RNART IMITED ANNUAL EPORT Furnmart 2018 Annual Report.pdf · CHAPTER 02 8-9 MANAGEMENT REPORT CHAPTER 03 10-11 DIRECTORS’ REPORT CHAPTER 04 ... Leonard Godfrey Waldeck Independent,

FURNMART LIMITED ANNUAL REPORT

3Furnmart Annual Report 2018 3Furnmart Annual Report 2018

IN THIS REPORT

WHO WE ARE

5 GROUP PROFILE5 MISSION STATEMENT

CONTENTS

CHAPTER 016-7 BRIEF PROFILE OF DIRECTORS

CHAPTER 028-9 MANAGEMENT REPORT

CHAPTER 03 10-11 DIRECTORS’ REPORT

CHAPTER 04 12 CORPORATE GOVERNANCE

13-18 REPORT OF THE INDEPENDENT AUDITOR

CHAPTER 05

ANNUAL FINANCIAL STATEMENTS19 CONSOLIDATED AND SEPARATE STATEMENTS OF COMPREHENSIVE INCOME

20 CONSOLIDATED AND SEPARATE STATEMENTS OF FINANCIAL POSITION

21 CONSOLIDATED AND SEPARATE STATEMENTS OF CHANGES IN EQUITY

22 CONSOLIDATED AND SEPARATE STATEMENTS OF CASH FLOWS

23-34 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

35-36 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

37-46 FINANCIAL RISK MANAGEMENT

47-63 NOTES TO THE ANNUAL FINANCIAL STATEMENTS

CHAPTER 06 64 SHAREHOLDERS’ ANALYSIS AND DIARY

CHAPTER 07 65 SHARE STATISTICS

CHAPTER 08 66 CORPORATE INFORMATION

CHAPTER 09 67 NOTICE OF THE ANNUAL GENERAL MEETING

CHAPTER 10 LOOSE PROXY FORM

4 2017 Furnmart Annual Report

5Furnmart Annual Report 2018 5Furnmart Annual Report 2018

GROUP PROFILE

Furnmart Limited retails domestic furniture and

electrical appliances through its network of stores

in Botswana, South Africa and Namibia. It aims

at the majority of households in its market and

concentrates on cultivating relationships with its

customers through its ‘value for money’ and ‘smart

credit’ policies. Furnmart Limited is listed on the

Botswana Stock Exchange.

MISSION STATEMENT • Wearedeterminedtobethemarketleaderinretailing‘value

for money’ furniture and electrical appliances

• Wewillachievethisby:

» offering service excellence to all our partners, customers,

staff, suppliers and shareholders;

» valuing our people and helping them to become the best;

» constantly adapting to market needs and opportunities;

and

» working as a team and encouraging the free flow of

information and ideas.

WHOWEARE

01


John Tobias MynhardtChairman [B. Comm (UCT)]

After completing his Bachelor of Commerce degree at the University of Cape Town in

1968, John Mynhardt started work in the family trading store in Francistown. He has

remained involved in the Botswana retail industry ever since. During this time he has

developed extensive business interests in Botswana and he remains actively involved

as chairman of all the companies in the Cash Bazaar Holdings Group as well as and

including Furnmart Limited and the companies in the group’s Tourism and Hospitality

division. During his career he has served as a member of the Francistown Town

Council, the Boards of the Botswana Housing Corporation and First National Bank of

Botswana. He is currently a member of the University of Botswana Council.

Tobias Louis John Mynhardt Deputy Chairman [B.Comm (Hons-UCT) MSc Econ(LSE)]

Tobias Mynhardt is the Deputy Chairman of the CBH Group which has investments

in a number of industries including property, retail, tourism, hospitality, building

manufacturing and supplies and financial services. He has assumed responsibility for

various CBH Group divisions since being appointed a director in 2003. Mr Mynhardt

assisted with the listing of Furnmart in 1998 and joined the management team in

2006. He was appointed Deputy Managing Director of Furnmart in 2007 and was

Managing Director from 2009 until his appointment as Deputy Chairman in 2016.

Mr Mynhardt led the 2011 listing of New African Properties Limited and has been

Managing Director of this associated company since. Mr Mynhardt’s early career

encompassed a broad exposure to the investment industry through an investment

advisory and fund of hedge funds firm in London, following the completion of

his Masters in Economics from the London School of Economics. In 2016 he was

appointed to the board of Barclays Bank of Botswana Limited as a Non Executive

Director.

DanielServaasleRoux:ManagingDirector[B.Com (Hons- UJ) (Financial Management), M.Com (Business Management), ACMA]

Serniel le Roux has more than 22 years’ experience in the furniture retail industry

and joined the Furnmart Group in 2011. His experience includes statutory reporting,

financial accounting, management accounting, treasury, micro-lending and general

management. Serniel has extensive knowledge of Southern African furniture retail

markets. He was appointed as Managing Director in July 2016.

BRIEF PROFILE OF

DIRECTORS

7Furnmart Annual Report 2018

Fact Badzile LebalaNon Executive Director

Fact Lebala left the Botswana Police Force after 28 years’

of service with the rank of Superintendent of Police and

was awarded the Police Medal for Long Service and Good

Conduct. During this career he was Commanding Officer for

all the major Police Districts in Botswana and was attached

to Scotland Yard in London for nine months. He has retired

from the CBH group after serving as a director in the group

for over 28 years. He continues to be a board member in

Furnmart Limited.

Leonard Godfrey WaldeckIndependent, Non Executive Director [Dip.Acc]

Len Waldeck has a Diploma in Accounting from Rhodes

University (PE) & served his articles with Starling, Treasure,

Blake and Company in Port Elizabeth. He has more than

23 years of experience in the furniture retail industry in

credit, finance and retail operations. He has served in

several different capacities, such as Financial Director,

Group Credit Director & Joint Managing Director, with the

Beares, McCarthy Retail, Relyant & Ellerines Groups until his

retirement in 2007. He is also a member of the Institute of

Directors, South Africa.

Jerome Patrick McLoughlinIndependent, Non Executive Director [B.Com, Dip Acc (Natal), CA(SA)]

Jerome McLoughlin is a qualified Chartered Accountant

and completed articles with Deloitte (Durban). He started

a career in public audit practice and currently serves as a

director of a firm of registered auditors known as Hodkinson

Inc. He also serves as a non-executive director to companies

and as trustee on a number of trusts. He has substantial

experience in an advisory capacity and in property

investment.

Subbarao VenkataramaniNon Executive Director [B.Com, ACA, ACS]

Subbarao Venkataramani qualified as a Chartered

Accountant in 1978. He has more than 39 years of

experience in financial management, treasury and

accounting as head of finance in various listed companies.

He joined Furnmart in May, 1998 as Group Financial

Manager. He became Chief Financial Officer of Furnmart

Group in 2007. He was fully involved in the implementation

of Argility Furniture Retail operations and information

systems and involved in the issue and listing of rights shares

and bonds. He was appointed as the Finance Director on

15 August 2011 and he continued till 12 July 2016 when he

relinquished his position as head of finance. He continues

to be a board member in Furnmart Limited and is currently

responsible for secretarial and compliance matters. He is also

overseeing the microlending activities of CBH Group.

Eric OdendaalDirector Operations

Eric Odendaal joined Furnmart in August 1997 as Group

Operations Manager. He has overseen the expansion of the

business in Botswana and RSA and is fully involved in the

opening of Home Corp Stores in both these countries. He

has more than 40 years of experience in the furniture retail

industry. He is responsible for the day to day operations

of Furnmart and Home Corp stores in Botswana and South

Africa.


02 MANAGEMENT

REPORT

OVERVIEW

Trading was strong in this first half of the financial year

but considerably weaker since the half year. Of concern, in

general, is that this weakening trend has continued into the

new financial year.

This was the first full financial year subsequent to closing

the Group’s Zambian operations. The main reason for the

improvement in Group results stemmed from the elimination

of the material losses that the Group previously incurred in

Zambia. All activities in the Zambian operations, including

the collection of the debtor’s book, have been shut down.

Management’s continued focus on productivity and gross

profit margins has contributed to the improvement in profits

too.

The Group’s store base grew steadily during the last 12

months. Limited opportunities exist for expansion in

Botswana and Namibia. The subdued economic climate in

Namibia is continuing longer than anticipated. The Group

will adopt a cautious approach to expansion in South Africa

given pending regulatory changes.

TRADING AND FINANCIAL PERFORMANCE

The Group has finally returned to double digit return on

investment after a few years of single digit returns. The

12 months to July 2018 has seen an improvement in the

Group’s results but mainly due to the closure of our Zambian

operations.

The Group experienced a marked downturn in trading since

early 2018. As a result, the second half of the year was much

less buoyant than the first six months.

Revenue of P1.25 billion for the year ended July 2018, was

P72.0m (6.1%) higher than the prior year. On a comparable

basis, revenue increased by 11.3%, as the prior year included

revenue from some of the non-performing business units

that were closed.

Gross profit margins increased compared to last year, but the

prior year comparable figures included the low margin sales

of the non-performing operations, whilst closing them down.

Operating income of P185.8m was P55.6m (42.7%) higher

than last year. This improvement in operating income is the

result of the closing down of some of the Group’s non-

performing business units; as well as increased revenue and

gross profit margins. Growth in operating expenses was kept

at levels below inflation on a comparable basis.

Total debtors’ costs have increased by 55.6% during the

period under review. The increase is as a result of the growth

in the debtors’ book and slowdown in Namibia and South

Africa. The impairment provision, management believes, is at

a satisfactory level.

The Pula strengthened marginally against the Rand during

the financial year. As a result, the Group realised an exchange

loss of P1.4m compared to an exchange gain of P10.6m in

the prior year. However, subsequent to year-end the Pula has

strengthened considerably against the Rand. The volatility

and weakness of the Rand bring uncertainty and risk to the

Group’s earnings.

Profit after tax of P107.9m is P43.4m (67.2%) higher than the

previous year.

Cash generated from operations has declined by P26.8m

mainly due to an increase in credit sales, resulting in the

growth of the Group’s debtor’s book.


STORE FOOTPRINT

The Group opened nine new Furnmart stores during the

period under review and is now trading out of 129 stores

in three countries. Store growth during the period under

review came from all three countries where the Group

trades. Total number of stores is weighted slightly towards

Botswana but the portfolio is increasingly more balanced

geographically.

OUTLOOK

Trading during the first couple of months of the new

financial year has been sluggish. Namibia in particular

is finding trading conditions difficult and achieving real

sales growth remains a challenge. The Namibian economy

has contracted on the back of the Government’s austerity

measures.

The Group’s remaining non-performing stores will continue

to attract further focus from management in an attempt

to turn them around. In addition, management will put

emphasis on the respective business models and specifically

on sales growth, gross margin maintenance, expense

control, productivity and debtor’s management.

The impact of the draft National Credit Amendment Bill

in South Africa, which proposes that all or part of the

debt under certain qualifying credit agreements can be

extinguished, is likely to have far reaching consequences

for credit providers. This amendment bill is of great concern

as most of the Group’s South African customers fall in the

income bracket that this legislation is targeting.

The furniture retail market in Botswana and Namibia

remains overtraded and imminent sweeping regulatory

changes, in these markets, may present future headwinds.

Given the concerns as highlighted above, the Group’s

strategy is to be cautious with new store openings,

particularly in South Africa.


03NATURE OF BUSINESS

Furnmart Limited retails domestic furniture and electrical appliances through its network

of stores in Botswana, Namibia and South Africa. The merchandise mix at mass-market

Furnmart stores is aimed at the middle to lower income market, thus covering the majority

of the population. The Group’s HomeCorp super stores, located in Gaborone, Windhoek,

Swakopmund, Boksburg and Kempton Park are aimed at the middle to higher income

market. Furnmart Limited strives to establish lasting relationships with its customers

through its ‘value for money’ and ‘smart credit’ policies.

SHARE CAPITAL

Theissuedsharecapitalofthecompanyis606446080(2017:606446080)shares.

DIVIDEND

A gross interim dividend of 3.44 thebe per share was paid to the shareholders who were

registered as at 11 May 2018. A gross final dividend of 2.49 thebe per share has been

proposed to be paid to the shareholders registered in the books of the company as at

16 November 2018.

Dividends are subject to withholding tax in accordance with the Botswana Income Tax Act.

SUBSIDIARY COMPANIES

The Group’s shareholdings in the issued share capital of the subsidiary companies are as

follows:

Company Countryheld

Percentage Nature ofbusiness

Furn Mart (Proprietary) Limited Namibia 100% Furniture retail

Xtreme Discounters (Proprietary) Limited South Africa 100% Furniture retail

Furniture Mart (Proprietary) Limited Botswana 100% Furniture retail

Furnmart (Proprietary) Limited South Africa 100% Distribution and shared services

DIRECTORS

REPORT

The Directors have

pleasure in submitting

their report for the

financial year ended

31 July 2018.


DIRECTORS’ INTERESTS The aggregate number of shares directly held by the directors was 1 127 685 at 31 July 2018 and 1 027 685 at 31 July 2017. Directors indirectly held 26 159 080 shares at 31 July 2018 and 26 159 080 shares at 31 July 2017.

DIRECTORS’ REMUNERATIONThe independent directors are paid for meetings attended and these fees amountedtoP353656(2017:P359250)fortheyear.Otherdirectorsincludingthose on contract to the Group from Cash Bazaar Holdings (Pty) Ltd, a related company,earnedremunerationofP7417657(2017:P6561158)fromtheGroup.

COMPANY SECRETARYThe Company Secretary is S. Venkataramani.

APPROVAL OF FINANCIAL STATEMENTSThe Directors of Furnmart Limited are responsible for the preparation, integrity and objectivity of the financial statements and other information contained in this annual report, which has been prepared in accordance with International Financial Reporting Standards and in the manner required by Botswana Companies Act (2003) and the Group’s policies and procedures.

The directors are also responsible for the Company and its subsidiaries’ systems of internal financial control. Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the year under review.

The directors have reviewed the Group’s financial projections for the year ending 31 July 2019 and are satisfied that the company and its subsidiaries have adequate resources in place to continue in operation for the foreseeable future. The financial statements have therefore been prepared on the going concern basis.

The Board of Directors approved the annual financial statements presented on pages 19 to 63 on 25 October 2018.

EVENTS AFTER THE REPORTING PERIODSubsequent to the year end the Board took to a decision to seek a delisting of the Company’s shares from quotation and trade on the BSE. The notice of the Extraordinary General Meeting in this regard is set out in the announcement released on 31 October 2018 and a circular will be dispatched to shareholders on 3 November 2018. As a result of this, and subject to shareholder approval, the Company will make an offer to shareholders to repurchase shares from shareholders who wish to exit the Company (the “Offer”). The company has adequate facilities in place to meet the maximum consideration that could be payable as a result of the Offer.

On behalf of the Board

D S le Roux T L J Mynhardt Managing Director Deputy Chairman

DIRECTORSThe following directors served on the Board duringtheyear:J T Mynhardt (Chairman)T L J Mynhardt (Deputy Chairman) D S le Roux* (Managing Director) E Odendaal*F B LebalaJ P McLoughlin* S Venkataramani^ L G Waldeck*

* South African, ^Indian

As per article 53 and 55 of the Articles of Association of the company, the following directors will retire at the forthcoming annual general meeting and, being eligible, offerthemselvesforre-election:

D S le RouxJ P McLoughlin S Venkataramani


04In accordance with international developments, the Group is committed to the underlying principles as set out in the King III Report on corporate governance.

BOARD OF DIRECTORSThe day-to-day operations of the Group is vested in the executive management, while the Group Executive Management Committee and Board meet periodically to review and decide on strategy, risk, compliance and corporate affairs.

The Board meets at least three times per annum. While the Board strives to have full attendance at meetings, the quorum is any four directors and board papers are distributed timeously to enable members to be properly briefed prior to meetings. Directors who are unable to attend a meeting receive the relevant documents and are able to communicate with the Chairman and Company executives on any issue.

FINANCIAL CONTROLSInternal controls and systems are in place in the Group and are designed to provide reasonable assurance as to the integrity and reliability of the financial statements. These controls are regularly reviewed by the Board and management.

RISK, AUDIT AND COMPLIANCE COMMITTEEThe Group has a Risk, Audit and Compliance Committee which reports to the Board of Directors on the effectiveness of internal controls and management control systems. The committee ensures the effective assessment of all significant risks affecting the achievement of the missions and objectives of the Group. The committee also monitors compliance with BSE Listing requirements, adherence to International Financial Reporting Standards, corporate governance, Companies Act, adequacy of debtors’ impairment and other applicable legislation.

The Risk, Audit and Compliance Committee chaired by an independent Director meets at least twice a year and includes experts with sufficient financial literacy so as to enable the effectiveness of the Board sub-committee. The Chief Finance Officer, IT Executive and the external auditors attend the meeting by invitation.

The Committee met thrice during the year.

CODE OF ETHICSAll employees of the Group are required to maintain high ethical standards, ensuring that the Group conducts its business in a proper and professional manner.

D S le Roux T L J Mynhardt Managing Director Deputy Chairman

CORPORATE

GOVERNANCE

13Furnmart Annual Report 2018 13

PricewaterhouseCoopers, Plot 50371, Fairground Office Park, Gaborone, P O Box 294, Gaborone, Botswana T: (267) 395 2011, F: (267) 397 3901, www.pwc.com/bw Country Senior Partner: B D Phirie Partners: R Binedell, A S Edirisinghe, L Mahesan, R van Schalkwyk, S K K Wijesena

Independent auditor’s report To the Shareholders of Furnmart Limited

Report on the audit of the consolidated and separate financial statements Our opinion In our opinion, the consolidated and separate financial statements give a true and fair view of the consolidated and separate financial position of Furnmart Limited (the “Company”) and its subsidiaries (together the “Group”) as at 31 July 2018, and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRS”).

What we have audited

Furnmart Limited’s consolidated and separate financial statements set out on pages 19 to 63 comprise:

● the consolidated and separate statements of financial position as at 31 July 2018;

● the consolidated and separate statements of comprehensive income for the year then ended;

● the consolidated and separate statements of changes in equity for the year then ended;

● the consolidated and separate statements of cash flows for the year then ended; and

● the notes to the financial statements, which include a summary of significant accounting policies.

Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated and separate financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence We are independent of the Group in accordance with the Botswana Institute of Chartered Accountants’ Code of Ethics (the “BICA Code”) and the ethical requirements that are relevant to our audit of financial statements in Botswana. We have fulfilled our other ethical responsibilities in accordance with these requirements and the BICA Code. The BICA Code is consistent with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (Parts A and B).


2 of 7

Our audit approach Overview

Overall group materiality ● P7,400,000 which represents 5% of consolidated profit before tax

Group audit scope ● The Group consists of 4 subsidiaries, operating in Botswana,

Namibia and South Africa. We performed full scope audits of the Company and all of its subsidiaries.

Key audit matters ● Impairment of loans and advances to customers

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated and separate financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Overall group materiality

P7,400,000

How we determined it 5% of consolidated profit before tax

Rationale for the materiality

We chose consolidated profit before tax as the benchmark because, in our view, it is the benchmark against which the performance of the

Materiality

Group scoping

Key audit matters


3 of 7

benchmark applied Group is most commonly measured by users, and is a generally accepted benchmark. We chose 5% which is consistent with quantitative materiality thresholds used for profit-oriented companies.

How we tailored our group audit scope

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.

In doing so, full scope audits were performed for the Company and all its subsidiaries, as based on materiality and risk, these could individually or in aggregate have a material impact on the consolidated financial statements.

In establishing the overall approach to the group audit, we determined the type of work that needed to be performed by us, as the Group engagement team, or component auditors from other PwC network firms operating under our instruction. Where the work was performed by component auditors, we determined the level of involvement we needed to have in the audit work at those components to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the Group financial statements as a whole.

Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We communicate the key audit matter that relates to the audit of the consolidated financial statements of the current period in the table below. We have determined that there are no key audit matters to communicate in our report with regard to the audit of the separate financial statements of the Company of the current period.

Key audit matter How our audit addressed the key audit matter

Impairment of loans and advances to customers

The nature of the Group’s credit business, combined with economic uncertainty in many of the jurisdictions where the Group operates, exposes the Group to significant credit risk on its loans and advances to customers. The assessment of impairment of loans and advances to customers requires the Group to exercise significant judgement and may have a significant impact on the consolidated financial statements.

In determining the required impairment provision on loans and advances to customers, the Group adopts a standardised impairment

Our audit procedures included gaining an understanding and testing the relevant controls within the revenue and receivables cycle, including controls over: ● The recording of credit sales transactions;

and ● The credit granting process, including

determining credit limits.

We assessed the client’s calculation of the impairment provision by performing an independent calculation. This included a


4 of 7

approach, which allows for appropriate customisation to take unique risks which may apply within specific jurisdictions into account.

This approach assesses likely credit losses based on factors, which include: ● Assessment of any objective evidence that

individual advances will not be collected; ● Categorisation of outstanding loans and

advances to customers based on: o Grouping of loans and advances to

customers into portfolios which include advances subject to similar credit risks; and

o The number of instalments in arrears; ● Loss ratios determined for each category of

loans and advances to customers showing similar historical loss experience as those identified through the categorisation processes.

Given the subjectivity and reliance on estimates and judgements inherent in the determination of the provision for impairment (P157.76 million), we determined that this was a matter of most significance to our audit of the consolidated financial statements.

The disclosures associated with impairment of loans and advances to customers are set out in the consolidated financial statements in the following notes: ● Financial Risk Management, Credit Risk

(page 38) ● Critical accounting estimates and

judgements, Impairment losses on loans and advances to customers (page 35), and

● Note 13 – Loans and advances to customers (page 56).

combination of: ● Testing the data used in the model, by

comparing it to supporting documentation, including the analysis of loans into groupings displaying the same delinquency characteristics;

● Assessing the reasonability of loss ratios applied by management by comparing them to historical loss ratios, recalculating the loss ratios and applying sensitivity tests. We found the loss ratios used by management to be reasonable; and

● Independent recalculation of the impairment provision using an independent model.

Our testing did not identify any material differences.

Other information The directors are responsible for the other information. The other information comprises the information included in the Furnmart Limited Annual Report 2018. Other information does not include the consolidated and separate financial statements and our auditor’s report thereon.


5 of 7

Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the consolidated and separate financial statements The directors are responsible for the preparation of the consolidated and separate financial statements that give a true and fair view in accordance with International Financial Reporting Standards, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and separate financial statements, the directors are responsible for assessing the Group and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and/or the Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the consolidated and separate financial statements Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

● Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.


6 of 7

● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

● Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and / or Company to cease to continue as a going concern.

● Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Individual practicing member: Lalithkumar Mahesan Gaborone Registration number: 20030046 31 October 2018


FURNMART LIMITED AND ITS SUBSIDIARIES

ANNUAL FINANCIAL STATEMENTS

CONSOLIDATED AND SEPARATE STATEMENTS OF COMPREHENSIVE INCOMEFor the year ended 31 July 2018 GROUP COMPANY

Note 2018 2017 2018 2017

P’000 P’000 P’000 P’000

Revenue 2 1 246 490 1 174 492 79 140 81 811

Cost of merchandise sold 3 (557 316) (565 623) - -

Selling and distribution costs 3 (532 219) (516 525) - -

Administrative expenses 3 (26 528) (22 557) (25 525) (23 550)

Other income 3 32 503 50 958 720 18 127

Operating profit 162 930 120 745 54 335 76 388

Finance income 4 2 455 1 369 28 334

Finance costs 4 (17 204) (22 978) (18 824) (21 978)

Share of profit/(loss) of associate 10 206 (1 630) - -

Profit before income tax 148 387 97 506 35 539 54 744

Income tax expense 5 (40 447) (32 949) (1 920) (3 900)

Profit for the year 107 940 64 557 33 619 50 844

Other comprehensive income – items that may

subsequently be reclassified to profit/ loss

Currency translation differences (2 627) 3 675 - -

Total comprehensive income for the year 105 313 68 232 33 619 50 844

Earnings per share (thebe) – basic and diluted 6 17.80 10.65 - -



ANNUAL FINANCIAL STATEMENTS05

CONSOLIDATED AND SEPARATE STATEMENTS OF FINANCIAL POSITIONAt 31 July 2018 GROUP COMPANY

Note 2018 2017 2018 2017

P’000 P’000 P’000 P’000

ASSETS

Non-current assets

Property plant and equipment 8 79 137 71 539 1 768 1 671

Intangible assets 8 5 643 4 398 5 643 4 398

Investment in associate 10 725 1 599 - -

Other financial assets 11 59 683 67 189 - -

Investment in subsidiaries 10 - - 290 628 291 200

Deferred income tax 9 7 613 1 718 4 084 340

152 801 146 443 302 123 297 609

Current assets

Inventories 12 191 272 195 099 - -

Loans and advances to customers 13 587 538 517 399 - -

Receivables and prepayments 14 18 741 23 419 158 156 200 774

Income tax receivable 26 14 261 17 426 8 212 10 771

Cash and cash equivalents 15 133 121 136 049 15 110 4 894

944 933 889 392 181 478 216,439

Total assets 1 097 734 1 035 835 483 601 514 048

EQUITY AND LIABILITIES

Capital and reserves

Stated capital 16 198 899 198 899 198 899 198 899

Other reserves (25 258) (22 631) - -

Retained earnings 602 439 529 006 9 399 10 287

Total equity 776 080 705 274 208 298 209 186

Non-current liabilities Borrowings 17 164 997 180 402 150 000 157 122

Deferred income tax 9 25 329 21 989 - -

190 326 202 391 150 000 157 122

Current liabilities

Borrowings 17 15 293 26 148 7 282 14 816

Trade and other payables 18 83 681 73 170 116 067 130 594

Income tax payable 26 10 103 12 045 - -

Accruals 19 22 251 16 807 1 954 2 330

131 328 128 170 125 303 147 740

Total liabilities 321 654 330 561 275 303 304 862

Total equity and liabilities 1 097 734 1 035 835 483 601 514 048




CONSOLIDATED AND SEPARATE STATEMENTS OF CHANGES IN EQUITYFor the year ended 31 July 2018

GROUP Foreign

currency

Stated translation Retained

capital reserve earnings Total

P’000 P’000 P’000 P’000

Balance at 01 August 2016 198 899 (26 306) 472 333 644 926

Total comprehensive income for the year - 3 675 64 557 68 232

Transactions with owners

Dividends paid - interim 2017 - - (7 884) (7 884)

Balance at 31 July 2017 198 899 (22 631) 529 006 705 274

Balance at 01 August 2017 198 899 (22 631) 529 006 705 274

Total comprehensive income for the year - (2 627) 107 940 105 313

Transactions with owners

Dividends paid - final 2017 - - (13 645) (13 645)

Dividends paid - interim 2018 - - (20 862) (20 862)

Balance at 31 July 2018 198 899 (25 258) 602 439 776 080

COMPANY

Stated Retained

capital earnings Total

P’000 P’000 P’000

Balance at 01 August 2016 198 899 (32 673) 166 226

Total comprehensive income for the year - 50 844 50 844

Dividends paid- interim 2017 - (7 884) (7 884)

Balance at 31 July 2017 198 899 10 287 209 186

Balance at 01 August 2017 198 899 10 287 209 186

Total comprehensive income for the year - 33 619 33 619

Dividends paid - final 2017 - (13 645) (13 645)

Dividends paid - interim 2018 - (20 862) (20 862)

Balance at 31 July 2018 198 899 9 399 208 298


CONSOLIDATED AND SEPARATE STATEMENTS OF CASH FLOWSFor the year ended 31 July 2018 GROUP COMPANY

Note 2018 2017 2018 2017

P’000 P’000 P’000 P’000

Operating activities:

Cash generated from operations 20 138 389 165 230 55 668 96 767

Income tax paid 26 (41 779) (41 960) (3 105) (2 901)

Net cash generated from operating activities 96 610 123 270 52 563 93 866

Investing activities:

Purchase of property, plant and equipment 8 (32 922) (17 479) (2 991) (17)

Disposals of property, plant, equipment 810 2 365 126 67

Dividend received on investment 21 - - 26 825 29 600

Dividend received from associate 10 1 080 - 1 080 -

Investment in subsidiaries 10 - - - (79,756)

Investment in other financial assets (net) 11 7 506 (2 453) - -

Interest received 4 2 455 1 369 28 334

Net cash (utilised in)/ generated from investing activities (21 071) (16 198) 25 068 (49 772)

Financingactivities:

Repayments on borrowings 17 (26 260) (21 957) (14 656) (13 397)

Interest paid 4 (17 204) (22 978) (18 824) (21 978)

Dividends paid 7 (34 507) (7 884) (34 507) (7 884)

Net cash (utilised) in financing activities (77 971) (52 819) (67 987) (43 259)

Net increase/ (decrease) in cash and cash equivalents (2 432) 54 253 9 644 835

Cash and cash equivalents at beginning of year 136 049 79 560 4 894 4 059

Exchange (loss)/gain on cash and cash equivalents of foreign subsidiaries (496) 2 236 572 -

Cash and cash equivalents at end of year 15 133 121 136 049 15 110 4 894






The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the requirements of the Botswana Companies Act (2003). The financial statements are prepared under the historical cost convention, as modified by the valuation of certain financial assets and financial liabilities at fair value through profit and loss.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group’s financial statements are disclosed in the “Critical accounting estimates and judgements” section of the financial statements.

Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

New standards, amendments and interpretations issued, relevant to the Group, but not yet effective and not early adopted.There were no new standards or amendments to existing standards that become effective for the first time during the year, that are relevant or had material impact to the operations of the group.

Standards issued but not yet effective at year endA number of new standards and amendments to standards are issued but not yet effective for period ended 31 July 2018. Those which may be relevant to the Group are set out below. The Group do not plan to

adopt these standards early. These will be adopted in the period that they become mandatory.

IFRS 9 Financial InstrumentsIFRS 9, published in July 2015, replaces the existing guidanceinIAS39:FinancialInstruments:Recognitionand Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and de recognition of financial instruments from IAS 39. In addition, IFRS 9 will include changes in the measurement bases of the Group’s financial assets to amortised cost, fair value through other comprehensive income or fair value through profit or loss. Even though these measurement categories are similar to IAS 39, the criteria for classification into these categories are significantly different. IFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. IFRS 9 introduces a revised impairment model which will require entities to recognise expected credit losses based on unbiased forward - looking information. This replaces the existing IAS 39 incurred loss model which only recognises impairment if there is objective evidence that a loss has already been incurred and would measure the loss at the most probable outcome. The IFRS 9 impairment model will be applicable to all financial assets at amortised cost, lease receivables, debt financial assets at fair value through other comprehensive income, loan commitments and financial guarantee contracts.The measurement of expected credit loss will involve increased complexity and judgement including estimation of probabilities of default, loss given default, a

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESFor the year ended 31 July 2018

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, and are unchanged from those applied in previous periods, unless noted otherwise.

These financial statements have been approved by the board of directors on 25 October 2018.

1. BASIS OF PREPARATION


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)For the year ended 31 July 2018

range of unbiased future economic scenarios, estimation of expected lives and estimation of exposures at default and assessing significant increases in credit risk.

IFRS 15 Revenue from Contracts with CustomersIFRS 15 establishes a comprehensive framework for revenue recognition. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Group is currently in the process of performing a more detailed assessment of the impact of this standard on the Group and the outcome of it is yet to be quantified.

IFRS 16 LeasesIASB and FASB decided that lessees should be required to recognise assets and liabilities arising from all leases (with limited exceptions) on the balance sheet. The model reflects that, at the start of a lease, the lessee obtains the right to use an asset for a period of time and has an obligation to pay for that right. A lessee measures lease liabilities at the present value of future lease payments. A lessee measures lease assets, initially at the same amount as lease liabilities, and also includes costs directly related to entering into the lease. Lease assets are amortised in a similar way to other assets such as property, plant and equipment. This approach will result in a more faithful representation of a lessee’s assets and liabilities and, together with enhanced disclosures, will provide greater transparency of a lessee’s financial leverage and capital

employed. IFRS 16 is effective for annual reporting periods beginning on or after 1 January 2019 and the Group is in the process of assessing the potential impact to the financial statements.

Other standards/amendmentsThe following new or amended standards are not expected to have a significant impact of the Group’s consolidatedfinancialstatements:

• Sharebasedpayments,accountingoncertainshare based transactions

(Amendments to IFRS 2 – effective 1 January 2018).• Revenuefromcontractswithcustomers

(Amendments to IFRS 15 – effective 1 January 2018).

• Foreigncurrencytransactionsandadvanceconsideration (IFRIC 22 – effective 1 January 2018).

• ConsolidatedFinancialStatements(IFRS10–effective date postponed initially 1 January 2016).

• Uncertaintyoverincometaxtreatments(IFRIC23–effective 1 January 2019)

Management is currently assessing the impact of the application of these standards on the company’s financial results.






All Group companies have a 31 July year end and apply uniform accounting policies for like transactions.

All intercompany transactions and balances between Group entities are eliminated. The company carries its investment in subsidiaries in its seperate financial statement at cost less any accumulated impairment.

AssociatesAssociates are entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights.

Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group’s investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss.

The Group’s financial statements include the following associatewhosefinancialyearalsoendson31July:

Company Country %Nature of business 2018 2017

United Impex (Pty) Ltd

Botswana 25% Financial Services(Dormant)

25% 25%

The Group’s share of its associates’ post-acquisition profits or losses and its share of post-acquisition movements in reserves are recognised in the Statement of Comprehensive Income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise any further losses, unless it has incurred obligations, issued guarantees or made payments on behalf of the associate.

Gains and losses arising from dilution of investments in associates are recognised in the Statement of Comprehensive Income when such dilutionary transactions become effective.

2 CONSOLIDATION

SubsidiariesSubsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

3 CELL CAPTIVE ARRANGEMENTS

The Group has entered into cell captive arrangements for purposes of managing and administering its customer protection programmes in Namibia and South Africa. These programmes offer customer credit insurance in the event of death or certain other life changing events prior to full settlement of outstanding balances.

The cell captive arrangements do not qualify as subsidiaries as they do not exist as separate entities from the underwriter. In one of these, the Group has no recapitalisation obligation and there is no ‘insurance contract’ as there is no transfer of risk and the arrangement is more akin to a profit sharing arrangement. On the other, the group has a recapitalisation obligation in the event the cell captive became insolvent. The group

continually assesses the cell captive status and where warranted a provision is recognised.

In both these instances, the group is the beneficiary. On this basis, where the cell captive is financially sound and has surplus cash the Group recognises its right to receive cash as a financial asset.



Group

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Group’s activities as described below.

a) Sale of merchandiseRevenue from the sale of merchandise is recognised upon transfer to the customer of the significant risks and rewards of ownership. In the case of cash sales, this is generally when cash is received, an invoice is raised and delivery of the goods has taken place. In the case of credit sales, this is generally when a credit sale agreement is concluded, an invoice is raised and delivery of the goods has taken place (related delivery charges are also recognised on this basis).

b) Ancillary charges on credit salesOther revenue flowing from the credit sale of merchandise comprises of the following significant components.• Financeincome:Onatimeproportionbasisthat

takes into account the effective yield over the loan life cycle on the principal amount outstanding;

• Customerprotectionplanincome:Thesearerecognised on a straight-line basis over the debt repayment period of the invoiced amount;

• FMClubmembershipfees:Ontheaccrualbasisascharged every month;

• Debtfollow-upcharges:Uponcustomerfallinginto arrears and on additional follow-up services being rendered. Customer protection plan income, FM Club membership fees and finance income are classified as financing income. Debt follow up charges and delivery charges are included as ancillary services.

Company

Interest incomeOn the accrual basis, taking into account the effective interest yield on underlying balances. When a loan and receivable is impaired, the company reduce the carrying amount to its recoverable amount, being the estimated future cash flows discounted at the original effective interest rate of the instrument, and continues unwinding discount interest income.

Dividend Income

Dividend income is recognised when the right to receive payment is established. Administration FeeAdministration fee represents sale of managerial and infrastructure services to Group companies. Revenue from sale of services is recognised in the period in which the services are rendered.


5 REVENUE RECOGNITION

The Group operates a chain of retail outlets for selling furniture and other household appliances. Revenue for the Group comprises of the fair value of the consideration received or receivable for the sale of goods and finance and other income earned on credit granted in the ordinary course of the Group’s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group.

4 SEGMENT REPORTING

Operating segments are reported in a manner consistent with the internal reporting provided to the Group Executive Management Committee. The Group Executive Management Committee is responsible for allocating resources and assessing performance of the operating segments and is considered the Chief Operating Decision Maker as defined in IFRS 8.






Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the Statement of Financial Position date, and any adjustment to tax payable in respect of previous years.

Income tax payable on profits, based on the applicable tax law, is recognised as an expense in the period in which profits arise.

Deferred tax is provided using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for current tax purposes. Deferred tax is not recognised for the followingtemporarydifferences:theinitialrecognitionof goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they probably will not reverse in the

foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively by the reporting date.

The principal temporary differences arise from differing tax depreciation rates on property, plant and equipment. A deferred tax is provided on temporary differences arising from investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the difference will not reverse in the foreseeable future.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that related tax benefit will be realised.


6 CURRENT AND DEFERRED INCOME TAX

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the Statement of Comprehensive Income except to the extent that it relates to items recognise directly in equity, in which case it is recognised in equity.

7 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the Statement of Comprehensive Income during the financial period in which they are incurred.

Leasehold land is depreciated over the lease period. Depreciation on other assets is calculated using the

straight line method to allocate their amounts to their residualvaluesovertheirestimatedusefullives,asfollows:

Freehold buildings 40 years

Leasehold buildings shorter of lease period or 40 years

Furniture and office equipment 5 – 10 years

Motor vehicles 4 years

Computer equipment 3 - 5 years

Shop refurbishment expenses 3 years

Intangibles 6 years


(a) Financial assets at fair value through profit or lossFinancial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months, otherwise they are classified as non-current.

(b) Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets. The group’s loans and receivables comprise ‘trade and other receivables’ and ‘cash and cash equivalents’ in the balance sheet.

(c) Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period.

(d) Held to maturity investments Held to maturity investments are non-derivative financial assets with fixed or determinable payments that an entity intents and is able to hold to maturity and

that do not meet the definition of loans and receivables and are not designated on initial recognition as asset at fair value through profit or loss or as available for sale.

Recognition and measurementRegular purchases and sales of financial assets are recognised on the trade-date – the date on which the group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss is initially recognised at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the income statement within ‘Other (losses)/gains – net’ in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the income statement as part of other income when the group’s right to receive payments is established.


8 FINANCIAL INSTRUMENTS

ClassificationTheGroupclassifiesitsfinancialassetsinthefollowingcategories:atfairvaluethroughprofitorloss,loansandreceivables,available for sale and held to maturity investments. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down to

its recoverable amount. Gains and losses on disposal of property, plant and equipment are determined by reference to their carrying amount and are taken to the Statement of Comprehensive Income in the period of disposal.

7 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)






Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognised in other comprehensive income. When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the income statement as ‘Gains and losses from investment securities’. Interest on available-for-sale securities calculated using the effective interest method is recognised in the income statement as part of finance income. Dividends on available-for-sale equity instruments are recognised in the income statement as part of other income when the group’s right to receive payments is established.

Offsetting financial instrumentsFinancial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the company or the counterparty.

Impairment of financial assets(a) Assets carried at amortised costThe group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

(b) Loans and receivables For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the group may measure impairment on the basis of an instrument’s fair value using an observable market price.If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated income statement.

(c) Assets classified as available for saleThe group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired.


8 FINANCIAL INSTRUMENTS (CONTINUED)


a) Finance leasesLeases of property, plant and equipment, where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases. Finance leases are capitalised at the estimated present value of the underlying lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The interest element of the finance charge is charged to the Statement of Comprehensive Income over the lease period. Property, plant and equipment, acquired under finance leases, are depreciated over the useful lives of the assets.

b) Operating leases - as a lessorLease arrangements in which a significant portion of the risks and rewards of ownership are retained by the

lessor are classified as operating leases. Rental receipts under operating leases (net of any incentives provided to the lessee) are recognised in the Statement of Comprehensive Income on a straight-line basis over the period of the lease.

c) Operating leases - as a lesseeLease arrangements in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the Statement of Comprehensive Income on a straight-line basis over the period of the lease.


9 IMPAIRMENT OF NON-FINANCIAL ASSETS

Property, plant and equipment and other non-current assets with finite useful lives are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the assets exceeds its recoverable amount which is the higher of an asset’s fair value less cost to sell and value in use. For the purposes

of assessing impairment, assets are grouped at the lowest level for which there is separately identifiable cash flows (cash generating units). Non-financial assets that suffered impairment are reviewed annually for possible reversal of the impairment.

Assets that have infinite useful life are not subject to amortisation and are tested annually for impairment.

10 ACCOUNTING FOR LEASES

11 COMPUTER SOFTWARE DEVELOPMENT COSTS

Costs associated with maintaining computer software programmes are recognised as an expense as incurred. Development Costs that are directly attributed to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangibleassetswhenthefollowingcriteriaaremet:

• itistechnicallyfeasibletocompletethesoftwareproduct so that it will be available for use;

• managementintendstocompletethesoftwareproduct and use or sell;

• thereisanabilitytouseorsellthesoftwareproduct;• itcanbedemonstratedhowthesoftwareproduct

will generate probable future economic benefits;

• adequatetechnical,financialandotherresourcesto complete the development and to use or sell the software product are available; and

• theexpenditureattributabletothesoftwareproductduring its development can be reliably measured.

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.

Other development expenditures that do not meet this criteria are recognised as an expense as incurred.






All loans and advances are recognised when an underlying credit agreement has been signed and the Group has supplied the related goods to the borrower.

An allowance for loan impairment is established if there is objective evidence that the Group will not be able to collect all amounts due according to the original contractual terms of loans. The amount of the provision is the difference between the carrying amount and the recoverable amount estimated.

The loan impairment provision also cover losses where there is objective evidence that incurred losses are present in components of the loan portfolio at the

Statement of Financial Position date. These have been estimated based upon historical pattern of losses in each component, reflecting the current economic climate in which the borrower operates. When a loan is uncollectible, it is written off against the related provision for impairments; subsequent recoveries are credited to the provision for loans losses in the Statement of Comprehensive Income.

If the amount of the impairment subsequently decreases due to an event occurring after the write down, the release of the provision is credited as a reduction of the provision for loan impairment.


12 INVENTORIES

Inventories are stated at the lower of cost and estimated net realisable value. Cost is determined by the first in first out (FIFO) method. Net realisable value is the estimated selling price in the ordinary course of business, less applicable selling expenses.

13 LOANS AND ADVANCES TO CUSTOMERS

Loans originated by the Group by providing money directly or indirectly to the borrower are categorised as loans and advances to customers and are carried at amortised cost, which is defined as the fair value of the cash consideration given to originate those loans as is determined by reference to market prices at origination date.

14 OTHER RECEIVABLES

Other receivables arise in the normal course of business and are stated at amortised cost or realisable value.

15 CASH AND CASH EQUIVALENTS

Cash and cash equivalent includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less and bank overdrafts. Cash and cash equivalents are measured at amortised cost using the effective interest rate method.

16 STATED CAPITAL

Ordinary share capital is recognised at the fair value of the consideration received.

Dividends on ordinary shares are recorded in the Group’s financial statements in the period in which they are paid or approved by the Group’s shareholders, whichever is earlier.



17 PROVISIONS

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

18 BORROWINGS

Borrowings are recognised initially at fair value, net of transaction costs. In subsequent periods, borrowings are stated at amortised cost using the effective yield method; any difference between proceeds (net of transaction costs) and the redemption value is recognised in the Statement of Comprehensive Income over the period of the borrowings.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the Statement of Financial Position date.

Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The financial statements are presented in Botswana Pula, which is the holding company’s functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of other comprehensive income.

Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentationcurrencyasfollows:

• assetsandliabilitiesforeachStatementofFinancialPosition presented are translated at the closing rate

at the date of that Statement of Financial Position;• incomeandexpensesforeachstatementofother

comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the date of the transaction) and;

• allresultingexchangedifferencesarerecognisedinthe statement of other comprehensive income and as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations are recognised in the statement of other comprehensive income.

When a foreign entity is sold, exchange differences that were recorded in equity are recognised in the Statement of Comprehensive Income as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign operation and translated at the closing rate.

19 FOREIGN CURRENCY TRANSLATION






(i) Short term employee benefits

The cost of short term employee benefits (those payable within 12 months after the service is rendered, such as paid leave and bonuses) are recognised in the period in which the service is rendered and are not discounted.The cost of paid leave is recognised as an expense as the employee render services that increases the entitlement or, in the case of non-accumulating absence, when absence occurs.

The expected cost of bonus payment is recognised as an expense when there is a legal or constructive obligation to make such payment as a result of past performance.

(ii) Defined contribution plans

Group companies in Namibia and South Africa operate pension schemes which are defined contribution plans. These schemes are generally funded through payments to insurance companies or trustee-administered funds. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity.

The Group has no legal or constructive obligations to pay further contribution if fund does not hold sufficient assets to pay all employees the benefits relating to employees service in the current and prior periods.

(iii) Gratuity and severance plans

The Group does not provide pension benefits for its employees in Botswana, but operates gratuity schemes for expatriates in terms of employment contracts and a severance benefit scheme for citizens in terms of the respective Employment Acts. Severance pay is not considered to be a retirement benefit plan as the benefits are payable on completion of each 60 month period of continuous employment or on termination of employment, at the option of the employee. The expected gratuity and severance benefits liability is provided for on the accrual basis based on completed (and unredeemed) periods of service at the financial year end.


20 EMPLOYEE BENEFITS

21 RELATED PARTY TRANSACTIONS

Related parties comprise directors of the company and companies with common ownership and/or directors and key management personal. Transactions with related parties are in the normal course of business.

22 DIVIDEND DISTRIBUTION

Dividend distribution to the Group’s shareholders is recognised as a liability in the financial statements in the period in which the dividends are approved by the shareholders.

23 EARNINGS PER ORDINARY SHARE

Earnings per ordinary share are calculated using the weighted average number of ordinary shares in issue during the period and are based on the net profit attributable to ordinary shareholders.



24 CURRENT ASSETS AND LIABILITIES

Current assets and liabilities have maturity terms of less than 12 months, except for instalment sale and loan receivables. Instalment sale and loan receivables, which are included in trade and other receivable, have maturity terms of between 6 to 30 months but are classified as current as they form part of the normal operating cycle.

25 TRADE PAYABLES

Trade payables are obligations to pay for goods and services that have been acquire in the ordinary course of business from suppliers. Accounts payables are classified as current liabilities if payment is due within one year or less.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method.






The Group’s products are consumed mainly by retail customers who are considered part of the middle to lower income segment. The timing and amount of cash inflows received from these customers is impacted by a broad range of economic and political risks, including the availability of liquidity, level of customers’ indebtedness towards other creditors who get first priority for deductions from salaries such as micro lenders and banks, salary increments, cost of food and other consumables etc.

In determining the required impairment provision on loans and advances to customers, the Group adopts a standardised impairment approach, which allows for appropriate customisation to take unique risks which may apply within specific jurisdictions into account.

This approach assesses likely credit losses based on factors,whichinclude:

• Assessment of any objective evidence that individualadvanceswillnotbecollected:

• Categorisation of outstanding loans and advances tocustomersbasedon:• Groupingofloansandadvancestocustomers

into portfolios which include advances subject to similar credit risks; and

• Thenumberofinstalmentsinarrears;

• Loss ratios determined for each category of loans and advances to customers showing similar historical loss experience as those identified through the categorisation processes.

As at July 2018, management has introduced

P7.88m(2017:P16.45m)asajudgementprovision, to take into account the additional losses expected in South Africa due to prevailing economic factors, proposed regulatory changes and unfamiliar credit risk events. Management believes that due to inherent limitations within the impairment model used for estimation of the impairment provision, such as time lag and the model’s assumption of sustaining historical

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTSFor the year ended 31 July 2018

In arriving at the amounts at which assets and liabilities are measured in the financial statements, the Group makes assumptions

concerning the future. The resulting accounting estimates will, by definition, seldom equate to the related actual results. The

estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and

liabilities within the next financial year are discussed below.

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

1 USEFUL LIVES AND RESIDUAL VALUES FOR PROPERTY, PLANT AND EQUIPMENT

The Group tests annually whether the useful life and residual value estimates for property, plant and equipment were appropriate and in accordance with its accounting policy. Residual values of buildings and motor vehicles are based on current estimates of the value of these assets at the end of their useful lives. The estimate residual values of the buildings and motor vehicles have been determined by the Directors based on their knowledge of the industry.

2 INCOME TAXES

The Group is subject to income taxes in various jurisdictions. Significant judgement is required in determining provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made.

3 IMPAIRMENT LOSSES ON LOANS AND ADVANCES TO CUSTOMERS


CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)For the year ended 31 July 2018

trends, recent developments in South Africa have not been fully manifested into the impairment model being used.

South Africa’s growth forecasts have once again been adjusted downwards to below 1.0% and the country has been in a recession for two quarters during 2018; only one ratings agency has kept them one notch out of junk status. Unemployment and job losses continue to plague the economy. The National Credit Regulator has proposed an amendment bill to parliament, allowing the extinguishing of certain qualifying credit

agreements (which management believes will directly impact our South African loans and advances book). Furthermore, the group is in a growth phase in South Africa and has ventured into new, unknown regions and offered credit products in direct marketing campaigns in ways not previously done. Management therefore believes there is a need to introduce an additional impairment layering based on management judgement to take into account these recent developments.

3 IMPAIRMENT LOSSES ON LOANS AND ADVANCES TO CUSTOMERS (CONTINUED)

4 IMPAIRMENT OF INVESTMENT IN SUBSIDIARIES The Company consider both debt and equity in the subsidiaries as its investments in these subsidiaries. These investments are assessed for impairment when there is objective evidence such as, continuous losses, need for additional equity etc.

In assessing impairment the Company takes into account future budgets and cash flow forecasts. The estimated recoverable value is calculated based on value in use. If the carrying value of the investment exceed the value in use, a provision for impairment is recognised.

During the year the Company identified its investments in Xtreme Discounters, as most vulnerable and has carried out impairment assessments.

For assessing the value in use of Xtreme Discounters, (Pty)Ltd,thefollowingkeyassumptionsareused:- terminal growth rate of 6.0%- discount rate of 12.9%

The outcome of the impairment calculated is most sensitive to discount rate and growth rate. The impairment of investment in Xtreme Discounters (Pty) Ltd will only be indicated when these assumptions reach the followinglevelsof:- terminal growth rate of 4.0%- discount rate of 14.4%






Thebalancesubjecttoforeigncurrencyandinterestraterisksareasfollows: GROUP COMPANY 2018 2017 2018 2017 P’000 P’000 P’000 P’000Amount subject to foreign currency rate riskNamibian Dollar – Net investment in foreign operations 286 003 246 713 55 850 60 172 – Imports of merchandise (28 030) (32 635) - - South African Rand – Net investment in foreign operations 200 228 226 968 83 969 138 872 – Imports of merchandise (59 804) (79 547) - - Zambian Kwacha – Net investment in foreign operations - 3 898 - 4 857 – Imports of merchandise - (541) - - Amount subject to cash flow interest rate riskIn Namibia 1 226 5 860 - - In South Africa 21 710 28 178 - - In Botswana 7 282 21 938 140 701 177 996

FINANCIAL RISK MANAGEMENTFor the year ended 31 July 2018

a) Market RiskThe Group is exposed to market risk primarily related to foreign exchange currency rates and interest rates. The Group actively monitors these risks. The Group’s objective is to reduce, where it deems appropriate to do so, fluctuations in earnings and cash flows associated with changes in interest rates, foreign currency exchange rates and market rates for investments in liquid funds. As part of this process, the Group has taken decisions not to sell short assets it does not have, or does not know it will have in the future. The Group only sells existing assets or enters into future transactions that it confidently expects it will be able to fulfil based on past experience.

i) Foreign currency riskThe Group operates within the Southern African region and uses the Pula as the reporting currency. As a result the Group is exposed to foreign exchange rate fluctuations arising from various currency exposures, primarily with respect to the Namibian Dollar and the South African Rand. Foreign exchange risk arises from imports of merchandise and net investments in foreign operations. However, as the financial instruments held in foreign currencies are denominated in the functional currency of that country,

the Group’s risk to foreign currency fluctuations is largely mitigated through the operation of such natural hedges.

Changes in foreign exchange rates also affect the group’s operating profit in connection with the translation of the income statement of foreign subsidiaries to Botswana Pula. The group does not hedge such risks. The translation exposures arising from the balance sheets of foreign subsidiaries are included in the foreign currency translation reserve.

ii) Cash flow and fair value interest rate riskThe interest rate risk arises mainly from long-term loans and advances to customers. All loans and advances to customers are issued at fixed interest rates which expose to fair value interest rate risk. However, as these loans and advances are accounted for at amortised cost, such risk has no direct impact on the financial results.

There is exposure to cash flow interest rate risk on borrowings due to the variable interest rates. Such cash flows vary according to movements in underlying market rates.

TheGroup’sactivitiesexposeittoavarietyoffinancialrisks:marketrisk(includingcurrencyrisk,fairvalueinterestraterisk,

cash flow interest rate risk and price risk) and credit risks. Details of these assets and liabilities are set out in the notes to the

financial statements. The Group’s overall risk management programme focuses on the unpredictability of financial markets

and seeks to minimise potential adverse effects on the financial performance of the Group.


a) Market Risk (continued) GROUP COMPANY 2018 2017 2018 2017

P’000 P’000 P’000 P’000The following tables show the effect on net income that would result from reasonably possible changes in the relevant foreign currency exchange or interest rate.Exchange rate sensitivities+/ (-) 5% Pula to Namibian dollar 12 899 10 704 2 810 2 865 +/ (-) 5% Pula to South African rand 6 449 7 371 3 999 6 613 +/ (-) 5% Pula to Zambian kwacha 8 168 8 231 Interest rate sensitivities1% increase/ (decrease) in Botswana interest rates 73 358 1 334 1 821 1% increase/ (decrease) in Namibian interest rates 12 59 - - 1% increase/ (decrease) in South African interest rates 217 282 - -

Theabovesensitivitiesarecalculatedwithreferencetoasinglemomentintimeandwillchangeduetoanumberoffactorsincluding:• Fluctuatingtradereceivablesandpayablesbalances;• Fluctuatingcashbalances;and• Changesincurrencymix

b) Credit riskThe financial assets of the Group which are subject to credit risk consist mainly of cash resources and debtors. Credit risk arises from granting loans and advance to customers and holding cash and cash equivalents with third parties. Cash resources are placed with reputable financial institutions. Financial institutions are not individually rated, however the Group’s policy is to hold cash resources in subsidiaries of highly rated Banks. The Group has policies to ensure that sales of products and services are made to customers with appropriate credit history and earnings capacity. The Group exposure to credit risk is limited to the carrying value of financial assets as at the 31 July 2018.

The main activity of the Group is the sale of goods on credit. The Board of Directors has delegated responsibility for the oversight of credit risk to sub-committee of the board and to its respective general managers and credit departments of each country in which it operates.

The Group has developed advanced credit-granting systems to properly assess the customer. The credit underwriting process flows through obtaining full and

detailed customer credentials and subjecting these to several fully automated checks that include (i) Pre-bureau assessment - predetermined demographic criteria and contactability plus identity and income/employment verification; and (ii) Post-bureau assessment - automated credit bureau analysis against predetermined payment criteria and behaviour application of a set affordability table that calculates maximum monthly exposure taking full cognisance of acceptable living expenses and existing commitments and applying a conservative formula to calculate nett disposable income thereby avoiding over-indebtedness.

The credit granting systems enable the Group to determine its appetite for risk. In determining the acceptable level of risk, the potential loss is weighed up against the revenue potential using the predictive behavioural models inherent in the credit-granting system. The Group monitors any variances from the level of risk that has been adopted and adjusts the credit-granting process on a dynamic basis. The Group manages its risk effectively by assessing the borrower’s ability to service the proposed monthly instalment.

FINANCIAL RISK MANAGEMENT (continued)For the year ended 31 July 2018







b) Credit risk (continued)Themaximumamountsubjecttocreditriskisasfollows: GROUP COMPANY 2018 2017 2018 2017 P’000 P’000 P’000 P’000 P’000Other financial assets 59 683 67 189 - - Loans and advances to customers - Gross 745 296 662 015 - - Staff advances and other receivables 18 741 23 419 158 156 306 686 Cash and cash equivalents 133 121 136 049 15 110 4 894 956 841 888 672 173 266 311 580

Staff advances are recovered through direct deduction from monthly salary and wages payments and procedures are in place to ensure full recovery of amounts due upon termination of service. Historically, the Group has not experienced any significant credit losses with respect to staff advances and none are anticipated at the year-end date.

Other financial assets represent amounts held in South African Rand/Namibian Dollar through independent units of Mutual and Federal Risk Financing Ltd/ Old Mutual Short Term Insurance Ltd. The Group is entitled to the net proceeds from these units (“cell captives”) which have been created solely to manage and administer the Group’s customer protection programmes in Namibia and South Africa. The counter party is a well known listed South African insurer of good reputation and standing. The Group monitors the financial standing of the counter-party, and ability of the individual cell captives to remit funds on a regular basis.

Cash, cash equivalents and similar deposits are placed with financial institutions of high repute only. These include domestic subsidiaries of international and regional institutions. The Group regularly monitors the outcomes of relevant regulatory inspections and reports with respect to these counterparties. The Group is not aware of any facts or circumstances which would indicate that institutions where cash, cash equivalents and similar deposits were held at the year-end expose the Group to levels of credit risk beyond those normally associated with such relationships.

Theperformanceanalysisofloansandadvancestocustomersareasfollows: Past due but not Fully individually Total performing impaired P’000 P’000 P’00031 July 2018Loans and advances to customers 745 296 485 988 259 308 Impairment provision on originated loans (157 758) (30 020) (127 738) 587 538 455 968 131 570

31 July 2017Loans and advances to customers 662 015 419 236 242 779Impairment provision on originated loans (144 616) (19 224) (125 392) 517 399 400 012 117 387


b) Credit risk (continued)

The Group’s loan and advances portfolio arises from contracts with similar terms and conditions entered into with a wide range of individuals and small / medium enterprises over a wide geographical and socio-economic spectrum. The performance of individual loans is thus impacted not only by regional or national economic factors, but also through specific circumstances in the specific cities, towns and villages where the Group operates.

The Group’s loans and advances originate from customers who are domiciled in Botswana, Namibia, South Africa and Zambia. Theterritoryanalysisoftotalgrossloansandadvancesat31Julyareasfollows: 2018 2017 P’000 P’000Botswana 305 556 270 426 Namibia 246 898 207 280 South Africa 192 842 172 836 Zambia - 11 473 745 296 662 015 The Group considers a loan to be fully performing when all repayments have been made in full on or before the contractual duedate.At31July2018:P518425,(2017:P419236)ofthetotalloansandadvanceswerefullyperforming.Basedonhistorical experience, 5.97 % of these loans and advances may miss one or more instalments in future financial periods.

Loans that have missed one or more contractual repayment (either in full or partly), and where the customer has not made good such arrears, are considered past due. Missed repayments are classified as debit arrears, and debit arrears are followed up by the Group’s in-house debt recovery teams as and when these arise. Debt recovery procedures include levying of additional charges and interest on arrears in addition to regular communication with customers aimed at encouraging normalisation of repayments or a resumption of repayments, even if at reduced amounts. The Group has a contractual right to repossess goods when customers default. While the fair value of such security is generally negligible to the Group, the risk of repossession represents a significant deterrent for customers to fully renege on repayment of the contractual dues.

While not a definitive indicator of the underlying credit quality, the maturity of loans - measured as that proportion of the contractual loan period which has already passed - is indicative of the inherent quality of the loan’s credit performance, irrespective of the customer’s geographic position or general socio-economic surroundings.

Loans and advances which were classified as past due but not individually impaired are analysed below.

2018 2017 P’000 P’000Instalments up to 90 days in arrears Customers who have completed 80% or more of their contract term 8 500 8 523 9% 12%Customers who have completed between 40% - 80% of their contract term 38 544 33 592 39% 47%Customers who have completed less than 40% of their contract term 51 438 29 803 52% 41% 98 482 71 918 100% 100%







b) Credit risk (continued) 2018 2017Instalments more than 90 days in arrears P’000 P’000 Customers who have completed 80% or more of their contract term 90 609 105 353 59% 62%Customers who have completed between 40% - 80% of their contract term 52 469 47 987 33% 28%Customers who have completed less than 40% of their contract term 13 748 17 520 9% 10% 160 826 170 860 100% 100%Total loans and advances which are past due but not individually impaired 259 308 242 778

Impairment: IFRS 9 Financial InstrumentsThe introduction of the impairment requirements of IFRS 9 Financial Instruments, implemented on 1 January 2018, could result in higher impairment loss allowances that are recognised earlier, on a more forward looking basis than is the case under IAS 39 and, as a result, may have an impact on the Group’s current impairment assessment. The adoption of IFRS 9 would affect all of the Group’s trading entities.

The work to prepare for IFRS 9 Impairment requirements for 2019 has commenced and expected to be complete and disclosed in the financial year end 31st July 2019. The replacement of IAS 39 with IFRS 9 Financial Instruments (“IFRS 9”) effective 1st January 2018 will have an impact on the methodology and level of provisioning required to be held by the Group as it will replace the current incurred loss model with the requirement to calculate expected losses. Furnmart is in the process of developing an appropriate methodology to align to IFRS 9 requirements.

TheapproachfollowedbyGroupisoutlinedbelow:

General steps considered by Group in applying IFRS 9 Impairment

ThefollowingstepsillustratesthegeneralstepsthattheGroupisconsideringwhenimplementingIFRS9Impairment:1. Establish the appropriate definition of default.2. Determine indicators/measures of significant increase in credit risk.3. Identify relevant forward-looking information and macro-economic factors.4. Identify appropriate sources of relevant forward-looking information and macro-economic factors.5. Incorporate forward-looking information and multiple scenarios in staging assessments of loans and advances to customers.6. Stage loans and advances based on the forward-looking assessment of significant increase in credit risk.7. Determine the method to be used for measuring Expected Credit Losses (ECL).8. Determine the estimation period – the expected lifetime of the financial instrument.9. Establish the respective Probability of Default (PD) for loans in Stage 1 and Stage 2.10. Calculate the Exposure at Default (EAD).11. Identify relevant collateral and credit enhancements, where relevant.12. Develop calculations for Loss Given Default (LGD)(incorporating collateral and credit enhancements, where relevant).13. Consider the time value of money and calculate Expected Credit Losses.14. Identify modifications that occurred during the period and determine if each modification results in derecognition or no

derecognition.15. Calculate the modification gain or loss and include the modified loan (or new loan).16. Establish and document the appropriate processes, internal controls and governance for estimating Expected Credit Losses.



b) Credit risk (continued) The impairment requirements are complex and require management judgements, estimates and assumptions. Key concepts and management judgements taken into consideration are as below.

Determining a significant increase in credit risk since initial recognitionIFRS 9 requires the recognition of 12 month expected credit losses (the portion of lifetime expected credit losses from default events that are expected within 12 months of the reporting date) if credit risk has not significantly increased since initial recognition (stage 1), and lifetime expected credit losses for financial instruments for which the credit risk has increased significantly since initial recognition (stage 2) or which are credit impaired (stage 3). Group will assess when a significant increase in credit risk has occurred based on quantitative and qualitative assessments.

TheIFRS9requirementsforthestagingofloansandadvancesissummarizedinthetwodiagramsbelow:

Diagram 1

STAGE 1Status: not determinedProvision: 12 month ECL

Transfer assets back to Stage 1 When criteria above no Longer met (symmetric model)

MOVE BACKIf the transfer condition above is No longer met

Transfer assets back to Stage 2 when assets have recovered from default

STAGE 2Status: not determinedProvision: Lifetime ECL

STAGE 3Status: credit impairedProvision: Lifetime ECL

1 32PROVISION CLIFF EFFECT NO PROVISION CLIFF EFFECT

DIAGRAM 2

12-MONTHEXPECTED CREDIT LOSSES

LIFETIMEEXPECTED CREDIT LOSSES

DIAGRAM 1

TRANSFERIf the credit risk on the financial asset has increased significantly since initial recognition

LIFETIMEEXPECTEDCREDIT LOSSES

12 –MONTHEXPECTEDCREDIT LOSSES

Diagram 2

STAGE 1Status: not determinedProvision: 12 month ECL

Transfer assets back to Stage 1 When criteria above no Longer met (symmetric model)

MOVE BACKIf the transfer condition above is No longer met

Transfer assets back to Stage 2 when assets have recovered from default

STAGE 2Status: not determinedProvision: Lifetime ECL

STAGE 3Status: credit impairedProvision: Lifetime ECL

1 32PROVISION CLIFF EFFECT NO PROVISION CLIFF EFFECT

DIAGRAM 2

12-MONTHEXPECTED CREDIT LOSSES

LIFETIMEEXPECTED CREDIT LOSSES

DIAGRAM 1

TRANSFERIf the credit risk on the financial asset has increased significantly since initial recognition

LIFETIMEEXPECTEDCREDIT LOSSES

12 –MONTHEXPECTEDCREDIT LOSSES







b) Credit risk (continued)

Quantitative elementWith the use of an internal scorecard or risk rating process, Furnmart can assess significant increases in customers’ credit risk in their in meeting the committed monthly hire purchase installments. This involves setting thresholds for determining what constitutes a significant increase in credit risk as a loan moves along the rating scale. Once the scorecard or risk rating has been developed, Furnmart can then determine the PD associated with those ratings.

Two types of PDs are considered under IFRS 9:• Twelve-monthPDs–Thisistheestimatedprobabilityofadefaultoccurringwithinthenext12months(oroverthe

remaining life of the financial instrument if that is less than 12 months). This is used to calculate 12-month ECL, which are applicable to Stage 1 financial instruments.

• LifetimePDs–Thisistheestimatedprobabilityofadefaultoccurringovertheremaininglifeofthefinancialinstrument. This is used for the purpose of staging assessment and also then to calculate lifetime ECLs for Stage2 and Stage 3 exposures.

Qualitative ElementAccounts that meet the portfolio’s ‘high risk’ criteria and are subject to closer credit monitoring.

Backstop CriteriaAccounts that are 30 calendar days or more past due. The 30 days past due criteria should be treated as a backstop rather than a primary driver of moving exposures into stage 2.Exposures will move back to stage 1 once they no longer meet the criteria for a significant increase in credit risk and when any cure criteria used for credit risk management are met. This is subject to all payments being up to date and the customer evidencing ability and willingness to maintain future payments.

Forward-looking informationThe IFRS 9 measure of ECL is an unbiased probability-weighted amount that is determined by evaluating a range of possible outcomes and using reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions. IFRS 9 requires the use of forward-looking factors, or predictive indicators, in the calculation of ECL, including the staging assessment.

Forward-looking information inherently involves management judgment in determining key inputs such asmacroeconomic factors that affect PD, LGD and Exposure at Default (EAD) risk factors of a loan, rating category or portfolio, as the case may be, as well as the forecasted values of those risk factors in one, two or more years forward (depending on the expected life of the portfolio).Source of the forward looking information will vary from country to country and all macro-economic factors used will be approved at high level by the credit committee. This will also be based on the correlation exercises done.

Definition of default, credit impaired assets, write-offs, and interest income recognitionDefault is not defined under IFRS 9. The Group is responsible for defining this for themselves and it should be based upon its own definition used in the Group’s internal risk management. Careful consideration of how default is defined is important as the definition impacts the calculation of PDs, LGDs and EADs, hence impacting the ECL results.



Definition of default, credit impaired assets, write-offs, and interest income recognition (continued)The simplest definition is that of failure to meet a scheduled payment of principal or interest, however, that definition has modifications depending upon the loan product. The definition of default has to be consistent with that used for internal credit risk management purposes for the relevant financial instrument and has to consider qualitative indicators, e.g., breaches of covenants, when appropriate. Inability to pay may also be considered in making the qualitative assessment of default.

Indicationsofinabilitytopayinclude:• thecreditobligationisplacedonnon-accruedstatus;• theGroupsellsthecreditobligationorreceivableatamaterialcreditrelatedeconomicloss;• theGroupagreestoadistressedrestructuringresultinginamaterialcreditrelateddiminishedassetstemmingfrom

such actions as material forgiveness or postponement of payments or repayments of amount owing;• theGrouphasfiledfortheobligor’sbankruptcyinconnectionwiththecreditobligationand• theobligorhassoughtorbeenplacedinbankruptcyresultinginthedelayoravoidanceofthecreditobligation’s

repayment.

There is a rebuttable presumption within the standard that default does occur once a loan is more than 90 days past due, the Group has adopted this presumption.

Write-off polices are not expected to change from IAS 39.

DiscountingExpected credit losses are discounted at the effective interest rate (EIR) at initial recognition or an approximation thereof and consistent with income recognition.

Modelling techniquesExpected credit losses (ECL) are calculated by multiplying three main components, being the PD, LGD and the EAD, discounted at the original effective interest rate.For the IFRS 9 impairment assessment, Group Impairment Models are used to determine the PD, LGD and EAD. For stage 2 and 3, Group applies lifetime PDs but uses 12 month PDs for stage 1. The ECL drivers of PD, EAD and LGD are modelled at an account level which considers vintage, among other credit factors. Also, the assessment of significant increase in credit risk is based on the initial lifetime PD curve, which accounts for the different credit risk underwritten over time.

Renegotiated loans treatmentBoth performing and non-performing restructured assets are classified as stage 3 except where it is established that the concession granted has not resulted in diminished financial obligation and that no other regulatory definitions of default criteria has been triggered, in which case the asset is classified as stage 2. The minimum probationary period is 6 months to move to cure state.

The Group is currently working on various elements which would make up the final IFRS 9 impairment model.







c) Liquidity risk

Liquidity risk is the risk that operations cannot be funded and financial commitments cannot be met timeously and cost effectively. The risk arises from both the difference between the magnitude of assets and liabilities and the disproportion in their maturities. Liquidity risk management deals with the overall profile of the Statement of Financial Position, the funding requirements of the Group and cash flows. The Group ensures sufficient flexibility by maintaining available committed credit lines. The Group monitors rolling forecast of liquid reserves, comprising cash and cash equivalents and available facilities.

The table below shows the analysis of the Group’s financial liabilities into relevant maturity groupings based on gross contractualrepaymentsandtheremainingperiodfromtheStatementofFinancialPositiontothecontractualmaturitydate:

GROUP Less than 6 -12 Between 6 months months 1-5 years Total P’000 P’000 P’00031 July 2018 Borrowings 13 896 1 397 164 997 180 290 Trade and other payables 105 932 - - 105 932 119 828 1 397 164 997 286 22231 July 2017Borrowings 13 582 19 017 286 726 319 325 Trade and other payables 89 977 - - 89 977 103 559 19 017 286 726 409 302

COMPANY less than 6 - 12 Between 6 months months 1-5 years Total P’000 P’000 P’000 P’00031 July 2018Borrowings 7 282 - 150 000 157 282 Trade and other payables 118 021 - - 118 021 125 303 - 150 000 275 303 31 July 2017Borrowings 7 608 10 652 255 534 273 794Trade and other payables 132 924 - - 132 924 140 532 10 652 255 534 406 718

d) Early settlement risk

Early settlement risk is the risk that loans and advances to customers will be settled before the end of their term. An increase in early settlements may result in a reduction in financial interest income. At the year end, loans and advances to customers under early notice were not significant.

e) Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group also monitors applicable debt covenants to ensure there are no breaches.

Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital employed. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the Group Statement of Financial Position) less cash and cash equivalents. Total capital employed is calculated as ‘equity’ as shown in the Group Statement of Financial Position plus net debt.



The strategy, which is unchanged from 2009, is to maintain the gearing ratio below 50% at Group level. The gearing ratios at 31July2018and2017wereasfollows: GROUP COMPANY 2018 2017 2018 2017

P’000 P’000 P’000 P’000

Total borrowings 180 290 206 550 157 282 171 938 Less:Cashandcashequivalents (133121) (136049) (15110) (4894)Net debt 47 169 70 501 142 172 167 044 Total equity 776 080 705 274 208 298 209 186 Total capital employed 823 249 775 775 350 470 376 230 Gearing ratio 6% 9% 41% 44%

f) Financial instruments by category GROUP COMPANY

2018 2017 2018 2017 P’000 P’000 P’000 P’000

Financial assets by category Loans and receivables •Otherfinancialassets-cellcaptives 59683 67189 - -•Receivablesandprepayments 18741 23419 158156 306686•Loansandadvancestocustomers 587538 517399 - -

•Cashandcashequivalents 133121 136049 15110 4894Total 799 083 744 056 173 266 311 580

Financial liabilities by category Other financial at amortised cost Borrowings 180 290 206 550 157 282 171 938

Trade and other payables 105 931 89 974 118 021 132 924Total 286 221 296 524 275 303 304 862







1. Segment informationThe Group’s operating businesses are organised and managed separately according to the nature of the products and services offered by each of such segments representing a strategic business unit. The Group is organised into two principal businessareasandthesemakeupthetworeportableoperatingsegmentsasfollows:

Retail - retail sale of furniture and appliancesFinancial Services - provider of consumer finance

The Group Executive Management Committee acts as the Chief Operating Decision Maker of the Group and it assesses the performance of the operating units based on the measure of operating profit. This measurements basis assesses performance on bases of recognition and measurement which are consistent with the accounting policies of the Group.

Inter-segment transactions between business segments are entered into in a manner similar to transactions with third parties. Revenue is derived from a very broad and diversified customer base, with no dependence on any significant customer.The segment information provided to the Group Executive Management Committee for the reportable segments for the year ended31July2018isasfollows: Year ended 31 July 2018 Financial Retail Services Unallocated Total P’000 P’000 P’000 P’000Total revenue 847 030 399 460 - 1 246 490 Depreciation (21 543) - - (21 543)Impairment of loans and advances - (56 890) - (56 890)Other costs (821 227) (208 030) (8 373) (1 037 630)

Operating profit 4 260 134 540 (8 373) 130 427 Other Income 32 503Finance income 2 455 Finance cost (17 204)Share of loss from associate 206Profit before tax 148 387 Income tax expense (40 447)

Net profit for the year 107 940

Total assets 776 612 260 715 60 407 1 097 734

Total liabilities (80 414) - (241 240) (321 654) Group interest bearing borrowings are not considered to be segment liabilities but are managed by the treasury function and therefore reflected as unallocated. Foreign exchange (losses)/gains resulting from the treasury function are also included under unallocated.

Other reconciling items relates to the head office functions (such as centralised finance and administration) which do not earn revenue from third parties.

NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 July 2018


1. Segment information (continued)

Year ended 31 July 2017 Financial Retail Services Unallocated Total P’000 P’000 P’000 P’000Total revenue 879 581 294 911 - 1 174 492 Depreciation (20 050) - - (20 050)Impairment of loans and advances - (24 705) - (24 705)Other costs (835 069) (195 237) (29 644) (1 059 950)Operating profit 24 462 74 969 (29 644) 69 787 Other Income 50 958 Finance income 1 369 Finance cost (22 978)Share of loss from associate (1 630)Profit before tax 97 506 Income tax expense (32 949)

Net profit for the year 64 557

Total assets 263 663 584 587 187 585 1 035 835

Total liabilities (89 974) - (240 587) (330 561)

2. Revenue GROUP COMPANY 2018 2017 2018 2017

P’000 P’000 P’000 P’000Merchandise sales 847 030 818 987 - - Financing services (net) 361 347 267 889 - - Ancillary services 38 113 87 616 - - Interest income – subsidiaries (note 21) - - 29 205 32 606Administration fees – subsidiaries (note 21) - - 22 030 19 605Dividend income – subsidiaries and associate (note 21) - - 27 905 29 600 1 246 490 1 174 492 79 140 81 811

NOTES TO THE FINANCIAL STATEMENTS (Continued)For the year ended 31 July 2018






GROUP COMPANY 2018 2017 2018 2017

P’000 P’000 P’000 P’0003. Expenses by nature

Cost of merchandise sold 557 316 565 623 - - Auditors remuneration 1 747 2 259 142 104 Directors’ remuneration and other managerial services 5 565 5 844 5 565 5 844 (paid to related company) (note 21) Management fees paid to related company (note 21) 1 060 1 139 1 060 1 139 Depreciation on property, plant and equipment (note 8) 21 543 20 050 1 649 1 304 Rentals and rates 86 333 90 487 581 466 Impairment of loans and advances (note 13) 56 890 24 705 - - Impairment of intercompany receivables (note 14) - - 1 329 3 527 Repossession loss 34 328 37 064 - - Repairs and maintenance 4 584 4 583 21 6 Marketing 24 269 22 802 9 18 Professional and other service fees 4 061 14 499 934 673 Travel and transport 22 328 19 858 570 544 Branch and office administration expenses 31 944 28 455 268 215 Staff costs - salaries and wages 197 180 199 255 10 221 7 798 - welfare and terminal benefits (note 19) 6 066 7 357 985 1 526 Exchange losses 1 350 - 1 923 - Distribution costs 35 848 35 780 - - Other expenses 23 651 24 945 268 386 Total cost of sales, distribution costs and administrative expenses 1 116 063 1 104 705 25 525 23 550

Other incomeProfit on sale of property, plant and equipment 405 1 347 126 65 Service fees (note 21) 3 241 4 740 594 3 240 Interest on staff loans 112 449 - (112) Income from cell captive (note 11) 27 249 31 800 - - Net exchange gains - 10 592 - 14 934 Sundry income 1 496 2 030 - - 32 503 50 958 720 18 127

4. Finance income and costsInterest income - Bank deposit 2 455 1 369 28 334 Finance income 2 455 1 369 28 334Interest expense - Bank overdraft (279) (2 241) (9) (17) - Related party loans (note 21) - - (4 939) (6 487)

- Bank borrowings (4 206) (6 896) (1 576) (3 174) - Finance leases (158) (257) - - - Bond (12 300) (12 300) (12 300) (12 300)

- Others (261) (1 284) - - Finance costs (17 204) (22 978) (18 824) (21 978)



GROUP COMPANY 2018 2017 2018 2017

P’000 P’000 P’000 P’0005. Income tax expense

Current income tax 34 662 32 369 - 2 717Withholding tax on dividend income - - - -

Irrecoverable withholding taxes 5 664 - 5 664 - Add:Netdeferredtaxcharge/(credit)fortheyear(note9) 121 580 (3744) 1183

Tax charge to the Statement of Comprehensive Income 40 447 32 949 1 920 3 900 The tax on Group income differs from the theoretical amount that would arise using the basic tax rate of the home country oftheGroupasfollows:Profit before tax 148 387 97 506 35 539 54 744 Taxcalculatedatdomestictaxratesapplicable(rate:15%) 22258 14626 5331 8212 Expenses not deductible for tax - 18 - -

Income not subject to tax - - (4 186) (4 440) Irrecoverable withholding taxes 5 664 - 5 664 - Adjustment in respect of prior years - (1 065) - - Effect of rates in foreign tax jurisdictions 15 484 5 384 - 72 Tax effects of timing differences not recognised in the prior year (2 959) 13 986 (4 889) 56

40 447 32 949 1 920 3 900

Deferred tax assets not recognised relate to the estimated tax losses of start-up entities within the Group which have not yet reachedastageofgeneratingsustainedtaxableincome.Theselossesamountingto2018:P146433364,(2017:P118467470)donot expire and are to be offset against future taxable profits.

Furnmart Limited obtained IFSC status in 2013/2014 financial year and as a result income earned outside of Botswana is taxed at a lower rate of 15%.

6. Earnings per shareBasic and diluted earnings per share is calculated by dividing the profit attributable to equity holders of the holding company by the weighted average number of ordinary shares in issue during the year (note 16).

2018 2017 Net profit attributable to shareholders (P’000) 107 940 64 557 Weighted average number of shares in issue 606 446 080 606 446 080 Basic earnings per share (thebe) 17.80 10.65

7. Dividend paid and proposedDuringtheyearended31July2018aninterimdividendofP20.862mwaspaid(2017:P7.884)andafinalgrossdividendofP15.101mwasdeclaredaftertheyearend(2017:P13.645). GROUP COMPANYDividend paid 2018 2017 2018 2017 P’000 P’000 P’000 P’000Prior year final dividend 13 645 - 13 645 -Current year interim dividend 20 862 7 884 20 862 7 884 34 507 7 884 34 507 7 884







8. Property, plant and equipment and intangibles GROUP Freehold Leased Owned Furniture land and motor motor and office Developed building vehicles vehicles equipment Software Total P’000 P’000 P’000 P’000 P’000 P’000Year ended 31 July 2018Opening net book amount 37 537 1 526 15 151 17 325 4 398 75 937 Exchange movement on translation (156) (8) (44) (1 923) - (2 131)of foreign subsidiaries Additions 86 - 7 935 22 295 2 606 32 922 Transfers (450) 450Disposals at cost - (593) (1 922) (31) - (2 546) Depreciation on disposals - 438 1 680 23 - 2 141 Depreciation and amortisation charge (806) (555) (6 669) (12 152) (1 361) (21 543)Closing net book amount 36 661 358 16 581 25 537 5 643 84 780

Year ended 31 July 2018Cost 42 204 3 543 48 347 122 384 15 802 232 279 Accumulated depreciation and amortisation (5 542) (3 185) (31 766) (96 846) (10 159) (147 499)Net book amount 36 661 358 16 581 25 537 5 643 84 780

Year ended 31 July 2017Opening net book amount 37 044 1 984 17 810 15 166 5 498 77 502 Exchange movement on translationof foreign subsidiaries 1 287 71 278 386 - 2 022Additions 7 - 5 220 12 251 - 17 479Disposals at cost - - (7 374) (13 339) - (20 713)Depreciation on disposal - - 6 588 13 110 - 19 697Depreciation and amortisation (801) (529) (7 371) (10 249) (1 100) (20 050)Closing net book amount 37 537 1 526 15 151 17 325 4 398 75 937

Year ended 31 July 2017Cost 42 299 4 092 42 514 102 875 13 196 204 976Accumulated depreciation and amortisation (4 762) (2 566) (27 363) (85 550) (8 798) (129 039)Net book amount 37 537 1 526 15 151 17 325 4 398 75 937

The bank facilities provided to Furnmart (Pty) Ltd, South Africa is secured by first mortgage over the group’s freehold land and building to the value of R 40 000 000.



8. Property, plant and equipment and intangibles (Continued)

COMPANY Owned Furniture motor and office Developed vehicles equipment Software Total P’000 P’000 P’000 P’000Year ended 31 July 2018Opening net book amount 1 584 87 4 398 6 069Additions 324 61 2 606 2 991 Disposals at cost (687) - - (687) Depreciation on disposals 687 - - 687 Depreciation (245) (43) (1 361) (1 649)Closing net book amount 1 663 105 5 643 7 411Year ended 31 July 2018Cost 3 162 16 459 15 803 35 424 Accumulated depreciation (1 499) (16 354) (10 160) (28 013)Net book amount 1 663 105 5 643 7 411 Year ended 31 July 2017Opening net book amount 1 777 96 5 498 7 371Additions - 17 - 17Disposals at cost (395) - - (395)Depreciation on disposals 380 - - 380Depreciation (178) (26) (1 100) (1 304)Closing net book amount 1 584 87 4 398 6 069

Year ended 31 July 2017Cost 3 525 16 398 13 197 33 119Accumulated depreciation (1 941) (16 311) (8 798) (27 050)Net book amount 1 584 87 4 398 6 069

GROUP COMPANY 2018 2017 2018 20179. Deferred income tax P’000 P’000 P’000 P’000

Deferred income tax assets 7 613 1 718 4 084 340 Deferred income tax liabilities 25 329 21 989 - -

Themovementonthedeferredtaxassetaccountisasfollows: Balance at the beginning of the year 1 718 1 608 340 1 523 Statement of comprehensive income credit/(charge) (note 5) 5 902 105 3 744 (1 183) Exchange movement on translation of foreign subsidiaries (7) 5 - -

Balance at the end of year 7 613 1 718 4 084 340Themovementonthedeferredtaxliabilityaccountisasfollows:

Balance at the beginning of the year 21 989 20 717 - -Statement of Comprehensive Income charge/ (credit) (note 5) 6 023 685 - -

Over provision in respect of prior years (2 608) - - -Exchange movement on translation of foreign subsidiaries (75) 587 - -Balance at the end of year 25 329 21 989 - -







GROUP COMPANY 2018 2017 2018 2017

9. Deferred income tax (continued) P’000 P’000 P’000 P’000 Thedeferredincometaxassetarisesfromthefollowing:

Accelerated tax depreciation 3 770 1 718 241 340Deferred tax on tax losses 3 843 - 3 843 - 7 613 1 718 4 084 340

This deferred tax asset is expected to be recovered within 12 months.

Thedeferredincometaxliabilityarisesfromthefollowing:Accelerated tax depreciation 1 270 2 092 - -Instalment sale allowance on loans and advances 24 107 19 801 - -Lease and other adjustments (48) 96 - - 25 329 21 989 - - This deferred tax liability is expected to be settled after 12 months.

10 Investment

10.1 Investment in associate 725 1 599 - -

Thenominalvalueofinvestmentinassociateisasfollows: (P) (P)United Impex (Pty) Ltd 25 25

Investment in associateBalance at beginning of the year 1 599 3 229 - -Dividend received (note 21) (1 080) - - -Share of profit/ (loss) for the year 206 (1 630) - -

Balance at the end of year 725 1 599 - -

The Group’s associate is unlisted and domiciled in Botswana and was in the business of providing personal finance, but is currently winding down. The investment is valued at net asset value. The Associate’s assets and liabilities, and results are summarisedasfollows: As at 31 As at 31 July 2018 July 2017 P’000 P’000

Assets Cash and cash equivalents 152 1 593Other assets 527 6 342 679 7 935Liabilities Trade and other payables 82 1 541Net assets 597 6 394Revenue (net) 834 189Profit before tax 811 166Income tax expense (12) (36)Total comprehensive income 799 130



COMPANY 2018 2017 P’000 P’000

10.2 Investment in subsidiariesInvestment in Furn Mart (Pty) Ltd, Namibia (Equity) 15 109 15 109 Investment in Furniture Mart Zambia Ltd (Equity) - 42 878 Investment in Xtreme Discounters (Pty) Ltd, South Africa (Equity) 142 099 142 099 Investment in Furnmart (Pty) Ltd, South Africa (Debt) 15 534 15 601 Investment in Xtreme Discounters (Pty) Ltd, South Africa (Debt) 117 886 118 391 Total investment in subsidiaries before impairment 290 628 334 078 The investment in subsidiaries includes equity investment in Furniture Mart (Pty) Ltd, Botswana of P2 shares and Furnmart (Pty) Ltd, RSA of R100 shares.

The movement during the year comprises:Balance at the beginning of the year, before impairment 291 200 250 281 Investment during the year - Xtreme Discounters (Pty) Ltd, South Africa - 79 756 Exchange gain arising from loans considered as part of investment (572) 4 041 Total investment before impairment 290 628 334 078 Provision for impairment - Furniture Mart Zambia Ltd - (42 878)Balance at the end of year 290 628 291 200

Furniture Mart Zambia LtdFurniture Mart Zambia Ltd was fully closed during the financial year ended July 2018. The de-registration process was completed. Accordingly the entity ceased to be the subsidiary of Furnmart Limited and its results are not consolidated.







10.3 Impairment of investments is calculated as follows: GROUP COMPANY 2018 2017 2018 2017 P’000 P’000 P’000 P’000Totalbalancedueismadeupasfollows:Investment in equity (note 10) - - - 42 878Investment in debt - intercompany receivables - - - 37 844 - - - 80 722Impairment of investment in subsidiary - - - (42 878)Impairment of intercompany receivables (note 14.1) - - - (33 597)Net recoverable amount (note 21) - - - 4 247

11. Other financial assetsInvestment in cell captive 59 683 67 189 - -

This represents the balances due from cell captive arrangements entered into by the Group. Themovementisanalysedasfollows:Balance at beginning of year 67 189 64 736 - -Income received during the year (note 3) 27 249 31 800 - -Customer protection charges deposited - net of claims and costs (34 755) (29 347) - -Balance at end of year 59 683 67 189 - -

These investments are held as balances of first recourse in the event of a claim under the customer protection plans sold by the Group in South Africa and Namibia.

Furnmart Limited, through its subsidiaries in South Africa and Namibia, has participated in some cell captive arrangements, which are unconsolidated structured entities. These are not consolidated as part of the group as the relevant assets of the cell captive are not ring-fenced from that of Mutual and Federal (South Africa) and Old Mutual Short Term Insurance Company (Namibia), the ultimate underwriters of the insurance policies issued by the cells.

These structured entities are financed by the insurance premium collected by Furnmart subsidiaries to provide insurance services to the Group’s customers, effectively insuring the debtors’ balance of the Group’s subsidiaries in Namibia and South Africa against any losses arising from death, disability and certain other life changing events of the customers.

The cell captive in Namibia does not have any recapitalisation obligations and the maximum loss exposure of the group is restricted to the carrying amount of the investment. In South Africa, the Group is obligated to recapitalise the cell captive in the event that the cell is financially insolvent due to excessive claims. As at the balance sheet date, the directors have assessed the financial status of the cell captive in South Africa and based on available cash reserves, have concluded that there is no obligation to recapitalise at that date. Accordingly no liability has been recognised in these financial statements.



11. Other financial assets (continued)The scale of the unconsolidated structured entities and the carrying amount of the investment in the entities by the Group are asfollows: GROUP 2018 2017 P’000 P’000 Total assets of the unconsolidated structured entities (aggregate amount) 59 683 67 189The carrying amount of the investment recognised by the Company 59 683 67 189

The Company has not provided, nor intends to provide any financial support or other significant support to the unconsolidated structured entities above without contractual obligation.

12. InventoriesMerchandise 191 272 195 099

InventoriesexcludesvalueofobsolescenceamountingtoP9.7m(2017:P12.25m)forthestockcarriedatnetrealisablevalue.InventorieswithavalueofP50.0m(2017:P50.0m)areheld as collateral for borrowings as set out in note 17. Cost of inventories sold is recognised as expense and included in note 3.

13. Loans and advances to customers Trade receivables – gross 989 212 867 818 Unearned finance and other charges (243 916) (205 803) 745 296 662 015 Impairment provision on originated loans (157 758) (144 616) 587 538 517 399

Impairment provision on originated loansOpening balance 144 616 154 466 Write offs during the year (44 038) (37 400) Charge for the year (note 3) 56 890 24 705 Exchange movement on translation of foreign subsidiaries 290 2 845 Closing balance 157 758 144 616

Unearned finance and other chargesOpening balance 205 803 211 418 Additions during the year 399 460 262 274 Earned during the year (361 347) (267 889) Closing balance 243 916 205 803

Loans and advances to customers are collateralised against the merchandise purchased by customers.As there is no observable market for instalment sale and loan receivables of the nature that the group holds, fair value is not readily available and consequently a valuation could be misleading. The carrying value of trade and other receivables approximates their fair values.

GrosstradereceivablesuptoP199.27m(2017:P224.80m)areheldascollateralforborrowingsassetoutinnote17.







GROUP COMPANY 2018 2017 2018 2017 P’000 P’000 P’000 P’00014. Receivables and prepayments Staff loans 853 1 841 - 30

Advances and prepayments 1 625 3 265 357 - Indirect taxes paid in advance 8 840 9 475 - -

Other receivables 7 369 5 840 35 32 Related companies (note 14.1) 54 2 998 157 764 200 712

18 741 23 419 158 156 200 774

The carrying amount of receivables and prepayments approximates to their fair values.

14.1. Receivables from related companies Receivable from related companies 54 2 998 157 764 234 309 Provision for impairment - - - (33 597)

Net receivables (note 21) 54 2 998 157 764 200 712 Themovementsofprovisionforimpairmentisasfollows:Brought forward provision - - (33 597) (30 070)Provision for the year - - (1 329) (3 527)

Amount written off - - 34 926 - - - - (33 597)

15. Cash and cash equivalentsBank balances 133 085 136 020 15 110 4 894

Cash in hand 36 29 - -Cash and bank balances 133 121 136 049 15 110 4 894 For the purposes of the cash flow statement, the cash and cash 133 121 136 049 15 110 4 894 Equivalentscomprisethefollowing:

Cash and bank balances 133 121 136 049 15 110 4 894 Net cash and cash equivalents 133 121 136 049 15 110 4 894

16. Stated capital606446080(2017:606446080)issuedandfullypaidordinaryShares at no par value 198 899 198 899 198 899 198 899

17. BorrowingsCurrent Bank loan 14 554 24 862 7 282 14 816 Finance lease liabilities 739 1 286 - - 15 293 26 148 7 282 14 816Non-currentBank loan 14 734 29 237 - 7 122 Finance lease liabilities 263 1 165 - - Bond 150 000 150 000 150 000 150 000 164 997 180 402 150 000 157 122Total borrowings 180 290 206 550 157 282 171 938 All leases are repayable over 24 to 60 months, commencing at various dates from 1 April 2016. The lease liabilities are effectively secured over the capitalised leased assets (note 8).Finance lease liabilities - minimum lease paymentsNot later than one year 785 1 479 - - Later than one year and not later than five years 271 1 255 - - 1 056 2 734 - -Future finance charges on finance leases (54) (283) - - Present value of finance lease liabilities 1 002 2 451 - -




17. Borrowings (continued) GROUP COMPANY 2018 2017 2018 2017 P’000 P’000 P’000 P’000The present value of finance lease liabilities is as follows;Not later than one year 739 1 286 - -Later than one year and no later than five years 263 1 165 - - 1 002 2 451 - -

Bond issueBalance at the beginning of year 150 000 150 000 150 000 150 000Balance at the end of year 150 000 150 000 150 000 150 000

ThetotalfairvalueofborrowingsatyearendamounttoP194987207,(2017:212329684).

Furnmart Limited on 14 June 2010 issued a tranche of P 50 m Notes, which forms part of its P 500m note. programannounced in June 2010. The first tranche bearing interest at Bank of Botswana certificates rate plus 1.60% per annumpayable quarterly matured on 12 July 2015 and was duly redeemed on the said date. Furnmart Limited on 18 October 2013 issued the second tranche of P 150m Notes. These notes are non-convertible, unsubordinated and unsecured. The second tranche bears interest at 8.20 % per annum payable semi-annually and matures in 23 October 2025.

TheGroup’sbankingfacilitiesareasfollows:(a) Short term facility of N$ 58m to finance working capital requirements with First National Bank of Namibia Limited at

Namibian prime rate (currently 10.50% per annum). This facility is secured by cession of book debts and suretyship in the amount of N$58m from Furnmart Limited, Botswana. The outstanding balance as at 31 July 2018 is N$ nil

(2017:N$nil). (b) Long term loan facility of N$ 25 million by First National Bank of Namibia Limited at Namibian prime rate (currently

at 10.50% per annum) less 0.5% to be repayable in 60 months ending October 2018, and secured by cession of book debtsandsuretyshipfromFurnmartLimited.Theoutstandingbalanceasat31July2018isN$1.6m(2017:N$7.5m)

(c) Payment guarantee facility amounting to P15 m, Foreign exchange contract facility amounting to P 0.8 m and facility for Credit Card amounting to P 0.2 m with First National Bank of Botswana secured by limited cession of book debts and suretyship of P 15 m from Furniture Mart (Pty) Limited.

(d) Overdraft facilities with Barclays Bank of Botswana Limited amounting to P30.0m at Botswana prime rate (currently at 6.5%perannum)less1%.Theoutstandingbalanceasat31July2018isPnil(2017:Pnil).

(e) Payment guarantee facility with Barclays Bank amounting to R 20 m and USD 0.1m. These facilities are secured by stock of P 50 m and limited cession of book debts of P 60 m.

(f ) Letter of Credit facility amounting to USD 0.3 m with Barclays Bank of Botswana Limited. The outstanding balance as at31July2018isPnil(2017:Pnil)

(g) Long term loan facility of R 75 m from Norsad Finance Limited at South African prime rate (currently 10.0% per annum) repayable in 16 quarterly instalments ending December 2018. This is secured by a limited cession on book debts of R75 m and a corporate guarantee from Furniture Mart (Pty) Ltd. The outstanding balance as at 31 July 2018 isR9.4m(2017:R28.1m)






17. Borrowings (continued)

(h) Term loan facility of R 40.0m from Nedbank Limited. The loan bears interest at South African prime rate less 1% (currently 10.0% per annum) and is repayable in 120 months ending August 2021 secured by mortgage bond over property at Erf13 Meadowdale, Gauteng Province, RSA and limited suretyship from Furnmart Limited Botswana. The outstandingbalanceasat31July2018isR16.2m(2017:R20.1m).

(i) Term loan facility of R 5.0m from Nedbank Limited. The loan bears interest at South African prime rate (currently 10.0% per annum) less 1% and is repayable in 84 months ending December 2020 and secured by a bank guarantee from First NationalBankofBotswanaLimited.Theoutstandingbalanceasat31July2018isR2.7m(2017:R3.6m).

(j) Term loan facility of R 10.0m from Nedbank Limited. The loan bears interest at South African prime rate (currently 10.0% per annum) less 1% is repayable in 84 months ending March 2022 and is secured by a bank guarantee from BarclaysBankofBotswanaLimited.Theoutstandingbalanceasat31July2018isR7.7m(2017:R9.4m)

(k) General banking facility by way of overdraft and/or letters of credit and/or forward exchange contract facility amounting to R6 m at Nedbank Limited at South Africa prime rate (currently 10.0% per annum). This facility is shared between Furnmart (Pty) Ltd and Xtreme Discounters (Pty) Ltd. This is secured by a general notorial bond over stock limitedtothefacilityofR6mandlimitedsuretyship.Theoutstandingbalanceasat31July2018isRnil(2017:Rnil)

(l) A vehicle and asset finance facility at Nedbank Limited for Xtreme Discounters (Pty) Ltd and Furnmart (Pty) Ltd. The outstandingbalanceasat31July2018isR0.99m(2017:R2.4m)



GROUP COMPANY 2018 2017 2018 2017 P’000 P’000 P’000 P’00018. Trade and other payables

Trade payables 49 855 45 587 - - Related companies (note 21) 188 233 111 801 126 383 Other payables 21 966 13 075 4 266 4 211 Deferred lease liabilities (note 22) 7 393 8 106 - - Amounts due to customers 4 279 6 169 - - 83 681 73 170 116 067 130 594The carrying amount of trade payables approximate their fair values.

19. AccrualsOpening balance 16 807 17 767 2 330 1 017 Charge for the year (note 3) 6 066 7 358 985 1 527 Paid during the year (622) (8 318) (1 361) (214)Closing balance 22 251 16 807 1 954 2 330 Accruals relate to the Group’s liabilities to employees for compensated absences from work, contractual gratuities and statutory long-service benefits.

20. Cash generated from operations Operating profit 162 930 120 745 54 335 76 388

Adjustmentfor:Dividend received - - (27 905) (29 600)Depreciation (note 8) 21 543 20 050 1 649 1 304 Profit on sale of property, plant and equipment (405) (1 347) (126) (65)

Cash inflow before working capital changes 184 068 139 448 27 953 48 027Changesinworkingcapital:- loans and advances to customers, receivables and prepayments (65 461) (1 799) (330) 272- related party receivables - - 42 948 18 735- inventories 3 827 33 956 - -- trade and other payables and accruals 15 955 (6 375) (14 903) 29 733Cash generated from operations 138 389 165 230 55 668 96 767

21. Related party transactions The Group is part of the CBH Group. Related parties comprise

the directors and other entities with common directors and shareholders, and includes Afritec (Pty) Ltd and Nafprop (Pty) Ltd

Thefollowingtransactionswerecarriedoutwithrelatedparties:(i) Trade of goods and services

- Rental paid to Cash Bazaar Holdings (Pty) Ltd and its subsidiaries 36 417 27 908 224 224- Expense reimbursementNafprop (Pty) Ltd - 92 - 92Afritec (Pty) Ltd - 874 - 874







GROUP COMPANY 2018 2017 2018 2017

P’000 P’000 P’000 P’00021. Related party transactions (continued)

- Impairment on investment in subsidiaries - Furniture Mart Zambia Ltd - - - 3 527 - Fees paid to Cash Bazaar Holdings (Pty) Ltd for managerial services rendered by directors and other senior staff* 6 625 6 983 6 625 6 983- Service fees received from - Afritec (Pty) Ltd, Botswana 3 241 4 740 594 3 240

- Xtreme Discounters (Pty) Ltd, South Africa - - 5 736 4 875 - Furn Mart (Pty) Ltd, Namibia - - 6 269 6 308 - Furniture Mart (Pty) Ltd, Botswana - - 10 025 8 422 22 030 19 605

* Some of the Group’s directors are employed as executives of Cash Bazaar Holdings (Pty) Ltd, and perform managerial and oversight duties at various entities throughout the Furnmart Group of companies, for which Cash Bazaar Holdings (Pty) Ltd charges the company entities based on an agreed formula. The company passes these on within service fee charged to its subsidiaries and associate.

(ii) Receivables from related parties: (note 14.1)

Afritec (Pty) Ltd - 2 981 - 2 981Xtreme Discounters (Pty) Ltd, South Africa - - 40 416 62 534 Furniture Mart Zambia Ltd - - - 4 247 Furn Mart (Pty) Ltd, Namibia - - 55 850 65 751 Furnmart (Pty) Ltd, South Africa - - 61 444 65 182 NafProp (Pty) Limited, Botswana 54 17 54 17

54 2 998 157 764 200 712

(iii) Payable to related parties (note 18):

Cash Bazaar (Pty) Ltd, Botswana 96 12 96 12 Afritec (Pty) Ltd, Botswana 92 221 92 221 Furniture Mart (Pty) Ltd, Botswana - - 111 613 126 150

188 233 111 801 126 383

(iv) Interest Income (note 2)

Furn Mart (Pty) Ltd, Namibia - - 9 407 9 152 Xtreme Discounters (Pty) Ltd, South Africa - - 18 012 23 454Furnmart (Pty) Ltd, South Africa - - 1 786 -

- - 29 205 32 606



GROUP COMPANY 2018 2017 2018 2017

P’000 P’000 P’000 P’00021. Related party transactions (continued)

(v) Dividend incomeFurniture Mart (Pty) Ltd, Botswana (note 2) - - 26 825 29 600United Impex (Pty) Ltd, Botswana 1 080 - 1 080 - 1 080 - 27 905 29 600

(vi) Dividend paid toCash Bazaar Holdings (Pty) Limited 1 489 340 1 489 340

(vii) Interest receivable from related parties (included in total receivables)

Furn Mart (Pty) Ltd, Namibia - - 9 256 9 239Xtreme Discounters (Pty) Ltd, South Africa - - - 24 554Furnmart (Pty) Ltd, South Africa - - 1 773 - - - 11 029 33 793

(viii) Interest ExpenseFurniture Mart (Pty) Ltd, Botswana - - 4 939 6 487

The receivable balances from Xtreme Discounters (Pty) Ltd, and Furnmart (Pty) Ltd, South Africa attract interest linked to the prime rate of South Africa, have no fixed repayment terms and are unsecured. These are denominated in Rands and considered as part of the company’s net investments in subsidiaries.

The receivable balance from Furn Mart (Pty) Ltd, Namibia attracts interest linked to the prime rate of Namibia, has no fixed repayment terms and is unsecured.

The balance payable to Furniture Mart (Pty) Ltd, Botswana attracts interest linked to the prime rate of Botswana. The payable is unsecured and has no fixed repayment terms.

(ix) Dividends paid to directors: P69 000 (2017: P13 000)

GROUP COMPANY 2018 2017 2018 2017

P’000 P’000 P’000 P’00022. Lease commitments

The operating lease rental commitments oftheGroupareanalysedasunder:Up to one year 64 761 65 427 - -Between two and five years 127 608 101 867 - -More than five years 7 098 9 322 - -Total future cash flows 199 467 176 616 - -Straight lining already accrued (note 18) (7 393) (8 106) - -Future expenses 192 074 168 510 - -







GROUP COMPANY 2018 2017 2018 2017

P’000 P’000 P’000 P’00023. Capital and loan commitments

Capital expenditure authorised but not contracted for 41 442 34 163 615 906Financing commitments to customers 1 929 1 162 - -

The capital expenditure and loan commitments will be funded from borrowings and internal sources.

24. Events after the reporting period Other than the facts and developments reported in these financial statements, there have been no material changes in the

affairs of the financial position of the Group between the year end and the date of approval of these financial statements; except that subsequent to the year end the Board took to a decision to seek a delisting of the Company’s shares from quotation and trade on the BSE. The notice of the Extraordinary General Meeting in this regard is set out in the announcement released on 31 October 2018 and a circular will be dispatched to shareholders on 3 November 2018. As a result of this, and subject to shareholder approval, the Company will make an offer to shareholders to repurchase shares from shareholders who wish to exit the Company (the “Offer”). The company has adequate facilities in place to meet the maximum consideration that could be payable as a result of the Offer.

25. Contingent liability

25.1 Legal action The Group is party to a number of legal suits as at the financial year-end. The most significant of these relates to claims laid

against the Group’s Namibian subsidiary by a group of former employees. The Group does not anticipate any significant cash out-flow from these claims.

25.2 Guarantees Company The company has issued bank guarantees in the ordinary course of the business to various parties, the total amount of such

guaranteesare2018:P12.71m(2017:P18.67m).

GROUP GROUP COMPANY

2018 2017 2018 2017 P’000 P’000 P’000 P’000

26. Income Tax paidBalance brought forward (net) (5 381) 4 210 (10 771) (10 955)Charge for the year (note 5) 34 662 32 369 - (2 717)Reversal of over provision adjustment 8 340 - 5 664 -Balance carried forward(net) 4 158 5 381 8 212 10 771 Net income tax paid 41 779 41 960 3 105 2 901



06

CategoryNo. of shareholders

2018 2017No. of shares held

2018 2017% of shares held

2018 20171- 1 000 53 50 26 211 24 665 0.0043 0.0040

1 001 – 5 000 195 195 467 427 462 252 0.0771 0.0762

5 001 – 10 000 45 46 300 400 310 288 0.0495 0.0512

10 001 – 100 000 102 105 3 408 439 3 409 786 0.5620 0.5623

Over 100 000 90 86 602 243 603 602 239 089 99.3070 99.3063

Total 485 482 606 446 080 606 446 080 100.0000 100.0000


2018 2017No. of shares held


2018 2017Body Corporates 33 39 464 356 560 479 366 822 76.57 79.05

Insurance companies andretirement funds 64 58 133 494 790 119 126 136 22.01 19.64

Individuals 388 385 8 594 730 7 953 122 1.42 1.31

Total 485 482 606 446 080 606 446 080 100.00 100.00


2018 2017 No. of shares held


2018 2017Public (<10%) 479 476 143 461 462 143 461 462 23.66 23.66

Directors’ Interest 5 5 248 484 978 248 484 978 40.97 40.97

Other (>10%) 1 1 214 499 640 214 499 640 35.37 35.37

Total 485 482 606 446 080 606 446 080 100.00 100.00

Shareholders holding more than 5%

No. of shareholders2018 2017

No. of shares held 2018 2017

% of shares held 2018 2017

Scotstrail Inc. 1 1 214 499 640 214 499 640 35.37 35.37

Kleinwort Benson Marula Trust 1 1 221 229 300 221 229 300 36.48 36.48

Total 2 2 435 728 940 435 728 940 71.85 71.85

SHAREHOLDERS’ DIARY

Financial year end 31st July 2018

Interim report for the six months to January April

Announcement of annual results October 2018

Annual report 02 November 2018

Annual general meeting 24 January 2019

ANALYSIS OF SHAREHOLDERS AND DIARYFor the year ended 31 July 2018

ANALYSIS OF

SHAREHOLDERS


07 SHARE

STATISTICS

SHARE STATISTICS2018

Month

Closing mkt capPm

HighP

LowP

Closing #P

Volume traded

Value traded

PNumber

of trades

August 363.87 0.60 0.60 0.60 86 008 51 604.80 3

September 333.55 0.60 0.55 0.55 136 707 75 188.85 2

October 333.55 0.55 0.55 0.55 7 696 4 232.80 3

November 333.55 0.55 0.53 0.55 120 668 66 367.40 16

December 333.55 0.55 0.55 0.55 182 212 100 216.60 7

January 327.48 0.55 0.54 0.54 226 786 122 464.44 10

February 327.48 0.54 0.54 0.54 10 123 5 466.42 3

March 327.48 0.54 0.54 0.54 - - -

April 327.48 0.54 0.54 0.54 165 605 89 426.70 11

May 327.48 0.54 0.54 0.54 91 785 49 563.90 12

June 327.48 0.54 0.54 0.54 150 334 81 180.36 33

July 327.48 0.54 0.54 0.54 17 850 9 639.00 7

1 195 774 655 351.27 107

Number of shares traded as a % of total shares in issue 0.197% 2017

Month

Closing mkt capPm

HighP

LowP

Closing #P

Volume traded

Value traded

PNumber

of trades

August 515.48 0.90 0.85 0.85 948 476 806 205 3

September 515.48 0.85 0.85 0.85 60 850 51 723 1

October 515.48 0.85 0.85 0.85 190 389 161 831 2

November 479.09 0.85 0.79 0.79 17 805 14 066 2

December 424.51 0.79 0.70 0.70 20 000 14 500 2

January 394.19 0.70 0.65 0.65 222 338 154 667 2

February 394.19 0.65 0.65 0.65 4 694 3 051 4

March 394.19 0.65 0.65 0.65 5 517 3 586 4

April 394.19 0.65 0.65 0.65 71 432 46 431 4

May 382.06 0.65 0.63 0.63 56 882 36 937 2

June 363.87 0.63 0.60 0.60 23 200 13 920 3

July 363.87 0.60 0.60 0.60 5 587 3 352 2

1 627 170 1 310 268 31

Number of shares traded as a % of total shares in issue 0.268%

# the closing value is based on the BSE report for trades that take place on the last day of the month while all other information is based on the record date per the Transfer Secretary records. At times the closing price is therefore outside the minimum to maximum range for a specific month.


Directorate BankersJ T Mynhardt Barclays Bank of Botswana LimitedT L J Mynhardt First National Bank LimitedD S le Roux* Bank Windhoek LimitedE Odendaal* ABSA Bank LimitedF B Lebala Nedbank LimitedJ P McLoughlin* Standard Bank LimitedS Venkataramani^ Capital Bank LimitedL G Waldeck* BancABC Limited (*South African) (^Indian)

Registered Office SecretaryPlot 50371 S VenkataramaniFairground Office Park Plot 20573/4 Magochanyama RoadGaborone, Botswana Sir Seretse Khama Airport Circle(PO Box 294, Gaborone, Botswana) Gaborone, Botswana

Transfer Secretaries Independent AuditorsDPS Consulting (Proprietary) Limited PricewaterhouseCoopersPlot 50371 Plot 50371Fairground Office Park Fairground Office ParkGaborone, Botswana Gaborone, Botswana(PO Box 1453, Gaborone, Botswana) (PO Box 294, Gaborone, Botswana)

Corporate Law Advisor Trustee Neill Armstrong Grant Thornton Business Services (Pty) LtdP.O.Box 45701, Riverwalk, Plot 50370, Acumen Parks, Gaborone, BotswanaGaborone, Botswana P. O. Box 1157, Gaborone, Tel:+2673952797 Tel:+2673952313 Fax:+2673972353Sponsors Stock Brokers Botswana (Pty) LtdP/Bag 00113Gaborone, BotswanaTel:+2673957900Fax:+2673957901

08 CORPORATE

INFORMATION


09NOTICE IS HEREBY GIVEN that the annual general meeting of the company for the year 2018 will be held in the Board Room,

FurnmartLimited,Plot20573/4MagochanyamaRoad,Gaboroneat15.00hrson24January2019,forthefollowingpurposes:

1. To consider and adopt the annual financial statements, including the report of the auditors for the year ended 31 July 2018.

2. To consider and ratify the dividends proposed by the directors.

3. To consider and elect individually the directors, who retire at the annual general meeting. In terms of the constitution of the

company. Being eligible, they offer themselves for re-election.

i D S le Roux

ii J P McLoughlin

iii S Venkataramani

Biographical information of the directors to be re-elected is set out on pages 6 and 7 of the Annual Report.

4. To consider and ratify the directors’ remuneration for the year ended 31 July 2018 (page 11).

5. To re-appoint PricewaterhouseCoopers as auditors of the company for the ensuing year.

6. To approve the auditors’ remuneration for the past audit (note 3, page 49).

7. To transact any other business, which may be transacted at an annual general meeting.

A member who is entitled to attend and vote at a general meeting is entitled to appoint one or more persons as a proxy to attend,

speak and vote in his/her stead and the proxy so appointed need not be a member of the company. Proxy forms should be

forwarded to reach the company’s registered office at least 48 hours before the time fixed for the meeting.

By order of the Board

S Venkataramani

Secretary 25 October 2018

NOTICE OF ANNUAL

GENERAL MEETING

01


Furnmart Annual Report 2018

10I/We_______________________________________________________________________________________________________

Of_________________________________________________________________________________________________________

Being the registered holder/s of___________________________ ordinary shares in the Company, at the close of business on Friday,16November2018,herebyappoint:

_______________________________________________________of __________________________________________________

Or failing him/her;

______________________________________________________________ of __________________________________________

Or failing him/her the Chairman of the meeting as my/our proxy to attend, speak and vote for me/us on my/our behalf at the annualgeneralmeetingofthecompanytobeheldat15:00hrsonWednesday,24January2019,andatanyadjournmentthereofand to vote for or against the restrictions or to abstain from voting in respect of the shares registered in my /our name(s), in

accordance with the following instructions:

Resolution number Detail In favour Against Abstain

1 To consider and adopt the annual financial statements, including the report of the auditors.

2 To consider and ratify the dividends proposed by the directors.

3 To consider and elect individually the directors, who retire at the annual general meeting. In terms of the constitution of the company. Being eligible, they offer themselves for re-election

i D S le Roux

ii J P McLoughlin

iii S Venkataramani

4 To consider and ratify the directors’ remuneration for the year ended 31 July 2018 (page11).

5 To re-appoint PricewaterhouseCoopers as auditors of the Company for the ensuing year.

6 To approve the auditors’ remuneration for the past audit (note 3, page 50).

7 To transact any other business, which may be transacted at an annual general meeting.

PROXY FORM

2018 Furnmart Annual Report

Signed this ______________________________________________________day of _______________________________________

Fullname:___________________________________________________________________________________________________

Signature:___________________________________________________________________________________________________

Assistedby(Guardian):_________________________________________________________________________________________

A member who is entitled to attend and vote at a general meeting is entitled to appoint one or more persons as a proxy to attend, speak and vote in his/her stead and the proxy so appointed need not be a member of the Company.

Registered officePlot 50371 Fairground Office Park, GaboroneFax:+2673973901

INSTRUCTIONS ON SIGNING AND LODGING THIS PROXY FORM

1. This must be deposited at the Registered Office of the Company not less than 48 (forty eight) hours before the time of the

scheduled meeting.

2. A deletion of any printed matter and the completion of any blank space(s) need not be signed or initialled. Any alteration or

correction made on this form must be signed, not initialled, by the signatory/signatories.

3. TheChairmanofthemeetingshallbeentitledtodeclinetoaccepttheauthorityofthesignatory:

a. Under a power of attorney; or

b. On behalf of a company or any other entity;

Unless such power of attorney or authority is deposited at the Registered Office of the Company not less than 48 (forty eight)

hours before the scheduled time for the meeting

4. The authority of a person signing as a Proxy in a representative capacity must be attached to the Proxy form unless the

authority has previously been recorded by the Secretary.

5. The signatory may insert the name of any person(s) whom the signatory wishes to appoint as his proxy in the blank space(s)

provided for that purpose.

6. When there are joint holders of shares and if more than one such joint holder is present in person or represented by proxy,

then the person whose name stands first in the register in respect of such shares, or his/her Proxy, as the case may be, shall

alone be entitled to vote in respect thereof.

7. The completion and lodging of this Proxy shall not preclude the signatory from attending the meeting and speaking and

voting in person thereat to the exclusion of any Proxy appointed in terms hereof should such signatory wish to do so.

8. The Chairman of the meeting may reject or accept my Proxy form which is completed and/or submitted other than in

accordance with these instructions, provided that he is satisfied as to the manner in which a member wishes to vote.

9. If the shareholding is not indicated on the Proxy form, the Proxy will be deemed to be authorised to vote the total

shareholding.

10. A minor or any other person under legal incapacity must be assisted by his/her parent or guardian, applicable, unless relevant

documents establishing his/her capacity are produced or have previously been registered.

PROXY FORM10

Documents

RNART IMITED ANNUAL EPORT Furnmart 2018 Annual Report.pdf · CHAPTER 02 8-9 MANAGEMENT REPORT CHAPTER 03 10-11 DIRECTORS’ REPORT CHAPTER 04 ... Leonard Godfrey Waldeck Independent,