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Page 1: 01 - bse.co.bw REISSUED FURNMART... · CHAPTER 02 8-9 MANAGEMENT REPORT CHAPTER 03 10-11 DIRECTORS’ REPORT CHAPTER 04 ... Leonard Godfrey Waldeck Independent, Non Executive Director
Page 2: 01 - bse.co.bw REISSUED FURNMART... · CHAPTER 02 8-9 MANAGEMENT REPORT CHAPTER 03 10-11 DIRECTORS’ REPORT CHAPTER 04 ... Leonard Godfrey Waldeck Independent, Non Executive Director
Page 3: 01 - bse.co.bw REISSUED FURNMART... · CHAPTER 02 8-9 MANAGEMENT REPORT CHAPTER 03 10-11 DIRECTORS’ REPORT CHAPTER 04 ... Leonard Godfrey Waldeck Independent, Non Executive Director

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Furnmart Annual Report 2017

IN THIS REPORT

WHO WE ARE

5 GROUP PROFILE5 MISSION STATEMENT

CONTENTS

CHAPTER 016-7 BRIEF PROFILE OF DIRECTORS

CHAPTER 028-9 MANAGEMENT REPORT

CHAPTER 03 10-11 DIRECTORS’ REPORT

CHAPTER 04 12 CORPORATE GOVERNANCE

13-19 REPORT OF THE INDEPENDENT AUDITOR

CHAPTER 05

ANNUAL FINANCIAL STATEMENTS20 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

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2017 Furnmart Annual Report

WHO

WEARE

2017 Furnmart Annual Report

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Furnmart Annual Report 2017

Furnmart Limited retails domestic furniture and

electrical appliances through its network of stores

in Botswana, South Africa and Namibia. It aims

at the majority of households in its market and

concentrates on cultivating relationships with its

customers through its ‘value for money’ and ‘smart

credit’ policies. Furnmart Limited is listed on the

Botswana Stock Exchange.

MISSION STATEMENT • Wearedeterminedtobethemarketleaderinretailing‘value

for money’ furniture and electrical appliances

• Wewillachievethisby:

» offering service excellence to all our partners, customers,

staff, suppliers and shareholders;

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

» constantly adapting to market needs and opportunities;

and

» working as a team and encouraging the free flow of

information and ideas.

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2017 Furnmart Annual Report Furnmart Annual Report 2017

John Tobias MynhardtChairman [B. Comm (UCT)]

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

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

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

developed extensive business interests in Botswana and he remains actively involved

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

encompassed a broad exposure to the investment industry through an investment

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

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

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

Director.

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

Serniel le Roux has more than 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

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

BRIEF PROFILE OF

DIRECTORS

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2017 Furnmart Annual Report Furnmart Annual Report 2017

Fact Badzile LebalaNon Executive Director

Fact Lebala left the Botswana Police Force after 28 years’

of service with the rank of Superintendent of Police and

was awarded the Police Medal for Long Service and Good

Conduct. During this career he was Commanding Officer for

all the major Police Districts in Botswana and was attached

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

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

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

Furnmart Limited.

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

Len Waldeck has a Diploma in Accounting from Rhodes

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

Blake and Company in Port Elizabeth. He has more than

22 years of experience in the furniture retail industry in

credit, finance and retail operations. He has served in

several different capacities, such as Financial Director,

Group Credit Director & Joint Managing Director, with the

Beares, McCarthy Retail, Relyant & Ellerines Groups until his

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

Directors, South Africa.

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

Jerome McLoughlin is a qualified Chartered Accountant

and completed articles with Deloitte (Durban). He started

a career in public audit practice and currently serves as a

director of a firm of registered auditors known as Hodkinson

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

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

experience in an advisory capacity and in property

investment.

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

Subbarao Venkataramani qualified as a Chartered

Accountant in 1978. He has more than 38 years of

experience in financial management, treasury and

accounting as head of finance in various listed companies.

He joined Furnmart in May, 1998 as Group Financial

Manager. He became Chief Financial Officer of Furnmart

Group in 2007. He was fully involved in the implementation

of Argility Furniture Retail operations and information

systems and involved in the issue and listing of rights shares

and bonds. He was appointed as the Finance Director on

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

relinquished his position as head of finance. He continues

to be a board member in Furnmart Limited and is currently

responsible for secretarial and compliance matters. He is also

overseeing the microlending activities of CBH Group.

Eric OdendaalDirector Operations

Eric Odendaal joined Furnmart in August 1997 as Group

Operations Manager. He has overseen the expansion of the

business in Botswana and RSA and is fully involved in the

opening of Home Corp Stores in both these countries. He

has more than 39 years of experience in the furniture retail

industry. He is responsible for the day to day operations

of Furnmart and Home Corp stores in Botswana and South

Africa.

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2017 Furnmart Annual Report Furnmart Annual Report 2017

02MANAGEMENT

REPORT

RESULTS

Group revenue of P1.17 billion for the year ended

July 2017, was slightly lower than the previous year.

The closure of the Zambian operations in particular

contributed to the decline. However, excluding

the discontinued operations, revenue increased

compared to the prior year. The somewhat difficult

trading environment was brought about by low

economic growth, increased competition, the

drought and high levels of consumer debt in the

region.

Gross profit margins were lower than last year,

mainly due to the closing down sale of our Zambian

operations and a very competitive, albeit subdued,

trading environment elsewhere.

Group operating profit of P120.7m was P18.9m

(18.6%) higher than the corresponding period. This

was caused, in the main, by lower debtors’ costs and

an exchange gain (prior year exchange loss), partially

offset by lower sales, lower gross profit margins and

higher operating expenses.

Total debtors’ costs have reduced considerably during

this reporting period due to an improvement in

collections and an improvement in the quality of the

book. The total impairment provision on the debtor’s

book remains at an adequate level.

The Pula weakened steadily against the Rand

during the financial year. As a result, the Group

realised an exchange gain of P10.6m compared

to an exchange loss of P16.9m in the prior year.

Subsequent to year-end, the Pula however, has

strengthened again.

Operating expenses were 4.9% higher than the prior

year. The Group did not incur full-year expenses in

respect of the discontinued operations, as these

business units ceased trading prior to year-end.

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.

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2017 Furnmart Annual Report Furnmart Annual Report 2017

However, some once-off severance packages and

reinstatement costs were paid during this period. Cost saving

initiatives across the Group have contributed to the relatively

low growth in the expense base.

Profit after tax of P64.6m is P16.8m (35.2%) higher than the

previous year.

As at 31st July 2017 the Group had a strong balance sheet

with low levels of gearing. The Group’s balance sheet

provides a very strong platform from which to grow. During

the period under review the Group was able to generate

strong cash flows.

ZAMBIAN OPERATIONS

The closure of our Zambian operations, which commenced

on the 1st of November 2016, has been completed. With

the exception of the debtor’s book, all assets in the Zambian

operations have been realised. The outstanding debtor’s book

will be collected in the new financial year. Collections on this

book, to date, have exceeded management’s expectations

and provisions are adequate.

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.

PROSPECTS

Management is confident that the new financial year

will bring about a stronger performance, now that the

loss-making business units, which had a considerable drag

on the profitability of the Group, have been discontinued.

Management’s focus will remain on the respective business

models and specifically on sales growth, gross margin

enhancement, expense control, productivity and debtor’s

management. The remaining non-performing stores have all

been subjected to a turn-around strategy.

Trading subsequent to financial year-end has been

encouraging. The cost saving initiatives, considerable efforts

in improving the quality of our respective debtors’ books and

new customer acquisition strategies are starting to bear fruit.

The Group’s businesses in our chosen markets and

territories are well positioned to take advantage of

the inevitable improvement in market conditions. Our

focussed management teams will continue to seek growth

opportunities in the region. New store growth will come

primarily out of South Africa.

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2017 Furnmart Annual Report Furnmart Annual Report 2017

03NATURE OF BUSINESS

Furnmart Limited retails domestic furniture and electrical appliances through its network

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

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

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

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

Theissuedsharecapitalofthecompanyis606446080(2016:606446080)shares.

DIVIDEND

A gross interim dividend of 1.30 thebe per share was paid to the shareholders who were

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

17 November 2017.

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

SUBSIDIARY COMPANIES

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

follows:

Company Countryheld

Percentage Nature ofbusiness

Furn Mart (Proprietary) Limited Namibia 100% Furniture retail

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

Furniture Mart Zambia Limited Zambia 100% Furniture retail

Furniture Mart (Proprietary) Limited Botswana 100% Furniture retail

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

DIRECTORS

REPORT

The Directors have

pleasure in submitting

their report for the

financial year ended

31 July 2017.

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2017 Furnmart Annual Report Furnmart Annual Report 2017

DIRECTORS’ INTERESTS The aggregate number of shares directly held by the directors was 1 027 685 at 31 July 2017 and 1 027 685 at 31 July 2016. Directors indirectly held 247 457 293 shares at 31 July 2017 and 247 388 380 shares at 31 July 2016.

DIRECTORS’ REMUNERATIONThe independent directors are paid for meetings attended and these fees amountedtoP359250(2016:P119000)fortheyear.Otherdirectorsareoncontract to the Group from Cash Bazaar Holdings (Pty) Ltd, a related company and accordingly earned no remuneration directly from the Group.

COMPANY SECRETARYThe Company Secretary is S. Venkataramani.

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

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

The directors have reviewed the Group’s financial projections for the year ending 31 July 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

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

* South African, ^Indian

As per article 53 and 55 of the Articles of Association of the company, the following directors will retire at the forthcoming annual general meeting and, being eligible, offerthemselvesforre-election:F B Lebala T L J Mynhardt E Odendaal

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2017 Furnmart Annual Report

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

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

The Board meets at least three times per annum. While the Board strives to have full attendance at meetings, the quorum is any four directors and board papers are distributed timeously to enable members to be properly briefed prior to meetings. Directors who are unable to attend a meeting receive the relevant documents and are able to communicate with the Chairman and Company executives on any issue. Absences noted this year, with apologies were L G Waldeck (1), J T Mynhardt (1) and S Venkataramani (1).

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

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

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

The Committee met thrice during the year. Absentees noted this year, with apologies were L G Waldeck (1) and S Venkataramani (1).

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

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

CORPORATE

GOVERNANCE

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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 PhiriePartners: R Binedell, A S Edirisinghe, L Mahesan, R van Schalkwyk, S K K Wijesena

INDEPENDENT AUDITOR’S REPORTTO THE SHAREHOLDERS OF FURNMART LIMITED

REPORT ON THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIALSTATEMENTS

Our opinion

In our opinion, the consolidated and separate financial statements give a true and fair view of theconsolidated and separate financial position of Furnmart Limited (the “Company”) and itssubsidiaries (together the “Group”) as at 31 July 2017, and of its consolidated and separate financialperformance and its consolidated and separate cash flows for the year then ended in accordance withInternational Financial Reporting Standards.

What we have auditedFurnmart Limited’s consolidated and separate financial statements set out on pages 20 to 60 whichcomprise:

● 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). Ourresponsibilities under those standards are further described in the Auditor’s responsibilities for theaudit 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 CharteredAccountants code of ethics (BICA Code) and the ethical requirements that are relevant to our audit offinancial statements in Botswana. We have fulfilled our other ethical requirements in accordancewith these requirements and the BICA Code. The BICA Code is consistent with the InternationalEthics Standards Boards for Accountants Code of Ethics for Professional Accountants (Parts A andB).

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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 materialmisstatement in the consolidated and separate financial statements. In particular, we consideredwhere the directors made subjective judgements; for example, in respect of significant accountingestimates that involved making assumptions and considering future events that are inherentlyuncertain. As in all of our audits, we also addressed the risk of management override of internalcontrols, including among other matters, consideration of whether there was evidence of bias thatrepresented 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 toobtain 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 inaggregate, they could reasonably be expected to influence the economic decisions of users taken onthe 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 outin the table below. These, together with qualitative considerations, helped us to determine the scopeof our audit and the nature, timing and extent of our audit procedures and to evaluate the effect ofmisstatements, 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

benchmark applied

We chose consolidated profit before tax as the benchmark

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.

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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 anopinion on the consolidated financial statements as a whole, taking into account the structure of theGroup, 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 onmateriality and risk- these could individually or in aggregate have a material impact on theconsolidated financial statements.

In establishing the overall approach to the group audit, we determined the type of work that neededto be performed by us, as the Group engagement team, or component auditors from other PwCnetwork firms operating under our instruction. Where the work was performed by componentauditors, we determined the level of involvement we needed to have in the audit work at thosecomponents to be able to conclude whether sufficient appropriate audit evidence had been obtainedas 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 inour audit of the consolidated and separate financial statements of the current period. These matterswere addressed in the context of our audit of the consolidated and separate financial statements as awhole, and in forming our opinion thereon, and we do not provide a separate opinion on thesematters.

Key audit matter How our audit addressed the key audit matter

Impairment of loans and advances to customers

(applicable only to the consolidated financial

statements)

The nature of the Group’s credit business,

combined with economic uncertainty in many of

the jurisdictions where the Group operates,

exposes the Group to significant credit risk on its

loans and advances to customers. The assessment

of impairment of customer advances requires the

Group to exercise significant judgement and may

have a significant impact on the consolidated

financial statements.

In determining the required impairment

provision on customer advances, the Group

adopts a standardised impairment approach,

which allows for appropriate customisation to

take account of unique risks which may apply

within specific jurisdictions.

This approach assesses likely credit losses based

on factors, which include:

● Assessment of any objective evidence that

Our audit procedures included

understanding and testing of the relevant

controls within the revenue and receivables

cycle, including controls over:

● The recording of credit sales

transactions;

● The credit granting process, including

determining credit limits;

● The identification and write-off of bad

debts; and

● The data used in the calculation of the

provision for impairment of customer

advances.

We considered the client’s calculation of the

impairment provision by performing an

independent valuation of the customer

advances. This included a combination of:

● Testing the data used in the model, by

comparing it to supporting

documentation, including the analysis of

loans into groupings displaying the

same delinquency characteristics;

● Testing the loss ratios by comparing

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2017 Furnmart Annual Report Furnmart Annual Report 2017

individual advances will not be collected due

to, for example, retrenchment of the customer,

closure of the employer, etc.;

● Categorisation of outstanding advance

balances based on:

● Grouping of advances into portfolios which

include advances subject to similar credit

risks; and

● The number of instalments in arrears;

● Loss ratios determined for each category of

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).

them to historical loss ratios, comparing

them against recomputed loss ratios and

applying sensitivities; and

● Recalculation of the impairment

provision using an independent model.

Based on the results we accepted the Group’s

estimate of impairment of customer advances

as falling within a reasonable range of likely

credit losses.

Impairment of investment in subsidiaries

(applicable only to the separate financial

statements)

The Company is required to assess at the end of

each reporting period whether there is an

indication that its investments in subsidiaries

recorded in the separate financial statements are

impaired.

The impairment assessments were based on

discounted cash flow calculations to determine

the Value In Use, referencing budgeted and

projected net cash flows and appropriate discount

Our audit procedures to test the Value In Use

calculation included the following:

● We compared the principal assumptions

to our own knowledge of other practices,

actual experience and market indicators;

● We tested the mathematical accuracy of

the calculation;

● We tested the reliability of budgets and

forecasts by comparing the actual results

against the historical budgets and

forecasts, and found that historical results

were consistent with the historically

budgeted results or, where there were

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rates for each investment in subsidiary.

The decision as to whether an impairment of

investment should be made can thus be

significantly influenced by:

● the reasonableness of forecasted cash flows,

with reference to the previous performance

against historical forecasts and budgets,

general economic and industry performance

indicators and competitor activity in relevant

market areas;

● the principal assumptions underlying the

calculations used for determining the Value in

Use; and

● the operation of the model used to perform

the Value in Use calculations.

The assessment of impairment of investment

requires significant judgement by management

and may have a significant impact on the separate

financial statements. For these reasons, the audit

of the assessment of whether the investments

were impaired was determined to be a matter of

most significance to our audit of the separate

financial statements.

The disclosure associated with investment is set

out in the separate financial statements in the

following notes:

● Critical accounting estimates and judgements,

Impairment of Investment in subsidiaries

(page 36);

● Note 10.2 – Investment in Subsidiaries (page

51); and

● Note 10.3 – Provision for impairment –

Furniture Mart Zambia Limited (page 51).

● Note 14.1 – Receivable from related

companies (page 54)

deviations, such deviations occurred

because of events which could not have

been foreseen at the time of preparing the

budget; and

● We tested whether the budgets and

forecasts utilised to support the recovery

of the investment in subsidiaries were

approved by those charged with

governance.

We challenged the key inputs and assumptions

used in forecasts of net cash flows as follows:

● We compared the growth rate beyond

forecast period to estimates of gross

domestic product (GDP) and the

Company’s performance against historical

GDP;

● We assessed the growth rates during the

budget periods by understanding the basis

and comparing these against historical

trends and economic forecasts used in

preparing the budgets; and

● We compared the discount rates to our

independently determined risk adjusted

discount rates.

We found the inputs and assumptions to be

within a reasonable range.

We performed sensitivity analyses on the

impairment calculations to determine the degree

by which the key assumptions would need to

change in order to trigger an impairment. We

discussed the outcomes of these sensitivity

analyses with the management, considered the

likelihood of such changes occurring and

accepted that the key assumptions used by

management fell within a reasonable range of

outcomes.

Other information

The directors are responsible for the other information. The other information comprises Groupprofile, Mission statement, Brief profile of directors, Management report, Director’s report,Corporate Governance, Shareholders’ analysis and diary, Share statistics, Notice of the annualgeneral meeting, Proxy form and Corporate information which we obtained prior to the date of this

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auditor’s report. The other information does not include the consolidated and separate financialstatements and our auditor’s report thereon.

Our opinion on the consolidated and separate financial statements does not cover the otherinformation 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 responsibilityis to read the other information identified above and, in doing so, consider whether the otherinformation is materially inconsistent with the consolidated and separate financial statements or ourknowledge 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 amaterial misstatement of this other information, we are required to report that fact. We have nothingto report in this regard.

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

In preparing the consolidated and separate financial statements, the directors are responsible forassessing the Group and the Company’s ability to continue as a going concern, disclosing, asapplicable, matters related to going concern and using the going concern basis of accounting unlessthe directors either intend to liquidate the Group and/or the Company or to cease operations, or haveno realistic alternative but to do so.

Auditor’s responsibilities for the audit of the consolidated and separate financialstatementsOur objectives are to obtain reasonable assurance about whether the consolidated and separatefinancial 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 ofassurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detecta material misstatement when it exists. Misstatements can arise from fraud or error and areconsidered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these consolidated and separatefinancial statements.

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

● Identify and assess the risks of material misstatement of the consolidated and separate financialstatements, whether due to fraud or error, design and perform audit procedures responsive tothose risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for ouropinion. The risk of not detecting a material misstatement resulting from fraud is higher than forone 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 auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the Group’s and Company’s internal control.

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

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

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

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

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Practicing member: Lalithkumar Mahesan 6 November 2017 Membership number: 20030046 Gaborone

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FURNMART LIMITED AND ITS SUBSIDIARIES

ANNUAL FINANCIAL STATEMENTS05

STATEMENT OF COMPREHENSIVE INCOMEFor 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

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FURNMART LIMITED AND ITS SUBSIDIARIES

ANNUAL FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITIONAt 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

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FURNMART LIMITED AND ITS SUBSIDIARIES

ANNUAL FINANCIAL STATEMENTS

STATEMENT OF CHANGES IN EQUITYFor the year ended 31 July 2017

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

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FURNMART LIMITED AND ITS SUBSIDIARIES

ANNUAL FINANCIAL STATEMENTS

STATEMENT OF CASH FLOWSFor the year ended 31 July 2017 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

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FURNMART LIMITED AND ITS SUBSIDIARIES

ANNUAL FINANCIAL STATEMENTS

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the requirements of the Botswana Companies Act (2003). The financial statements are prepared under the historical cost convention, as modified by the valuation of certain financial assets and financial liabilities at fair value through profit and loss, and the effects (if any) of adjustments passed in the financial statements of Furniture Mart Zambia Ltd to prepare it on break up basis.

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

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

Adoption of new and revised standards(a) Standards and amendment to existing standards and interpretations effective on or after 01 August 2016 and adopted by the group

Amendment/ Standard/ interpretation Content

Applicable for financialyears beginning on/after

IAS 1 Amendments:'Presentation of financial statements' disclosure initiative

1 January 2016

Amendments to IAS 1,’Presentation of financial statementIn December 2014 the IASB issued amendments to clarify guidance in IAS 1 on materiality and aggregation, the presentation of subtotals, the structure of financial statements and the disclosure of accounting policies.

b) New standards, amendments and interpretations issued, relevant to the Group, but not yet effective and not early adopted.

Amendment/ Standard/ interpretation Content

Applicable for financialyears beginning on/after

IAS 12 Amendment – Recognition of deferred tax assets for unrealised losses.

1 January 2017

IAS 7 Amendment– Statement of cash flows on disclosure initiative

1 January 2018

IFRS 15 Revenue from contracts with customers.

1 January 2018

IFRS 9 Financial Instruments (2009 &2010)•Financialliabilities•Derecognitionof

financial instruments•Financialassets•Generalhedge

accounting

1 January 2018

IFRS 16 Leases 1 January 2019

IFRIC 22 Foreign currency transactions and advance consideration

1 January 2018

IFRS 10 Consolidated financial statements' and IAS 28,'Investments in associates and joint ventures' on sale or contribution of assets

Effective date postponed (initially 1 January 2016)

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESFor the year ended 31 July 2017

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

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FURNMART LIMITED AND ITS SUBSIDIARIES

ANNUAL FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)For the year ended 31 July 2017

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

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

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

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

The Group’s financial statements include the following associatewhosefinancialyearalsoendson31July:

Company Country %

Nature of business 2017 2016

United Impex (Pty) Ltd

Botswana 25% Financial Services

25% 25%

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

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

2 CONSOLIDATION

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

3 CELL CAPTIVE ARRANGEMENTS

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

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

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

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

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FURNMART LIMITED AND ITS SUBSIDIARIES

ANNUAL FINANCIAL STATEMENTS

Group

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

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

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

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

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

• FMClubmembershipfees.Ontheaccrualbasisascharged every month;

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

Company

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

Dividend Income

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)For the year ended 31 July 2017

5 REVENUE RECOGNITION

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

4 SEGMENT REPORTING

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

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FURNMART LIMITED AND ITS SUBSIDIARIES

ANNUAL FINANCIAL STATEMENTS

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

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

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

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

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

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)For the year ended 31 July 2017

6 CURRENT AND DEFERRED INCOME TAX

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

7 PROPERTY, PLANT AND EQUIPMENT

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

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

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

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

Freehold buildings 40years

Leasehold buildings shorter of lease period or 40 years

Furniture and office equipment 5 – 10 years

Motor vehicles 4 years

Computer equipment 3 - 5 years

Shop refurbishment expenses 3 years

Intangibles 6 years

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FURNMART LIMITED AND ITS SUBSIDIARIES

ANNUAL FINANCIAL STATEMENTS

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

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

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

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

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

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

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)For the year ended 31 July 2017

8 FINANCIAL INSTRUMENTS

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

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

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

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

7 PROPERTY, PLANT AND EQUIPMENT (CONTITUED)

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

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

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

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

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

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)For the year ended 31 July 2017

8 FINANCIAL INSTRUMENTS (CONTINUED)

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

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

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

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)For the year ended 31 July 2017

9 IMPAIRMENT OF NON-FINANCIAL ASSETS

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

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

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

10 ACCOUNTING FOR L EASES

11 COMPUTER SOFTWARE DEVELOPMENT COSTS

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

• itistechnicallyfeasibletocompletethesoftwareproduct so that it will be available for use;

• managementintendstocompletethesoftwareproduct and use or sell;

• thereisanabilitytouseorsellthesoftwareproduct;• itcanbedemonstratedhowthesoftwareproduct

will generate probable future economic benefits;

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

• theexpenditureattributabletothesoftwareproductduring its development can be reliably measured.

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

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

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

An allowance for loan impairment is established if there is objective evidence that the Group will not be able to collect all amounts due according to the original contractual terms of loans. The amount of the provision is the difference between the carrying amount and the recoverable amount, being the present value of the expected cash flows, including the amounts recoverable from guarantees and collateral, discounted at the original effective interest rate of loans.

The loan impairment provision also cover losses where there is objective evidence that incurred losses are

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

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)For the year ended 31 July 2017

12 INVENTORIES

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

13 LOANS AND ADVANCES TO CUSTOMERS

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

14 OTHER RECEIVABLES

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

15 CASH AND CASH EQUIVALENTS

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

16 STATED CAPITAL

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

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

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)For the year ended 31 July 2017

17 PROVISIONS

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

18 BORROWINGS

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

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

Functional and presentation currency

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

Transactions and balances

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

Group companies

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

• assetsandliabilitiesforeachStatementofFinancialPosition presented are translated at the closing rate

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

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

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

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

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

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

19 FOREIGN CURRENCY TRANSLATION

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(i) Short term employee benefits

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

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

(ii) Defined contribution plans

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

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

(iii) Gratuity and severance plans

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)For the year ended 31 July 2017

20 EMPLOYEE BENEFITS

21 RELATED PARTY TRANSACTIONS

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

22 DIVIDEND DISTRIBUTION

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

23 EARNINGS PER ORDINARY SHARE

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

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)For the year ended 31 July 2017

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).

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

In determining whether an impairment loss should be recorded in the Statement of Comprehensive Income, the Group classifies individually insignificant loans into portfolios which include loans subject to similar credit risks, and makes judgements as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows from each portfolio before the decrease can be identified with an individual loan in that portfolio. This evidence may include observable data indicating that there has been

an adverse change in the payment status of borrowers in a group, or national or local economic conditions that correlate with defaults on advances in the group. Management uses estimates based on historical loss experience for assets with similar credit risk characteristics and objective evidence of impairment similar to those in the portfolio when scheduling its future cash flows. The methodology and assumptions used for estimating both the amount and timing of future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience.

As at July 2017, management has introduced P16.45m (2016:11.7mn)asjudgementalprovision,totakeintoaccount the additional losses expected in Zambia due to closure of the retail outlets and to cover against any potential losses arising from the loss of employment to the company’s customers, due to the provisional liquidation of BCL and Tati mines in Botswana.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTSFor the year ended 31 July 2017

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

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Management believes that due to the inherent limitations within the impairment model used for estimation of the impairment provision such as time lag and the model’s assumptions of sustaining historical trends, the recent developments (such as placement of BCL Limited and Tati Nickel Mining Company Limited under provisional liquidation) have not been fully manifested into the current impairment model being 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.

In introducing such a management judgement, management has also taken cognisence of the average ratios (i.e. the provision for impairment as a percentatge of the debit arrears) and also the overall impairment as a percentatge of the net debtors and has strived to maintain a consistent ratio, whilst at the same time taking credit for cleaning up the book via debt write offs.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)For the year ended 31 July 2017

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

4 IMPAIRMENT OF INVESTMENT IN SUBSIDIARIES

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

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

During the year the Company identified its investments in 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.

For assessing the value in use of Xtreme Discounters, (Pty)Ltd,thefollowingkeyassumptionsareused:- terminal growth rate of 6%- discount rate of 12.92%

The outcome of the impairment calculated is most sensitive to discount rate and growth rate. The impairment of investment in Xtreme Discounters (Pty) Ltd will only be indicated when these assumptions reach the followinglevelsof:- terminal growth rate of 4%- discount rate of 14.39%

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Thebalancesubjecttoforeigncurrencyandinterestraterisksareasfollows: GROUP COMPANY 2017 2016 2017 2016 P’000 P’000 P’000 P’000Amount subject to foreign currency rate riskNamibian 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 riskIn Namibia 5 860 10 116 - -In South Africa 28 178 32 182 - -In Botswana 21 938 35 335 177 996 186 585

FINANCIAL RISK MANAGEMENTFor the year ended 31 July 2017

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

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

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

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

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

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

TheGroup’sactivitiesexposeittoavarietyoffinancialrisks:marketrisk(includingcurrencyrisk,fairvalueinterestraterisk,

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

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

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

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a) Market Risk (continued) GROUP COMPANY 2017 2016 2017 2016

P’000 P’000 P’000 P’000The following tables show the effect on net income that would result from reasonably possible changes in the relevant foreign currency exchange or interest rate.Exchange rate sensitivities+/ (-) 5% Pula to Namibian dollar 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 1149Interest rate sensitivities1% increase/ (decrease) in Botswana interest rates 358 424 1 821 1 8711% 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:• Fluctuatingtradereceivablesandpayablesbalances;• Fluctuatingcashbalances;and• Changesincurrencymix

b) Credit riskThe financial assets of the Group which are subject to credit risk consist mainly of cash resources and debtors. Credit risk arises from granting loans and advance to customers and holding cash and cash equivalents with third parties. Cash resources are placed with reputable financial institutions. Financial institutions are not individually rated, however the Group’s policy is to hold cash resources in subsidiaries of rated United Kingdom and South African Banks. The Group has policies to ensure that sales of products and services are made to customers with appropriate credit history and earnings capacity. The Group exposure to credit risk is limited to the carrying value of financial assets as at the 31 July 2017.

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

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

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

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

FINANCIAL RISK MANAGEMENT (continued)For the year ended 31 July 2017

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b) Credit risk (continued)Themaximumamountsubjecttocreditriskisasfollows: GROUP COMPANY 2017 2016 2017 2016

P’000 P’000 P’000 P’000Other 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 371Cash 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.

Theperformanceanalysisofloansandadvancestocustomersareasfollows: Past due but not Fully individually Total performing impaired P’000 P’000 P’00031 July 2017Loans and advances to customers 662 015 419 236 242 779Impairment provision on originated loans (144 616) (19 224) (125 392) 517 399 400 012 117 387

31 July 2016Loans and advances to customers 666 969 377 229 289 740Impairment provision on originated loans (154 466) (17 703) (136 763) 512 503 359 526 152 977

FINANCIAL RISK MANAGEMENT (continued)For the year ended 31 July 2017

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b) Credit risk (continued)

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

The Group’s loans and advances originate from customers who are domiciled in Botswana, Namibia, South Africa and Zambia. Theterritoryanalysisoftotalgrossloansandadvancesat31Julyareasfollows: 2017 2016 P’000 P’000Botswana 270 426 281 762Namibia 207 280 189 177South Africa 172 836 167 008Zambia 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 duedate.At31July2017:P419236,(2016:P377229)ofthetotalloansandadvanceswerefullyperforming.Basedonhistorical experience, 5.97 % of these loans and advances may miss one or more instalments in future financial periods.

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

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

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

2017 2016 P’000 P’000Instalments 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% 71 918 126 604 100% 100%

FINANCIAL RISK MANAGEMENT (continued)For the year ended 31 July 2017

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b) Credit risk (continued)

2017 2016 P’000 P’000Instalments 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 riskLiquidity risk is the risk that operations cannot be funded and financial commitments cannot be met timeously and cost effectively. The risk arises from both the difference between the magnitude of assets and liabilities and the disproportion in their maturities. Liquidity risk management deals with the overall profile of the Statement of Financial Position, the funding requirements of the Group and cash flows. The Group ensures sufficient flexibility by maintaining available committed credit lines. The Group monitors rolling forecast of liquid reserves, comprising cash and cash equivalents and available facilities.

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

GROUP Less than 6 -12 Between 6 months months 1-5 years Total P’000 P’000 P’00031 July 2017Borrowings 13 582 19 017 286 726 319 325Trade and other payables 89 974 - - 89 974 103 556 19 017 286 726 409 299

31 July 2016Borrowings 29 622 41 472 310 233 381 327Trade and other payables 96 348 - - 96 348 125 970 41 472 310 233 477 675

FINANCIAL RISK MANAGEMENT (continued)For the year ended 31 July 2017

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c) Liquidity risk (continued)

COMPANY less than 6 - 12 Between 6 months months 1-5 years Total P’000 P’000 P’000 P’00031 July 2017Borrowings 7 608 10 652 255 534 273 794Trade and other payables 132 924 - - 132 924 140 532 10 652 255 534 406 718 31 July 2016Borrowings 13 069 18 297 264 683 296 049Trade and other payables 103 567 - - 103 567 116 636 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 31July2017and2016wereasfollows: GROUP COMPANY 2017 2016 2017 2016

P’000 P’000 P’000 P’000

Total borrowings 206 550 254 694 171 938 185 335Less:Cashandcashequivalents (136049) (105747) (4894) (4059)Net debt 70 501 148 947 167 044 181 276Total equity 705 274 644 926 209 186 166 226 Total capital employed 775 775 793 873 376 230 347 502 Gearing ratio 9% 19% 44% 52%

FINANCIAL RISK MANAGEMENT (continued)For the year ended 31 July 2017

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f) Financial instruments by category GROUP COMPANY

2017 2016 2017 2016 P’000 P’000 P’000 P’000

Financial assets by categoryLoans and receivables•Otherfinancialassets-cellcaptives 67189 64736 - -•Receivablesandprepayments 23419 26494 306686 353371•Loansandadvancestocustomers 517399 512503 - -

•Cashandcashequivalents 136049 105747 4894 4059Total 744 056 709 480 311 580 357 430

Financial liabilities by categoryOther financial liabilities at amortised costBorrowings 206 550 254 694 171 938 185 335

Trade and other payables 89 974 96 348 132 924 103 567Total 296 524 351 042 304 862 288 902

FINANCIAL RISK MANAGEMENT (continued)For the year ended 31 July 2017

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

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

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

Inter-segment transactions between business segments are entered into in a manner similar to transactions with third parties. Revenue is derived from a very broad and diversified customer base, with no dependence on any significant customer.The segment information provided to the Group Executive Management Committee for the reportable segments for the year ended31July2017isasfollows: Year ended 31 July 2017 Financial Retail Services Unallocated Total P’000 P’000 P’000 P’000Total revenue 879 581 294 911 - 1 174 492 Depreciation (20 050) - - (20 050)Impairment of loans and advances - (24 705) - (24 705)Other costs (835 069) (195 237) (29 644) (1 059 950)

Operating profit 24 462 74 969 (29 644) 69 787 Other Income 50 958 Finance income 1 369 Finance cost (22 978)Share of loss from associate (1 630)Profit before tax 97 506 Income tax expense (32 949)

Net profit for the year 64 557

Total assets 263 663 584 587 187 585 1 035 835

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

NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 July 2017

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1. Segment information (continued)

Year ended 31 July 2016 Financial Retail Services Unallocated Total P’000 P’000 P’000 P’000Total revenue 859 983 327 559 - 1 187 542Depreciation (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 008Other Income 43 831Finance income 1 031Finance cost (23 410)Share of loss from associate (77)Profit before tax 79 383Income tax expense (31 646)Net profit for the year 47 737

Total assets 299 186 577 239 157 183 1 033 608Total liabilities (96 348) - (292 334) (388 682)

2. Revenue GROUP COMPANY 2017 2016 2017 2016

P’000 P’000 P’000 P’000Merchandise 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 904Administration fees – subsidiaries and associate (note 21) - - 19 605 20 815Dividend Income – subsidiaries and associate (note 21) - - 29 600 - 1 174 492 1 187 542 81 811 49 719

NOTES TO THE FINANCIAL STATEMENTS (Continued)For the year ended 31 July 2017

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GROUP COMPANY 2017 2016 2017 2016

P’000 P’000 P’000 P’0003. 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 878Impairment of intercompany receivables (note 14) - - 3 527 30 070Repossession 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 incomeProfit 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 costsInterest income - Bank deposit 1 369 1 031 334 16 Finance income 1 369 1 031 334 16Interest 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)

NOTES TO THE FINANCIAL STATEMENTS (Continued)For the year ended 31 July 2017

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GROUP COMPANY 2017 2016 2017 2016

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

Current income tax 32 369 31 177 2 717 -Withholding tax on dividend income - - - 225

Add:Netdeferredtaxcharge/(credit)fortheyear(note9) 580 469 1183 (1088)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 oftheGroupasfollows:Profit/(loss) before tax 97 506 79 383 54 744 (77 045)

Taxcalculatedatdomestictaxratesapplicable(rate:15%) 14626 11907 8212 (11557) 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 reachedastageofgeneratingsustainedtaxableincome.Theselossesamountingto2017:P118467470(2016:P132062035)donot expire and are to be offset against future taxable profits.

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

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

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 proposedDuringtheyearended31July2017aninterimdividendofP7.884mwaspaid(2016:Pnil)andafinalgrossdividendofP13.645mwasdeclaredaftertheyearend(2016:nil). GROUP COMPANYDividend paid 2017 2016 2017 2016 P’000 P’000 P’000 P’000Prior year final dividend - 5 276 - 5 276Current year interim dividend 7 884 - 7 884 - 7 884 5 276 7 884 5 276

NOTES TO THE FINANCIAL STATEMENTS (Continued)For the year ended 31 July 2017

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8. Property, plant and equipment and intangibles GROUP Freehold Leased Owned Furniture land and motor motor and office Developed building vehicles vehicles equipment Software Total P’000 P’000 P’000 P’000 P’000 P’000Year ended 31 July 2017Opening 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 022Additions 7 - 5 220 12 251 - 17 479Disposals at cost - - (7 374) (13 339) - (20 713)Depreciation on disposal - - 6 588 13 110 - 19 697Depreciation (801) (529) (7 371) (10 249) (1 100) (20 050)Closing net book amount 37 537 1 526 15 151 17 325 4 398 75 937

Year ended 31 July 2017Cost 42 299 4 092 42 514 102 875 13 196 204 976Accumulated depreciation (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

Year ended 31 July 2016Opening net book amount 39 916 2 969 15 334 18 063 6 598 82 879Exchange movement on translationof foreign subsidiaries (2 154) (21) (635) (826) - (3 635) Additions 42 140 9 262 8 144 - 17 588Disposals at cost - - (3 282) (19) - (3 301)Depreciation on disposal - - 3 095 12 - 3 107Depreciation (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

Year ended 31 July 2016Cost 41 273 3 954 48 196 113 463 6 598 213 484Accumulated 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.

NOTES TO THE FINANCIAL STATEMENTS (Continued)For the year ended 31 July 2017

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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’000Year ended 31 July 2017Opening net book amount 1 777 96 5 498 7 371Additions - 17 - 17Disposals at cost (395) - - (395)Depreciation on disposals 380 - - 380Depreciation (178) (26) (1 100) (1 304)Closing net book amount 1 584 87 4 398 6 069Year ended 31 July 2017Cost 3 525 16 398 13 197 33 119Accumulated depreciation (1 941) (16 311) (8 798) (27 050)Net book amount 1 584 87 4 398 6 069 Year ended 31 July 2016Opening net book amount 1 246 - 6 598 7 844Additions 710 82 - 792Disposals at cost (853) - - (853)Depreciation on disposals 853 - - 853Depreciation (179) 14 (1 100) (1 265)Closing net book amount 1 777 96 5 498 7 371

Year ended 31 July 2016Cost 3 922 16 382 13 196 33 500Accumulated depreciation (2 145) (16 286) (7 698) (26 129)Net book amount 1 777 96 5 498 7 371

GROUP COMPANY 2017 2016 2017 20169. 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 - -

Themovementonthedeferredtaxassetaccountisasfollows: 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 523Themovementonthedeferredtaxliabilityaccountisasfollows:

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 - -

NOTES TO THE FINANCIAL STATEMENTS (Continued)For the year ended 31 July 2017

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GROUP COMPANY 2017 2016 2017 2016

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

Accelerated tax depreciation 1 718 303 340 303Recognition 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.

Thedeferredincometaxliabilityarisesfromthefollowing: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 - -

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

Investment in associateBalance 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 isvaluedatnetassetvalue.TheAssociate’sassetsandliabilities,andresultsaresummarisedasfollows: As at 31 As at 31 July 2017 July 2016 P’000 P’000

Assets Cash and cash equivalents 1 593 8 209Other assets 6 342 847 7 935 9 056Liabilities Trade and other payables 1 541 2 415Net assets 6 394 6 641Revenue (net) 189 2 796Profit /(Loss) before tax 166 (217)Income tax expense (36) (93)Total comprehensive income/ (loss) 130 (310)

NOTES TO THE FINANCIAL STATEMENTS (Continued)For the year ended 31 July 2017

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COMPANY 2017 2016 P’000 P’000

10.2 Investment in subsidiariesInvestment in Furn Mart (Pty) Ltd, Namibia (Equity) 15 109 15 109Investment in Furniture Mart Zambia Ltd (Equity) 42 878 42 878Investment in Xtreme Discounters (Pty) Ltd, South Africa (Equity) 142 099 62 807Investment in Furnmart (Pty) Ltd, South Africa (Debt) 15 601 15 076Investment in Xtreme Discounters (Pty) Ltd, South Africa (Debt) 118 391 114 411Total investment in subsidiaries before impairment 334 078 250 281The 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 291Investment during the year - Xtreme Discounters (Pty) Ltd, South Africa 79 756 18 503Loans given to subsidiaries considered as part of investment - Xtreme Discounters (Pty) Ltd - 114 411- Furnmart (Pty) Ltd, South Africa - 15 076Exchange gain arising from loans considered as part of investment 4 041 -Total investment before impairment 334 078 250 281Provision 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 LimitedOn 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 equipmentFixed assets have been assessed for impairment and written down to the recoverable amount. Total impact to the income statementisNil(2016:ZMK336189)

InventoryStock is carried at the lower of cost and net realisable value (“NRV”) at the balance sheet date. NRV is the estimated selling price intheordinarycourseofbusinessafterdiscounts.OnthatbasisanadditionalprovisionofNil(2016:ZMK2530000)isprovidedin the books.

Loans and receivables Loans and receivables are carried at amortised cost under IAS 39, Financial Instruments, Recognition and measurement. Based onthemanagementjudgementonestimatesanadditionalprovisionofZMK283456(2016:ZMK4000000)isprovidedforimpairment, considering incentive to be offered for accelarated repayment.

Trade and other payablesTrade 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.

NOTES TO THE FINANCIAL STATEMENTS (Continued)For the year ended 31 July 2017

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10.3 Accordingly impairment is calculated as follows: GROUP COMPANY 2017 2016 2017 2016 P’000 P’000 P’000 P’000Totalbalancedueismadeupasfollows:Investment in equity (note 10) - - 42 878 42 878Investment in debt - intercompany receivables - - 37 844 54 195 - 80 722 97 073Impairment 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 assetsInvestment in cell captive 67 189 64 736 - -

This represents the balances due from cell captive arrangements entered into by the Group. Themovementisanalysedasfollows: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.

NOTES TO THE FINANCIAL STATEMENTS (Continued)For the year ended 31 July 2017

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ANNUAL FINANCIAL STATEMENTS

11. Other financial assets (continued)The scale of the unconsolidated structured entities and the carrying amount of the investment in the entities by the Group are asfollows: GROUP 2017 2016 P’000 P’000 Total assets of the unconsolidated structured entities (aggregate amount) 67 189 64 736The 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. InventoriesMerchandise 195 099 229 055

Inventories excludes value of obsolescence amounting to P12.25m (2016: P14.0m) for thestockcarriedatnet realisablevalue. InventorieswithavalueofP50.0m (2016:P50.0m)areheld as collateral for borrowings as set out in note 17. Cost of inventories sold is recognised as expense and included in note 3.

13. Loans and advances to customers Trade receivables – gross 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 loansOpening 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 chargesOpening 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.

GrosstradereceivablesuptoP224.80m(2016:P175.38m)areheldascollateralforborrowingsassetoutinnote17.

NOTES TO THE FINANCIAL STATEMENTS (Continued)For the year ended 31 July 2017

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ANNUAL FINANCIAL STATEMENTS

GROUP COMPANY 2017 2016 2017 2016 P’000 P’000 P’000 P’00014. 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 Themovementsofprovisionforimpairmentisasfollows:Brought foward provision - - (30 070) -

Provision for the year - - (3 527) (30 070) - - (33 597) (30 070)

15. Cash and cash equivalentsBank 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 cashEquivalentscomprisethefollowing:Cash and bank balances 136 049 105 747 4 894 4 059Bank overdrafts (note 17) - (26 187) - -Net cash and cash equivalents 136 049 79 560 4 894 4 059

16. Stated capital606446080(2016:606446080)issuedandfullypaidordinaryShares at no par value 198 899 198 899 198 899 198 899

17. BorrowingsCurrent Bank overdraft - 26 187 - -Bank loan 24 862 22 569 14 816 14 134Finance lease liabilities 1 286 1 220 - - 26 148 23 789 14 816 14 134Non-currentBank loan 29 237 52 299 7 122 21 201Finance lease liabilities 1 165 2 419 - -Bond 150 000 150 000 150 000 150 000 180 402 204 718 157 122 171 201Total 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 paymentsNot 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) - - Present value of finance lease liabilities 2 451 3 638 - -

NOTES TO THE FINANCIAL STATEMENTS (Continued)For the year ended 31 July 2017

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ANNUAL FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS (Continued)For the year ended 31 July 2017

17. Borrowings (continued) GROUP COMPANY 2017 2016 2017 2016 P’000 P’000 P’000 P’000The 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 issueBalance at the beginning of year 150 000 150 000 150 000 150 000Bonds matured during the year - - - -Balance at the end of year 150 000 150 000 150 000 150 000

ThetotalfairvalueofborrowingsatyearendamounttoP212329684(2016:P258194025).

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.

TheGroup’sbankingfacilitiesareasfollows:

(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 theamountofN$60mfromFurnmartLimited,Botswana.Theoutstandingbalanceasat31July2017isN$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 debtsandsuretyshipfromFurnmartLimited.Theoutstandingbalanceasat31July2017isN$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 suretyshipfromFurnmartLimitedofP5m.Theoutstandingbalanceasat31July2017isPnil(2016:Pnil).

(e) Overdraft facilities with Barclays Bank of Botswana Limited amounting to P25.0m, at Botswana prime rate (currently at7.0%perannum)less1%.Theoutstandingbalanceasat31July2017isPnil(2016:Pnil).

(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 at31July2017isPnil(2016:Pnil).

(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 R28.1m(2016:R46.9m).

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ANNUAL FINANCIAL STATEMENTS

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.Theoutstandingbalanceasat31July2017isR20.1m(2016:R24.3m).

(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 fromFirstNationalBankofBotswanaLimited.Theoutstandingbalanceasat31July2017isR3.6m(2016:R4.5m).

(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 BarclaysBankofBotswanaLimited.Theoutstandingbalanceasat31July2017isR9.4m(2016:R10.0m).

(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, limitedtothefacilityofR6m;andlimitedsuretyship.Theoutstandingbalanceasat31July2017isRnil(2016:Rnil).

(m) A vehicle and asset finance facility at Nedbank Limited, for Xtreme Discounters (Pty) Ltd and Furnmart (Pty) Ltd. The outstandingbalanceasat31July2017isR2.4m(2016:R4.2m).

(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 isRnil(2016:Rnil).

Borrowings from related companies are set out in note 21.

NOTES TO THE FINANCIAL STATEMENTS (Continued)For the year ended 31 July 2017

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ANNUAL FINANCIAL STATEMENTS

GROUP COMPANY 2017 2016 2017 2016 P’000 P’000 P’000 P’00018. 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 550The carrying amount of trade payables approximate their fair values.

19. AccrualsOpening balance 17 767 19 122 1 017 1 010Charge for the year 7 358 3 962 1 527 269Paid during the year (8 318) (5 317) (214) (262)Closing balance 16 807 17 767 2 330 1 017Accruals 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)

Adjustmentfor:Dividend received - (267) (29 600) (3 267)Depreciation (note 8) 20 050 19 136 1 304 1 265Profit 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 983Cash 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) LtdThefollowingtransactionswerecarriedoutwithrelatedparties:

(i) Trade of goods and services

- Rental paid to Cash Bazaar Holdings (Pty) Ltd and its subsidiaries 27 908 26 377 224 425- Expense reimbursementNafprop (Pty) Ltd 92 74 92 74Chobe Fish Eagle (Pty) Ltd - 3 - 3Afritec (Pty) Ltd 874 - 874 -

NOTES TO THE FINANCIAL STATEMENTS (Continued)For the year ended 31 July 2017

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ANNUAL FINANCIAL STATEMENTS

GROUP COMPANY 2017 2016 2017 2016

P’000 P’000 P’000 P’00021. 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 287Furniture Mart Zambia Ltd - - 4 247 24 125Furn Mart (Pty) Ltd, Namibia - - 65 751 60 498Furnmart (Pty) Ltd, South Africa - - 65 182 62 493NafProp (Pty) Limited, Botswana 17 21 17 21Cash Bazaar Holdings (Pty) Ltd, Botswana - 59 - 59Chobe 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 252Furniture Mart (Pty) Ltd, Botswana - - 126 150 97 993

233 252 126 383 98 245

(iv) Interest Income (note 2)

Furn Mart (Pty) Ltd, Namibia - - 9 152 7 533Xtreme Discounters (Pty) Ltd, South Africa - - 23 454 21 371

- - 32 606 28 904

NOTES TO THE FINANCIAL STATEMENTS (Continued)For the year ended 31 July 2017

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ANNUAL FINANCIAL STATEMENTS

GROUP COMPANY 2017 2016 2017 2016

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

(v) Dividend incomeFurniture Mart (Pty) Ltd, Botswana (note 2) - - 29 600 -United Impex (Pty) Ltd, Botswana - - - 3 000New African Properties Limited - 267 - 267 - 267 29 600 3 267

(vi) Dividend paidCash Bazaar Holdings (Pty) Limited 340 - 340 -

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

Furn Mart (Pty) Ltd, Namibia - - 9 239 16 319Xtreme Discounters (Pty) Ltd, South Africa - - 24 554 39 448 - - 33 793 55 767

(viii) Interest ExpenseFurniture 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’00022. Lease commitments

The operating lease rental commitments oftheGroupareanalysedasunder: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 - -

NOTES TO THE FINANCIAL STATEMENTS (Continued)For the year ended 31 July 2017

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ANNUAL FINANCIAL STATEMENTS

GROUP COMPANY 2017 2016 2017 2016

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

Capital expenditure authorised but not contracted for 34 163 40 685 906 443Financing 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

guaranteesare2017:P18665416(2016:P27281592).

GROUP GROUP COMPANY

2017 2016 2017 2016 P’000 P’000 P’000 P’000

26. Income Tax paidBalance brought forward (net) 4 210 (6 952) (10 955) (11 083)Charge for the year (note 5) 32 369 31 177 2 717 225Balance carried forward(net) 5 381 (4 210) 10 771 10 955 Net income tax paid/ (refund) 41 960 20 015 2 901 97

NOTES TO THE FINANCIAL STATEMENTS (Continued)For the year ended 31 July 2017

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06Category

No. of shareholders2017 2016

No. of shares held2017 2016

% of shares held2017 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

CategoryNo. of shareholders

2017 2016No. of shares held

2017 2016% of shares held2017 2016

Body Corporates 39 35 479 366 822 479 019 490 79.05 78.99

Insurance companies andretirement 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

CategoryNo. of shareholders

2017 2016No. of shares held

2017 2016% of shares held2017 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 than 5%

No. of shareholders2017 2016

No. of shares held2017 2016

% of shares held2017 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

ANALYSIS OF SHAREHOLDERS AND DIARYFor the year ended 31 July 2017

ANALYSIS OF

SHAREHOLDERS

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ANNUAL FINANCIAL STATEMENTS07SHARE

STATISTICS

SHARE STATISTICS2017

Month

Closing mkt capPm

HighP

LowP

Closing #P

Volume traded

Value tradedP

Number 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

Month

Closing mkt capPm

HighP

LowP

Closing #P

Volume traded

Value tradedP

Number 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.

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ANNUAL FINANCIAL STATEMENTS

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

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

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

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

08CORPORATE

INFORMATION

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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,forthefollowingpurposes:

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

NOTICE OF ANNUAL

GENERAL MEETING

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Furnmart Annual Report 2017

I/We_________________________________________________________________________________________

Of___________________________________________________________________________________________

Being the registered holder/s of___________________________ ordinary shares in the Company, at the close of businessonFriday,17November2017,herebyappoint:

________________________________________________ of _____________________________________

Or failing him/her;_________________________________________________ of __________________________________________

Or failing him/her the Chairman of the meeting as my/our proxy to attend, speak and vote for me/us on my/our behalfattheannualgeneralmeetingofthecompanytobeheldat15:00hrsonWednesday,24January2018,andat 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.

10PROXY FORM

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Signed this ______________________________________________________day of _________________________________

Fullname:_____________________________________________________________________________________________

Signature:_____________________________________________________________________________________________

Assistedby(Guardian):__________________________________________________________________________________

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

Registered officePlot 50371 Fairground Office Park, GaboroneFax:+2673973901

INSTRUCTIONS ON SIGNING AND LODGING THIS PROXY FORM

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

of the scheduled meeting.

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

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

3. TheChairmanofthemeetingshallbeentitledtodeclinetoaccepttheauthorityofthesignatory:

a. Under a power of attorney; or

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

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

(forty eight) hours before the scheduled time for the meeting

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

the authority has previously been recorded by the Secretary.

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

space(s) provided for that purpose.

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

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

may be, shall alone be entitled to vote in respect thereof.

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

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

do so.

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

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

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

shareholding.

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

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

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