Quick Facts About BotswanaPost · Quick Facts About BotswanaPost • BotswanaPost was established...

Quick Facts About BotswanaPost

• BotswanaPostwasestablishedbyParliamentundertheBotswanaPostalServicesActNo.22of1989.

• BotswanaPostismandatedtoprovideuniversalpostalservicesforeveryonecountrywide

• BotswanaPosthasapostalnetworkof121PostOfficesand73PostalAgenciescountrywide

• BotswanaCouriers(Pty)Ltdisa100%subsidiaryofBotswanaPost

• Thetargetformaildeliverytoallmajortownsandvillagesisthenextdayandtootherremoteareaswithinthreedays.

• TheproductsandservicesprovidedbyBotswanaPostinclude;

- mailingsolutions

- businesscenters

- moneytransferservices

- expressmailservice(EMS)andparcelservices

- courierandfreightservices

- agencyservices

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Contents

Chairman’s Statement 4

Corporate Governance 10

Performance Highlights 16

Business and Operational Report 17

Annual Financial Statements 27

Contents

Chairman’s Statement

Corporate Governance

Performance Highlights

Business and Operational Report

Annual Financial Statements

4

Chairman’s Statement

The 2009/10 financial year closed off at the same time

as the end of my first term as the Chairman of the

BotswanaPost Board of Directors. It gives me great

pleasure therefore to reflect on this period and share

with you the path that we have walked, our experiences

and our aspirations going forward.

We started the year on an uncertain note, following the

world financial crisis. While it was difficult to determine

what the impact of the crisis would be on our business,

there was no doubt that some of our key partners in the

developed world had felt the first ripples of the crisis

and that would inevitably trickle down to us and the

local market in general.

This uncertainty notwithstanding, we adopted an

optimistic stance and set ourselves very challenging targets. In setting these targets

we wanted to accelerate our transformation processes and the implementation

thereof. The year 2009/10 was intended to provide a platform for rapid growth in

the ensuing years, our growth rate hitherto having been at unsatisfactory levels.

In addition to the appointment of new leadership in the previous year, these

ambitious targets would partly be supported by capital injection by the shareholder

and the remainder by borrowings from the market. I am happy to report that we

were able to have access to both sources of funds although shareholder funding came

in at much lower levels than had been expected. To that end, during the year, two

of our four flagship capital projects, the International Mail Exchange Centre and the

Refurbishment of Poso House took off, although the latter commenced at the tail

end of the year. The Business Automation and the Gaborone Central Post Office

Development were pushed forward to the 2010/11 financial year.

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As part of our transformation, we were keen on

establishing a Postbank during this year, which

however depended on strategic direction by the

Shareholder. In December 2009, the shareholder

directed that our operations be merged with those of the

Botswana Savings Bank. Under the leadership of the parent

Ministry and the participation of other key stakeholders,

action towards this merger was initiated in January 2010 with

a completion target of March 2011. As at the close of the year,

the form that the merged entity will take was beginning to take

shape. This development is a source of excitement to us at the

Post as it will serve to propel our aspirations of becoming an Icon of

Excellence. We are very grateful to the shareholder for facilitating

the creation of the Postbank.

The support of the shareholder was a key lever for business growth this year.

Among others, a resolve on the tariff review which was long overdue would

enable us to respond adequately to market imperatives. This was not achieved

during the year, but at the close of the year, common ground had been broken

and all indications were that in the ensuing year, the requisite approvals would

be made for market related tariffs. The pressure of shareholder regulated tariffs

has hitherto stifled business growth. We are thankful to the shareholder for the

position that was taken during the year to engage the Post as a key logistics provider to

reach out to rural communities and Government establishments. This will go a long way

towards promoting self sustenance.

We were not able to achieve the envisaged results of increasing revenues at faster rates

than costs with our revenues remaining flat and the cost base increasing at rates above

inflation. This trend has put tremendous pressure on us to go back to the drawing board

with a view to not only reversing it but achieving the intended results at a much faster

rate to realise our new vision of an Icon of Excellence, which was adopted during the year.

The Icon of Excellence envisions BotswanaPost as a successful and competitive

player in both the local and international market by the year 2013. The thrust of

this strategy will be on growing our people and establishing robust human resources

management structures to enable our whole corporate team to meet the needs of

all our stakeholders.

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In order to enliven our commitment to good corporate governance, we adopted a

Board Charter in November 2009 which will govern our ways of working as the Board

as well as our relationship with both Management and the Shareholder. To that end

among others, we shall be engaging the latter to agree on performance expectations

and targets, which will be formalized in a Shareholder Compact or agreement which

will bind both parties on the agreed inputs and outcomes.

BotswanaPost continues to participate actively in international and regional fora

with a view to ensuring that the policies, regulations and standards adopted for the

postal sector take cognizance of our operating environment, the peculiarities of the

developing world and help us grow towards competitiveness with the developed world.

The road ahead for BotswanaPost remains very challenging. While a lot is expected

from the shareholder in terms of financial support, cognizance is taken of the

competing national needs over dwindling resources. On the other hand, the lending

market is also very cautious because of experiences of the credit crunch. A lot will

therefore be upon us to sharpen our position enough to attract the attention of the

market and to sustain the position from which we take off with our partners.

Despite the challenges, we close the year once again on an optimistic note, given our

strategic aspirations, the continued support of the shareholder and the indications of

a progressive recovery in the world economy.

At the end of the year, two Directors who have served the Board selflessly for

12 and 10 years respectively retired from the Board. We cannot express enough

appreciation to Mr. B. M. S. Letsididi and Mrs. T. Mabutho. The Post will remain

forever indebted to them for their tireless work towards strategically positioning the

Post Office and guiding the business through some of its most challenging times. The

whole Post family and I wish them the very best in their future endeavours.

In November 2009, our parent Ministry changed its structure and was also assigned

a new Minister, Mr. Frank Ramsden. I wish to take this opportunity to both welcome

and assure him our steadfast commitment to growing postal services in Botswana

and more importantly, reaching out to all communities through our vast national

footprint. I also wish to thank the Minister for his and the Ministry staff’s commitment

to the growth of the postal sector.

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BotswanaPost would not realise its objectives without the support of the customer,

the entire business community, the Universal Postal Union, the Southern Africa Postal

Operators Association and other stakeholders. This continued support is much appreciated

and we will continue to nurture the respective partnerships for mutual benefit.

Finally, my appreciation goes to my colleagues on the Board, Management

and Staff for their dedication and hard work during the year. Despite the not

so pleasing year end results, I wish to encourage the entire Post family to

leverage on all the foundations laid so far to propel us to an Icon of Excellence.

Pego Ya Modulasetilo

Ngwaga wa kgwebo wa 2009/10 o wetse gongwe le boloko jwame ja ntlha ja ngwaga tse tharo ke le modulasetilo wa Khuduthamaga ya tsamaiso ya BotswanaPost (BP). Ka jalo go a intumedisa go leba ko morago ke le lekodisa ka tsela e re e tsamaileng mo nakong e, maitemogelo le maikaelelo a rona goya ko pele.

Re simolotse ngwaga ka ketsaetsego, morago ga kwelo tlase ya itsholelo e e neng e amile lefatshe ka bophara. Le fa gone go le thata go itse gore kgwebo e tla amega go le kae, gone go sa belaetse gore dikgwebo tse re dirisanyang le tsone ko mafatsheng a a tlhabologileng, di ne di utlwile manokonoko a ntlha a seemo se, le gore, kwa bofelong, a tla a re ama, le yone itsholelo ya lefatshe la rona ka kakaretso.

Le fa gontse jalo, re ne ra seka ra kgobega marapo, mme ra ipeela dielo tse di kwa godimo, tse di gwetlhang. Mo go direng jalo, keletso ya rona ene ele go fefosa mananeo a go tsisa diphetogo le go tlhabolola ditirelo tsa rona, tota le gone go oketsa maduo.

Mo godimo ga go thapa boeteledipele jo bosha mo ngwageng e e fetileng, re ne re solofetse gore dielo tse re neng re di ipeetse di tla rotloediwa ke dithuso tsa madi go tswa ko Pusong, a okediwa ke a mangwe a dikadimo ko dibankeng tsa mo gae. Mme ke a itumela ka jaana se se ile sa kgonega, le fa thuso ya Puso e ile ya nna ko tlase gona le jaaka re ne re solofetse. Madi a ka kakaretso, a ile a re thusa go simolodisa ditiro tsa botlhokwa tsa tlhabololo ya dikago, ebong madirelo a magolo a dikwalo le dithoto, le paakanyo ya ntlokgolo ya rona, Poso House, le fa e simologile ngwaga o setse o fela. Ditiro tse dingwe tse pedi, ya go tlhabolola mafaratlhatlha a maranyane a kgwebo le ya go aga sesha Poso ya ntlha ya Gaborone, di ile tsa fetisediwa ko ngwageng o o latelang wa 2010/11.

Mo ngwageng o, re ne re ikaeletse go tlhoma lekalana la Banka(Postbank), mme ele gore se se tla laolwa ke ditshwetso dingwe tsa Puso. Erile ka kgwedi ya Sedimonthole

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2009, Puso ya tsaya tshwetso ya go kopanya kgwebo e, le ya Botswana Savings Bank. Tiro ya go rulaganyetsa kopano ya dikgwebo tse pedi tse, e simolotse ka Firikgong 2010 mme e akaretsa banaleseabe botlhe. Maikaelelo ke gore tiro e e bo e wetse ka Mopitlo 2011. Mo bofelong ja ngwaga, megopolo ya gore kgwebo e e tshwaraganyeng e tla nna jang, ene e setse e itshetlela. Re le ba Poso, diphetogo tse di a re itumedisa thata ka jaana di tla re thusa go fitlhelela maikalelo a rona a go nna sekgantshwane sa botswerere le bonokopila jwa kgwebo (an Icon of Excellence). Re leboga Puso fela thata ka go tsaya tshwetso e.

Thotloetso ya Puso ene ele pinagare ya go gola ga kgwebo ya rona monongwaga. Mo go tsotlhe tse dingwe, tshwetso ya go letlelela koketso ya ditlhwatlhwa tsa ditirelo tsa Poso, e e neng e saletse ko morago, e ne e tla a thusa kgwebo ya rona go lepalepana le diphetogo tsa mmaraka wa kgwebo ka kakaretso. Se ga se a ka sa kgonega, mme legale ko bofelong ja ngwaga megopolo e ne e setse e kopana ka dikoketso tse di neng di tlhokafala. Taolo e Puso e nang nayo mo ditlhwatlhweng, e nnile sekgoreletsi mo go goleng ga kgwebo ya rona mo dingwageng tse dintsi. Le fa gontse jalo, re leboga Puso thata ka jaanong e lemoga se, mme ebile e simolotse go dirisa Poso thata go isa ditirelo ko sechabeng, bogolo jang ko metseng ya magae. Se se tla thusa go tshegetsa kgwebo ya rona.

Mo ngwageng o, ga re aka ra fitlhelela maikaelelo a rona a go oketsa letseno la madi, ka ntlha e nngwe re fokotsa ditshenyegelo. Mo boemong ja seo, re bone letseno le lekana le la ngwaga o o fetileng mme ditshenyegelo tsone di gola. Seemo se, se re gwetlha gore re leke maano a go se fetola gore re fitlhelele ko bokgantshwaneng ja botswerere le bonokopila.

Maikaelelo a rona a “an Icon of Excellence” kana, “sekgantswhane sa botswerere le bonokopila” ke go isa kgwebo ya rona ko seemong se re ka iteisanang borathana le dikgwebo tsa mo gae le tsa mafatshefatshe ka ngwaga wa 2013. Bogolo thata re tla bo re itebagantse le go rutuntsha le go godisa dikitso tsa babereki ba rona gore rotlhe re tshwaraganele go direla banaleseabe botlhe ka botswerere, bogolo jang sechaba se se rekang ditirelo le dithoto tsa rona, le Puso, e e solofelang dipoelo.

Re le lekgotla la Khuduthamaga ya tsamaiso ya BotswanaPost, re itlamile go dira tiro ya rona ka boammaaruri, le ka go sala morago ditsamaiso tse di amogelesagang. Jalo he mo ngwageng o, re ne ra dira mokwalo wa tsamaiso ya lekgotla la rona (Board Charter) o gape o tlhalosang sentle gore re tla dirisanya jang le Puso le boeteledipele ja Poso. Mo tsamaong ya nako, re tla eletsa go tsena mo tumalanong le Puso e mo go yone, Puso e tla itlamang ka thotloetso e o tla a re e neelang, le rona re itlama ka maduo a re tla a ntshang. (Shareholder Compact).

Poso e tsweletse ka go nna le seabe mo mererong ya mafatshefatshe le ya SADC, ya ditirelo tsa diposo, maikaleleo e le go tlhomamisa gore ditshwetso tse di tsewang le melawana e e dumalanwang, ga e beele lefatshe la rona le a mangwe a a tlhabologang, ka fa mosing, le gore re kgone go tswelela re itepatepanya le kgaisano le mafatshe a a tlhabologileng.

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Tsela e re e tsamayang e santse e le telele ebile e na le dikgopi ko pele. Le fa re solofela gore Puso e ka re rotloetsa ka mangwe madi, re a itse ebile re lemoga gore Puso le yone e a tlhaelelwa ka jaana gona le mananeo a sechaba a le mantsi a a tlhokang go tsweledisiwa. Ka ntlha e nngwe dibanka le makalana a mangwe a kadimo ya madi, le bone ba huparetse meamuso ya bone ka jaana ga ba ise ba tshepe gore a ruri botsogo ja itsholelo ya lefatshe bo tokafala ka seemo se eleng gore yo o adimang madi o ka kgona go a busa. Se ke kgwetlho mo go rona gore re itshupe gore re kgwebo e e itshetletseng go ka kgatlhegelwa ke dibanka le ba bangwe ba dikadimo.

Le fa ko pele go le bokete, re fetsa ngwaga gape ka tsholofelo ka jaana re betlile tsela ka botswerere, Puso e tsweletse ka go re thusa ebile gape go setse go nale dikai tsa gore itsholelo ya lefatshe e nna botoka.

E rile ngwaga o fela, bakaulengwe ba le babedi ba Khuduthamaga ya tsamaiso ya BotswanaPost ba wetsa tiro ya bone. Rre B.M.S. Letsididi le Mme T. Mabutho ba dirile le rona ngwaga tse lesome le bobedi (12) le lesome (10) ka go latelelana. Mafoko a rona a malebogo a re felela a le tlhaeng, ebile ga re kitla re lebala bonatla, boineelo le bopelotelele jwa bone mo tirong e ba neng ba e dira ya go tlhabolola Poso ka nako tse di neng dile thata. Botlhe ba ba amanang le BotswanaPost le nna, re eleletsa bobedi jo katlego mo matshelong a bone goya ko pele.

Ka Ngwanaatsele 2009, lephata la Puso le le okametseng Poso, le ne la fetolwa go nna tsa Mesepele le Ditlhaeletsanyo, le eteletswe pele ke Tona Frank Ramsden. Ke eletsa go tsaya nako e go amogela Rre Ramsden le go mo tlhomamisetsa gore re le ba Poso, re lomile molomo wa tlase mo maitekong a rona a go tlhabolola Poso le go isa ditirelo ko ntlheng tsotlhe tsa Botswana. Ke eletsa gape go leboga Tona le bodiredi ja gagwe ka kemonokeng e e kana e ba tsweletseng ka go re e efa.

Tse re di kgonneng ngwaga ono ke ka kemonokeng ya bareki ba ditirelo tsa rona, bao ba dikgwebo tse re dirisanyang natso, ba lekgotla la mafatshefatshe la diposo (Universal Postal Union), ba lekgotla la diposo la SADC (Southern Africa Postal Operators Association) le banaleseabe ba bangwe. Re a ba leboga ebile re tla tswelela re dira gotlhe go godisa tshwaragano ya rona.

Ke eletsa gape go leboga badiri ka nna mo Khuduthamageng, Boeteledipele le Babereki ba Poso, go bo ba nkeme nokeng e bile ba dirile ka natla mo ngwageng o. Le fa ntswa maduo a sa nametse, ke eletsa go ba rotloetsa botlhe gore a re diriseng matshego a re setseng re a adile go isa kgwebo ya rona ko seemong sa botswerere le bonokopila (an

Icon of Excellence).

Martin Makgatlhe

Board Chairman

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tsela ka botswerere, Puso e tsweletse ka go re thusa ebile gape go setse go nale dikai

E rile ngwaga o fela, bakaulengwe ba le babedi ba Khuduthamaga ya tsamaiso ya BotswanaPost ba wetsa tiro ya bone. Rre B.M.S. Letsididi le Mme T. Mabutho ba dirile le rona ngwaga tse lesome le bobedi (12) le lesome (10) ka go latelelana. Mafoko a rona a malebogo a re felela a le tlhaeng, ebile ga re kitla re lebala bonatla, boineelo le bopelotelele jwa bone mo tirong e ba neng ba e dira ya go tlhabolola Poso ka nako tse di neng dile thata. Botlhe ba ba amanang le BotswanaPost le nna, re eleletsa

Ka Ngwanaatsele 2009, lephata la Puso le le okametseng Poso, le ne la fetolwa go nna tsa Mesepele le Ditlhaeletsanyo, le eteletswe pele ke Tona Frank Ramsden. Ke eletsa go tsaya nako e go amogela Rre Ramsden le go mo tlhomamisetsa gore re le ba Poso, re lomile molomo wa tlase mo maitekong a rona a go tlhabolola Poso le go isa ditirelo ko ntlheng tsotlhe tsa Botswana. Ke eletsa gape go leboga Tona le bodiredi ja gagwe ka kemonokeng e e kana e ba tsweletseng ka go re e efa.

Tse re di kgonneng ngwaga ono ke ka kemonokeng ya bareki ba ditirelo tsa rona, bao ba dikgwebo tse re dirisanyang natso, ba lekgotla la mafatshefatshe la diposo (Universal Postal Union), ba lekgotla la diposo la SADC (Southern Africa Postal Operators Association) le banaleseabe ba bangwe. Re a ba leboga ebile re tla tswelela re dira gotlhe go godisa tshwaragano ya rona.

Ke eletsa gape go leboga badiri ka nna mo Khuduthamageng, Boeteledipele le Babereki ba Poso, go bo ba nkeme nokeng e bile ba dirile ka natla mo ngwageng o. Le fa ntswa maduo a sa nametse, ke eletsa go ba rotloetsa botlhe gore a re diriseng matshego a re setseng re a adile go isa kgwebo ya rona ko seemong sa botswerere le bonokopila (an

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Corporate Governance

BotswanaPost as a state owned commercial enterprise is accountable to the

shareholder, the Government and the wider public. In recognition of this

responsibility, the Board has committed itself to the highest standards of corporate

governance through a Board Charter which was adopted on the 20th November 2009

and took effect on the 1st December 2009. In the absence of a corporate governance

code for Botswana, the Board has also adopted the King III Corporate Governance

Code for South Africa, as a guiding principle.

In accordance with the Board Charter, the Board will for the first time enter into a

performance agreement with the Shareholder in the next financial year. This will be

supported by a robust Board effectiveness and evaluation process.

Board Structure and CompositionIn accordance with the Botswana Postal Services Act of 1989, the Minister of

Communications and Transport has a duty to appoint a Board of Management

comprising eight non-executive Directors, including the Chairman and one ex-officio

Director, the Director General. In appointing the Directors, the Minister takes into

account the balance of skills, experience, professional and industry knowledge

necessary to realise the corporate mandate of operating and managing postal

services along commercial lines.

Directors are appointed for a period not exceeding four years while the Chairman

is appointed for a three year term. In determining the Directors’ tenure, the

Minister ensures that the tenure of not more than one third of the members expire

in any one year. This is aimed at ensuring business continuity and preservation of

corporate memory.

At the end of the last reporting period, Dr. B.O. Tsheko retired from the Board. He

was replaced by Ms. Shirley Segokgo who was appointed on the 1st April 2009. Mrs. T.

Modungwa, was re-appointed to the Board for another three years with effect from

1st April 2009.

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Board Members

Chairman Mr Martin Makgatlhe

Board Member Mr Bugalo Maripe

Board Member Mr Nathan Kgabi

Appointed 01/07/2010

Vice Chairman Dr Alinah Segobye

Board Member Mrs Tekolo Modungwa

Board Member Mr Polokoetsile P. MotauAppointed 01/07/2010

Board Member Mrs Tsetsele Fantan

Board Member Ms Shirley I.T. Segokgo

Chief Executive Mr Pele Moleta

During the 2010 financial year BotswanaPost bid farewell to board members: Former Vice Chairman Mrs Thembela Mabutho and Mr Bernard M.S. Letsididi

The BotswanaPost board welcome Mr Nathan Kgabi and Mr Polokoetsile Motau

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Executive Management

Chief Executive Pele Moleta

Director Corporate Services Ruth Mphathi

Head Human Resources Courtney Sethebe

Head Internal AuditEnoch Mushango

Head OperationsThapelo Kalake

Head IT & SecurityAhmed Mangera

Head CommunicationsLebogang Bok

Head FinanceSetshedi Botlhole-Mmopi

Head Property and Administration Services

Booster Nkomba

General Manager Botswana Couriers

Leatile Medupe

Head Business Development

Cornelius Ramatlhakwane

Head RetailNed Phatshwane

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Board MeetingsThe Board meets at least four times a year. The role of the Board is to set strategic

direction, development of key policies, approval of budgets and monitoring or

implementation of the approved strategic direction through periodic reporting by

Executive Management. During the year, the Board met seven times.

Board RemunerationThe Board is remunerated at rates prescribed by the Government of Botswana from

time to time. During the year, the remuneration rates were as follows:

Board Chairman - P1050 per sitting

Vice Chairman - P950 per sitting

Directors - P840 per sitting

Board CommitteesThe Board has taken a deliberate position to delegate some of its powers to

designated Committees. Such delegated authority is express and where it has not

been expressed, the Committees recommend the final decision to the Board. This

however does not transfer any of the responsibilities of the Board to the respective

Committees. The Board remains ultimately accountable to the shareholder.

During the year under review, the Board had three Committees. The Chairman sat

on none of these.

Finance and Audit CommitteeThe Finance and Audit Committee comprises a total of four members. The main

function of this Committee is to assist the Board in discharging its duties under

the Botswana Postal Services Act for prudent management of financial matters

and reporting thereon. The Committee continuously reviews reports on the

management of internal controls, risk management and management accounts

and makes the requisite recommendations for approval by the Board.

During the year, the following Directors were on the Committee;

Mrs. T. Mabutho - Chairperson

Dr. A. Segobye - Member

Ms. S. I.T. Segokgo - Member

Mrs. T. M. Modungwa - Member

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Tender CommitteeThe function of the Tender Committee is to advise the Board on strategies and policies

for corporate procurement. The Committee ensures compliance with laid down

rules and procedures for procurement of goods and services required for running

the business and the generation of value for the business out of these processes.

The Committee has delegated financial authority that is reviewed from time to time.

During the year, the following Directors were on the Committee

Mr. B. Maripe - Chairman

Mrs. T. C. Fantan - Member

Dr. A. Segobye - Member

Ms. S. I. T. Segokgo - Member

Human Resources CommitteeThe function of the Human Resources Committee is to advise the Board on Human

Resources policies and strategies, including remuneration and the appointment of

officers to senior management positions.

During the year, the following were on the Committee

Mrs. T. M. Modungwa - Chairperson

Mrs. T. C. Fantan - Member

Mr. B. Maripe - Member

Mr. B. M.S. Letsididi - Member

ComplianceBotswanaPost is committed to ensuring that all the statutory, policy and regulatory

requirements relevant to its business are fully complied with. During the year there

were no issues of non compliance.

Ministerial DirectivesIn September 2009, through dialogue, the then Minister of Communications Science

and Technology directed the Board of BotswanaPost to give a hearing to the

Botswana Postal Services Workers Union, following a petition

that had been presented to her. This was fully

complied with.

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Code of EthicsA code of ethics is due to be borne out of the Board Charter. In the absence of it, the

Board strives at all times to embrace and bring to bear the highest levels of integrity

in corporate decisions.

Going Concern The Board has considered the position of BotswanaPost and is of the opinion that the

organisation shall be a going concern in the 2010/11 financial year.

Board and Board Committee Meeting Attendance

Name BoardFinance & Audit

Committee

Human Resources

Committee

Tender Committee

Meetings Attended

Meetings Attended

Meetings Attended

Meetings Attended

M. M. Makgatlhe 7/7

T. Mabutho 7/7 4/4

B. M. S. Letsididi 3/7 1/4

B. Maripe 7/7 3/4

A. S. Segobye 4/7 4/4 3/4

T. M. Modungwa 5/7 2/4 3/4 3/4

T. C. Fantan 4/7 4/4 3/4

S. I. T. Segokgo 6/7 3/4 2/4

K. P. Moleta 7/7

Internal AuditCharters for the Finance and Audit Committee and Internal Audit have been drawn.

These have been approved by the Executive Management and serve as the authority

for Internal Audit operations pending approval by the Board. These will assist in

ensuring audit independence in line with the King III Report on Good Governance.

An Enterprise Risk Management system has been introduced to ensure coordination

of activities and goal congruence.

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Performance Highlights

Comparison of Revenue vs Expenditure

Total Revenue Total Expenditure

BWP

mBW

P m

Total Assets

BWP

000’

sProfit and Loss

6,4274,476

(2,170) (1,663)

(12,844)-15,000

-10,000

-5,000

0

5,000

10,000

2009/102008/092007/082006/072005/06

120,000

140,000

160,000

180,000

200,000

220,000

240,000

260,000

280,000

300,000

2009/102008/092007/082006/072005/06

80,000

90,000

100,000

110,000

120,000

130,000

140,000

150,000

160,000

2009/102008/092007/082006/072005/06

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Business and Operational ReportI am happy to present the business and operational report

of the BotswanaPost Group for the 2009/10 financial year.

The year under review had a transformational theme and

true to this theme, during the year we embarked on a

courageous journey towards excellence. First we adopted

the European Foundation for Quality Management model

to drive our business performance improvement initiatives.

Indeed this was a courageous move as we had to assess our

position as at September 2009 and be willing to share the

results with any of our partners. The results, perhaps not

surprisingly, were poor, but the objective was for them to

shift us out of any comfort zone and face the imperatives

for change. This initiative has been aptly named LEBOA,

‘mushroom’, because we likened ourselves to the humble

‘mushroom’, which starts hardly noticeable and as it grows

towards the surface, blossoms into a beautiful shape,

enough to gratify anyone, both aesthetically and in taste.

This journey continued and as at the end of the year, teams of employees had been

formed to come up with and implement improvement initiatives. These are largely

quick wins that are within reach with little or no financial inputs. The assessment

process will take place at annual intervals, until such time that the highest excellence

standards have been achieved.

The second leg of our journey to excellence was the adoption of our corporate

strategy; “An Icon of Excellence”. Our aspiration is to “To consistently deliver value

for all stakeholders; addressing existing requirements whilst exploiting opportunities

to anticipate future needs.” This strategy puts our stakeholders first, determines and

confirms with them their desired end results, which in turn inform the performance

targets that we must reach for. The strategy was completed towards the end of the

second half of the year and will largely inform our plans and targets for the ensuing year.

18

Financial PerformanceOur targeted performance for this year was going to be driven by foundational

interventions aimed at preparing ground for faster growth in the ensuing years.

Due to a very challenging market environment, inadequate sales resources and

suboptimal tariffs, we were not able to reach our target of a breaking even position.

Revenues across the Group were flat compared to last year and costs grew by 20%,

suffice to say that the cost of sales was contained at similar levels as the previous

year. The growth of administrative costs was driven by salaries where an increase

of 3% was made to the pension contribution to 11% and gratuity payments had to

be made to staff that were converting to permanent and pensionable employment

contracts at higher rates than originally envisaged, depreciation, arising from asset

revaluations and professional fees towards IFRS compliance and strategic business

interventions. This resulted in a loss of P13m.

Bottom line performance also dropped because the subsidiary, Botswana Couriers,

was not able to meet its own profit targets, owing to myriad reasons, including below

target revenues by 30% and above target costs at 17%. During the year, the subsidiary

experienced many challenges including the high turnover of sales personnel which

impacted negatively on revenues and unexpected legacy tax issues arose, which

resulted in large cash outflows. The outlook for the subsidiary however is very positive

as the improvements introduced in the ensuing year are expected to generate far

better results.

For the second year running, we have a clean audit report and we are confident that

with the IFRS compliance interventions that have been put in place and the continued

improvements in the internal control environment, we shall be able to sustain this trend.

ProjectsWhile our profit performance is wanting, we are gratified by the fact that we were

able to mobilize two of our flagship projects for this year which were part of our

deliberate effort towards hinging levers for growth. As at the close of the year,

construction works on the Gaborone Mail Processing Development was delayed but it

was expected that project completion and fitting of the equipment would be realized

within the first half of the 2010/11 financial year.

interventions aimed at preparing ground for faster growth in the ensuing years.













of 3% was made to the pension contribution to 11% and gratuity payments had to

19

The Poso House Refurbishment Project had been awarded to Project Managers by the

end of the year for them to work on the designs, culminating in the identification

of contractors and construction project supervision. This project will result in a

converted Poso House, our head office, to a modern building with a three level

parkade. Close to 50% of the space available will be leased as another source of

revenue. Envisaged completion of this project is December 2011. A related project,

the Gaborone Central Post office building development was put in abeyance until the

following year.

As part of our ambitious drive to provide the organisation with much needed

Information, Communication and Technology (ICT) infrastructure which will allow

the business to better serve its customers and manage business information, we

improved our communications network by connecting eighty-three (83) sites to a

real-time Wide Area Network (WAN), with plans for the remaining forty (40) sites

to be completed by December 2010. A high capacity Internet Bandwidth link is

incorporated in the design.

To enhance service delivery across the postal network, another of the flagship

The Poso House Refurbishment Project had been awarded to Project Managers by the The Poso House Refurbishment Project had been awarded to Project Managers by the

21

projects, development of IT systems, took shape at the tail end of the year with

two layers. The first layer will involve optimization of the corporation wide IT

infrastructure which will provide a robust platform for any business system that will

be required henceforth and the second layer will be the automation of post offices

counters to provide all postal sales transactions from one-point of sale. The projects

are expected to be complete by July 2011.

Mail Operations

We have been a key player in the improvement of mail delivery service quality standards

across the region. To that end, we signed a Memorandum of Understanding with Namibia

Post during the year and have since opened a new mail network link between Gantsi and

Gobabis, the result of which will be much improved delivery standards between the two

countries which hitherto were grossly wanting at far below the “5 days after posting”

standard. This follows on another link with Zambia, which was opened last year, both of

which are under the auspices of the SAPOA mail road network links. These improvements

are over and above those on the local delivery network.

Our major concern last year was on the suboptimal tariffs which if not changed were

threatening the very foundations of our business. In the international mail exchange

arena, there have been rapid changes that will serve to erode our revenues unless

adjustments are made to the tariff structure. Fortunately, tariff increases were

approved shortly after the year end, allowing us to confidently sign up for the

Global Monitoring System, under which remuneration to us for handling mail on

behalf of global partners will both be performance based and determined in

relation to our costs of handling mail, compared to the current system where

standard rates are applied per kilogram of mail handled, irrespective of the

delivery standards achieved.

During the year we waited expectantly for the Government to sign the

International Payment Services Agreement which would allow us as

the designated postal operator to participate in the international

electronic postal money transfer network and position us to compete

for international remittances and also boost our revenues. As the Post

Office, we rely heavily on Government participation at the Universal Postal

22

Artistic impression of the refurbished Poso House

Union and national compliance to several of the agreed conventions. Going forward,

more than ever before, our close collaboration with Government shall be among the

key success factors for our business.

In the international mail network, a key success factor is the ability to interact

electronically on mail transactions with various partners. During the year, our

National Operations Control Centre

became fully operational. Through

the centre operations, we are able to

enhance corporate accountability for

traceable mail products and improve our

ability to respond to national and global

inquiries through internet based inquiry

systems. The centre has also enabled us

to interact with customers through short

message service (sms) notifications on

their mobile phones. These processes

feed into UPU “pay for performance”

systems. To date we have entered into

a Pay-for-Performance agreement with

one of our Universal Postal Union (UPS)

partners for the Express Mail Service

(EMS) products for targeted performance

measures. Under the Global Monitoring System, pay for performance will not be an

option and BotswanaPost is due for mandatory enrolment in 2012.

In a bid to close a gap that was threatening our performance ratings at global level,

we had to regularize the position of what were illegal operators in postal services in

the local market. As at year end, four of these participants had been given permission

to operate as agents of the Post Office. This model is expected among others to

extend access to basic postal services without major investment in infrastructure

and it is expected to grow with enrolment of new agents.

While the Post Code and addressing project was launched in September 2009, and was

to be driven by the Ministry of Transport and Communications, some consideration

23

Three level parking as part of the Poso House refurbishment

had to be made to merge this project with the LAPCAS project at the Ministry of

Lands and Housing. This merger was informed by the need to coordinate effort and

avoid cost duplication by the same entity i.e. the Government. It is expected that

the project will gain momentum in 2010/11.

BotswanaPost - Botswana Savings Bank MergerOne of the highlights of this financial year was the resolve by the Government

to merge BotswanaPost and Botswana Savings Bank. This followed the erstwhile

intentions by BotswanaPost to set up a PostBank. As already alluded to by the

Chairman, this development, provides an opportunity for growth of the Group and

it is a source of excitement as it will put us ahead of many participants in the Postal

World, where the race towards enhancing operational performance through postal

financial services took off in earnest after the 2008 world postal congress. We are

active participants in the teams that have been created by the Government to drive

the merger and like the rest of the key stakeholders, we are optimistic that the

target of March 2011 will be reached.

Without doubt, the merger will bring on

a new organization and will potentially

change the structure and form of the

Group. However we welcome these

changes as necessary towards the

desire for transformation.

Our PeopleThe success of our journey to

excellence hinges heavily on the

participation of our people. I am

happy to report that during the year,

we were able to realise our goals of

staff development.

As articulated in our previous report,

the leadership skills development, team building and supervisory skills programs

took place during the year and we were fortunate to identify programs with non-

24

conventional approaches that focus on developing the individual first, then as a

team member and a leader.

Due to the impact of global business pressures and our envisaged nil profit

situation, our people had to go without salary increases this year. We were

however able to increase the pension contribution by 3% to 11% to enhance

the growth of a future nest egg. We were faced with the difficult decision

between retaining all of our staff resources and forgoing a salary increase, and

taking increases but off loading some of the staff resources to retain the same

financial targets. I wish to applaud the whole team for making this sacrifice,

which was informed by an ambition for better performance this year. While

the targeted performance has not been realized, the team remains optimistic

because the intended foundations have been laid and the next year offers far

better opportunities.

At close of the year, we were expecting the delivery of our staff uniform, which

forms part of our branding campaign that will involve many marketing interventions

in the new year.

Capital Resources We were fortunate this year as the local financial market responded to our needs

for borrowed funds, thus enabling us to proceed with the key projects. In the next

year we will continue to engage the lenders for long term and sustainable borrowing

arrangements to support our growth objectives.

OutlookThe foundation that has been laid this year, gives us optimism for the next year.

To that end our outlook for the future of this business is once again of exciting

times ahead. The immediate financial year will see completion of the mail

centre project and automation of the mail processes, automation of the Post

Office counter, the merger with Botswana Savings Bank, a stepped up sales drive,

which is expected largely to enroll Government as a customer and therefore assist

cost containment thereat, a continued drive towards excellence and improved

financial performance.

25

AppreciationOur key stakeholders are pillars of our success. In closing I would like to express

appreciation to them all round for their continued partnership and the commitment

to grow along with us. I would also like to thank the Board for their leadership and

guidance in transforming our business.

Having developed the strategy “The Post - An icon of Excellence” and brought all

our stakeholders aboard at every level – we need to constantly reinforce the need

and urgency for the organization to change.

• Our suppliers have committed to deliver quality improvements in both services

and products coupled with cost savings. We realise that the creativity and

innovativeness of our employees alone cannot drive the drastic changes needed

to meet our customer expectations.

• Our shareholder as well has been asked to commit to shareholder compact – which

states key deliverables to enable the Board to drive management performance

to deliver tangible, measurable and positive returns.

• Our customers reflect that they are seeing change at the Post Offices – we assure

them that the organization shall continue to provide convenience, value adding

services and at their door-steps at affordable fees. The benefits of our ongoing

automation shall be felt in the incoming year when all our offices connect to a

real – time - online system to provide superior service.

• We are pleased that a converged communications regulator will soon be in place

to regulate all service providers inclusive of BotswanaPost. Regulators provide

market certainty for both providers and consumers eliminating unregulated and

unregistered operators

• Our employees shall be guided through clearly set performance targets and

deliverables enabling them to drive shareholder value whilst focused on

organizational performance for both short and long term.

With the generous support of all our stakeholders, we see the ‘Icon of Excellence’

within reach.

Re a leboga!

Pele

27

Annual Financial StatementsFor the year ended 31 March 2010

ContentsResponsibility for and Approval of the Financial Statements 28

Report of the Auditor General 29

Statement of Comprehensive Income – Year ended 31 March 2010 31

Statement of Financial Position as at 31 March 2010 32

Statement of Cash Flows – Year ended 31 March 2010 33

Statement of Changes in Equity – Year ended 31 March 2010 34

Summary of Significant Accounting Policies 35

Notes to the Annual Financial Statements 48

27

28

Responsibility for and approval of the annual financial statements

The Board of Management is responsible for the annual financial statements and all

other information presented therewith. Its responsibility includes the maintenance

of true and fair financial records and the preparation of annual financial statements

in accordance with International Financial Reporting Standards and provisions of the

Botswana Postal Services Act.

The Auditor General has the responsibility to give an independent opinion on the

reasonableness of the annual financial statements based on the audit of the affairs of

the organization. The Board Finance and Audit Committee which consist of four non-

executive members of the Board, meets with the members of senior management

as well as the external auditors as and when it deems necessary to evaluate matters

concerning accounting, internal control, auditing and financial reporting.

At its meeting held on the 1st September 2010, Members of the Board, supported

by the Board Finance and Audit Committee, satisfied themselves that Management

introduced and maintained adequate internal controls to ensure that dependable

records exist for the preparation of the financial statements to safeguard assets

of the organization and to ensure all transactions are duly authorised. Against

this background, the members of the Board accept responsibility for the financial

statements on pages 31 to 60 for the year ended 31 March 2010.

Mr. M. Makgatlhe Mr. P. Moleta Chairman Chief Executive

Date: 01/09/2010 Date: 01/09/2010

29

TELEPHONE: (+267) 3617100/3951050 OFFICE OF THE AUDITOR GENERALFAX: (+267) 3908582/3188145 PRIVATE BAG 0010FARM FORST HILL, NO.9 GABORONELOT 134, MILLENIUM PARK BOTSWANAKGALE HILLGABORONEBOTSWANA

AUDIT REPORT OF THE AUDITOR GENERALTO THE BOARD OF MANAGEMENTOF BOTSWANA POSTAL SERVICES:

I have completed the audit of the financial statements of the Botswana Postal Services,

set out on pages 4 to 28 for the year ended 31 March 2010, which comprises the

statement of financial position as at 31 March 2010, the statement of comprehensive

income, statement of changes in equity and the statement of cash flows for the year

then ended, in terms of Section 21 (2) and (3), of the Botswana Postal Services ACT

(No 22 of 1989).

Management’s Responsibility for the Financial Statements:

The Members of the Botswana Postal Services Board of Management are responsible

for the preparation and fair presentation of these financial statements in accordance

with International Financial Reporting Standards; and in compliance with the

Botswana Postal Services ACT (No 22 of 1989). The responsibility includes:

• designing, implementing and maintaining internal control relevant to the

preparation and fair presentation of financial statements that are free from

material misstatement, whether due to fraud or error;

• selecting and applying appropriate accounting policies; and

• making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

My responsibility is to express an opinion on these financial statements based on the

audit conducted. I conducted the audit in accordance with the International Standards

on Auditing. Those standards require that I comply with ethical requirements and

plan and perform the audit to obtain reasonable assurance whether the financial

statements are free from material misstatement; and whether they were prepared in

all material respects, in accordance with an applicable reporting frame work.

29

TELEPHONE: (+267) 3617100/3951050

30

An audit includes an examination, on a test basis, of evidence supporting amounts

and disclosures in the financial statements. An audit also includes an evaluation of the

appropriateness of the accounting principles, assessment of the reasonableness of

the accounting estimates made by management, as well as the overall presentation

of the financial statements.

I have examined the books, accounts and vouchers of Botswana Postal Services to

the extent I considered necessary. I believe that the audit procedures used and the

evidence obtained are sufficient and appropriate basis for the opinion given below.

In my opinion:

• The financial Statements of Botswana Postal Services for the year ended on 31

March 2010, present fairly in all material respects, the statement of financial

position of the organization as at 31 March 2010, its statement of comprehensive

income, its changes in equity and its statement of cash flows for the year then

ended in accordance with International Financial Reporting Standards.

Report on other Legal and Regulatory Requirements:

• Botswana Postal Services has kept proper books of account, with which the

financial statements are in agreement;

• I received all the information and explanations which to the best of my knowledge

and belief, were necessary for the performance of my audit duties;

• The financial statements were prepared on a basis consistent with that used

in the previous financial year and therefore represent a fair view of the Postal

Services’ transactions and its financial affairs as at 31 March 2010;

• Botswana Postal Services has complied with the financial provisions of the

Botswana Postal Services ACT, (No. 22 of 1989).

R. B. SEBOPENG

AUDITOR GENERAL

Dated: 3 September 2010

31

Statement of Comprehensive Income

For the year ended 31 March 2010

GROUP CORPORATION

2010 2009 2010 2009

Notes P P P P

Revenue 1 127,018,557 127,696,392 114,966,727 115,354,521

Cost of Sales 2 (64,296,752) (62,883,239) (60,174,762) (60,545,223)

Gross profit 62,721,805 64,813,153 54,791,965 54,809,298

Other income 3 7,628,368 1,780,360 6,833,591 1,725,951

Administrative expenses 4 (83,718,472) (70,604,283) (75,355,270) (60,958,876)

Other operating expenses 5 (32,090) (2,716,546) (32,090) (2,716,546)

Operating loss (13,400,389) (6,727,316) (13,761,804) (7,140,173)

Finance cost 6 (3,624,652) (783,842) (3,519,527) (629,632)

Finance income 7 4,181,082 5,848,489 4,112,274 5,801,510

Loss before taxation (12,843,959) (1,662,669) (13,169,056) (1,968,295)

Taxation 8 35,057 (137,722) - -

Loss for the year (12,808,902) (1,800,391) (13,169,056) (1,968,295)

Other comprehensive income:

Gains and losses on property, plant and equipment revaluations 885,940 12,413,264 - 12,413,264

Taxation related to components of other comprehensive income (221,485) - - -

Other comprehensive income for the year net of taxation

664,455 12,413,264 - 12,413,264

Total Comprehensive income (12,144,447) 10,612,874 (13,169,056) 10,444,969

31

32

Statement of Financial Position As at 31 March 2010

GROUP CORPORATION 2010 2009 2010 2009

Notes P P P P

ASSETS Non current assets Property, Plant and Equipment 9 193,205,539 172,880,091 191,466,736 171,834,841 Intangible assets 10 8,893 314,554 8,893 307,629 Investment in subsidiary - - 2,558,280 2,558,280

193,214,431 173,194,645 194,033,908 174,700,750

Current Assets Inventories 11 3,211,017 1,795,168 3,211,017 1,795,168 Trade and other receivables 12 38,704,964 25,469,294 37,156,785 22,463,827 Cash and short term deposits 13 48,406,284 62,258,014 46,965,132 61,252,648

90,322,265 89,522,476 87,332,935 85,511,643

TOTAL ASSETS 283,536,698 262,717,121 281,366,841 260,212,393

EQUITY AND LIABILITIES Equity Stated capital 14 38,431,729 38,431,729 38,431,729 38,431,729 Revaluation reserve 94,883,309 95,810,401 94,218,854 95,810,401 Other capital reserves 14 199,761 199,761 199,761 199,761 Retained earnings 30,269,343 41,486,699 31,270,037 42,847,548

163,784,142 175,928,590 164,120,382 177,289,439

Non current liabilities Interest bearing loans and borrowings 15 177,825 233,277 177,825 233,277 Government grants 16 13,968,958 14,860,970 13,968,958 14,860,970 Finance lease obligation 18 8,950,516 483,068 8,601,301 - Deferred tax liability 19 252,190 65,762 - - Provisions - Severance pay 20 238,442 190,732 - -

23,587,931 15,833,809 22,748,083 15,094,247

Current liabilities Finance lease obligation 18 2,904,797 319,978 2,669,500 - Trade and other payables 17 87,484,093 69,081,180 86,110,668 66,338,849 Interest bearing loans and borrowings 15 55,452 359,818 55,452 359,818

Government grants 16 5,662,755 1,130,040 5,662,755 1,130,040

Current tax payable 57,527 63,706 - -

96,164,625 70,954,722 94,498,376 67,828,707

TOTAL EQUITY AND LIABILITIES 283,536,698 262,717,121 281,366,841 260,212,393

33

Statement Cash Flow For the year ended 31 March 2010


Notes P P P P

Operating activitiesLoss before taxation (12,843,958) (1,662,669) (13,169,056) (1,968,295)Adjustment to reconcile loss before tax to net cash flowsNon- cash:

Depreciation and impairment of property and equipment 14,430,521 11,775,611 13,862,380 11,144,094

Amortisation and impairment of intangible assets 305,660 640,503 298,735 629,809

Loss on disposal of property and equipment 497,019 75,997 678,760 75,997

Finance income (4,181,082) (5,848,489) (4,112,274) (5,801,510)Finance cost 3,624,652 783,842 3,519,527 629,632 Amortisation of government grants (2,372,675) (659,190) (2,372,675) (659,190)Movements in provisions 47,710 41,246 - - Loss on foreign exchange 1,765 - - -

Working capital adjustments:(Increase) / Decrease in inventories (1,415,850) 306,430 (1,415,850) 306,430 Increase in trade and other receivables (13,576,752) (7,304,084) (14,692,958) (6,127,108)Increase in trade and other payables 18,742,232 15,697,762 19,771,820 14,069,839

Cash generated from operating activities 3,259,242 13,846,959 2,368,409 12,299,698 Tax paid (6,179) (3,917) - -

Net cash from operating activities 3,253,063 13,843,042 2,368,409 12,299,698

Investing activitiesProceeds from sale of property and equipment 3,123,247 6,898 2,824,515 6,898

Purchase of property and equipment (37,490,298) (8,210,343) (36,997,549) (8,019,306)Receipt of government grant 6,013,378 11,000,000 6,013,378 11,000,000 Finance income 4,181,082 5,848,489 4,112,274 5,801,510 Net cash flows from investing activities (24,172,591) 8,645,044 (24,047,382) 8,789,102

Financing activitiesRepayment of borrowings (359,818) (657,433) (359,818) (657,433)Finance lease payments (1,473,737) (418,341) (1,167,575) - Finance lease obligation 12,438,376 - 12,438,376 Finance cost (3,537,024) (783,842) (3,519,527) (629,632)Net cash flows from financing activities 7,067,798 (1,859,616) 7,391,457 (1,287,065)

Net increase in cash and cash equivalents (13,851,730) 20,628,470 (14,287,516) 19,801,734 Cash and cash equivalents at beginning of the year 62,258,014 41,629,544 61,252,648 41,450,914

Cash and cash equivalents end of year 48,406,284 62,258,014 46,965,132 61,252,648

34

Statement of Changes in Equity

For the year ended 31 March 2010

GROUPStated Other capital Revaluation Retainedcapital reserves reserve earnings Total

P P P P P

At 1 April 2008 38,431,729 199,761 83,397,135 43,287,088 165,315,713Revaluation adjustments - - (742,405) - (742,405)Revaluation of equipment - - 13,155,669 - 13,155,669Loss for the year - - - (1,800,391) (1,800,391)At 31 March 2009 38,431,729 199,761 95,810,401 41,486,699 175,928,590Revaluation surplus on motor vehicles disposed - - (1,591,546) 1,591,546 -

Loss for the year - - - (12,808,902) (12,808,902)Revaluation gain of property - - 664,455 - 664,455At 31 March 2010 38,431,729 199,761 94,883,309 30,269,343 163,784,143

CORPORATIONStated share Other capital Revaluation Retained

capital reserves reserve earnings TotalP P P P P

At 1 April 2008 38,431,729 199,761 83,397,137 44,815,842 166,844,469Revaluation adjustments - - (742,405) - (742,405)Revaluation of equipment & Motor Vehicles - - 13,155,669 - 13,155,669

Loss for the year - - - (1,968,295) (1,968,295)At 31 March 2009 38,431,729 199,761 95,810,401 42,847,548 177,289,439Revaluation surplus on motor vehicles disposed - - (1,591,546) 1,591,546 -

Loss for the year - - - (13,169,056) (13,169,056)At 31 March 2010 38,431,729 199,761 94,218,854 31,270,037 164,120,382

35

Summary of Significant Accounting Policies

Year ended 31 March 2010

Basis of PreparationThe consolidated financial statements have been prepared on a historical cost basis,

except for property and equipment that have been measured at revalued amounts.

The financial statements are presented in Botswana Pula (P).

Basis of ConsolidationThe consolidated financial statements comprise the financial statements of Botswana

Postal Services and its subsidiary Botswana Couriers (Pty) Ltd.

The accounting policies of the subsidiary are in line with those of Botswana

Postal Services.

All intra-group balances, income and expenses and profits and losses arising out of

intra-group transactions are eliminated in full upon consolidation.

Subsidiaries are consolidated from the date of acquisition, being the date on which the

corporation obtains control, and continues to be consolidated until such control ceases.

Foreign Currency TranslationThe corporation’s consolidated financial statements are presented in Botswana

Pula (P), which is the corporation’s functional currency. That is the currency of the

primary economic environment in which Botswana Postal Services operates.

Transactions in currencies other than the Botswana Pula are initially recorded at the

rate of exchange prevailing on the date of transaction. Foreign denominated monetary

assets and liabilities are retranslated at the Botswana Pula spot rate of exchange at the

balance sheet date. Foreign exchange gains and losses arising on translation of foreign

currencies are dealt with in the income statement in the year in which they arise.

Non-monetary items that are measured in terms of historical cost in a foreign currency

are translated using the exchange rates as at the dates of the initial transactions. Non-

monetary items measured at fair value in a foreign currency are translated using the

exchange rates at the date when the fair value is determined.

36

Transactions with other postal administrators are governed by the Universal Postal

Union (UPU) which uses Special Drawing Rights (SDR) as the currency to settle

international balances.

Property & EquipmentLand and buildings, motor vehicles and furniture and equipment are measured at

revaluation less accumulated depreciation and impairment losses recognised after the

date of revaluation. Revaluations are performed in a staggered manner as the operations

of the corporation are dispersed all over the country. Work in progress is stated at cost.

Any revaluation surplus is credited to the revaluation reserve included in equity in

the balance sheet, except to the extent that it reverses a revaluation decrease of the

same asset previously recognised in the income statement. A revaluation deficit is

recognised in the income statement, except to the extent that it offsets an existing

surplus on the same asset recognised in the revaluation reserve.

Accumulated depreciation as at the date of revaluation is eliminated against the

gross carrying amount of the asset and the net amount is restated to the revalued

amount of the asset. Upon disposal, any revaluation reserve relating to the particular

asset being sold is transferred to retained earnings.

Depreciation is calculated on the depreciable amount on a straight line basis over

the useful life of the asset as follows:

Buildings 50 years

Motor vehicles 5 years

Furniture and equipment 3 to 7 years

Depreciable amount is the cost or revaluation amount of the asset, less its residual value.

An item of property and equipment is derecognised upon disposal or when no future

economic benefits are expected from its use or disposal. Any gain or loss arising on

derecognition of the asset (calculated as the difference between the net disposal

proceeds and the carrying amount of the asset) is included in the income statement

in the year in which the asset is derecognised.

Summary of Significant Accounting Policies continued...

37

The assets residual values, useful lives and methods of depreciation are reviewed at

each financial year end, and adjusted prospectively if appropriate.

Intangible AssetsIntangible assets consist of purchased software and are measured on initial recognition

at cost. Following initial recognition, intangible assets are carried at cost less any

accumulated amortisation and any accumulated impairment losses.

Intangible assets are amortised over the useful economic life and assessed for

impairment whenever there is an indication that the intangible asset may be

impaired. The amortisation expense on intangible assets is recognised in the

income statement in the expense category consistent with the function of the

intangible asset.

The estimated useful lives and residual values are reviewed at each year end, with

the effect of any changes in estimate accounted for on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the

difference between the net disposal proceeds and the carrying amount of the asset,

and are recognised in the income statement when the asset is derecognised.

Operating LeasesLeases where the organisation does not transfer substantially all the risks and

benefits of ownership are classified as operating leases.

BotswanaPost as Lessee

Operating lease payments are recognised as an expense in the income statement

on a straight line basis over the lease term. The difference between the expense

determined on a straight line basis and the actual lease payments is recognised as a

deferred lease asset or liability in the balance sheet.

BotswanaPost as Lessor

Operating lease payments received are recognised as rental income in the income

statement on a straight line basis over the lease term. The difference between the

income determined on a straight line basis and the actual lease payments received is

recognised as a deferred lease asset or liability in the balance sheet.

38

Finance LeasesFinance leases,which transfer to the Group substantially all the risks and benefits

incidental to ownership of the leased item, are capitalised at the commencement of

the lease at the fair value of the leased property or, if lower at the present value of

the minimum lease payments.

Lease payments are apportioned between finance charges and reduction of the lease

liability so as to achieve a constant rate of interest on the remaining balance of the

liability. Finance charges are recognised in the income statement.

Leased assets are depreciated over the useful life of the asset. However, if there is

no reasonable certainty that the Group will obtain ownership by the end of the lease

term, the asset is depreciated over the shorter of the estimated useful life of the

asset and the lease term.

Borrowing CostsBorrowing costs directly attributable to the acquisition, construction or production

of an asset that necessarily takes a substantial period of time to get ready for its

intended use or sale are capitalised as part of the cost of the respective assets.

All other borrowing costs are expensed in the period they occur. Borrowing costs

consist of interest and other costs that an entity incurs in connection with the

borrowing of funds.

InventoriesInventories are valued at the lower of cost and net realisable value. Cost is purchase

cost, determined on a first in first out basis, including transport and handling costs.

Net realisable value is the estimated selling price in the ordinary course of business,

less estimated costs of completion and the estimated costs necessary to make the sale.

Government GrantsGovernment grants are recognised when there is reasonable assurance that the grant

will be received and all attached conditions will be complied with. When the grant

relates to an expense item, it is recognised as income over the period necessary to


39

match the grant on a systematic basis to the costs that it is intended to compensate.

When the grant relates to an asset, it is recognised as deferred income and released

to income in equal amounts over the useful life of the asset.

Where non-monetary grants are received, the asset and the grant are recorded at

nominal amounts and released to the income statement over the expected useful life

of the asset by equal annual installments.

Impairment of Non-Financial AssetsBotswana Post assesses at each reporting date, whether there is an indication that an

asset may be impaired. If any indication exists, an estimate of the recoverable amount

is made. An asset’s recoverable amount is the higher of the asset’s fair value less

costs to sell, and its value in use and is determined for an individual asset unless the

asset does not generate cash flows that are largely independent of those from other

assets or groups of assets. In assessing value in use, the estimated future cash flows

are discounted to their present value using a pre-tax discount rate that reflects current

market assessments of the time value of money and the risks specific to the asset. In

determining fair value less costs to sell, an appropriate valuation model is used.

Impairment losses are recognised in the income statement in those expense

categories consistent with the function of the impaired asset, except for property

previously revalued where the revaluation surplus was taken to equity. In respect

of that asset, the impairment is also recognised in equity up to the amount of any

previous revaluation surplus.

An assessment is made at each reporting date as to whether there is any indication that

previously recognised impairment losses may no longer exist or may have decreased.

If such indication exists, the organisation estimates the asset’s recoverable amount.

A previously recognised impairment loss is reversed only if there has been a change

in the assumptions used to determine the asset’s recoverable amount since the last

impairment loss was recognised. The reversal is limited so that the carrying amount

of the asset does not exceed its recoverable amount, nor exceed the carrying amount

that would have been determined, net of depreciation, had no impairment loss been

recognised for the asset in prior years. Such reversal is recognised in the income

statement unless the asset is carried at revalued amount, in which case the reversal

is treated as a revaluation increase.

40

Revenue RecognitionRevenue is recognised only when it is probable that the economic benefits associated

with the transaction will flow to the organisation and the revenue can be measured

reliably. Revenue is measured at the fair value of the consideration received,

excluding discounts, rebates, value added tax or duty. The following specific

recognition criteria should also be met before revenue is recognised:

Box and Bag Rentals

These are amounts paid by customers for the rental of private post boxes and bags.

Revenue is recognised upon receipt of the rent payment.

Mail Revenue and Bulk Mail Revenue

Mail services include both letter and parcel delivery and revenue from these services

is recognised upon delivery of the mail or parcel to its destination. Bulk mail is a

mail sorting and delivery service offered to customers with large mailing lists such

as banks. Revenue from bulk mail services is recognised upon delivery of the mail to

its destination.

Expedited Mail Service (EMS) Revenue

This is an express courier service and revenue is recognised upon delivery of the

parcel to its intended destination.

Terminal and Transit Dues

Terminal dues are amounts due to Botswana Post for mail received from foreign

postal administrators whose destination is Botswana. Transit dues are amounts due

from international postal administrators for international mail which passes through

Botswana Post in transit to its destination out of Botswana. Revenue from terminal

and transit dues is recognised once the mail has been delivered to its destination in

the case of terminal dues, and once it has been sent off to its next stop with regard

to the latter.


41

Sale of Philatelic Products

Revenue is recognised when the significant risks and rewards of ownership of the

goods have passed to the buyer.

Agency Fees and Commissions

Revenue from rendering of agency services is recognised as the services are provided

in accordance with the terms of the agency agreement.

Interest Income

Revenue is recognised as interest accrues (using the effective interest method).

Interest income is included in finance revenue in the income statement.

Rental Income

Rental income arising from operating leases is accounted for on a straight line basis

over the lease terms.

Cash and Short Term DepositsCash and short term deposits in the statement of financial position comprise cash at banks

and on hand and short term deposits with an original maturity of three months or less.

For the purpose of the consolidated statement of cash flows, cash and cash equivalents

consist of short term deposits, as defined above, net of outstanding bank overdrafts.

Financial AssetsInitial recognition

Financial assets within the definition of IAS39 are classified as financial assets at

fair value through profit or loss, loans and receivables, held-to-maturity investments

available-for-sale financial assets or as derivatives designated as hedging instruments

in an effective hedge, as appropriate. The corporation determines the classification

of its financial assets at initial recognition.

Financial assets are recognised initially at fair value plus, in the case of investments

not at fair value through profit or loss, directly attributable transaction costs.

Purchases or sales of financial assets that require delivery of assets within a time

42

frame established by regulation or convention in the marketplace (regular way

purchases) are recognised on the trade date, I.e. the date that the corporation

commits to purchase or sell the asset.

The corporations financial assets include cash and short term deposits and trade and

other receivables.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as

follows:

Cash and short term deposits

Cash on hand and cash equivalents are carried at amortised cost. Deposits held on call

are classified as loans originated by the corporation and carried at amortised cost.

Trade and other receivables

These are classified as loans and receivables. Subsequent to initial recognition,

trade and other receivables are measured at amortised cost, which approximates

the original invoice amount less an allowance for any uncollectable amounts.

Financial LiabilitiesInitial recognition

Financial liabilities within the scope of IAS39 are classified as financial liabilities at

fair value through profit or loss, loans and borrowings or as derivatives designated

as hedging instruments in an effective hedge, as appropriate. The corporation

determines the classification of its financial liabilities at initial recognition.

Financial liabilities are recognised initially at fair value and in the case of loans and

borrowings, directly attributable transaction costs.

The corporations financial liabilities include trade and other payables, bank overdraft

and loans and borrowings.


43

Subsequent measurement

The subsequent measurement of financial liabilities depends on their classification

as follows:

Interest bearing loans and borrowings

After initial recognition, interest bearing loans and borrowings are subsequently

measured at amortised cost using the effective interest rate method.

Gains and losses are recognised in the income statement when the liabilities are

derecognised as well as through the amortisation process.

Trade and other payables

Liabilities for trade and other payables are subsequently measured at amortised cost

which is the present value of the consideration to be paid in the future for goods and

services received, whether or not billed to the corporation.

Offsetting of Financial InstrumentsFinancial assets and financial liabilities are offset and the net amount reported in the

consolidated balance sheet if, and only if, there is a currently enforceable legal right

to offset the recognised amounts and there is an intention to settle on a net basis,

or to realise the assets and settle the liabilities simultaneously.

Impairment of Financial InstrumentsThe Corporation assesses at each balance sheet date whether there is any objective

evidence that a financial asset or a group of financial assets is impaired. A financial

asset or a group of financial assets is deemed to be impaired if, and only if, there is

objective evidence of impairment as a result of one or more events that has occurred

after the initial recognition of the asset (an incurred “loss event”) and that loss

event has an impact on the estimated future cash flows of the financial asset or the

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

44

reorganisation and where observable data indicate that there is measurable decrease

in the estimated future cash flows, such as changes in arrears or economic conditions

that correlate with defaults.

Trade and other receivables

For amounts due from trade and other receivables carried at amortised cost, the

corporation first assesses individually whether objective evidence of impairment

exists individually for financial assets that are individually significant, or collectively

for financial assets that are not individually significant. If the corporation determines

that no objective evidence of impairment of assets exists for an individually assessed

financial asset, whether significant or not, it includes the asset in a group of financial

assets with similar credit risk characteristics and collectively assesses them for

impairment. Assets that are individually assessed for impairment and for which

an impairment loss or continues to be recognised, are not included in a collective

assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, 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 shall be reduced either directly or through use

of an allowance account. The amount of the loss shall be recognised in profit or loss.

If, in a subsequent year, the amount of the estimated impairment loss increases or

decreases because of an event occurring after the impairment was recognised, the

previously recognised impairment loss is increased or reduced accordingly. If a future

write-off is later recovered, the recovery is recognised in the income statement.

Derecognition of Financial InstrumentsThe corporation derecognises a financial asset when it loses control over the

contractual rights that comprise the asset and consequently transfers the substantive

risks and benefits associated with the asset.


45

A financial liability is derecognised when the obligation under the liability is

discharged or cancelled or expires.

ProvisionsProvisions are recognised when the organisation has a present obligation (legal or

constructive) as a result of a past event, it is probable that an outflow of resources

embodying economic benefits will be required to settle the obligation and a reliable

estimate can be made of the amount of the obligation. The expense relating to any

provision is presented in the income statement.

TaxationBotswana Postal Services is exempt from income tax in terms of the income Tax Act.

However, Botswana Couriers (Pty) Ltd is taxable.

Current Income TaxCurrent income tax assets and liabilities for the current and prior periods are

measured at the amount expected to be recovered from or paid to the taxation

authorities. The tax rates and laws used to compute the amount are those enacted

or substantively enacted by the balance sheet date.

Current income tax relating to items recognised directly in equity is recognised in

equity and not in the income statement.

Deferred Income TaxDeferred income tax is provided using the liability method on temporary differences

at the balance sheet date between the tax bases of assets and liabilities and

their carrying amounts for financial reporting purposes. Deferred tax liabilities

are generally recognised for all taxable temporary differences, and deferred tax

assets are recognised for all deductible temporary differences to the extent that

it is probable that taxable profits will be available against which those deductible

temporary differences can be utilised. Such assets and liabilities are not recognised

if the temporary difference arises from goodwill or from the initial recognition (other

than in a business combination) of other assets and liabilities in a transaction that

affects neither the taxable profit nor the accounting profit.

46

Deferred tax assets and liabilities are measured at the tax rates that are expected to

apply to the period when the asset is realised or the liability is settled, based on tax rates

and laws that have been enacted or substantively enacted by the balance sheet date.

Significant Accounting Judgements & EstimatesThe preparation of the corporation’s financial statements requires management to

make judgements, estimates and assumptions that affect the reported amounts of

revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities,

at the reporting date. However, uncertainty about these assumptions and estimates

could result in outcomes that require a material adjustment to the carrying amount

of the asset or liability affected in future periods.

The following are critical judgements and estimates that management has made in

the process of applying the entities’ accounting policies and have the most significant

effect on the amounts recognised in the financial statements:

Revaluation, Useful Lives and Residual Values of Property and EquipmentThe corporation engaged independent valuation experts to determine the market

values of the revalued assets at 31 March 2009. The results of this valuation exercise

were used as the basis for revaluation of the assets. The estimation of the useful life

and residual value of an asset is a matter of judgement based on past experience of

the corporation with similar assets and the intention of management.

Useful Lives of Intangible AssetsThe estimation of the useful life of an intangible asset is a matter of judgement

based on past experience of the corporation with similar assets and the intention

of management.

ProvisionsManagement estimated for provisions raised, based on information available.


47

Contingent LiabilitiesManagement applies its judgement to information received from its attorneys

and other advisors in assessing if an obligation is probable, more likely than not,

or remote. This judgement application is used to determine if the obligation is

recognised as a liability or disclosed as a contingent liability.

Impairment of Trade and Other ReceivablesThe impairment of trade and other receivables was based on a combination of

specifically identified doubtful debtors and providing for older debtors.

Impairment of Slow Moving InventoryManagement assumed inventory that has not moved for a 12 month period to be

obsolete and have no value. The basis for the provision raised is the full cost or net

realisable value of the product.

Deferred Tax AssetsJudgement is required in determining the provision for income taxes due to the

complexity of legislation. There are many transactions and calculations for which the

ultimate tax determination is uncertain during the ordinary course of business. The

company 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 differences will impact

the income tax and deferred tax provisions in the period in which such determination

is made.

The company recognises the net future tax benefit related to deferred income tax

assets to the extent that it is probable that the deductible temporary differences

will reverse in the foreseeable future. Assessing the recoverability of deferred

income tax assets requires the company to make significant estimates related to

expectations of future taxable income. Estimates of future taxable income are based

on forecast cash flows from operations and the application of existing tax laws in

each jurisdiction. To the extent that future cash flows and taxable income differ

significantly from estimates, the ability of the company to realise the net deferred

tax assets recorded at the balance sheet date could be impacted.

47

48

Notes to the Financial Statements

As at 31 March 2010


P P P P

1. REVENUE Courier Income 12,051,830 12,341,872 - - Box and bag rentals 18,535,525 19,661,363 18,535,525 19,661,363 Bulk mail 18,370,928 18,558,830 18,370,928 18,558,830 EMS revenue 3,888,561 4,018,241 3,888,561 4,018,241 Mail revenue 26,972,010 27,514,924 26,972,010 27,514,924 Terminal dues 5,344,511 6,430,112 5,344,511 6,430,112 Transit dues 38,535 37,049 38,535 37,049 Money order commission 13,943,598 13,075,964 13,943,598 13,075,964 Postal order commission 281,231 239,730 281,231 239,730 Western Union agency commission 3,143,555 4,070,522 3,143,555 4,070,522 Philatelic products 1,459,494 1,236,846 1,459,494 1,236,846 Agency services 22,988,779 20,510,941 22,988,779 20,510,941

127,018,557 127,696,392 114,966,727 115,354,521

2. COST OF SALES Salaries 44,879,430 41,661,347 43,311,209 39,323,331 Compensation to customers 32,766 5,198 32,766 5,198 Fees paid postal agencies 112,085 80,652 112,085 80,652 Printing of stamps 575,461 677,906 575,461 677,906 Stock adjustment 165,929 (221,606) 165,929 (221,606)Staff transport 432,414 417,498 432,414 417,498 Mail bags and other consumables 1,781,542 332,055 1,781,542 332,055 Discount allowed 795,483 521,425 795,483 521,425 Maintenance post boxes 351,256 8,619 351,256 8,619 Depreciation 3,928,342 3,305,209 3,491,243 3,305,209 Advertisement and promotion 2,093,301 2,368,633 2,093,301 2,368,633 Mail conveyance 9,148,743 13,726,304 7,032,073 13,726,304

64,296,752 62,883,239 60,174,762 60,545,223

49


P P P P 3. OTHER INCOME

Directors’ fees received 17,304 17,984 17,304 17,984 Sale of merchandise 398,456 230,191 398,456 230,191 Minimum rental payments recognised as operating lease income 1,519,788 394,059 1,519,788 394,059

Sundry income 3,457,675 54,409 2,662,898 - Profit / (Loss) on disposal on property and equipment (678,760) (75,997) (678,760) (75,997)

Newspaper and periodicals registration fees 50,099 64,245 50,099 64,245

Staff housing rental recoveries 300,888 245,913 300,888 245,913 Business services 190,243 190,366 190,243 190,366 Government grant 2,372,675 659,190 2,372,675 659,190

7,628,368 1,780,360 6,833,591 1,725,951

4. ADMINISTRATIVE EXPENSES Salaries 35,620,884 33,497,170 30,305,784 29,099,474 Training 3,187,607 736,910 3,134,731 696,420 Travelling 3,475,783 3,438,961 3,335,459 3,247,252 Sales promotion and advertising 319,064 624,788 59,239 96,331 Cleaning 1,000,389 913,364 942,982 883,807 Subscriptions 681,439 307,988 637,359 278,749 Telephone 6,510,048 4,345,452 6,130,053 3,978,285 Audit fees 443,293 95,500 350,243 - Professional fees 3,276,820 925,257 3,121,233 884,008 Rent and rates 3,147,130 2,571,501 2,633,162 2,218,154 Directors fees and board expenses 338,170 169,105 338,170 169,105 Electricity 1,035,256 1,063,072 1,009,050 1,038,372 Insurance 1,034,261 945,873 650,175 784,656 Security and alarm 1,479,135 1,034,963 1,438,952 999,125 Water 259,544 200,806 250,809 192,572 Pinagare Strategic plan - 8,455 - 8,455 Doubtful debts - 1,533,484 - 633,962 Printing and stationery 3,774,936 2,949,848 3,676,409 2,849,064 Repairs and maintenance 6,618,735 6,849,563 6,067,661 5,355,223 Depreciation 10,807,840 7,621,075 10,669,873 6,978,864 Office expenses 708,138 771,149 603,926 566,998

83,718,472 70,604,283 75,355,270 60,958,876

49

50


P P P P 5. OTHER OPERATING EXPENSES

Donations 80,181 87,103 80,181 87,103 Other expenses (48,091) 5,180 (48,091) 5,180 Defalcations - 161,983 - 161,983 Other income sundry - 2,462,280 - 2,462,280

32,090 2,716,546 32,090 2,716,546

6. FINANCE COST

Bank charges and interest 3,545,541 695,579 3,440,416 541,369 Interest on interest bearing loans and borrowings 79,111 88,263 79,111 88,263

3,624,652 783,842 3,519,527 629,632

7. FINANCE INCOME Interest income from short term deposits 3,333,026 4,706,761 3,333,026 4,706,761 Interest income on call accounts from banks 848,056 1,141,728 779,248 1,094,749

4,181,082 5,848,489 4,112,274 5,801,510

8. TAXATION

Current Local income tax - current period - 67,623 - -

Deferred Originating and reversing temporary differences 88,995 8,783 - -

Arising from prior period adjustments (124,052) 61,316 - -

(35,057) 137,722 - -

Notes to the Financial Statements Continued...

51

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51

52

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9

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r fin

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53

10. INTANGIBLE ASSETS

GROUP Purchased software

Counter automation

project software

Total

P P P Cost: At 1 April 2008 2,523,873 3,654,005 6,177,878 Additions - - - At 31 March 2009 2,523,873 3,654,005 6,177,878 At 31 March 2010 2,523,873 3,654,005 6,177,878

Accumulated amortisation: At 1 April 2008 1,714,977 3,507,845 5,222,822 Amortisation 494,343 146,160 640,503 At 31 March 2009 2,209,320 3,654,005 5,863,325 Amortisation 305,660 - 305,660 At 31 March 2010 2,514,980 3,654,005 6,168,985

Net book value: At 31 March 2010 8,893 - 8,893

At 31 March 2009 314,553 - 314,553

At 1 April 2008 808,896 146,160 955,056

INTANGIBLE ASSETS

CORPORATION Purchased software

Counter automation

project software

Total

P P P Cost: At 1 April 2008 2,437,329 3,654,005 6,091,334 Additions - - - At 31 March 2009 2,437,329 3,654,005 6,091,334 At 31 March 2010 2,437,329 3,654,005 6,091,334

Accumulated amortisation: At 1 April 2008 1,646,052 3,507,845 5,153,897 Amortisation 483,649 146,160 629,809 At 31 March 2009 2,129,701 3,654,005 5,783,706 Amortisation 298,735 - 298,735 At 31 March 2010 2,428,436 3,654,005 6,082,441

Net book value: At 31 March 2010 8,893 - 8,893

At 31 March 2009 307,629 - 307,624

At 1 April 2008 791,277 146,160 937,435

53

54


P P P P

11. INVENTORIES

Definitive stamps 281,756 439,911 281,756 439,911 Postal orders and postal stocks 23,272 52,748 23,272 52,748 Kiosks, nests, pillar boxes and equipment 109,579 113,003 109,579 113,003

Stationery and other consumables 2,796,410 1,189,506 2,796,410 1,189,506

Total inventories at lower of cost and net realisable value 3,211,017 1,795,168 3,211,017 1,795,168

12. TRADE AND OTHER RECEIVABLES

Trade receivables 31,396,255 21,368,637 29,363,603 17,756,033 Receivables from related parties (804,828) (463,746) - 463,746

30,591,427 20,904,891 29,363,603 18,219,779 Staff advances 539,087 301,385 475,406 237,704 Prepayments and deposits 2,559,521 1,631,455 2,458,369 1,530,303 Other receivables 5,014,930 2,631,563 4,859,408 2,476,041

38,704,964 25,469,294 37,156,785 22,463,827

Trade receivables are non-interest bearing and are generally on 30-60 day terms. Staff advances may be up to 6 months.

- Trade receivables Neither past due nor impaired 3,082,136 4,083,859 1,816,833 1,782,227 less than 30 days 12,627,307 11,779,210 12,627,307 11,779,210 between 30 days and 60 days 5,153,268 4,568,800 4,562,447 4,419,644 between 60 days and 90 days 4,637,220 195,691 4,495,677 49,236 more than 90 days 6,465,223 1,942,561 6,430,238 1,390,945

(568,900) (1,201,484) (568,900) (1,201,484)Net carrying amount 31,396,255 21,368,637 29,363,603 18,219,779


55

The movement in the provision for impairment of trade and other receivables is set out below:

Provision for doubtful debts

GROUP Individually impaired

Collectively impaired Total

P P P

At 1 April 2008 - (1,385,532) (1,385,532)Charge for the year - (1,060,796) (1,060,796)Unused amounts reversed - (715,459) (715,459)

At 31 March 2009 - (3,161,787) (3,161,787)Charge for the year - 632,583 632,583 Unused amounts reversed - 1,960,303 1,960,303

At 31 March 2010 - (568,900) (568,900)

Provision for doubtful debts

CORPORATION Individually impaired

Collectively impaired Total

P P P

At 1 April 2008 - (1,385,532) (1,385,532)Charge for the year - - - Unused amounts reversed - 184,048 184,048

At 31 March 2009 - (1,201,484) (1,201,484)Charge for the year - 632,583 632,583 Unused amounts reversed - - -

At 31 March 2010 - (568,900) (568,900)

13. CASH AND SHORT-TERM DEPOSITS GROUP CORPORATION

2010 2009 2010 2009 P P P P

Cash at banks and on hand 19,616,011 14,681,266 18,174,859 13,675,900 Short-term deposits 28,790,273 47,576,748 28,790,273 47,576,748

48,406,284 62,258,014 46,965,132 61,252,648

Short term deposits are made at for varying periods between one day and three months, depending on the immediate cash requirements of the group, and earn interest at the respective short-term deposit rates.

55

56

14. STATED CAPITAL AND RESERVES


P P P P Stated share capital Stated capital held 100 % by the government of Botswana 38,431,729 38,431,729 38,431,729 38,431,729

Other capital reserves At 31 March 199,761 199,761 199,761 199,761

Revaluation reserve

The revaluation reserve is used to record revaluation surpluses recognised on revaluation of property and equipment as well as deficits to such an extent that such deficit relates to an increase on the same asset previously recognised in equity.

15. INTEREST BEARING LOANS AND BORROWINGS

GROUP 2010 2009

P P Current Government of Botswana:

Loan 17 - 76,129 Loan 21 - 232,422 Loan 22 16,934 15,656 Loan 23 2,119 1,957 Loan 24 36,400 33,654

55,452 359,818

Non- current Government of Botswana:

Loan 22 - 16,934 Loan 23 - 2,119 Loan 24 177,825 214,224

177,825 233,277

The loans are unsecured and consist of advances given to Botswana Post by the government of Botswana.


57

15. INTEREST BEARING LOANS AND BORROWINGS continued...

CORPORATION 2010 2009

P P Current Government of Botswana:

Loan 17 - 76,129 Loan 21 - 232,422 Loan 22 16,934 15,656 Loan 23 2,119 1,957 Loan 24 36,400 33,654

55,452 359,818

Non- current Government of Botswana:

Loan 22 - 16,934 Loan 23 - 2,119 Loan 24 177,825 214,224

177,825 233,277

The loans are unsecured and consist of advances given to Botswana Post by the government of Botswana.


P P P P 16. GOVERNMENT GRANTS

At 1 April 15,991,010 5,650,200 15,991,010 5,650,200 Received during the year 6,013,378 11,000,000 6,013,378 11,000,000 Released to income statement (2,372,675) (659,190) (2,372,675) (659,190)

At 31 March 19,631,713 15,991,010 19,631,713 15,991,010

Current 5,662,755 1,130,040 5,662,755 1,130,040 Non- current 13,968,958 14,860,970 13,968,958 14,860,970

19,631,713 15,991,010 19,631,713 15,991,010

57

58


P P P P 17. TRADE AND OTHER PAYABLES

Trade payables 36,872,322 28,915,507 35,441,808 26,964,786 Other payables 51,416,600 40,629,418 50,668,861 39,374,063 Due to related parties (804,828) (463,746) - -

87,484,093 69,081,180 86,110,668 66,338,849

18. FINANCE LEASE OBLIGATION

Finance lease obligation 11,855,314 803,046 11,270,802 - Short term portion disclosed under current liabilities (2,904,797) (319,978) (2,669,500) -

Long term portion 8,950,516 483,068 8,601,301 - - -

11,855,314 803,046 11,270,802 -

19. DEFERRED TAX

Deferred tax (liability) asset

Accelerated capital allowances for tax purposes (30,705) (65,762) - -

Recognised in other comprehensive income (221,485) - - -

(252,190) (65,762) - -

Reconciliation of deferred tax asset (liability)

At beginning of the year (65,762) 4,337 - - Originating temporary difference on tangible fixed assets 35,057 (70,099) - -

Originating temporary difference on revaluation of property (221,485) - - -

(252,190) (65,762) - -


59

20. PROVISIONS

Reconciliation of provisions - 2010

Opening balance Additions

Utilised during the

year

Reversed during the

year Total

Severance pay provision 190,732 52,619 (4,909) - 238,442

Reconciliation of provisions - 2009

Opening balance Additions

Utilised during the

year

Reversed during the

year Total

Severance pay provision 149,486 126,570 (32,389) (52,935) 190,732

21. RELATED PARTY DISCLOSURES

Below is a summary of the total amount of transactions that have been entered into with related parties:

Sales to related

party

Purchases from related

party

Amounts owed by related

party

Amounts owed to related

party P P P P

Botswana Couriers (Pty) Ltd- subsidiary 2010 - - 679,970 124,858 2009 - - 463,746 -

Terms and conditions of transactions with related parties The sales to and purchases from related parties are made at normal market prices. Outstanding balances at year end are unsecured and interest-free.


P P P P Compensation of key management personnel Short- term employee benefits 5,116,891 4,730,041 3,437,976 3,464,254 Post- employment and medical employee benefits - - - -

5,116,891 4,730,041 3,437,976 3,464,254

59

60

22. COMMITMENTS AND CONTINGENCIES Operating lease commitments- Corporation as lessee Future minimum rentals payable under non-cancellable lease at 31 March are as follows:


P P P P Within one year 1,870,680 1,892,989 1,870,680 1,892,989 After one year but no more than 5 years 1,418,737 4,253,145 1,418,737 4,253,145 More than 5 years - - - 3,289,417 6,146,134 3,289,417 6,146,134

Operating lease commitments- Corporation as lessor Future minimum rentals receivable under non-cancellable lease at 31 March are as follows: Within one year 550,963 546,335 550,963 546,335 After one year but no more than 5 years 925,074 1,349,313 925,074 1,349,313 More than 5 years - - - - 1,476,036 1,895,648 1,476,036 1,895,648

Guarantees

Botswana Postal Services has provided the following guarantees at 31 March 2010: The obligations of certain employees under Motor Vehicle, Housing and Personal loan schemes with Botswana Savings bank to the extent of P 3 319 216 .

Pension

In 1989 BotswanaPost employed former Government employees who transferred to the Corporation. This comprised employees that had formerly been employed by the departments of Posts and Telegraph. Those citizen employees who were transferred from Government in 1989 are covered under a separate defined benefit pension scheme to Government employees to which the Corporation has not made contributions.

These employees who were members of the Government defined benefit pension plan are also eligible to become members of the BotswanaPost Staff

Pension Fund which is a defined contribution plan.

An actuarial valuation of the of the Botswana Postal Services employees and pensioners entitled to benefits under the rules of the Public Service of Botswana Pension Scheme was carried out as at 31 March 2010, which revealed an estimated contingent liability of P88 million, relating to the period of their employment with the Corporation. There is uncertainty as to whether or not Botswana Postal Services has any liability in excess of the amounts receivable from the Botswana Postal Services Staff Pension Fund. The discussions with the relevant Government officials had not been finalised as at the date of issue of these financial statements.

The ultimate outcome of the matter cannot presently be determined, and consequently no provision for any liability that may result has been made in these financial statements.


Botswana Postal Network

As at 31 March 2010

BotswanaPostP O Box 100Gaborone

www.botspost.co.bw

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