Furnmart Ltd. (FURNMART-BW) - Annual Report For Period End 31-Jul-2017 (English) PDF

01
IN THIS
REPORT
WHO WE ARE
5 GROUP PROFILE
5 MISSION STATEMENT
CONTENTS
CHAPTER 01
6-7 BRIEF PROFILE OF DIRECTORS
CHAPTER 02
8-9 MANAGEMENT REPORT
CHAPTER 03
10-11 DIRECTORS’ REPORT
CHAPTER 04
12 CORPORATE GOVERNANCE
13-19 REPORT OF THE INDEPENDENT AUDITOR
CHAPTER 05
ANNUAL FINANCIAL STATEMENTS
20 STATEMENT OF COMPREHENSIVE INCOME
21 STATEMENT OF FINANCIAL POSITION
22 STATEMENT OF CHANGES IN EQUITY
23 STATEMENT OF CASH FLOWS
24-34 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
35-36 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
37-43 FINANCIAL RISK MANAGEMENT
44-60 NOTES TO THE ANNUAL FINANCIAL STATEMENTS
CHAPTER 06
61 SHAREHOLDERS’ ANALYSIS AND DIARY
CHAPTER 07
62 SHARE STATISTICS
CHAPTER 08
63 CORPORATE INFORMATION
CHAPTER 09
64 NOTICE OF THE ANNUAL GENERAL MEETING
CHAPTER 10
LOOSE PROXY FORM
3
Furnmart Annual Report 2017
01
WHO
WE
ARE
4
2017 Furnmart Annual Report
Furnmart Limited retails domestic furniture and
electrical appliances through its network of stores
in Botswana, South Africa and Namibia. It aims
at the majority of households in its market and
concentrates on cultivating relationships with its
customers through its ‘value for money’ and ‘smart
credit’ policies. Furnmart Limited is listed on the
Botswana Stock Exchange.
MISSION STATEMENT
• We are determined to be the market leader in retailing ‘value
for money’ furniture and electrical appliances
• We will achieve this by:
» offering service excellence to all our partners, customers,
staff, suppliers and shareholders;
» valuing our people and helping them to become the best;
» constantly adapting to market needs and opportunities;
and
» working as a team and encouraging the free flow of
information and ideas.
5
01 BRIEF PROFILE OF
DIRECTORS
John Tobias Mynhardt

Chairman [B. Comm (UCT)]
After completing his Bachelor of Commerce degree at the University of Cape Town in
1968, John Mynhardt started work in the family trading store in Francistown. He has
remained involved in the Botswana retail industry ever since. During this time he has
developed extensive business interests in Botswana and he remains actively involved
as chairman of all the companies in the Cash Bazaar Holdings Group as well as and
including Furnmart Limited and the companies in the group’s Tourism and Hospitality
division. During his career he has served as a member of the Francistown Town
Council, the Boards of the Botswana Housing Corporation and First National Bank of
Botswana. He is currently a member of the University of Botswana Council.
Tobias Louis John Mynhardt

Deputy Chairman [B.Comm (Hons-UCT) MSc Econ(LSE)]
Tobias Mynhardt is the Deputy Chairman of the CBH Group which has investments
in a number of industries including property, retail, tourism, hospitality, building
manufacturing and supplies and financial services. He has assumed responsibility for
various CBH Group divisions since being appointed a director in 2003. Mr Mynhardt
assisted with the listing of Furnmart in 1998 and joined the management team in
2006. He was appointed Deputy Managing Director of Furnmart in 2007 and was
Managing Director from 2009 until his appointment as Deputy Chairman in 2016.
Mr Mynhardt led the 2011 listing of New African Properties Limited and has been
Managing Director of this associated company since. Mr Mynhardt’s early career
encompassed a broad exposure to the investment industry through an investment
advisory and fund of hedge funds firm in London, following the completion of
his Masters in Economics from the London School of Economics. In 2016 he was
appointed to the board of Barclays Bank of Botswana Limited as a Non Executive
Director.
Daniel Servaas le Roux : Managing Director

[B.Com (Hons- UJ) (Financial Management), M.Com (Business Management), ACMA]
Serniel le Roux has more than 21 years’ experience in the furniture retail industry
and joined the Furnmart Group in 2011. His experience includes statutory reporting,
financial accounting, management accounting, treasury, micro-lending and general
management. Serniel has extensive knowledge of Southern African furniture retail
6 markets. He was appointed as Managing Director in July 2016.
Fact Badzile Lebala Subbarao Venkataramani
Non Executive Director Non Executive Director [B.Com, ACA, ACS]
Fact Lebala left the Botswana Police Force after 28 years’ Subbarao Venkataramani qualified as a Chartered
of service with the rank of Superintendent of Police and Accountant in 1978. He has more than 38 years of
was awarded the Police Medal for Long Service and Good experience in financial management, treasury and
Conduct. During this career he was Commanding Officer for accounting as head of finance in various listed companies.
all the major Police Districts in Botswana and was attached He joined Furnmart in May, 1998 as Group Financial
to Scotland Yard in London for nine months. He has retired Manager. He became Chief Financial Officer of Furnmart
from the CBH group after serving as a director in the group Group in 2007. He was fully involved in the implementation
for over 28 years. He continues to be a board member in of Argility Furniture Retail operations and information
Furnmart Limited. systems and involved in the issue and listing of rights shares
and bonds. He was appointed as the Finance Director on
Leonard Godfrey Waldeck 15 August 2011 and he continued till 12 July 2016 when he
Independent, Non Executive Director [Dip.Acc]
relinquished his position as head of finance. He continues
Len Waldeck has a Diploma in Accounting from Rhodes to be a board member in Furnmart Limited and is currently
University (PE) & served his articles with Starling, Treasure, responsible for secretarial and compliance matters. He is also
Blake and Company in Port Elizabeth. He has more than overseeing the microlending activities of CBH Group.
22 years of experience in the furniture retail industry in
Eric Odendaal
credit, finance and retail operations. He has served in Director Operations
several different capacities, such as Financial Director,
Group Credit Director & Joint Managing Director, with the Eric Odendaal joined Furnmart in August 1997 as Group
Beares, McCarthy Retail, Relyant & Ellerines Groups until his Operations Manager. He has overseen the expansion of the
retirement in 2007. He is also a member of the Institute of business in Botswana and RSA and is fully involved in the
Directors, South Africa. opening of Home Corp Stores in both these countries. He
has more than 39 years of experience in the furniture retail
Jerome Patrick McLoughlin
Independent, Non Executive Director [B.Com, Dip Acc industry. He is responsible for the day to day operations
(Natal), CA(SA)] of Furnmart and Home Corp stores in Botswana and South
Africa.
Jerome McLoughlin is a qualified Chartered Accountant
and completed articles with Deloitte (Durban). He started
a career in public audit practice and currently serves as a
director of a firm of registered auditors known as Hodkinson
Inc. He also serves as a non-executive director to companies
and as trustee on a number of trusts. He has substantial
experience in an advisory capacity and in property
investment. 7
02 MANAGEMENT
REPORT
The financial year will be remembered as one of consolidation where management closed the loss-making
business units of Furnmart Zambia and Home Corp Upington. These were disruptive processes that required
considerable focus and effort from management. However, these actions will have a positive impact on the
Group’s profitability in future.
The furniture retail industry continues to consolidate, particularly in South Africa, where store closures
occurred across the board. As a result, to maintain growth, the South African furniture retailers maintained
their expansion drives into Africa and are becoming more competitive in the territories where the Group
traditionally dominated.
The regulatory environment for consumer credit providers is becoming increasingly challenging and complex
as regulatory bodies introduce more restrictive laws, regulations and limitations in an attempt to protect
consumers from high levels of indebtedness or exploitation by credit providers. Changes and developments
in this regard are closely monitored across all countries where the Group operates, and where necessary,
adjustments are made to the respective business models. The Group will continue to be a good corporate
citizen and we intend to abide by all laws and regulations, in all geographical areas.
RESULTS an exchange gain (prior year exchange loss), partially

offset by lower sales, lower gross profit margins and
Group revenue of P1.17 billion for the year ended
higher operating expenses.
July 2017, was slightly lower than the previous year.
The closure of the Zambian operations in particular
Total debtors’ costs have reduced considerably during
contributed to the decline. However, excluding
this reporting period due to an improvement in
the discontinued operations, revenue increased
collections and an improvement in the quality of the
compared to the prior year. The somewhat difficult
book. The total impairment provision on the debtor’s
trading environment was brought about by low
book remains at an adequate level.
economic growth, increased competition, the
drought and high levels of consumer debt in the
The Pula weakened steadily against the Rand
region.
during the financial year. As a result, the Group
realised an exchange gain of P10.6m compared
Gross profit margins were lower than last year,
to an exchange loss of P16.9m in the prior year.
mainly due to the closing down sale of our Zambian
Subsequent to year-end, the Pula however, has
operations and a very competitive, albeit subdued,
strengthened again.
trading environment elsewhere.
Operating expenses were 4.9% higher than the prior

Group operating profit of P120.7m was P18.9m
year. The Group did not incur full-year expenses in
(18.6%) higher than the corresponding period. This
respect of the discontinued operations, as these
was caused, in the main, by lower debtors’ costs and
business units ceased trading prior to year-end.
8
However, some once-off severance packages and PROSPECTS
reinstatement costs were paid during this period. Cost saving
Management is confident that the new financial year
initiatives across the Group have contributed to the relatively
will bring about a stronger performance, now that the
low growth in the expense base.
loss-making business units, which had a considerable drag
on the profitability of the Group, have been discontinued.
Profit after tax of P64.6m is P16.8m (35.2%) higher than the
Management’s focus will remain on the respective business
previous year.
models and specifically on sales growth, gross margin
enhancement, expense control, productivity and debtor’s
As at 31st July 2017 the Group had a strong balance sheet
management. The remaining non-performing stores have all
with low levels of gearing. The Group’s balance sheet
been subjected to a turn-around strategy.
provides a very strong platform from which to grow. During
the period under review the Group was able to generate
Trading subsequent to financial year-end has been
strong cash flows.
encouraging. The cost saving initiatives, considerable efforts
in improving the quality of our respective debtors’ books and
ZAMBIAN OPERATIONS
new customer acquisition strategies are starting to bear fruit.
The closure of our Zambian operations, which commenced
on the 1st of November 2016, has been completed. With The Group’s businesses in our chosen markets and
the exception of the debtor’s book, all assets in the Zambian territories are well positioned to take advantage of
operations have been realised. The outstanding debtor’s book the inevitable improvement in market conditions. Our
will be collected in the new financial year. Collections on this focussed management teams will continue to seek growth
book, to date, have exceeded management’s expectations opportunities in the region. New store growth will come
and provisions are adequate. primarily out of South Africa.
STORE FOOTPRINT
The Group opened four (4) new Furnmart stores during the
period under review and are now, net of the store closures in
the discontinued operations, trading out of 120 stores in three
countries.
9
03 DIRECTORS
REPORT
NATURE OF BUSINESS
Furnmart Limited retails domestic furniture and electrical appliances through its network
of stores in Botswana, Namibia and South Africa. The merchandise mix at mass-market
Furnmart stores is aimed at the middle to lower income market, thus covering the majority
of the population. The Group’s HomeCorp super stores, located in Gaborone, Windhoek,
Boksburg, Swakopmund and Kempton Park are aimed at the middle to higher income
market. Furnmart Limited strives to establish lasting relationships with its customers
through its ‘value for money’ and ‘smart credit’ policies.
SHARE CAPITAL
The issued share capital of the company is 606 446 080 (2016: 606 446 080) shares.
The Directors have DIVIDEND

A gross interim dividend of 1.30 thebe per share was paid to the shareholders who were
pleasure in submitting registered as at 16 May 2017. A gross final dividend of 2.25 thebe per share has been
proposed to be paid to the shareholders registered in the books of the company as at
their report for the
17 November 2017.
financial year ended
Dividends are subject to withholding tax in accordance with the Botswana Income Tax Act.
31 July 2017.
SUBSIDIARY COMPANIES
The Group’s shareholdings in the issued share capital of the subsidiary companies are as
follows:
Company Country Percentage Nature of

held business
Furn Mart (Proprietary) Limited Namibia 100% Furniture retail
Xtreme Discounters (Proprietary) Limited South Africa 100% Furniture retail
Furniture Mart Zambia Limited Zambia 100% Furniture retail
Furniture Mart (Proprietary) Limited Botswana 100% Furniture retail
Furnmart (Proprietary) Limited South Africa 100% Distribution and

shared services
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DIRECTORS DIRECTORS’ INTERESTS
The following directors served on the Board The aggregate number of shares directly held by the directors was 1 027 685 at
during the year: 31 July 2017 and 1 027 685 at 31 July 2016. Directors indirectly held 247 457 293
J T Mynhardt (Chairman) shares at 31 July 2017 and 247 388 380 shares at 31 July 2016.
T L J Mynhardt (Deputy Chairman)
D S le Roux* (Managing Director) DIRECTORS’ REMUNERATION
E Odendaal* The independent directors are paid for meetings attended and these fees
F B Lebala amounted to P359 250 (2016: P119 000) for the year. Other directors are on
J P McLoughlin* contract to the Group from Cash Bazaar Holdings (Pty) Ltd, a related company
S Venkataramani^ and accordingly earned no remuneration directly from the Group.
L G Waldeck*
COMPANY SECRETARY
* South African, ^Indian The Company Secretary is S. Venkataramani.
As per article 53 and 55 of the Articles of APPROVAL OF FINANCIAL STATEMENTS

Association of the company, the following The Directors of Furnmart Limited are responsible for the preparation, integrity
directors will retire at the forthcoming and objectivity of the financial statements and other information contained in
annual general meeting and, being eligible, this annual report, which has been prepared in accordance with International
offer themselves for re-election: Financial Reporting Standards and in the manner required by Botswana
F B Lebala Companies Act (2003) and the Group’s policies and procedures.
T L J Mynhardt
E Odendaal The directors are also responsible for the Company and its subsidiaries’ systems
of internal financial control. Nothing has come to the attention of the directors
to indicate that any material breakdown in the functioning of these controls,
procedures and systems has occurred during the year under review.
The directors have reviewed the Group’s financial projections for the year
ending 31 July 2018 and are satisfied that the company and its subsidiaries
have adequate resources in place to continue in operation for the foreseeable
future. The financial statements have therefore been prepared on the going
concern basis. However, directors had taken a decision to cease the operations
of Furniture Mart Zambia Limited in the financial year 2017. Accordingly the
financial statements for Furniture Mart Zambia Limited will be prepared on a
non-going concern basis.
The Board of Directors approved the annual financial statements presented on

pages 20 to 60 on 24 October 2017.
On behalf of the Board

D S le Roux T L J Mynhardt
Managing Director Deputy Chairman
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04 CORPORATE
GOVERNANCE
In accordance with international developments, the Group is committed to the underlying principles as
set out in the King III Report on corporate governance.
BOARD OF DIRECTORS
The day-to-day operations of the Group is vested in the executive management, while the Group
Executive Management Committee and Board meet periodically to review and decide on strategy, risk,
compliance and corporate affairs.
The Board meets at least three times per annum. While the Board strives to have full attendance at
meetings, the quorum is any four directors and board papers are distributed timeously to enable
members to be properly briefed prior to meetings. Directors who are unable to attend a meeting
receive the relevant documents and are able to communicate with the Chairman and Company
executives on any issue. Absences noted this year, with apologies were L G Waldeck (1), J T Mynhardt (1)
and S Venkataramani (1).
FINANCIAL CONTROLS
Internal controls and systems are in place in the Group and are designed to provide reasonable
assurance as to the integrity and reliability of the financial statements. These controls are regularly
reviewed by the Board and management.
RISK, AUDIT AND COMPLIANCE COMMITTEE

The Group has a Risk, Audit and Compliance Committee which reports to the Board of Directors on
the effectiveness of internal controls and management control systems. The committee ensures the
effective assessment of all significant risks affecting the achievement of the missions and objectives
of the Group. The committee also monitors compliance with BSE Listing requirements, adherence
to International Financial Reporting Standards, corporate governance, Companies Act, adequacy of
debtors’ impairment and other applicable legislation.
The Risk, Audit and Compliance Committee chaired by an independent Director meets at least twice a
year and includes experts with sufficient financial literacy so as to enable the effectiveness of the Board
sub-committee. The Chief Finance Officer, IT Executive and the external auditors attend the meeting by
invitation.
The Committee met thrice during the year. Absentees noted this year, with apologies were L G Waldeck (1)
and S Venkataramani (1).
CODE OF ETHICS
All employees of the Group are required to maintain high ethical standards, ensuring that the Group
conducts its business in a proper and professional manner.

D S le Roux T L J Mynhardt
Managing Director Deputy Chairman
12
INDEPENDENT AUDITOR’S REPORT
TO THE SHAREHOLDERS OF FURNMART LIMITED
REPORT ON THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL

STATEMENTS
Our opinion
In our opinion, the consolidated and separate financial statements give a true and fair view of the
consolidated and separate financial position of Furnmart Limited (the “Company”) and its
subsidiaries (together the “Group”) as at 31 July 2017, and of its consolidated and separate financial
performance and its consolidated and separate cash flows for the year then ended in accordance with
International Financial Reporting Standards.
What we have audited

Furnmart Limited’s consolidated and separate financial statements set out on pages 20 to 60 which
comprise:
● the consolidated and separate statements of financial position as at 31 July 2017;
● the consolidated and separate statements of comprehensive income for the year then ended;
● the consolidated and separate statements of changes in equity for the year then ended;
● the consolidated and separate statements of cash flows for the year then ended; and
● the notes to the financial statements, which include a summary of significant accounting policies.
Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the consolidated and separate financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with the Botswana Institute of Chartered
Accountants code of ethics (BICA Code) and the ethical requirements that are relevant to our audit of
financial statements in Botswana. We have fulfilled our other ethical requirements in accordance
with these requirements and the BICA Code. The BICA Code is consistent with the International
Ethics Standards Boards for Accountants Code of Ethics for Professional Accountants (Parts A and
B).
PricewaterhouseCoopers, Plot 50371, Fairground Office Park, Gaborone, P O Box 294, Gaborone, Botswana
T: (267) 395 2011, F: (267) 397 3901, www.pwc.com/bw
Country Senior Partner: B D Phirie

13
Partners: R Binedell, A S Edirisinghe, L Mahesan, R van Schalkwyk, S K K Wijesena
Our audit approach
Overview
Overall Group materiality
● Overall Group materiality: P 4,875,000, which represents 5% of the
consolidated profit before tax for the year.
Group audit scope

● The Group consists of 5 subsidiaries, operating in Botswana,
Namibia, South Africa and Zambia .We performed full scope audits
of the Company and all of its subsidiaries.
Key audit matters

● Impairment of loans and advances to customers – applicable only
to the consolidated financial statements
● Impairment of investment in subsidiaries – applicable only to the
separate financial statements
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the consolidated and separate financial statements. In particular, we considered
where the directors made subjective judgements; for example, in respect of significant accounting
estimates that involved making assumptions and considering future events that are inherently
uncertain. As in all of our audits, we also addressed the risk of management override of internal
controls, including among other matters, consideration of whether there was evidence of bias that
represented a risk of material misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to
obtain reasonable assurance whether the financial statements are free from material misstatement.
Misstatements may arise due to fraud or error. They are considered material if individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the consolidated financial statements as a whole as set out
in the table below. These, together with qualitative considerations, helped us to determine the scope
of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
misstatements, both individually and in aggregate on the financial statements as a whole.
Overall Group materiality P 4,875,000

How we determined it 5% of consolidated profit before tax for the year.
Rationale for the materiality We chose consolidated profit before tax as the benchmark
benchmark applied because, in our view, it is the benchmark against which the
performance of the Group is most commonly measured by
users, and is a generally accepted benchmark. We chose 5%
which is consistent with quantitative materiality thresholds
used for profit-oriented companies.
14
How we tailored our group audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the consolidated financial statements as a whole, taking into account the structure of the
Group, the accounting processes and controls, and the industry in which the Group operates.
In doing so, full scope audits were performed at the Company and all its subsidiaries as-based on
materiality and risk- these could individually or in aggregate have a material impact on the
consolidated financial statements.
In establishing the overall approach to the group audit, we determined the type of work that needed
to be performed by us, as the Group engagement team, or component auditors from other PwC
network firms operating under our instruction. Where the work was performed by component
auditors, we determined the level of involvement we needed to have in the audit work at those
components to be able to conclude whether sufficient appropriate audit evidence had been obtained
as a basis for our opinion on the Group financial statements as a whole.
Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated and separate financial statements of the current period. These matters
were addressed in the context of our audit of the consolidated and separate financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
Key audit matter How our audit addressed the key audit matter
Impairment of loans and advances to customers Our audit procedures included
(applicable only to the consolidated financial understanding and testing of the relevant
statements) controls within the revenue and receivables
cycle, including controls over:
The nature of the Group’s credit business, ● The recording of credit sales
combined with economic uncertainty in many of transactions;
the jurisdictions where the Group operates, ● The credit granting process, including
exposes the Group to significant credit risk on its determining credit limits;
loans and advances to customers. The assessment ● The identification and write-off of bad
of impairment of customer advances requires the debts; and
Group to exercise significant judgement and may ● The data used in the calculation of the
have a significant impact on the consolidated provision for impairment of customer
financial statements. advances.
In determining the required impairment We considered the client’s calculation of the

provision on customer advances, the Group impairment provision by performing an
adopts a standardised impairment approach, independent valuation of the customer
which allows for appropriate customisation to advances. This included a combination of:
take account of unique risks which may apply ● Testing the data used in the model, by
within specific jurisdictions. comparing it to supporting
documentation, including the analysis of
This approach assesses likely credit losses based loans into groupings displaying the
on factors, which include: same delinquency characteristics;
● Assessment of any objective evidence that ● Testing the loss ratios by comparing
15
individual advances will not be collected due them to historical loss ratios, comparing
to, for example, retrenchment of the customer, them against recomputed loss ratios and
closure of the employer, etc.; applying sensitivities; and
● Categorisation of outstanding advance ● Recalculation of the impairment
balances based on: provision using an independent model.
● Grouping of advances into portfolios which
include advances subject to similar credit Based on the results we accepted the Group’s
risks; and estimate of impairment of customer advances
● The number of instalments in arrears; as falling within a reasonable range of likely
● Loss ratios determined for each category of credit losses.
advances showing similar historical loss
experience as those identified through the
categorisation processes.
Given the subjectivity and reliance on estimates

and judgements inherent in the determination of
the provision for impairment (P144.6Mn), we
determined that this was a matter of most
significance to our audit of the consolidated
financial statements.
The disclosures associated with impairment of

customer advances are set out in the consolidated
financial statements in the following notes:
● Financial Risk Management, Credit Risk (page
38)
● Critical accounting estimates and judgements,
Impairment losses on loans and advances to
customers (page 35), and
● Note 13 – Loans and advances to customers
(page 53).
Impairment of investment in subsidiaries Our audit procedures to test the Value In Use
(applicable only to the separate financial calculation included the following:
statements)
● We compared the principal assumptions
The Company is required to assess at the end of to our own knowledge of other practices,
each reporting period whether there is an actual experience and market indicators;
indication that its investments in subsidiaries ● We tested the mathematical accuracy of
recorded in the separate financial statements are the calculation;
impaired. ● We tested the reliability of budgets and
forecasts by comparing the actual results
The impairment assessments were based on against the historical budgets and
discounted cash flow calculations to determine forecasts, and found that historical results
the Value In Use, referencing budgeted and were consistent with the historically
projected net cash flows and appropriate discount budgeted results or, where there were
16
rates for each investment in subsidiary. deviations, such deviations occurred
because of events which could not have
The decision as to whether an impairment of been foreseen at the time of preparing the
investment should be made can thus be budget; and
significantly influenced by: ● We tested whether the budgets and
● the reasonableness of forecasted cash flows, forecasts utilised to support the recovery
with reference to the previous performance of the investment in subsidiaries were
against historical forecasts and budgets, approved by those charged with
general economic and industry performance governance.
indicators and competitor activity in relevant
market areas; We challenged the key inputs and assumptions
● the principal assumptions underlying the used in forecasts of net cash flows as follows:
calculations used for determining the Value in ● We compared the growth rate beyond
Use; and forecast period to estimates of gross
● the operation of the model used to perform domestic product (GDP) and the
the Value in Use calculations. Company’s performance against historical
GDP;
The assessment of impairment of investment ● We assessed the growth rates during the
requires significant judgement by management budget periods by understanding the basis
and may have a significant impact on the separate and comparing these against historical
financial statements. For these reasons, the audit trends and economic forecasts used in
of the assessment of whether the investments preparing the budgets; and
were impaired was determined to be a matter of ● We compared the discount rates to our
most significance to our audit of the separate independently determined risk adjusted
financial statements. discount rates.
The disclosure associated with investment is set We found the inputs and assumptions to be
out in the separate financial statements in the within a reasonable range.
following notes:
● Critical accounting estimates and judgements, We performed sensitivity analyses on the
Impairment of Investment in subsidiaries impairment calculations to determine the degree
(page 36); by which the key assumptions would need to
● Note 10.2 – Investment in Subsidiaries (page change in order to trigger an impairment. We
51); and discussed the outcomes of these sensitivity
● Note 10.3 – Provision for impairment – analyses with the management, considered the
Furniture Mart Zambia Limited (page 51). likelihood of such changes occurring and
● Note 14.1 – Receivable from related accepted that the key assumptions used by
companies (page 54) management fell within a reasonable range of
outcomes.
Other information
The directors are responsible for the other information. The other information comprises Group
profile, Mission statement, Brief profile of directors, Management report, Director’s report,
Corporate Governance, Shareholders’ analysis and diary, Share statistics, Notice of the annual
general meeting, Proxy form and Corporate information which we obtained prior to the date of this
17
auditor’s report. The other information does not include the consolidated and separate financial
statements and our auditor’s report thereon.
Our opinion on the consolidated and separate financial statements does not cover the other
information and we do not express an audit opinion or any form of assurance conclusion thereon.
In connection with our audit of the consolidated and separate financial statements, our responsibility
is to read the other information identified above and, in doing so, consider whether the other
information is materially inconsistent with the consolidated and separate financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information, we conclude that there is a
material misstatement of this other information, we are required to report that fact. We have nothing
to report in this regard.
Responsibilities of the directors for the consolidated and separate financial

statements
The directors are responsible for the preparation of the consolidated and separate financial
statements that give a true and fair view in accordance with International Financial Reporting
Standards and for such internal control as the directors determine is necessary to enable the
preparation of consolidated and separate financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated and separate financial statements, the directors are responsible for
assessing the Group and the Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting unless
the directors either intend to liquidate the Group and/or the Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated and separate financial
statements
Our objectives are to obtain reasonable assurance about whether the consolidated and separate
financial statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these consolidated and separate
financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
● Identify and assess the risks of material misstatement of the consolidated and separate financial
statements, whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
● Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s and Company’s internal control.
18
• Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Centre’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Centre
to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the consolidated and separate financial statements of the current period
and are therefore the key audit matters. We describe these matters in our auditor’s report unless law
or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
Practising member: Lalithkumar Mahesan 6 November 2017

Membership number: 20030046 Gaborone
19
05 FURNMART LIMITED AND ITS SUBSIDIARIES
STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 July 2017
GROUP COMPANY
Note 2017 2016 2017 2016
P’000 P’000 P’000 P’000
Revenue 2 1 174 492 1 187 542 81 811 49 719

Cost of merchandise sold 3 (565 623) (558 831) - -
Selling and distribution costs 3 (516 525) (550 955) - -
Administrative expenses 3 (22 557) (19 748) (23 550) (113 130)
Other income 3 50 958 43 831 18 127 7 776
Operating profit/ (loss) 120 745 101 839 76 388 (55 635)
Finance income 4 1 369 1 031 334 16
Finance costs 4 (22 978) (23 410) (21 978) (21 426)
Share of loss of associate 10 (1 630) (77) - -

Profit/ (loss) before income tax 97 506 79 383 54 744 (77 045)
Income tax expense 5 (32 949) (31 646) (3 900) 863
Profit / (loss) for the year 64 557 47 737 50 844 (76 182)
Other comprehensive income -items that may subsequently be
reclassified to profit/ (loss)
Currency translation differences 3 675 (16 065) - -
Changes in value of available for sale investments - (456) - (456)
Total comprehensive income/(loss) for the year 68 232 31 216 50 844 (76 638)

Earnings per share (thebe) – basic and diluted 6 10.65 7.87
20
FURNMART LIMITED AND ITS SUBSIDIARIES
STATEMENT OF FINANCIAL POSITION

At 31 July 2017
GROUP COMPANY
Note 2017 2016 2017 2016
P’000 P’000 P’000 P’000
ASSETS
Non-current assets
Property, plant and equipment 8 71 539 72 004 1 671 1 873
Intangible assets 8 4 398 5 498 4 398 5 498
Investment in associate 10 1 599 3 229 - -
Other financial assets 11 67 189 64 736 - -
Investment in subsidiaries 10 - - 291 200 207 403
Deferred income tax 9 1 718 1 608 340 1 523

146 443 147 075 297 609 216 297
Current assets
Inventories 12 195 099 229 055 - -
Loans and advances to customers 13 517 399 512 503 - -
Receivables and prepayments 14 23 419 26 515 200 774 223 817
Income tax receivable 26 17 426 12 713 10 771 10 955
Cash and cash equivalents 15 136 049 105 747 4 894 4 059
889 392 886 533 216 439 238 831
Total assets 1 035 835 1 033 608 514 048 455 128
EQUITY AND LIABILITIES

Capital and reserves
Stated capital 16 198 899 198 899 198 899 198 899
Other reserves (22 631) (26 306) - -
Retained earnings 529 006 472 333 10 287 (32 673)
Total equity 705 274 644 926 209 186 166 226
Non-current liabilities
Borrowings 17 180 402 204 718 157 122 171 201
Deferred income tax 9 21 989 20 717 - -
202 391 225 435 157 122 171 201
Current liabilities
Borrowings 17 26 148 23 789 14 816 14 134
Bank overdraft 17 - 26 187 - -
Trade and other payables 18 73 170 78 581 130 594 102 550
Income tax payable 26 12 045 16 923 - -
Accruals 19 16 807 17 767 2 330 1 017
128 170 163 247 147 740 117 701
Total liabilities 330 561 388 682 304 862 288 902
Total equity and liabilities 1 035 835 1 033 608 514 048 455 128 21
STATEMENT OF CHANGES IN EQUITY

GROUP Foreign Available

currency for sale
Stated translation investment Retained
capital reserve reserve earnings Total
P’000 P’000 P’000 P’000 P’000
Balance at 01 August 2015 198 899 (10 241) 456 429 872 618 986
Total comprehensive income for the year - (16 065) (456) 47 737 31 216
Transactions with owners
Dividends paid - prior year final (gross) - - - (5 276) (5 276)
Balance at 31 July 2016 198 899 (26 306) - 472 333 644 926
Balance at beginning of the year 198 899 (26 306) - 472 333 644 926
Total comprehensive income for the year - 3 675 - 64 557 68 232
Transactions with owners
Dividends paid - interim (gross) - - - (7 884) (7 884)
Balance at 31 July 2017 198 899 (22 631) - 529 006 705 274
COMPANY Available
for sale
Stated investment Retained
capital reserve earnings Total
P’000 P’000 P’000 P’000
Balance at 01 August 2015 198 899 456 48 785 248 140
Total comprehensive income for the year - (456) (76 182) (76 638)
Dividends paid-prior year final (gross) - - (5 276) (5 276)
Balance at 31 July 2016 198 899 - (32 673) 166 226
Balance at beginning of the year 198 899 - (32 673) 166 226
Total comprehensive income for the year - - 50 844 50 844
Dividends paid-interim (gross) - - (7 884) (7 884)
Balance at 31 July 2017 198 899 - 10 287 209 186
22
STATEMENT OF CASH FLOWS

GROUP COMPANY
Note 2017 2016 2017 2016

P’000 P’000 P’000 P’000
Operating activities:
Cash generated from operations 20 165 230 123 910 96 767 60 735
Income tax paid 26 (41 960) (20 015) (2 901) (97)
Net cash generated from operating activities 123 270 103 895 93 866 60 638

Investing activities:
Purchase of property, plant and equipment 8 (17 479) (17 588) (17) (792)
Disposals of property, plant and equipment 2 365 872 67 256
Dividend received from associate 10 - 3 000 - 3 000
Dividend received on investment 21 - 267 29 600 267
Investment in subsidiaries 10 - - (79 756) (18 503)
Investment in other financial assets (net) 11 (2 453) (4 366) - -
Interest received 4 1 369 1 031 334 16
Net cash utilised in investing activities (16 198) (16 784) (49 772) (15 756)
Financing activities:
Repayments on borrowings (21 957) (33 741) (13 397) (21 139)
Interest paid 4 (22 978) (23 410) (21 978) (21 426)
Dividends paid 7 (7 884) (5 276) (7 884) (5 276)
Net cash utilised in financing activities (52 818) (62 427) (43 259) (47 841)
Net increase/ (decrease) in cash and cash equivalents 54 254 24 684 835 (2 959)
Cash and cash equivalents at beginning of year 79 560 62 363 4 059 7 018
Exchange gain/ (loss) on cash and cash equivalents of foreign subsidiaries 2 236 (7 487) - -
Cash and cash equivalents at end of year 15 136 049 79 560 4 894 4 059
23
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have
been consistently applied to all the years presented, and are unchanged from those applied in previous periods, unless noted
otherwise.
These financial statements have been approved by the board of directors on 24 October 2017.
1. BASIS OF PREPARATION
The financial statements have been prepared in Amendments to IAS 1,’Presentation of financial
accordance with International Financial Reporting statement
Standards (IFRS) and the requirements of the Botswana In December 2014 the IASB issued amendments to
Companies Act (2003). The financial statements are clarify guidance in IAS 1 on materiality and aggregation,
prepared under the historical cost convention, as the presentation of subtotals, the structure of financial
modified by the valuation of certain financial assets and statements and the disclosure of accounting policies.
financial liabilities at fair value through profit and loss, b) New standards, amendments and interpretations
and the effects (if any) of adjustments passed in the issued, relevant to the Group, but not yet effective and
not early adopted.
financial statements of Furniture Mart Zambia Ltd to
prepare it on break up basis.
Applicable
for financial
The preparation of financial statements in conformity Amendment/ years
with IFRS requires the use of certain critical accounting Standard/ beginning
estimates. It also requires management to exercise interpretation Content on/after
its judgement in the process of applying the Group’s IAS 12 Amendment – 1 January
Recognition of deferred 2017
accounting policies. The areas involving a higher degree tax assets for unrealised
of judgement or complexity, or areas where assumptions losses.
and estimates are significant to the Group’s financial IAS 7 Amendment– 1 January
statements are disclosed in the “Critical accounting Statement of cash flows 2018
on disclosure initiative
estimates and judgements” section of the financial
IFRS 15 Revenue from contracts 1 January
statements. with customers. 2018
Estimates and judgments are continually evaluated IFRS 9 Financial Instruments 1 January
(2009 &2010) 2018
based on historical experience and other factors, • Financial liabilities
including expectations of future events that are believed • Derecognition of
to be reasonable under the circumstances. financial instruments
• Financial assets
Adoption of new and revised standards • General hedge
accounting
(a) Standards and amendment to existing standards
and interpretations effective on or after 01 August IFRS 16 Leases 1 January
2016 and adopted by the group 2019
Applicable IFRIC 22 Foreign currency 1 January
for financial transactions and 2018
advance consideration
Amendment/ years
Standard/ beginning IFRS 10 Consolidated financial Effective
interpretation Content on/after statements' and IAS date
28,'Investments in postponed
IAS 1 Amendments : 1 January associates and joint (initially
'Presentation of 2016 ventures' on sale or 1 January
contribution of assets 2016)
financial statements'
disclosure initiative Management is currently assessing the impact of the
application of these standards on the company’s financial
24 results.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

2 CONSOLIDATION
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity
when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the group. They are deconsolidated from the date that control ceases.
All Group companies have a 31 July year end and apply Nature
uniform accounting policies for like transactions. of
Company Country % business 2017 2016
All intercompany transactions and balances between United Botswana 25% Financial 25% 25%
Group entities are eliminated. The company carries Impex Services
its investment in subsidiaries in its seperate financial (Pty) Ltd
statement at cost less any accumulated impairment.
The Group’s share of its associates’ post-acquisition
Associates profits or losses and its share of post-acquisition
Associates are entities over which the Group has movements in reserves are recognised in the Statement
significant influence but not control, generally of Comprehensive Income. When the Group’s share
accompanying a shareholding of between 20% and 50% of losses in an associate equals or exceeds its interest
of the voting rights. in the associate, the Group does not recognise any
further losses, unless it has incurred obligations, issued
Investments in associates are accounted for using guarantees or made payments on behalf of the associate.
the equity method of accounting and are initially
recognised at cost. The Group’s investment in associates Gains and losses arising from dilution of investments
includes goodwill identified on acquisition, net of any in associates are recognised in the Statement of
accumulated impairment loss. Comprehensive Income when such dilutionary
transactions become effective.
The Group’s financial statements include the following
associate whose financial year also ends on 31 July:
3 CELL CAPTIVE ARRANGEMENTS
The Group has entered into cell captive arrangements for purposes of managing and administering its customer protection
programmes in Namibia and South Africa. These programmes offer customer credit insurance in the event of death or
certain other life changing events prior to full settlement of outstanding balances.
The cell captive arrangements do not qualify as continually assesses the cell captive status and where
subsidiaries as they do not exist as separate entities warranted a provision is recognised.
from the underwriter. In one of these, the Group
has no recapitalisation obligation and there is no In both these instances, the group is the beneficiary. On
‘insurance contract’ as there is no transfer of risk and the this basis, where the cell captive is financially sound and
arrangement is more akin to a profit sharing arrangement. has surplus cash the Group recognises its right to receive
On the other, the group has a recapitalisation obligation cash as a financial asset.
in the event the cell captive became insolvent. The group
25

4 SEGMENT REPORTING
Operating segments are reported in a manner consistent with the internal reporting provided to the Group Executive
Management Committee. The Group Executive Management Committee is responsible for allocating resources and assessing
performance of the operating segments and is considered the Chief Operating Decision Maker as defined in IFRS 8.
5 REVENUE RECOGNITION
The Group operates a chain of retail outlets for selling furniture and other household appliances. Revenue for the Group
comprises of the fair value of the consideration received or receivable for the sale of goods and finance and other income
earned on credit granted in the ordinary course of the Group’s activities. Revenue is shown net of value-added tax, returns,
rebates and discounts and after eliminating sales within the Group.
Group • Debt follow-up charges. Upon customer falling

into arrears and on additional follow-up services
The Group recognises revenue when the amount of being rendered. Customer protection plan income,
revenue can be reliably measured, it is probable that FM Club membership fees and finance income
future economic benefits will flow to the entity and when are classified as financing income. Debt follow
specific criteria have been met for each of the Group’s up charges and delivery charges are included as
activities as described below. ancillary services.
a) Sale of merchandise Company

Revenue from the sale of merchandise is recognised
upon transfer to the customer of the significant risks Interest income
and rewards of ownership. In the case of cash sales, this On the accrual basis, taking into account the effective
is generally when cash is received, an invoice is raised interest yield on underlying balances, when a loan and
and delivery of the goods has taken place. In the case of reciveable is impaired, the company reduce the carrying
credit sales, this is generally when a credit sale agreement amount to its recoverable amount, being the estimated
is concluded, an invoice is raised and delivery of the future cashflows discounted at the origional effective
goods has taken place (related delivery charges are also interest rate of the instrument, and continues unwinding
recognised on this basis). discount interest income.

b) Ancillary charges on credit sales
Dividend Income
Dividend income is recognised when the right to recieve
Other revenue flowing from the credit sale of
payment is established.
merchandise comprises of the following significant

components.
Administration Fee
• Finance income. On a time proportion basis that
Administration fee represents sale of managerial and
takes into account the effective yield over the loan
infrastructure services to Group companies. Revenue from
life cycle on the principal amount outstanding;
sale of services is recognised in the period in which the
• Customer protection plan income. These are
services are rendered.
recognised on a straight-line basis over the debt
repayment period of the invoiced amount;
• FM Club membership fees. On the accrual basis as
charged every month;
26

6 CURRENT AND DEFERRED INCOME TAX
Income tax expense comprises current and deferred tax. Income tax expense is recognised in the Statement of
Comprehensive Income except to the extent that it relates to items recognise directly in equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable foreseeable future. Deferred tax is measured at the tax
income for the year, using tax rates enacted or rates that are expected to be applied to the temporary
substantively enacted at the Statement of Financial differences when they reverse, based on the laws that
Position date, and any adjustment to tax payable in have been enacted or substantively by the reporting
respect of previous years. date.
Income tax payable on profits, based on the applicable The principal temporary differences arise from
tax law, is recognised as an expense in the period in differing tax depreciation rates on property, plant and
which profits arise. equipment. A deferred tax is provided on temporary
differences arising from investments in subsidiaries and
Deferred tax is provided using the liability method, associates, except where the timing of the reversal of
providing for temporary differences between the the temporary difference is controlled by the Group and
carrying amounts of assets and liabilities for financial it is probable that the difference will not reverse in the
reporting purposes and the amounts used for current foreseeable future.
tax purposes. Deferred tax is not recognised for the
following temporary differences: the initial recognition A deferred tax asset is recognized only to the extent that
of goodwill, the initial recognition of assets or liabilities it is probable that future taxable profits will be available
in a transaction that is not a business combination and against which the asset can be utilised. Deferred tax
that affects neither accounting nor taxable profit, and assets are reviewed at each reporting date and are
differences relating to investments in subsidiaries to reduced to the extent that it is no longer probable that
the extent that they probably will not reverse in the related tax benefit will be realised.
7 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying straight line method to allocate their amounts to their
amount or recognised as a separate asset, as appropriate, residual values over their estimated useful lives, as follows:
only when it is probable that future economic benefits Freehold buildings 40years
associated with the item will flow to the Group and the shorter of lease
Leasehold buildings
cost of the item can be measured reliably. The carrying period or 40 years
amount of the replaced part is derecognised. All other Furniture and office equipment 5 – 10 years
repairs and maintenance are charged to the Statement Motor vehicles 4 years
of Comprehensive Income during the financial period in
Computer equipment 3 - 5 years
which they are incurred.
Shop refurbishment expenses 3 years
Intangibles 6 years
Leasehold land is depreciated over the lease period.
Depreciation on other assets is calculated using the
27

7 PROPERTY, PLANT AND EQUIPMENT (CONTITUED)
The assets’ residual values and useful lives are reviewed, and its recoverable amount. Gains and losses on disposal
adjusted if appropriate, at the end of each reporting period. of property, plant and equipment are determined by
reference to their carrying amount and are taken to the
Where the carrying amount of an asset is greater than
Statement of Comprehensive Income in the period of
its estimated recoverable amount, it is written down to
disposal.
8 FINANCIAL INSTRUMENTS
Classification
The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables,
available for sale and held to maturity investments. The classification depends on the purpose for which the financial assets
were acquired. Management determines the classification of its financial assets at initial recognition.
(a) Financial assets at fair value through profit or loss that do not meet the definition of loans and receivables
Financial assets at fair value through profit or loss are and are not designated on initial recognition as asset at
financial assets held for trading. A financial asset is fair value through profit or loss or as available for sale.
classified in this category if acquired principally for the
purpose of selling in the short term. Derivatives are also
Recognition and measurement
Regular purchases and sales of financial assets are
categorised as held for trading unless they are designated
recognised on the trade-date – the date on which
as hedges. Assets in this category are classified as current
the group commits to purchase or sell the asset.
assets if expected to be settled within 12 months, Investments are initially recognised at fair value plus
otherwise they are classified as non-current. transaction costs for all financial assets not carried at
fair value through profit or loss. Financial assets carried
(b) Loans and receivables at fair value through profit or loss is initially recognised
Loans and receivables are non-derivative financial assets at fair value, and transaction costs are expensed in the
with fixed or determinable payments that are not quoted income statement. Financial assets are derecognised
in an active market. They are included in current assets. when the rights to receive cash flows from the
The group’s loans and receivables comprise ‘trade and investments have expired or have been transferred
other receivables’ and ‘cash and cash equivalents’ in the and the group has transferred substantially all risks
balance sheet. and rewards of ownership. Available-for-sale financial
assets and financial assets at fair value through profit
or loss are subsequently carried at fair value. Loans and
(c) Available-for-sale financial assets
receivables are subsequently carried at amortised cost
Available-for-sale financial assets are non-derivatives
using the effective interest method.
that are either designated in this category or not
classified in any of the other categories. They are Gains or losses arising from changes in the fair value
included in non-current assets unless the investment of the ‘financial assets at fair value through profit or
matures or management intends to dispose of it within loss’ category are presented in the income statement
12 months of the end of the reporting period. within ‘Other (losses)/gains – net’ in the period in which
they arise. Dividend income from financial assets at fair
(d) Held to maturity investments value through profit or loss is recognised in the income
Held to maturity investments are non-derivative statement as part of other income when the group’s
financial assets with fixed or determinable payments right to receive payments is established.
that an entity intents and is able to hold to maturity and
28

8 FINANCIAL INSTRUMENTS (CONTINUED)
Changes in the fair value of monetary and non- Evidence of impairment may include indications that
monetary securities classified as available for sale are the debtors or a group of debtors is experiencing
recognised in other comprehensive income. When significant financial difficulty, default or delinquency in
securities classified as available for sale are sold or interest or principal payments, the probability that they
impaired, the accumulated fair value adjustments will enter bankruptcy or other financial reorganisation,
recognised in equity are included in the income and where observable data indicate that there is a
statement as ‘Gains and losses from investment measurable decrease in the estimated future cash flows,
securities’. Interest on available-for-sale securities such as changes in arrears or economic conditions that
calculated using the effective interest method is correlate with defaults.
recognised in the income statement as part of finance
income. Dividends on available-for-sale equity (b) Loans and receivables
instruments are recognised in the income statement as For loans and receivables category, the amount of the
part of other income when the group’s right to receive loss is measured as the difference between the asset’s
payments is established. carrying amount and the present value of estimated
future cash flows (excluding future credit losses that
Offsetting financial instruments
have not been incurred) discounted at the financial
Financial assets and liabilities are offset and the net
asset’s original effective interest rate. The carrying
amount reported in the balance sheet when there is
a legally enforceable right to offset the recognised amount of the asset is reduced and the amount of the
amounts and there is an intention to settle on a loss is recognised in the consolidated income statement.
net basis or realise the asset and settle the liability If a loan or held-to-maturity investment has a variable
simultaneously. The legally enforceable right must interest rate, the discount rate for measuring any
not be contingent on future events and must be impairment loss is the current effective interest rate
enforceable in the normal course of business and in determined under the contract. As a practical expedient,
the event of default, insolvency or bankruptcy of the the group may measure impairment on the basis of an
company or the counterparty. instrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the
Impairment of financial assets
impairment loss decreases and the decrease can be
(a) Assets carried at amortised cost
related objectively to an event occurring after the
The group assesses at the end of each reporting period
impairment was recognised (such as an improvement in
whether there is objective evidence that a financial
the debtor’s credit rating), the reversal of the previously
asset or group of financial assets is impaired. A financial
asset or a group of financial assets is impaired and recognised impairment loss is recognised in the
impairment losses are incurred only if there is objective consolidated income statement.
evidence of impairment as a result of one or more
events that occurred after the initial recognition of the (c) Assets classified as available for sale
asset (a ‘loss event’) and that loss event (or events) has The group assesses at the end of each reporting period
an impact on the estimated future cash flows of the whether there is objective evidence that a financial
financial asset or group of financial assets that can be asset or a group of financial assets is impaired.
reliably estimated.
29

9 IMPAIRMENT OF NON-FINANCIAL ASSETS
Property, plant and equipment and other non-current of assessing impairment, assets are grouped at the lowest
assets with finite useful lives are reviewed for impairment level for which there is separately identifiable cash flows
losses whenever events or changes in circumstances (cash generating units). Non-financial assets that suffered
indicate that the carrying amount may not be recoverable. impairment are reviewed annually for possible reversal of
An impairment loss is recognised for the amount by the impairment.
which the carrying amount of the assets exceeds its
recoverable amount which is the higher of an asset’s fair Assets that have infinite useful life are not subject to
value less cost to sell and value in use. For the purposes amortisation and are tested annually for impairment.
10 ACCOUNTING FOR L EASES
a) Finance leases lessor are classified as operating leases. Rental receipts

Leases of property, plant and equipment, where the under operating leases (net of any incentives provided
Group assumes substantially all the benefits and risks to the lessee) are recognised in the Statement of
of ownership are classified as finance leases. Finance Comprehensive Income on a straight-line basis over the
leases are capitalised at the estimated present value period of the lease.
of the underlying lease payments. Each lease payment
c) Operating leases - as a lessee
is allocated between the liability and finance charges
Lease arrangements in which a significant portion of the
so as to achieve a constant rate on the finance balance
risks and rewards of ownership are retained by the lessor
outstanding. The interest element of the finance charge
are classified as operating leases. Payments made under
is charged to the Statement of Comprehensive Income
operating leases (net of any incentives received from the
over the lease period. Property, plant and equipment,
lessor) are charged to the Statement of Comprehensive
acquired under finance leases, are depreciated over the
Income on a straight-line basis over the period of the
useful lives of the assets.
lease.
b) Operating leases - as a lessor
Lease arrangements in which a significant portion of
the risks and rewards of ownership are retained by the
11 COMPUTER SOFTWARE DEVELOPMENT COSTS
Costs associated with maintaining computer software • adequate technical, financial and other resources
programmes are recognised as an expense as incurred. to complete the development and to use or sell the
Development Costs that are directly attributed to the software product are available; and
design and testing of identifiable and unique software • the expenditure attributable to the software product
products controlled by the Group are recognised as during its development can be reliably measured.
intangible assets when the following criteria are met:
Directly attributable costs that are capitalised as part of
• it is technically feasible to complete the software the software product include the software development
product so that it will be available for use; employee costs and an appropriate portion of relevant
• management intends to complete the software overheads.
product and use or sell;
• there is an ability to use or sell the software product; Other development expenditures that do not meet
• it can be demonstrated how the software product this criteria are recognised as an expense as incurred.
will generate probable future economic benefits; Computer software
30

12 INVENTORIES
Inventories are stated at the lower of cost and estimated net realisable value. Cost is determined by the first in first out
(FIFO) method. Net realisable value is the estimated selling price in the ordinary course of business, less applicable selling
expenses.
13 LOANS AND ADVANCES TO CUSTOMERS
Loans originated by the Group by providing money directly or indirectly to the borrower are categorised as loans and
advances to customers and are carried at amortised cost, which is defined as the fair value of the cash consideration given
to originate those loans as is determined by reference to market prices at origination date.
All loans and advances are recognised when an present in components of the loan portfolio at the
underlying credit agreement has been signed and the Statement of Financial Position date. These have been
Group has supplied the related goods to the borrower. estimated based upon historical pattern of losses
in each component, the credit ratings allocated to
An allowance for loan impairment is established if there the borrowers and reflecting the current economic
is objective evidence that the Group will not be able climate in which the borrower operates. When a loan
to collect all amounts due according to the original is uncollectible, it is written off against the related
contractual terms of loans. The amount of the provision provision for impairments; subsequent recoveries
is the difference between the carrying amount and the are credited to the provision for loans losses in the
recoverable amount, being the present value of the Statement of Comprehensive Income.
expected cash flows, including the amounts recoverable
from guarantees and collateral, discounted at the If the amount of the impairment subsequently
original effective interest rate of loans. decreases due to an event occurring after the write
down, the release of the provision is credited as a
The loan impairment provision also cover losses where reduction of the provision for loan impairment.
there is objective evidence that incurred losses are
14 OTHER RECEIVABLES
Other receivables arise in the normal course of business and are stated at amortised cost or realisable value.
15 CASH AND CASH EQUIVALENTS
Cash and cash equivalent includes cash in hand, deposits held at call with banks, other short term highly liquid investments
with original maturities of three months or less, and bank overdrafts. Cash and cash equivalents are measured at amortised
cost using the effective interest rate method.
16 STATED CAPITAL
Ordinary share capital is recognised at the fair value of the consideration received.
Dividends on ordinary shares are recorded in the Group’s financial statements in the period in which they are paid or
approved by the Group’s shareholders, whichever is earlier.
31

17 PROVISIONS
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be
made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement
is recognised as a separate asset but only when the reimbursement is virtually certain.
18 BORROWINGS
Borrowings are recognised initially at fair value, net of transaction costs. In subsequent periods, borrowings are stated
at amortised cost using the effective yield method; any difference between proceeds (net of transaction costs) and the
redemption value is recognised in the Statement of Comprehensive Income over the period of the borrowings.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the Statement of Financial Position date.
19 FOREIGN CURRENCY TRANSLATION
Functional and presentation currency at the date of that Statement of Financial Position;
• income and expenses for each statement of other
Items included in the financial statements of each of
comprehensive income are translated at average
the Group’s entities are measured using the currency
exchange rates (unless this average is not a
of the primary economic environment in which the
reasonable approximation of the cummulative effect
entity operates (“the functional currency”). The financial
of the rates prevailing on the transaction dates, in
statements are presented in Botswana Pula, which is the
which case income and expenses are translated at
holding company’s functional and presentation currency.
the rate on the date of the transaction) and;
• all resulting exchange differences are recognised in
Transactions and balances
the statement of other comprehensive income and
Foreign currency transactions are translated into the as a separate component of equity.
functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange On consolidation, exchange differences arising from
gains and losses resulting from the settlement of the translation of the net investment in foreign
such transactions and from the translation at year- operations are recognised in the statement of other
end exchange rates of monetary assets and liabilities comprehensive income.
denominated in foreign currencies are recognised in the
statement of other comprehensive income. When a foreign entity is sold, exchange differences that
were recorded in equity are recognised in the Statement of
Group companies
Comprehensive Income as part of the gain or loss on sale.
The results and financial position of all the Group entities
(none of which has the currency of a hyperinflationary Goodwill and fair value adjustments arising on the
economy) that have a functional currency different acquisition of a foreign entity are treated as assets and
from the presentation currency are translated into the liabilities of the foreign operation and translated at the
presentation currency as follows: closing rate.
• assets and liabilities for each Statement of Financial

Position presented are translated at the closing rate
32

20 EMPLOYEE BENEFITS
(i) Short term employee benefits The Group has no legal or constructive obligations to
pay further contribution if fund does not hold sufficient
The cost of short term employee benefits (those payable
assets to pay all employees the benefits relating to
within 12 months after the service is rendered, such as
employees service in the current and prior periods.
paid leave and bonuses) are recognised in the period in
which the service is rendered and are not discounted.
The cost of paid leave is recognised as an expense as the (iii) Gratuity and severance plans
employee render services that increases the entitlement
The Group does not provide pension benefits for its
or, in the case of non-accumulating absence, when
employees in Botswana, but operates gratuity schemes
absence occurs.
for expatriates in terms of employment contracts and
a severance benefit scheme for citizens in terms of
The expected cost of bonus payment is recognised as an
the respective Employment Acts. Severance pay is
expense when there is a legal or constructive obligation
not considered to be a retirement benefit plan as the
to make such payment as a result of past performance.
benefits are payable on completion of each 60 month
period of continuous employment or on termination of
(ii) Defined contribution plans employment, at the option of the employee. The expected
Group companies in Namibia and South Africa operate gratuity and severance benefits liability is provided for on
pension schemes which are defined contribution plans. the accrual basis based on completed (and unredeemed)
These schemes are generally funded through payments periods of service at the financial year end.
to insurance companies or trustee-administered funds. A
defined contribution plan is a pension plan under which
the Group pays fixed contributions into a separate entity.
21 RELATED PARTY TRANSACTIONS
Related parties comprise directors of the company and companies with common ownership and/or directors and key
management personal. Transactions with related parties are in the normal course of business.
22 DIVIDEND DISTRIBUTION
Dividend distribution to the Group’s shareholders is recognised as a liability in the financial statements in the period in which
the dividends are approved by the shareholders.
23 EARNINGS PER ORDINARY SHARE
Earnings per ordinary share are calculated using the weighted average number of ordinary shares in issue during the period
and are based on the net profit attributable to ordinary shareholders.
33

24 CURRENT ASSETS AND LIABILITIES
Current assets and liabilities have maturity terms of less than 12 months, except for instalment sale and loan receivables.
Instalment sale and loan receivables, which are included in trade and other receivable, have maturity terms of between 6 to
30 months but are classified as current as they form part of the normal operating cycle.
25 TRADE PAYABLES
Trade payables are obligations to pay for goods and services that have been acquire in the ordinary course of business from
suppliers. Accounts payables are classified as current liabilities if payment is due within one year or less.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
rate method.
26 COMPARATIVES
Impairment of investment in subsidiary (P76 948 000) previously shown separately on the statement of comprehensive
income has now been reclassified as part of administration expense (refer to note 3).
34
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

In arriving at the amounts at which assets and liabilities are measured in the financial statements, the Group makes assumptions
concerning the future. The resulting accounting estimates will, by definition, seldom equate to the related actual results. The
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and
liabilities within the next financial year are discussed below.
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
1 USEFUL LIVES AND RESIDUAL VALUES FOR PROPERTY, PLANT AND EQUIPMENT

The Group tests annually whether the useful life and residual value estimates for property, plant and equipment were
appropriate and in accordance with its accounting policy. Residual values of buildings and motor vehicles are based on
current estimates of the value of these assets at the end of their useful lives. The estimate residual values of the buildings and
motor vehicles have been determined by the Directors based on their knowledge of the industry.
2 INCOME TAXES
The Group is subject to income taxes in various jurisdictions. Significant judgement is required in determining provision
for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain
during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates
of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that
were initially recorded, such difference will impact the income tax and deferred tax provisions in the period in which such
determination is made.
3 IMPAIRMENT LOSSES ON LOANS AND ADVANCES TO CUSTOMERS
The Group’s products are consumed mainly by retail an adverse change in the payment status of borrowers
customers who are considered part of the middle to in a group, or national or local economic conditions
lower income segment. The timing and amount of cash that correlate with defaults on advances in the group.
inflows received from these customers is impacted Management uses estimates based on historical
by a broad range of economic and political risks, loss experience for assets with similar credit risk
including the availability of liquidity, level of customers’ characteristics and objective evidence of impairment
indebtedness towards other creditors who get first similar to those in the portfolio when scheduling its
priority for deductions from salaries such as micro future cash flows. The methodology and assumptions
lenders and banks,salary increments, cost of food and used for estimating both the amount and timing of
other consumables etc. future cash flows are reviewed regularly to reduce any
differences between loss estimates and actual loss
In determining whether an impairment loss should be experience.
recorded in the Statement of Comprehensive Income,
the Group classifies individually insignificant loans into As at July 2017, management has introduced P16.45m
portfolios which include loans subject to similar credit (2016: 11.7mn) as judgemental provision, to take into
risks, and makes judgements as to whether there is any account the additional losses expected in Zambia due
observable data indicating that there is a measurable to closure of the retail outlets and to cover against any
decrease in the estimated future cash flows from each potential losses arising from the loss of employment
portfolio before the decrease can be identified with to the company’s customers, due to the provisional
an individual loan in that portfolio. This evidence may liquidation of BCL and Tati mines in Botswana.
include observable data indicating that there has been
35
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

3 IMPAIRMENT LOSSES ON LOANS AND ADVANCES TO CUSTOMERS (CONTINUED)
Management believes that due to the inherent In introducing such a management judgement,
limitations within the impairment model used for management has also taken cognisence of the
estimation of the impairment provision such as time lag average ratios (i.e. the provision for impairment as a
and the model’s assumptions of sustaining historical percentatge of the debit arrears) and also the overall
trends, the recent developments (such as placement of impairment as a percentatge of the net debtors and has
BCL Limited and Tati Nickel Mining Company Limited strived to maintain a consistent ratio, whilst at the same
under provisional liquidation) have not been fully time taking credit for cleaning up the book via debt
manifested into the current impairment model being write offs.
used. Management therefore believes there is a need
to introduce an additional impairment layering based
on management judgement to take into account the
recent developments.
4 IMPAIRMENT OF INVESTMENT IN SUBSIDIARIES

The Company consider both debt and equity in the For assessing the value in use of Xtreme Discounters,
subsidiaries as its investments in these subsidiaries. (Pty) Ltd, the following key assumptions are used:
These investments are assessed for impairment when - terminal growth rate of 6%
there is objective evidence such as, continuous losses, - discount rate of 12.92%
need for additional equity etc.
The outcome of the impairment calculated is most
In assessing impairment the Company takes into sensitive to discount rate and growth rate. The
account future budgets and cash flow forecasts. The impairment of investment in Xtreme Discounters (Pty) Ltd
estimated recoverable value is calculated based on value will only be indicated when these assumptions reach the
in use. If the carrying value of the investment exceed the following levels of:
value in use, a provision for impairment is recognised. - terminal growth rate of 4%
- discount rate of 14.39%
During the year the Company identified its investments
in Furniture Mart Zambia Ltd and Xtreme Discounters,
as most vulnerable and has carried out impairment
assessments.
For Furniture Mart Zambia Ltd, it was noted that the

investment was impaired and the carrying value was
reduced to take this into account. More details are given
in Note 10.3 and 14.1.
36
FINANCIAL RISK MANAGEMENT

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk,
cash flow interest rate risk and price risk) and credit risks. Details of these assets and liabilities are set out in the notes to the
financial statements. The Group’s overall risk management programme focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on the financial performance of the Group.
a) Market Risk that country, the Group’s risk to foreign currency fluctuations
The Group is exposed to market risk primarily related to is largely mitigated through the operation of such natural
foreign exchange currency rates and interest rates. The hedges.
Group actively monitors these risks. The Group’s objective is
to reduce, where it deems appropriate to do so, fluctuations Changes in foreign exchange rates also affect the group’s
in earnings and cash flows associated with changes in operating profit in connection with the translation of the
interest rates, foreign currency exchange rates and market income statement of foreign subsidiaries to Botswana
rates for investments in liquid funds. As part of this process, Pula. The group does not hedge such risks. The translation
the Group has taken decisions not to sell short assets it exposures arising from the balance sheets of foreign
does not have, or does not know it will have in the future. subsidiaries are included in the foreign currency translation
The Group only sells existing assets or enters into future reserve.
transactions that it confidently expects it will be able to fulfil
based on past experience. ii) Cash flow and fair value interest rate risk
The interest rate risk arises mainly from long-term loans and
i) Foreign currency risk
advances to customers. All loans and advances to customers
The Group operates within the Southern African region and
are issued at fixed interest rates which expose to fair value
uses the Pula as the reporting currency. As a result the Group
interest rate risk. However, as these loans and advances
is exposed to foreign exchange rate fluctuations arising
are accounted for at amortised cost, such risk has no direct
from various currency exposures, primarily with respect
impact on the financial results.
to the Namibian Dollar, Zambian Kwacha and the South
African Rand. Foreign exchange risk arises from imports of
There is exposure to cash flow interest rate risk on
merchandise and net investments in foreign operations.
borrowings due to the variable interest rates. Such cash flows
However, as the financial instruments held in foreign
vary according to movements in underlying market rates.
currencies are denominated in the functional currency of
The
balance subject to foreign currency and interest rate risks are as follows:
GROUP COMPANY
2017 2016 2017 2016
P’000 P’000 P’000 P’000
Amount subject to foreign currency rate risk
Namibian Dollar – Net investment in foreign operations 246 713 235 677 60 172 60 499
– Imports of merchandise (32 635) (80 044) - -
South African Rand – Net investment in foreign operations 226 968 170 235 138 872 138 780
– Imports of merchandise (79 547) (122 604) - -
Zambian Kwacha – Net investment in foreign operations 3 898 25 430 4 857 24 125
– Imports of merchandise (541) (7 983) - -
Amount subject to cash flow interest rate risk

In Namibia 5 860 10 116 - -
In South Africa 28 178 32 182 - -
In Botswana 21 938 35 335 177 996 186 585 37
FINANCIAL RISK MANAGEMENT (continued)

a) Market Risk (continued)

GROUP COMPANY
2017 2016 2017 2016
P’000 P’000 P’000 P’000
The following tables show the effect on net income that would result
from reasonably possible changes in the relevant foreign currency
exchange or interest rate.
Exchange rate sensitivities
+/ (-) 5% Pula to Namibian dollar 10 704 7 781 2 865 2 881
+/ (-) 5% Pula to South African rand 7 371 2 381 6 613 4 926
+/ (-) 5% Pula to Zambian kwacha 168 872 231 1149
Interest rate sensitivities
1% increase/ (decrease) in Botswana interest rates 358 424 1 821 1 871
1% increase/ (decrease) in Namibian interest rates 59 101 - -
1% increase/ (decrease) in South African interest rates 282 322 - -

The above sensitivities are calculated with reference to a single moment in time and will change due to a number of factors
including:
• Fluctuating trade receivables and payables balances;
• Fluctuating cash balances; and
• Changes in currency mix
b) Credit risk detailed customer credentials and subjecting these to

The financial assets of the Group which are subject to several fully automated checks that include (i) Pre-bureau
credit risk consist mainly of cash resources and debtors. assessment - predetermined demographic criteria and
Credit risk arises from granting loans and advance to contactability plus identity and income/employment
customers and holding cash and cash equivalents with verification; and (ii) Post-bureau assessment - automated
third parties. Cash resources are placed with reputable credit bureau analysis against predetermined payment
financial institutions. Financial institutions are not criteria and behaviour application of a set affordability
individually rated, however the Group’s policy is to hold table that calculates maximum monthly exposure taking
cash resources in subsidiaries of rated United Kingdom full cognisance of acceptable living expenses and existing
and South African Banks. The Group has policies to ensure commitments and applying a conservative formula to
that sales of products and services are made to customers calculate nett disposable income thereby avoiding over-
with appropriate credit history and earnings capacity. The indebtedness.
Group exposure to credit risk is limited to the carrying
value of financial assets as at the 31 July 2017. The credit granting systems enable the Group to
determine its appetite for risk. In determining the
The main activity of the Group is the sale of goods on acceptable level of risk, the potential loss is weighed
credit. The Board of Directors has delegated responsibility up against the revenue potential using the predictive
for the oversight of credit risk to sub-committee of the behavioural models inherent in the credit-granting system.
board and to its respective general managers and credit The Group monitors any variances from the level of risk
departments of each country in which it operates. that has been adopted and adjusts the credit-granting
process on a dynamic basis. The Group manages its risk
The Group has developed advanced credit-granting effectively by assessing the borrower’s ability to service
systems to properly assess the customer. The credit the proposed monthly instalment.
underwriting process flows through obtaining full and
38

b) Credit risk (continued)

The maximum amount subject to credit risk is as follows:
GROUP COMPANY
2017 2016 2017 2016
P’000 P’000 P’000 P’000
Other financial assets 67 189 64 736 - -
Loans and advances to customers - Gross 662 015 666 969 - -
Staff advances and other receivables 23 419 26 494 306 686 353 371
Cash and cash equivalents 136 049 105 747 4 894 4 059
888 672 863 946 311 580 357 430

Staff advances are recovered through direct deduction from monthly salary and wages payments and procedures are in place to
ensure full recovery of amounts due upon termination of service. Historically, the Group has not experienced any significant credit
losses with respect to staff advances and none are anticipated at the year-end date.
Other financial assets represent amounts held in South African Rand/Namibian Dollar through independent units of Mutual and
Federal Risk Financing Ltd/ Old Mutual Short Term Insurance Ltd. The Group is entitled to the net proceeds from these units (“cell
captives”) which have been created solely to manage and administer the Group’s customer protection programmes in Namibia
and South Africa. The counter party is a well known listed South African insurer of good reputation and standing. The Group
monitors the financial standing of the counter-party, and ability of the individual cell captives to remit funds on a regular basis.
Cash, cash equivalents and similar deposits are placed with financial institutions of high repute only. These include domestic
subsidiaries of international and regional institutions. The Group regularly monitors the outcomes of relevant regulatory
inspections and reports with respect to these counterparties. The Group is not aware of any facts or circumstances which would
indicate that institutions where cash, cash equivalents and similar deposits were held at the year-end expose the Group to levels
of credit risk beyond those normally associated with such relationships.
The performance analysis of loans and advances to customers are as follows:

Past due but
not
Fully individually
Total performing impaired
P’000 P’000 P’000
31 July 2017
Loans and advances to customers 662 015 419 236 242 779
Impairment provision on originated loans (144 616) (19 224) (125 392)
517 399 400 012 117 387
31 July 2016
Loans and advances to customers 666 969 377 229 289 740
Impairment provision on originated loans (154 466) (17 703) (136 763)
512 503 359 526 152 977
39

The Group’s loan and advances portfolio arises from contracts with similar terms and conditions entered into with a wide range
of individuals and small / medium enterprises over a wide geographical and socio-economic spectrum. The performance of
individual loans is thus impacted not only by regional or national economic factors, but also through specific circumstances in
the specific cities, towns and villages where the Group operates.
The Group’s loans and advances originate from customers who are domiciled in Botswana, Namibia, South Africa and Zambia.
The territory analysis of total gross loans and advances at 31 July are as follows:
2017 2016
P’000 P’000
Botswana 270 426 281 762
Namibia 207 280 189 177
South Africa 172 836 167 008
Zambia 11 473 29 022
662 015 666 969

The Group considers a loan to be fully performing when all repayments have been made in full on or before the contractual
due date. At 31 July 2017: P419 236, (2016: P377 229) of the total loans and advances were fully performing. Based on
historical experience, 5.97 % of these loans and advances may miss one or more instalments in future financial periods.
Loans that have missed one or more contractual repayment (either in full or partly), and where the customer has not made
good such arrears, are considered past due. Missed repayments are classified as debit arrears, and debit arrears are followed
up by the Group’s in-house debt recovery teams as and when these arise. Debt recovery procedures include levying of
additional charges and interest on arrears in addition to regular communication with customers aimed at encouraging
normalisation of repayments or a resumption of repayments, even if at reduced amounts. The Group has a contractual right
to repossess goods when customers default. While the fair value of such security is generally negligible to the Group, the risk
of repossession represents a significant deterrent for customers to fully renege on repayment of the contractual dues.
While not a definitive indicator of the underlying credit quality, the maturity of loans - measured as that proportion of the
contractual loan period which has already passed - is indicative of the inherent quality of the loan’s credit performance,
irrespective of the customer’s geographic position or general socio-economic surroundings.
Loans and advances which were classified as past due but not individually impaired are analysed below.
2017 2016
P’000 P’000
Instalments up to 90 days in arrears

Customers who have completed 80% or more of their contract term 8 523 11 938
12% 9%
Customers who have completed between 40% - 80% of their contract term 33 592 52 777
47% 42%
Customers who have completed less than 40% of their contract term 29 803 61 889
41% 49%
71 918 126 604
40 100% 100%

2017 2016
P’000 P’000
Instalments more than 90 days in arrears
Customers who have completed 80% or more of their contract term 105 353 92 226
62% 57%
Customers who have completed between 40% - 80% of their contract term 47 987 61 011
28% 37%
Customers who have completed less than 40% of their contract term 17 520 9 899
10% 6%
170 860 163 136
100% 100%
Total loans and advances which are past due but not individually impaired 242 779 289 740
c) Liquidity risk
Liquidity risk is the risk that operations cannot be funded and financial commitments cannot be met timeously and cost
effectively. The risk arises from both the difference between the magnitude of assets and liabilities and the disproportion in
their maturities. Liquidity risk management deals with the overall profile of the Statement of Financial Position, the funding
requirements of the Group and cash flows. The Group ensures sufficient flexibility by maintaining available committed credit
lines. The Group monitors rolling forecast of liquid reserves, comprising cash and cash equivalents and available facilities.
The table below shows the analysis of the Group’s financial liabilities into relevant maturity groupings based on gross
contractual repayments and the remaining period from the Statement of Financial Position to the contractual maturity date:
GROUP Less than 6 -12 Between

6 months months 1-5 years Total
P’000 P’000 P’000
31 July 2017
Borrowings 13 582 19 017 286 726 319 325
Trade and other payables 89 974 - - 89 974
103 556 19 017 286 726 409 299
31 July 2016
Borrowings 29 622 41 472 310 233 381 327
125 970 41 472 310 233 477 675
41

c) Liquidity risk (continued)
COMPANY less than 6 - 12 Between

6 months months 1-5 years Total
P’000 P’000 P’000 P’000
31 July 2017
Borrowings 7 608 10 652 255 534 273 794
140 532 10 652 255 534 406 718

31 July 2016
Borrowings 13 069 18 297 264 683 296 049
116 636 18 297 264 683 299 616
d) Early settlement risk
Early settlement risk is the risk that loans and advances to customers will be settled before the end of their term. An increase
in early settlements may result in a reduction in financial interest income. At the year end, loans and advances to customers
under early notice were not significant.
e) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order
to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to
reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends
paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group also monitors
applicable debt covenants to ensure there are no breaches.
Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as
net debt divided by total capital employed. Net debt is calculated as total borrowings (including ‘current and non-current
borrowings’ as shown in the Group Statement of Financial Position) less cash and cash equivalents. Total capital employed is
calculated as ‘equity’ as shown in the Group Statement of Financial Position plus net debt.
The strategy, which is unchanged from 2009, is to maintain the gearing ratio below 50% at Group level. The gearing ratios at
31 July 2017 and 2016 were as follows:
GROUP COMPANY
2017 2016 2017 2016
P’000 P’000 P’000 P’000
Total borrowings 206 550 254 694 171 938 185 335
Less: Cash and cash equivalents (136 049) (105 747) (4 894) (4 059)
Net debt 70 501 148 947 167 044 181 276
Total equity 705 274 644 926 209 186 166 226

Total capital employed 775 775 793 873 376 230 347 502

42 Gearing ratio 9% 19% 44% 52%


f) Financial instruments by category GROUP COMPANY
2017 2016 2017 2016

P’000 P’000 P’000 P’000
Financial assets by category

Loans and receivables
• Other financial assets - cell captives 67 189 64 736 - -
• Receivables and prepayments 23 419 26 494 306 686 353 371
• Loans and advances to customers 517 399 512 503 - -
• Cash and cash equivalents 136 049 105 747 4 894 4 059
Total 744 056 709 480 311 580 357 430

Financial liabilities by category

Other financial liabilities at amortised cost
Borrowings 206 550 254 694 171 938 185 335
Trade and other payables 89 974 96 348 132 924 103 567
Total 296 524 351 042 304 862 288 902
43
NOTES TO THE FINANCIAL STATEMENTS

1. Segment information
The Group’s operating businesses are organised and managed separately according to the nature of the products and
services offered by each of such segments representing a strategic business unit. The Group is organised into two principal
business areas and these make up the two reportable operating segments as follows:
Retail - retail sale of furniture and appliances

Financial Services - provider of consumer finance
The Group Executive Management Committee acts as the Chief Operating Decision Maker of the Group and it assesses the
performance of the operating units based on the measure of operating profit. This measurements basis assesses performance
on bases of recognition and measurement which are consistent with the accounting policies of the Group.
Inter-segment transactions between business segments are entered into in a manner similar to transactions with third parties.
Revenue is derived from a very broad and diversified customer base, with no dependence on any significant customer.
The segment information provided to the Group Executive Management Committee for the reportable segments for the year
ended 31 July 2017 is as follows:

Year ended 31 July 2017 Financial
Retail Services Unallocated Total
P’000 P’000 P’000 P’000
Total revenue 879 581 294 911 - 1 174 492
Depreciation (20 050) - - (20 050)
Impairment of loans and advances - (24 705) - (24 705)
Other costs (835 069) (195 237) (29 644) (1 059 950)
Operating profit 24 462 74 969 (29 644) 69 787
Other Income 50 958
Finance income 1 369
Finance cost (22 978)
Share of loss from associate (1 630)
Profit before tax 97 506
Income tax expense (32 949)
Net profit for the year 64 557
Total assets 263 663 584 587 187 585 1 035 835
Total liabilities (89 974) - (240 587) (330 561)

Group interest bearing borrowings are not considered to be segment liabilities but are managed by the treasury function
and therefore reflected as unallocated. Foreign exchange gains/(losses) resulting from the treasury function are also included
under unallocated.
Other reconciling items relates to the head office functions (such as centralised finance and administration) which do not
earn revenue from third parties.
44
NOTES TO THE FINANCIAL STATEMENTS (Continued)

1. Segment information (continued)
Year ended 31 July 2016 Financial

Retail Services Unallocated Total
P’000 P’000 P’000 P’000
Total revenue 859 983 327 559 - 1 187 542
Depreciation (19 136) - - (19 136)
Impairment of loans and advances - (63 553) - (63 553)
Other costs (833 093) (179 448) (34 304) (1 046 845)
Operating profit 7 754 84 558 (34 304) 58 008
Other Income 43 831
Finance income 1 031
Finance cost (23 410)
Share of loss from associate (77)
Profit before tax 79 383
Income tax expense (31 646)
Net profit for the year 47 737
Total assets 299 186 577 239 157 183 1 033 608
Total liabilities (96 348) - (292 334) (388 682)
2. Revenue
GROUP COMPANY
2017 2016 2017 2016
P’000 P’000 P’000 P’000
Merchandise sales 818 987 837 945 - -
Financing services (net) 287 787 291 789 - -
Ancillary services 67 718 57 808 - -
Interest income – subsidiaries and associate (note 21) - - 32 606 28 904
Administration fees – subsidiaries and associate (note 21) - - 19 605 20 815
Dividend Income – subsidiaries and associate (note 21) - - 29 600 -
1 174 492 1 187 542 81 811 49 719

45

GROUP COMPANY
2017 2016 2017 2016
P’000 P’000 P’000 P’000
3. Expenses by nature
Cost of merchandise sold 565 623 558 831 - -
Auditors remuneration 2 259 2 615 104 129
Directors’ remuneration and other managerial services
(paid to related company) 5 844 5 513 5 844 5 513
Management fees paid to related company 1 139 2 554 1 139 2 554
Depreciation on property, plant and equipment (note 8) 20 050 19 136 1 304 1 265
Rentals and rates 90 487 90 128 466 425
Impairment of loans and advances (note 13) 24 705 63 553 - -
Impairment of investment in subsidiary (note 10) - - - 42 878
Impairment of intercompany receivables (note 14) - - 3 527 30 070
Repossession loss 37 064 41 229 - -
Repairs and maintenance 4 583 5 296 6 124
Marketing 22 802 24 909 18 50
Professional and other service fees 14 499 12 655 673 735
Travel and transport 19 858 23 388 544 370
Branch and office administration expenses 28 455 26 765 215 67
Staff costs - salaries and wages 199 255 181 273 7 798 5 834
- welfare and terminal benefits 7 357 2 652 1 526 276
Exchange losses - 16 921 - 22 840
Distribution costs 35 780 28 908 - -
Other expenses 24 945 23 208 386 -
Total cost of sales, distribution costs and administrative expenses 1 104 705 1 129 534 23 550 113 130

Other income
Profit on sale of property, plant and equipment 1 347 678 65 256
Service fees (note 21) 4 740 5 400 3 240 3 240
Interest on staff loans 449 1 065 (112) 97
Income from cell captive (note 11) 31 800 33 944 - -
Net exchange gains 10 592 - 14 934 -
Dividend income from related parties (note 21) - 267 - 3 267
Sundry income 2 030 2 477 - 916
50 958 43 831 18 127 7 776
4. Finance income and costs

Interest income - Bank deposit 1 369 1 031 334 16
Finance income 1 369 1 031 334 16
Interest expense - Bank overdraft (2 241) (2 339) (17) (32)
- Related party loans (note 21) - - (6 487) (5 106)
- Bank borrowings (6 896) (8 382) (3 174) (3 988)
- Finance leases (257) (307) - -
- Bond (12 300) (12 300) (12 300) (12 300)
- Others (1 284) (82) - -
Finance costs (22 978) (23 410) (21 978) (21 426)
46

GROUP COMPANY
2017 2016 2017 2016
P’000 P’000 P’000 P’000
5. Income tax expense
Current income tax 32 369 31 177 2 717 -
Withholding tax on dividend income - - - 225
Add: Net deferred tax charge/ (credit) for the year (note 9) 580 469 1 183 (1 088)
Tax charge to the Statement of Comprehensive Income 32 949 31 646 3 900 (863)
The tax on Group income differs from the theoretical amount
that would arise using the basic tax rate of the home country
of the Group as follows:
Profit/(loss) before tax 97 506 79 383 54 744 (77 045)
Tax calculated at domestic tax rates applicable (rate: 15%) 14 626 11 907 8 212 (11 557)
Expenses not deductible for tax 18 36 - 11 616
Income not subject to tax - - (4 440) (450)
Adjustment for new tax rates - 444 - -
Adjustment in respect of prior years (1 065) 172 56 -
Effect of rates in foreign tax jurisdictions 5 384 4 883 72 (472)
Deferred tax asset not recognised 13 986 14 204 - -
32 949 31 646 3 900 (863)
Deferred tax assets not recognised relate to the estimated tax losses of start-up entities within the Group which have not yet
reached a stage of generating sustained taxable income. These losses amounting to 2017: P118 467 470 (2016: P132 062 035) do
not expire and are to be offset against future taxable profits.
Furnmart Limited obtained IFSC status in 2013/2014 financial year and as a result income earned outside of Botswana is taxed at a
lower rate of 15%.
6. Earnings per share

Basic and diluted earnings per share is calculated by dividing the profit attributable to equity holders of the holding company by
the weighted average number of ordinary shares in issue during the year (note 16).
2017 2016
Net profit attributable to shareholders (P’000) 64 557 47 737
Weighted average number of shares in issue 606 446 080 606 446 080
Basic earnings per share (thebe) 10.65 7.87
7. Dividend paid and proposed

During the year ended 31 July 2017 an interim dividend of P7.884m was paid (2016: P nil) and a final gross dividend of P13.645m
was declared after the year end (2016: nil).
GROUP COMPANY
Dividend paid 2017 2016 2017 2016
P’000 P’000 P’000 P’000
Prior year final dividend - 5 276 - 5 276
Current year interim dividend 7 884 - 7 884 -
7 884 5 276 7 884 5 276
47

8. Property, plant and equipment and intangibles

GROUP Freehold Leased Owned Furniture
land and motor motor and office Developed
building vehicles vehicles equipment Software Total
P’000 P’000 P’000 P’000 P’000 P’000
Year ended 31 July 2017
Opening net book amount 37 044 1 984 17 810 15 166 5 498 77 502
Exchange movement on translation
of foreign subsidiaries 1 287 71 278 386 - 2 022
Additions 7 - 5 220 12 251 - 17 479
Disposals at cost - - (7 374) (13 339) - (20 713)
Depreciation on disposal - - 6 588 13 110 - 19 697
Depreciation (801) (529) (7 371) (10 249) (1 100) (20 050)
Closing net book amount 37 537 1 526 15 151 17 325 4 398 75 937

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

Opening net book amount 39 916 2 969 15 334 18 063 6 598 82 879
Exchange movement on translation
of foreign subsidiaries (2 154) (21) (635) (826) - (3 635)
Additions 42 140 9 262 8 144 - 17 588
Disposals at cost - - (3 282) (19) - (3 301)
Depreciation on disposal - - 3 095 12 - 3 107
Depreciation (760) (1 104) (5 964) (10 208) (1 100) (19 136)
Closing net book amount 37 044 1 984 17 810 15 166 5 498 77 502

Cost 41 273 3 954 48 196 113 463 6 598 213 484
Accumulated depreciation (4 229) (1 970) (30 386) (98 297) (1 100) (135 982)
Net book amount 37 044 1 984 17 810 15 166 5 498 77 502
The bank facilities provided to Furnmart (Pty) Ltd, South Africa is secured by first mortgage over the group’s freehold land and
building to the value of R 40 000 000.
48

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

COMPANY Owned Furniture
motor and office
vehicles equipment Intangibles Total
P’000 P’000 P’000 P’000
Opening net book amount 1 777 96 5 498 7 371
Additions - 17 - 17
Disposals at cost (395) - - (395)
Depreciation on disposals 380 - - 380
Depreciation (178) (26) (1 100) (1 304)
Closing net book amount 1 584 87 4 398 6 069
Cost 3 525 16 398 13 197 33 119
Accumulated depreciation (1 941) (16 311) (8 798) (27 050)
Net book amount 1 584 87 4 398 6 069

Opening net book amount 1 246 - 6 598 7 844
Additions 710 82 - 792
Disposals at cost (853) - - (853)
Depreciation on disposals 853 - - 853
Depreciation (179) 14 (1 100) (1 265)
Closing net book amount 1 777 96 5 498 7 371

Cost 3 922 16 382 13 196 33 500
Accumulated depreciation (2 145) (16 286) (7 698) (26 129)
Net book amount 1 777 96 5 498 7 371
GROUP COMPANY
2017 2016 2017 2016
9. Deferred income tax P’000 P’000 P’000 P’000
Deferred income tax assets 1 718 1 608 340 1 523
Deferred income tax liabilities 21 989 20 717 - -

The movement on the deferred tax asset account is as follows:
Balance at the beginning of the year 1 608 435 1 523 435
Statement of comprehensive income (charge)/ credit (note 5) 105 1 088 (1 183) 1 088
Exchange movement on translation of foreign subsidiaries 5 85 - -
Balance at the end of year 1 718 1 608 340 1 523
The movement on the deferred tax liability account is as follows:
Balance at the beginning of the year 20 717 20 072 - -
Statement of Comprehensive Income charge/ (credit) (note 5) 685 1 992 - -
Effect of change in income tax rate - (435) - -
Exchange movement on translation of foreign subsidiaries 587 (912) - -
Balance at the end of year 21 989 20 717 - -
49

GROUP COMPANY
2017 2016 2017 2016
9. Deferred income tax (continued) P’000 P’000 P’000 P’000
The deferred income tax asset arises from the following:
Accelerated tax depreciation 1 718 303 340 303
Recognition of previously unrecognised deferred taxes - 85 - -
Deferred tax on tax losses - 1 220 - 1 220

1 718 1 608 340 1 523
This deferred tax asset is expected to be recovered within 12 months.
The deferred income tax liability arises from the following:

Accelerated tax depreciation 2 092 1 712 - -
Instalment sale allowance on loans and advances 19 801 18 664 - -
Lease and other adjustments 96 341 - -

21 989 20 717 - -
This deferred tax liability is expected to be settled after 12 months.
10 Investment
10.1 Investment in associate 1 599 3 229 - -

The nominal value of investment in associate is as follows: (P) (P)
United Impex (Pty) Ltd 25 25
Investment in associate
Balance at beginning of the year 3 229 6 306 - -
Dividend received (note 21) - (3 000) - -
Share of loss for the year (1 630) (77) - -
Balance at the end of year 1 599 3 229 - -
The Group’s associate is unlisted and domiciled in Botswana and is in the business of providing personal finance. The investment
is valued at net asset value. The Associate’s assets and liabilities, and results are summarised as follows:
As at 31 As at 31
July 2017 July 2016
P’000 P’000
Assets
Cash and cash equivalents 1 593 8 209
Other assets 6 342 847
7 935 9 056
Liabilities
Trade and other payables 1 541 2 415
Net assets 6 394 6 641
Revenue (net) 189 2 796
Profit /(Loss) before tax 166 (217)
Income tax expense (36) (93)
Total comprehensive income/ (loss) 130 (310)
50

COMPANY
2017 2016
P’000 P’000
10.2 Investment in subsidiaries
Investment in Furn Mart (Pty) Ltd, Namibia (Equity) 15 109 15 109
Investment in Furniture Mart Zambia Ltd (Equity) 42 878 42 878
Investment in Xtreme Discounters (Pty) Ltd, South Africa (Equity) 142 099 62 807
Investment in Furnmart (Pty) Ltd, South Africa (Debt) 15 601 15 076
Investment in Xtreme Discounters (Pty) Ltd, South Africa (Debt) 118 391 114 411
Total investment in subsidiaries before impairment 334 078 250 281
The investment in subsidiaries includes equity investment in Furniture Mart (Pty) Ltd, Botswana
of P2 shares and Furnmart (Pty) Ltd, RSA of R100 shares.
The movement during the year comprises:

Balance at the beginning of the year, before impairment 250 281 102 291
Investment during the year - Xtreme Discounters (Pty) Ltd, South Africa 79 756 18 503
Loans given to subsidiaries considered as part of investment - Xtreme Discounters (Pty) Ltd - 114 411
- Furnmart (Pty) Ltd, South Africa - 15 076
Exchange gain arising from loans considered as part of investment 4 041 -
Total investment before impairment 334 078 250 281
Provision for impairment - Furniture Mart Zambia Ltd (42 878) (42 878)
Balance at the end of year 291 200 207 403
10.3 Provision for impairment – Furniture Mart Zambia Limited

On 25th October 2016, Directors took a decision to discontinue operations of Furniture Mart Zambia Limited in the financial year
2017. Accordingly the financial statements for the subsidiary are prepared on a break up basis, for this and the prior financial
year.
For the purpose of assessment of realisable or settlement values of assets and liabilities, the following factors have been
considered for individual classes of assets and liabilities.
Property, plant and equipment

Fixed assets have been assessed for impairment and written down to the recoverable amount. Total impact to the income
statement is Nil (2016: ZMK 336 189)
Inventory
Stock is carried at the lower of cost and net realisable value (“NRV”) at the balance sheet date. NRV is the estimated selling price
in the ordinary course of business after discounts. On that basis an additional provision of Nil ( 2016: ZMK 2 530 000) is provided
in the books.
Loans and receivables

Loans and receivables are carried at amortised cost under IAS 39, Financial Instruments, Recognition and measurement. Based
on the management judgement on estimates an additional provision of ZMK 283 456 ( 2016: ZMK 4 000 000) is provided for
impairment, considering incentive to be offered for accelarated repayment.
Trade and other payables

Trade and other payables are stated at higher of carrying amount or settlement value. No additional provision has been made
as there is no present obligation (legal or constructive) as a result of past event.
51

10.3 Accordingly impairment is calculated as follows:

GROUP COMPANY
2017 2016 2017 2016
P’000 P’000 P’000 P’000
Total balance due is made up as follows:
Investment in equity (note 10) - - 42 878 42 878
Investment in debt - intercompany receivables - - 37 844 54 195

- 80 722 97 073
Impairment of investment in subsidiary - - (42 878) (42 878)
Impairment of intercompany receivables (note 14.1) - - (33 597) (30 071)
Net recoverable amount (note 21) - - 4 247 24 125
11. Other financial assets

Investment in cell captive 67 189 64 736 - -

This represents the balances due from cell captive arrangements
entered into by the Group.
The movement is analysed as follows:
Balance at beginning of year 64 736 60 370 - -
Income received during the year (note 3) 31 800 33 944 - -
Customer protection charges deposited - net of claims and costs (29 347) (29 578) - -
Balance at end of year 67 189 64 736 - -

These investments are held as balances of first recourse in the event of a claim under the customer protection plans sold by the
Group in South Africa and Namibia.
Furnmart Limited, through its subsidiaries in South Africa and Namibia, has participated in some cell captive arrangements,
which are unconsolidated structured entities. These are not consolidated as part of the group as the relevant assets of the cell
captive are not ring-fenced from that of Mutual and Federal (South Africa) and Old Mutual Short Term Insurance Company
(Namibia), the ultimate underwriters of the insurance policies issued by the cells.
These structured entities are financed by the insurance premium collected by Furnmart subsidiaries to provide insurance
services to the Group’s customers, effectively insuring the debtors’ balance of the Group’s subsidiaries in Namibia and South
Africa against any losses arising from death, disability and certain other life changing events of the customers.
The cell captive in Namibia does not have any recapitalisation obligations and the maximum loss exposure of the group is
restricted to the carrying amount of the investment. In South Africa, the Group is obligated to recapitalise the cell captive in the
event that the cell is financially insolvent due to excessive claims. As at the balance sheet date, the directors have assessed the
financial status of the cell captive in South Africa and based on available cash reserves, have concluded that there is no
obligation to recapitalise at that date. Accordingly no liability has been recognised in these financial statements.
52

11. Other financial assets (continued)

The scale of the unconsolidated structured entities and the carrying amount of the investment in the entities by the Group are
as follows:
GROUP
2017 2016
P’000 P’000
Total assets of the unconsolidated structured entities (aggregate amount) 67 189 64 736
The carrying amount of the investment recognised by the Company 67 189 64 736
The Company has not provided, nor intends to provide any financial support or other significant
support to the unconsolidated structured entities above without contractual obligation.
12. Inventories
Merchandise 195 099 229 055
Inventories excludes value of obsolescence amounting to P12.25m (2016: P14.0m) for the
stock carried at net realisable value. Inventories with a value of P50.0m (2016: P50.0m) are
held as collateral for borrowings as set out in note 17. Cost of inventories sold is recognised as
expense and included in note 3.
13. Loans and advances to customers

Trade receivables – gross 867 818 878 387
Unearned finance and other charges (205 803) (211 418)
662 015 666 969
Impairment provision on originated loans (144 616) (154 466)
517 399 512 503
Impairment provision on originated loans

Opening balance 154 466 151 081
Write offs during the year (37 400) (58 939)
Charge for the year (note 3) 24 705 63 553
Exchange movement on translation of foreign subsidiaries 2 845 (1 229)
Closing balance 144 616 154 466
Unearned finance and other charges

Opening balance 211 418 221 974
Additions during the year 262 274 349 747
Earned during the year (267 889) (360 303)
Closing balance 205 803 211 418
Loans and advances to customers are collateralised against the merchandise purchased by customers.
As there is no observable market for instalment sale and loan receivables of the nature that the group holds, fair value is
not readily available and consequently a valuation could be misleading. The carrying value of trade and other receivables
approximates their fair values.
Gross trade receivables up to P224.80m (2016: P175.38m) are held as collateral for borrowings as set out in note 17.
53

GROUP COMPANY
2017 2016 2017 2016
P’000 P’000 P’000 P’000
14. Receivables and prepayments
Staff loans 1 841 4 714 30 190
Advances and prepayments 3 265 2 833 - -
Indirect taxes paid in advance 9 475 8 225 - -
Other receivables 5 840 10 660 32 144
Related companies (note 14.1) 2 998 83 200 712 223 483
23 419 26 515 200 774 223 817

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

14.1. Receivables from related companies
Receivable from related companies 2 998 83 234 309 253 553
Provision for impairment - - (33 597) (30 070)
Net receivables (note 21) 2 998 83 200 712 223 483

The movements of provision for impairment is as follows:
Brought foward provision - - (30 070) -
Provision for the year - - (3 527) (30 070)
- - (33 597) (30 070)
15. Cash and cash equivalents
Bank balances 136 020 105 677 4 894 4 059
Cash in hand 29 70 - -
Cash and bank balances 136 049 105 747 4 894 4 059

For the purposes of the cash flow statement, the cash and cash
Equivalents comprise the following:
Cash and bank balances 136 049 105 747 4 894 4 059
Bank overdrafts (note 17) - (26 187) - -
Net cash and cash equivalents 136 049 79 560 4 894 4 059

16. Stated capital
606 446 080 (2016: 606 446 080) issued and fully paid ordinary
Shares at no par value 198 899 198 899 198 899 198 899

17. Borrowings
Current
Bank overdraft - 26 187 - -
Bank loan 24 862 22 569 14 816 14 134
Finance lease liabilities 1 286 1 220 - -
26 148 23 789 14 816 14 134
Non-current
Bank loan 29 237 52 299 7 122 21 201
Finance lease liabilities 1 165 2 419 - -
Bond 150 000 150 000 150 000 150 000
180 402 204 718 157 122 171 201
Total borrowings 206 550 254 694 171 938 185 335

All leases are repayable over 24 to 60 months, commencing at various
dates from 1 April 2015. The lease liabilities are effectively secured over
the capitalised leased assets (note 8).
Finance lease liabilities - minimum lease payments
Not later than one year 1 479 1 541 - -
Later than one year and not later than five years 1 255 2 674 - -
2 734 4 215 - -
Future finance charges on finance leases (283) (577) - -
54 Present value of finance lease liabilities 2 451 3 638 - -

17. Borrowings (continued) GROUP COMPANY

2017 2016 2017 2016
P’000 P’000 P’000 P’000
The present value of finance lease liabilities is as follows;
Not later than one year 1 286 1 220 - -
Later than one year and no later than five years 1 165 2 418 - -
2 451 3 638 - -
Bond issue
Balance at the beginning of year 150 000 150 000 150 000 150 000
Bonds matured during the year - - - -
Balance at the end of year 150 000 150 000 150 000 150 000
The total fair value of borrowings at year end amount to P212 329 684 (2016: P258 194 025).
Furnmart Limited on 14 June 2010 issued a tranche of P 50m Notes, which forms part of its P 500m notes program
announced in June 2010. The first tranche, bearing interest at Bank of Botswana certificate rates, plus 1.60% per annum,
payable quarterly, matured on 12 July 2015 and was duly redeemed on said date.
Furnmart Limited on 18 October 2013 issued the second tranche of P 150m Notes. These notes are non-convertible,
unsubordinated and unsecured. This second tranche bears interest at 8.20 % per annum, payable semi-annually and
matures on 23 October 2025.
The Group’s banking facilities are as follows:
(a) Short term facility of N$ 60m to finance working capital requirements, with First National Bank of Namibia Limited, at
Namibian prime rate (currently 10.75% per annum). This facility is secured by cession of book debts and suretyship in
the amount of N$60m from Furnmart Limited, Botswana. The outstanding balance as at 31 July 2017 is N$ nil (2016:
N$ 34.7m).
(b) Long term loan facility of N$ 25mfrom First National Bank of Namibia Limited, at Namibian prime rate (currently at
10.75% per annum) less 0.5%, to be repayable in 60 months ending October 2018, and secured by cession of book
debts and suretyship from Furnmart Limited. The outstanding balance as at 31 July 2017 is N$7.5m (2016: N$ 13.4m).
(c) Payment guarantee facility amounting to P 39m and Foreign exchange contract facility amounting to P 0.8 m,
with Rand Merchant Bank of Botswana, secured by limited cession of book debts and suretyship of P 40m through
Furniture Mart (Pty) Limited.
(d) Overdraft facilities amounting to P 1.5m at Botswana prime rate (Currently 7.0 % per annum) and Letter of credit
(LC) amounting to P 3.5m with Rand Merchant Bank of Botswana, secured by limited cession of book debts and
suretyship from Furnmart Limited of P 5m. The outstanding balance as at 31 July 2017 is P nil (2016: P nil).
(e) Overdraft facilities with Barclays Bank of Botswana Limited amounting to P25.0m, at Botswana prime rate (currently
at 7.0% per annum) less 1%. The outstanding balance as at 31 July 2017 is P nil (2016: P nil).
(f ) Payment guarantee facility amounting to R 20m and USD 0.1m; with Barclays Bank of Botswana Limited. These
facilities are secured by stock and limited cession of book debts of P 50 m.
(g) Letter of Credit facility amounting to USD 0.3m with Barclays Bank of Botswana Limited. The outstanding balance as
at 31 July 2017 is P nil (2016: P nil).
(h) Long term loan facility of R 75m from Norsad Finance Limited, at South African prime rate (currently 10.25% per
annum); repayable in 16 quarterly instalments ending December 2018. This is secured by a limited cession on book
debts of R75m and a corporate guarantee from Furniture Mart (Pty) Ltd. The outstanding balance as at 31 July 2017 is
R 28.1m (2016: R 46.9m). 55

17. Borrowings (continued)
(i) Term loan facility of R40.0m from Nedbank Limited. The loan bears interest at South African prime rate (currently
10.25% per annum) less 1% and is repayable in 120 months ending August 2021; secured by mortgage bond over
property at Erf13 Meadowdale, Gauteng Province, South Africa and limited suretyship from Furnmart Limited
Botswana. The outstanding balance as at 31 July 2017 is R 20.1m (2016: R 24.3m).
(j) Term loan facility of R 5.0m from Nedbank Limited. The loan bears interest at South African prime rate (currently
10.25% per annum) less 1% and is repayable in 84 months, ending December 2020; and secured by a bank guarantee
from First National Bank of Botswana Limited. The outstanding balance as at 31 July 2017 is R 3.6m (2016: R 4.5m).
(k) Term loan facility of R 10.0m from Nedbank Limited. The loan bears interest at South African prime rate (currently
10.25% per annum) less 1% is repayable in 84 months, ending March 2022; and is secured by a bank guarantee from
Barclays Bank of Botswana Limited. The outstanding balance as at 31 July 2017 is R 9.4m (2016: R 10.0m).
(l) General banking facility by way of overdraft and/or letters of credit and/or forward exchange contract facility
amounting to R 6m at Nedbank Limited, at South Africa prime rate (currently 10.25% per annum). This facility is shared
between Furnmart (Pty) Ltd and Xtreme Discounters (Pty) Ltd. This is secured by a general notarial bond over stock,
limited to the facility of R 6m; and limited suretyship. The outstanding balance as at 31 July 2017 is R nil (2016: R nil).
(m) A vehicle and asset finance facility at Nedbank Limited, for Xtreme Discounters (Pty) Ltd and Furnmart (Pty) Ltd. The
outstanding balance as at 31 July 2017 is R 2.4m (2016: R 4.2m).
(n) Overdraft facility with ABSA Limited amounting to R5.0m at South African prime rate (currently 10.25% per annum)
and secured by a bank guarantee from Barclays Bank of Botswana Limited. The outstanding balance as at 31 July 2017
is R nil (2016: R nil).
Borrowings from related companies are set out in note 21.
56

GROUP COMPANY
2017 2016 2017 2016
P’000 P’000 P’000 P’000
18. Trade and other payables
Trade payables 45 587 47 759 - -
Related companies (note 21) 233 252 126 383 98 245
Other payables 13 075 14 611 4 211 4 305
Deferred lease liabilities (note 22) 8 106 9 220 - -
Amounts due to customers 6 169 6 739 - -
73 170 78 581 130 594 102 550
The carrying amount of trade payables approximate their fair values.
19. Accruals
Opening balance 17 767 19 122 1 017 1 010
Charge for the year 7 358 3 962 1 527 269
Paid during the year (8 318) (5 317) (214) (262)
Closing balance 16 807 17 767 2 330 1 017
Accruals relate to the Group’s liabilities to employees for
compensated absences from work, contractual gratuities and
statutory long-service benefits.
20. Cash generated from operations

Operating profit/ (loss) 120 745 101 839 76 388 (55 635)
Adjustment for:
Dividend received - (267) (29 600) (3 267)
Depreciation (note 8) 20 050 19 136 1 304 1 265
Profit on sale of property, plant and equipment (1 347) (677) (65) (256)
Cash inflow/ (outflow) before working capital changes 139 448 120 032 48 027 (57 893)
Changes in working capital
- loans and advances to customers, receivables and prepayments (1 799) 26 024 272 129 310
- related party receivables - - 18 735 (80 665)
- inventories 33 956 (2 367) - -
- trade and other payables and accruals (6 375) (19 779) 29 733 69 983
Cash generated from operations 165 230 123 910 96 767 60 735
21. Related party transactions

The Group is part of the CBH Group. Related parties comprise
the directors and other entities with common directors and
shareholders, and includes Afritec (Pty) Ltd, Nafprop (Pty) Ltd
and Chobe Fish Eagle (Pty) Ltd
The following transactions were carried out with related parties:
(i) Trade of goods and services
- Rental paid to Cash Bazaar Holdings (Pty) Ltd and its subsidiaries 27 908 26 377 224 425
- Expense reimbursement
Nafprop (Pty) Ltd 92 74 92 74
Chobe Fish Eagle (Pty) Ltd - 3 - 3
Afritec (Pty) Ltd 874 - 874 -
57

GROUP COMPANY
2017 2016 2017 2016
P’000 P’000 P’000 P’000
21. Related party transactions (continued)
- Impairment on investment in subsidiaries - Furniture Mart Zambia Ltd - - 3 527 72 948
- Fees paid to Cash Bazaar Holdings (Pty) Ltd for managerial
services rendered by directors and other senior staff* 6 983 8 067 6 983 8 067
- Service fees received from - United Impex (Pty) Ltd, Botswana - 540 - 314
- Afritec (Pty) Ltd, Botswana 4 740 4 860 3 240 2 916
- Xtreme Discounters (Pty) Ltd, South Africa - - 4 875 3 551
- Furniture Mart Zambia Ltd - - - 953
- Furn Mart (Pty) Ltd, Namibia - - 6 308 4 143
- Furniture Mart (Pty) Ltd, Botswana - - 8 440 12 168
* Some of the Group’s directors are employed as executives of Cash

Bazaar Holdings (Pty) Ltd, and perform managerial and oversight
duties at various entities throughout the Furnmart Group of
companies, for which Cash Bazaar Holdings (Pty) Ltd charges the
company entities based on an agreed formula. The company passes
these on within service fee charged to its subsidiaries and associate.
(ii) Receivables from related parties: (note 14.1)
Afritec (Pty) Ltd 2 981 - 2 981 -
Xtreme Discounters (Pty) Ltd, South Africa - - 62 534 76 287
Furniture Mart Zambia Ltd - - 4 247 24 125
Furn Mart (Pty) Ltd, Namibia - - 65 751 60 498
Furnmart (Pty) Ltd, South Africa - - 65 182 62 493
NafProp (Pty) Limited, Botswana 17 21 17 21
Cash Bazaar Holdings (Pty) Ltd, Botswana - 59 - 59
Chobe Fish Eagle (Pty) Ltd, Botswana - 3 - -
2 998 83 200 712 223 483
(iii) Payable to related parties (note 18):
Cash Bazaar (Pty) Ltd, Botswana 12 - 12 -
Afritec (Pty) Ltd, Botswana 221 252 221 252
Furniture Mart (Pty) Ltd, Botswana - - 126 150 97 993
233 252 126 383 98 245
(iv) Interest Income (note 2)
- - 32 606 28 904
58

GROUP COMPANY
2017 2016 2017 2016
P’000 P’000 P’000 P’000
21. Related party transactions (continued)
(v) Dividend income
Furniture Mart (Pty) Ltd, Botswana (note 2) - - 29 600 -
United Impex (Pty) Ltd, Botswana - - - 3 000
New African Properties Limited - 267 - 267
- 267 29 600 3 267
(vi) Dividend paid
Cash Bazaar Holdings (Pty) Limited 340 - 340 -
(vii) Interest receivable from related parties
(included in total receivables)
- - 33 793 55 767
(viii) Interest Expense
Furniture Mart (Pty) Ltd - - 6 487 5 106
The receivable balance from Xtreme Discounters (Pty) Ltd, South Africa attracts interest linked to the prime rate of
South Africa and has no fixed repayment terms.
The balances receivable from Furnmart (Pty) Ltd, South Africa and Furniture Mart Zambia Limited are unsecured,
do not attract any interest and have no fixed repayments terms. These are denominated in Rands and Kwacha
respectively and considered as part of the company’s net investments in subsidiaries.
The receivable balance from Furn Mart (Pty) Ltd, Namibia attracts interest linked to the prime rate of Namibia and has
no fixed repayment terms.
The balance payable to Furniture Mart (Pty) Ltd, Botswana attracts interest linked to the prime rate of Botswana. The
payable is unsecured and has no fixed repayment terms.
(ix) Dividends paid to directors: P13,000 (2016: P9,000)

GROUP COMPANY
2017 2016 2017 2016
P’000 P’000 P’000 P’000
22. Lease commitments
The operating lease rental commitments of
the Group are analysed as under:
Up to one year 65 427 74 676 - -
Between two and five years 111 189 88 877 - -
Total future cash flows 176 616 163 553 - -
Straight lining already accrued (note 18) (8 106) (9 220) - -
Future expenses 168 510 154 333 - -
59

GROUP COMPANY
2017 2016 2017 2016
P’000 P’000 P’000 P’000
23. Capital and loan commitments
Capital expenditure authorised but not contracted for 34 163 40 685 906 443
Financing commitments to customers 1 162 1 551 - -

The capital expenditure and loan commitments will be funded from borrowings and internal sources.
24. Events after the reporting period

Other than the facts and developments reported in these financial statements, there have been no material changes in the
affairs of the financial position of the Group between the year end and the date of approval of these financial statements.
25. Contingent liability
25.1 Legal action

The Group is party to a number of legal suits as at the financial year-end. The most significant of these relates to claims laid
against the Group’s Namibian subsidiary by a group of former employees. The Group does not anticipate any significant cash
out-flow from these claims.
25.2 Sale of insurance products

The Non Banking Financial Institutions Regulatory Authority (“NBFIRA”) had in the prior years raised concerns with regard to
the Botswana trading subsidiary’s potential violation of the Insurance Industry Act. The Group is continuing to engage with
NBFIRA to find common ground. As part of its efforts to mitigate this situation, during the prior year, the Group entered into
a contract with an insurer to underwrite some of the products offered. This development was intimated to NBFIRA and the
Group is awaiting feedback.
In the event that NBFIRA does not accede to the Group’s view or recognise changes implemented, the trading activities of
the Botswana subsidiary may need to be changed to adhere to NBFIRA’s interpretation. Such changes may have material
operational and financial implications, which may include penalties levied by the regulator. Given the continuing discussions,
no reasonable estimate of any costs (relating to historical or future periods) can be made at this time.
25.3 Guarantees
Company
The company has issued bank guarantees in the ordinary course of the business to various parties, the total amount of such
guarantees are 2017: P18 665 416 (2016: P27 281 592).

GROUP GROUP COMPANY
2017 2016 2017 2016
P’000 P’000 P’000 P’000
26. Income Tax paid
Balance brought forward (net) 4 210 (6 952) (10 955) (11 083)
Charge for the year (note 5) 32 369 31 177 2 717 225
Balance carried forward(net) 5 381 (4 210) 10 771 10 955
Net income tax paid/ (refund) 41 960 20 015 2 901 97
60
06 ANALYSIS OF
SHAREHOLDERS
ANALYSIS OF SHAREHOLDERS AND DIARY

No. of shareholders No. of shares held % of shares held

Category 2017 2016 2017 2016 2017 2016
1- 1 000 50 46 24 665 21 876 0.0040 0.0036
1 001 – 5 000 195 194 462 252 468 899 0.0762 0.0773
5 001 – 10 000 46 47 310 288 317 100 0.0512 0.0523
10 001 – 100 000 105 105 3 409 786 3 308 309 0.5623 0.5455
Over 100 000 86 83 602 239 089 602 329 896 99.3063 99.3213
Total 482 475 606 446 080 606 446 080 100.0000 100.0000

Category 2017 2016 2017 2016 2017 2016
Body Corporates 39 35 479 366 822 479 019 490 79.05 78.99
Insurance companies and
retirement funds 58 60 119 126 136 119 482 007 19.64 19.70
Individuals 385 380 7 953 122 7 944 583 1.31 1.31
Total 482 475 606 446 080 606 446 080 100.00 100.00

Category 2017 2016 2017 2016 2017 2016
Public (<10%) 476 469 143 461 462 143 530 375 23.66 23.67
Directors’ Interest 5 5 248 484 978 248 416 065 40.97 40.96
Other (>10%) 1 1 214 499 640 214 499 640 35.37 35.37
Total 482 475 606 446 080 606 446 080 100.00 100.00
Shareholders holding more No. of shareholders No. of shares held % of shares held
than 5% 2017 2016 2017 2016 2017 2016
Scotstrail Inc. 1 1 214 499 640 214 499 640 35.37 35.37
Kleinwort Benson Marula Trust 1 1 221 229 300 221 229 300 36.48 36.48
Total 2 2 435 728 940 435 728 940 71.85 71.85
SHAREHOLDERS’ DIARY
Financial year end 31st July
Interim report for the six months to January April
Announcement of annual results October
Annual report November
Annual general meeting January 61
07
SHARE
STATISTICS
SHARE STATISTICS
2017
Closing mkt
cap High Low Closing # Volume Value traded Number
Month Pm P P P traded P of trades
August 515.48 0.90 0.85 0.85 948 476 806 205 3
September 515.48 0.85 0.85 0.85 60 850 51 723 1
October 515.48 0.85 0.85 0.85 190 389 161 831 2
November 479.09 0.85 0.79 0.79 17 805 14 066 2
December 424.51 0.79 0.70 0.70 20 000 14 500 2
January 394.19 0.70 0.65 0.65 222 338 154 667 2
February 394.19 0.65 0.65 0.65 4 694 3 051 4
March 394.19 0.65 0.65 0.65 5 517 3 586 4
April 394.19 0.65 0.65 0.65 71 432 46 431 4
May 382.06 0.65 0.63 0.63 56 882 36 937 2
June 363.87 0.63 0.60 0.60 23 200 13 920 3
July 363.87 0.60 0.60 0.60 5 587 3 352 2
1 627 170 1 310 268 31
Number of shares traded as a % of total shares in issue 0.268%

2016
Closing mkt
cap High Low Closing # Volume Value traded Number
Month Pm P P P traded P of trades
August 885.41 1.59 1.35 1.35 418 019 592 152 3
September 885.41 1.35 1.35 1.35 - - 0
October 836.90 1.35 1.35 1.35 524 270 707 764 1
November 836.90 1.35 1.35 1.35 - - 0
December 812.64 1.35 1.09 1.09 18 048 19 672 3
January 654.96 1.09 1.07 1.07 12 216 13 174 4
February 648.90 1.07 1.07 1.07 - - 0
March 648.90 1.07 1.07 1.07 20 843 22 302 3
April 630.70 1.07 1.04 1.04 24 160 25 789 2
May 630.70 1.04 1.04 1.04 57 000 59 280 1
June 630.70 1.04 1.04 1.04 - - 0
July 545.80 1.00 0.90 0.90 2 317 2 095 2
1.59 0.90 1 076 873 1 442 230 19
Number of shares traded as a % of total shares in issue 0.178%

# the closing value is based on the BSE report for trades that take place on the last day of the month while all other information is
based on the record date per the Transfer Secretary records. At times the closing price is therefore outside the minimum to maximum
range for a specific month.
62
08
CORPORATE
INFORMATION
Directorate Bankers
J T Mynhardt Barclays Bank of Botswana Limited
T L J Mynhardt First National Bank Botswana Limited
D S le Roux* Bank Windhoek Limited
E Odendaal* ABSA Bank Limited
F B Lebala Nedbank Limited
J P McLoughlin* Standard Bank Limited
S Venkataramani^ Capital Bank Limited
L G Waldeck* BancABC Limited
(*South African)
(^Indian)

Registered Office Secretary

Plot 50371 S Venkataramani
Fairground Office Park Plot 20573/4 Magochanyama Road
Gaborone, Botswana Sir Seretse Khama Airport Circle
(PO Box 294, Gaborone, Botswana) Gaborone, Botswana
Transfer Secretaries Independent Auditors

DPS Consulting (Proprietary) Limited PricewaterhouseCoopers
Plot 50371 Plot 50371
Fairground Office Park Fairground Office Park
Gaborone, Botswana Gaborone, Botswana
(PO Box 1453, Gaborone, Botswana) (PO Box 294, Gaborone, Botswana)
Corporate Law Advisor Trustee

Neill Armstrong Grant Thornton Business Services (Pty) LTD
P.O.Box 45701, Riverwalk, Plot 50370, Acumen Parks, Gaborone, Botswana
Gaborone, Botswana P. O. Box 1157, Gaborone,
Tel: +267 395 2797 Tel: +267 395 2313
Fax: +267 397 2353
Sponsors
Stock Brokers Botswana (Pty) Ltd
P/Bag 00113
Gaborone, Botswana
Tel: +267 3957900
Fax: +267 395 7901
63
09 NOTICE OF ANNUAL
GENERAL MEETING
NOTICE IS HEREBY GIVEN that the annual general meeting of the company for the year 2017 will be held in
the Board Room, Furnmart Limited, Plot 20573/4 Magochanyama Road, Gaborone at 15.00 hrs on 24 January
2018, for the following purposes:
1. To consider and adopt the annual financial statements, including the report of the auditors for the year
ended 31 July 2017.
2. To consider and ratify the dividends proposed by the directors.
3. To consider and elect individually the directors, who retire at the annual general meeting. In terms of the
constitution of the company. Being eligible, they offer themselves for re-election.
i F B Lebala
ii E Odendaal
iii T L J Mynhardt
Biographical information of the directors to be re-elected is set out on pages 6 and 7 of the Annual Report.
4. To consider and ratify the directors’ remuneration for the year ended 31 July 2017 (page 11).
5. To re-appoint PricewaterhouseCoopers as auditors of the company for the ensuing year.
6. To approve the auditors’ remuneration for the past audit (note 3, page 46).
7. To transact any other business, which may be transacted at an annual general meeting.
A member who is entitled to attend and vote at a general meeting is entitled to appoint one or more
persons as a proxy to attend, speak and vote in his/her stead and the proxy so appointed need not be a
member of the company. Proxy forms should be forwarded to reach the company’s registered office at least
48 hours before the time fixed for the meeting.
By order of the Board
S Venkataramani
Secretary 24 October 2017

10 PROXY
FORM
I/We_________________________________________________________________________________________
Of___________________________________________________________________________________________
Being the registered holder/s of___________________________ ordinary shares in the Company, at the close of
business on Friday, 17 November 2017, hereby appoint:
________________________________________________ of _____________________________________
Or failing him/her;
_________________________________________________ of __________________________________________
Or failing him/her the Chairman of the meeting as my/our proxy to attend, speak and vote for me/us on my/our
behalf at the annual general meeting of the company to be held at 15:00 hrs on Wednesday, 24 January 2018, and
at any adjournment thereof and to vote for or against the restrictions or to abstain from voting in respect of the
shares registered in my /our name(s), in accordance with the following instructions:
Resolution
number Detail In favour Against Abstain
1 To consider and adopt the annual financial statements,
including the report of the auditors.
2 To consider and ratify the dividends proposed by the

directors.
3 To consider and elect individually the directors, who

retire at the annual general meeting. In terms of the
constitution of the company. Being eligible, they offer
themselves for re-election
i F B Lebala
ii E Odendaal
iii T L J Mynhardt
4 To consider and ratify the directors’ remuneration for the

year ended 31 July 2017 (page11).
5 To re-appoint PricewaterhouseCoopers as auditors of the

Company for the ensuing year.
6 To approve the auditors’ remuneration for the past audit

(note 3, page 46).
7 To transact any other business, which may be transacted
at an annual general meeting.

PROXY
10 FORM
Signed this ______________________________________________________day of _________________________________
Full name: _____________________________________________________________________________________________
Signature: _____________________________________________________________________________________________
Assisted by (Guardian): __________________________________________________________________________________
A member who is entitled to attend and vote at a general meeting is entitled to appoint one or more persons as a proxy to
attend, speak and vote in his/her stead and the proxy so appointed need not be a member of the Company.
Registered office
Plot 50371 Fairground Office Park, Gaborone
Fax: +267 397 3901
INSTRUCTIONS ON SIGNING AND LODGING THIS PROXY FORM
1. This must be deposited at the Registered Office of the Company not less than 48 (forty eight) hours before the time
of the scheduled meeting.
2. A deletion of any printed matter and the completion of any blank space(s) need not be signed or initialled. Any
alteration or correction made on this form must be signed, not initialled, by the signatory/signatories.
3. The Chairman of the meeting shall be entitled to decline to accept the authority of the signatory:
a. Under a power of attorney; or
b. On behalf of a company or any other entity;
Unless such power of attorney or authority is deposited at the Registered Office of the Company not less than 48
(forty eight) hours before the scheduled time for the meeting
4. The authority of a person signing as a Proxy in a representative capacity must be attached to the Proxy form unless
the authority has previously been recorded by the Secretary.
5. The signatory may insert the name of any person(s) whom the signatory wishes to appoint as his proxy in the blank
space(s) provided for that purpose.
6. When there are joint holders of shares and if more than one such joint holder is present in person or represented by
proxy, then the person whose name stands first in the register in respect of such shares, or his/her Proxy, as the case
may be, shall alone be entitled to vote in respect thereof.
7. The completion and lodging of this Proxy shall not preclude the signatory from attending the meeting and speaking
and voting in person thereat to the exclusion of any Proxy appointed in terms hereof should such signatory wish to
do so.
8. The Chairman of the meeting may reject or accept my Proxy form which is completed and/or submitted other than in
accordance with these instructions, provided that he is satisfied as to the manner in which a member wishes to vote.
9. If the shareholding is not indicated on the Proxy form, the Proxy will be deemed to be authorised to vote the total
shareholding.
10. A minor or any other person under legal incapacity must be assisted by his/her parent or guardian, applicable, unless
relevant documents establishing his/her capacity are produced or have previously been registered.

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01

John Tobias Mynhardt

Tobias Louis John Mynhardt

Daniel Servaas le Roux : Managing Director

RESULTS an exchange gain (prior year exchange loss), partially

Operating expenses were 4.9% higher than the prior

The Directors have DIVIDEND

Company Country Percentage Nature of

Furn Mart (Proprietary) Limited Namibia 100% Furniture retail

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

Furniture Mart Zambia Limited Zambia 100% Furniture retail

Furniture Mart (Proprietary) Limited Botswana 100% Furniture retail

Furnmart (Proprietary) Limited South Africa 100% Distribution and

As per article 53 and 55 of the Articles of APPROVAL OF FINANCIAL STATEMENTS

The Board of Directors approved the annual financial statements presented on

On behalf of the Board

RISK, AUDIT AND COMPLIANCE COMMITTEE

REPORT ON THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL

What we have audited

Basis for opinion

Country Senior Partner: B D Phirie

Group audit scope

Key audit matters

Overall Group materiality P 4,875,000

Key audit matters

In determining the required impairment We considered the client’s calculation of the

Given the subjectivity and reliance on estimates

The disclosures associated with impairment of

Responsibilities of the directors for the consolidated and separate financial

Practising member: Lalithkumar Mahesan 6 November 2017

ANNUAL FINANCIAL STATEMENTS

STATEMENT OF COMPREHENSIVE INCOME

Revenue 2 1 174 492 1 187 542 81 811 49 719

ANNUAL FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITION

EQUITY AND LIABILITIES

ANNUAL FINANCIAL STATEMENTS

STATEMENT OF CHANGES IN EQUITY

GROUP Foreign Available

ANNUAL FINANCIAL STATEMENTS

STATEMENT OF CASH FLOWS

ANNUAL FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2017 Furnmart Annual Report

ANNUAL FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3 CELL CAPTIVE ARRANGEMENTS

ANNUAL FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Group • Debt follow-up charges. Upon customer falling

a) Sale of merchandise Company

ANNUAL FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

6 CURRENT AND DEFERRED INCOME TAX

7 PROPERTY, PLANT AND EQUIPMENT

ANNUAL FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

7 PROPERTY, PLANT AND EQUIPMENT (CONTITUED)

ANNUAL FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

8 FINANCIAL INSTRUMENTS (CONTINUED)

ANNUAL FINANCIAL STATEMENTS