annual report 2008

Sefalana Holding Company Limited

SEFALANA HOLDING COMPANY LIMITED • ANNUAL REPORT 2008

1

Contents

Financial highlights 2

Value added statement 2

Analysis of shareholders 3

stock market information 3

Financial and shareholders’ calendar 3

Corporate information 4

Directors 5

Group profile 6-17

Financial record history 18

Directors’ report 19-23

Report on corporate governance 24-29

Directors’ approval of the financial statements 30

Independent auditor’s report 31

Income statement 32

statement of changes in equity 33

Balance sheet 34-35

Cash flow statement 36-37

Notes to the financial statements 38-74

Notice of meeting 75

Form of proxy 77

Notes to form of proxy 78



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FInAnCIAl HIgHlIgHtsFor the year ended 30 April 2008 2008 2007 P’000 P’000

Revenue 1 402 745 1 019 844Profit for the year attributable to equity holders of the parent 30 164 22 708Shares in issue at beginning of year (number) 16 422 414 16 000 000Shares issued during the year (number) 422 414Increase due to 10 : 1 share split (number) 147 801 726Capitalisation shares issued (number) 1 424 927Shares in issue at end of the year (number) 165 649 067 16 422 414Weighted average shares in issue (number) 164 356 873 16 316 811 The prior period information presented below is restated for the effect of the 10:1 share split.

Earnings per share (thebe) 18.35 13.92Dividends per share (thebe) - ordinary - paid 5.00 5.00Dividends per share (thebe) - ordinary - proposed 10.00 5.00Dividend cover (times) - ordinary 1.22 1.39Net asset value per share (thebe) 1.13 0.92Market share price at year end (thebe) 430 250

VAlUe ADDeD stAteMent For the year ended 30 April 2008 2008 2007 P’000 P’000

Revenue 1 402 745 1 019 844less paid to suppliers and providers of services (1 272 282) (919 852)Value added 130 463 99 992From associated company 98From investments 5 474 7 772 Total wealth created 135 937 107 862

Wealth distributionto employees 72 267 65 447to providers of capital 20 165 32 330government for taxes 10 054 4 709Depreciation and amortisation 13 370 6 879Retained / (used) within the group to maintain and develop operations 20 081 (1 503)Total wealth distributed 135 937 107 862 Average number of employees (number) 1 174 1 157



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AnAlYsIs oF sHAReHolDeRs30 April 2008

Shareholders with a determinable interest in Sefalana Holding Company Limited in excess of 5% are the following:

2008 2007 number of shares % number of shares %Botswana Public Officers Pension Fund 36 760 255 22.19 38 333 890 23.34Bank of New York - custodial holding for laxey Partners 28 275 656 17.07 28 570 370 17.40Motor Vehicle Accident Fund 18 535 956 11.19 18 333 000 11.16Debswana Pension Fund 1 160 146 0.70 9 811 720 5.97

Analysis of shareholders:Insurance companies, pension funds and nominee companies 82.50 75.76Individuals and others 17.50 24.24 100.00 100.00Shares held by citizens (individuals and institutions) 131 575 054 79.43 129 827 140 79.05

The prior period information presented above is restated for the effect of the 10:1 share split.

stoCK MARKet InFoRMAtIonFor the year ended 30 April 2008 2008 2007

Number of shares traded (000) 8 830 9 370Value of shares traded (P’000) 43 282 21 015Share price for the period (thebe):Lowest 250 140Highest 450 250Closing 430 250Market capitalisation at year end (P’000) 712 291 410 560

The prior period information presented above is restated for the effect of the 10:1 share split.

FInAnCIAl AnD sHAReHolDeRs’ CAlenDAR Financial year end 30 April Announcement of 2008 audited results 29 August 2008 2008 Annual general meeting 27 November 2008 Announcement of half year results January 2009 Payment of 2008 final dividend September 2008 Payment of 2009 interim dividend February 2009



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CoRPoRAte InFoRMAtIon

seCRetARY

Venkit Iyer

email:[email protected]

BUsIness ADDRess

Private Bag 0080

Gaborone

Botswana

Telephone (267) 3913661

Fax (267) 3907613

RegIsteReD oFFICe

Plot 10247/50

Corner lejara and noko Roads

Broadhurst Industrial sites

Gaborone

Botswana

BAnKeRs

First National Bank of Botswana Limited

Stanbic Bank Botswana Limited

Standard Chartered Bank Botswana Limited

AUDItoRs

Deloitte & touche

P O Box 778

Gaborone

Botswana

sHARe tRAnsFeR seCRetARY

DPS Consulting Services (Proprietary) Limited

P o Box 294

Gaborone

Botswana

The company is incorporated in Botswana - company number 86/1025



5

DIReCtoRs

Lawrence Lekalake (75) (Chairman)

Lawrence holds a BSc (Hons) degree and is a director of a number of companies in Botswana.

Jenny Marinelli (50)

Jenny is a Chartered Accountant consulting to various companies in Botswana.

Chandra Chauhan (46) (Group Managing Director)

Chandra is a Chartered Accountant and has had many years experience as an independent businessman in Botswana.

Andrew Pegge (45)

Andrew holds an MBA and is a CFA; he is a partner in Laxey Partners, a UK based fund manager specialising in applying an active value approach to investment.

Elias Dewah (67)

elias holds an MBA in Industrialisation and Strategic Management. He has been associated with Botswana Confederation of Commerce, Industry and Manpower (BOCCIM) since 1989 to 2006 and his last held post was ‘Executive Director’ at BOCCIM.

Venkit Iyer (36) (Group Finance Director)

Venkit is a Chartered Accountant and has experience in many different industries in Botswana.

Reginald Motswaiso (44)

Reginald is a member of the Chartered Institute of Management Accountants. He is presently Chief Executive Officer of Botswana Housing Corporation (BHC).



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gRoUP PRoFIle

Sefalana sa Botswana Limited was formed in 1974 by Bechmalt Holdings Limited, a South African company based in Vryburg, to hold that Group’s Botswana assets; at this stage the assets comprised six wholesale operations and one maize mill at Lobatse. A total of 233 people were employed by the Group. The name of the company ‘Sefalana’ means ‘Bountiful Granary’ and it was chosen by a well known Motswana poet, MLA Kgasa.

In January 1975, the Botswana Public was invited to subscribe for 23.1% of the equity of the company thereby making Sefalana the first public company in Botswana.

In 1986, Sefalana Holding Company Limited was formed to buy the ramaining shares held by the South Africans. The last “Sefalana” wholesale branch to open was in Kasane which opened in 1987 – this brought the total wholesale operations to twelve stores. The Group’s property portfolio grew with every expansion, with all operations being sited in owned property.

During 1989, the group opened a rice packing plant and acquired ACK Milling, a wheat and maize milling plant in Pilane. Consolidated distribution commenced with Ya Rona Packaging and Distribution opening – this company received bulk supplie and then distributed smaller loads out to all the wholesales.

In October 1991, equity in Foods Botswana was acquired. Foods Botswana is a factory in Serowe that manufactures value added cereals and malt.

In 1992, Sefalana invested in Dafin Sales – a sales agency that enabled the group to extend its distribution to third parties.

In November 1994, by a sale of all of the wholesaling assets and liabilities Sefalana and Metro merged their wholesale operations into Metro Sefalana Cash and Carry Ltd (Metsef). 20% of this company’s equity distributed as a dividend in specie to Sefalana shareholders leaving both Sefalana and Metro holding an equal share of 40%; at this stage there were sixteen stores – twelve from Sefalana and four from Metro. Metro was awarded the management contract.

In 1996, Sefalana acquired the balance of the equity in Foods Botswana and merged the Lobatse and Pilane Milling operations with Francistown Milling – a company owned by a Namibian milling group. In 1997, the Lobatse mill was closed with sufficient supply being generated from the other two mills; an animal feed plant was opened at this site.

In 1997, Trade Center Gaborone opened, the property for the Trade Centre was constructed and financed by the Sefalana Pension Fund. Metsef now had seventeen branches and employment throughout the Group was in excess of 1 600 persons.

In 2000, the Group commenced a contraction. The economy was on a downturn and trading conditions were not as profitable as they had been in the past; the milling operations were disposed to our partners. The disposal of the milling operation strengthened the balance sheet enormously and a special 50 thebe dividend was paid to shareholders from the proceeds of the sale of the mills.

In 2005, Dafin Sales was disposed of further release shareholder funds and a P 2 dividend was paid out from the proceeds of this non-performing investment.

In 2005, negotiations commenced with Metro Cash and Carry to acquire their 40% holding in Metsef; these negotiations were protracted and were only finalised in December 2006 but backdated to 30 June 2006. Sefalana now ownes 79.4% of Metsef comprising twenty six wholesale operations and two Hyper Stores; Metsef was renamed Sefalana Cash & Carry (Sefcash). Sefcash employs over 900 staff.

In addition to the acquisition of the additional equity in sefcash, the Group acquired a 50% investment in KSI Holdings group and 55% in the MF Holdings group in the year 2006.

Kgalagadi Soap Industries within KSI Holdings group is Botswana’s sole manufacturer of soaps and cooking oils and it is owned in partnership with the Trans Africa group, giving the factory access to a wide spread of stores throughout Botswana. The factory employs 63 staff.

The MF group added much desired diversification to the Sefalana Group – this group trades in the automotive and construction industry having the Honda, MAn and tAtA vehicular franchises, CAse and Wacker construction equipment, Massey Ferguson agricultural equipment, general electric locomotive parts and a small travel agency.

Today, the Sefalana Group is a truly Botswana company with ownership spread across 600 shareholders; 80% of the equity is held and controlled by citizens of Botswana.

HIstoRY oF tHe gRoUP



7

The Sefalana head office continues to operate with a lean but focused team from our centrally located offices in Broadhurst. The proximity of our head office to the Sefcash Head Office and the MF group activities has proven to be a huge advantage, with greater involvement by the head office team in the strategic and managerial activities of these companies.

The team has been strengthened during this financial year under review by the appointment of a Group Finance Director – Venkit Iyer. Venkit is a Chartered Accountant with previous experiences in many different industries in Botswana which included a listed entity.

We will continue to strengthen the skills of our head office team and propose to extend the scope and responsibilities of the Sefcash internal audit team to include other elements of the Group. The harmonisation of the various human resource and other managerial systems within the group has proven successful and this will continue.

seFAlAnA HeAD oFFICe

gRoUP PRoFIlecontinued



8


seFAlAnA PRoPeRtIes

the property portfolio operates through eight companies within the group, with the majority of the commercial properties held by Meybeernick Investments (Proprietary) Limited. The Group has within its portfolio, properties that are used by the Sefcash operations and properties that are let to third parties. All rentals are entered into on an arms-length basis and there is an on-going programme of maintenance and renovation to ensure that all properties are developed to a suitable standard and kept in that standard.

The development of the Sefcash Head Office has progressed well this year with a very appropriate suite of offices in a good location. The remainder of the old ‘Ifestos’ site is undergoing a complete re-engineering with the construction of workshops and showroom for the MAN range of trucks that the Group sells through Commercial Motors.

The Group has also acquired, subsequent to the year end, a large undeveloped plot of land opposite to the Phakalane turn off on the Francistown Road. We are considering the various options available for the development of this property into a fully fledged shopping centre with good services available for our Group activities.

A property in Lusaka, Zambia is being considered for acquisition, this will enable the Group to expand outside of Botswana; this property, which is very extensive, will be ideal for use by Sefcash and should generate good revenues for the Group.

the property portfolio continues to change and the group is alert to opportunities within the Botswana property market.



9


Foods Botswana operates a factory in Serowe from which it mills and produces sorghum, soya and maize- based extruded products, malt and diastatic malt. Foods Botswana market includes the provision of enriched meals for the government feeding schemes and a variety of its own branded products. The products produced by this company include:

• Sechaba Mabele • Tholo Malt • Tsabotlhe • Sarona Samp • Fortified Pre-Cooked Maize Meal (FPMM) • Soya Sorghum Weaning Food (TSABANA)

the company has a policy to support local farmers and continuously buys sorghum as available from the local market.

Management is committed to continuous review of the operations of the factory. We have adopted a strategy to increase the overall growth of our branded products; this has contributed significantly to the earnings of this company during the year.

the company provides direct employment to more than 200 citizens and is a major contributor to the economic activities in and around Serowe.

In the current financial year the company has concentrated its efforts on improving and growing own-branded products sales.

In May 2008, the company was awarded the full Government contracts for Tsabana, Fortified Maize Meal and Sorghum Meal. These contracts are expected to generate revenues in excess of P 90 million for the ensuing year; the contribution from this business plus the consistent improvement in the own-branded products is expected to generate a substantial improvement in profit for the coming financial year.

FOODS (BOTSWANA) (PROPRIETARY) LIMITED



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Sefcash trades primarily as wholesale distributors of fast-moving consumer goods. The company operates through twenty-six cash and carry outlets located throughout Botswana trading under the name Sefalana Cash & Carry, two Hyper Stores located in Gaborone and Francistown trading under the name Sefalana Hyper Store, one distribution centre and one cigarette distribution outlet located in Gaborone trading under the name Capital Tobacco. In addition, the company has just under four hundred voluntary retail franchise members located throughout Botswana who trade under the names Supa 7, Supa Deal, Citi Saver, Bonanza, Pula Value and Triple Seven Liquor.

Sefcash is listed on the Botswana Stock Exchange with 20.65% of its equity in free float.

The Sefcash mission statement is:

to maintain sefcash’s position as the largest and most competitive and efficient distributor of fast-moving consumer goods in Botswana.

We are customer driven, value our image and aim to meet the needs of all our stakeholders.

The company’s objectives are: • Ensure long term profitability for the benefit of all stakeholders;• Provide shareholders with an acceptable return on their investment;• Provide our people with security and merit-based reward, stimulating productivity and self improvement through training and development;• Satisfy customer requirements through superior service and the supply of quality products;• Support our suppliers by routing their products through our distribution network;• Improve operational efficiencies within the company and thereby establish a winning culture and image; and• Be constructive in the development of the social and economic future of Botswana.

The company has completed its first full financial year as a subsidiary of the Sefalana Holding Company Limited. The focus during the year was the implementation of new computer systems, both in the stores and at Head Office, and the rebranding of the company and its trading outlets. During the year, the Head Office was relocated

SEFALANA CASH & CARRY LIMITED - SEFCASH

The Home of

STORES

unified marketing



11



The Home of

HOUSE BRANDS

unified marketing

to refurbished premises in Broadhurst Industrial sites, nearby to the Sefalana Head Office. Plans to expand the activities of the company are well underway and will be unfurled in the new financial year, the most exciting of which is the opportunity to expand into Zambia with a cash and carry store in Lusaka.

Subsequent to the financial year-end, Sefcash in partnership with an established dealer and manufacturer in building materials, has opened three builders hardware outlets, in Maun and Mahalapye, trading under the name SefTim Hardware. The company has plans to open a string of SefTim outlets throughout the country over the next two years. The outlets will be opened primarily from the existing trading premises of Sefcash thereby optimising the utilisation of our premises and offering our customers a more inclusive shopping experience. This is an exciting development and a diversification from the company’s traditional product offering.

sefcash invests heavily in employee training and development programmes. The company operates successful management trainee and mentoring programmes through which future management is sourced. In addition, numerous training courses are conducted by the in-house training department and in conjunction with outside training institutions. Wherever possible, existing employees are promoted to fill vacant posts rather than employing from outside.

The company is committed to contributing to the upliftment of the communities in which it operates and on which it depends. Substantial support is given to local charitable causes. Regular monthly donations are made to several orphanages and annual donations are made to the Botswana Defence Force and the Masiela Trust.

The highlight of our support to our business community this year was our “WIN - A - BUSINESS” promotion. This major promotion was run over 4 months and took the form of an SMS competition, where our customers were required to SMS the word “SEFALANA” to their cell phone service provider. The objective of the competition was to create awareness amongst our customers of the change in trading name and also to assist in empowering Batswana to start up and run their own business. The winner of the competition was Mr and Mrs Ndumo (James and Matlakala) from The Big House General Dealer in Francistown. They invested the P 500 000 prize money in stock and assets for their business. We will continue to support our winners Mr and Mrs Ndumo with ongoing mentoring in the following years.

SEFALANA CASH & CARRY LIMITED - SEFCASH



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Honda is sold and supported by Commercial Motors through our current premises in Broadhurst, with plans on the drawing board for a modern purpose-built showroom and service section to be constructed within the next two years.

Honda vehicles, long desired in UK and USA have grabbed the imagination of the consumer in Southern Africa, with market share growing in recent years. Statistics, through independent research, confirm that Honda customers are satisfied with the product integrity, service, affordability and value retention.

Honda’s new range of vehicles includes the spunky 1.5lt Jazz, Civic 4 & 5 Doors, Accord and CRV, setting new standards in competitiveness, design and versatility. These vehicles have been well received in our market as these introductions have been accelerated relative to competitor approaches.

The Honda Jazz has attracted the general utility and city buyer due to its strong performance, low fuel consumption, manoeuvrability and above-average value added package. The Civic 4 Door sedan is probably Honda’s best recent introduction; this vehicle was voted Car of the Year 2007; consumer confidence in this vehicle is supported by a consistently growing sales trend. The New Honda

Accord was launched in June 2008. Comparative testing was held in Gauteng against steady rivals, Mercedes Benz C200, BMW 320, Audi 2.0lt and Lexus IS 250; the general consensus was that the Accord is most desired for the new innovative design, improved ergonomics, stylish looks and overall detailed finish. The Accord is positioned as a sedan saloon offering added space, power and the impulsive extras that normally brings the final satisfaction to its operator. The philosophy behind Honda’s Vision is of Continued Transformation, keeping abreast of customer needs.

the Honda CRV, also in a diesel version, surpasses its predecessor by creating a more dynamic design that competes favourably in the recreational vehicle segment. Honda vehicles have fast gained the reputation of evoking automotive passion and excitement to make them truly outstanding vehicles. Global studies reveal the Honda Civic as a most desired medium reliable sedan and the CRV as a most desired recreational vehicle. Honda strategy is reflected in the vehicle’s value for money, safety, dynamics, style, technology and aesthetics. In Botswana, the Civic 4-Door has been well received by both the private and public sectors, with many units delivered to Government. We can look forward to increasing the Honda presence in Botswana with these high profile users.

COMMERCIAL MOTORS (PROPRIETARY) LIMITED- HONDA DEALERSHIP



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The MAN range of vehicles has established itself as a producer of reliable and respected workhorses. The entire range from Germany is 100% Trucknology Generation vehicles. All vehicles enjoy service intervals of 30 000km, most competitive in the individual segments for servicing costs and turnaround time. The latter affords the operator optimum usage and a lucrative return on investment. MAn Used Vehicles are amongst the highest in value retention.

MAN AG – Germany has recently celebrated 250 years in existence, which started with the invention of the first Diesel Engine built by Rudolph Diesel. MAN has been entrenched in Southern Africa for the past 30 years and over the last 10 years become a major player amongst its European rivals.

Global trends dictate and demand technological advancements that conform to european standard on gas emission and noise pollution; MAN is quick to respond to these demands and has launched compliant vehicles in Southern Africa. MAN’s 4x4 Truck is the market leader in Botswana with some 90 units (90% market share) in operation in all sectors. This vehicle has proven to be the most dependable 4x4 truck in the Botswana conditions.

All vehicles have been designed to make the cab a workstation with key focus on ergonomics. This ensures that the driver enjoys a driving experience with less fatigue because of standard features such as air-

conditioning, air sprung seats, radio/cd, electric windows, on-board computer and so on, with concomitant safety improvements.

MAN buses enjoy 45% of the regional bus market. It has been proven in Southern Africa, and most especially in Botswana, that the MAN bus is most reliable, a technician’s dream and provides the operator with maximum uptime.

the MAn lion’s explorer Bus is a pedigree that is entirely built in South Africa at state-of-the-art facilities, combining chassis and body. Quality is not compromised as all developments pass stringent sABs testing relative to passenger transportation.

MAN Germany this year spread its wings to India. The popular M2000 range was discontinued to give way for the TGM Series. There continues to be a need for the more mechanical M2000 truck and reacting to this, MAN germany and Force Motors India have entered into a joint venture to build the MAN CLA Range (M2000) for the African market. The first unit produced has been tested in Botswana very successfully. Botswana will enjoy 30 of these vehicles over the next few months for the private sector and government.

MAN Botswana will be relocating to new upgraded facilities by end of 2008. This initiative will place MAN as leaders in commercial vehicles in Botswana with key focus in after-sales support and service.

COMMERCIAL MOTORS (PROPRIETARY) LIMITED - MAN DEALERSHIP



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ELLERRY HOLDINGS (PROPRIETARY) LIMITED - TATA DEALERSHIP

tAtA Motors production only commenced in southern Africa in 1999; this brand provides the consumer with solid engineering and price competitiveness. One million TATA Indicas were produced by TATA Motors South Africa in 2007/8. The introduction of TATA Safari in 2008, a well priced, high spec’d vehicle, is very exciting with a vehicle that can hold its own against many of the other SUV’s in our market- we have already received many enquiries for this vehicle from the public and private sectors. The TATA Passenger and light Commercial segments have proven to be good value for money complimented by low running costs, quality and competitive factory warranties.

The TATA range of vehicles is supported by their strong and robust structure and they have proven suitable to Botswana terrain and operations. TATA Commercial vehicles have enjoyed consistent and steady growth in Botswana. These vehicles are marketed in their own price-attractive segment.

The TATA Motor infrastructure has grown enormously over the last two years, with some 90 dealers being appointed in Southern Africa. The key to the growing success has been consistent aftermarket support from parts and service. The ease of maintenance and the suitability of technology favour the harsh African market. Cost of components and maintenance is very attractive, thereby rendering valuable savings to an operation.

The TATA 713 chassis used for the trucks and buses have a proven track record in Botswana over the years and success on this product is largely due to durability and suitability to the required application and operation. TATA Motors has come a long way in engineering, planning and production; it is anticipated that the international acquisition of Jaguar and Land Rover will improve the overall quality of vehicles by the sharing and exchange of skills and technology. For Botswana, this move will further enhance the integrity of the TATA brand.



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MeCHAnIseD FARMIng (PROPRIETARY) LIMITED

Mechanised Farming brings together the knowledge and heritage of worldwide leaders in agriculture and construction, the Case, Honda and Massey Ferguson brand families, backed by the strength and resources of this company’s commercial, industrial, product support and finance organisations enabling the company to offer its customers the choice and specialisation they expect from each brand.

The following principals have Mechanised Farming as their exclusive Botswana based product representative:

• Agrinet –Yanmar engines • Barloworld – Massey Ferguson tractors and implements and Perkins spare parts • CASE Equipments SA – Case Heavy Equipment and spare parts. • Honda South Africa- power generators, engines, water pumps and spares. • Midmacor SA- engines, generators and water pumps. • Tuner Morris – lawnmowers, concrete mixers, construction equipment etc. • Wacker SA – construction equipment • Electro Motive Diesel (EMD) Inc USA – locomotives engines and spares.

Exclusive distributorships in Botswana

• Massey Ferguson Tractors- the Massey brand is perceived to be a premium brand in Botswana and Massey has approximately 75% market share of the new tractor market in Botswana. • Honda Power Products – The products covered under this agreement are Honda power generators, water pumps, lawnmowers and grass cutters. Honda is the only product of its kind that is offered in Botswana with full after –sales back up, spares stockholding and a dedicated workshop. Mechanised Farming also offers a financing scheme for Honda products. • Wacker compaction equipment – Wacker is a well established brand in Botswana and is viewed as a most reliable brand among building contractors. • CASE Heavy Equipments – Products include CASE backhoes, excavators and front-end loaders. • Mechanised Farming has the agency in Botswana for Electro Motive Diesel – formerly General Motors. Through this agency, Botswana Railways are supplied with spare parts and consumables for locomotives.

Mechanised Farming concentrates on providing customers with appropriate service and support to enable our customers to grow. The company continues to invest in products and procedures, leveraging resources to provide constant quality and reliability improvements both as dealers and in our customer support. Through enterprise and innovation, vision and commitment, our brands provide our customers with a full range of equipment to meet their needs.

Mechanised Farming agricultural and construction products shape the world of everyone, building and changing an environment, sustainable today and for future generations, as a company with operations and products that interact with the public sphere; Mechanised Farming (Proprietary) Limited maintains close relations with the government and enjoys access to other national and international bodies.

MASSEY FERGUSONMECHANISED FARMING

FARMIN

G

MACHIN

ERY

MASSEY FERGUSONMECHANISED FARMING

FARMIN

G

MACHIN

ERY



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“driven by a vision to be best”

Anywhere, we’ll

take you there

.

BARGEN (PROPRIETARY) LIMITED Trading as VINTAGE TRAVEL AND TOURS

Vintage Travel and Tours has been in operation since 1999; the following local and international accreditations have been awarded to Vintage allowing it to carry out all aspects of retail travel and tourism arrangements worldwide:

• IATA International Air transport Association

• TAABOT Travel Agents Association of Botswana

• HATAB Hotel and Travel Association of Botswana

• BOCCIM Botswana Confederation of Commerce Industry and Manpower

• ASATA Association of southern African travel Agents

The company has an affiliation with EUROPE ASSISTANCE – Worldwide Travel Insurance providing medical, personal, death and disability cover, baggage and money loss, and compensation for cancellation and curtailment.

The company’s core business is providing service for:

• Air flights, car hire, hotel reservation and related bookings;

• Organizing Tour packages worldwide;

• Conference coordination; and

• Airport shuttle service.

As an 80% corporate travel agency, and 20% leisure agency, the company utilises an internet and online reservations system that has revolutionised global travel.

The agency is staffed with five International Travel Consultants and seven support personnel.



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This group consists of three companies – KSI Holdings, Kgalagadi Soaps and Refined Oils. The business operations are the operation of the Kgalagadi soap Industries factory and the investment in the very extensive property in Broadhurst Gaborone on which the factory and the Sefalana Head Office block are located; approximately half of the land is undeveloped and the board is investigating various options available to develop and exploit the property.

Kgalagadi soap Industries produces toilet and laundry soaps, cooking oils and dishwashing liquid soap. The factory was established in 1985 and for many years operated as a subsidiary of the Heinz international group; Heinz pulled out of Botswana during 2006 and the operation was acquired by Sefalana and the Overseas Development Enterprises (Botswana). Sefalana has the management contract.

The factory processes have been reviewed and remodelled where necessary and there have been significant efficiencies achieved in production. A marketing campaign is to be undertaken to re-launch the toilet soaps and we expect to regain market share in this area. The laundry soaps are perceived by the market as being excellent quality and value and it is estimated that these products represent 50% of the Botswana market share.

the cooking oil market is exceptionally competitive and volatile depending on world commodity pricing; a feasibility study is currently under way to assess the viability of expansion into a large-scale refining and bottling process to add value to this factory’s processes.

KSI HOLDINGS (PROPRIETARY) LIMITED



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(*) 2008 2007 2006 2005 2004 P'000 P'000 P'000 P'000 P'000Income statementRevenue 1 402 745 1 019 844 70 565 45 906 274 896 Profit from operations 52 399 31 655 26 218 8 106 5 360 Net finance (costs) / income (4 608) (347) 5 040 2 385 (3 075)Income from associate 98 1 997 1 493 8 549Income tax (expense) / credit (10 054) (4 709) 516 (2 879) (9 435)Minority interest (7 573) (3 989) Profit for the year 30 164 22 708 33 771 9 105 1 399

Earnings per share (thebe) - (**) 18.35 13.92 21.11 5.69 0.87Dividends per share (thebe) - (**) 15.00 10.00 20.00 20.00 1.00

Balance sheetProperty, plant and equipment 137 962 97 073 11 900 8 570 35 105Investment property 26 117 19 810 77 397 79 241 54 433Intangible assets 30 931 24 880Property development loan 1 220 1 320Deferred lease assets 197 4 977 1 307Deferred tax assets 8 900 1 567Investment in associate 34 625 46 549 51 180Current assets 324 373 295 976 41 442 45 517 72 119Current liabilities (266 782) (221 261) (8 653) (5 805) (42 511)Non-current liabilities (42 625) ( 39 193) (15 495) (14 331) (12 773)Minority interest (33 728) (29 326) Equity attributable to equity holders of the parent 186 565 150 846 146 193 161 048 157 553

(*) results not restated to recognise the effect of the change in accounting policies as a result of the adoption of thenew IFRS.

(**) The earnings and dividends per share have been restated to take into account the share split in October 2007.

FInAnCIAl ReCoRD HIstoRY



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DIReCtoRs’ RePoRt

Financial Review

Last year we presented our results with the Income Statement reflecting twelve months of trading for the Property portfolio, Foods Botswana and Kgalagadi Soap Industries, ten months of trading of Sefalana Cash & Carry Limited – Sefcash (previously Metro Sefalana Cash & Carry Limited – Metsef), and nine months of trading of the MFH group, and the associate share of Metsef for two months.

This year we are pleased to present our results incorporating a full twelve-month trading period for all our operations; our group turnover has increased by 38% to P 1 402 745 000.

There were no acquisitions or disposals of businesses during the year as we focussed on consolidating the previous year’s acquisitions and growing the existing businesses.

Our focus has generated the expected improvement in profits and efficiencies, as can be seen in the following statistics:

• Turnover increased by 38% from P 1 019 844 000 to P 1 402 745 000; • Gross profit increased by 43% from P 79 170 000 to P 113 390 000; • Profit before tax increased by 52% from P 31 406 000 to P 47 791 000; • Profit after tax increased by 41% from P 26 697 000 to P 37 737 000; and • Shareholders’ equity increased by 24% from P 150 846 000 to P 186 565 000.

Five years ago Sefalana reported the lowest profits in its history, a meagre P 1 399 000; your Board reacted positively to this and undertook a major restructuring of all its businesses.

The decisions and actions taken then have been rewarded with the growth achieved over the past five years; the Group prospects over the next financial year look even more promising.

Sefalana Cash & Carry Limited - Sefcash

Sefcash now forms the largest subsidiary within the Group and, whilst it has faced many challenges since Sefalana took full control of the business, it has settled down well into a Sefalana managed organisation.

The Sefcash Head Office moved from Gaborone West to a newly acquired building in Broadhurst bringing the Head Office operations closer to the Sefalana Head Office as well as to some of its larger trading operations.

Sefcash met the deadline, imposed by Metro, of moving to a completely new computer system, away from that of Metro Sefalana Cash and Carry. This posed many challenges; the directors are confident that based on the measures undertaken by management to meet those challenges, the financial statements fairly present the position and results of the company. Sefcash managed to continue to trade throughout the period of changeover and never had to close any of its stores for a single day. That was an incredible feat to achieve and we are very proud of the dedication and effort that the entire team at Sefcash showed during this period.

Sefcash management are working continuously to bed down the issues surrounding such a changeover and are looking forward to utilising management information generated by the system to improve the profitability and availability of its entire product range.



20

DIReCtoRs’ RePoRtcontinued

The new name “Sefcash” resulted in the re-branding of 29 cash & carry outlets as well as approximately 400 banner stores and, whilst that too was a challenging task, management achieved the transformation without any major hurdles.

Sefcash has recorded significant growth in net income through the local management of the procurement of supplies and with renewed enthusiasm in promoting its stores and product ranges.

We believe that this growth will continue for the foreseeable future; management are tasked with focussing on growing the business as well as identifying new opportunities for growth.

With the re-branding exercise there has been emphasis placed on improving the premises from which Sefcash operates; we have identified new premises in Selebi Phikwe into which our Selebi Phikwe branch will move towards the end of October 2008. This new branch is located closer to the central business district and in newly upgraded premises, which will enable it to grow its business further.

Since the year-end Sefcash has entered into a joint venture with the Timco/Windorf Group of companies whose principal business is that of manufacture, wholesale and retail of building materials.

The joint venture business trades under the name of SefTim Hardware and to date, three stores have been opened in existing Sefalana properties, one in Maun and two in Mahalapye.

Additional stores are expected to be opened by the end of December 2008, of which, one will be in the new Selebi- Phikwe premises and further stores are expected to be opened in 2009.

In most instances, existing properties within the Group are being upgraded and will be utilised for trading premises of the joint venture. It is expected that SefTim, with its wide geographical coverage in Botswana, will become a major player in that industry within two years with countrywide outlets.

Sefcash is also looking to enter the Zambian market by opening a cash & carry outlet in Lusaka within the next year.

Taking all the above factors into account, Sefcash is once again poised to become the leading operator in the Fast Moving Consumer Goods industry.

Foods (Botswana) (Proprietary) Limited – Foods Botswana

Foods Botswana is the only company within the Group that has not performed to expectation. The business of Foods Botswana has traditionally been dependent on Government contracts, namely, the manufacture and supply of sorghum-soya weaning food (Tsabana) and fortified pre-cooked maize meal (FPMM).

There was a considerable delay in the award of the Government contracts in the last financial year, and when these were awarded, they were not very favourable to Foods Botswana. The tenders awarded were, however, completed satisfactorily and on time.



21

The reduced award of the Tsabana tender, together with the delays experienced in the timing of the award, resulted in the contracts being completed at very low margins; this was further exacerbated by unpredicted increases in commodity prices experienced worldwide since the beginning of 2008, all of which meant that the budgeted profitability was not met.

In order to protect itself from this predominance of business in the Government contracts, Foods Botswana directed focus to the sales of its own branded product range, namely Sechaba Sorghum Meal, Tsabotlhe High Vitamin Enriched Sorghum Meal, Tholo Beer Powder and Sarona Samp.

The increase in turnover on the branded products is ten fold over previous years and Foods Botswana is now the largest player of these products in Botswana.

Foods Botswana will continue to focus on improving sales of its branded products and at the same time ensure that it continues to meet its commitments on Government contracts.

Encouragingly, immediately after the year-end, Foods Botswana was awarded 100% of both of the Government contracts for Tsabana and FPMM and, together with its strategy to never lose focus of its own branded products, the 2008/2009 financial year is once again expected to be a good year for this company.

MF Holdings Group

All three businesses in this group, which include Mechanised Farming (Proprietary) Limited – Mechanised Farming, Commercial Motors (Proprietary) Limited – Commercial Motors and Bargen (Proprietary) Limited - Vintage Travel and Tours, have traded profitably and performed better than budgeted.

This group of businesses continue to benefit from the direct involvement of the Sefalana management on a day to day basis, both in terms of sharing managerial expertise as well the Sefalana Group’s ability to fund larger transactions on the back of Sefalana’s market capitalisation and reputation. The integration of this group into the Sefalana family is now well established.

the three major motor vehicle dealerships, namely MAn, tAtA and Honda have all increased their market share in Botswana. The company has been very successful in growing both in terms of profitability and volume growth in this sector.

New premises recently acquired by a Sefalana Group company within the Broadhurst area are being upgraded to house new showrooms and workshop facilities for both the MAN and Honda dealerships.

Mechanised Farming, which specialises in products for the building and farming industries, has seen increased growth due in part to Government directives towards growing the farming industry as well as fast tracking many large development projects throughout the country.

Vintage Travel and Tours continues to trade extremely well because of its small, highly experienced and well-managed team of travel consultants and the company constantly keeps abreast of current trends in the industry.

The MF Group is expected to continue to achieve improved growth and profitability as it re-establishes the presence of all its brands within newer and better facilities for its dealerships.




22

KSI Holdings Group

The two businesses under this Group, namely Kgalagadi Soap Industries (Proprietary) Limited – KSI, and Refined Oil Products (Proprietary) Limited – ROP continue to trade well and within expectations. Sefalana owns 50% of the equity and holds the management contract.

KSI is the manufacturing arm of the business and we are very pleased to report there has been a total turn around in the performance of this company from being a loss making business to a break-even situation within the first six months of acquisition of the business in 2007 and now to real profitability in its first full year of our management.

Feasibility plans are currently being undertaken to assess the viability of growing both the manufacture of cooking oil and the soap. ROP is the property arm of the group and here again, the directors are looking at ways in which to maximise the utilisation of prime land in the Broadhurst area.

Property Portfolio

The property portfolio continues to perform well especially with the recent improvement in the regional property market with higher rentals prevailing on commercial, industrial and residential property.

The Group has made significant land acquisitions, after the year-end, on the main Gaborone to Phakalane Highway, and is looking to develop these properties during the course of the coming year.

The Group will continue to invest in attractive property projects with a view to expanding and diversifying the portfolio.

Outlook

The Group is poised to grow significantly over the next financial year as investments and acquisitions made over the last few years are now beginning to yield the expected results.

Sefcash, being the largest subsidiary in the Group, is now in a position to consolidate and focus on growing its business without the interruptions of implementing and developing the IT systems and re-branding and repositioning all of its stores.

The award of several large contracts to the Group after the financial year-end is expected to significantly improve earnings going forward.




23


Management

The Board of Sefalana has been strengthened with the appointment of two additional non-executive directors, namely Mr Reginald Motswaiso and Mr Elias Dewah, and the appointment of our Group Finance Director, Mr Venkit Iyer.

Mr Reginald Motswaiso has also been appointed as the Chairman of the Audit Committee.

We welcome our new members and look forward to working with them in strengthening your Group and its performance.

lD lekalake CD Chauhan Chairman group Managing Director

19 August 2008 Gaborone



24

Corporate Governance

the Directors and Management of the group are committed to consistently meeting the highest standards of responsible conduct and best practice as set out in the Botswana Stock Exchange Code of Best Practice on Corporate Governance in order to achieve a good balance between direction, control, accountability, responsibility, fairness and transparency at the Board level, while also ensuring management decision-making capability and efficiency. The Group always aims at 100% adherence to the Botswana Stock Exchange Code of Best Practice on Corporate Governance.

The Directors believe that trust in our people and products is a pre-requisite for success in a highly competitive environment, and are committed to ensuring that this challenge is embraced in daily activities of the Group’s business.

Board of Directors

Sefalana Holding Company Limited ensures that the Board has a balance of executive and non-executive directors (including independent non-executives) such that no individual or small group of individuals can dominate the Board’s decision taking.

The Board includes non-executive directors of sufficient calibre and number for their views to carry significant weight in the Board’s decisions. Non-executive directors comprise not less than one third of the Board.

The Board of Sefalana Holding Company Limited comprises the following members at the reporting date:

Lawrence Lekalake - Chairman - Independent and Non-executive Chandra Chauhan - Group Managing - Executive Venkit Iyer - Group Finance - Executive Elias Dewah - Independent and Non-executive Jenny Marinelli - Independent and Non-executive Reginald Motswaiso - Independent and Non-executive Andrew Pegge - Non-executive

The Board is responsible for the ultimate supervision of the Group. The Board meets regularly at scheduled intervalsto ensure it remains fully informed on matters involving the Company and the Group’s business.

The Board has the following principal duties:

• formulating and monitoring implementation of the Group’s long term business strategy; • approval of the Group’s investment plans, budgets and forecasts; • the review of reports submitted to the Board and their subsequent approval; • review of the business operations of the Group; • establishing sound accounting and financial control principles, as well as principles of financial planning; and • ensuring compliance with legal and ethical standards.

RePoRt on CoRPoRAte goVeRnAnCe



25

The Board ensures that the Managing Director (MD) and Management team are competent and adopt an effective MD and Senior Management succession strategy;

The office of the Chairman and MD are separate. The Chairman is an independent non-executive director. The Chairman is not subject to a formal review by the Board but is selected by the Board and his appropriate performance is therefore tacit in his continued chairmanship.

The Chairman conducts Board proceedings in a proper manner to ensure, inter-alia, that:

• the effective participation of both executive and non-executive directors is secured; • all directors are encouraged to make an effective contribution, within their respective capabilities, for the benefit of the Company and Group; • the balance of power in the Board is maintained; • the sense or decision of directors on issues, under consideration, is ascertained; and • the Board is in complete control of the Company’s affairs and alert to its obligations to all shareholders and other stakeholders;

The Board periodically appraises its performance in order to ensure that its primary responsibilities are satisfactorily discharged.

At the commencement of every fiscal year, the Board, in consultation with the MD, sets reasonable financial and non-financial targets, in line with the short, medium and long term objectives of the Company and the Group, that are to be met by the MD during the course of the year.

The performance of the MD is evaluated by the Board at the end of each fiscal year in order to ascertain whether the targets set by the Board have been achieved and if not, whether the failure to meet such targets was reasonable in the circumstances.

During the financial year ended 30 April 2008, there were only three formal Board Meetings instead of four as suggested in the Code of Best Practice. However, there were frequent informal meetings and sharing of views and information by the Board members on all major events that happened during the financial year.

Executive directors are rewarded substantially according to the Group performance and achievement of individual stretch targets. Non-executive directors are remunerated according to best practice as ascertained through independent research in Southern Africa. Senior management is subject to review by the Remuneration Committee at least annually.

In compliance with the Botswana Stock Exchange Code of Best Practice on Corporate Governance, the total remuneration of the executive and non-executive directors are disclosed in note 12 to the financial statements. The remuneration includes bonus payments and value of all benefits.

RePoRt on CoRPoRAte goVeRnAnCecontinued



26


Directors’ interests

At 30 April 2008 the following directors had an interest in the stated capital of the Company:

Mr lekalake controlled 489 441 (2007: 453 00) ordinary shares, Mr Chauhan controlled 7 283 975 (2007: 7 617 400) ordinary shares, Mr. Iyer controlled 5 057 ordinary shares (2007: Nil) and Mr Pegge controlled 28 275 656 (2007: 28 570 370) ordinary shares representing 17.07% (2007: 17.40%) of the issued capital. The shares controlled by Mr Pegge are held through Laxey Partners, an asset management firm, in which he is a shareholder.

Audit committee

The audit committee is chaired by Reginald Motswaiso and Jenny Marinelli is a member. Both these members are independent and non-executive directors of the Company. The Group Finance Director attends and reports at all meetings and the external auditors attend by invitation. In executing its duties, the audit committee has unrestricted access to the Group’s accounting records. The Board is looking to appoint another independent and non- executive director to the audit committee in the coming year in order to fully comply with the requirements of Botswana Stock Exchange Code of Best Practice on Corporate Governance.

The audit committee has the following responsibilities:

• identify and measure the impact and likelihood of business risks through ongoing risk management process; • to oversee that management has established an effective system of internal controls; • to report to the Board on the decisions taken, including approval of the annual financial statements; • to make recommendations to the Board regarding the nomination of external auditors to be appointed by the shareholders; • to discuss audit procedures, including the proposed scope and the results and findings of the external auditors; • to ensure that the external auditors findings are adequately addressed; and • to oversee the quality of the external audit.

The audit committee ensures that the independence of auditors is maintained and that any consultancy or any work contracted with the auditing firm will not have a material impact on the auditors independence. The audit committee sets principles for recommending to the Board rotation and remuneration of auditors.

There is a 100% attendance by committee members at scheduled meetings.

Remuneration committee

the role of the remuneration committee is to ensure that the group adopts and implements appropriate policies and procedures that provide the framework for remunerating its employees on a competitive and equitable basis and to set the Group’s grading and remuneration levels each year. The remuneration committee reports to the Board on its activities after every meeting held.

The Company has established a formal and transparent procedure for developing policies on executive remuneration and for fixing the remuneration packages of individual directors. No director is involved in deciding his or her own remuneration.



27

Remuneration committee (continued)

The remuneration committee consists exclusively of non-executive directors who are independent of management and free from any business or other relationship which could materially interfere with the exercise of their independent judgement. The Company’s remuneration committee is chaired by Lawrence Lekalake and Jenny Marinelli is a member.

Nomination committee

There are formal and transparent procedures for the appointment of new directors to the Board. The nomination committee consists of three members of the Board and it makes recommendations to the Board on all new Boardappointments. The Chairman and one member of the nomination committee are non-executive directors. As at the reporting date, the nomination committee is represented by the following members of the Board:

Jenny Marinelli - Chairman- Independent and Non-executive directorAndrew Pegge - Non-executive directorChandra Chauhan - Group Managing – Executive director

The nomination committee annually assesses the Board’s composition to ascertain whether the combined knowledge and experience of the Board matches the strategic demands facing the Company and the Group. The findings of such assessments are taken into account when new Board appointments are considered and when incumbent directors come up for re-election.

Dealings and securities

The Group has closed periods whereby directors, senior management and their families and other relevant related parties may not trade in the Company’s shares. Formally, these periods comprise the period commencing from the week before the end of a half or full financial year, and ends when the relevant period’s results are publically announced. Additionally, when the Board members believe that they or senior management are privy to information that is price sensitive regarding current activities of the Company, they are precluded from dealing in the Company’s securities.

Company Secretary

The Company Secretary is knowledgeable in matters that should be addressed by the members of the Board so as to discharge their duties appropriately. The Company Secretary advises members of the Board in this regard. The Company Secretary is also a member of the Board but seeks guidance where necessary from the Chairman of the audit committee regarding his duties.

Risk management

The Group’s risk management system is informal. Risk is assessed, controlled and reported on an ad hoc basis. Management is responsible for risk management and the results of such are reported to the audit committee and onto the Board, where relevant risk issues are debated and concluded. The Group is currently going through a process of documenting risk and internal control systems.




28

Internal control

the Board maintains a sound system of internal control to safeguard the shareholders’ investment and the group’s assets. The directors review the effectiveness of the Group’s systems of internal controls frequently, which cover, all controls, including financial, operational and compliance controls and risk management.

The Board believes that it is not commercially viable to establish a fully-fledged internal audit department at the Head Office level. There is an independent internal audit department set up within the largest subsidiary of the company, Sefalana Cash and Carry Limited. In all other areas of the Group, reliance is placed on Head Office review and control of subsidiary operations. The Board remains of the view that sufficient attention is brought to bear on the systems and controls of the Group. The Board reviews requirement of internal audit division at all areas within the Group from time to time.

Sustainability reporting

The Company has no formal policies that govern its sustainability reporting. The Board has contemplated this aspect of corporate governance and is of the view that the Group’s focus at this point is on its core objective of providingshareholders with maximum returns. The Group, by design, operates very efficiently and entrepreneurially – much like a smaller private company – so as to achieve its core objective. In this scenario, certain “softer” issues are not currently given the attention that the highest standards of corporate governance dictate. However, though not formal, the Board is aware of these sustainability reporting issues and does, when it becomes necessary, deliberate on such. The sustainability reporting of the Group is therefore not elaborated upon in this report, but is addressed informally on an ad hoc basis by the Board.

Organisational integrity

Whilst the Group has no formal system regarding the implementation and control of ethical behaviour it endeavours at all times to exercise best practice in all its dealings. The Board has established an audit committee, with written terms of reference which deal clearly with its authority and duties. Senior management constantly monitors integrity in all of the operations of the Group. In turn, senior management are subject to the scrutiny of the Board and the high standards required of them by their professional governing bodies. Senior management has an open-door policy with employees. Regular meetings with worker representatives are held without resident management present, providing opportunities for employees to report perceived lapses in integrity. No cases of unethical behaviour have been pursued in the financial period under review.

Non-financial information

The Board constantly monitors and evaluates all information that affects the Group and is nimble in adapting strategy to fit current circumstances

All aspects of the Group, financial and non-financial, are revealed to, and discussed with, the external auditors who report accordingly.

The Board believes in transparency in the activities of the Group and has adopted a 100% honesty principle in keeping shareholders appraised. Such communications are subject to statutory approval by the Botswana Stock Exchange and are published in at least two national newspapers to ensure that all stakeholders are informed concurrently.




29

Relations with shareholders

The Board uses the Annual General Meetings (AGM) and Extra-ordinary General Meetings (EGM) to communicate with investors and encourage their participation. Frequent announcements through press and mailing of information for the attention of the shareholders are practiced wherever necessary. The Company circulates with every Notice of General Meeting, a summary of the procedures governing voting at General Meetings.

The Board arranges for the Chairmen of the audit, remuneration and nomination committees to be available to answer questions at the AGM and EGM, if so requested by the Chairman of the Board.

In terms of a circular issued in terms of Listing Rule 9.31 by the Botswana Stock Exchange, the Directors also disclose to shareholders all proposed corporate transactions, which if entered into, would materially alter or vary the Group’s net asset base, through trading announcements.

Environment, Occupational Health and Safety

The Group is committed to minimizing the environmental impact of the Group’s operations on both staff and the public, against all risks to health and safety, from all operations associated with our businesses.


Attendance at Board and Sub-committee meetings of Sefalana Holding Company Limited during the financial year

ended 30 April 2008:

Member Board of Directors Remuneration committee Audit committee Nomination committee

Maximum Attended Maximum Attended Maximum Attended Maximum Attended

Possible Possible Possible Possible

Lawrence Lekalake 3 3 1 1

Chandra Chauhan 3 3 3 3 1 1

Elias Dewah 2 1

Venkit Iyer 3 3 3 3

Jenny Marinelli 3 3 1 1 3 3 1 1

Reginald Motswaiso 2 1

Andrew Pegge 3 3 1 1

(by invitation)



30

The directors are responsible for the integrity and objectivity of the annual financial statements of the Company and its subsidiaries, the underlying accounting policies and the information included therein. The auditors are responsible for reporting on the fair presentation of the annual financial statements.

The Group’s internal financial controls and systems are designed to provide reasonable, but not absolute, assurance as to the integrity and reliability of the financial statements and to adequately safeguard, verify and maintain its assets. these controls are monitored throughout the group and nothing has come to the directors’ attention 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 no reason to believe that the business will not continue as a going concern in the year ahead. The annual financial statements of the Company and of the Group for the year ended 30 April 2008, as set out on pages 32 to 74, have been prepared in accordance with International Financial Reporting Standards and in compliance with the Companies Act of Botswana (Companies Act, 2003) on a basis consistent with that of the previous year, except where otherwise noted, and have been approved by the Board.

lD lekalake CD Chauhan Chairman group Managing Director 19 August 2008 Gaborone

DIReCtoRs’ APPRoVAl oF tHe FInAnCIAl stAteMents



31

InDePenDent AUDItoR’s RePoRt

Independent Auditor’s Report To the Members of Sefalana Holding Company Limited

Report on the Financial StatementsWe have audited the accompanying company and group annual financial statements of Sefalana Holding Company Limited, set out on pages 32 to 74 which comprise the balance sheets as at 30 April 2008, the income statements, statements of changes in equity and cash flow statements for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Directors’ Responsibility for the Financial StatementsThe directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in compliance with the Companies Act of Botswana (Companies Act, 2003).

This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. the procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

OpinionIn our opinion, the financial statements present fairly, in all material respects the financial position of the company and the group as of 30 April 2008, and of their financial performance, statements of changes in equity and cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of Botswana (Companies Act, 2003).

Certified Public Accountants (Botswana)29 August 2008Gaborone



32

Group Company Notes 2008 2007 2008 2007 P'000 P'000 P'000 P'000

Revenue 5 1 402 745 1 019 844Cost of sales (1 289 355) (940 674) Gross profit 113 390 79 170Investment revenue 7 5 474 7 772 17 382 19 239other gains or losses 8 11 490 7 184 2 103 884Share of profits from associate 98Distribution expenses (2 651) (3 309)Marketing expenses (7 861) (5 941) (71) (2)occupancy expenses (4 046) (3 721)Administration expenses (57 923) (41 728) (645) (1 285)Finance costs 9 (10 082) (8 119) (5 223) (3 534) Profit before tax 47 791 31 406 13 546 15 302Income tax (expense) / credit 10 (10 054) (4 709) (2 639) 1 926 Profit for the year 11 37 737 26 697 10 907 17 228

Attributable to:equity holders of the parent 30 164 22 708Minority interest 7 573 3 989 37 737 26 697

Earnings per share (thebe) 13 18.35 13.92

InCoMe stAteMentfor the year ended 30 April 2008



33

Properties Associate’s Attributable to

Stated revaluation undistributed Retained equity holders Minority

capital reserve income earnings of the parent interest Total

Group P’000 P’000 P’000 P’000 P’000 P’000 P’000

Balance at 30 April 2006 2 115 9 735 29 589 104 754 146 193 146 193Shares issued during the year 6 156 6 156 6 156On acquisition of subsidiaries 30 224 30 224Release of revaluation surplus (919) 919Profit for the year 22 708 22 708 3 989 26 697Associate’s retained earnings transferred (29 589) 29 589Dividends paid - 2006 final (16 000) (16 000) (16 000)Dividends paid - 2007 interim (8 211) (8 211) (4 887) (13 098)Balance at 30 April 2007 8 271 8 816 133 759 150 846 29 326 180 172On additional interest in subsidiary (274) (274)Profit for the year 30 164 30 164 7 573 37 737Dividends paid - 2007 final (8 211) (8 211) (2 099) (10 310)Dividends paid - 2008 interim (1 872) (1 872) (798) (2 670)Capitalisation of dividend - 2008 interim 6 341 (6 341)Net revaluation of properties 15 638 15 638 15 638Balance at 30 April 2008 14 612 24 454 147 499 186 565 33 728 220 293

Stated Retained

capital earnings Total

Company P’000 P’000 P’000

Balance at 30 April 2006 2 115 71 874 73 989Shares issued during the year 6 156 6 156Profit for the year 17 228 17 228Dividends paid - 2006 final (16 000) (16 000)Dividends paid - 2007 interim (8 211) (8 211)Balance at 30 April 2007 8 271 64 891 73 162Profit for the year 10 907 10 907Dividends paid - 2007 final (8 211) (8 211)Dividends paid - 2008 interim (1 872) (1 872)Capitalisation of dividend - 2008 interim 6 341 (6 341) Balance at 30 April 2008 14 612 59 374 73 986

STATEMENT OF CHANGES IN EQUITYfor the year ended 30 April 2008



34

BAlAnCe sHeet30 April 2008

Group Company

Notes 2008 2007 2008 2007

P’000 P’000 P’000 P’000

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 14 137 962 97 073

Investment property 15 26 117 19 810

Intangible assets 16 30 931 24 880

Property development loan 17 1 220 1 320

Deferred lease assets 18 197

Deferred tax assets 10 8 900 7 121

Investment in subsidiaries 19 65 993 65 993

Total non-current assets 205 327 150 204 65 993 65 993

CURRENT ASSETS

Inventories 20 170 310 123 190

Trade and other receivables 21 93 137 65 430 59 825

Amounts due from related parties 22 270 56 026 46 317

Current tax assets 10 1 443 1 567 202 288

Cash and bank balances 59 483 93 615 195 2 060

324 373 284 072 56 482 49 490

Non-current assets classified as held for resale 23 6 350

total current assets 324 373 290 422 56 482 49 490

TOTAL ASSETS 529 700 440 626 122 475 115 483



35

Group Company

Notes 2008 2007 2008 2007

P’000 P’000 P’000 P’000

EQUITY AND LIABILITIES

CAPITAL AND RESERVES

stated capital 24 14 612 8 271 14 612 8 271

Reserves 24 454 8 816

Retained earnings 147 499 133 759 59 374 64 891

Equity attributable to equity holders of the parent 186 565 150 846 73 986 73 162

Minority interest 33 728 29 326

total equity 220 293 180 172 73 986 73 162

NON-CURRENT LIABILITIES

Finance lease obligations 25 22 333 24 293

Deferred lease obligations 26 740 403

Deferred tax liabilities 10 19 552 14 900

Total non-current liabilities 42 625 39 596

CURRENT LIABILITIES

Trade and other payables 27 199 332 164 929 995 951

Amounts due to related parties 22 1 166 7 477 6 395

Finance lease obligations 25 1 960 1 273

Current tax liabilities 10 4 355 1 346

Bank overdrafts 28 46 620 44 550 40 017 34 975

Provisions 29 14 515 7 594

Total current liabilities 266 782 220 858 48 489 42 321

Total liabilities 309 407 260 454 48 489 42 321

TOTAL EQUITY AND LIABILITIES 529 700 440 626 122 475 115 483

BAlAnCe sHeet30 April 2008



36

CAsH FloW stAteMentfor the year ended 30 April 2008

Group Company 2008 2007 2008 2007 P’000 P’000 P’000 P’000

CASH FLOWS IN OPERATING ACTIVITIES

Profit for the year 37 737 26 697 10 907 17 228Income tax expense 10 054 4 709 2 639 (1 926)Finance costs 10 082 8 119 5 223 3 534Investment revenue (5 474) (7 772) (17 383) (19 239)gain on disposal of investment property (4 650) (500)Change in fair value of investment property (6 688)straight line adjustment on rental income 140Deferred lease income (482)Impairment of property, plant and equipment 1 371loss on disposal of property plant and equipment 593 23Share of profits of associates (98)Amortisation of intangible assets 2 327Depreciation of property, plant and equipment 11 043 6 879 Operating profit before working capital changes 56 535 37 575 1 386 (403)Movements in working capital:Movement in trade and other receivables (27 707) 3 763 (883) (825)Movement in inventories (47 120) (925)Movement in trade and other payables and provisions 41 324 3 252 45 538Movement in balances with related parties (896) 896 2 313Cash generated from operations 22 136 44 561 548 1 623Interest on loans and finance leases paid (10 082) (8 119) (5 223) (3 534)Income taxes paid (8 053) (4 875) (2 553) (1 472)Net cash generated /(utilised) by operating activities 4 001 31 567 (7 228) (3 383)

CASH FLOWS IN INVESTING ACTIVITIES

Interest received 5 474 7 772 6 574Dividends received from subsidiaries 10 808 19 239Dividends received from associates 544Purchase of computer software rights (8 378)Purchase of property, plant and equipment (33 923) (1 898)Proceeds from disposal of property, plant and equipment 51 178Receipts from loans advanced 100Proceeds from disposal of investment property 11 000 2 661Additional investment in subsidiaries (274)Acquisition of subsidiaries (51 681) (51 681)Net cash flows in investing activities (25 950) (42 424) 17 382 (32 442)



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CASH FLOWS IN FINANCING ACTIVITIES

Repayment of borrowings (1 273) (439) (6 978)Cash dividends paid- to equity holders of the parent (10 083) (24 211) (10 083) (24 211)- to minority interests (2 897) (4 887) Net cash used in financing activities (14 253) (29 537) (17 061) (24 211)

NET MOVEMENT IN CASH AND CASH EQUIVALENTS (36 202) (40 394) (6 907) (60 036)CASH AND CASH EQUIVALENTS at beginning of year 49 065 26 846 (32 915) 27 121CASH AND CASH EQUIVALENTS acquired 62 613 CASH AND CASH EQUIVALENTS at end of year 12 863 49 065 (39 822) (32 915)

Represented by:Bank overdrafts (46 620) (44 550) (40 017) (34 975)Cash and bank balances 59 483 93 615 195 2 060 12 863 49 065 (39 822) (32 915)

CAsH FloW stAteMentfor the year ended 30 April 2008



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notes to tHe FInAnCIAl stAteMents30 April 2008

1 GENERAL INFORMATION

Sefalana Holding Company Limited is a company incorporated in the Republic of Botswana. The addresses of its registered office and principal places of business are disclosed in the introduction to the annual report. The principal activities of the Company and its subsidiaries (the Group) are described in the Group profile.

2 ADOPTION OF NEW AND REVISED STANDARDS

The Group adopts the new and revised International Financial Reporting Standards that are relevant to its operations.

In particular, the Group has adopted IFRS 7: Financial Instruments Disclosures in the current year under review. The primary objective of the statement is to require entities to disclose in their financial statements, the significance of financial instruments in as far as their financial performance and position is concerned, and the nature and extent of risks arising from financial instruments that an entity is exposed to and the processes by which these risks are managed. In addition, the Group has disclosed information regarding its objectives, policies and processes for managing capital as required by amendments to IAS 1 : Presentation of Financial Statements.

At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective:

• IAS 1 Presentation of Financial Statements (effective for accounting periods beginning on or after 1 January 2009); • IAS 23 (Revised) Borrowing Costs (effective for accounting periods beginning on or after 1 January 2009); • IFRS 8 Operating Segments (effective for accounting periods beginning on or after 1 January 2009); • IFRIC 13 Customer Loyalty Programmes (effective for accounting periods beginning on or after 1 July 2008).

As part of its annual improvements project, the International Accounting Standards Board (IASB) made various necessary amendments to a number of existing Standards. All amendments are effective for annual periods beginning on or after 1 January 2009.

The Directors anticipate that the adoption of these standards and interpretations will have no material impact on the Group’s distributions or distributable earnings in future periods.

3 SIGNIFICANT ACCOUNTING POLICIES

STATEMENT OF COMPLIANCEThe financial statements have been prepared in accordance with International Financial Reporting Standards.

BASIS OF PREPARATIONThe financial statements have been prepared on the historical cost basis except for the revaluation of certain non-current assets and financial instruments. The principal accounting policies applied in the preparation of these Group and Company financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.



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3 SIGNIFICANT ACCOUNTING POLICIES (continued)

BASIS OF CONSOLIDATIONThe consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results of subsidiaries acquired or disposed of during the period are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Minority interests in the net assets (excluding goodwill) of consolidated subsidiaries are identified separately from the Group’s equity therein. Minority interests consist of the amount of those interests at the date of the original business combination and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.

BUSINESS COMBINATIONSAcquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of the business combination is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 - Business Combinations, are recognised at their fair value at the acquisition date, except for non-current assets that are classified as held for sale in accordance with IFRS 5 - Non-current Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities recognised. If, after re-assessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the costs of the business combination, the excess is recognised immediately in profit or loss.

the interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

INVESTMENTS IN ASSOCIATESAn associate is an enterprise over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting. Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment value of individual investments.

notes to tHe FInAnCIAl stAteMents 30 April 2008



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INVESTMENTS IN ASSOCIATES (continued)Losses of an associate in excess of the Group’s interest in the associate (which includes any long-term interests that, in substance, form part of the Group’s net investment in the associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss.

Where a Group entity transacts with an associate of the Group, gains and losses are eliminated to the extent of the Group’s interest in the relevant associate.

GOODWILLGoodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

SOFTWAREAcquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their useful lives (three to five years) on a straight-line basis. Costs associated with developing or maintaining computer software programmes are recognised as an expense as incurred. Costs that are directly associated with the development of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Costs include the employee costs incurred as a result of developing software and an appropriate portion of relevant overheads.

The useful lives of software are reviewed at each balance sheet date. If appropriate, adjustments are made and accounted for prospectively as a change in estimate.



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REVENUE RECOGNITIONRevenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances.

sale of goods Revenue from the sale of goods is recognised when the following conditions are satisfied: • the Group has transferred to the buyer the significant risks and rewards of ownership of the goods; • the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor

• the amount of revenue can be measured reliably; • it is probable that the economic benefits associated with the transaction will flow to the entity; and • the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Dividend and interest incomeDividend income from investments is recognised when the shareholder’s right to receive payment has been established.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

Rental income Rental income from investment properties is recognised on a straight-line basis over the term of the relevant lease.

LEASINGLeases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

the group as lessor Amounts due from lessees under finance leases are recorded as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases.

Rental income is recognised on a straight line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.



effective control over the goods sold;



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LEASING (continued)the group as lessee Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on borrowing costs. Contingent rentals are recognised as an expense in the period in which they are incurred.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

FOREIGN CURRENCIESThe individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purposes of the consolidated financial statements, the results and financial position of each entity are expressed in Botswana Pula (‘P’), which is the functional currency of the Group and the presentation currency for the financial statements.

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the balance sheet date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences are recognised in profit or loss in the period in which they arise except for exchange differences on transactions entered into in order to hedge certain foreign currency risks.





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BORROWING COSTSBorrowing costs directly attributable to the acquisition, construction or production of qualifying assets which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in profit or loss for the period in which they are incurred.

RETIREMENT BENEFIT COSTSContributions to defined contribution retirement benefit plans are recognised as an expense when the employees have rendered service entitling them to the contributions.

Where employees are not members of the Group’s retirement benefit plan, provision is made for severance benefit as required in terms of Botswana’s labour laws or terminal service gratuity. Costs incurred herein are recognised in profit or loss in the period in which they are incurred.

TAXATIONIncome tax expense represents the sum of the tax currently payable and deferred tax.

Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted by the balance sheet date.

Deferred tax Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method.

Deferred tax liabilities are generally recognised for all temporary differences, and deferred tax assets are generally recognised for deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates and interests in joint ventures, except where the Group is able to control the reversal of temporary differences and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.





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TAXATION (continued)The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates and tax laws that have been enacted or substantially enacted by the balance sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the periodCurrent and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or debited directly to equity, in which case the tax is also recognised directly in equity, or where they arise from the initial accounting for a business combination. In the case of a business combination the tax effect is taken into account in calculating goodwill or in determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost.

PROPERTY, PLANT AND EQUIPMENTLand and buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the balance sheet at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment loss. Revaluations are performed with sufficient regularity such that the carrying amounts do not differ materially from that which would be determined using fair values at the balance sheet date.

Any revaluation increase arising on the revaluation of land and buildings is credited to the properties revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously charged. A decrease in the carrying amount arising on revaluation of such land and buildings is charged to profit or loss to the extent that it exceeds the balance, if any, held in the properties revaluation reserve relating to a previous revaluation of that asset.

Depreciation on revalued buildings is charged to profit or loss. On the subsequent sale or retirement of a revalued property, the attributable revaluation surplus remaining in the properties revaluation reserve is transferred directly to accumulated profits. No transfer is made from the revaluation reserve to accumulated profits except when an asset is derecognised.

Buildings capitalised under leases are stated at historical cost less accumulated depreciation. The historical cost is determined at inception of the lease as the present value of committed future lease payments determined using an appropriate interest rate factor. Improvements to leasehold properties are shown at cost and written off over the





45


PROPERTY, PLANT AND EQUIPMENT (continued)remaining period of the lease. Management determines the estimated useful lives and the related depreciation charges at acquisition, but revises the depreciation charge where useful lives are subsequently found to be different from the previous estimate.

Properties in the course of construction for production or supply of goods or services, or for administrative purposes, or for purposes not yet determined, are carried at cost less any recognised impairment loss. Cost includes professional fees and, for qualifying assets, borrowing costs capitalised in terms of the Group’s accounting policy. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for their intended use.

Fixtures and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is charged so as to write off the cost or valuation of assets, other than land and properties under construction, over their estimated useful lives using the straight-line method. The estimated useful lives, residual values and depreciation methods are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets, or, where shorter, the term of the relevant lease.

the gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

INVESTMENT PROPERTYInvestment property, which is property held to earn rentals and/or for capital appreciation, is measured initially at its cost, including transaction costs. Subsequent to initial recognition, investment property is measured at fair value. Gains or losses arising from changes in the fair value of investment property are included in profit or loss for the period in which they arise.

INTANGIBLE ASSETSIntangible assets acquired separately Intangible assets acquired separately are reported at cost less accumulated amortisation and accumulated impairment losses.

Amortisation is charged on a straight-line basis over their estimated useful lives. The estimated lives and amortisation periods are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

Intangible assets acquired in a business combinationIntangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset and their fair values can be measured reliably. The cost of such intangible assets is their fair value at the acquisition date.

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately.





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IMPAIRMENT OF TANGIBLE AND INTANGIBLE ASSETS EXCLUDING GOODWILLAt each balance sheet date, the Group reviews the carrying amount of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually, and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of an asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years.

A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at revalued amount, in which case the reversal of the loss is treated as a revaluation increase.

INVENTORIESInventories are stated at the lower of cost and net realisable value. Costs, including an appropriate portion of fixed and variable overhead expenses, are assigned to inventories held by the method most appropriate to the particular class of inventory, with the majority being valued on the first-in first-out basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

PROVISIONSProvisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that the Group will be required to settle that obligation, and a reliable estimate can be made of the amount of the obligation.

notes to tHe FInAnCIAl stAteMentsFor the year ended 30 April 2008




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PROVISIONS (continued)The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the receivable can be measured reliably. Provisions are measured at the directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date, and are discounted to the present value where the effect is material.

onerous contracts Present obligations arising under onerous contracts are recognised and measured as a provision. An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

Warranties Provisions for warranty costs are recognised at the date of the sale of the relevant products, at the directors’ bestestimate of the expenditure required to settle the Group’s obligation.

FINANCIAL INSTRUMENTS

FINANCIAL ASSETSInvestments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value.

Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL); ‘held-to-maturity’ investments; ‘available-for-sale’ (AFS); and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

All the Group’s financial assets are classified as ‘loans and receivables’.

Loans and receivablesTrade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Cash and cash equivalentsCash and cash equivalents are carried in the balance sheet at amortised cost. For the purpose of the cash flowstatement, cash and cash equivalents comprise cash on hand and at bank and funds on deposits.





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FINANCIAL ASSETS (continued)effective interest methodThe effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated futurecash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period.

Impairment of financial assetsFinancial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date.Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

For all other financial assets, including redeemable notes classified as AFS and finance lease receivables, objective evidence of impairment could include:

• significant financial difficulty of the issuer or counterparty; or • default or delinquency in interest or principal payments; or • it becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectivelyto an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.



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FINANCIAL ASSETS (continued) Derecognition of financial assets The Group de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

FINANCIAL LIABILITIES AND EQUITY INSTRUMENTS ISSUED BY THE GROUP

Financial liabilitiesAll the Group’s financial liabilities are classified as ‘other financial liabilities’.

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

Derecognition of financial liabilitiesThe Group de-recognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.

equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

4 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION/ UNCERTAINTY

In the application of the Group’s accounting policies that are described in note 3, management is required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources.





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4 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION / UNCERTAINTY (continued)

The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may vary from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revision to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

a) Critical judgement in applying accounting policiesThe following are the critical judgements, apart from those involving estimations, that management has made in the process of applying the entity’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

Revaluation of property - Notes 14 and 15 describe the valuation method adopted by the directors to determine the fair value of investment property at 30 April 2008. In making their judgement, the directors considered the revaluation on an open market basis prepared by the independent valuers, escalation factor on leases, the self repairing element of certain leases and benchmark yields. The rentals were discounted over the period of the relevant leases and capitalised.

b) Key sources of estimation/uncertaintyThe following are the key assumptions concerning the future and other key sources of estimation/uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year.

Impairment loss on debtorsThe Group reviews its debtors to assess impairment on a monthly basis. In determining whether an impairment loss should be recorded in profit or loss, the Group companies make judgements as to whether there is any observable data indicating that there is a measurable decrease in estimated cash flows from a portfolio of debtors. Management uses estimates based on historical loss experience of assets. The assumptions used for estimating the amount and timing of cash flows are reviewed regularly to reduce any difference between loss estimates and actual loss experience.

Impairment of goodwill The Group companies test annually whether goodwill has suffered any impairment, in accordance with the accounting policy on goodwill. The recoverable amounts of each cash-generating unit have been determined based on the expectation of future growth, cash flows and an appropriate discount rate.

Residual values and useful livesResidual values and useful lives of property, plant and equipment are based on current estimates of the values of these assets at the end of their useful lives.

Provision for slow moving or obsolete stocks and shrinkageManagement’s estimate of slow moving or obsolete stocks is based on the movement of stocks and general market trends. The provision for shrinkage is based on the historical results of stock counts.

Provision for warrantiesOne of the subsidiary companies gives a warranty on vehicles sold by it; most of the warranty costs are met by the initial suppliers of these vehicles, but there is an element of cost that will be borne by the company. Based on the directors’ knowledge of the industry and previous practices a provision has been made to account for future warranty costs on vehicles sold.





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Group 2008 2007 P'000 P'000

5 REVENUE

An analysis of the Group's revenue is as follows: Sales of consumable and other products 1 401 181 1 014 959 Property rental income 1 564 4 885 1 402 745 1 019 844 Property rental income comprises: Contractual rental income 1 496 4 403 straight line lease adjustment 68 482 1 564 4 885

6 BUSINESS SEGMENTS

For management purposes the Group is organised into trading, manufacturing and property. These divisions are the basis on which the Group reports its primary segment information.

Principal activities are as follows:

Trading - wholesale distribution and sale of fast moving consumer goods, automotive and construction goods.

Manufacturing - the manufacture of soaps and oils, and milling of sorghum and soya flour and manufacture of

Property - rental of property portfolio.

No secondary segmental information has been provided as all of the Group's operations are based in Botswana.

SEGMENT REVENUES

External sales Inter-segment Total 2008 2007 2008 2007 2008 2007 P'000 P'000 P’000 P’000 P’000 P'000

trading 1 352 896 966 385 104 1 353 000 966 385 Manufacturing 49 451 48 574 13 068 8 510 62 519 57 084 Property 398 4 885 29 547 11 400 29 945 16 285 total of all segments 1 445 464 1 039 754 eliminations (42 719) (19 910) Consolidated revenue 1 402 745 1 019 844

Inter-segment sales are charged at amounts equal to competitive market prices for external sales of similar products.



value added products.



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2008 2007 P’000 P’000

6 BUSINESS SEGMENTS (continued)

SEGMENT RESULTS

trading 33 963 20 838 Manufacturing 1 870 4 048 Property 27 201 6 919 63 034 31 805 eliminations (21 802) (142) Unallocated expenses 6 559 (257) Profit before tax 47 791 31 406 Income tax expense (10 054) (4 709) Profit for the year 37 737 26 697

Assets Liabilities 2008 2007 2008 2007 P’000 P’000 P’000 P’000

SEGMENT ASSETS AND LIABILITIES

trading 375 128 315 359 238 693 205 005 Manufacturing 44 250 44 894 6 650 7 788 Property 109 863 83 079 23 052 17 586 total of all segments 529 241 443 332 268 395 230 379 Eliminations (5 901) (5 901) Unallocated 459 3 195 41 012 35 976 Consolidated 529 700 440 626 309 407 260 454

Trading Manufacturing Property 2008 2007 2008 2007 2008 2007

P’000 P’000 P’000 P’000 P’000 P’000

OTHER SEGMENT INFORMATION

Acquisition of assets 13 841 685 1 286 1 195 18 796 18 Depreciation of assets (6 995) (4 891) (1 470) (1 081) (2 578) (907)





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7 INVESTMENT REVENUE

Interest revenue from : Bank deposits 5 474 7 767 105 1 450 Related party loans 6 469 2 766 Other loans and receivables 5 Dividends from subsidiaries 10 808 15 023 5 474 7 772 17 382 19 239

8 OTHER GAINS OR LOSSES

Commission received 190 938 Management fees received from subsidiaries 1 860 (Loss) gain on disposal of property, plant and equipment (593) 500 Change in fair value of investment property 6 688 Gain on disposal of non-current asset held for sale 4 650 Loss on disposal of investment property (23) net foreign exchange gains 384 1 078 224 Premium realised on acquisition of subsidiary 3 799 other 171 892 19 884 11 490 7 184 2 103 884

9 FINANCE COSTS

Interest on bank overdrafts and loans 10 077 5 724 4 705 1 094 Interest on obligations under finance leases 5 18 Interest on balances with subsidiary companies 518 107 Other interest expense 2 377 2 333 10 082 8 119 5 223 3 534 The weighted average interest rate on funds borrowed generally is 12,65% per annum.





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10 INCOME TAX EXPENSE / (CREDIT)

Income tax recognised in profit or loss: Basic company taxation 6 778 4 337 386 48 Additional company taxation at 10% 4 574 2 945 257 32 Deferred taxation (1 132) (659) Share of taxation attributable to associate (72) Current tax charge 10 220 6 551 643 80 Withholding tax set off on dividends paid (426) (4 718) (2 006) Withholding tax on dividend received 1 621 Prior year under provision 260 2 876 375 Taxation expense / (credit) per income statement 10 054 4 709 2 639 (1 926) The basic taxation rate is 15% (2007:15%), other than in the case of manufacturing companies, where it is 5% (2007:5%). The charge for the year can be reconciled to the accounting profit as follows: Profit before tax 47 791 31 406 13 546 15 302 tax at the current rates 11 803 7 728 3 386 3 825 Tax effect of expenses that are not deductible 574 665 200 Tax effect of income that is not chargeable (1 672) (1 503) (2 744) (3 945) Expenses entitled to double deduction (133) tax effect of prior year under provision 260 2 876 375 Withholding tax set off on dividends received 1 621 Tax effect of withholding tax set off on dividends paid (426) (4 718) (2 006) Tax effect of utilisation of accumulated losses brought forward (352) (339) Income tax expense 10 054 4 709 2 639 (1 926)

Additional company taxation available to be offset against future withholding tax on dividends 20 928 16 780 327 70

Current tax assets and liabilities

Current tax assets Tax refund receivable 1 443 1 567 202 288

Current tax liabilities Income tax payable 4 355 1 346





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10 INCOME TAX EXPENSE / (CREDIT) (continued) Deferred tax balances Group

Deferred tax assets (liabilities) arise from the following: Accelerated tax Revaluation depreciation of property Other Total P’000 P’000 P’000 P’000

Balance at 30 April 2007 1 819 10 582 (4 622) 7 779 Arising from revaluation of properties during the year (equity) 4 005 4 005 Charged to income (2 175) 2 041 (998) (1 132) Balance at 30 April 2008 (356) 16 628 (5 620) 10 652

2008 2007 P’000 P’000

Disclosed as: Deferred tax assets 8 900 7 121 Deferred tax liabilities (19 552) (14 900) Total net deferred tax (liabilities) (10 652) (7 779)


11 PROFIT FOR THE YEAR

Profit for the year has been arrived at after charging:

Audit fees 1 753 1 404 204 158 Depreciation of property, plant and equipment 11 043 6 879 Amortisation of intangible assets 2 327 Pension costs - defined contribution plans 1 581 1 743 Directors and employee benefits 70 686 63 704 200





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12 DIRECTORS’ EMOLUMENTS

Emoluments of the directors of Sefalana Holding Company Limited from the company and its subsidiaries:


Fees for services as directors 200 162 200 162 Fees for consultancy services 183 186 84 Managerial services 6 445 2 980 total 6 828 3 328 200 246 Less paid by subsidiaries (6 628) (3 082) Borne by the Company 200 246 200 246

2008 2007

13 EARNINGS PER SHARE AND DIVIDENDS

Earnings per share Group Earnings per share is calculated by dividing the profit for the year attributable to equity holders of the parent by the weighted number of ordinary shares in issue during the year. Shares in issue at beginning of year (number) 16 422 414 16 000 000 Increase due to 10 : 1 share split (number) 147 801 726 Capitalisation shares issued (number) 1 424 927 Shares issued during the year (number) 422 414 Shares in issue at end of the year (number) 165 649 067 16 422 414 Weighted average shares in issue (number) 164 356 873 16 316 811

The prior period information presented below is restated for the effect of the share split:

Earnings per share (thebe) 18.35 13.92





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2008 2007 P’000 P’000

13 EARNINGS PER SHARE AND DIVIDENDS (continued)

Dividends paid and proposed

Declared and paid during the year

Final 2007: 5 thebe (2006: 10 thebe) 8 211 16 000

Interim 2008: 5 thebe (2007: 5 thebe) Cash dividend 1 872 8 211 Capitalisation shares issued 6 341

Proposed for approval

(not recognised as a liability as at April) Final 2008: 10 thebe (2007: 5 thebe) 16 565 8 211



The Company issued 1 424 927 shares valued at P 6.3 million during the current year based on an option given to the shareholders for the capitalisation of their interim dividend for 2008.



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14 PROPERTY, PLANT AND EQUIPMENT Plant Land Buildings fixtures and capitalised and Motor buildings under leases equipment vehicles Total Group P’000 P’000 P’000 P’000 P’000

COST OR VALUATION Balance at 30 April 2006 6 035 4 053 7 118 17 206 Acquired on purchase of subsidiaries 9 885 22 680 63 527 2 058 98 150 Additions 40 1 653 205 1 898 Transfers from investment properties 49 076 49 076 Disposals (135) (271) (406) Balance at 30 April 2007 65 036 22 680 69 098 9 110 165 924 Additions 19 449 12 246 2 228 33 923 Revaluation during the year 15 732 15 732 Impairment during the year (1 589) (1 589) transfers from investment properties 381 381 Disposals (7 234) ( 25) (7 259) Balance at 30 April 2008 99 009 22 680 74 110 11 313 207 112

ACCUMULATED DEPRECIATION Balance at 30 April 2006 291 5 950 566 6 807 Acquired on purchase of subsidiaries 410 10 188 38 177 6 595 55 370 Depreciation charge for the year 999 1 562 3 828 490 6 879 Disposals (106) (99) (205) Balance at 30 April 2007 1 700 11 750 47 849 7 552 68 851 Revaluation during the year (3 911) (3 911) Impairment during the year (218) (218) Depreciation charge for the year 2 791 1 562 5 943 747 11 043 Disposals (6 614) (1) (6 615) Balance at 30 April 2008 362 13 312 47 178 8 298 69 150

CARRYING AMOUNT At 30 April 2008 98 647 9 368 26 932 3 015 137 962 At 30 April 2007 63 336 10 930 21 249 1 558 97 073

Assets to the value of P Nil (2007 - P 546 000) are pledged as security for borrowings.





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14 PROPERTY, PLANT AND EQUIPMENT (continued)

The fair value of land and buildings as at 30 April 2008 has been arrived at by the Directors on the basis of an independent market valuation of the Group’s land and buildings which was performed by Messrs PAM Golding International Botswana, who are independent valuers not related to the Company or the Group. Messrs PAM Golding International Botswana is a member of the ‘Real Estate Institute of Botswana’ and they have appropriate qualifications and recent experience in the valuation of properties in the relevant locations. The valuation report has been made in conformity with and is subject to the requirements of the ‘Code of Professional Ethics’ and ‘Standards of Professional Conduct’ of the appraisal organisations with which the valuer is affiliated. The market value was determined by the valuers using an investment valuation model for industrial and commercial properties. The effective date of valuation is 30 April 2008.

Had the Group’s land and buildings been measured on the historical cost basis the carrying amount would have been P 54.29 million (2007- P 34.84 million)

The following useful lives are used in the calculation of depreciation.

Freehold buildings 50 years Leasehold land and buildings remaining period of the lease Buildings capitalised under leases 15 years (being the initial lease period) Plant, fixtures and equipment 4 to 10 years Motor vehicles 4 years

2008 2007 P’000 P’000

15 INVESTMENT PROPERTY

Group

Freehold and leasehold land and buildings at fair value 26 185 19 810 straight line lease rental adjustment (68) 26 117 19 810 Reconciliation of fair value opening fair value 19 810 77 397 transfers to property, plant and equipment (381) (49 076) Property reclassified as held for sale (6 350) Disposals during the year (2 161) Increase in fair value during the year 6 756 straight line lease rental adjustment (68) Closing fair value 26 117 19 810

The Group’s investment property is held under freehold and leasehold interests. The register is available for inspection at the registered office.





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15 INVESTMENT PROPERTY (continued)

The fair value of land and buildings as at 30 April 2008 has been arrived at by the Directors on the basis of an independent market valuation of the Group’s land and buildings which was performed by Messrs PAM Golding International Botswana, who are independent valuers that are not related to the Company or the Group. Messrs PAM Golding International Botswana is a member of the ‘Real Estate Institute of Botswana’ and they have appropriate qualifications and recent experience in the valuation of properties in the relevant locations. The valuation report has been made in conformity with and is subject to the requirements of the ‘Code of Professional Ethics’ and ‘Standards of Professional Conduct’ of the appraisal organisations with which the valuer is affiliated. The market value was determined by the valuers using an investment valuation model for industrial and commercial properties. The effective date of valuation is 30 April 2008.

The Group has not pledged any of its investment property to secure banking facilities.

16 INTANGIBLE ASSETS Computer Goodwill Software Total Group P’000 P’000 P’000

COST Balance at 30 April 2007 25 323 25 323 Additions 8 378 8 378 Balance at 30 April 2008 25 323 8 378 33 701

ACCUMULATED AMORTISATION AND IMPAIRMENT Balance at 30 April 2007 443 443 Charge during the year 2 327 2 327 Balance at 30 April 2008 443 2 327 2 770

CARRYING AMOUNT At 30 April 2008 24 880 6 051 30 931 At 30 April 2007 24 880 24 880 Goodwill Goodwill has been allocated for impairment testing to three individual cash-generating units as follows:

Sefalana Cash and Carry Limited, MF Holdings (Proprietary) Limited and the wholesale business operation in South West Botswana.

Sefalana Cash and Carry Limited - the recoverable amount is determined based on the discounted cash flow projections using a 7.5% growth rate for a five year period and an average cost of capital of 12.5%.

MF Holdings (Proprietary) Limited - the recoverable amount is determined based on warranted future profits.

Wholesale operations in South West Botswana - the recoverable amount has been determined based on a value in use calculation using cash flow projections based on financial budgets approved by the directors using a 7.5% growth rate for a five year period and a discount rate of 12%.





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16 INTANGIBLE ASSETS (continued)

Computer software rights Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. The useful lives of software are reviewed at each balance sheet date.

2008 2007

17 PROPERTY DEVELOPMENT LOAN P’000 P’000

Group

Loan receivable 1 220 1 320 The loan is secured over property owned by BG Estate (Proprietary) Limited, which is leased under a long-term lease agreement. It bears interest at 14.5% per annum and is payable in 120 equal instalments from February 2005.

18 DEFERRED LEASE ASSETS

Group

Raised during the year - straight line lease rental 68 - deferred letting fees 129 Balance at end of year 197

The deferred lease assets arise from straight line adjustments of long term lease rentals as required by International Accounting Standard (IAS) 17-Leases.

19 INVESTMENT IN SUBSIDIARIES % holding Company Held directly

Botswana Grain and Milling Company (Proprietary) Limited 100 337 337 Brook Street Holdings (Proprietary) Limited 100 26 26 Dumela Development (Proprietary) Limited 100 1 044 1 044 Foods (Botswana) (Proprietary) Limited 100 2 524 2 524 KSI Holdings (Proprietary) Limited 50 4 250 4 250 Meybeernick Investments (Proprietary) Limited 100 12 12 MF Holdings (Proprietary) Limited 55 8 861 8 861 Ngwato Industrial Distributing Company (Proprietary) Limited 100 51 51 Riverview Holdings (Proprietary) Limited 100 32 32 Sefalana Cash and Carry Limited 79.35 48 855 48 855 Sefalana Housing (Proprietary) Limited 100 Sefalana sa Botswana Limited 100 Selibe-Pikwe Wholesale (Proprietary) Limited 100 1 1 65 993 65 993





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2008 2007 P’000 P’000

19 INVESTMENT IN SUBSIDIARIES (continued) % holding Held indirectly Bargen (Proprietary) Limited 39.60 Commercial Motors (Proprietary) Limited 49.50 Ellerry Holdings (Proprietary) Limited 55 Kgalagadi Soap Industries (Proprietary) Limited 50 Mechanised Farming (Proprietary) Limited 55 Refined Oil Products (Proprietary) Limited 50 Seftim Hardware (Proprietary) Limited 39.68

The principal activities of the subsidiaries are described in the Directors’ report and Company profiles.

There are management agreements in place that result in all of the above companies being deemed subsidiaries.

The Company and Sefalana Cash and Carry Limited are listed on the Botswana Stock Exchange. The market value of the investment by the Company in Sefalana Cash and Carry limited at the end of the year is 234 044 137 198

The property companies are valued by the Directors on the underlying net value of the properties at 94 072 79 974

The other investments are valued by the Directors on the basis of the underlying net value plus attributable current earnings extrapolated over five years at 48 609 45 654

20 INVENTORIES Group

Purchased for resale 174 308 119 635 Finished goods 1 255 1 664 Raw materials 6 980 6 284 Less provision for obsolescence and shrinkage (13 002) (5 029) Work in progress 769 636 170 310 123 190

Inventories to the value of P 3.7 million (2007: P 2.3 million) are pledged as security for borrowings.





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2008 2007

P’000 P’000

21 TRADE AND OTHER RECEIVABLES

Group

Trade receivables 73 398 61 983Allowance for doubtful debts (6 035) (6 209) 67 363 55 774Prepaid expenses 2 706 7 541other 23 068 2 115 93 137 65 430

Trade receivables to the value of P Nil (2007- P 15 million) are pledged as security for borrowings.

The average credit period on sales of goods is 60 days.

The Group has provided fully for all receivables over 120 days because historical experience is such that receivables that are past due beyond 120 days are generally not recoverable. Trade receivables between 60 days and 120 days are provided for based on estimated irrecoverable amounts from the sale of goods, determined by reference to past default experience.

Before accepting any new customer, the Group assesses the potential customer's credit quality and defines credit limits by customer. Limits and scoring attributed to customers are reviewed regularly. Included in the Group’s trade receivable balance are debtors with a carrying amount of P 8.75 million (2007: P 7.80 million) which are past due at the reporting date for which the Group has not provided as there has not been a significant change in credit quality and the amounts are still considered recoverable. The Group does not hold any collateral over these balances. The average age of these receivables is 60 days (2007: 60 days).

Ageing of past due but not impaired:30-60 days 6 084 5 54360-90 days 2 664 2 12290-120 days 131 total 8 748 7 796

Movement in the allowance for doubtful debts:

Balance at beginning of year 6 209 1 874Impairment losses recognised on receivables 1 315Amounts written off as uncollectible (1 186) 4 518Amounts recovered during the year (303) (183)Balance at end of year 6 035 6 209

In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. Credit risk is not concentrated to any particular segment due to the customer base being large and unrelated. Accordingly, the directors believe that there is no further impairment provision required in excess of the allowance for doubtful debts.





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2008 2007 P’000 P’000

21 TRADE AND OTHER RECEIVABLES (continued) Company

Trade receivables 132 Prepaid expenses 58 37 Other receivables 1 656 59 825

22 RELATED PARTIES Group

Amounts due from: Contract Building Supplies (Proprietary) Limited 270 Amounts due to: Metro Sefalana Cash and Carry Limited 1 166 Company

Amounts due from: Botswana Grain and Milling Company (Proprietary) Limited 660 2 205 Brook Street Holdings (Proprietary) Limited 1 948 2 256 Foods (Botswana) (Proprietary) Limited 8 999 9 012 Meybeernick Investments (Proprietary) Limited 42 003 31 611 sefalana Cash and Carry limited 18 Ngwato Industrial Distributing Company (Proprietary) Limited 112 Riverview Holdings (Proprietary) Limited 197 187 Selibe-Pikwe Wholesale (Proprietary) Limited 551 934 Commercial Motors (Proprietary) Limited 1 100 Mechanised Farming (Proprietary) Limited 550 56 026 46 317

Amounts due to: Dumela Development (Proprietary) Limited 434 319 Ngwato Industrial Distributing Company (Proprietary) Limited 563 Sefalana Housing (Proprietary) Limited 1 424 987 Sefalana sa Botswana Limited 5 056 5 089 7 477 6 395

The related party loans bear interest at the prevailing bank rate of 12.65% (2007: 12.65%) fixed, which is the rate obtained by the Group from its bank; there are no fixed terms for repayment.





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2008 2007 P’000 P’000

23 NON-CURRENT ASSETS CLASSIFIED AS HELD FOR RESALE

Property 6 350 This property was disposed of during the year.

24 STATED CAPITAL Group and Company Issued and fully paid: At beginning of year -16 422 414 shares (2007: 16 000 000 shares) 8 271 2 115 10:1 share split - 147 801 726 shares issued 1 424 927 shares issued on dividend capitalisation 6 341 422 414 shares issued during the year 6 156 At end of year 165 649 067 shares (2007: 16 422 414) 14 612 8 271

In terms of a special resolution passed at the Annual general Meeting of the Company, the authorised and issued shares of the Company were subdivided by a factor of 10 on 12 October 2007.

The Company issued 1 424 927 shares during the current year based on an option given to the shareholders for the capitalisation of their interim dividend for 2008. In 2007, 422 414 shares were issued in part settlement of the acquisition of 55% of the equity in MF Holdings (Proprietary) Limited.

The Company has one class of ordinary shares of no par value which carries no right to fixed income.

25 FINANCE LEASE OBLIGATIONS

Group 2008 2007 Present Present value of value of Minimum capital Minimum capital payments payments payments payments P’000 P’000 P’000 P’000 Finance lease liabilities payable as follows: Within one year 6 314 1 960 5 878 1 273 Between two to five years 26 665 15 195 28 944 14 750 More than five years 9 029 7 138 13 065 9 543 42 008 24 293 47 887 25 566 Unearned finance charges (17 715) (22 321) 24 293 24 293 25 566 25 566





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2008 2007 P’000 P’000

25 FINANCE LEASE OBLIGATIONS (continued) Comprising: long term 22 333 24 293 short term 1 960 1 273 24 293 25 566

The leases are in respect of store premises and comprise fixed rentals payable monthly with annual escalations of between 1% and 10%. Most of the leases have renewal options for a further period of five years.

26 DEFERRED LEASE OBLIGATIONS

Group

Balance at beginning of year 403 298 Raised during the year 337 105 Balance at end of year 740 403

Deferred lease liabilities arises on account of recognising lease rentals for store premises, office and workshop premises of subsidiary companies on a straight-line basis over the lease period.

27 TRADE AND OTHER PAYABLES

Group

Trade payables 184 404 152 440 Accrued expenses 14 211 12 008 others 240 Unclaimed dividends 477 481 199 332 164 929

Company

trade creditors 108 Accrued expenses 675 733 Unclaimed dividends 212 218 995 951 The average credit period for settlement of liabilities is 30 days.

The Group has financial risk management policies in place to ensure that all payables are paid within the credit time frame.





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28 BORROWING FACILITIES

The Group has banking facilities with three financial institutions. The latest facility details for specific companies within the Group are as noted below.

Facilities with Stanbic Bank Botswana Limited

Mechanised Farming (Proprietary) LimitedThis facility comprises an overdraft facility of US$ 450 000 (2007: US$ 450 000) and is secured by an unlimited suretyship from its immediate holding company, MF Holdings (Proprietary) Limited and by an assignment of trade receivables. Interest is at LIBOR rate plus 400 basis points for 2008 and 2007. The unutilised facility at the end of the year amounted to US$ 450 000 (2007: US$ 282 893).

Commercial Motors (Proprietary) LimitedThis facility comprises an overdraft facility and letters of credit amounting to P 2.70 million (2007: P 3 million) and is secured by an unlimited suretyship from its immediate holding company, MF Holdings (Proprietary) Limited and by a cession of the specific contract monies. Interest is at the bank prime rate less 2% (2007: prime rate less 2%).

Facilities with First National Bank of Botswana Limited

sefalana Holding Company limitedThe company has an unsecured overdraft facility of P 45 million (2007: P 45 million) at interest rate of prime less 3.35%, effective March 2008. Previously, the same facility was available at a fixed interest rate of 12.65%.

sefalana Cash and Carry limitedSefalana Cash and Carry Limited has overdraft facility of P 20 million (2007:P 20 million) at an interest rate of prime less 0.25%.

Meybeernick Investments (Proprietary) LimitedThe company has an overdraft facility of P 15 million (2007: Nil) at an interest rate of prime less 3.35%. This facility is secured by letter of suretyship from Sefalana Holding Company Limited.

Mechanised Farming (Proprietary) LimitedThis facility comprises of an overdraft facility of P 2 million (2007: P 2 million) and a commercial bank guarantee limit of P 300 000 (2007: P 1 million) . The facility is being renewed at the balance sheet date and the security pro-posal for the facility is an unlimited suretyship from its immediate holding company, MF Holdings (Proprietary) Limited. Interest is at the bank prime rate less 2% (2007: prime rate less 2%).

Commercial Motors (Proprietary) LimitedThis facility comprises of an overdraft facility of P 2 million (2007: P 2 million). The facility is being renewed at the balance sheet date and the security proposal for the facility is an unlimited suretyship from its immediate holding company, MF Holdings (Proprietary) Limited. Interest is at bank prime rate less 2% (2007: prime less 2%).





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28 BORROWING FACILITIES (continued)

Facilities with Wesbank (A division of First National Bank of Botswana Limited)

Mechanised Farming (Proprietary) LimitedCapitalised leases were repayable over a period of 39-60 months in equal monthly instalments of P 17 125, inclusive of interest, bear interest at prime and are secured by the respective assets under finance. These have been fully repaid before the current year end. A floor plan facility of P 600 000 is available for the company's use. Interest is at the bank prime rate less 2%.

Commercial Motors (Proprietary) LimitedA floor plan facility of P 4.75 million (2007: P 3.50 million) is available for the company's use. The facility is secured by the vehicles which are under floor plan. Interest rate on the floor plan is at bank prime rate less 2% (2007: prime rate) For all facilities of the M F Holdings group with First National Bank of Botswana Limited, Sefalana Holding Company Limited has given assurance that it will provide suretyship for 55% of the total facilities.

Facilities with Standard Chartered Bank Botswana Limited

sefalana Cash and Carry limitedSefalana Cash and Carry Limited has overdraft facilities of P 30 million (2007: Nil) at an interest rate of prime less 3%; the facility is secured by a guarantee from Sefalana Holding Company Limited.

Commercial Motors (Proprietary) LimitedThis overdraft facility of P 1.5 million (2007: P 1.5 million) and a letter of credit facility of P 3 million (2007: P 1.5 million). The facility is secured by corporate guarantee by MF Holdings (Proprietary) Limited and hypothecation over Company's movable assets for P 3 million. Interest is charged at the bank prime rate less 2% (2007: prime rate less 2%).

29 PROVISIONS

Group Employee benefits Others Total P’000 P’000 P’000

Balance at 30 April 2007 7 262 332 7 594Arising during the year 11 742 182 11 924Utilised during the year (4 797) (206) (5 003)Balance at 30 April 2008 14 207 308 14 515

The provision for employee benefits represents annual leave and severance benefit entitlements. Other provisions include provisions for warranties.





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30 OPERATING LEASES AND CAPITAL COMMITMENTS

Group as lessor

Operating leases relate to the investment property owned by the Group with lease terms of between 3 to 10 years, with an option to extend for a further negotiated period. All operating lease contracts contain market review clauses in the event that the lessees exercise their option to renew. The lessees do not have an option to purchase the properties at the expiry of the lease period.

2008 2007 P’000 P’000 Within one year 2 717 1 496Within to two to five years 8 638Over five years 13 364 24 719 1 496

Group as lessee

At the year end, the Group had contracted with tenants for the following minimum lease payments:

Within one year 2 428 4 179Within two to five years 3 169 7 351Over five years 5 597 11 530

Capital expenditure approved by Directors:Contracted for 10 146 13 666not contracted for 30 000 4 567 40 146 18 233

31 RETIREMENT BENEFIT PLANS

The Group operates two defined contribution retirement benefit plans for qualifying employees in Sefalana Holding Company Limited, Foods (Botswana) (Proprietary) Limited and Sefalana Cash and Carry Limited. The assets of these plans are held separately from those of the Group in funds under the control of trustees.

The Group has utilised P 261 000 (2007: P 190 000) of the employer reserve in the Sefalana Pension Fund to fund its portion of the contribution. The employer reserve in the Sefalana Pension Fund as at the end of the financial year was P 21.9 million (2007: P 20.8 million), which is available for utilisation in the coming years.

Those employees who do not belong to the above pension plans are entitled to the severance benefit in terms of Botswana Labour Laws, full provision is made for this liability.





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32 FINANCIAL INSTRUMENTS

Capital risk managementThe Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged from 2007.

The capital structure of the Group consists of debt, which includes the bank overdraft disclosed in the balance sheet and equity attributable to equity holders of the parent, comprising stated capital, reserves and retained earnings as disclosed in the statement of changes in equity.

gearing ratioThe Board of Directors reviews the capital structure on an on-going basis. As part of this review, the Board considers the cost of capital and the risks associated with each class of capital. The Group aims to minimise net borrowings on a Group basis but will incur debt for expansion of operations. The Group has a target maximum gearing ratio of 20-25% determined as the proportion of net debt to equity.

As at the end of both the current and previous year, the Group's cash and cash equivalents exceeded its debts to banks. The Group expects to increase its gearing ratio through raising borrowings to enable it to expand its operations and for the procurement of essential stocks of grains.

Significant accounting policiesDetails of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 3 to the financial statements.

Financial risk management objectivesThe Group’s Corporate Treasury function provides services to the business, co-ordinates access to domestic financial markets and monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk.

The Group’s financial risk management policies are approved by the Board of Directors, which provides principles on foreign exchange risk, interest rate risk, credit risk and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by management on a continuous basis. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

The Corporate Treasury function reports regularly to the Group’s Board of Directors, an independent body thatmonitors risks and policies implemented to mitigate risk exposures.





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32 FINANCIAL INSTRUMENTS (continued)

Market riskThe Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates (see below) and interest rates (see below). The Group enters into forward foreign exchange contracts to hedge the exchange rate risk arising on the import of supplies throughout the Group.

Market risk exposures in the prices of grains used by Foods Botswana are managed by securing contracts for grain purchases at fixed prices.

Foreign currency risk managementThe Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising forward foreign exchange contracts.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:

Liabilities Liabilities Assets Assets 2008 2007 2008 2007 P’000 P’000 P’000 P’000

South African Rand (ZAR ) 82 881 80 284 7 520 13 936United States Dollars (USD) 15 168 470 358Great Britain Pounds (GBP) 5 5

Pula equivalent 69 996 71 014 9 476 14 619

Foreign currency sensitivity analysisThe Group is mainly exposed to the currency of South Africa, ZAR, through its buying operations. The following table details the Group’s sensitivity to a 10% increase and decrease in the Pula against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 10% change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the Group where the denomination of the loan is in a currency other than the currency of the lender or the borrower. A positive number reported indicates an increase in profit and other equity where the Pula strengthens 10% against the relevant currency. For a 10% weakening of the Pula against the relevant currency, there would be an equal and opposite impact on the profit and other equity, and the balances reported would be negative.





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Foreign currency sensitivity analysis (continued)

ZAR impact USD impact GBP Impact 2008 2007 2008 2007 2008 2007 P’000 P’000 P’000 P’000 P’000 P’000On liabilitiesProfit or (loss) if Pula strengthens by 10% 6 354 6 345 10 104 Profit or (loss) if Pula weakens by 10% (6 989) (6 980) (11) (115)

on assetsProfit or (loss) if Pula strengthens by 10% (628) (1 212) (314) (244) (6) (6)Profit or (loss) if Pula weakens by 10% 571 1 102 286 222 5 5

Interest rate risk managementThe Group is exposed to interest rate risk as entities in the Group borrow funds at floating interest rates. The Group’s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.

Interest rate sensitivity analysisThe sensitivity analyses reported have been determined based on the exposure to interest rates for both derivatives and non-derivative instruments at the balance sheet date. For floating rate liabilities, the analysis is prepared assuming the amount of liability outstanding at the balance sheet date was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s profit for the year ended 30 April 2008 would decrease/increase by P 33 000 (2007: decrease/increase by P 48 000). This is attributable to the subsidiary companies exposure to interest rates on their variable rate borrowings.

Credit risk managementCredit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group only transacts with entities that are rated the equivalent of investment grade and above. This information is supplied by independent rating agencies where available and, if not available, the Group uses other publicly available financial information and its own trading records to rate its major customers.


32 FINANCIAL INSTRUMENTS (continued)



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FINANCIAL INSTRUMENTS (continued)

Credit risk management (continued)the group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the risk management committee annually.

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee insurance cover is purchased.

The Group does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are related entities. Concentration of credit risk did not exceed 5% of gross monetary assets at any time during the year. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained.

Liquidity risk managementUltimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Included below is a listing of undrawn facilities that the Group has at its disposal to further reduce liquidity risk.

Liquidity and interest risk tables:The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows.

Weighted less than 1 3 months to average month 1-3 months 1 year 1 - 5 years Total % P’000 P’000 P’000 P’000 P’0002008 Variable interest rate instruments 13 42 902 3 718 46 620

2007 %Variable interest rate instruments 13 41 407 4 309 45 716

The Group has access to financing facilities, the total unused amount at the balance sheet date is as follows: 2008 2007 P’000 P’000Banking facilities in Pula 75 184 32 969Pula equivalent of UsD overdraft facility 3 059 1 923Wesbank Floor plan facility in Pula 1 632 3 086

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33 CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Sefalana Cash and Carry Limited (Sefcash) is disputing a claim of approximately P 4.3 million that relates to a construction contract entered into in 1999. The dispute is to be resolved by arbitration. The Directors are of the opinion that there will be no significant cost to the Group arising out of this.

In addition, the Metcash group has taken legal action against Sefcash in respect of monies allegedly owing to Metcash. The Directors believe that this matter is without merit and accordingly no provision has been made in the books of the subsidiary company.

A second action taken by Metcash in respect of the use of names belonging to Metcash and reported in the interim results for 2008 has subsequently been dismissed in court with costs awarded to Sefcash.

34 EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

On 27 June 2008, the Group acquired a large undeveloped plot of land on the Francistown road for P 15 million. This acquisition was financed through internal resources.




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Notice is hereby given that the Annual General Meeting of Sefalana Holding Company Limited will be held at The Coffee Shop, Plot 50676, Block A, Fairgrounds Office Park, Gaborone, on Thursday, 27 November 2008 at 16h00 for the purpose of transacting the following business:

1. To receive, consider and adopt the financial statements for the year ended 30 April 2008 together with the Directors and Auditors reports thereon.

2. To approve the dividend proposed of 10 thebe per share.

3. To elect Directors in the place of Mr E Dewah and Mr R Motswaiso who retire by rotation. Both, being eligible, offer themselves for re-election.

4. To approve the remuneration of the Directors for the year ended 30 April 2008 as required by the Articles of Association and as detailed on note 12 to the financial statements.

5. To approve the remuneration of the Auditors for the year ended 30 April 2008.

6. To appoint Auditors for the forthcoming financial year.

7. To grant the Directors authority to allot the unissued shares of the company, as they deem fit, until the next Annual General Meeting.

8. To transact such other business as may be transacted at an Annual General Meeting.

A member entitled to attend and vote at the abovementioned meeting is entitled to appoint a proxy to attend and speak and, on a poll, to vote in his / her stead. A proxy need not also be a member. Proxy forms must be received at Sefalana Head Office, Plot 10247/50, Corner of Noko and Lejara Roads, Broadhurst Industrial Sites, Private Bag 0080, Gaborone, before Tuesday, 25 November 2008.

By order of the Board

Venkit Iyer secretary 19 August 2008

notICe oF MeetIng



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For completion by holders of ordinary shares

PLEASE READ THE NOTES OVERLEAF BEFORE COMPLETING THIS FORM.

For use at the Annual General Meeting of ordinary shareholders of Sefalana Holding Company Limited to be held at The Coffee Shop, Plot 50676, Block A, Fairgrounds Office Park, Gaborone, on Thursday, 27 November 2008 at 16h00.

I/We (name/s in block letters)

of (address)

Appoint (see note 1):

1. or failing him/her, 2. or failing him/her, 3. the Chairman of the Meeting,

as my/our proxy to act for me/us at the General Meeting which will be held for the purpose of considering and if deemed fit, passing, with or without modification, the resolutions to be proposed thereat and at each adjournment thereof, and to vote for or against the resolutions and/or abstain from voting in respect of the ordinary shares registered in my/our name in accordance with the following instructions (see note 2):

Number of ordinary shares1. Ordinary resolution number 1 For Against Abstain2. Ordinary resolution number 23. Ordinary resolution number 34. Ordinary resolution number 45. Ordinary resolution number 56. Ordinary resolution number 67. Ordinary resolution number 78. Ordinary resolution number 8

Signature on 2008

Assisted by (where applicable)

Each shareholder is entitled to appoint one or more proxies (who need not be Member/s of Sefalana) to attend,speak and vote in place of that shareholder at the General Meeting.

Please read the attached notes.

FoRM oF PRoXY



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1 A Shareholder may insert the names of two alternative proxies of the Shareholder’s choice in the space provided, with or without deleting “the Chairman of the Meeting.” The person whose name appears first on the form of proxy, and whose name has not been deleted will be entitled to act as proxy to the exclusion of those whose names follow.

2 A Shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by the Shareholder in the appropriate space provided. Failure to comply herewith will be deemed to authorise the proxy to vote at the General Meeting as he/she deems fit in respect of the Shareholder’s votes exercisable thereat, but where the proxy is the Chairman, failure to comply will be deemed to authorise the proxy to vote in favour of the resolution. A Shareholder or his/her proxy is obliged to use all the votes exercisable by the Shareholder or by his/her proxy.

Forms of proxy must be lodged at or posted to the Secretary of Sefalana, to reach him before the Tuesday, 25 November 2008.

3 The completion and lodging of this form will not preclude the relevant Shareholder from attending the General Meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof should such Shareholder wish to do so.

4 the Chairman of the general Meeting may reject or accept any form of proxy not completed and/or received other than in accordance with these notes provided that he is satisfied as to the manner in which the Shareholder concerned wishes to vote.

5 An instrument of proxy shall be valid for the General Meeting as well as for any adjournment thereof, unless the contrary is stated thereon.

6 A vote given in accordance with the terms of a proxy shall be valid, notwithstanding the previous death or insanity of the Shareholder, or revocation of the proxy, or of the authority under which the proxy was executed, or the transfer of the Ordinary Shares in respect of which the proxy is given, provided that no intimation in writing of such death, insanity or revocation shall have been received by Sefalana not less than one hour before the commencement of the General Meeting or adjourned General Meeting at which the proxy is to be used.

7 The authority of a person signing the form of proxy under a power of attorney or on behalf of a company must be attached to the form of proxy, unless the authority or full power of attorney has already been registered by the Company or the Transfer Secretaries.

8 Where Ordinary Shares are held jointly, all joint Shareholders must sign.

9 A minor must be assisted by his/her guardian, unless the relevant documents establishing his/her legal capacity are produced or have been registered by Sefalana.

notes to FoRM oF PRoXY



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annual report 2008

Documents

cooked maize meal

fairgrounds office park

real estate institute

ad hoc basis

minimum lease payments

massey fergusonmechanised farming

sefalana head office

kgalagadi soap industries