessthan5.5%.Theprincipalvalueofdebenturesoutstandingat2014USD39207838(2013:USD42896635).DuringtheyearthesubsidiarypaidUSD3688797asprincipal.

Non-current assetsHeldtomaturity - - 356922311 345742124


58

Group Company

Figures in Pula 2014 2013 2014 2013

8. Other financial assets l (continued) Fair value measurement of financial instruments ThefairvaluesoftheUS-dollardebentureareestimatedusingadiscountedcashflowapproach,whichdiscountsthecontractualcashflowsusingdiscountratesderivedfromobservablemarketinterestratesofsimilarloanswithsimilarrisk.Theinterestrateusedforthiscalculationis5.5%. Fair value hierarchy of financial assets at fair value FinancialassetsandmeasuredatfairvalueinthestatementoffinancialpositionaregroupedintothreeLevelsofafairvaluehierarchy.ThethreeLevelsaredefinedbasedontheoperabilityofsignificantinputstothemeasurement,asfollows:Level1representsthoseassetswhicharemeasuredusingunadjustedquotedpricesforidenticalassets.Level2appliesinputsotherthanquotedpricesthatareobservablefortheassetseitherdirectly(asprices)orindirectly(derivedfromprices).Level3appliesinputswhicharenotbasedonobservablemarketdata. Level 2 Investmentindebentures-MlimaniHoldingsLimited - - 356922311 345742124Fair value of held to maturity investments Debentures - - 443536479 447511645

9. Financial assets by category Theaccountingpoliciesforfinancialinstrumentshavebeenappliedtothelineitemsbelow.Thecarryingamountsofthefinancialassetsineachcategoryareasfollows:

Group - 2014 Loans and Total receivables Tradeandotherreceivables 11407799 11407799Cashandcashequivalents 74239026 74239026

85 646 825 85 646 825Group - 2013 Loans and Total receivables Tradeandotherreceivables 10044884 10044884Cashandcashequivalents 82936100 82936100

92 980 984 92 980 984


59

Group Company

Figures in Pula 2014 2013 2014 2013

9. Financial assets by category l (continued) Company - 2014 Loans and Held to Total receivables maturity investments Otherfinancialassets - 356922311 356922311Tradeandotherreceivables 7684232 - 7684232Cashandcashequivalents 66040234 - 66040234

73 724 466 356 922 311 430 646 777Company - 2013 Loans and Held to Total receivables maturity investments Otherfinancialassets - 345742129 345742129Tradeandotherreceivables 7733358 - 7733358Cashandcashequivalents 69451972 - 69451972

77 185 330 345 742 129 422 927 459 10. Deferred tax

Deferred tax liability Acceleratedcapitalallowancesfortaxpurposes (18238358) (15985881) (18238358) (15985881)Onprovisionforbadanddoubtfuldebts 504511 818303 504511 818303Onunrealisedforeignexchangegain/loss (5246703) (3958806) (5246703) (3958806)Onfairvaluesurplusoninvestmentproperties (186431177) (105668837) (60152375) (20407552)Onoperatingleasereceivables (5220235) (3970845) (5220235) (3970845)Taxlossesavailableforsetoffagainstfuturetaxableincome 3627408 1668702 3627408 1668720

(211 004 554 ) (127 097 346 ) (84 725 752 ) (41 836 061 )Reconciliation of deferred tax asset (liability) Atbeginningoftheyear (127097346) (38627663) (41836061) (38627663)Originatingtemporarydifferenceonplantandequipment (2252477) (2260184) (2252477) (2260184)(Decrease)/increaseintaxlossesavailableforsetoff 1958688 1222325 1958688 2238415Originatingtemporarydifferenceonfairvalueofinvestmentproperty (65252663) (7894747) (39744822) 1222325Onprovisionforbaddebts (313792) (110488) (313792) (110488)OnIAS17Straightlineadjustment (1249391) (339660) (1249391) (339660)Deferredtaxonforeignexchangetranslation (1287897) (3958806) (1287897) (3958806)Arisingoutofbusinesscombination - (64505464) - -Exchangefluctuationsonyearendtranslationofdeferredtax (15509676) (10622659) - -(onsubsidiary) (211 004 554 ) (127 097 346 ) (84 725 752 ) (41 836 061 )


60

Group Company

Figures in Pula 2014 2013 2014 2013

10. Deferred tax (continued)Carry forward tax losses Inthepriorperiodnoprovisionforcurrenttaxationhasbeenmade,asthecompanyhasassessedcarryforwardtaxlosses.Theestimatedtaxlossavailableforsetoffagainstfuturetaxableincomeasat31January2014wasP16488216(2013:P7585096.)

DeferredtaxoninvestmentpropertyheldbyMlimaniHoldingsLimitediscalculatedbasedonthefairvalueofinvestmentpropertyattheyearend,lessthecostofinvestmentpropertyandtheprofitsearneduptotheyearendasrequiredbytheIncomeTaxActofTanzania.

11. Operating lease assets Non-currentassets 26449748 20436694 21089380 13438970Currentassets 5144173 4733819 2638963 4610328 31 593 921 25 170 513 23 728 343 18 049 298

Operating lease assets relate to the impacton straight liningof leases as requiredby IAS17.This relates to thedifferencebetween thecontractualrentalsovertheperiodofleaseagainsttheactualrentalschargedduringtheyear.Thegroupleasesinvestmentproperties,withaverageleaseyearsbetween1to5yearswiththeexceptionofafewleases,whicharebetween10to25years.Averageannualescalationontheseleasesis9%.

12. Trade and other receivables Tradereceivables 9359268 7350764 5738399 5159251Deposits 293037 81531 202284 -Otherreceivables 1755494 2612589 1743549 2574107Prepaidexpenses 428588 279956 215411 231668 11 836 387 10 324 840 7 899 643 7 965 026Trade and other receivables pledged as security IncludedundertradeandotherreceivablesareduesfromtenantsrelatingtoMlimaniHoldingsLimitedandGameCityShoppingCentrewhichhavebeenpledgedassecurityforborrowingsfromBarclaysBankBotswanaLimited,refertonote15. Credit quality of trade and other receivables Thecreditqualityof tradeandother receivables that areneitherpastnorduenor impairedcan beassessedby reference tohistoricalinformationaboutcounterpartydefaultrates: Fair value of trade and other receivables Tradeandotherreceivables 8363387 10324840 7899643 7965026

Thecompany’spolicyistoconsiderimpairmentprovisionsbasedonreviewofindividualdebtorscurrentcreditsituation,pastperformanceandotherfactorsandwhererequired,appropriateprovisionshavebeenmadeforimpairment. Trade and other receivables past due but not impaired Tradeandotherreceivableswhicharelessthan1monthpastduearenotconsideredtobeimpaired.At31January2014,P3257444(2013:P4166982)(companyP1290989(2013:P2082310)werepastduebutnotimpaired.


61

Group Company

Figures in Pula 2014 2013 2014 2013

12. Trade and other receivables (continued) Theageingofthesetradeotheramountspastduebutnotimpairedisasfollows:1monthpastdue 2608574 2167538 642119 4726462monthspastdue 355328 470026 355328 1653993monthspastdue 293542 15294182 93542 1444265 3 257 444 4 166 982 1 290 989 2 082 310Trade and other receivables impaired Asof31January2014,tradeandotherreceivablesofP2293233(2013:P3719553)(CompanyP2293233(2013:P3719553))wereimpairedandprovidedfor. ThechargefortheyearwasP403155(2013:P741006)(CompanyP403155asof31January2014(2013:P741006)). Theageingofthesetradeandotherreceivablesisasfollows: Notmorethan3months 338406 604235 338406 604235Morethan3Months 1954827 3115318 1954827 3115318 2293233 3719553 2293233 3719553Reconciliation of provision for impairment of trade and other receivables Openingbalance 3719553 4221772 3719553 4221772Provisionforimpairment 403155 741006 403155 741006Amountswrittenoffasuncollectable (1534275) (1243225) (1534275) (1243225)Baddebtsrecovered (295200) - (295200) - 2 293 233 3 719 553 2 293 233 3 719 553

Thecreationandreleaseofprovisionforimpairedreceivableshavebeenincludedinoperatingexpensesinprofitorloss(note19).Amountschargedtotheallowanceaccountaregenerallywrittenoffwhenthereisnoexpectationofrecoveringadditionalcash.

13. Cash and cash equivalents

Cashandcashequivalentsconsistof: Cashonhand 76832 79144 1277 3165Bankbalances 38614932 52178133 30491695 38769984Short-termdeposits 35547262 30678823 35547262 30678823 74 239 026 82 936 100 66 040 234 69 451 972

Credit quality of cash at bank and short term deposits, excluding cash on handThecreditqualityofcashatbankandshorttermdeposits,excludingcashonhandthatareneitherpastduenorimpairedcanbeassessedbyreferencetoexternalcreditratingsorhistoricalinformationaboutcounterpartydefaultrates.HoweverthebanksinBotswanaandTanzaniaarenotrated,butaresubsidiariesofratedbanksinSouthAfricaandtheUnitedKingdom.


62

Group Company

Figures in Pula 2014 2013 2014 2013

14. Stated capital and linked unit debentures Reconciliation of number of shares and linked units issued: Atthebeginningofthereportingperiod 572153603 385810579 572153603 385810579

Issuesofsharesandlinkedunitdebenturestowardsrightsoffer - 66610078 - 66610078Issuesofsharesandlinkedunitdebenturestowardsdischargeof - 119732946 - 119732946 purchase 572 153 603 572 153 603 572 153 603 572 153 603

Issued StatedCapital-572153603(2013:572153603)Ordinary 349185538 3491855383 49185538 349185538 sharesofnoparvalue Shareissuecostswrittenoffagainststatedcapital (2764983) (2764983) (2764983) (2764983)Linkedunitdebentures-572153603(2013:572153603) 286076802 286076802 286076802 286076802 Linkedunitdebenturesof50thebeeach 632 497 357 632 497 357 632 497 357 632 497 357

Thedebenturescarryinterestataratewhichislinkedtothedividenddeclaredontheordinaryshares,anditbecomespayableupondeclarationofdividendsonshares.

Linkedunitdebenturesareredeemablesubjecttoapprovalofshareholdersbyaspecialresolutionandwithwrittenconsentofthecreditorsofthecompany.

15. Borrowings Held at amortised cost FirstNationalBankofBotswanaLimited - 100000000 - 100000000The loan approved is forP100000000 towards consolidationof theoverdraft and further loan requirements of the company.MoratoriumoncapitalrepaymentsisprovideduntilJune2013, theloanwas renegotiatedduring theyearwithmoratoriumperiodextended upto June 2016, with interest being servicedmonthly.Theloanischargedinterestatprimeless2%.Theloanhasbeentransferred to Barclays Bank of Botswana Limited effective 27November2013.


63

Group Company

Figures in Pula 2014 2013 2014 2013

15. Borrowings (continued) BarclaysBankofBotswanaLimited 236148458 241710088 236148458 241710088

Term loanwith a limitof USD33,500,000, Interest atUSDLIBORplus1.85%calculatedona365daybasisandcomputedmonthly inarrears.USD3,000,000payableonsigningthe facilityagreementand18 installments of USD 401,875, payable monthly commencing 1monthafterthefirstdrawdownofthefacilityuntiltheloantovalue(LTV)reducesto70%.Thebalancetobepaidasabulletonthefinalrepaymentdate.DuringtheyearthecompanyrepaidUSD4000654towardsthisfacility.TheloanisdisclosednetofdebtissuecostofP3546107(2013:P4249627),whichwillbeamortisedoverthebalanceperiodoftheloan.Inthecurrentperiod,anamountofP703520(2013:P646506)hasbeenrecognisedasanexpensesunderfinancecosts.ThebalanceoutstandingtowardsprincipalattheendoftheyearisUSD25814819(2013:USD30.5million)

BarclaysBankofBotswanaLimited 100000000 - 100000000 -Thecompanyand”Barclays”havesignedafacilityletteron30October2012,theinterestrateissetat2%belowtheprimerateperannum,themonthlyinstallmentissetatP1388889payableover72monthscommencing12monthsafterthedateofthefirstdrawdown.ThistermloanwastransferredfromFirstNationalBankofBotswanaLimitedonthe27November2013. 336 148 458 341 710 088 336 148 458 341 710 088

Financialcovenantsthatshallbemaintainedinaccordancewiththeagreementare:BarclaysUSD33,500,000.00Loan• Grossborrowingattheendofeachrelevantperiodshallnotexceed66%ofNettangibleassets• Theratioofcashflowtodebtserviceforeachrelevantperiodshallnotfallbelow1.5:1• NettangibleassetsshallatalltimesexceedBWP500million• NetRentalIncomefortherelevantperiodshallexceed1.25timesDebtServiceforsuchrelevantperiod• Thevalueoffreeholdandleaseholdpropertiessecurednoworsubsequentlyinfavourofthebankpursuanttothesecurityatalltime notexceedtheLoannotmorethan70%oftheloanvalue.


64

Group Company

Figures in Pula 2014 2013 2014 2013

15. Borrowings (continued)Financialcovenantsthatshallbemaintainedinaccordancewiththeagreementare:BarclaysBWP100000000Loan• GrossBorrowingattheendofeachRelevantperiodshallnotexceed66%ofnettangibleassets• TheratioofCashFlowtoDebtServiceforeachRelevantPeriodshallnotfallbelow1.5:1• NetTangibleAssetsshallatalltimeexceedP500million• ThevalueoffreeholdandleaseholdpropertiessecurednoworsubsequentlyinfavourofthebankpersuanttotheSecurityatalltimenot

exceedtheLoannotmorethan30%.Suchvalueshallbedeterminedfromtimetimebythebankattheexpenseoftheborrower.Ifsuchvaluefallsbelowtheabovelevel,theborrowerwillrestoretheagreedmarginwithadditionalsecuritywithina30daysfromthedateofthebanksnotificationinwritingtotheborrower.

• NetRentalIncomefortherelevantperiodshallexceed1.25timesDebtServiceforsuchrelevantperiod

Thecompanyhascompliedwiththeabovecovenantsduringtheyear SecurityheldbyBarclaysBankofBotswanaLimited• DeedofcessionoverrentalsforanunlimitedamountofallrentalswhichmayaccruefromanyandalltenantsofPlotNo2,BlockLubungu

area,KinondonimunicipalityDarEsSalaam,TanzaniaotherwiseknownasMilimaniCity.• FirstcoveringmortgagebondpassedbyTurnstarHoldingsLimitedinfavouroftheBarclaysBankofBotswanaLtdintheamountofBWP

10,600,000.00overPortion63,SouthEastAdministrationDistrict.• FirstcoveringmortgagepassedbyTurnstarHoldingsLimitedinfavouroftheBarclaysBankofBotswanaLimitedintheamountofBWP32,400,000.00

overlotnumber1131-7,Gaborone.• First coveringmortgagebondpassedbyTurnstarHoldingsLimited in favourof theBarclaysBankofBotswanaLimited in theamountof

BWP15,200,000.00overLOT16398,Gaborone.• First covering mortgage bond passed byTurnstar Holdings Limited in favour of the Barclays Bank of Botswana Ltd in the amount of

BWP4,940,000.00overlotnumber14444,Gaborone.• First covering mortgage bond passed byTurnstar Holdings Limited in favour of the Barclays Bank of Botswana Ltd in the amount of


BWP6,800,000.00overlotnumber1203,Mogoditshane.• First covering mortgage bond passed byTurnstar Holdings Limited in favour of the Barclays Bank of Botswana Ltd in the amount of


BWP67,400,000.00overlotnumber904,Francistown.• Deedofcessionoverrentals foranunlimitedamountofall rentalswhichmayaccrue fromfromanyall tenantsLA975-KO,SouthEast

administrationdistrictotherwiseknownasGameCityShoppingCentre,Gaborone.• DeedofcessionoverrentalsforanunlimitedamountofallrentalswhichmayaccruefromanyandalltenantsofPlotNo2,BlockLubunguarea,

KinondonimunicipalityDarEsSalaam,TanzaniaotherwiseknownasMilimaniCity.• First coveringmortgagebondpassedbyTurnstarHoldingsLimited in favourof theBarclaysBankofBotswanaLimited in theamountof

BWP180,000,000.00(onehundredandeightymillionpula)overLA975-KO,SouthEastadministrationdistrictotherwiseknownasGameCityShoppingCentre,Gaborone.

• DeedofCessionofanyandallbenefitswhichmayaccrueinTermsoftheinsurancepolicyarrangedinrespectofGameCityShoppingCentre.


65

Group Company

Figures in Pula 2014 2013 2014 2013

15. Borrowings (continued)Non-current liabilities Atamortisedcost 319094691 298713642 319094691 298713642Current liabilities Atamortisedcost 17053767 42996446 17053767 42996446 336 148 458 341 710 088 336 148 458 341 710 088

16. Trade and other payables Tradepayables 2769760 3261401 2667091 2773230ValueAddedTax 2213558 1504882 765574 290650Withholdingtaxpayable 1158421 104659 177987 104659Retentionpayable 52219 2238972 52219 2238972Accruedleavepay 382318 1480702 276086 1347323Accruedexpenses 2515114 2401422 1559049 2081641Advancerentfromtenants 3056139 2697607 - -SecurityDeposits 12923171 11064044 5068669 4346005Otherpayables 3095673 2555087 3095673 2522663 28 166 373 27 308 776 13 662 348 15 705 143Fair value of trade and other payables Tradepayables 28166373 27308776 13662346 15705143

17. Financial liabilities by category Theaccountingpoliciesforfinancialinstrumentshavebeenappliedtothelineitemsbelow.Thecarryingamountsofthefinancialliabilitiesineachcategoryareasfollows:

Financial liabilities at amortised cost Borrowings 336148458 341710088 336148458 341710088Advancefromtenants 3056139 2697607 - -Retentionpayable 52219 2238972 52219 2238972Securitydeposit 12923171 11064044 5068669 4346005Tradeandotherpayables 5865443 5816488 5295893 5295893 358 045 430 363 527 199 346 565 239 353 590 958

18. Revenue Rentalincome 174963670 151272429 99656754 93626539Straightlineadjustments 5620854 2711040 5679044 1543910Turnoverrent-Contingentrentincome 613542 707118 613542 707118Recoveries 41905206 37605887 22243625 20486744 223 103 272 192 296 474 128 192 965 116 364 311

RentalincomewerepledgedassecurityforloanavailedfromBarclaysBankofBotswanaLimitedasstatedinnote15.


66

Group Company

Figures in Pula 2014 2013 2014 2013

19. Operating profit Operatingprofitfortheyearisstatedafteraccountingforthefollowing:

Operating lease charges Leaserentalsonoperatinglease• Contingentamounts 16182174 14303527 8995003 8086596

Baddebtsexpense 403155 818369 403155 741006Cateringexpenses 752187 1133669 26153 14046Cleaning 2176659 1807836 828038 974604Consultingandprofessionalfee 1946303 1455869 1361252 12794004Depreciationonproperty,plantandequipment 1178745 961419 373100 351288Employeecosts 12803144 12956074 10886882 11180008Insurance 1561855 961234 982182 914284Pestcontrol 1067299 999433 1067299 999433Petrolandoil 1508895 562606 71674 28185(Profit)/lossonexchangedifferences (1138312) 5748513 (910705) 4550837Repairsandmaintenance 6571620 6727518 4356183 4955198Securityfees 4451215 3295714 2426130 1939494Utilities 27388393 24069960 16018071 14782964

Included in (other income)/operating expenses Foreignexchangeloss/(gain)onrevaluationofcashandcash 92794 (602595) 92794 (602595)equivalents Foreignexchangegainonrevaluationoffinancialassets (43146035) (48277957) (42918428) (48277957)Foreignexchangelossonrevaluationoffinancialliabilities 34160473 29735039 34160473 29735039

20. Investment revenue Interest revenue Debentures - - 20379333 20208174InterestIncomefromcashandcashequivalents 69295 428908 69295 428908 69 295 428 908 20 448 628 20 637 082

21. Fair value adjustments Investmentproperty(Fairvaluemodel) 244605155 42281629 200121286 31065321ImpairmentofInvestmentProperty - (1800000) - (1800000) 244 605 155 40 481 629 200 121 286 29 265 321

Impairmenttoinvestmentpropertyrepresentsthereductioninfairvalueofcertainpropertiesasvaluedbyanindependentvaluer,basedonmarketconditions.Thereductioninvaluedoesnotindicatecashlosstothecompany.


67

Group Company

Figures in Pula 2014 2013 2014 2013

22. Finance costs InterestpaidtoFirstNationalBankBotswanaLimited 5094317 9030921 5094317 9030921InterestpaidtoBarclaysBankofBotswanaLimited 7866122 6191882 7866122 6191882Amortisationofdebtissuecosts 703520 646506 703520 646506 13 663 959 15 869 309 13 663 959 15 869 309

23. Taxation Major components of the tax expense (income) Current Foreignwithholdingtax-currentperiod 1760577 - - -Foreignwithholdingtax-recognisedincurrenttaxforprior 681210 - - -periods 2 441 787 - - -Deferred Originatingandreversingtemporarydifferences 68397532 13315104 42889692 3208398 70 839 319 13 315 104 42 889 692 3 208 398Reconciliation of the tax expense Reconciliationbetweenapplicabletaxrateandaverageeffectivetaxrate. Applicabletaxrate 22.00% 22.00% 22.00% 22.00%

Permanentdisallowance’s (19.40)% (14.16)% (21.99)% (17.06)%Fairvaluesurplusconsideredforcapitalgainstax 17.04% (1.68)% 12.74% (2.03)%Effectsofdifferentcountrytaxrate (1.78)% 0.89% -% -%Withholdingstaxonforeigndividends 0.64% -% -% -% 18.50 % 7.05 % 12.75 % 2.91 %

IntheprioryearnoprovisionfortaxhadbeenmadeasthegrouphasnotaxableincomeduetotaxlossesavailableforsetoffandtaxincentivesinTanzaniaforMlimaniHoldingsLimited,asstatedbelow.TheestimatedtaxlossforthecompanyinBotswanaavailableforsetoffagainstfuturetaxableincomeisP16488216(2013:P7585096). MlimaniholdingsLimitedhasbeengrantedstrategicinvestors’statusbytheGovernmentofTanzaniaunderwhich,MlimaniHoldingsLimitedwillstartpayingcorporationtaxafterrecoveryofitsinvestment.ThetaxincentivesgrantedbytheGovernmentofTanzaniatothesubsidiaryhasremainedinforcethroughforthereportingperiod.

24. Auditors’ remuneration Fees 588502 405300 457788 317300


68

Group Company

Figures in Pula 2014 2013 2014 2013

25. Other comprehensive income Components of other comprehensive income - Group - 2014

Gross Tax NetExchange differences arising on translating of foreign operations Exchangedifferencesarisingduringtheyear 21031036 - 21031036Components of other comprehensive income - Group - 2013

Gross Tax Net Exchange differences on translating foreign operations Exchangedifferencesarisingduringtheyear 34791243 - 34791243

26. Operating lease arrangements

Operatingleasesaslessor Propertyrentalincomeearnedduringtheyearissetoutinnote18.Atthebalancesheetdate,thecompanyhadcontractedwithitstenantsforthefollowingfutureminimumcontractualleasepayments:- Rental Income Notmorethanoneyear 170092238 148890133 105230865 88663366Laterthanoneyearandnotlatterthanfiveyears 328593061 395319443 245768223 269924616Laterthanfiveyears 35708979 45204903 35708979 45204903 534 394 278 589 414 479 386 708 067 403 792 885

Operatingleasesrelatetovariousinvestmentpropertiesownedbythegroup,averageleaseyearsbetween1to5yearswiththeexceptionofafewleases,whicharebetween10to25years.Averageannualescalationontheseleasesis9%.Someoftheseleaseshaveanoptiontorenewforfurtheryears,atmarketrelatedrates,atthetimeofsuchrenewal.Thelesseesdonothaveanoptiontopurchasethepropertyattheexpiryoftheleaseyear. TwooftheleaseshavecontingentrentoptionandaccordinglyanamountofP613542(2013:P707118)isrecognisedintheincomestatementascontingentrentincome. Operating leases as lessee TurnstarHoldingsLimited Oneoftheleasesforalandisheldundera75yearleasecommencingfrom1April2001expiringon31March2076.UponexpiryoftheleaseperiodthepropertywillreverttotheLessorwiththedevelopmentthereon.Considerationforthisleaseispayableattherateof10%ofthegrossrentalsreceivedfromthepropertybuiltonthisland,netofoperatingexpensesforthefirst10years.Thereafter,therentalincreasesby2.5%ofthegrossrental(netofrecoveries)everyfiveyearsupto40thyearoflease.Theleaserentalsareheldat20%for40thyearto50thyearandthereafterat25%from51styeartothe75thyear.TheserentalpaymentsarerecognisedascontingentrentexpensesduringtheyearamountingtoP8995003(2013:P8086596).


69

Group Company

Figures in Pula 2014 2013 2014 2013

26. Operating lease arrangements (continued)Witheffectfrom1February2013,thecompany’smanagementhasrenegotiatedtheleasewiththelessor(RomanCatholicChurch)aspertheaddendum,rentwillbecalculatedatanagreedpercentageasmentionedaboveongrossrentalincomebilled.Thischangeintherenalcalculationis

Futureleasingchargesforthelandarebasedat12.5%ofthegrossrentalsreceived,netofoperatingexpenses,whichcannotbeestimatedreliablybeyondoneyear.EstimatedchargesfortheimmediatefollowingyearwouldbeP10354929(2013:P8086596). MlimaniHoldingsLimited Theleaseoflandisheldundera50yearsgroundleasefromtheUniversityofDaresSalaamcommencingfrom01October2004expiringon30September2054,subjecttoafurther35yearsrenewal.Considerationfortheleaseispayableattherateof10%ofthegrossrentalsreceivedfromthepropertybuiltonthislandnetofoperatingcosts.TheserentalpaymentsarerecognisedascontingentrentexpensesduringtheyearamountingtoP7187171(2013:P6216931). Futureleasingchargesforthelandarebasedat10%ofthegrossrentalsreceived,netofoperatingexpenses,whichcannotbeestimatedreliablybeyondoneyear.EstimatedchargesfortheimmediatefollowingyearwouldbeP7905888(2013:P6216931).

27. Cash generated from operationsProfitbeforetaxation 383010709 144821291 311977458 110228492Adjustments for: Depreciationandamortisation 1178745 961419 373100 351288Profitonforeignexchange (7847250) (19145513) (7847250) (19145513)Financeincome (69295) (428908) (20448628) (20637082)Financecosts 13663959 15869309 13663959 15869309Fairvalueadjustments (244605155) (40481629) (200121286) (29265321)Movementsinoperatingleaseassets (6423408) (3591173) (5679045) (1543910)Professionalfeestowardsacquisition - 12470310 - 12470310Dividendincome - - (15845193) (6130890)Changes in working capital: Tradeandotherreceivables (1511548) 7344706 65384 1219098Prepayments - 3270206 - 3270206Tradeandotherpayables 857597 2265915 (2042795) (65898)Unclaimeddebentureinterestanddividendpayable 37001 121039 37001 121039 138 291 355 123 476 972 74 132 705 66 741 128

28. Tax paid Balanceatbeginningoftheyear 2325082 1351634 340700 1351634Currenttaxfortheyearrecognisedinprofitorloss (2441787) - - -Balanceatendoftheyear (2057548) (2325082) (606970) (340700) (2 174 253 ) (973 448 ) (266 270 ) 1 010 934


70

Group Company

Figures in Pula 2014 2013 2014 2013

29. Dividends paid Balanceatbeginningoftheyear (46703290) (25645861) (46703290) (25645861)Dividendsanddebentureinterestdeclared (97266113) (91331279) (97266113) (91331279)Balanceatendoftheyear 53210285 46703290 53210285 46703290 (90 759 118 ) (70 273 850 ) (90 759 118 ) (70 273 850)

30. Basic and diluted earnings per linked unit Basic and diluted earnings per linked unit is calculated by dividing the earnings attributable to the Linked unit holders by the weighted average number of Linked unit holders in issue during the year. Basic and diluted earnings attributable to linked unit holders -fromcontinuedoperations 312171390 131506187 269087766 107020094Basicearningsperlinkedunit(inpula) 0.546 0.234 0.470 0.191Profitfromcontinuingoperations(inpula) 0.546 0.234 0.470 0.191Profitfromdiscontinuedoperations(inpula) - - - -Dilutedearningsperlinkedunit(inpula) 0.546 0.234 0.470 0.191Weightedaveragenumberoflinkedunits(asatyearend) 572153603 561432498 572153603 561432498Weightedaveragenumberoflinkedunits(includingissuesafter 572153603 561432498 572153603 561432498yearend)

31. Directors linked unit holdings Directors GHAbdoola-Beneficial 105182612 106070179 105182612 106070179C.M.Lekaukau-Beneficial 500000 500000 500000 500000N.W.Armstrong-Beneficial 500000 500000 500000 500000A.J.Lemo-Beneficial - 350000 - 350000I.Nshakazhogwe-Beneficial 2179340 2179340 2179340 2179340 108 361 952 109 599 519 108 361 952 109 599 519

TheDirectorshadthebeneficialinterestinTurnstarHoldingsLimitedasatyearend.


71

Group Company

Figures in Pula 2014 2013 2014 2013

32. Shareholders informations Top ten linked unit holders

StanbicNomineesBotswana(Proprietary)LimitedRE:BIFM 79567686 114955652 79567686 114955652StanbicNomineesBotswana(Proprietary)LimitedRE:AG 85404358 85404358 85404358 85404358BPOPF GHGroup(Proprietary)Limited 105182612 36070179 105182612 36070179FNBNOMSBW(PTY)LTDRE:FAMBPOPF1-10001028 25032632 - 25032632 -FNBNOMSBW(PTY)LTDRE:BIFMBPOPLFWP 13821699 - 13821699 -10001027 SCBN(PTY)LTDRE:BIFMDPF 14070114 - 14070114 -SCBN(PTY)LTDRE:AG211/002 22991923 22991923 22991923 22991923FNBNOMINEES(PTY)LTDRE:CFMBPOPF10001011 - 11887971 - 11887971MOTORVEHICLEACCIDENTFUND 16950000 - 16950000 -StanbicNomineesBotswanaRE:GHGroup - 70000000 - 70000000AssociatedInvestmentandDevelopmentCorporation 77974649 77974649 77974649 77974649(Proprietary)Limited FNBBWNOMS(PTY)LTDRE:IAMBPOPFP10001031 - 23513850 - 23513850FNBNOMSBW(PTY)LTDRE:BIFMBPOPFACTIVE 40878679 34199719 40878679 3419971910001025 481 874 352 476 998 301 481 874 352 476 998 301Linked unit holder classification The spread of Linked unit holders as at year end between public and non public was as follows: (in percentage) Public 41 38 41 38NonPublic 59 62 59 62 100 100 100 100


72

Group Company

Figures in Pula 2014 2013 2014 2013

33. Business combinations Aggregated business combinations Investmentproperty - 525071027 - -Property,plantandequipment - 2844883 - -Operatingleaseasset - 5073952 - -Tradeandotherreceivables - 8485425 - -Cashandcashequivalents - 6041650 - -Deferredtax - (64505466) - -Tradeandotherpayables - (9271820) - -Totalidentifiablenetassets - 473739651 - -Goodwill - 42762109 - - - 516 501 760 - -Consideration paid Cash - (310561093) - -Equity-77558140linkedunitsinTurnstarHoldingsLimited - (133400001) - -Additionalequity-42174806linkedunitsinTurnstarHoldings - (72540666) - -Limited - (516 501 760 ) - -Net cash outflow on acquisition Cashconsiderationpaid - (516501760) - -Cashacquired - 6041650 - - - (510 460 110 ) - -Island View (Proprietary) Limited Intheprioryearthecompanyacquired100%ofthevotingequityinterestinIslandView(Proprietary)LimitedwhichresultedinthecompanyobtainingcontroloverIslandView(Proprietary)Limitedandits100%ownedsubsidiaryMlimaniHoldingsLimited.

GoodwillofP42762109(USD6146170)arisingfromtheacquisitionconsistslargelyofthesynergiesandeconomiesofscaleexpectedfromcombiningtheoperationsoftheentities.

Fair value of assets acquired and liabilities assumed as at the acquisition date 22 February 2012 Investmentproperty - 525071027 - -Property,plantandequipment - 2844883 - -Operatingleaseasset - 5073952 - -Tradeandotherreceivables - 8485425 - -Cashandcashequivalents - 6041650 - -Deferredtax - (64505466) - -Tradeandotherpayables - (9271820) - -Totalidentifiablenetassets - 473739651 - -Goodwill - 42762109 - - - 516 501 760 - -


73

Group Company

Figures in Pula 2014 2013 2014 2013

33. Business combinations (continued)

Acquisition date fair value of consideration paid Cash - (310561093) - -Equity–77558140linkedunitsinTurnstarHoldingsLimited - (133400001) - -Additionalequity-42174806linkedunitsinTurnstar - (72540666) - -HoldingsLimited - (516 501 760 ) - -

34. Contingencies

ThegroupissuedaguaranteeinfavourofBotswanaPowerCorporationforP584145(2013:P404145).

35 Commitments

Authorised capital expenditure

Already contracted for but not provided for • Property,plantandequipment 200906 - 200906 -


74

Group Company

Figures in Pula 2014 2013 2014 2013

36. Related parties Relationships

Subsidiaries IslandView(Proprietary)Limited MlimaniHoldingsLimitedRelatedcompanies AffluenceAgencies(Proprietary)Limited AIDC(Proprietary)Limited AutoCity(Proprietary)Limited B&TTraders(Proprietary)Limited

BlueStoneHoldings(Proprietary)Limited BotswanaInsuranceFundsManagementLimited BotswanaLifeInsuranceLimited Boulavou(Proprietary)Limited Cascadelle(Proprietary)Limited CBDFillingStation(Proprietary)Limited ConsumerIndustries(Proprietary)Limited Damstock(Proprietary)Limited DeltaCafe(Proprietary)Limited DevelopmentManagementInvestment(Proprietary)Limited Eleganza(Proprietary)Limited EximBureauDeChange(Proprietary)Limited EximEnterprises(Proprietary)Limited ExponentialInvestmentsLimited Fego(Proprietary)Limited FinanceHouse(Proprietary)Limited GHFamilyHoldings(Proprietary)Limited GHInvestments(Proprietary)Limited GHGroup(Proprietary)Limited IslandViewDistributors(Proprietary)Limited IslandView(Proprietary)Limited Joe’sFillingStation(Proprietary)Limited Kelsoft(Proprietary)Limited KhumoAssetManagement(Proprietary)Limited LionMotors(Proprietary)Limited MaitekoEnterprises(Proprietary)Limited MlimaniHoldingsLimited NotwaneIndustrialEstate(Proprietary)Limited OpalInvestments(Proprietary)Limited OpalInvestments(Proprietary)Limited PetadcoPaperProducts(Proprietary)Limited


75

Group Company

Figures in Pula 2014 2013 2014 2013

36. Related parties (continued) SonatInvestments(Proprietary)Limited StanbicBankBotswanaLimited TheSquareMart(Proprietary)Limited TrackHoldings(Proprietary)Limited TshesebeInvestments(Proprietary)Limited UniBuild(Proprietary)Limited WhaleEximIndustries(Botswana)(Proprietary)Limited ZambeziMotors(Proprietary)Limited ZambeziTransportandEngineeringServices(Proprietary) Limited Directors CMLekaukau(Chairman) GHAbdoola(ManagingDirectorappointedon1June2013) INshakazhogwe JMMothlbane(ManagingDirectorresignedon31May2013) MKNteta MRAdelman(appointedon2April2013) NWArmstrong(resigned16April2014) PJBezuidenhout(appointedon2April2013) PPillar Membersofkeymanagement GHAbdoola

Related party balances

Amounts included in Trade receivable (Trade Payable) regarding related parties

KhumoPropertyAssetsManagement(Proprietary)Limited - 47763 - 47763MlimaniHoldingsLimited - - 45283 - - 47 763 45 283 47 763

Debenture asset and Investment MlimaniHoldingsLimited - - 356922311 345742124IslandView(Proprietary)Limited - - 198399513 198399513 - - 555 321 824 544 141 637

Investment in shares MlimaniHoldingsLimited-Investmentinshares - - 5 5


76

Group Company

Figures in Pula 2014 2013 2014 2013

36. Related parties (continued) Related party transactions Debenture Interest paid to related parties

GHGroup(Proprietary)Limited 13298116 5664721 13298116 5664721BotswanaInsuranceFundManagementLimited 19083748 8879006 19083748 8879006LenoHoldings(Proprietary)Limited - 53571 - 53571CMLekaukau 63215 26786 63215 26786AssociatedInvestmentandDevelopmentCorporation 9858315 - 9858315 -(Proprietary)Limited INshakazhogwe 275533 116750 275533 116750NWArmstrong 63215 26786 63215 26786LenoHoldings(Proprietary)Limited 62785 - 62785 -AssociatedInvestmentDevelopmentCorporation - 4177216 - 4177216 42 704 927 18 944 836 42 704 927 18 944 836

Dividends paid to related parties GHGroup(Proprietary)Limited 3386584 7294055 3386584 7294055BotswanaInsuranceFundManagementLimited 4859996 11466576 4859996 11466576AssociatedInvestmentDevelopmentCorporation 2510585 5399895 2510585 5399895LenoHoldings(Proprietary)Limited - 69252 - 69252CMLekaukau 16099 34626 16099 34626INshakazhogwe 70169 150923 70169 150923NWArmstrong 16099 34626 16099 34626 10 859 532 24 449 953 10 859 532 24 449 953

Rent received from related parties KhumoPropertyAssetManagement(Proprietary)Limited (489578) (516130) (489578) (516130)BotswanaInsuranceFundManagementLimited (1980694) (2014658) (1980694) (2014658)BotswanaLifeInsuranceLimited (7926715) (8107560) (7926715) (8107560)DevelopmentManagementInvestments(Proprietary)Limited (128800) (258665) (128800) (258665)

(10 525 787) (10 897 013) (10 525 787) (10 897 013) Directors Fees

CMLekaukau 186000 131400 186000 131400GHAbdoola 95345 177156 82000 135290NWArmstrong 209000 175550 209000 175550INshakazhogwe 208000 138190 208000 138190 PPillar 203019 186594 187000 132770TKgatlwane(representingBIFM) - 33880 - 33880TMoremong - 94825 - 61930MKNteta 212000 - 212000 -PJBezuidenhout 142000 - 142000 -MRAdelman 180000 - 180000 - 1 435 364 937 595 1 406 000 809 010


77

Group Company

Figures in Pula 2014 2013 2014 2013

36 Related parties (continued)Legal and professional payments NeilArmstrong 206074 272895 206074 272895

Dividend income and debenture Interest received from related parties MilimaniHoldingsLimited - - (20379333) (20208174)IslandView(Proprietary)Limited - - (15845193) (6130890) - - (36 224 526) (26 339 064)

Underwriting fees GHGroup(Proprietary)Limited - 581585 - 581585Purchase consideration as part of business combination GHGroup(Proprietary)Limited(37785829linkedunits) - 64991626 - 64991626

Issue of share and linked units debentures as part of rights offer GHGroup(Proprietary)Limited(38202339linkedunits) - 65708023 - 65708023INshakazhogwe(479340linkedunits) - 824465 - 824465MiddlewayInvestments(Proprietary)Limited(140982linked - 242489 - 242489units) - 66 774 977 - 66 774 977

Compensation to directors and other key management JMothlbane 960000 1516500 960000 1516500GHAbdoola 1140000 - 1140000 -

2 100 000 1 516 500 2 100 000 1 516 500

Aspermittedbythesaleagreementdated27June2011enteredwiththesellersofIslandView(Proprietary)LimitedandMlimaniHoldings LimitedbeingGHGroup (Proprietary)LimitedandAssociated InvestmentDevelopmentCorporation (Proprietary)Limited, thecompanywaivedsomeoftheconditionsprecedentafterthesellersexecutedadeedofguaranteeon24December2011infavourofthecompanybindingthemselvesjointlyandseverallyirrevocablyandunconditionallytoTurnastarHoldingsLimited,topaytoTurnstarHoldingsLimitedanyshortfallthatoccursduringtheguaranteeperiodending31January2023.Thefollowingareconditionsprecedentwhichwerewaived:

• confirmationof theexistence in termsof lawandduration, to thesatisfactionofTurnstarHoldingsLimited,of the tax incentivesandexemptionsgrantedtoMlimaniHoldingsLimitedbytheGovernmentofTanzaniaincludingi. anyamendmentstothePerformanceContractnecessarytogiveeffecttothetaxincentivesandexemptionsandii. theregistrationofthePerformanceContractasrequiredbylaw.

• proofofpublication,tothesatisfactionofTurnstarHoldingsLimited,oftheGovernmentNoticesconfirmingtheexistenceintermsoflawofthetaxincentivesandexemptionsgrantedtoMlimaniHoldingsLimitedandthedurationthereof;and

• thewrittenconsentoftheMinisterofFinanceandDevelopmentPlanningforBotswanatothesaleofthesharesinIslandView(Proprietary)LimitedbyGHGroup(Proprietary)LimitedandAssociatedInternationalDevelopmentCorporationtoTurnstarHoldingsLimited.


78

Group Company

Figures in Pula 2014 2013 2014 2013

36. Related parties (continued)Asperthedeedofguaranteeintheeventofdefaultthesellers,beingGHGroup(Proprietary)LimitedandAssociatedInvestmentDevelopmentCorporation(Proprietary)Limited,haveagreedtopayTurnstarHoldingsLimitedandanyshortfallwhichoccursinrelationtoreceivablebyTurnstarHoldingsLimitedinrespectofthedebentureswhichshortfalliscausedbytheimpositionuponMlimaniHoldingsLimitedoftheobligationtowithholdtaxonanyinterestwhichispayablebyMlimaniHoldingsLimitedtoTurnstarHoldingsLimitedforthedebenturesandtheprofitofMlimaniHoldingsLimitedotherwiseavailablefordistributiontoshareholdersbywayofdividend,whichshortfallistheresultoftheimpositionofincometaxonMlimaniHoldingsLimited,providedthatanysuchpaymentdoesnotexceedthesumofUSD6millionbeingthemaximumguaranteeamount.

AssecurityfordueperformancebyGHGroup(Proprietary)LimitedandAssociatedInvestmentDevelopmentCorporation(Proprietary)Limitedoftheobligationspledgeduponthembythetermsoftheaboveguaranteeandundertaking,GHGroup(Proprietary)LimitedandAssociatedInvestmentDevelopmentCorporation(Proprietary)Limitedhaveeachpledged10millionlinkedunitsinfavourofTurnstarHoldingsLimited. TherearenochangestotheconditionsrelatingtoP10millionlinkedunitspledgedeachbyGHGroup(Proprietary)LimitedandAssociatedInvestmentDevelopmentCorporation(Proprietary)Limitedinfavourofthecompany.Thepledgeremainedinforceduringthereportingperiod.

37. Directors’ emolumentsExecutive

2014 Emoluments Bonus and leave Total pay Forservicesasdirectors 2100000 120000 2220000 2013 Emoluments Bonus and leave Total pay

Forservicesasdirectors 1304000 212500 1516500

Non-executive

2014 Directors’ fees Total

Forservicesasdirectors 1406000 1406000

2013 Directors’ fees Total

Forservicesasdirectors 937595 937595


79

Group Company

Figures in Pula 2014 2013 2014 2013

38. Risk managementCapital risk management Thegroup’sobjectiveswhenmanagingcapitalaretosafeguardthegroup’sabilitytocontinueasagoingconcerninordertoprovidereturnsforshareholdersandbenefitsforotherstakeholdersandtomaintainanoptimalcapitalstructuretoreducethecostofcapital. Thecapitalstructureofthegroupconsistsofdebt,whichincludestheborrowingsdisclosedinnotes15cashandcashequivalentsdisclosedinnote13,andequityasdisclosedinthestatementoffinancialposition.

Inordertomaintainoradjustthecapitalstructure,thegroupmayadjusttheamountofdividendspaidtoshareholders,issuenewsharesorsellassetstoreducedebt. Thegroupmanagementmaintainsthethreshholdofborrowingpowersinlinewiththelimitsspecifiedbytheboardofdirectors. Thisratioiscalculatedasnetdebtdividedbytotalcapital.Netdebtiscalculatedastotalborrowings(including‘currentandnon-currentborrowings’asshowninthestatementoffinancialposition)lesscashandcashequivalents.Totalcapitaliscalculatedas‘equity’asshowninthe statementoffinancialpositionplusnetdebt. Thegroup’sstrategyistomaintainagearingratioofbetween0%to40%. ThecompanyhasavailedcreditfacilitiesfromBarclaysBankBotswanaLimited,thesecreditfacilitiesareattachedwithfinancialcovenantsas referredinnote15.Thecompanyduringtheyearhasnotbreachedanyofthecovenantsreferredto. Therehavebeennochangestowhattheentitymanagesascapital,thestrategyforcapitalmaintenanceorexternallyimposedcapitalrequirementsfromthepreviousyear. Thegearingratioat2014and2013respectivelywereasfollows: Total borrowings Borrowings 15 336148458 341710088 336148458 341710088Less:Cashandcashequivalents 13 74239026 82936100 66040234 69451972Netdebt 261909432 258773988 270108224 272258116Totalequity 1325094311 1082651001 1201702315 1023373665Total capital 1 587 003 743 1 341 424 989 1 471 810 539 1 295 631 781Gearingratio 17% 19% 18% 21%


80

Group Company

Figures in Pula 2014 2013 2014 2013

38. Risk management (continued) Financial risk managementThegroup’sactivitiesexposeittoavarietyoffinancialrisks:marketriskincludingcurrencyriskandcashflowinterestraterisk,creditriskandliquidityrisk. Thegroup’soverallriskmanagementprogramfocusesontheunpredictabilityoffinancialmarketsandseekstominimisepotentialadverseeffectsonthegroup’sfinancialperformance. RiskmanagementiscarriedoutbyagroupfinancedepartmentunderpoliciesapprovedbytheBoard.Groupfinancedepartmentidentifiesandevaluatesfinancialrisksincloseco-operationwiththegroup’soperatingmanagement.TheBoardprovidesprinciplesforoverallrisk management,aswellaspoliciescoveringspecificareas,suchasforeignexchangerisk,interestraterisk,creditrisk,andinvestmentofexcessliquidity.

Liquidity riskLiquidity risk is the risk that operations cannot be funded and financial commitments cannot bemet timeously and cost effectively.The riskarisesfromboththedifferencebetweenthemagnitudeofassetsandliabilitiesandthedisproportionintheirmaturities.Liquidityriskmanagementdealswiththeoverallprofileofthestatementoffinancialposition,thefundingrequirementsofthecompanyandcashflows.Inquantifyingtheliquidityrisk,futurecashflowprojectionsaresimulatedandnecessaryarrangementsareputinplaceinordertoensurethatallfuturecashflowcommitmentsaremetfromtheworkingcapitalgeneratedbythecompanyandalsofromavailablefinancialinstitutions’facilities Thetablebelowanalysesthegroup’sfinancialliabilitiesandfinancialassetsintorelevantmaturitygroupingsbasedontheremainingperiodatthestatementoffinancialpositiontothecontractualmaturitydate.Theamountsdisclosedinthetablearethecontractualdiscountedcash

Group Financial Liabilities At 31 January 2014 Due not more Due after one Due after Due after one than one month but not three months year month more than but not than three months one year Borrowings 3243213 9643887 4166667 319094691Tradeandotherpayables 5865443 - - -Securitydeposit - - - 12923171Retention - - 52219 -


81

Group Company

Figures in Pula 2014 2013 2014 2013

38. Risk management (continued)

At 31 January 2013 Due not more Due after one Due after Due after one than one month but not three months year month more than but not than three months one year

Borrowings 7498827 6454113 29043506 298713642Tradeandotherpayables 5816488 - - -Securitydeposits - - - 11064044Retention - - 2238972 -

Company Financial Liabilities At 31 January 2014 Due not more Due after one Due after Due after one than one month but not three months year month more than but not than three months one year

Borrowings 3243213 9643887 4166667 319094691Tradeandotherpayables 5295893 - - -Securitydeposit - - 5068669 -Retention - - 52219 -

At 31 January 2013 Due not more Due after one Due after Due after one than one month but not three months year month more than but not than three months one year

Borrowings 7498827 6454113 29043506 298713642Tradeandotherpayables 5295893 - - -Securitydeposits - - - 4346005Retention - - 2238972 -


82

Group Company

Figures in Pula 2014 2013 2014 2013


Group Financial Assets

At 31 January 2014 Due not more than one monthCashandcashequivalents 74239026Tradeandotherreceivables 11399956 At 31 January 2013 Due not more than one monthCashandcashequivalents 82936100Tradeandotherreceivables 10044884CompanyFinancialAssets At 31 January 2014 Due not more than one monthCashandcashequivalents 66040234Tradeandotherreceivables 7684232

At 31 January 2013 Due not more Due after one than one year month Otherfinancialassets - 345742129Cashandcashequivalents 69451972 -Tradeandotherreceivables 7733358 -


83

Group Company

Figures in Pula 2014 2013 2014 2013


Interest rate risk Asthegrouphasnosignificantinterest-bearingassets,however,thecompanyhassignificantinterest-bearingborrowings.Thegroup’sincomeandoperatingcashflowsaresubstantiallyindependentofchangesinmarketinterestrates.

Thegroup’sinterestrateriskarisesfromlong-termborrowings.Borrowingsissuedatvariableratesexposethegrouptocashflowinterestraterisk.During2014and2013,thegroup’sborrowingsatvariablerateweredenominatedinthePulaandUSDollar. At31January2014,ifinterestratesonPula-denominatedborrowingshadbeen0.5%higher/lowerwithallothervariablesheldconstant,pre-taxprofitfortheyearwouldhavebeen2014P265285(2013:P451507)(CompanyP265285(2013:P451507))lower/higher,mainlyasaresultofhigher/lowerinterestexpenseonfloatingrateborrowings. At31January2014,ifinterestratesonUSDollar-denominatedborrowingsandotherfinancialassetshadbeen0.5%higher/lowerwithallothervariablesheldconstant,pre-taxprofitfortheyearwouldhavebeen2014P244044(2013:P248227)(CompanyP244044(2013:1341086))onthegrouplower/higher,mainlyasaresultofhigher/lowerinterestexpenseonfloatingrateborrowings. Group cash flow interest rate riskFinancial instrument Current interest Due in less than Due in one to Due in two to Due in three to Due after five rate a year two years three years four years yearsCashincurrentbankinginstitutions- 3.00% 24327775 - - - - callaccount Shorttermdeposits 4.00% 35547262 - - - -BorrowingsinUSDLIBOR 2.08% 12887100 - - - 223261358BorrowingsinBWPatlocalrate 9.00% 4166667 16666667 16666667 16666667 45833333

Company cash flow interest rate risk Financial instrument Current interest Due in less than Due in one to Due in two to Due in three to Due after five rate a year two years three years four years yearsCashincurrentbankinginstitutions- 3.00% 24327775 - - - -callaccount Shorttermdeposits 4.00% 35547262 - - - -InvestmentindebenturesofMlimani 6.00% - - - - 356922311HoldingsLimited BorrowingsinUSDatLIBOR 2.08% 12887100 - - - 223261358BorrowingsinBWPatlocalrate 9.00% 4166667 16666667 16666667 16666667 45833333


84

Group Company

Figures in Pula 2014 2013 2014 2013

38. Risk management (continued) Credit riskCreditriskconsistsmainlyofcashdeposits,cashequivalents,andtradedebtors.Thecompanyonlydepositscashwithmajorbankswithhighqualitycreditstandingandlimitsexposuretoanyonecounter-party. CreditriskistheriskoffinanciallosstotheGroupifatenantorcounterpartytoafinancialinstrumentfailstomeetitscontractualobligationsandarisesprincipallyfromtheleaseofofficespacetotenants.TheGrouphasaddressedthisriskbydevelopingacreditpolicy,whichguidesonwhatstepstotakewhenfacedwithsuchrisk. Financialassetsexposedtocreditriskatyearendwereasfollows: Financial instrument Group - 2014 Group - 2013 Company - 2014 Company - 2013 Tradeandotherreceivables 11399956 10044884 7684232 7733358FirstNationalBankofBotswanaLimited 10612591 10436967 10612591 10436967BarclaysBankofBotswanaLimited 19879104 28333016 19879104 28333016EximBankTanzaniaLimited 6572013 5844652 - -BarclaysBankTanzaniaLimited 1551225 7563497 - -StannicMoneyMarketFundandAfricanAllianceBotswana 35547262 30678823 35547262 30678823

Foreign exchange risk ThegroupoperateswithinSub-saharaAfricaandisexposedtoforeignexchangeriskarisingfromvariouscurrencyexposures,primarilywith respecttotheUSdollar,SouthAfricanRand’sandtheTanzanianShillings.Foreignexchangeriskarisesfromfuturecommercialtransactions, recognisedassetsandliabilitiesandnetinvestmentsinforeignoperations. ThegroupownsTanzaniansubsidiarycompanywhichholdsinvestmentpropertyinTanzaniaandisaccordinglyexposedtoforeignexchange riskinrespectoffinancialassetsandliabilitiesthatarenotinthegroup’sfunctionalcurrencywhichistheBotswanaPula.Theduringtheyearthegrouphasnothedgedtheforeignexchangefluctuationsarisingfromnetinvestmentsinforeignoperations.Group At31January2014,ifthecurrencyhadstrengthenedby10%againsttheUSdollarwithallothervariablesheldconstant,pre-taxprofitfortheyearwouldhavebeenP20357155(2013:P19886705Nil)higher,mainlyasaresultofforeignexchangegainsontranslationofUSdollar denominatedfinancialassetsandborrowings.

At31January2014,ifthecurrencyhadweakenedby10%againsttheUSdollarwithallothervariablesheldconstant,pre-taxprofitfortheyearwouldhavebeenP24880967(2012:PNil)lower,mainlyasaresultofforeignexchangelossesontranslationofUSdollardenominatedfinancialassetsandborrowings.

Company At31January2014,ifthecurrencyhadstrengthenedby10%againsttheUSdollarwithallothervariablesheldconstant,pre-taxprofitfortheyearwouldhavebeenP12180644(2013:P11435565)higher,mainlyasaresultofforeignexchangegainsontranslationofUSdollardenominatedfinancialassetsandborrowings.

At31January2014,ifthecurrencyhadweakenedby10%againsttheUSdollarwithallothervariablesheldconstant,pre-taxprofitfortheyearwouldhavebeenP14887454(2013:P13976802)lower,mainlyasaresultofforeignexchangelossesontranslationofUSdollardenominatedfinancialassetsandborrowings.


85

Group Company

Figures in Pula 2014 2013 2014 2013

38. Risk management (continued)Foreign currency exposure at the end of the reporting period

Current assets DebentureUSDollarNil(Company39207838(2013:42723 - - 356922311 345742124856) TradeandotherreceivablesUSD604644 5427684 - - -Cashandcashequivalents,USDollar27726232013USD1 24879925 26161245 16756688 26161245866695(2013:USD3244016)(CompanyUSD1866695 (2013:USD3244016))

Liabilities Borrowings2013:USD25814819(2013:USD30623107) 239691914 241710088 239691914 241710088(CompanyUSD25814819(2013:USD30623107)) TradeandotherpayablesUSD1566432 14544401 - - -

Exchange rates used for conversion of foreign items were: USD 0.11 0.14 0.11 0.14

39. Fair value measurementFair value measurement of financial instruments FinancialassetsandfinancialliabilitiesmeasuredatfairvalueinthestatementoffinancialpositionaregroupedintothreeLevelsofafairvaluehierarchy.ThethreeLevelsaredefinedbasedontheobservabilityofsignificantinputstothemeasurement,asfollows: •Level1:quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities •Level2:inputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectlyorindirectly •Level3:unobservableinputsfortheassetorliability. ThefollowingtableshowstheLevelswithinthehierarchyoffinancialassetsandliabilitiesmeasuredatfairvalueat31January2014. Financial assets at Level 2 Investmentindebentures-MlimaniHoldingsLimited - - 356922311 345742124

Financial liabilities at level 2 BarclaysBankofBotswanaLimited-Loan1 280672833 - 280672833 -BarclaysBankofBotswanaLimited-Loan2 124333333 - 124333333 - 405 006 166 - 405 006 166 -


86

Group Company

Figures in Pula 2014 2013 2014 2013

39. Fair value measurement (continued)TherewerenotransfersbetweenLevel1andLevel2in2013.

Measurement of fair value of financial instruments ThevaluationtechniquesusedforinstrumentscategorisedinLevels2and3aredescribedbelow:

US-dollarloanfromBarclaysBankofBotswanaLimited(Level2) ThefairvaluesoftheUS-dollarloanareestimatedusingadiscountedcashflowapproach,whichdiscountsthecontractualcashflowsusingdiscountratesderivedfromobservablemarketinterestratesofsimilarloanswithsimilarrisk.TheinterestrateusedforthiscalculationisLIBORplus1.85%.

BWPloanfromBarclaysBankofBotswanaLimited(Level2) ThefairvaluesoftheBotswanaPulaloanareestimatedusingadiscountedcashflowapproach,whichdiscountsthecontractualcashflowsusingdiscountratesderivedfromobservablemarketinterestratesofsimilarloanswithsimilarrisk.Theinterestrateusedforthiscalculationisprimeminus2%.

Fair value measurement of non-financial assets ThefollowingtableshowstheLevelswithinthehierarchyofnon-financialassetsmeasuredatfairvalueonarecurringbasisat31January2014. Theinvestmentpropertyfairvalueinformationdisclosedbelowarebasedonindependentvaluersreport.Theindependentvaluationwascarriedout1February2014.Refertodetailsundernote4. Investment property Level 3 Ex-Bifmhouse 31700000 - 31700000 -Plot63CommercePark 11400000 - 1400000 -Plot14444Citroen 8500000 - 8500000 -TapologoApartments 29500000 - 29500000 -MogoditshaneFlats 11700000 - 11700000 -NzanoShoppingCentre 93300000 - 93300000 -GameCity 680000000 - 680000000 -SupaSaveMall 23800000 - 23800000 -Fairgrounds 115482000 - 115482000 -MlimaniCity 747755839 - - -Lessoperatingleaseasset (31593921) - (23728342) - 1 721 543 918 - 981 653 658 - Informationaboutvaluationtechniquesandinputsusedtoderivelevel3fairvalues


87

Group Company

Figures in Pula 2014 2013 2014 2013

39. Fair value measurement (continued) Company

Investment property - Retail segment RetailsegmentcomprisesofthefollowingpropertiesGameCityShoppingCentre,NzanoShoppingCentre,SuperSaveMall.ThefairvaluesofthesepropertiesdeterminedbyindependentvaluersisPula797000000.Thefairvaluesofthesepropertiesareestimatedusinganincomeapproachwhichcapitalisestheestimatedrentalincomestream,netofprojectedoperatingcosts,usingadiscountratederivedfrommarketyieldsimpliedbyrecenttransactionsinsimilarproperties.Theestimatedmarketrentalpersquaremeterusedbythevaluerintheprojectedcashflowsarewithintherangeoffuturecontractualrentagreedbythecompanywithitstenants.Theestimatedrentalstreamtakesintoaccountcurrentoccupancylevel,estimatesoffuturevacancylevels,rentalescalationasperleaseagreementssignedbythetenants. Investment property - Commercial segment Commercial segment comprises of the following propertiesTurnstar House, Fairgrounds, Plot 63 in Commerce Park and Plot 14444Hyundai.TherefairvaluesofthesepropertiesdeterminedbyindependentvaluersisPula187600000.Thefairvaluesofthesepropertiesareestimatedusinganincomeapproachwhichcapitalisestheestimatedrentalincomestream,netofprojectedoperatingcosts,usingadiscountratederivedf rommarketyieldsimpliedbyrecenttransactionsinsimilarproperties.Theestimatedmarketrentalpersquaremeterusedbythevaluerintheprojectedcashflowsarewithintherangeoffuturecontractualrentagreedbythecompanywithitstenants.Theestimatedrentalstreamtakesintoaccount currentoccupancylevel,estimatesoffuturevacancylevels,rentalescalationasperleaseagreementssignedbythetenants.Investment property - Residential segment Residential segment comprises of the following properties Mogodithshane Flats andTaplogo Apartments.There fair values of thesepropertiesdeterminedbyindependentvaluersisPula41200000.Thefairvaluesofthesepropertiesareestimatedusinganincomeapproachwhichcapitalisestheestimatedrentalincomestream,netofprojectedoperatingcosts,usingadiscountratederivedfrommarketyieldsimpliedbyrecenttransactionsinsimilarproperties.Theestimatedmarketrentalpersquaremeterusedbythevaluerintheprojectedcashflowsarewithintherangeoffuturecontractualrentagreedbythecompanywithitstenants.Theestimatedrentalstreamtakesintoaccountcurrentoccupancylevel,estimatesoffuturevacancylevels,rentalescalationasperleaseagreementssignedbythetenants. Themostsignificantinputs,allofwhichareunobservable,arethediscountrate,longtermrevenuegrowthrate,longtermexpendituregrowthrate, estimated rental value, reversionary capitalisation rate and assumptions about vacancy levels.The estimated fair value increases if theestimatedrentalincreases,longtermrevenuegrowthrateincreases,longtermexpenditureratereduces,rentalescalationincreases,discountrateandreversionarydiscountratedeclinesTheoverallvaluationsaresensitivetoalltheseassumptions.Thethevaluationwasdoneon1February2014andtheinputsusedinthevaluationsfortheyearended31January2014were:


88

Group Company

Figures in Pula 2014 2013 2014 2013

39. Fair value measurement (continued) Assumptions Retail Commercial Residential Averagediscountrate 8.25-12% 9-10% 5-9.5%Averageoccupancyrate 100% 96% 88%Long-termrevenueGrowthRate-Aspervaluation 6% 5% 6%Long-termexpenditureGrowthRate-AsperValuation 8% 8% 8%Discountedcashflowperiod 5 5 5Averageleaseperiod 2-25Yrs 3-5years 1-2yearsAverageEscalation/Rental-FromMDA 8-9% 8-10% 9-10%CurrentrentalperMonth(sqm)/(unit) P84.314 P80.62 P5388.45GrossrentalperMonth(sqm)/(unit) P90.277 P89.86 P5502.86MarketrentalperMonth(sqm)/(unit) P90.9737 P76.90 P5858.25

Mlimani Holdings Limited MlimaniHoldingsLimitedpropertiescomprisesof the followingpropertiesRetail,OfficePark, ConferenceandHousingcentrewith there fairvaluesdeterminedbyindependentvaluersatUSD41400000,USD29600000,USD350000andUSD4800000respectively.Thefairvaluesofthesepropertiesareestimatedusinganincomeapproachwhichcapitalisestheestimatedrentalincomestream,netofprojectedoperatingcosts,usingadiscountratederivedfrommarketyieldsimpliedbyrecenttransactionsinsimilarproperties.Theestimatedmarketrentalpersquaremeterusedbythevaluerintheprojectedcashflowsarewithintherangeoffuturecontractualrentagreedbythecompanywithitstenants.Theestimatedrentalstreamtakesintoaccountcurrentoccupancylevel,estimatesoffuturevacancylevels,rentalescalationasperleaseagreementssignedbythetenants.

Assumptions Retail Office Park Conference Centre HousingIncomecapitalisationrate - - - 10.5%Discountrate 82.5% 9% 13% -Averageoccupancyrate 90-100% 90-100% - 100%Long-termrevenueGrowthRate-Aspervaluation 6% 6% - -Long-termexpenditureGrowthRate-AsperValuation 7% 7% - -Discountedcashflowperiod 5years 5years - -Averageleaseperiod 5-10years 5-6years - -AverageEscalation/Rental-FromMDA 3-5% 3-5% - -AveragerentalperMonth(sqm)/(unit) USD19.23 USD22.24 - -MarketrentalperMonth(sqm)/(unit) USD21.62 USD25.00 - -Grossrentpermonth(US$) - - 1550-1365 800-1400


89

Group Company

Figures in Pula 2014 2013 2014 2013

39. Fair value measurement (continued) The reconciliation of the carrying amounts of non- financial assets classified within Level 3 is as follows: Balanceat1February2013 1404194076 - 781480702 --additionstoinvestmentproperty 51670 - 51670 --increaseinfairvalueofinvestmentproperty 265123155 - 220639286 --exchangedifferencesontranslatingforeignoperations 72693017 - - -Balance at 31 January 2014 1 742 061 918 - 1 002 171 658 -

Sensitivity analysis for recurring fair value measurements Thegroupcarriedoutfairvaluationofalltheproperties.Thesevaluationswerebasedonphysicalinspection.Thevaluationassumptionscontainedunobservableinputswhichhavebeenmentionedabove.Anychangestotheunobservableinputswouldhaveanupwardordownwardimpactonthenetprofitbeforetaxandtheinvestmentpropertyvalues.


90

40. Segment ReportPrimary segment Geographical segment 2014 2013 2014 2013 2014 2013 Figures in Pula Figures in Pula Botswana Botswana Tanzania Tanzania Consolidated Consolidated

Revenuesfromexternalcustomers 128192965 116364400 94910307 75932074 223103272 192296474Intersegmentrevenues - - - - - -Total segment revenues 128 192 965 116 364 400 94 910 307 75 932 074 223 103 272 192 296 474Segmentpropertydirectandindirectexpenses 35047763 33807104 28483843 22012849 63531606 55819953Segment operating profit 93 145 202 82 557 296 66 426 464 53 919 225 159 571 666 136 476 521

Segment Assets 1 085 497 109 880 563 180 819 496 652 700 283 896 1 904 993 761 1 580 847 076

Secondary segment - Operating segment

2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 Figures in Pula Figures in Pula Revenues Retail Retail Commercial Commercial Consolidated Botswana Botswana Tanzania Tanzania Botswana Botswana Tanzania Tanzania Rentalincomefromexternalcustomers99635180 87621172 49747315 41442714 28557787 28743228 45162990 34489360 223103272 192296474Intersegmentalrevenues - - - - - - - - - -Total segment revenues 99 635 180 87 621 172 49 747 315 41 442 714 28 557 787 28 743 228 45 162 990 34 489 360 223 103 272 192 296 474Segmentexpenses29740419 28387163 14576505 18754985 5307344 5419941 13907339 3257863 63531607 55819952

Segment operating profit 69 894 761 59 234 009 35 170 810 22 687 729 23 250 443 23 323 287 31 255 651 31 231 497 159 571 665 136 476 522

Reconciliation of group net profit before tax 2014 2013 Totalreportingsegmentoperatingprofit 159571665 136476521Professionalfeetowardsacquisition - 12470310Salariesandwages -12803144 -12956074Lossonexchangedifference -34160473 -35483552Profitonexchangedifferences 43146035 48880552Fairvalueadjustments 244605155 42281634Financeincome 69295 428908Otherincome 3652581 2185023Sundryincome 2120035 1021592Corporateexpenses -9526480 -7873689Operating profit 396 674 668 162 490 605Impairmentoffairvalues - -1800005Financecosts -13663959 -15869309Group profit before tax 383 010 709 144 821 291


91

Noticeisherebygiventhatthe2014AnnualGeneralMeetingofTURNSTARHOLDINGSLIMITEDwillbeheldat17:30hoursonThursday14August2014atGaboroneSunHotel,Gaborone,Botswanafortransactingforthefollowingbusinessagenda.

Agenda:1. Toreadthenoticeconveningthemeeting.

2. Toreceive,considerandadopttheAuditedFinancialStatementsfortheyearended31January2014togetherwiththeReportofAuditorstotheBoardofDirectors.

3. Toapprovethedistributionofdividendandpaymentofinterestasrecommendedbydirectors.

4. Tore-electthefollowingdirectorsofthecompany

CuthbertMLekaukau MokgadiKNteta

Whoretirebyrotationintermsof63oftheArticlesofAssociationand,beingeligible,offerthemselvesforre-election.

5. Toapprovetheremunerationofthedirectorsfortheyearended31January2014.

6. ToappointAuditorsfortheensuingyearandauthorizethedirectorstofixtheirremuneration.

7. TheansweringbytheDirectorsandManagementofquestionsputbyholdersoflinkedunitsinrespectoftheaffairsandthebusinessofthecompany.

Amemberentitledtoattendandvotemayappointaproxy(whoneednotbeamemberofthecompany)toattendandvoteforhim/heronhis/herbehalf.Theinstrumentappointingsuchaproxymustbelodgedatorpostedtotheregisteredofficeofthecompanynotlessthan48hoursbeforethemeeting.

ByorderoftheBoard

LEO BUSINESS SERVICES (PROPRIETARY) LIMITEDCompany Secretaries

Gaborone.12June2014

REGISTERED OFFICE:Plot50370,AcumenParkFairgroundsPOBox1172Gaborone

Notice of the 2014 Annual General Meeting

92

Form of Proxy

I/We_____________________________________________________________________________________________________________

beingamemberofTurnstarHoldingsLimiteddoherebyappoint

_____________________________________________________________of___________________________________________________

orfailinghim___________________________________________________________________________

of____________________________________________________________________________________orfailinghimthe

Chairmanofthemeetingasmy/ourproxytoattend,speakandvoteforme/usonmy/ourbehalfattheGeneralmeetingofmembersofthecompanytobeheldonandatanyadjournmentthereof.

Signedthisthe____________________________dayof_______________________2014.

Signature:

Name:

Capacity:

93

94

Notes

95

Notes

96

HeadquartersTurnstar House1131-37 Queens Road, Main MallGaborone, BotswanaPhone: (+267) 393 6105Fax: (+267) 393 6169E-mail: [email protected]: www.turnstar.co.bw

Documents

Annual Report Turnstar annual report... · 2016-03-21 · to develop. Mlimani has been a huge success and demand for the units is high. The Turnstar Group is bullish regarding growth