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sefalana holding company limited annual report 2009 1 contents corporate information group structure five year review value added statement analysis of shareholders stock market information financial and shareholders calendar board of directors group managing director s report financial record history 2009 performance highlights group finance director s report the directors report on corporate governance group profile annual financial statements 2 2 4 4 5 5 5 6 8 12 13 14 16 24 62

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sefalana holding company limited annual report 2009 3 sefalana ­ botswana s bountiful granary our name sefalana which means bountiful granary symbolises the role we believe we play in botswana as a botswana company we feed the nation we make an enormous contribution to its economy and we care for its people while we have developed beyond a granary our raison d etre ­ to serve and nurture the people of this nation ­ remains unchanged all that has changed is the way we fulfill our mandate from the time of our founding in 1974 sefalana has been a pioneer and a leader we are the first company to list on the botswana stock exchange and the first botswana company to empower staff with shareholding schemes this is reflected in the wide spread of shareholders in sefalana we take our positioning as a botswana company very seriously botswana citizens hold more than 90 of our equity because of our high level of institutional and pension fund shareholding it is no exaggeration to say that almost every citizen ­ from our president to the ordinary man on the street ­ is a beneficiary of our operations our profits ultimately contribute to their pensions our long-term growth and success contributes to botswana s long-term security and stability we are proud of the fact that we have been able to build sefalana into the formidable company it has become over the years we are proud of the fact that our name has become a household brand in the country we are proud of our history and the pioneering role we have played in helping to grow the botswana economy and we don t intend to rest on our laurels we will continue our pioneering role by going out into other countries as it becomes appropriate taking our proven model to our neighbours because of our high level of institutional and pension fund shareholding it is no exaggeration to say that almost every citizen ­ from our president to the ordinary man on the street ­ is a beneficiary of our operations sefcash sells 12 000 tonnes of maize and 22 000 tonnes of wheat flour every year.

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sefalana holding company limited annual report 2009 5 analysis of shareholders for the year ended 30 april 2009 shareholders with a determinable interest in sefalana holding company limited in excess of 5 are the following 2009 number of shares botswana public officers pension fund bank of new york custodial holding motor vehicle accident fund barclays botswana nominees re iam 030/14 barclays botswana nominees re fam 3582376 barclays botswana nominees re bnp 039/003 analysis of shareholders insurance companies pension funds and nominee companies individuals and others 22 373 049 18 535 956 18 403 386 9 993 465 9 074 529 13.51 11.19 11.11 6.03 5.48 2008 number of shares 36 760 255 28 275 656 18 535 956 22.19 17.07 11.19 84.48 82.50 15.52 17.50 100.00 100.00 shares held by citizens individuals and institutions 148 034 458 89.37 131 575 054 79.43 stock market information for the year ended 30 april 2009 number of shares traded 000 value of shares traded p 000 share price for the period thebe lowest highest closing market capitalisation at year end p 000 2009 26 798 81 300 270 430 270 447 252 2008 8 830 43 282 250 450 430 712 291 financial and shareholders calendar financial year end announcement of 2009 audited results 2009 annual general meeting announcement of half year results payment of 2009 final dividend payment of 2010 interim dividend 30 april 31 july 2009 30 october 2009 january 2010 september 2009 february 2010

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88 sefalana holding company limited annual report 2009 group managing director s report sefalana s excellent performance in the 2008/2009 financial year is the culmination of a strategy put in place some five years ago to restore the group to its leading position in the botswana economy with steady growth over this period we can now once again claim the position of being the leading fmcg company in the country an important adjunct to that is that we re now also a proudly home-grown all-botswana fmcg business importantly we are also well on the road to becoming a diverse industrial group with interests in a wide range of economic sectors this diversification gives us the wherewithal to continue pioneering new and exciting developments and to exploit new opportunities as we move into an extremely challenging era in our history our current financial results are an indication of the growing maturity of our diverse investments it s a maturity that is likely to be sorely needed as the global economic downtown which botswana largely managed to avoid for much of the review period starts to take a greater toll on the country s economy and potentially our profitability we could batten down the hatches and sit tight through the downturn or we could take up the challenge of seeking growth where others might see decline we ve chosen the latter route but caution and prudence will remain our watchwords it was caution which caused us to withhold our usual interim dividend declaration at the half-year a situation that we have been able to rectify by declaring a handsome 20 thebe per share dividend for the year off the back of record profits for the review period we will also continue with our expansion plans in the current financial year including our move into zambia and our first foray into the fmcg retail sector at home however these developments indeed all activity within the group will continue to be closely monitored and supported from our head office while we run a lean head office operation we are fortunate in that we have people there who are geared to take an objective view of our businesses evaluate their needs and assist them to maintain and grow their profitability indeed that s the entire sefalana ethos we take businesses that might not be realising their full potential and we turn them around by giving them what they need we ve done this for the past five years and we ll continue to do so our management teams consist of young and vibrant individuals who thrive on the challenges we set for them our people also go the extra mile and they are rewarded for doing so operating review when we implemented our turnaround strategy five years ago our first course of action was to focus on foods botswana to build it up and make it a consistently profitable business it s extremely gratifying to see that a business that we take businesses that might not be realising their full potential and we turn them around by giving them what they need chandra chauhan group managing director

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sefalana holding company limited annual report 2009 9 a few years ago would sometimes lose money or make but a small profit is one of the star performers in the group in the review period we experienced 20 growth on our branded products and this combined with our being awarded lucrative government tenders resulted in record profits for this company we have worked hard to ensure that we continue to win government tenders by focusing on service and delivery while meeting and even exceeding government s health and safety specifications for our products as well as at our production facilities should we retain the latest government tender and we are quietly confident of doing so and with commodity prices coming down as a result of good harvests we anticipate another profitable year for foods botswana in 2009/2010 while we were working on the turnaround of foods botswana we also set about regaining control of our wholesale operations which were wilting under what we believed were extremely unfavourable conditions as a result of the control by the south african-based shareholder metro so we fought a protracted legal battle with metro for three years and eventually managed to buy them out and sefcash has never looked back one of the reasons for this is that we now have control of our own procurement and supplier negotiations we have introduced our own sefalana management style and imbued that with our wholehearted dedication to the business we have also had to become more efficient the results speak for themselves we have steadily improved the results of the company over the past 30 months culminating in the record profits we achieved in this review period we have also expanded sefcash s operations and reach with mixed success to date hyperbola pty ltd trading as sefalana home liquor store in orapa in which the company has a 49 interest commenced operations in february 2009 although the first few months were difficult the re-opening of the mine in april 2009 has brought a steady improvement in sales and profitability our investment in seftim hardware pty ltd a supplier of builders hardware in which the company has a 50 interest has not been as promising the company produced disappointing results for the year and future participation in this business is under review looking ahead sefcash is preparing to take a giant leap into a whole new realm the exciting challenging and potentially enormously rewarding world of retail when the first of our shoppers supermarkets opens in the 2009/2010 financial year another exciting departure for the group was heralded by our 2006 investment in the mf holdings group which has grown from generating a profit of p1m in its first year in the sefalana fold to a profit of around p12m in the review period this is largely as a result of our hands-on involvement in what is essentially a very solid operation with superb brands and products that meet a diverse range of needs in the market we ve managed to give the company access to better banking facilities more manpower and appropriate skills and the financial wherewithal for expansion the opening of the new man truck and honda showroom and workshop in the 2009/2010 financial year will elevate this operation to a whole new level of professionalism and ultimately profitability our other 2006 acquisition 50 shareholding in ksi holdings kgalagadi soap and refined oils is also doing well this is a small business which was losing money but we ve managed to turn it around and it is now making a positive contribution to group profits we anticipate good growth for ksi in the year ahead.

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10 10 sefalana holding company limited annual report 2009 there are opportunities out there waiting to be exploited and we are extremely excited about two which should come to fruition in the 2009/2010 financial year we will be opening a distribution business in zambia the prospects for this look excellent but because of the recessionary times in which we find ourselves we will be taking a more cautious approach than we might otherwise have done secondly we are delighted to have been appointed as the distributor for shell lubricants for botswana there is enormous potential in this business and we will be looking to grow it and ensure shell takes its rightful place as a leading lubricant brand in botswana best pricing the best displays the best products and the best service availability and price and accessibility will be more important than ever our biggest challenge in the review year was having to focus on more companies than we had in our group at the start of the implementation of this five-year strategy back then we were dealing with turnover of p45m moving forward we will have to ensure that we remain focused and that each subsidiary continues to hold its own in order to avoid cross-subsidisation we expect each sefalana group company to be profitable in its own right at the same time sefalana is a group and our member companies must work together and support each other we will also have to ensure we remain abreast of technology this has been quite a challenge at sefcash in the past few years as we had previously made use of metro s systems but as we have found out challenges present opportunities and taking control of our own it opens the way for new developments from a profitability perspective i am confident that foods botswana will do well while other group companies might come under increasing pressure however if current fundamentals change and with growth anticipated from our looking ahead there is no question that the macro economic environment is going to be far more difficult than anything we have experienced in the past decade or more although there are indications that there are certain parts of the world that are improving this could have positive implications for us nevertheless we must be prepared for difficult times and our challenge therefore is to instil a culture of discipline professionalism good branding and mass appeal across all our brands products and operations we are the biggest fmcg business in the country and we will have to exploit this and make sure that we continue to have the 13 746kg of sunlight washing powder was sold at the shoppers supermarket in the first two weeks of its opening in mochudi

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sefalana holding company limited annual report 2009 11 diversification gives us the wherewithal to continue pioneering new and exciting developments and to exploit new opportunities as we move into an extremely challenging era in our history new ventures such as our shoppers retail stores we could well be in for another bumper year in which we emulate the achievements of the review period we will continue to run our businesses efficiently and strive for profits by increasing efficiencies rather than prices this policy has already had a remarkable effect on our numbers and we are convinced that further efficiency improvements will translate into greater rewards for all our stakeholders despite the recessionary times sefalana had its best year ever in 2008/2009 if we can keep the momentum going if we build on our culture of discipline and professionalism and if we remain focused on our strengths i am confident that sefalana will achieve its goals and remain a role model for businesses in botswana and further afield thanks i would like to take this opportunity to thank our chairman mr lawrence lekalake for his years of guidance and support in helping us to build sefalana into the company it is today i would also like to thank the board of directors for their unwavering support in helping us to achieve our vision for sefalana finally i d like to thank sefalana management and staff for their dedication and commitment to the group the group could not have done as well as it has without your untiring efforts chandra chauhan group managing director gaborone 29 july 2009 our latest investment covers 1000 square metres in mochudi

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