annualTHE YEAR IN REVIEW report2015-2016
Botswana Fibre Networks Ltd (BoFiNet) is a wholesale provider of national and international telecommunication infrastructure. BoFiNet’s mandate is to provide and operate a world class telecommunications backbone network infrastructure which will drive connectivity and economic growth. BoFiNet services licensed retail organizations in the telecommunications industry such as Public Telecommunications Operators, Value Added Network Service Providers and International Communications Operators/Carriers. Table of Contents
The Board ______08
Chairmans’ Statement______10
Executive Committee______14
Chief Executive Officer’s Statement______16
Strategic Projects______18
Network Operations Report______22
Products & Services______26
Our People______30
CSR______32
Financial Statements______34 driving connectivity & economic growth
Page 4 Botswana Fibre Network - BoFiNet | Annual Report 2016 Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 5
Botswana Fibre Networks The Board
Botswana Fibre Networks (BoFiNet) is governed BOARD TENDER COMMITTEE by a Board consisting of eight (8) non-Executive Directors. In terms of Clause 10 of the BoFiNet The Board Tender Committee consists of three Constitution, the selection and appointment of the (3) non-Executive members. The Committee was BoFiNet Board lies with the Minister of Transport established for amongst others, to ensure that and Communications. As per best practice, Board fundamental procurement principles are observed appointments are based on prescribed skills and in awarding tenders. This is meant to ensure that experience, as such the appointed members of fairness, transparency and value for money are the Board have diverse skills and experience in observed during the procurement process. The various disciplines which accordingly assists in threshold for the Committee is for procurement of ensuring BoFiNet discharges its mandate within goods and services valued at P5, 000, 001.00 to the stipulated provisions of the BoFiNet License. P30, 000, 000.00.
THE BOARD MEMBERS FOR THE PERIOD THE MEMBERS OF THE BOARD TENDER UNDER REVIEW WERE: COMMITTEE ARE:
• Mr Ratsela Mooketsi – Chairman • Mr Gazhani Thangwane – Chairman
• Ms Pauline Sebina – Vice Chairman • Ms Yolisa Phillips - sLejowa – Member
• Mr Marvin Toto – Member • Mr Marvin Torto – Member
• Mr Letsebe Sejoe – Member FINANCE AND AUDIT COMMITTEE • Ms Malebogo Mpugwa – Member
• Ms Yolisa Phillips - Lejowa – Member The Finance and Audit Committee consists of three • Ms Lynette Armstrong – Member (3) non-Executive members. The Committee was set up to ensure and maintin an effective internal • Mr Gazhani Thangwane - Member controls environment for BoFiNet. The Committee reviews financial controls, accounting systems, and reporting to external stakeholders, as well as BOARD COMMITTEES providing oversight over the audit function of the organization. The Board has 3 standing committees namely; the Board Tender Committee, Finance and Audit Committee and the Human Resource Committee.
Page 8 Botswana Fibre Network - BoFiNet | Annual Report 2016 THE MEMBERS OF THE FINANCE AND DECLARATION OF INTERESTS AUDIT COMMITTEE ARE:
The members of the Board are required to declare • Mr Letsebe Sejoe – Chairman their interests at every Board and/or Committee meeting to ensure observance of good corporate • Ms Pauline Sebina – Member governance principles. • Ms Lynette Armstrong – Member
COMPANY SECRETARY HUMAN RESOURCE COMMITTEE Subsequent to the establishment of BoFiNet, Kingsway (Pty) Ltd was appointed as Company The committee was set up to oversee both Secretaries. The Company Secretary duties substantive and procedural administration of include the provision of corporate governance staff welfare issues, amongst other recruitment advice and secretarial services to the Board and processes, industrial relations, remuneration and its Committees. compensation, as well as the maintenance of a high performance culture.
THE MEMBERS OF THE HUMAN RE- SOURCE COMMITTEE ARE:
• Ms Malebogo Mpugwa – Chairperson
• Mr Marvin Torto – Member
• Ms Yolisa Phillips - Lejowa – Member
BOARD ATTENDANCE FEES
The BoFiNet Board fees are paid as follows:
• Chairman – P1, 050.00 per sitting
• Member – P840.00 per sitting
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 9 Chairman’s Statement
The impact that ICT has had on our lives is immeasurable and every human being in the world continues to be touched by technology in one way or the other.
MR. RATSELA MOOKETSI Chairman of Board of Directors
Page 10 Botswana Fibre Network - BoFiNet | Annual Report 2016 The launch of Botswana Hotspots, BoFiNet’s wholesale Wi-Fi internet service, not only marked an important milestone in taking internet to the people, but reflects our desire to continue to explore cost effective technology platforms for delivering broadband connectivity to the public. The impact that ICT has had on our lives is The affordability of this product has empowered immeasurable and every human being in the world Batswana to access the internet in strategically continues to be touched by technology in one way selected areas across Botswana. The usage or the other. There is a direct correlation between patterns have indicated that indeed we are on to countries that have high broadband penetration a winning product that is set to grow and further and telecommunications usage and the success of shape the connectivity landscape of Botswana. their societies at the level of both social inclusion and upliftment as well as sustained economic Our continued commitment to increasing growth. To this end, closing the digital divide has broadband penetration, taking the services to all certainly ignited a spark in Africa, a spark that is corners of Botswana, is continuing in earnest. In seen as a beacon of hope to fast track sluggish the 2015/16 financial year, BoFiNet commenced development and economic growth in some of the on several key projects that were aimed at poorest countries in our continent. modernizing the national backbone network, increasing our reach as well as improving internet Botswana is no different in our quest to connect all connectivity. Batswana, making telecommunication and internet services available to all. I must commend the In conclusion, I would like to quote Steve Ballmer, foresight of the Botswana Government in seeing former CEO of Microsoft; “The number one benefit the importance of laying a robust and intricate of information technology is that it empowers foundation for enabling broadband connectivity for people to do what they want to do. It lets people all. . In pursuing this noble development imperative; be creative. It lets people be productive. It lets Botswana Fibre Networks remains a testament people learn things they didn’t think they could and central to that foresight of putting Batswana learn before, and so in a sense it is all about first, creating a conducive environment for potential.” This quote underpins why we do what business, learning and innovation. The formation we do at BoFiNet and why connectivity is a key of this company, about three year years ago now, driver of economic diversification. We will continue was widely debated and it was reason that won to connect Botswana to the rest of the world, in the end and we find ourselves here. Like the delivering on our mandate for many years to come. iconic swallow on the company logo, many saw BoFiNet as a panacea to all challenges related to telecommunications and broadband services. I am happy to see that in our short existence we have made significant in-roads in meeting those challenges and addressing them within the scope of our mandate.
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 11 Board of Directors MR. RATSELA MOOKETSI Chairman of the Board Mr. Ratsela Mooketsi is the Chairman of the Board of Directors of Botswana Fibre Networks Ltd (BoFiNet) since April 2012. Whilst a Director of Information Technology (IT) at the University of Botswana (UB) he successfully directed implementation of UB’s new ERP system, including the going live of the Finance, Human Resources, Payroll, Fleet, and Estates Management systems. He previously served as Network Manager, and then as Computer Services Manager at the University. He holds a Master of IT from The University of Newcastle (Australia), Bachelor of Engineering (Honours) in Telecommunications (UK), and Bachelor of Science (UB). He served in the Botswana Telecommunications Corporation (BTC) Board of Directors from April 2006 to March 2012, where he was also Chairman of the Board Tender Committee.
MS. PAULINE SEBINA Vice - Chairman of the Board Ms. Pauline Sebina is the Vice-Chairman of the Board of Directors of Botswana Fibre Networks Ltd (BoFiNet) and that of Art of Living Botswana. She has previously served as Director in the Boards of Motor Vehicle Fund (MVA), Botswana Couriers and Botswana Savings Bank. She started her career as an accountant and later moved into management, which landed her the leadership role of General Manager of BECI. She has over 25 years experience in financial management and general management across industries inclusive of mining, telecommunications, SMME lending and ultimately found her home in the insurance industry.
MR. GADZANI THANGWANE Board Member Mr. Gadzani A. Thangwane is a retired telecommunications engineer. He served Botswana Telecommunications Corporation (BTC) now Botswana Telecommunication Communications Limited (BTCL) for 36 years with over 10 of these years working at management and executive level. His role involved conceptualising, planning and the execution of the organisational strategies. At BTC, Thangwane rose through the Technical ranks to the positions of General Manager Operations responsible for service delivery and that of General Manager Technology responsible for planning and development of the entire network infrastructure. Thangwane holds a degree in Electrical Engineering from South Dakota State University in USA.
MR. LETSEBE SEJOE Board Member
Mr. Letsebe Sejoe serves in the Board of Directors of Botswana Fibre Networks Company (BoFiNet) and is Chairman of the Finance & Audit Board Committee. He serves as an Ex- officio Director on the Board of the Botswana Investment & Trade Centre (BITC). He is the Chief Executive Officer at BITC.
Page 12 Botswana Fibre Network - BoFiNet | Annual Report 2016 MS. YOLISA PHILLIPS-LEJOWA Board Member
Ms. Yolisa Phillips - Lejowa has a wealth of experience gained over the past twenty (20) years in the Banking Industry. She holds the position of Director of eSolutions & Merchant services with FNBB. Her position comprises of overseeing online-banking delivery channels and Merchant Services which includes eCommerce, mCommerce and Point of Sale (POS). Through her effective leadership and fortitude of being results orientated, she has overseen the successful launch of various eSolutions into the Botswana market, to cater for the banked and under banked such as the FNB eWallet, Mobile Banking and the Mobile App. She holds a Post Graduate Diploma in Leadership & Change Management from Leeds Metropolitan University (UK).
MS. LYNETTE ARMSTRONG Board Member
Ms. Lynette Armstrong is a highly accomplished results driven senior finance executive with more than seventeen years of financial management experience within the Botswana Exploration and Mining Industry. Lynette is a Chartered Accountant by profession and is currently the Chief Financial Officer at Debswana Diamond Mining Company. Lynette has an excellent track record for understanding shareholder needs, establishing timely, transparent and value added reporting, has solid experience in team development, employee relations, financial analysis and reporting. Lynette is also a Board member of the Debswana Pension Fund.
Lynette has completed the Accelerated Development Programme at the London Business School, Management Development Programme at Stellenbosch Business School, as well as an Executive Leadership Personal Coaching programme.
MS. MALEBOGO MPUGWA Board Member
Ms. Malebogo Mpugwa serves in the Board of Directors of Botswana Fibre Networks Ltd (BoFiNet) and is a member of the Botswana Development Corporation (BDC) Human Resources Board Committee. She serves as the Head of Human Resources for De Beers Global Sightholder Sales (DBGSS). She joined DBGSS in May 2012 from Standard Chartered Bank Botswana (SCBB) as the Regional Head of Human Resources for Consumer Banking Business in Southern Africa. She has extensive experience in the upstream diamond business and is now accelerating her learning and growth in the midstream side of the diamond business.
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 13 Executive Committee MR. MABUA LESEGO MABUA CEO
Mr. Mabua Lesego Mabua joined BoFiNet as the Chief Executive Officer in 2013 after being in the Ministry of Transport and Communications since 2005. He joined the Ministry as the Director of Telecommunications and Postal Services and rose through the ranks of the Ministry to the position of Permanent Secretary. After two years, he was appointed the National Coordinator for Information and Communications Technology (ICT) in the Ministry of Transport and Communications. Mabua is a graduate of University of Essex in the United Kingdom where he obtained his Honours Bachelors Engineering Degree in Telecommunications. He started his career as a graduate engineer at Botswana Telecommunications Corporation (BTC) and left BTC at Senior Management level after 12 years. He went on to become a Board Member of BTC, while he was at the Ministry of Transport and Communications, from 2006 to 2010. Mabua is experienced, knowledgeable and exposed to the ICT industry. He has lead the formulation and implementation of many ICT initiatives in the country at different levels such as the e-Government strategy, International Connectivity Initiative and the Rural Telecommunications Development Initiative dubbed Nteletsa.
MR. OAITSE GABADIRWE Corporate Services Executive
Mr. Oaitse Gabadirwe joined BoFiNet as Corporate Services Executive where he oversees Finance, Human Resources, Regulatory Affairs and Compliance and Commercial (Procurement, Outsourcing and Legal) divisions. He holds a Bachelor of Commerce (Accounting) degree from University of Botswana and a Chartered Management Accountant with Chartered Institute of Management Accountants (CIMA). He holds an MBA from the University of Derby through Botswana Accountancy College. Prior to joining BoFiNet Mr Gabadirwe has worked for BEC as Finance Manager and then Director Corporates Services from Mid 2012. He was also the Finance Manager at National Food Technology Research Centre in Kanye, after serving as a Business Consultant, targeting SMMEs for three years. Oaitse Gabdirwe also served in Botswana Defence Force for 11 years where he worked as a Finance Officer.
MR. THATO JENSEN Strategy & Business Development Executive
Mr Thato Jensen joined BoFiNet as the Strategy & Business Development Executive. Prior to this position, he was Director of the Corporate Planning Division at the Local Enterprising Authority (LEA). He previously was Public Policy Analyst at LEA. Jensen holds a Masters of Arts in Governance and Development and a Bachelor of Arts in Social Sciences degree.
Page 14 Botswana Fibre Network - BoFiNet | Annual Report 2016 MR. ALDRIN SIVAKO Technical Executive
Mr. Aldrin Sivako joined BoFiNet as Technical Executive. He previously was Head of Product Development at beMOBILE/BTC from 2009 until April 2013. He Holds a Bachelor of Engineering (Hons) in Telecommunication Systems from Coventry University (UK). With over 14 years of experience in the Telecommunications Industry, he was part of the team that started Mascom Wireless in 1998 working as a network planning engineer. He has served in various disciplines including leading Data Network Planning activities at BTC, leading strategic projects such as mobile network rollout, mobile network planning and optimization, and mobile financial services business development from concept to commercial launch.
MR. KEABETSWE SEGOLE Project Management Executive
Mr. Keabetswe Segole is the current Project Management Executive at Botswana Fibre Networks (Pty) Ltd (BoFiNet) and is credited for pioneering the Project Management Office within BoFiNet. In his candid assessment of all projects he has delivered, he considers the establishment of BoFiNet as his flagship project after delivering it successfully between April 2012 and August 2013 (17 months). Prior to joining Botswana Fibre Networks (Pty) Ltd, he worked for Botswana Telecommunications Corporation and Orange Botswana as Group General Manager for Technology and Chief Technical Officer respectively. In both organizations he delivered key strategic projects and exemplified leadership qualities, as a result he got assigned special responsibilities amongst them being Acting Chief Executive Officer for Orange Botswana [January 2007 – April 2007 (4 months)] and Acting Chief Executive Officer for Botswana Telecommunications Corporation [February 2009 – July 2010 (18 months)]. Keabetswe has studied and attained a Bachelor of Science (Computer Science) from Lakehead University and is currently studying towards fulfillment of a Master of Science in Project Management with the University of Sunderland. He is a certified PRINCE2® Practitioner.
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 15 We will continue to deliver on our promise to the shareholder, the Government and ultimately the people of Botswana.
MR. MABUA LESEGO MABUA Chief Executive Officer
Page 16 Botswana Fibre Network - BoFiNet | Annual Report 2016 CEO’s Statement
It is indeed an exciting time to be part of an been borne of recognition that we are indeed a extraordinary change agent and team in the change agent; built around a strong, cohesive mould of Botswana Fibre Networks. The 2015/16 and dynamic team that believes in substantively financial year has been a year of tremendous contributing to the country’s national development growth, marked by key milestone achievements goals and aspirations. To this end, BoFiNet aims as we cement our path to organizational maturity to be an employer of choice, putting in place an in the execution of our mandate. Our mandate employee brand that will attract the best people continued to be carried out, through the provision for the job. A rapidly growing company, which of wholesale products that are competitively will stabilize in the next year or so, saw the staff priced, accessible to Batswana and services that complement grow by 25.5%, bring us to a total of are equally reliable. 149 at the end of the period under review. We want to remain competitive and relevant in the niche In pursuing our strategic growth imperatives, industry of telecommunications, ensuring we have BoFiNet managed to grow its customer base the crème of the crop. by 26%, galvanising our position as the leading wholesale provider of broadband products and We will continue to deliver on our promise to the services in the country. This positive growth has shareholder, the Government and ultimately the primarily been driven by greater focus on customer people of Botswana. The strides we have made relationship management while offering relevant, in 2015/16 are a source of pride, but we will not innovative and forward-thinking products and lessen our pace as we know there is more to do services at competitive prices. We certainly believe to fully realize the strategic objectives regarding that achieving excellence in customer service will broadband penetration in Botswana. To remain trickle down to bettered experience for the retail relevant in this world, communication and end of the market and the public. information are the cornerstones of success. BoFiNet endeavours to bring forth results that One of the most transformative developments in improve year on year, as the market becomes even the year under review has been the introduction more competitive and sophisticated. and roll out of Fibre-To-The-x (FTTx) products. BoFiNet is pleased to roll-out the products to improve the quality of internet services as well keeping prices as low as possible. This is set to address two concerns regarding internet service in Botswana; price and quality of internet. In addition to bridging the last mile we have indeed revolutionized connectivity and cut the costs of service to customer provisioning. Importantly in availing the FTTx infrastructure we are ushering; in real terms; high speed networks in line with global trends and most certainly opening a new frontier in customer experience and satisfaction.
The achievements of the past three years have
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 17 Strategic Projects
Improvement of the Socio- adopted new technologies such as LTE to offer Economic Status the market faster connectivity and improve the way business is conducted in Botswana. Proliferation BoFiNet, a wholly Government owned entity has a of smart phones and other bandwidth hungry critical role to play in implementing the National ICT gadgets continues in our market, which inevitably Policy and the Rural Telecommunication Strategy. necessitate investment in the telecommunication These policies and strategies have been the bedrock infrastructure to support new age technological of our strategies in expanding our investment in advancement. 2015/16 saw intensive investment in rural areas to enable the provision of essential FTTx (Fibre to the X) Network, wireless technologies telecommunication services. Ngamiland, Kgalagadi and optic fibre expansion to different parts of the and Central region areas have been provided with country. connectivity that joins into the national backbone allowing citizens in those communities and BoFiNet remains Government’s key implementation opportunity to enhanced services such as 3G and partner in rolling out telecommunications other faster technologies. Such developments infrastructure in the country to ensure increased have enabled e-Government initiatives and allowed national coverage and cost effective broad band citizens to have basic internet connectivity. Rural penetration. In the 2015/16 financial year, BoFiNet area dwelling citizens are now able to connect at embarked on a number of key strategic projects that improved internet speeds or similar to citizens in were aimed at modernizing the national backbone urban areas. BoFiNet has achieved a milestone in network, increasing our reach as well as improving reducing the technological gap that exists between internet connectivity. These projects are as follows: urban and rural areas, and we will continue with our efforts to reduce it further to ensure digital inclusion 1.1. National Backbone for all citizens in Botswana. Projects The national backbone projects entailed surveying, The financial year 2015/16 has seen enormous planning, designing, installation and commissioning technological advancement and infrastructure of the transport network in the route in order to development in Botswana. Businesses have establish connectivity of voice and data traffic to provide services in the villages along the routes.
Page 18 Botswana Fibre Network - BoFiNet | Annual Report 2016 1.1.1. Tsabong to Two Rivers Optic Fibre project: The project is an extension of the Sekoma imperative for BoFiNet to develop the infrastructure – Tsabong project which was officially closed on as close as possible to bridge the last mile gap the 22nd August 2015 in Werda. and facilitate broadband connectivity as much as possible. The deployment of FTTx is a key landmark The villages covered were Tsabong, Maubelo, towards improvement of broadband penetration. Kolokwaneng, Bogogobo, Middlepits, Gakhibana, FTTx (Fibre-To-The-x) is a generic term for any Rapplespan, Vaalhoek, Bokspits, Struizendum and network architecture describing the “last mile” of the Two Rivers. The total distance covered was 310km. telecom connectivity between the communications The project commenced on the 13th November provider and the customer denoted as ‘x’. The ‘x’ is 2015, and will be completed on the 6th June 2016. a collective term for various optical fibre delivery topologies that are categorized according to where 1.1.2. Mohembo to Gudigwa Optic the fibre terminates .e.g. FTTH: Fibre - To-The Fibre project: The project is an extension to Home, FTTB: Fibre - To-The Building, FTTC: Fibre - the Sehithwa – Mohembo project, which will be To-The Curb etc. During the financial year 2015/16 officially closed on the 11th September 2016 in Shakawe. BoFiNet succeeded in the deployment of Fibre to the Building covering close to 568 sites within 4 The coverage included the villages of Mohembo strategic areas of Gaborone, Francistown, Maun East, Kauxwi, Xakau, Sekondomboro, Nkarange, and Kasane to address the last mile connectivity Mogotlho, Mokgacha, Seronga, Gunotsoga, Eretsha, and the list continues to grow with the completion Beetsha and Gudigwa. The total distance covered of on-going projects. by the projects is 162km. The project commenced on the 5th February 2016, and will be completed FTTx connectivity provides high speed, secure on the 14th June 2016. transmission, stability and better service quality overall and allows for innovative services, and 1.1.3. Kachikau to Parakarungu Optic improved internet experience through faster Fibre project: The project entailed the downloads and uploads that service providers will construction of an underground optical fibre cable be able to deliver to end- users. network from Kachikau to Parakarungu at a total distance of 32km. The primary objective of this project is for BoFiNet to expand the current, 1/10G Gigabit-Passive The project will cover the villages of Kachikau, Optical Network (XG-PON) based Fibre-To-The Curb/ Satau and Parakarungu. The project commenced Business/Home (FTTx), network to major villages in on the 18th March 2016, and will be completed on an effort to enhance the access network coverage. the 13th May 2016. The network will be used for integrating data, voice & video services and shall be the primary access 1.2. Deployment of The Fibre - mechanism for services to strategic Government To - The - X (FTTx) Network Institutions and Retail users. Coverage for Phase 2 is in the areas of Gaborone, Francistown, Tsabong, One of the constraints to accessing tele- Lobatse, Mogoditshane, Serowe, Palapye, Selebi – communications services is cost of last mile- Phikwe and Bobonong. FTTx will provide high speed extending fibre reach from the provider’s backbone connectivity to commercial and strategic areas in network to the final termination point where the major urban and suburban localities in Botswana. consumer is. This cost generally borne by the end Gaborone expansion is slated for completion in user is a hindrance to accessing services. It became September 2016. All the other villages are scheduled to be completed in March 2017.
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 19 1.3. Wholesale Wi-Fi Project of the market in Botswana. Coupled with the In the year under review the global market infrastructure, is the products that have been has experienced an exponential growth in the launched to the market which include a prepaid development of Wi-Fi technology. The Wi-Fi network reseller model of Wi-Fi vouchers and Wi-Fi lease has grown from a small cell network into a global model. The Wi-Fi infrastructure lease model will network with high prospects of enabling roaming allow large players such as the current PTOs (Public agreements. The deployed hotspots have grown Telecommunications Operators) and other Service to over 50 million worldwide. The rapid growth is Provider to rent the infrastructure and develop own supported by consumer preference of the Wi-Fi due innovative Wi-Fi offerings to consumers. BoFiNet, to its high speed and affordability. through the regulator envisages that consumers will have various options of Wi-Fi offers products Public Wi-Fi plays a major role in the development through the large number of players (small and of the global hotspots. Botswana as a country does large) who will be able to participate in providing not exist in isolation. It is against the backdrop of service which will further enhance access to this global trend that BoFiNet in conjunction with internet and services. USAF (Universal Services Access Fund) deployed and launched more than thirty (30) public Wi-Fi 1.4. Operations Support hotspot in August 2015. So far, 31 hotspots have Systems/Business Support been deployed in Gaborone, Maun, Francistown, System/Enterprise Resource Mahalapye, Palapye, Serowe and Kasane with Planning Project a cumulative reach of over 300 000 users and The Operations Support Systems/Business Support 384 access points. These are located in strategic System/Enterprise Resource Planning Project (OSS/ densely populated areas covering shopping malls, BSS/ERP) is meant to improve BoFiNet’s business airports, public hospitals, Government enclave, bus operations. The Operations Support Systems – and taxi ranks. Business Support Systems – Enterprise Resource An online purchasing channel is under development Planning solution will enable BoFiNet to operate using First National Bank of Botswana’s (FNBB) efficiently and effectively after having automated *174# portal as well as an app to enhance the its business processes. BSS which comprises of product. Initiatives have been introduced to increase the Customer Relationship Management (CRM), uptake of the service, such as the introduction of 30 Product Lifecycle Management (PLM) and Billing minutes of free daily internet, as well as free access went live on the 16th March 2015. ERP which to all <.gov.bw> websites. comprises of Finance, Supply Chain Management (SCM) and Human Capital Management (HCM) and BoFiNet branded “Botswana Hotspots’ public Wi- went live on the 30th April 2015. The OSS which Fi has been characterized by various marketing manages all active network devices & links went activities to facilitate service providers to create live on the 14th March 2016. This means all system awareness on the product. This is the first ever modules are now live, and the project is in Build- wholesale Wi-Fi service in Botswana which is Operate-Transfer (BOT) phase, which is planned to anticipated to change the connectivity landscape end in August 2016.
Page 20 Botswana Fibre Network - BoFiNet | Annual Report 2016 Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 21 Network Operations Report Network Development & Performance
The year 2015/16 was yet another exciting year for BoFiNet in terms of growing and expanding its network footprint countrywide to 320 elements (SDH, DWDM, Metro routers and switches) delivering high capacity bandwidth services in 132 cities/towns and villages thereby creating an enabling platform to support the country’s national broadband strategy. BoFiNet also continued to deploy carrier grade Wi-Fi, FTTx (Fibre-To-The-Building) and Carrier grade Ethernet networks providing super-speed broadband connectivity to customers and end consumers. Below is the current fibre footprint where the country has broadband reach;
BoFiNet Network Footprint
Page 22 Botswana Fibre Network - BoFiNet | Annual Report 2016 BoFiNet services availability improved quite BoFiNet continues working with local contractors significantly from 99.8% to 99.9% hence minimized on an outsourced model to provide installations and service outages to ensure business continuity. This maintenance support, thus contributing towards was achieved, despite frequent power outages citizen empowerment initiatives as a responsible that bedeviled the country during the first half of corporate citizen. year. However, in order to counter the challenge BoFiNet implemented power backup solutions in On the international connectivity level BoFiNet is critical sites and enhanced network resiliency in an active member in the West Africa Cable System high traffic/major routes. ‘WACS’ and Eastern Africa Submarine Cable System (EASSy) undersea cable consortia ensuring the The Fibre-To-The Building and Carrier Wi-Fi country’s interests and stake are protected and initiatives have revolutionized the citizenry’s access used efficiently for the benefit of the country. to ultra-high speed connectivity hence bridging Through these networks, as a country we have the digital and connectivity gap. There has been robust connectivity to the internet and the outside an exponential service uptake during the last world despite being landlocked. BoFiNet continues half of the financial year on both Wi-Fi and FTTx to work with its peers within the neighboring connections. We believe that such initiatives countries to access the undersea cable systems and trajectory will contribute positively to the and for regional networking. country’s global competitiveness hence driving economic growth. BoFiNet has automated its business processes through an OSS/BSS/ERP (Operations Support The company has enhanced its operational Subsystem and Business Support Subsystem) with presence by opening five additional offices enterprise resource planning (ERP) system. The in Gantsi, Jwaneng, Tsabong, Gumare and OSS/BSS/ERP platform provides a fully integrated Kasane in addition to the existing four business environment that supports the business being Gaborone, Palapye, Francistown from order to cash. The company has already and Maun to facilitate provision of started seeing benefits of improved efficiency in network field services functions. its business operations from order management to Over 40 field engineers and billing and collections. This ultimately will inevitably technicians have been deployed improve business performance and efficiency in the 9 service stations to through integration and automation of all key ensure high network availability. functions and processes. In order to complement its technical capacity within field maintenance services,
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 23
Products & Services The Market, Products & Services
Page 26 Botswana Fibre Network - BoFiNet | Annual Report 2016 International Connectivity Market Growth To date the growth of the undersea cable market continues to experience intensive investment and Our strategies have translated into impressive upgrades. Investment in the submarine cables is results and for the year under review we have mainly due to various reasons such as to improve maintained our wholesale market leader position route diversity, the quest to reach new markets, in Botswana and witnessed a growth of 26% in improving existing cables etc. Continued investment customer base. The impressive results are premised in the submarine cables and the falling prices of on the commitment of the BoFiNet leadership and high transmission systems installed resulted in employees to offer unmatched customer service. an increased supply of bandwidth and lowering Our robust account management service and agile prices. This has created intense competition and response to customer provision have been at the price wars in the wet segment. core of our operations. Product innovation and affordable products and services that address the BoFiNet has maintained her stakeholder position market needs was also a pillar to our success in in the two cable systems WACS and EASSy by 2015/16. BoFiNet will continue to grow its market investing in upgrades. The upgrades have more share through the development and deployment than tripled BoFiNet’s capacity in both WACS and of a diversified yet relevant product portfolio and EASSy, at 600 STM 1s for the former and 143 STM scaled up account management services to ensure 1s for the latter. This is to ensure sufficient supply end to end customer responsiveness. for future consumption which continues to grow exponentially. The cables are essential in providing route diversity and redundancy as well as bringing in international content in a landlocked Botswana. WACS and EASSy also provides international connectivity for our clients who desire to connect with the rest of the world. International trade has been seamless with the ownership of these two cables.
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 27 Fibre Pro Botswana Hotspots – Wi-Fi This is a dedicated uncontended internet service that is provided within areas where there is a FTTx The deployment of Wi-Fi has seen the launch of delivered directly to end user from 2 mbps to up to two service options, being the reseller voucher 300 mbps.. The service is delivered over the Metro option and infrastructure lease. and FTTx technologies offering customers high quality of service. Fibre Pro is suitable for high The Wi-Fi Voucher bandwidth users such as large enterprises and Government sector who require dedicated internet The Wi-Fi voucher service comprise of service. predetermined data packages which are availed to Internet Service (ISP) providers to re-sell to Fibre Lite consumers. The product has been designed to address service providers who may not have their It is a shared internet provided on best effort own billing platform to develop their own products. catering for the SMMEs and residential users. Fibre This is a white labelled product carrying the Wi-Fi Lite is a premium service positioned to provide best SSID ‘ Botswana Hotspots’ which provide the re- possible quality and price to the market via service sellers the opportunity to brand the Wi-Fi vouchers providers. as they wish. Internet Protocol Transit (IPT) The Wi-Fi Infrastructure Lease The internet protocol transit product enables The Wi-Fi option targets service providers who customers to connect to internet content. BoFiNet already have built infrastructure and a billing offers premium uncontended IPT service to its system that allows the providers to develop their customer. Our internet is fully protected with dual own products innovatively and provide Wi-Fi service undersea cables and with multiple inland routes via the BoFiNet infrastructure on lease. coming into Botswana. BoFiNet peers with Tier 1 upstream content providers which provides our FTTx Internet Products customers with premium internet content. Our IPT is a blend of regional and international content BoFiNet has developed packaged internet product enabling us to serve a wide range of customers with and services which are sold at wholesale to different content needs. Service Providers who then will sell the service to consumers. The products have been developed with International Private Lease view to improve broadband penetration through Circuit (IPLC) pricing and quality of the service .The two flavours developed are dedicated (non-contended) and Our stake in the ownership of undersea cables shared internet (contended) internet packages. such as WACS and EASSy has made it possible for BoFiNet to deploy a resilient and redundant IPLC offering to market. This has created a gateway for national players to widen their reach on the back of competitive prices.
Page 28 Botswana Fibre Network - BoFiNet | Annual Report 2016 National Leased Lines (NLL)
Our NLL product is essentially domestic leased infrastructure, to cater for the data communication line services provided on the national backbone to requirements of a wide spectrum of enterprises and provide transmission across Botswana. It connects services providers. The network deploys a tiered IP/ all major villages and cities throughout the country MPLS architecture to provide for both scalability providing a robust network to meet the demands and resilience. of our customers. The network has been designed to ensure that almost all districts have connectivity Transit Services on the promise of providing access for all through Botswana’s geographical positioning in the region our NLL product. Our NLL services are critical and the inherent comparative advantage as a for carrying and supporting 3G and 4G network gateway to the region and the rest of the continent expansions in the country and providing high resulted in the aggressive launch of transit services. quality services to the retail segment at amongst We have positioned ourselves as a preferred transit the lowest prices in the region. This has re-affirmed service provider for international customers who our position as the “go to” enabler in the national seek to access in neighbouring countries such as market in addition to being increasingly recognized Namibia, Zimbabwe, Zambia and South Africa. as a reliable carrier of carriers in the region. BoFiNet through its robust and resilient national Enterprise Solutions / network offers international customers value for Carrier Ethernet Product money with our competitively priced transit product.
Metro Ethernet offers affordable multi-point to multi-point connectivity. The mesh topology of the network enhances the quality of services and addresses the needs of the customers such as multi-point to multi-point connections through simplified intelligent routing capability of the network. BoFiNet ‘s deployment of a carrier Ethernet Network infrastructure aims to provide a diversified range of services over a converged IP/MPLS
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 29 Our People Report
Page 30 Botswana Fibre Network - BoFiNet | Annual Report 2016 BoFiNet recognizes that its human capital is key enroll in self-development programmes. to delivering its mandate and setting pace in Our people are vital to the success and provision of quality service to the market creating sustainability of our business. They determine attractive employee brand that is key to BoFiNet’s how effectively the organisation operates and are approach to harnesing the full potential of staff. instrumental in realizing the vision of being World BoFiNet has attracted highly skilled, experienced Class ICT organisation for a globally connected and talented workforce. This has been achieved in Botswana. Therefore, it’s imperative to remember part by motivating staff through various platforms the role health, safety and wellness play in keeping and creating a conducive environment for them to employees motivated and performing at an optimal thrive. Staff Engagement remains a key initiative in level. Research indicates that greater employee ensuring that staff are meaningfully engaged and wellbeing is significantly associated with better job hence have a sense of fulfilment working for the performance and engagement, lower absenteeism, organization. and reduced probability of leaving an employer. As at 31st March 2016, the staff complement stood In its pursuit of ensuring a healthy and productive at 149, an increase of 25.5% from the March 2015 workforce, BoFiNet conducted Wellness Day for figure of 111. The organization had a turnover of its employees. In addition, BoFiNet continues to 3.4% against a target of 6%. provide its employees with access to recreational Effective targeted human resource development facilities. remains one of the organisations’s critical success As BoFiNet evolves at a rapid pace, a realignment factors. BoFiNet continues to invest in developing exercise has been embarked upon to align its the requisite competencies that are intended to evolving structure with the mandate, business build the desired behaviors for achieving results. model and the vision of the organisation. The In its effort to improve staff capacity, BoFiNet deliverables include a new structure, talent has partnered with the University of Stellenbosch management strategy, succession planning for equipping its Managers and Executives with model and other staff engagement enhancement advanced leadership skills through Management initiatives that propel the organisation towards and Executive Development Programmes (M/EDP). ingraining a high performance culture. The organization further encourages employees to
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 31 CSR
Page 32 Botswana Fibre Network - BoFiNet | Annual Report 2016 We operate in communities all over Botswana, Girls in ICT, as part of the World Telecommunica- which through BoFiNet are now connected to tions Information Society Day saw BoFiNet partic- the rest of the world. Our daily interactions with ipate through a debate in Thamaga. Schools were Batswana from all corners and backgrounds has invited to send girls only teams to debate on ICT allowed BoFiNet to touch lives in numerous ways, issues. The winning team received goodie bags which is why our Corporate Social Responsibility and tablets as well as internet connectivity for their remains close to our hearts. During the year under school. Schools connectivity remained high on the review, CSR played an important role in maintaining CSR agenda as several schools were connected in good relations with the communities we operate in. Thamaga and Moshupa, Ramotswa and Shakawe to name a few. This has allowed students to access The BoFiNet Softball League continues to be our the internet for their studies, availing resources that flagship sponsorship, with the sponsorship being were out of their reach previously. renewed at an increased P1 500 000 annually over the next 3 years. This move was made in order to BoFiNet’s community outreach programme with improve the infrastructure and grounds. 2015/16 children from disadvantaged backgrounds in saw floodlights and new stands being erected at Tlokweng continued during the year under review. the national diamond, enabling night games to The children were placed in boarding schools in be held. Record attendance was achieved due Kgomodiatshaba and Letlhakane to ensure that to the improved grounds, showing that the sport they have a better chance at focusing on their has grown in leaps and bounds. BoFiNet remains studies. The children have been equipped to enable committed to reviving this sport, investing in them to do their best academically. Together with the growth of the sport. The league saw teams the schools and social services, the needs of the return to the sport, chasing the P100 000 first children are met. prize. The investment in softball did not end there as BoFiNet was a proud sponsor of Sponsorships were a big part of the BoFiNet CSR CHOPS, a grassroots initiatve aimed at programme, reaching across different fields. For growing the sport at primary school level. the first time, BoFiNet sponsored motor-cross The tournament saw private schools at the Toyota 1000 Desert Race. Two teams compete for the coveted championship were sponsored, enabling them to compete and title. participate with international riders. This investment was geared towards growing the sport locally, encouraging citizen participation in the sport.
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 33 Botswana Fibre Networks (Proprietary) Limited (Registration number 2012/12673) Financial statements for the year ended March 31, 2016
Country of incorporation & domicile Botswana
Nature of business and principal Providing wholesale national and activities international telecommunication infrastructure services
Directors • Ratsela Mooketsi • Pauline Sebina • Marvin Torto • Letsebe Sejoe • Malebogo Mpugwa • Gadzani Thangwane • Yolisa Phillips -Lejowa • Lynette Armstrong
Registered office Plot 74769 Building 2, Mowana Mews, Central Business Districts Gaborone
Bankers Stanbic Bank Botswana Limited
Auditors KPMG
Chartered Accountants
Secretary Kingsway (Proprietary) Limited
Page 34 Botswana Fibre Network - BoFiNet | Annual Report 2016 The reports and statements set out below comprise the financial statements presented to the shareholder:
36 Directors’ Responsibilities and Approval 37 Independent Auditor’s Report 41 Directors’ Report 42 Statement of Financial Position 44 Statement of Profit or Loss and other comprehensive income
45 Statement of Changes in Equity 46 Statement of Cash Flows 47 Significant Accounting Policies 57 Notes to the Financial Statements 71 Supplementary Statement of Profit or Loss and of the Comprehensive Income for the year
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 35 Directors’ Responsibilities and Approval
The directors are responsible for the preparation and fair presentation of the annual financial statements of Botswana Fibre Networks (Proprietary) Limited, comprising the statement of financial position at 31 March 2016, and the statements of profit or loss and other comprehensive income, changes on equity and cash flows for the year ended, and a summary of significant accounting policies and notes to the financial statements, in accordance with International Financial Reporting Standards.
The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error and for maintaining adequate accounting records and an effective system of risk management.
The directors have made an assessment of the ability of the company to continue as a going concern and have no reason to believe that the business will not be a going concern in the year ahead.
The auditor is responsible for reporting on whether the annual financial statements are fairly presented in accordance with the applicable financial reporting framework.
APPROVAL OF THE FINANCIAL STATEMENTS
The annual financial statements of Botswana Fibre Networks (Proprietary) Limited, as identified in the first paragraph, were approved by the board of directors on06-09-2016 and are signed on their behalf by:
CHAIRMAN DIRECTOR
Page 36 Botswana Fibre Network - BoFiNet | Annual Report 2016 Independent Auditor’s Report TO THE SHAREHOLDER OF BOTSWANA FIBRE NETWORKS (PROPRIETARY) LIMITED
We have audited the financial statements of Botswana Fibre Networks (Proprietary) Limited, which comprise the statement of financial position as at March 31, 2016, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and notes to the financial statements, and the directors’ report, as set out on pages 5 to 29.
DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and requirements of the Companies Act of Botswana, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error.
AUDITORS’ RESPONSIBILITY
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OPINION
In our opinion, the financial statements present fairly, in all material respects, the financial position of Botswana Fibre Networks (Proprietary) Limited as at March 31, 2016, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards, and the requirements of the Companies Act of Botswana.
OTHER MATTER
The supplementary schedules set out on pages 30 to 31 does not form part of the financial statements and is presented as additional information. We have not audited these schedules and accordingly we do not express an opinion on it.
KPMG GABORONE CERTIFIED AUDITORS 08 SEPTEMBER 2016 PRACTICING MEMBER : AG DEVLIN (19960060:23)
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 37 Page 38 Botswana Fibre Network - BoFiNet | Annual Report 2016 Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 39 Page 40 Botswana Fibre Network - BoFiNet | Annual Report 2016 Directors’ Report
The directors are pleased to present their report and the annual financial statements for the year ended March 31, 2016.
1. REVIEW OF ACTIVITIES MAIN BUSINESS AND OPERATIONS The company is engaged in providing wholesale national and international telecommunication infrastructure services and operates principally in Botswana
The operating results and state of affairs of the company are fully set out in the attached financial statements and do not in our opinion require any further comment.
2. EVENTS AFTER THE REPORTING PERIOD The directors are not aware of any matter or circumstance arising since the end of the financial year.
3. AUTHORISED AND ISSUED SHARE CAPITAL There were no changes in the authorised or issued share capital of the company during the year under review.
4. DIVIDENDS No dividends were declared or paid to shareholders during the year.
5. DIRECTORS The directors of the company during the year and to the date of this report are as follows:
DIRECTORS Ratsela Mooketsi - Chairman
Pauline Sebina
Marvin Torto
Letsebe Sejoe
Malebogo Mpugwa
Gadzani Thangwane
Yolisa Phillips -Lejowa
Lynette Armstrong
6. SECRETARY The secretary of the company is Kingsway (Proprietary) Limited.
7. AUDITORS KPMG will continue in office in accordance with section 195 of the Companies Act of Botswana.
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 41 Statement of Financial Position as at March 31, 2016
Notes 2016(P) 2015(P) Assets Non-Current Assets Property, plant and equipment 2 1,260,977,735 910,705,731 Deferred tax 3 6,845,878 10,269,278 Investment in Shares 4 5,882,353 -
1,273,705,966 920,975,009
Current Assets Inventories 5 11,417,380 9,369,145 Trade and other receivables 6 77,401,715 43,994,561 Cash and cash equivalents 7 388,428,068 88,255,346
477,247,163 141,619,052 Total Assets 1,750,953,129 1,062,594,061
Equity and Liabilities Equity Share capital 8 747,244,423 747,244,423 Funding Reserves 9 677,455,569 254,925,290 Accumulated loss (70,245,621) (91,648,703)
1,354,454,371 910,521,010
Page 42 Botswana Fibre Network - BoFiNet | Annual Report 2016 Notes 2016(P) 2015(P) Liabilities Non-Current Liabilities Other financial liabilities 10 5,817,360 - Finance lease obligation 11 - 3,257,148 Deferred Revenue 12 112,027,931 46,409,823
117,845,291 49,666,971
Current Liabilities Finance lease obligation 11 2,037,189 41,802,937 Trade and other payables 14 117,933,799 60,603,143 Government Data Network Liability 13 158,682,479 -
278,653,467 102,406,080
Total Liabilities 396,498,758 152,073,051
Total Liabilities 1,750,953,129 1,062,594,061
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 43 Statement of Profit or Loss and other comprehensive income
Note(s) 2016(P) 2015(P)
Revenue 15 268,776,165 178,511,861
Cost of sales 16 (107,025,392) 145,871,484
Gross profit 161,750,773 32,640377
Other income 17 7,925,925 403,433
Operating expenses (145,448,014) (102,117,272)
Operating profit / (loss) 24,228,684 69,073,462
Finance income 18 1,680,887 808,693
Finance costs 19 (1,083,089) 595,880
Profit / (loss) before taxation 24,826,482 (68,860,649)
Taxation 20 (3,423,400) 9,726,666
Profit / (loss) for the year 21,403,082 (59,133,983)
Other comprehensive income - -
Total comprehensive income 21,403,082 (59,133,983) / (loss) for the year
Page 44 Botswana Fibre Network - BoFiNet | Annual Report 2016 Statement of Changes in Equity
Share Capital Funding Reserves Accumulated loss Total equity P P P P
Balance at April 1, 2014 1,000,000 805,119,115 (32,514,720) 773,604,395
Loss for the year (59,133,983) (59,133,983)
Total comprehensive Loss for (59,133,983) (59,133,983) the year
Issue of share capital 746,244,423 (746,244,423)
Government Funding 196,050,598 196,050,598
Total contributions by and 746,244,423 (550,193,825) 196,050,598 distributions to owners of company recognised directly in equity
Balance at April 1, 2015 747,244,423 254,925,290 (91,648,703) 910,521,010
Profit for the year 21,403,082 21,403,082
Total comprehensive income 21,403,082 21,403,082 for the year
Government Funding 422,530,279 422,530,279
Total contributions by and 422,530,279 422,530,279 distributions to owners of company recognised directly in equity
Balance at March 31, 2016 747,244,423 677,455,569 (70,245,621) 1,354,454,371
Note(s) 8 9
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 45 Statement of Cash Flows
Note(s) 2016(P) 2015(P)
Cash flows from operating activities
Cash generated from operations 23 182,908,858 62,874,582 Finance income 1,680,887 808,693 Finance costs (1,083,089) (595,880)
Net cash from operating activities 183,506,656 63,087,395
Cash flows from investing activities
Purchase of property, plant and equipment 2 (421,458,803) (182,700,422) Investment in shares (Non-cash) (5,882,353) -
Net cash from investing activities (427,341,156) (182,700,422)
Cash flows from financing activities
Increase in other financial liabilities 5,817,360 - Increase in Government Data Network Liability 158,682,479 - Finance lease payments (43,022,896) (50,465,261) Government Funding 24 422,530,279 196,050,598
Net cash from operating activities 544,007,222 145,585,337
Total cash movement for the year 300,172,722 25,972,310 Cash at the beginning of the year 88,255,346 62,283,036
Net cash from investing activities 7 388,428,068 88,255,346
Page 46 Botswana Fibre Network - BoFiNet | Annual Report 2016 Significant Accounting Policies 1. Presentation of financial statements
Botswana Fibre Networks (Proprietary) Limited is a company domiciled and registered in Botswana under the Companies Act, 2003. The financial statements represent the company’s statutory financial statements. The financial statements have been prepared in all material aspects with International Financial Reporting Standards. The financial statements have been prepared on the historical cost basis except where otherwise stated and incorporate the principal accounting policies set out below.
These accounting policies are consistent with the previous year,except where otherwise stated.The financial statements are presented in and rounded to the nearest Pula which is also the functional currency. 1.1 Significant judgements and sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimated and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results which for the basis of making the judgements about carrying values of assets and liabilities that are not readlily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis and relate mainly to the evaluation of trade and other receivables for possible impairment, assessment of residual values and depreciation rates applied to property, plant and equipment items and calculation and recognition of income and deferred taxation. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years. 1.2 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Depreciation
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of plant and equipment. The items of plant and equipment are depreciated over the following periods:
Item Average useful life
Land and buildings Lease Period Plant and machinery 5-20 years Motor vehicles 6 years Other plant and equipment 4-20 years
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 47 The residual value of each part of property, plant and equipment, if not insignificant, is reassessed annually. The useful lives of these items are reassessed annually. Land is not depreciated.
Each property, part of plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately. Gains and losses on disposal of property, plant and equipment items are determined by comparing proceeds with the carrying amounts and included in profit or loss. Repairs and Maintenenace costs are recognised in profit or loss during the financial period in which these costs are incurred. The cost of a major renovation is included in the carrying amount of the related asset when it is probable that future economic benefits in excess of the most recently assessed standard of performance of the existing asset will flow to the company and the renovation replaces an identifiable part of the asset. Major renovations are depreciated over the remaining useful life of the related asset. 1.3 Financial instruments Classification
The company classifies non-derivative financial assets as loans and receivables and non-derivative financial liabilities as other financial liabilities. 1.3 Financial instruments (continued) Non-derivative financial assets and financial liabilities- recognition and derecognition
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost using effective interest method. The company recognises loans and receivables on the date that they are originated. The company dercognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such transferred financial assets that is created or retained by the company is recognised as a separate asset or liability.
The company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when,the company has a legal right to offset the amounts and intends to settle them on a net basis or to realise the asset and settle the liability simultaneously. Non-derivative financial assets-measurement
The company’s loans and receivables comprise mainly of cash and cash equivalents, trade and other receivables, including amounts due from related parties.
Page 48 Botswana Fibre Network - BoFiNet | Annual Report 2016 Cash and Cash Equivalents
Cash and cash equivalents are defined as cash on hand, demand deposits and short-term highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value.
Bank overdarfts, which are payable on demand and form an integral part of the company’s cash management, are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Trade and other receivables including amounts due from related parties
Trade and other receivables, including amounts due from related companies, are amounts due for goods provided in the normal course of business. These amounts are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an impairment accrual. An accrual for impairment is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of these receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that a balance is impaired.
The amount of impairment accrual is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted future cash flows, discounted at the effective interest rate. The amount is recognised in profit or loss. Subsequent recoveries of amounts previously written off are recognised in profit or loss. Investment in Shares
Investment in shares are invested for an indefinite period. These investments are carried at cost plus interest earned, less accumulated impairment. Impairment charges are written off to the profit or loss as incurred. 1.3 Financial instruments (continued) Non-derivative financial liabilities - measurement
The comapny initially recognises financial liabilities on the trade date, which is the date that the company becomes party to the contractual provisions of the instrument.
The company derecognises a financial liability when its contractual obligations are discharged, cancelled or expire. Financial liabilities are measured at amortised cost using the effective interest rate method.
Fo liabilities carried at amortised cost, any gain or loss is recognised in profit or loss when the liability is derecognised or impaired, as well as through the amortisation process.
Financial liabilities comprise of interest bearing borrowings and trade and other payables, including amounts due to related companies.
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 49 which case the related taxation is also recognised Borrowings in the other comprehensive income or equity. Borrowings are initially recognised at cost, being Current taxation comprises the expected taxation the fair value of the consideration received and payable or refundable on the taxable income or include acquisition charges associated with the loss for the period and any adjustment to taxation borrowing. After initial recognition, borrowings payable or refundable in respect of previous are subsequently measured at amortised cost. periods. Taxation is measured using rates enacted Amortised cost is calculated by taking into account or substantively enacted at the reporting date. any discount or premium on settlement. Long term Current taxation also includes any taxation arising borrowings are classified as financial liabilities at from dividends. Withholding taxation of 7.5% is amortised cost. payable on the gross amounts of dividends paid. Trade and other payables, Deferred taxation including amounts due from related companies Deferred taxation is recognised in respect of temporary differences between the carrying Trade and other payables, including amounts due to amounts of assets and liabilities for financial related companies, are obligations to pay for goods reporting purposes and the amounts used for or services that have been acquired in the ordinary taxation purposes. Deferred taxation assets are course of business from suppliers. These amounts recognised for unused taxation losses, unused are classified as current liabilities if payments is due taxation credits and deductible temporary within twelve months (or in the normal operating differences to the extent that it is probable that cycle of the business, if longer). If not, they are future taxable profits will be available against prsented as non-current liabilities. which they can be used. Deferred taxation assets are reviewed at each reporting date and are reduced Gains and losses on subsequent to the extent that it is no longer probable that the measurement related taxation benefit will be realised.
Gains and losses arising from a change in the Deferred taxation is measured at the taxation rates fair value of financial instruments are recognised that are expected to apply to temporary differences in profit or loss in the period in which the change when they reverse, using taxation rates enacted or arises. substantively enacted at the reporting date. Offset The measurement of deferred taxation reflects the consequences that would follow from the manner Financial assets and financial liabilities are offset in which the company expects, at the reporting and the net amount reported in the statement date, to recover or settle the carrying amount of its of financial position when the company has a assets and liabilities. legally enforceable right to set off the recognised amounts, and intends either to settle on a net Deferred taxation is not recognised when it arises basis, or to realise the asset and settle the liability from:- simultaneously. - Temporary differenences on the initial recognition 1.4 Taxation of an asset or liability in a transaction that is not a business combination and affects neither Current taxation accounting nor taxable profit or loss; - Temporary differences related to investments in Taxation comprises of current and deferred taxation. subsidiaries, associates and joint arrangements to Taxation is recognised in profit or loss except to the the extent that the company is able to control the extent that it relates to items recognised directly in timing of the reversal of the temporary differences equity or in other comprehensive income (OCI) in
Page 50 Botswana Fibre Network - BoFiNet | Annual Report 2016 and it is probable that they will not reverse in the Minimum Lease Payments made under finance forseeable future; and leases are apportioned between the finance expense and the reduction of the outstanding - Taxable temporary differences arising from initial liability. The finance expense is allocated to each recognition of goodwill. period during the lease term so as to produce a Current taxation comprises the expected taxation constant periodic rate of interest on the remianing payable or refundable on the taxable income or balance of the liability. loss for the period and any adjustment to taxation payable or refundable in respect of previous 1.6 Inventories periods. Taxation is measured using rates enacted Inventories are measured at the or substantively enacted at the reporting date. Current taxation also includes any taxation arising lower of cost and net realisable from dividends. Withholding taxation of 7.5% is value. payable on the gross amounts of dividends paid. Net realisable value is the estimated selling price in the ordinary course of business less the estimated 1.5 Leases costs of completion and the estimated costs Determining whether an necessary to make the sale. arrangement contains a lease The cost of inventories is based on the weighted average cost basis and includes expenditure At the inception of an arrangement, the company incurred in acquiring the inventories and bringing determines whether the arrangement is or contains them to their existing location and condition. a lease. Slow moving, obsolete and redundant inventories At the inception or reassessment of an arrangement are identified on a regular basis and are written that contains a lease, the company separates down to their estimated net realisable values. payments and other consideration required by the arrangement into those for the lease and those for 1.7 Impairment other elements on the basis of their relative fair values. If the company concludes for a finance Non-derivative financial assets lease that it is impracticable to separate the payments reliably, then an asset and a liability are Financial assets are assessed at each reporting recognised at an amount equal to the fair value of date to determine whether there is any objective the underlying asset; subsequently, the liability is evidence of impairment. Objective evidence that reduced as payments are made and an imputed financial assets are impaired includes: finance cost on the liability is recognised using the company’s incremental borrowing rate. - default or delinquency by a debtor Lease Payments - restructuring of an amount due to the company on terms that the company would not consider Leases where the lessor retains the risks and otherwise rewards of ownership of the underlying asset are classified as operating leases. Payments made or - indications that a debtor will enter bankruptcy received under operating leases are recognised in - observable data indicating that there is profit or loss on a straight line basis over the period measureable decrease in expected cash flows from of the lease. The operating lease liability resulting a group of financial assets. from the straight lining is disclosed as deferred income.
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 51 Financial assets measured at The recoverable amount of an asset or CGU is the amortised cost greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated The company considers evidence of impairment future cash flows, discounted to their present value for financial assets at both individual asset and a using a pre-tax discount rate that reflects current collective level. All individually significant assets are market assessments of the time value of money individually assessed for impairment. Those found and the risks specific to the asset or CGU. not to be impaired are then collectively assessed for any impairment that has been incurred but An impairment loss is recognised if the carrying not yet individually identified.Assets that are not amount of an asset or CGU exceeds its recoverable individually significant are collectively assessed amount. for impairment. Collective assessment is carried Impairment losses are recognised in profit or out by grouping together assets with similar risk loss. An impairment loss is reversed only to the characteristics. extent that the asset’s carrying amount does not exceed the carrying amount that wouls have been In assessing collective impairment, the company determined, net of depreciation or amortisation, if uses historical information on the timing of no impairment loss had been recognised. recoveries and the amount of loss incurred, and makes an adjustment if current economic and 1.8 Stated Capital credit conditions are such that are actual losses are likely to be greater or lesser than suggested by Ordinary shares are classified as equity. Stated historical trends. capital is recognised at the fair value of the consideration received. Incremental costs directly An impairment loss is calculated as the difference attributable to the issue of ordinary shares, net of between an asset’s carrying amount and the present any tax effects, are recognised as a deduction from value of the estimated future cash flows discounted equity. at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an 1.9 Employee benefits allowance account. When the company considers that there are no realistic prospects of recovery of Short-term employee benefits the asset, the relevant amounts are written off. If the amount of impairment was recognised, then the Employee entitlements to annual leave, bonuses, previously recognised impairment loss is reversed medical aid, housing benefits and severance through profit or loss. benefits are recognised when they accrue to employees and an accrual is recognised for the Non-financial assets estimated liability as a result of services rendered by the employee up to the reporting date. These At each reporting date, the company reviews the accruals are calculated at the undiscounted carrying amounts of its non-financial assets (other amounts based on current wage and salary rates. than inventories) to determine whether there is any indication of impairment. If such indication exists, Severance benefits then the asset’s recoverable amount is estimated. Employees who are not members of an approved For impairment testing, assets are regrouped pension scheme or entitled to gratuities per together into the smallest group of assets that employment contracts, are entitled to severance generated cash inflows from the continuing use benefits as regulated by the Botswana Labour that are largely independent of the cash inflows of Regulations. An accrual is recognised for the other assets or cash generating units (CGU). estimated liability for services rendered by
Page 52 Botswana Fibre Network - BoFiNet | Annual Report 2016 employees up to the reporting date. Severance services is recognised when the amount of revenue benefits are not considered to be a retirement can be measured reliably, it is probable that the benefit plan as the benefits are payable on economic benefits associated with the transaction completion of a continuous employment period of will flow to the company and the costs incurred or 5 years or on a pro rata basis on termination of to be incurred in respect of the transaction can be employment. measured reliably.
Pension contributions The company’s finance income and finance costs include interest income and interest expense. A defined contribution retirement plan is a post- Interest income or expense is recognised, in profit employment benefit plan under which an entity or loss, using the effective interest rate method. pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay 1.11 Translation of foreign currencies further amounts. Obligations for contributions to defined contribution plans are recognised as an Foreign currency transactions employee benefit expense in profit or loss when they are due. Prepaid contributions are recognised Items included in the financial statements are as an asset to the extent that a cash refund or a measured using the currency of the primary reduction in future payments is available. economic environment in which the entity operates (“the functional currency”). Profit sharing and bonus schemes Transactions conducted in foreign currencies are translated to Pula at the foreign exchange rate A liability is recognised for the amount expected ruling at the date of the transaction. Assets and to be paid under short-term bonus or profit liabilities denominated in foreign currencies at the sharing plans if the company has a present legal reporting date are translated to Pula at the foreign or constructive obligation to pay this amount as a exchange rate ruling at that date. Foreign exchange result of past services provided by the employee gains and losses resulting from the settlement and the obligation can be estimated reliably. of such transactions and from the translation if monetary assets and liabilities denominated in 1.10 Revenue foreign currencies are recognised in profit or loss. Rendering of services Interest received
Revenue is recognised when the amount of revenue Interest received is accrued on a time basis using can be measured reliably, it is probable that the the effective interest method. economic benefits associated with the transaction will flow to the company and the costs incurred Interest paid or to be incurred in respect of the transaction can Interest paid is recognised in profit or loss for all be measured reliably. Revenue is measured net interest-bearing financial instruments on an accrual of returns, trade discounts and exclusive of Value basis, using the effective interest rate method on the Added Taxation. original settlement amount. The effective interest method is a method of calculating the amortised The timing of the transfer of risks and rewards cost of a financial asset or a financial liability and of varies depending on the individual terms of the allocating the interest income or interest expense sales agreement, i.e. on customer acceptance of over the relevant period. The effective interest rate site specifications. is the rate that exactly discounts estimated future The company provides transportation services cash payments or receipts through the expected to customers for an additional fee over the sale life of the financial instrument or, when appropriate, of goods. Revenue from the rendering of these a shorter period to the net carrying amount of the financial asset or financial liability.
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 53 1.12 Changes in accounting policy
The annual financial statements have been prepared in accordance with International Financial Reporting Standards on a basis consistent with the prior year except for the adoption of the following new or revised standards.
Standards/Interpretation Impact
IFRS 14 - Regulatory Deferral Accounts No impact on these financial statements
Amendments to IFRS 1 Accounting for Acquistion of Interests in No impact on these Joint Operations financial statements
Amendments to IAS 27 Equity Method in Separate Financial No impact on these Statements financial statements
Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of No impact on these Depreciation and Amortisation financial statements
Sale or Contribution of Assets between Amendments to IFRS 10 and IAS 28 No impact on these an Investor and its Associate or Joint financial statements Venture
Amendments to IFRS 10 12 and IAS 28 Investment Entities, Applying the No impact on these Consolidation Exception financial statements
1.13 New Standards and Interpretations (continued) Standards and interpretations not yet effective
The following are new standards, amendments to standards and interpretations which are not yet effective for the year ended 31st March 2016 and have not been applied in preparing these financial statements:- Amendments to IAS 7:- Disclosure Initiative
The amendments provide for disclosures that enable users of financial statements to evaluate changes in liabilities arising from financial activities, including both changes arising from cash flow and non-cash changes. This includes providing a reconciliation between the opening and closing balances for liabilities arising from financing activities.
Page 54 Botswana Fibre Network - BoFiNet | Annual Report 2016 The amendments apply for annual periods beginning on or after 1 January 2017 and early application is permitted. These amendments are not expected to have any impact on the company’s financial statements. Amendments to IAS 12:- Recognition of Deferred Tax Assets for Unrealised Losses
The amendments provide additional guidance on the existence of deductible temporary differences, which depend solely on a comparison of the carrying amount of an asset and its tax base at the end of the reporting period, and is not affected by the possible future changes in the carrying amount or expected manner of recovery of the asset.
The amendments also provide additional guidance on the methods used to calculate future taxable profit to establish whether a deferred tax asset can be recognised.
Guidance is provided where an entity may assume that it will recover an asset for more than its carrying amount, provided that there is sufficient evidence that it is probable that the entity will achieve this.
Guidance is provided for deductible temporary differences related to unrealised losses that are not assessed separately for recognition. These are assessed on a combined basis, unless a tax law restricts the use of losses to deductions against income of a specific type.
The amendments apply for annual periods beginning on or after 1 January 2017 and early application is permitted. These amendments are not expected to have any impact on the company’s financial statement. IFRS 15:- Revenue from Contracts with Customers
This standard replaced IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18, Transfer of Assets from Customers and SIC-31 Revenue- Barter of Transactions Involving Advertising Services.
The standard contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or over time. The model features a contract-based five-step analysis of transactions to determine whether, how much and when revenue is recognised.
The standard, which becomes effective for the company’s 2018 financial statements, with early adoption permitted, is currently evaluated by the company. The standard is however not expected to have a significant impact on the company’s financial statements due to the nature of its revenue transactions.
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 55 IFRS 9:- Financial Instruments
On 24 July 2014, the IASB issued the final IFRS 9 Financial Instruments standard, which replaces earlier versionsof IFRS 9 and completes the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement.
This standard will have an impact on the measurement bases of an entity’s assets to amortised cost, fair value through other comprehensive income or fair value through profit or loss. Even though these measurement categories are similar to IAS 39, the criteria for classification into these categories are significantly different. In addition, the IFRS 9 impairment model has been changed from an “incurred loss” model from IAS 39 to an “expected credit loss” model.
The standard is effective for annual periods beginning on or after 1 January 2018 with retrospective application. Early adoption is permitted. The standard may have an impact on the classification and measurement of the company’s financial assets and liabilities. 1.13 New Standards and Interpretations (continued) IFRS 16:- Leases
IFRS 16 was publised in January 2016. It sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer (‘Lessee’) and the supplier (‘Lessor’). IFRS 16 replaces the previous leases standard, IAS 17 Leases, and related interpretations. IFRS 16 has one model for lessees which will result in almost all leases being included on the Statement of Financial Position. No significant changes have been included for lessors.
The standard is effective for annual periods beginning on or after 1 January 2019, with early adoption permitted only if the entity also adopts IFRS 15. The transitional requirements are different for lessees and lessors.
The standard, which becomes effective of the company’s 2019 financial statements, which will have an impact in the measurement, presentation and disclosure of operating leases in the company’s financial statements.
Page 56 Botswana Fibre Network - BoFiNet | Annual Report 2016 Notes to the Financial Statements
2. Property, plant and equipment
2016(P) 2015(P)
Cost / Accumulated Carrying Cost / Accumulated Carrying Valuation depreciation value Valuation depreciation value Buildings 110,143,021 (10,684,626) 99,458,395 47,136,199 (5,387,124) 41,749,075 Plant and machinery 1,180,163,155 (123,669,465) 1,056,493,690 789,650,031 (68,369,976) 721,280,055 Motor vehicles 11,988,826 (2,571,741) 9,417,085 7,270,107 (997,905) 6,272,202 Other Plant and Equipment 46,864,701 (11,150,494) 35,714,207 8,926,933 (2,134,522) 6,792,411 Capital Work in Progress 59,894,358 - 59,894,358 134,611,988 - 134,611,988
Total 1,409,054,061 148,076,326 1,260,977,735 987,595,258 (76,889,527) 910,705,731
Reconciliation of property, plant and equipment - 2016
Opening Additions Transfers Depreciation Total Balance
Buildings 41,749,075 59,604,750 3,402,072 (5,297,502) 99,458,395 Plant and machinery 721,280,055 - 390,513,124 (55,299,489) 1,056,493,690 Motor vehicles 6,272,202 2,575,224 2,143,495 (1,573,836) 9,417,085 Other Plant and Equipment 6,792,411 2,223,561 35,714,207 (9,015,972) 35,714,207 Capital Work in Progress 134,611,988 357,055,268 (431,772,898) - 59,894,358
Total 910,705,731 421,458,803 - (71,186,799) 1,260,977,735
Reconciliation of property, plant and equipment - 2015
Opening Additions Depreciation Total Balance
Buildings 42,324,558 3,400,286 (3,975,769) 41,749,075 Plant and machinery 738,447,329 39,358,040 (56,525,314) 721,280,055 Motor vehicles 4,437,055 2,684,455 (849,308) 6,272,202 Other Plant and Equipment 5,556,820 2,645,653 (1,410,062) 6,792,411 Capital Work in Progress - 134,611,988 - 134,611,988
Total 790,765,762 182,700,422 (62,760,453) 910,705,731
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 57 2016 2015 P P 3. Deferred tax
The deferred tax assets and the deferred tax liability relate to income tax in the same jurisdiction, and the law allows net settlement. Therefore, they have been offset in the statement of financial position as follows:
Deferred tax asset 6,845,878 10,269,278
Reconciliation of deferred tax asset / (liability) At beginning of year 10,269,278 542,612 Movement in profit or loss (3,423,400) 9,726,666
6,845,878 10,269,278
Analysis of deferred taxation Accelerated capital allowances on property, plant and (55,015,313) (36,244,012) equipment Finance lease (21,438,682) (14,480,917) Unrealised foreign exchange gains 392,430 (104,075) Prepayments (769,247) (88,298) Deferred Income 24,646,145 10,180,533 Assessed losses 59,030,545 51,006,047 6,845,878 10,269,278 4. Investment in Shares
Investments in shares represents shareholding in WIOCC (West Indian Ocean Cabling Company). The shareholding in WIOCC is 5%. The company holds 550 ordinary shares valued at 1000 US Dollars each in WIOCC. The fair value of the investment in shares is P 5,882,353.
5. Inventories
Raw Materials, Components 11,417,380 9,369,145
6. Trade and other receivables
Trade receivables 66,861,060 42,625,664 Provision for doubtful debts (707,777) - Other receivable 11,248,432 1,368,897
77,401,715 43,994,561
Other receivables comprise Sundry customers 3,622,941 77,369 Prepayments and deposits 3,735,059 639,836 Other Advances 3,204,035 85,484 Imprest Control 423,564 364,434 Withholding taxation and credit card receivable 262,833 201,774
11,248,432 1,368,897
Page 58 Botswana Fibre Network - BoFiNet | Annual Report 2016 2016 2015 P P
7. Cash and cash equivalents
Cash and cash equivalents consist of: Cash on hand 23,911 100 Call Accounts - BWP 305,053,331 86,063,179 Current Account - USD 83,350,826 2,192,067
388,428,068 88,255,346
Cash and Cash equivalents comprise of Petty Cash 23,911 100 Call Accounts- BWP 305,053,331 106,183,283 Current account - USD 83,350,826 2,192,067 Bank Overdraft - (20,120,104)
388,428,068 88,255,346
8. Share capital
Issued 1 000 000 ordinary shares at P746.24 746,244,423 746,244,423 1 000 000 ordinary shares at no par value 1,000,000 1,000,000
747,244,423 747,244,423
The holders of the ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the company. All shares rank equally with regard to the company’s residual assets.
The company issued 1,000,000 ordinary shares to the Government of Botswana in the previous financial year. The consideration originated from the funding reserve, which was then capitalised to shares.
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 59 2016 2015 P P 9. Funding Reserve
Botswana Fibre Networks was set up as part of the asset separation exercise in the privatisation of a local company. The funding received relates to equity in respect of assets taken over and cash received from the Government of Botswana for setup and initial operating activities. These amounts are interest free and are not expected to be repaid.
Opening balance 254,925,290 - Assets transferred - 676,247,202 Expenses paid on behalf of the company - 7,473,624 Issue of stated capital - 1,000,000 Capitalisation of funding reserve - (746,244,423) Cash funding 422,530,279 316,448,887 677,455,569 254,925,290
10. Other financial liabilities
Held at amortised cost UASF Funding 5,817,360 -
The Universal Access Services Fund (UASF) Grant relates to the capital subsidy provided by the Fund for the implementation of Wi-Fi Hotspots in key strategic public areasincluding cities, towns and major tourist destinations. BoFiNet rolled out the project in partnership with the Fund. 10. Other financial liabilities (continued)
Non-current liabilities At amortised cost 5,817,360 -
11. Finance lease obligation
Minimum lease payments due - within one year 2,283,292 42,253,010 - in second to fifth year inclusive - 3,835,730
2,283,292 46,088,740 less: future finance charges (246,103) (1,028,655) Present value of minimum lease payment 2,037,189 45,060,085
Non-current liabilities - 3,257,148 Current liabilities 2,037,189 41,802,937 2,037,189 45,060,085
Page 60 Botswana Fibre Network - BoFiNet | Annual Report 2016 2016 2015 P P
The finance lease comprises vehicle leases. Motor vehicle leases The finance lease liability is secured over motor vehicles with book values of P 2,037,189. The finance lease liability bears interest at the Botswana prime lending rate plus 2% perannum (currently 7.5%) and is repayable in 36 monthly instalments of P 126 404, commencing December 2013.
12. Deferred Revenue The deferred revenue comprises of lease agreement in respect of indefeasible rights of use of assets with Botswana Telecommunications Corporation and WIOCC.
The future lease payments receivable are detailed as follows:-
Deferred Revenue Balance as at 01 April 2015 46,409,823 - BTC IRU invoiced during the year 97,700,000 - WIOCC IRU invoiced during the year 5,229,183 - Recognised revenue for BTC IRU (35,700,000) - Recognised revenue for WIOCC IRU (1,611,075) - Receivable in terms of lease agreements - 81,259,392 Recognised in revenue - (34,849,569) 112,027,931 46,409,823
The future lease payments receivable are detailed as follows 97,700,000 99,731,987 -receivable within one year 92,300,000 176,000,000 -receivable within two to five years 190,000,000 275,731,987
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 61 2016 2015 P P 13. Government Data Network
The Government Data Network (GDN) liability relates to funds received from the Government of Botswana for the GDN project, which BoFiNet is managing on behalf of Government.
Amount received during the year 171,446,452 - Less:- Expenses for the year (12,763,973) -
158,682,479 -
14. Trade and other payables
Trade payables 74,082,096 40,006,167 Other payables 43,851,703 20,596,976 117,933,799 60,603,143
Other payables comprise:- Payroll related accruals 22,570,982 16,128,473 Sundry payables 21,280,721 4,468,503
43,851,703 20,596,976
15. Revenue
Sale of goods and rendering of services 184,448,543 118,197,372 Government subvention 74,696,000 60,314,489 Amortisation of Government Grant 9,631,622 -
268,776,165 178,511,861
16. Cost of sales
Sale of goods Cost of sales 48,314,252 86,199,812 Depreciation 58,711,140 59,671,672
107,025,392 145,871,484
17. Other income
Rebate received 4,232,114 - Tender Fees and Sundry Income 201,506 403,433 UASF Subsidy 3,492,305 -
7,925,925 403,433
Page 62 Botswana Fibre Network - BoFiNet | Annual Report 2016 2016 2015 P P 18. Finance income Interest revenue Bank 1,680,887 808,693 19. Finance costs Finance Finance costs Finance Lease Obligations 1,083,089 595,880 20. Taxation Major components of the tax expense Deferred
Originating and reversing temporary differences 3,423,400 (9,726,666)
No provision for normal company taxation was recognised in the current or previous reporting period as the company has estimated tax losses of P 268,320,659 ( 2015: P 231,845,667) available for set-off against future taxable income. Tax losses fall away after five years if not utilised. 21. Auditors’ remuneration
Fees 375,000 275,000 22. Operating Profit / (Loss)
Operating profit / (loss) is stated after the following:- Depreciation on property, plant and equipment 12,475,659 3,088,781 Unrealised exchange gains 2,130,519 (473,070) Consultancy fees 888,828 3,089,212 Employee costs 52,555,868 45,275,450 68,050,874 50,980,373
23. Cash generated from operations
Operating profit / (loss) is stated after the following:- Profit before taxation 24,826,482 (68,860,649) Adjustments for: Depreciation and amortisation 12,475,659 3,088,782 Interest received (1,680,887) (808,693) Finance costs 1,083,089 595,880 Depreciation and amortisation (included in cost of sales) 58,711,140 59,671,671 Changes in working capital: Inventories (2,048,235) (4,112,065) Trade and other receivables (33,407,154) (19,952,573) Trade and other payables 57,330,656 46,842,406 Deferred Revenue 65,618,108 46,409,823
182,908,858 62,874,582
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 63 2016 2015 P P
24. Government Funding
Government funding received during the year 422,530,279 196,050,598
25. Related parties
Relationships Botswana Telecommunications Corporation Limited Fellow subsidiary Government of Botswana Holding entity
Related party balances
Amounts owing to related parties Amounts due to related company - Botswana Telecommunications Corporation Limited - 192,324
Amounts owing from related parties Amounts due from related company - Botswana Telecommunications Corporation Limited 29,304,041 25,343,549
Related party transactions Government of Botswana Issuing of share capital - 746,244,423 Funding 422,530,279 196,050,598 Government subvention 84,327,622 64,900,000
Key personnel remuneration
The key management personnel compensation - consists of short term employee benefits paid to senior - management of the company as follows:- Short term employee benefits (salaries and allowances) 3,852,516 3,268,903 Directors’ fees 681,585 397,405 4,534,101 3,666,308
26. Capital Commitments
Authorised commitments 91,308,546 41,005,290
Page 64 Botswana Fibre Network - BoFiNet | Annual Report 2016 27. Reclassification
Certain comparative figures have been reclassified and there is no material effect on the financials due to the re-classification. Depreciation for the core network and related assets have been reclassified from operating expenses to Cost of Sales.The depreciation amount re-classified from depreciation to cost of sales is P 59,671,672.
The depreciation on the core network and related assets have been reclassified to cost of sales. In previous accounting periods, the depreciation on core network and related assets was classified as part of operating expenses.
As there are no effect on the opening retained earnings as at 1st March 2014, no opening statement of financial position has been presented. The effect of the reclassification is dislcosed below:-
Statement of Comprehensive Income As currently Reclassification As currently reported reported 31st March 2014 31st March 2014 Cost of Sales (P 86,199,812) (P 59, 671, 672) (P 145,871, 484) Gross Profit P 92, 312, 049 (P,59, 671, 672) P 32, 640, 377 Operating Expenses (P 161, 788, 944) P 59, 671, 672 (P 102, 117, 272)
28. Risk management Overview
The company has exposure to interest rate, liquidity, foreign currency and credit risk whci arises in the normal course of the company’s business. This note presents information about the company’s exposure to each of the above risks, the company’s objectives, policies and processes for measuring and managing these risks, and the company’s management of capital. Further quantitative disclosures are included. The Board of Directors has overall responsibility for the establishment and oversight of the company’s risk management framework.
The company’s risk management policies are established to identify and analyse the risks faced by the company, to set appropriate risk limits and controls, and to monitor risks and adherance to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the company’s activities.
The Board of Directors oversees how management monitors compliance with the company’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the company. The following analysis indicates the carrying and fair values of financial instruments in the settlement of financial position: Financial assets
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 65 2016 2015 P P
Trade and other receivables 77,401,715 43,994,561 Cash and Cash Equivalents 388,428,068 88,255,347
465,829,783 132,249,908
Financial liabilities Trade and other payables 117,465,500 60,603,143 Finance lease obligation 2,037,189 45,060,085
119,502,689 105,663,228
Liquidity risk The company is exposed to daily operational payments, payments of trade payable balances, payment of amounts due to related companies and payment of interest-bearing borrowings. Liquidity risk is the risk that cash may not be available to pay obligations when due at a reasonable cost. The company sets limits on the minimum proportions of maturing funds available to meet such calls and unexpected levels of demand.
Contractual amount cashflows due in less 2016 Carrying Amount than 6 months Trade payables 74,082,096 74,082,096 Other payables 43,851,703 43,851,703 Finance lease obligation 2,037,189 2,037,189
119,970,988 119,970,988
Contractual amount cashflows due in less 2015 Carrying Amount than 6 months Trade payables 18,547,276 18,547,276 Other payables 42,055,587 42,055,587 Finance lease obligation 45,060,085 45,060,085
105,662,948 105,662,948
Interest rate risk Financial insturments that are sensitive to interest rate are cash and cash equivalents and interest bearing-borrowings. Interest rates applicable to financial instruments fluctuate with movements in the Botswana prime interest rate and are comparable with rates that are currently available in the market.
An increase of 50 basis points in interest rates during the period would not have had a significant impact on the results of the company. Financial instruments subject to interest rate risk are summarised as follows:
Page 66 Botswana Fibre Network - BoFiNet | Annual Report 2016 Interest rate Interest rate Balance at Balance at per annum per annum period end period end 2016 2015 2016 2015 Amounts due from related company - Botswana Telecommunications Corporation Limited 0.50 % 0.50 % 305,053,331 106,183,283 Credit risk The company has exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due. Key areas where the company is exposed tocredit risk are:
• amounts due from trade and other receivables,
• amount due from related party, and
• investments in cash and cash equivalents.
The company limits the levels of credit risk that it accepts by placing on its exposure to a single counterparty or group of counterparties.
Exposure to third parties is monitored as part of the credit control process. The maximum exposure to credit risk is presented by the carrying amount of each financial asset in the statement of financial position.
Reputable financial institutions are used for investing and cash handling purposes. All money market instruments and cash equivalents are placed with financial institutions registered in Botswana. Banks in Botswana are not rated but the banks concerned are regulated by Bank of Botswana.
The company establishes an allowance for impairment which represents its estimate of incurred losses in respect of trade receivables. This allowance is estimated through a detailed specific balance analysis of the trade receivable balances and includes trade receivables handed over to lwayers, known slow payers and disputed amounts.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposue to credit risk at the reporting date is analysed as follows:-
Financial instrument 2016 2015
Trade Receivables 66,861,060 42,625,664
Other Receivables 10,540,655 1,368,897
Cash and Cash Equivalents 393,313,444 88,255,347
All trade receivables are due from customers within Botswana.
The ageing of trade receivables at the reporting date is analysed as follows:-
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 67 Ageing 2016 Impairment 2015 Impairment
Not past due (0-30 days) 16,850,641 - 8,135,900 - 30-60 days 27,601,348 - 13,979,033 - 90 days 8,394,940 - 6,714,915 - Over 120 days 14,014,131 - 13,795,816 - Sub-Total 66,861,060 42,625,664 66,861,060 42,625,664
Foreign currency risk The company is exposed to foreign currency risk for transactions which are denominated in a currecny other than Pula. The company does not take cover on foreign currency as it regards the Pula as a stable currency.The company’s exposure to foreign exchange risk, based on notional amounts, is anlaysed as follows:-
Foreign Pula Foreign Pula Foreign Currency equivalent Currency equivalent Description Currency Amount 2016 2016 Amount 2015 2015
Trade receivables USD 1,472,883 16,549,244 1,092,681 11,206,993 Finance lease obligations USD - - (4,393,143) (45,060,085) Trade payables USD (4,116,758) (46,255,707) (847,016) (8,687,344) Trade payables GBP (50,139) (797,453) - - Trade payables EURO (27,114) (340,303) (166,931) (1,834,409) Trade payables ZAR (5,611,084) (4,316,219) (1,037,050) (874,041)
Subtotal - (8,332,212) (35,160,438) (5,351,459) (45,248,886) (8,332,212) (35,160,438) (5,351,459) (45,248,886)
The following exchange rates were applied at the reporting date:-
1 BWP 2016 2015
Rand 1.2999 1.1865 GBP 0.0629 0.0667 EUR 0.0797 0.0910 US Dollars 0.0890 0.0975 Sensitivity analysis A 10 percent strengthening of the Botswana Pula against the US Dollar at the reporting date would have increased the company’s profit before taxation by the amounts shown below. This analysis assumes that all the other variables, in particular interest rates, remain constant.
Page 68 Botswana Fibre Network - BoFiNet | Annual Report 2016 2016 Effect on profit
USD 2,700,588 GBP 72,496 EURO 30,937 ZAR 392,383
2015 Effect on profit
USD 371,999 EURO 166,767 ZAR 103,705
A 10 percent weakening of the Botswana Pula against the above currencies at reporting date would have had an equal but opposite effect on the company’s loss before taxation to the amounts shown above, on the basis that all the other variables remain constant.
29. Fair value information
Fair value hierarchy Financial instruments carried at fair value are categorised in 3 levels by valuation method. The different levels have been defined as follows:- - Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. - Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability either directly or indirectly. - Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs) The company’s financial insruments carried at fair value are categorised as level 3.
The company’s assets and liabilities are categorised as follows:-
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 69 Financial assets Financial financial Other nonassets Assets 2016 Carrying designated at Loans and liabilities at / assets and values fair value receivables amortised cost liabilities
Deferred taxation 10,269,278 - - - 10,269,278 Property,plant and equipment 1,260,977,735 - - - 1,260,977,735 Trade and other receivables 77,401,715 - 77,401,715 - - Cash and cash equivalents 388,428,068 - 388,428,068 - - Inventory 11,417,380 - - - 11,417,380
1,748,494,176 - 465,829,783 - 1,282,664,393
Financial assets Financial financial Other nonassets Liabilities 2016 Carrying designated at Loans and liabilities at / assets and values fair value receivables amortised cost liabilities
Trade and other payables 117,933,799 - - 117,933,799 - Deferred revenue 112,027,931 - - - 112,027,931 Finance lease obligation 2,037,189 - - 2,037,189 - Government Data Network 158,682,479 - - - 158,682,479 Liability 390,681,398 - - 119,970,988 270,710,410
Financial assets Financial financial Other nonassets Assets 2015 Carrying designated at Loans and liabilities at / assets and values fair value receivables amortised cost liabilities
Deferred taxation 10,269,278 - - - 10,269,278 Property,plant and equipment 910,705,731 - - - 910,705,731 Trade and other receivables 43,994,561 - 43,994,561 - - Cash and cash equivalents 88,255,346 - 88,255,346 - - Inventory 9,369,145 - - - 9,369,145
1,062,594,061 - 132,249,907 - 930,344,154
Financial assets Financial financial Other nonassets Liabilities - 2015 Carrying designated at Loans and liabilities at / assets and values fair value receivables amortised cost liabilities
Trade and other payables 60,603,143 - - 44,474,670 16,128,473 Deferred revenue 46,409,823 - - - 46,409,823 Finance lease obligation 45,060,085 - - 45,060,085 -
152,073,051 - - 89,534,755 62,538,296
Page 70 Botswana Fibre Network - BoFiNet | Annual Report 2016 Supplementary Statement of Profit or Loss and of the Comprehensive Income for the year ended 31st March 2016
Note(s) 2016(P) 2015(P) Revenue Sale of goods and rendering of services 184,448,543 118,197,372 Government subvention 74,696,000 60,314,489 Amortisation of Government Grant 9,631,622 - 15 268,776,165 178,511,861 Cost of sales PURCHASES (107, 025, 392) (145,871,484) GROSS PROFIT 161,750,773 32,640,377 Other income Rebate received 4,232,114 - Tender Fees and Sundry Income 201,506 403,433 UASF Subsidy 3,492,305 - Interest received 18 1,680,887 808,693 9,606,812 1,212,126
Expenses (Refer to Next Page) (145,448,014) (102,117,272) Operating profit (loss) 25,909,571 (68,264,769) Finance costs 19 (1,083,089) (595,880)
Profit (loss) before taxation 24,826,482 (68,860,649) Taxation 20 3,423,400 (9,726,666) Profit (loss) for the year 21,403,082 (59,133,983)
The supplementary information presented does not form part of the financial statements and is unaudited
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 71 Supplementary Statement of Profit or Loss and of the Comprehensive Income for the year ended 31st March 2016 Notes 2016(P) 2015(P) Operating expenses
Advertising (5,099,038) (4,787,965) Levies (330,198) (210,128) Auditors remuneration 21 (375,000) (275,000) Bad debts (707,777) - Bank charges (238,208) (161,121) Cleaning (1,317,147) (722,134) Consulting Fees (9,030,363) (4,390,525) Consumables (158,186) - Depreciation and amortisation (12,475,659) (3,088,782) Salaries and Wages (52,555,868) (45,877,825) Entertainment - (65,857) Seminars and Events (1,239,271) (1,932,041) Foreign Exchange Gians and Losses (2,130,519) 473,070 Tender Costs (73,217) (450,587) Other Expenses (252,689) (4,297,125) Recruitment Costs (268,086) (608,255) Sponsorships (Social Responsibilty) (5,003,994) (1,868,200) Directors’ Fees (681,585) (397,405) Hire (3,208,100) (1,604,264) Insurance (1,591,904) (466,060) Lease rentals (3,096,731) (4,215,233) Legal expenses (1,920,332) (353,316) Medical expenses (1,896,990) (1,140,796) Motor vehicle expenses (41,543) (400,208) Fuel (2,173,055) (947,398) Printing and stationery (1,499,567) (2,828,390) Uniform and Clothing (51,740) (62,164) Repairs and maintenance (10,798,350) (1,286,885) Security (5,603,754) (978,240) Staff welfare (2,648,964) (1,314,829) Subscriptions (3,085,475) (864,144) Telephone and fax (3,555,909) (2,771,441) Training (1,427,112) (2,324,959) Transport and freight (3,221,466) (2,810,057) Travel (7,690,217) (102,117,272) (145,448,014) (102,117,272)
The accounting policies on the pages 19 to 29 form an integral part of the financial statements.
Page 72 Botswana Fibre Network - BoFiNet | Annual Report 2016 Notes ______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 73 Notes ______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
______
Page 74 Botswana Fibre Network - BoFiNet | Annual Report 2016 Driving Connectivity & Economic Growth BOTSWANA FIBRE NETWORK Plot 74769, Unit 3 Mowana Mews, CBD Gaborone, Botswana [ T ] +267 - 399 5500 [ F ] +267 - 392 3414 [ E ] [email protected] [ W ] www.BoFiNet.co.bw