annual - BOFINET | Home 4 Botswana Fibre Network - BoFiNet Annual Report 2016 Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 5 Botswana Fibre Networks The Board Botswana

reportannualTHE YEAR IN REVIEW

2015-2016

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

driving connectivity& economic growth

The Board __________________________________

Chairmans’ Statement__________________________

Executive Committee___________________________

Chief Executive Officer’s Statement__________________

Strategic Projects_____________________________

Network Operations Report_______________________

Products & Services____________________________

Our People__________________________________

CSR______________________________________

Financial Statements___________________________

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Botswana Fibre Network - BoFiNet | Annual Report 2016Page 4

Botswana Fibre Network - BoFiNet | Annual Report 2016 Page 5

Botswana Fibre Networks

The Board

Botswana Fibre Networks (BoFiNet) is governed by a Board consisting of eight (8) non-Executive Directors. In terms of Clause 10 of the BoFiNet Constitution, the selection and appointment of the BoFiNet Board lies with the Minister of Transport and Communications. As per best practice, Board appointments are based on prescribed skills and experience, as such the appointed members of the Board have diverse skills and experience in various disciplines which accordingly assists in ensuring BoFiNet discharges its mandate within the stipulated provisions of the BoFiNet License.

THE BOARD MEMBERS FOR THE PERIOD UNDER REVIEW WERE:

• Mr Ratsela Mooketsi – Chairman

• Ms Pauline Sebina – Vice Chairman

• Mr Marvin Toto – Member

• Mr Letsebe Sejoe – Member

• Ms Malebogo Mpugwa – Member

• Ms Yolisa Phillips - Lejowa – Member

• Ms Lynette Armstrong – Member

• Mr Gazhani Thangwane - Member

BOARD COMMITTEES

The Board has 3 standing committees namely; the Board Tender Committee, Finance and Audit Committee and the Human Resource Committee.

BOARD TENDER COMMITTEE

The Board Tender Committee consists of three (3) non-Executive members. The Committee was established for amongst others, to ensure that fundamental procurement principles are observed in awarding tenders. This is meant to ensure that fairness, transparency and value for money are observed during the procurement process. The threshold for the Committee is for procurement of goods and services valued at P5, 000, 001.00 to P30, 000, 000.00.

THE MEMBERS OF THE BOARD TENDER COMMITTEE ARE:

• Mr Gazhani Thangwane – Chairman

• Ms Yolisa Phillips - sLejowa – Member

• Mr Marvin Torto – Member

FINANCE AND AUDIT COMMITTEE

The Finance and Audit Committee consists of three (3) non-Executive members. The Committee was set up to ensure and maintin an effective internal controls environment for BoFiNet. The Committee reviews financial controls, accounting systems, and reporting to external stakeholders, as well as providing oversight over the audit function of the organization.


THE MEMBERS OF THE FINANCE AND AUDIT COMMITTEE ARE:

• Mr Letsebe Sejoe – Chairman

• Ms Pauline Sebina – Member

• Ms Lynette Armstrong – Member

HUMAN RESOURCE COMMITTEE

The committee was set up to oversee both substantive and procedural administration of staff welfare issues, amongst other recruitment processes, industrial relations, remuneration and 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

DECLARATION OF INTERESTS

The members of the Board are required to declare their interests at every Board and/or Committee meeting to ensure observance of good corporate governance principles.

COMPANY SECRETARY

Subsequent to the establishment of BoFiNet, Kingsway (Pty) Ltd was appointed as Company Secretaries. The Company Secretary duties include the provision of corporate governance advice and secretarial services to the Board and its Committees.


Chairman’s Statement

MR. RATSELA MOOKETSIChairman of Board of Directors

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.


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. There is a direct correlation between countries that have high broadband penetration and telecommunications usage and the success of their societies at the level of both social inclusion and upliftment as well as sustained economic growth. To this end, closing the digital divide has certainly ignited a spark in Africa, a spark that is seen as a beacon of hope to fast track sluggish development and economic growth in some of the poorest countries in our continent.

Botswana is no different in our quest to connect all Batswana, making telecommunication and internet services available to all. I must commend the foresight of the Botswana Government in seeing the importance of laying a robust and intricate foundation for enabling broadband connectivity for all. . In pursuing this noble development imperative; Botswana Fibre Networks remains a testament and central to that foresight of putting Batswana first, creating a conducive environment for business, learning and innovation. The formation of this company, about three year years ago now, was widely debated and it was reason that won in the end and we find ourselves here. Like the 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.

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 affordability of this product has empowered Batswana to access the internet in strategically selected areas across Botswana. The usage patterns have indicated that indeed we are on to a winning product that is set to grow and further shape the connectivity landscape of Botswana.

Our continued commitment to increasing broadband penetration, taking the services to all corners of Botswana, is continuing in earnest. In the 2015/16 financial year, BoFiNet commenced on several key projects that were aimed at modernizing the national backbone network, increasing our reach as well as improving internet connectivity.

In conclusion, I would like to quote Steve Ballmer, former CEO of Microsoft; “The number one benefit of information technology is that it empowers people to do what they want to do. It lets people be creative. It lets people be productive. It lets people learn things they didn’t think they could learn before, and so in a sense it is all about potential.” This quote underpins why we do what we do at BoFiNet and why connectivity is a key driver of economic diversification. We will continue to connect Botswana to the rest of the world, delivering on our mandate for many years to come.


Board of Directors

MS. PAULINE SEBINAVice - Chairman of the BoardMs. 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. RATSELA MOOKETSI Chairman of the BoardMr. 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.

MR. GADZANI THANGWANEBoard MemberMr. 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 SEJOEBoard 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.


MS. MALEBOGO MPUGWABoard 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.

MS. YOLISA PHILLIPS-LEJOWABoard 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 ARMSTRONGBoard 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.


Executive CommitteeMR. MABUA LESEGO MABUACEO

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 GABADIRWECorporate 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 JENSENStrategy & 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.


MR. ALDRIN SIVAKOTechnical 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 SEGOLEProject 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.


MR. MABUA LESEGO MABUAChief Executive Officer

We will continue to deliver on our promise

to the shareholder, the Government and

ultimately the people of Botswana.


CEO’s StatementIt is indeed an exciting time to be part of an extraordinary change agent and team in the mould of Botswana Fibre Networks. The 2015/16 financial year has been a year of tremendous growth, marked by key milestone achievements as we cement our path to organizational maturity in the execution of our mandate. Our mandate continued to be carried out, through the provision of wholesale products that are competitively priced, accessible to Batswana and services that are equally reliable.

In pursuing our strategic growth imperatives, BoFiNet managed to grow its customer base by 26%, galvanising our position as the leading wholesale provider of broadband products and services in the country. This positive growth has primarily been driven by greater focus on customer relationship management while offering relevant, innovative and forward-thinking products and services at competitive prices. We certainly believe that achieving excellence in customer service will trickle down to bettered experience for the retail end of the market and the public.

One of the most transformative developments in the year under review has been the introduction 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

been borne of recognition that we are indeed a change agent; built around a strong, cohesive and dynamic team that believes in substantively contributing to the country’s national development goals and aspirations. To this end, BoFiNet aims to be an employer of choice, putting in place an employee brand that will attract the best people for the job. A rapidly growing company, which will stabilize in the next year or so, saw the staff complement grow by 25.5%, bring us to a total of 149 at the end of the period under review. We want to remain competitive and relevant in the niche industry of telecommunications, ensuring we have the crème of the crop.

We will continue to deliver on our promise to the shareholder, the Government and ultimately the people of Botswana. The strides we have made in 2015/16 are a source of pride, but we will not lessen our pace as we know there is more to do to fully realize the strategic objectives regarding broadband penetration in Botswana. To remain relevant in this world, communication and information are the cornerstones of success. BoFiNet endeavours to bring forth results that improve year on year, as the market becomes even more competitive and sophisticated.


Strategic Projects

Improvement of the Socio-Economic StatusBoFiNet, a wholly Government owned entity has a critical role to play in implementing the National ICT Policy and the Rural Telecommunication Strategy. These policies and strategies have been the bedrock of our strategies in expanding our investment in rural areas to enable the provision of essential telecommunication services. Ngamiland, Kgalagadi and Central region areas have been provided with connectivity that joins into the national backbone allowing citizens in those communities and opportunity to enhanced services such as 3G and other faster technologies. Such developments have enabled e-Government initiatives and allowed citizens to have basic internet connectivity. Rural area dwelling citizens are now able to connect at improved internet speeds or similar to citizens in urban areas. BoFiNet has achieved a milestone in reducing the technological gap that exists between urban and rural areas, and we will continue with our efforts to reduce it further to ensure digital inclusion for all citizens in Botswana.

The financial year 2015/16 has seen enormous technological advancement and infrastructure development in Botswana. Businesses have

adopted new technologies such as LTE to offer the market faster connectivity and improve the way business is conducted in Botswana. Proliferation of smart phones and other bandwidth hungry gadgets continues in our market, which inevitably necessitate investment in the telecommunication infrastructure to support new age technological advancement. 2015/16 saw intensive investment in FTTx (Fibre to the X) Network, wireless technologies and optic fibre expansion to different parts of the country.

BoFiNet remains Government’s key implementation partner in rolling out telecommunications infrastructure in the country to ensure increased national coverage and cost effective broad band penetration. In the 2015/16 financial year, BoFiNet embarked on a number of key strategic projects that were aimed at modernizing the national backbone network, increasing our reach as well as improving internet connectivity. These projects are as follows:

1.1. National Backbone ProjectsThe national backbone projects entailed surveying, planning, designing, installation and commissioning of the transport network in the route in order to establish connectivity of voice and data traffic to provide services in the villages along the routes.


1.1.1. Tsabong to Two Rivers Optic Fibre project: The project is an extension of the Sekoma – Tsabong project which was officially closed on the 22nd August 2015 in Werda.

The villages covered were Tsabong, Maubelo, Kolokwaneng, Bogogobo, Middlepits, Gakhibana, Rapplespan, Vaalhoek, Bokspits, Struizendum and Two Rivers. The total distance covered was 310km. The project commenced on the 13th November 2015, and will be completed on the 6th June 2016.

1.1.2. Mohembo to Gudigwa Optic Fibre project: The project is an extension to the Sehithwa – Mohembo project, which will be officially closed on the 11th September 2016 in Shakawe.

The coverage included the villages of Mohembo East, Kauxwi, Xakau, Sekondomboro, Nkarange, Mogotlho, Mokgacha, Seronga, Gunotsoga, Eretsha, Beetsha and Gudigwa. The total distance covered by the projects is 162km. The project commenced on the 5th February 2016, and will be completed on the 14th June 2016.

1.1.3. Kachikau to Parakarungu Optic Fibre project: The project entailed the construction of an underground optical fibre cable network from Kachikau to Parakarungu at a total distance of 32km.

The project will cover the villages of Kachikau, Satau and Parakarungu. The project commenced on the 18th March 2016, and will be completed on the 13th May 2016.

1.2. Deployment of The Fibre - To - The - X (FTTx) NetworkOne of the constraints to accessing tele-communications services is cost of last mile- extending fibre reach from the provider’s backbone network to the final termination point where the consumer is. This cost generally borne by the end user is a hindrance to accessing services. It became

imperative for BoFiNet to develop the infrastructure as close as possible to bridge the last mile gap and facilitate broadband connectivity as much as possible. The deployment of FTTx is a key landmark towards improvement of broadband penetration. FTTx (Fibre-To-The-x) is a generic term for any network architecture describing the “last mile” of the telecom connectivity between the communications provider and the customer denoted as ‘x’. The ‘x’ is a collective term for various optical fibre delivery topologies that are categorized according to where the fibre terminates .e.g. FTTH: Fibre - To-The Home, FTTB: Fibre - To-The Building, FTTC: Fibre - To-The Curb etc. During the financial year 2015/16 BoFiNet succeeded in the deployment of Fibre to the Building covering close to 568 sites within 4 strategic areas of Gaborone, Francistown, Maun and Kasane to address the last mile connectivity and the list continues to grow with the completion of on-going projects.

FTTx connectivity provides high speed, secure transmission, stability and better service quality overall and allows for innovative services, and improved internet experience through faster downloads and uploads that service providers will be able to deliver to end- users.

The primary objective of this project is for BoFiNet to expand the current, 1/10G Gigabit-Passive Optical Network (XG-PON) based Fibre-To-The Curb/Business/Home (FTTx), network to major villages in an effort to enhance the access network coverage. The network will be used for integrating data, voice & video services and shall be the primary access mechanism for services to strategic Government Institutions and Retail users. Coverage for Phase 2 is in the areas of Gaborone, Francistown, Tsabong, Lobatse, Mogoditshane, Serowe, Palapye, Selebi – Phikwe and Bobonong. FTTx will provide high speed connectivity to commercial and strategic areas in major urban and suburban localities in Botswana. Gaborone expansion is slated for completion in September 2016. All the other villages are scheduled to be completed in March 2017.


1.3. Wholesale Wi-Fi ProjectIn the year under review the global market has experienced an exponential growth in the development of Wi-Fi technology. The Wi-Fi network has grown from a small cell network into a global network with high prospects of enabling roaming agreements. The deployed hotspots have grown to over 50 million worldwide. The rapid growth is supported by consumer preference of the Wi-Fi due to its high speed and affordability.

Public Wi-Fi plays a major role in the development of the global hotspots. Botswana as a country does not exist in isolation. It is against the backdrop of this global trend that BoFiNet in conjunction with USAF (Universal Services Access Fund) deployed and launched more than thirty (30) public Wi-Fi hotspot in August 2015. So far, 31 hotspots have been deployed in Gaborone, Maun, Francistown, Mahalapye, Palapye, Serowe and Kasane with a cumulative reach of over 300 000 users and 384 access points. These are located in strategic densely populated areas covering shopping malls, airports, public hospitals, Government enclave, bus and taxi ranks.

An online purchasing channel is under development using First National Bank of Botswana’s (FNBB) *174# portal as well as an app to enhance the product. Initiatives have been introduced to increase uptake of the service, such as the introduction of 30 minutes of free daily internet, as well as free access to all <.gov.bw> websites.

BoFiNet branded “Botswana Hotspots’ public Wi-Fi has been characterized by various marketing activities to facilitate service providers to create awareness on the product. This is the first ever wholesale Wi-Fi service in Botswana which is anticipated to change the connectivity landscape

of the market in Botswana. Coupled with the infrastructure, is the products that have been launched to the market which include a prepaid reseller model of Wi-Fi vouchers and Wi-Fi lease model. The Wi-Fi infrastructure lease model will allow large players such as the current PTOs (Public Telecommunications Operators) and other Service Provider to rent the infrastructure and develop own innovative Wi-Fi offerings to consumers. BoFiNet, through the regulator envisages that consumers will have various options of Wi-Fi offers products through the large number of players (small and large) who will be able to participate in providing service which will further enhance access to internet and services.

1.4. Operations Support Systems/Business Support System/Enterprise Resource Planning ProjectThe Operations Support Systems/Business Support System/Enterprise Resource Planning Project (OSS/BSS/ERP) is meant to improve BoFiNet’s business operations. The Operations Support Systems – Business Support Systems – Enterprise Resource Planning solution will enable BoFiNet to operate efficiently and effectively after having automated its business processes. BSS which comprises of the Customer Relationship Management (CRM), Product Lifecycle Management (PLM) and Billing went live on the 16th March 2015. ERP which comprises of Finance, Supply Chain Management (SCM) and Human Capital Management (HCM) and went live on the 30th April 2015. The OSS which manages all active network devices & links went live on the 14th March 2016. This means all system modules are now live, and the project is in Build-Operate-Transfer (BOT) phase, which is planned to end in August 2016.



Network Operations ReportNetwork Development & Performance

BoFiNet Network Footprint

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 services availability improved quite significantly from 99.8% to 99.9% hence minimized service outages to ensure business continuity. This was achieved, despite frequent power outages that bedeviled the country during the first half of year. However, in order to counter the challenge BoFiNet implemented power backup solutions in critical sites and enhanced network resiliency in high traffic/major routes.

The Fibre-To-The Building and Carrier Wi-Fi initiatives have revolutionized the citizenry’s access to ultra-high speed connectivity hence bridging the digital and connectivity gap. There has been an exponential service uptake during the last half of the financial year on both Wi-Fi and FTTx

connections. We believe that such initiatives and trajectory will contribute positively to the country’s global competitiveness hence driving economic growth.

The company has enhanced its operational presence by opening five additional offices in Gantsi, Jwaneng, Tsabong, Gumare and Kasane in addition to the existing four being Gaborone, Palapye, Francistown and Maun to facilitate provision of

network field services functions. Over 40 field engineers and technicians have been deployed in the 9 service stations to ensure high network availability.

In order to complement its technical capacity within field maintenance services,

BoFiNet continues working with local contractors on an outsourced model to provide installations and maintenance support, thus contributing towards citizen empowerment initiatives as a responsible corporate citizen.

On the international connectivity level BoFiNet is an active member in the West Africa Cable System ‘WACS’ and Eastern Africa Submarine Cable System (EASSy) undersea cable consortia ensuring the country’s interests and stake are protected and used efficiently for the benefit of the country. Through these networks, as a country we have robust connectivity to the internet and the outside world despite being landlocked. BoFiNet continues to work with its peers within the neighboring countries to access the undersea cable systems and for regional networking.

BoFiNet has automated its business processes through an OSS/BSS/ERP (Operations Support Subsystem and Business Support Subsystem) with enterprise resource planning (ERP) system. The OSS/BSS/ERP platform provides a fully integrated business environment that supports the business from order to cash. The company has already started seeing benefits of improved efficiency in its business operations from order management to billing and collections. This ultimately will inevitably improve business performance and efficiency through integration and automation of all key functions and processes.


Products & ServicesThe Market, Products & Services


Market GrowthOur strategies have translated into impressive results and for the year under review we have maintained our wholesale market leader position in Botswana and witnessed a growth of 26% in customer base. The impressive results are premised on the commitment of the BoFiNet leadership and employees to offer unmatched customer service. Our robust account management service and agile response to customer provision have been at the core of our operations. Product innovation and affordable products and services that address the market needs was also a pillar to our success in 2015/16. BoFiNet will continue to grow its market share through the development and deployment of a diversified yet relevant product portfolio and scaled up account management services to ensure end to end customer responsiveness.

International Connectivity

To date the growth of the undersea cable market continues to experience intensive investment and upgrades. Investment in the submarine cables is mainly due to various reasons such as to improve route diversity, the quest to reach new markets, improving existing cables etc. Continued investment in the submarine cables and the falling prices of high transmission systems installed resulted in an increased supply of bandwidth and lowering prices. This has created intense competition and price wars in the wet segment.

BoFiNet has maintained her stakeholder position in the two cable systems WACS and EASSy by investing in upgrades. The upgrades have more than tripled BoFiNet’s capacity in both WACS and EASSy, at 600 STM 1s for the former and 143 STM 1s for the latter. This is to ensure sufficient supply 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 Hotspots – Wi-Fi The deployment of Wi-Fi has seen the launch of two service options, being the reseller voucher option and infrastructure lease.

The Wi-Fi Voucher The Wi-Fi voucher service comprise of predetermined data packages which are availed to Internet Service (ISP) providers to re-sell to consumers. The product has been designed to address service providers who may not have their own billing platform to develop their own products. This is a white labelled product carrying the Wi-Fi SSID ‘ Botswana Hotspots’ which provide the re- sellers the opportunity to brand the Wi-Fi vouchers as they wish.

The Wi-Fi Infrastructure Lease The Wi-Fi option targets service providers who already have built infrastructure and a billing system that allows the providers to develop their own products innovatively and provide Wi-Fi service via the BoFiNet infrastructure on lease.

FTTx Internet ProductsBoFiNet has developed packaged internet product and services which are sold at wholesale to Service Providers who then will sell the service to consumers. The products have been developed with view to improve broadband penetration through pricing and quality of the service .The two flavours developed are dedicated (non-contended) and shared internet (contended) internet packages.

Fibre ProThis is a dedicated uncontended internet service that is provided within areas where there is a FTTx delivered directly to end user from 2 mbps to up to 300 mbps.. The service is delivered over the Metro and FTTx technologies offering customers high quality of service. Fibre Pro is suitable for high bandwidth users such as large enterprises and Government sector who require dedicated internet service.

Fibre LiteIt is a shared internet provided on best effort catering for the SMMEs and residential users. Fibre Lite is a premium service positioned to provide best possible quality and price to the market via service providers.

Internet Protocol Transit (IPT)The internet protocol transit product enables customers to connect to internet content. BoFiNet offers premium uncontended IPT service to its customer. Our internet is fully protected with dual undersea cables and with multiple inland routes coming into Botswana. BoFiNet peers with Tier 1 upstream content providers which provides our customers with premium internet content. Our IPT is a blend of regional and international content enabling us to serve a wide range of customers with different content needs.

International Private Lease Circuit (IPLC)Our stake in the ownership of undersea cables 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.


National Leased Lines (NLL)Our NLL product is essentially domestic leased line services provided on the national backbone to provide transmission across Botswana. It connects all major villages and cities throughout the country providing a robust network to meet the demands of our customers. The network has been designed to ensure that almost all districts have connectivity on the promise of providing access for all through our NLL product. Our NLL services are critical for carrying and supporting 3G and 4G network expansions in the country and providing high quality services to the retail segment at amongst the lowest prices in the region. This has re-affirmed our position as the “go to” enabler in the national market in addition to being increasingly recognized as a reliable carrier of carriers in the region.

Enterprise Solutions / Carrier Ethernet ProductMetro 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

infrastructure, to cater for the data communication requirements of a wide spectrum of enterprises and services providers. The network deploys a tiered IP/MPLS architecture to provide for both scalability and resilience.

Transit ServicesBotswana’s geographical positioning in the region and the inherent comparative advantage as a gateway to the region and the rest of the continent resulted in the aggressive launch of transit services. We have positioned ourselves as a preferred transit service provider for international customers who seek to access in neighbouring countries such as Namibia, Zimbabwe, Zambia and South Africa. BoFiNet through its robust and resilient national network offers international customers value for money with our competitively priced transit product.


Our People Report


BoFiNet recognizes that its human capital is key to delivering its mandate and setting pace in provision of quality service to the market creating attractive employee brand that is key to BoFiNet’s approach to harnesing the full potential of staff. BoFiNet has attracted highly skilled, experienced and talented workforce. This has been achieved in part by motivating staff through various platforms and creating a conducive environment for them to thrive. Staff Engagement remains a key initiative in ensuring that staff are meaningfully engaged and hence have a sense of fulfilment working for the organization.

As at 31st March 2016, the staff complement stood at 149, an increase of 25.5% from the March 2015 figure of 111. The organization had a turnover of 3.4% against a target of 6%.

Effective targeted human resource development remains one of the organisations’s critical success factors. BoFiNet continues to invest in developing the requisite competencies that are intended to build the desired behaviors for achieving results. In its effort to improve staff capacity, BoFiNet has partnered with the University of Stellenbosch for equipping its Managers and Executives with advanced leadership skills through Management and Executive Development Programmes (M/EDP). The organization further encourages employees to

enroll in self-development programmes.

Our people are vital to the success and sustainability of our business. They determine how effectively the organisation operates and are instrumental in realizing the vision of being World Class ICT organisation for a globally connected Botswana. Therefore, it’s imperative to remember the role health, safety and wellness play in keeping employees motivated and performing at an optimal level. Research indicates that greater employee wellbeing is significantly associated with better job performance and engagement, lower absenteeism, and reduced probability of leaving an employer.

In its pursuit of ensuring a healthy and productive workforce, BoFiNet conducted Wellness Day for its employees. In addition, BoFiNet continues to provide its employees with access to recreational facilities.

As BoFiNet evolves at a rapid pace, a realignment exercise has been embarked upon to align its evolving structure with the mandate, business model and the vision of the organisation. The deliverables include a new structure, talent management strategy, succession planning model and other staff engagement enhancement initiatives that propel the organisation towards ingraining a high performance culture.


CSR


We operate in communities all over Botswana, which through BoFiNet are now connected to the rest of the world. Our daily interactions with Batswana from all corners and backgrounds has allowed BoFiNet to touch lives in numerous ways, which is why our Corporate Social Responsibility remains close to our hearts. During the year under review, CSR played an important role in maintaining good relations with the communities we operate in.

The BoFiNet Softball League continues to be our flagship sponsorship, with the sponsorship being renewed at an increased P1 500 000 annually over the next 3 years. This move was made in order to improve the infrastructure and grounds. 2015/16 saw floodlights and new stands being erected at the national diamond, enabling night games to be held. Record attendance was achieved due to the improved grounds, showing that the sport has grown in leaps and bounds. BoFiNet remains

committed to reviving this sport, investing in the growth of the sport. The league saw teams return to the sport, chasing the P100 000 first prize. The investment in softball did not end

there as BoFiNet was a proud sponsor of CHOPS, a grassroots initiatve aimed at growing the sport at primary school level. The tournament saw private schools

compete for the coveted championship title.

Girls in ICT, as part of the World Telecommunica-tions Information Society Day saw BoFiNet partic-ipate through a debate in Thamaga. Schools were invited to send girls only teams to debate on ICT issues. The winning team received goodie bags and tablets as well as internet connectivity for their school. Schools connectivity remained high on the CSR agenda as several schools were connected in Thamaga and Moshupa, Ramotswa and Shakawe to name a few. This has allowed students to access the internet for their studies, availing resources that were out of their reach previously.

BoFiNet’s community outreach programme with children from disadvantaged backgrounds in Tlokweng continued during the year under review. The children were placed in boarding schools in Kgomodiatshaba and Letlhakane to ensure that they have a better chance at focusing on their studies. The children have been equipped to enable them to do their best academically. Together with the schools and social services, the needs of the children are met.

Sponsorships were a big part of the BoFiNet CSR programme, reaching across different fields. For the first time, BoFiNet sponsored motor-cross at the Toyota 1000 Desert Race. Two teams were sponsored, enabling them to compete and participate with international riders. This investment was geared towards growing the sport locally, encouraging citizen participation in the sport.


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 principalactivities Providing wholesale national and

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 74769Building 2, Mowana Mews,Central Business DistrictsGaborone

Bankers Stanbic Bank Botswana Limited

Auditors KPMG

Chartered Accountants

Secretary Kingsway (Proprietary) Limited


Directors’ Responsibilities and Approval

Independent Auditor’s Report

Directors’ Report

Statement of Financial Position

Statement of Profit or Loss and other comprehensive income

Statement of Changes in Equity

Statement of Cash Flows

Significant Accounting Policies

Notes to the Financial Statements

Supplementary Statement of Profit or Loss and of the Comprehensive Income for the year

3637414244

4546475771

The reports and statements set out below comprise the financial statements presented to the shareholder:


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 on 06-09-2016 and are signed on their behalf by:

CHAIRMAN DIRECTOR


Independent Auditor’s ReportTO 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.

KPMGCERTIFIED AUDITORS

PRACTICING MEMBER : AG DEVLIN (19960060:23)GABORONE08 SEPTEMBER 2016





Directors’ ReportThe directors are pleased to present their report and the annual financial statements for the year ended March 31, 2016.

1. REVIEW OF ACTIVITIESMAIN 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:

DIRECTORSRatsela Mooketsi - Chairman

Pauline Sebina

Marvin Torto

Letsebe Sejoe

Malebogo Mpugwa

Gadzani Thangwane

Yolisa Phillips -Lejowa

Lynette Armstrong

6. SECRETARYThe secretary of the company is Kingsway (Proprietary) Limited.

7. AUDITORSKPMG will continue in office in accordance with section 195 of the Companies Act of Botswana.


Statement of Financial Positionas at March 31, 2016

Notes 2016(P) 2015(P)

AssetsNon-Current Assets

Property, plant and equipment

Deferred tax

Investment in Shares

2

3

4

1,260,977,735

6,845,878

5,882,353

910,705,731

10,269,278

-

1,273,705,966

Current AssetsInventories

Trade and other receivables

Cash and cash equivalents

5

6

7

11,417,380

77,401,715

388,428,068

9,369,145

43,994,561

88,255,346

477,247,163

1,750,953,129Total Assets

141,619,052

1,062,594,061

Equity and LiabilitiesEquityShare capital

Funding Reserves

Accumulated loss

8

9

747,244,423

677,455,569

(70,245,621)

747,244,423

254,925,290

(91,648,703)

1,354,454,371 910,521,010

920,975,009


Notes 2016(P) 2015(P)

LiabilitiesNon-Current LiabilitiesOther financial liabilities

Finance lease obligation

Deferred Revenue

10

11

12

5,817,360

-

112,027,931

-

3,257,148

46,409,823

117,845,291

Current LiabilitiesFinance lease obligation

Trade and other payables

Government Data Network Liability

11

14

13

2,037,189

117,933,799

158,682,479

41,802,937

60,603,143

-

278,653,467 102,406,080

49,666,971

396,498,758 152,073,051Total Liabilities

Total Liabilities 1,750,953,129 1,062,594,061


Statement of Profit or Loss and other comprehensive income

Note(s) 2016(P) 2015(P)

Revenue

Cost of sales

Gross profit

Other income

Operating expenses

Operating profit / (loss)

Finance income

Finance costs

Profit / (loss) before taxation

Taxation

Profit / (loss) for the year

Other comprehensive income

Total comprehensive income / (loss) for the year

15

16

17

18

19

20

268,776,165

(107,025,392)

161,750,773

7,925,925

(145,448,014)

24,228,684

1,680,887

(1,083,089)

24,826,482

(3,423,400)

21,403,082

-

21,403,082

178,511,861

145,871,484

32,640377

403,433

(102,117,272)

69,073,462

808,693

595,880

(68,860,649)

9,726,666

(59,133,983)

-

(59,133,983)


Share Capital Funding Reserves Accumulated loss Total equity

Balance at April 1, 2014 1,000,000

P P P P

Statement of Changes in Equity

805,119,115 (32,514,720) 773,604,395

Total comprehensive Loss for the year

(59,133,983) (59,133,983)

Loss for the year (59,133,983) (59,133,983)

Issue of share capital 746,244,423 (746,244,423)

Government Funding 196,050,598

Total contributions by and distributions to owners of company recognised directly in equity

746,244,423 (550,193,825) 196,050,598

196,050,598

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 for the year

21,403,082 21,403,082

Government Funding 422,530,279422,530,279

Total contributions by and distributions to owners of company recognised directly in equity

422,530,279422,530,279

Balance at March 31, 2016 747,244,423 677,455,569 (70,245,621) 1,354,454,371

Note(s) 8 9


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)

Net cash from operating activities 544,007,222 145,585,337

Government Funding 422,530,279 196,050,59824

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 388,428,068 88,255,3467


Significant Accounting Policies1. Presentation of financial statementsBotswana 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 uncertaintyThe 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 equipmentProperty, 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:

Land and buildingsPlant and machineryMotor vehiclesOther plant and equipment

Lease Period5-20 years6 years4-20 years

Item Average useful life


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 instrumentsClassificationThe 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 derecognitionLoans 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-measurementThe company’s loans and receivables comprise mainly of cash and cash equivalents, trade and other receivables, including amounts due from related parties.


Cash and Cash EquivalentsCash 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 partiesTrade 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 SharesInvestment 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 - measurementThe 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.


BorrowingsBorrowings are initially recognised at cost, being the fair value of the consideration received and include acquisition charges associated with the borrowing. After initial recognition, borrowings are subsequently measured at amortised cost. Amortised cost is calculated by taking into account any discount or premium on settlement. Long term borrowings are classified as financial liabilities at amortised cost.

Trade and other payables, including amounts due from related companiesTrade and other payables, including amounts due to related companies, are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. These amounts are classified as current liabilities if payments is due within twelve months (or in the normal operating cycle of the business, if longer). If not, they are prsented as non-current liabilities.

Gains and losses on subsequent measurementGains and losses arising from a change in the fair value of financial instruments are recognised in profit or loss in the period in which the change arises.

OffsetFinancial assets and financial liabilities are offset and the net amount reported in the statement of financial position when the company has a legally enforceable right to set off the recognised amounts, and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

1.4 TaxationCurrent taxationTaxation comprises of current and deferred taxation. Taxation is recognised in profit or loss except to the extent that it relates to items recognised directly in equity or in other comprehensive income (OCI) in

which case the related taxation is also recognised in the other comprehensive income or equity.

Current taxation comprises the expected taxation payable or refundable on the taxable income or loss for the period and any adjustment to taxation payable or refundable in respect of previous periods. Taxation is measured using rates enacted or substantively enacted at the reporting date. Current taxation also includes any taxation arising from dividends. Withholding taxation of 7.5% is payable on the gross amounts of dividends paid.

Deferred taxationDeferred taxation is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred taxation assets are recognised for unused taxation losses, unused taxation credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred taxation assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related taxation benefit will be realised.

Deferred taxation is measured at the taxation rates that are expected to apply to temporary differences when they reverse, using taxation rates enacted or substantively enacted at the reporting date.

The measurement of deferred taxation reflects the consequences that would follow from the manner in which the company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred taxation is not recognised when it arises from:-

- Temporary differenences on the initial recognition of an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss;

- Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the company is able to control the timing of the reversal of the temporary differences


Current taxation comprises the expected taxation payable or refundable on the taxable income or loss for the period and any adjustment to taxation payable or refundable in respect of previous periods. Taxation is measured using rates enacted or substantively enacted at the reporting date. Current taxation also includes any taxation arising from dividends. Withholding taxation of 7.5% is payable on the gross amounts of dividends paid.

1.5 LeasesDetermining whether an arrangement contains a leaseAt the inception of an arrangement, the company determines whether the arrangement is or contains a lease.

At the inception or reassessment of an arrangement that contains a lease, the company separates payments and other consideration required by the arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the company concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset; subsequently, the liability is reduced as payments are made and an imputed finance cost on the liability is recognised using the company’s incremental borrowing rate.

Lease PaymentsLeases where the lessor retains the risks and rewards of ownership of the underlying asset are classified as operating leases. Payments made or received under operating leases are recognised in profit or loss on a straight line basis over the period of the lease. The operating lease liability resulting from the straight lining is disclosed as deferred income.

and it is probable that they will not reverse in the forseeable future; and

- Taxable temporary differences arising from initial recognition of goodwill.

Minimum Lease Payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remianing balance of the liability.

1.6 InventoriesInventories are measured at the lower of cost and net realisable value.Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

The cost of inventories is based on the weighted average cost basis and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.

Slow moving, obsolete and redundant inventories are identified on a regular basis and are written down to their estimated net realisable values.

1.7 ImpairmentNon-derivative financial assetsFinancial assets are assessed at each reporting date to determine whether there is any objective evidence of impairment. Objective evidence that financial assets are impaired includes:

- default or delinquency by a debtor

- restructuring of an amount due to the company on terms that the company would not consider otherwise

- indications that a debtor will enter bankruptcy

- observable data indicating that there is measureable decrease in expected cash flows from a group of financial assets.


Financial assets measured at amortised costThe company considers evidence of impairment for financial assets at both individual asset and a collective level. All individually significant assets are individually assessed for impairment. Those found not to be impaired are then collectively assessed for any impairment that has been incurred but not yet individually identified.Assets that are not individually significant are collectively assessed for impairment. Collective assessment is carried out by grouping together assets with similar risk characteristics.

In assessing collective impairment, the company uses historical information on the timing of recoveries and the amount of loss incurred, and makes an adjustment if current economic and credit conditions are such that are actual losses are likely to be greater or lesser than suggested by historical trends.

An impairment loss is calculated as the difference between an asset’s carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account. When the company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.

Non-financial assetsAt each reporting date, the company reviews the carrying amounts of its non-financial assets (other than inventories) to determine whether there is any indication of impairment. If such indication exists, then the asset’s recoverable amount is estimated.

For impairment testing, assets are regrouped together into the smallest group of assets that generated cash inflows from the continuing use that are largely independent of the cash inflows of other assets or cash generating units (CGU).

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognised in profit or loss. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that wouls have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

1.8 Stated CapitalOrdinary shares are classified as equity. Stated capital is recognised at the fair value of the consideration received. Incremental costs directly attributable to the issue of ordinary shares, net of any tax effects, are recognised as a deduction from equity.

1.9 Employee benefitsShort-term employee benefitsEmployee entitlements to annual leave, bonuses, medical aid, housing benefits and severance benefits are recognised when they accrue to employees and an accrual is recognised for the estimated liability as a result of services rendered by the employee up to the reporting date. These accruals are calculated at the undiscounted amounts based on current wage and salary rates.

Severance benefitsEmployees who are not members of an approved pension scheme or entitled to gratuities per employment contracts, are entitled to severance benefits as regulated by the Botswana Labour Regulations. An accrual is recognised for the estimated liability for services rendered by


employees up to the reporting date. Severance benefits are not considered to be a retirement benefit plan as the benefits are payable on completion of a continuous employment period of 5 years or on a pro rata basis on termination of employment.

Pension contributionsA defined contribution retirement plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised as an employee benefit expense in profit or loss when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

Profit sharing and bonus schemesA liability is recognised for the amount expected to be paid under short-term bonus or profit sharing plans if the company has a present legal or constructive obligation to pay this amount as a result of past services provided by the employee and the obligation can be estimated reliably.

1.10 RevenueRendering of servicesRevenue is recognised when the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the company and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Revenue is measured net of returns, trade discounts and exclusive of Value Added Taxation.

The timing of the transfer of risks and rewards varies depending on the individual terms of the sales agreement, i.e. on customer acceptance of site specifications.

The company provides transportation services to customers for an additional fee over the sale of goods. Revenue from the rendering of these

services is recognised when the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the company and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

The company’s finance income and finance costs include interest income and interest expense. Interest income or expense is recognised, in profit or loss, using the effective interest rate method.

1.11 Translation of foreign currenciesForeign currency transactionsItems included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”).

Transactions conducted in foreign currencies are translated to Pula at the foreign exchange rate ruling at the date of the transaction. Assets and liabilities denominated in foreign currencies at the reporting date are translated to Pula at the foreign exchange rate ruling at that date. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation if monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Interest receivedInterest received is accrued on a time basis using the effective interest method.

Interest paidInterest paid is recognised in profit or loss for all interest-bearing financial instruments on an accrual basis, using the effective interest rate method on the original settlement amount. The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability.


1.12 Changes in accounting policyThe 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.

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.

Standards/Interpretation Impact

IFRS 14 - Regulatory Deferral Accounts No impact on these financial statements

Amendments to IFRS 1 Accounting for Acquistion of Interests in Joint Operations

No impact on these financial statements

Amendments to IAS 27 Equity Method in Separate Financial Statements


Amendments to IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation


Amendments to IFRS 10 and IAS 28Sale or Contribution of Assets between

an Investor and its Associate or Joint Venture


Amendments to IFRS 10 12 and IAS 28 Investment Entities, Applying the Consolidation Exception



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.


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.


Notes to the Financial Statements

Cost / Valuation

Accumulateddepreciation

Carrying value

BuildingsPlant and machineryMotor vehiclesOther Plant and EquipmentCapital Work in Progress

Total

Cost / Valuation

Accumulateddepreciation

Carrying value

2016(P) 2015(P)

Opening Balance

Additions Transfers


Total

41,749,075721,280,055

6,272,2026,792,411

134,611,988

910,705,731

59,604,750-

2,575,2242,223,561

357,055,268

421,458,803

3,402,072390,513,124

2,143,49535,714,207

(431,772,898)

-

Depreciation Total

(5,297,502)(55,299,489)(1,573,836)(9,015,972)

-

(71,186,799)

99,458,3951,056,493,690

9,417,08535,714,20759,894,358

1,260,977,735

Reconciliation of property, plant and equipment - 2016

Opening Balance

Additions


Total

42,324,558738,447,329

4,437,0555,556,820

-

790,765,762

3,400,28639,358,0402,684,4552,645,653

134,611,988

182,700,422

Depreciation Total

(3,975,769)(56,525,314)

(849,308)(1,410,062)

-

(62,760,453)

41,749,075721,280,055

6,272,2026,792,411

134,611,988

910,705,731

Reconciliation of property, plant and equipment - 2015

2. Property, plant and equipment

110,143,0211,180,163,155

11,988,82646,864,70159,894,358

1,409,054,061

(10,684,626)(123,669,465)

(2,571,741)(11,150,494)

-

148,076,326

99,458,3951,056,493,690

9,417,08535,714,20759,894,358

1,260,977,735

47,136,199789,650,031

7,270,1078,926,933

134,611,988

987,595,258

(5,387,124)(68,369,976)

(997,905)(2,134,522)

-

(76,889,527)

41,749,075721,280,055

6,272,2026,792,411

134,611,988

910,705,731


3. Deferred tax

Reconciliation of deferred tax asset / (liability)At beginning of year

Movement in profit or loss

6,845,878

10,269,278(3,423,400)

6,845,878

10,269,278

542,6129,726,666

10,269,278

Deferred tax asset

2016P

2015P

Analysis of deferred taxationAccelerated capital allowances on property, plant and equipment

Finance lease

Unrealised foreign exchange gains

Prepayments

Deferred Income

Assessed losses

(55,015,313)

(21,438,682)

392,430(769,247)

24,646,14559,030,5456,845,878

(36,244,012)

(14,480,917)

(104,075)(88,298)

10,180,53351,006,04710,269,278

4. Investment in SharesInvestments 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. Inventories11,417,380 9,369,145Raw Materials, Components

6. Trade and other receivablesTrade receivables

Provision for doubtful debts

Other receivable

66,861,060(707,777)

11,248,432

77,401,715

42,625,664-

1,368,897

43,994,561

Other receivables comprise Sundry customers

Prepayments and deposits

Other Advances

Imprest Control

Withholding taxation and credit card receivable

3,622,9413,735,0593,204,035423,564262,833

11,248,432

77,369639,83685,484

364,434201,774

1,368,897

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:


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.

7. Cash and cash equivalentsCash and cash equivalents consist of:Cash on hand

Call Accounts - BWP

Current Account - USD

23,911305,053,33183,350,826

388,428,068

10086,063,1792,192,067

88,255,346

Cash and Cash equivalents comprise ofPetty Cash

Call Accounts- BWP

Current account - USD

Bank Overdraft

23,911305,053,33183,350,826

-

388,428,068

100106,183,283

2,192,067(20,120,104)

88,255,346

8. Share capitalIssued1 000 000 ordinary shares at P746.24

1 000 000 ordinary shares at no par value746,244,423

1,000,000

747,244,423

746,244,4231,000,000

747,244,423

2016P

2015P


2016P

2015P

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.

9. Funding Reserve

Opening balance

Assets transferred

Expenses paid on behalf of the company

Issue of stated capital

Capitalisation of funding reserve

Cash funding

254,925,290----

422,530,279

677,455,569

-676,247,202

7,473,6241,000,000

(746,244,423)316,448,887

254,925,290

10. Other financial liabilities

5,817,360 -

Held at amortised cost UASF Funding

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)

5,817,360 -

Non-current liabilitiesAt amortised cost

11. Finance lease obligationMinimum lease payments due - within one year

- in second to fifth year inclusive2,283,292

-

2,283,292(246,103)

2,037,189

-2,037,1892,037,189

42,253,0103,835,730

46,088,740(1,028,655)

45,060,085

3,257,14841,802,93745,060,085

less: future finance charges

Present value of minimum lease payment

Non-current liabilities

Current liabilities


2016P

2015P

The finance lease comprises vehicle leases.

Motor vehicle leasesThe 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% per annum (currently 7.5%) and is repayable in 36 monthly instalments of P 126 404, commencing December 2013.

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:-

12. Deferred Revenue

Deferred RevenueBalance as at 01 April 2015

BTC IRU invoiced during the year

WIOCC IRU invoiced during the year

Recognised revenue for BTC IRU

Recognised revenue for WIOCC IRU

Receivable in terms of lease agreements

Recognised in revenue

46,409,82397,700,0005,229,183

(35,700,000)(1,611,075)

--

112,027,931

-----

81,259,392(34,849,569)

46,409,823

The future lease payments receivable are detailed as follows

-receivable within one year

-receivable within two to five years

97,700,00092,300,000

190,000,000

99,731,987176,000,000

275,731,987


2016P

2015P

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

Less:- Expenses for the year

171,446,452(12,763,973)

158,682,479

--

-

14. Trade and other payables

Trade payables

Other payables

74,082,09643,851,703

117,933,799

40,006,16720,596,976

60,603,143

Other payables comprise:-Payroll related accruals

Sundry payables22,570,98221,280,721

43,851,703

16,128,4734,468,503

20,596,976

15. Revenue

Sale of goods and rendering of services

Government subvention

Amortisation of Government Grant

184,448,54374,696,0009,631,622

268,776,165

118,197,37260,314,489

-

178,511,861

16. Cost of sales

Sale of goodsCost of sales

Depreciation48,314,25258,711,140

107,025,392

86,199,81259,671,672

145,871,484

17. Other income

Rebate received

Tender Fees and Sundry Income

UASF Subsidy

4,232,114201,506

3,492,305

7,925,925

-403,433

-

403,433


2016P

2015P

18. Finance income

1,680,887 808,693Bank

Interest revenue

19. Finance costs Finance

1,083,089 595,880Lease Obligations

Finance costs Finance

20. Taxation

3,423,400 (9,726,666)Originating and reversing temporary differences

Major components of the tax expenseDeferred

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

Originating and reversing temporary differences

375,000 275,000Fees

22. Operating Profit / (Loss)Operating profit / (loss) is stated after the following:-Depreciation on property, plant and equipment

Unrealised exchange gains

Consultancy fees

Employee costs

12,475,6592,130,519888,828

52,555,868

68,050,874

3,088,781(473,070)3,089,212

45,275,450

50,980,373

23. Cash generated from operationsOperating profit / (loss) is stated after the following:-Profit before taxation

Adjustments for:Depreciation and amortisation

Interest received

Finance costs

Depreciation and amortisation (included in cost of sales)

Changes in working capital: Inventories



Deferred Revenue

24,826,482

12,475,659(1,680,887)1,083,089

58,711,140

(2,048,235)(33,407,154)57,330,65665,618,108

182,908,858

(68,860,649)

3,088,782(808,693)595,880

59,671,671

(4,112,065)(19,952,573)46,842,40646,409,823

62,874,582


2016P

2015P

24. Government Funding422,530,279 196,050,598Government funding received during the year

25. Related parties

RelationshipsBotswana Telecommunications Corporation Limited

Government of Botswana

Related party balances

Amounts owing to related partiesAmounts due to related company - Botswana Telecommunications Corporation Limited

Fellow subsidiary

Holding entity

- 192,324

29,304,041 25,343,549Amounts due from related company - Botswana Telecommunications Corporation Limited

Amounts owing from related parties

Related party transactionsGovernment of BotswanaIssuing of share capital

Funding


-422,530,27984,327,622

746,244,423196,050,59864,900,000

Key personnel remunerationThe 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)

Directors’ fees

-

3,852,516681,585

4,534,101

-

3,268,903397,405

3,666,308

26. Capital Commitments91,308,546 41,005,290Authorised commitments


27. ReclassificationCertain 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:-

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

Statement of Comprehensive Income Reclassification As currently reported

31st March 2014

As currently reported

31st March 2014

Cost of SalesGross ProfitOperating Expenses

(P 86,199,812) P 92, 312, 049

(P 161, 788, 944)

(P 59, 671, 672)(P,59, 671, 672) P 59, 671, 672

(P 145,871, 484)P 32, 640, 377

(P 102, 117, 272)

28. Risk management


2016P

2015P


Cash and Cash Equivalents77,401,715

388,428,068

465,829,783

43,994,56188,255,347

132,249,908

Financial liabilitiesTrade and other payables

Finance lease obligation117,465,500

2,037,189

119,502,689

60,603,14345,060,085

105,663,228

Liquidity riskThe 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.

2016Trade payables

Other payables


74,082,09643,851,7032,037,189

119,970,988

74,082,09643,851,7032,037,189

119,970,988

Carrying Amount

Contractual amount cashflows due in less

than 6 months

2015Trade payables

Other payables


18,547,27642,055,58745,060,085

105,662,948

18,547,27642,055,58745,060,085

105,662,948

Carrying Amount

Contractual amount cashflows due in less

than 6 months

Interest rate riskFinancial 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:


Credit riskThe 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:-

All trade receivables are due from customers within Botswana.

The ageing of trade receivables at the reporting date is analysed as follows:-

Interest rateper annum

2016Amounts due from related company - Botswana Telecommunications Corporation Limited 0.50 %

Interest rateper annum

2015

0.50 %

Balance atperiod end

2016

305,053,331

Balance atperiod end

2015

106,183,283

Financial instrument

Trade Receivables

Other Receivables

Cash and Cash Equivalents

66,861,060

10,540,655

393,313,444

42,625,664

1,368,897

88,255,347

2016 2015


2016Ageing

Not past due (0-30 days)

30-60 days

90 days

Over 120 days

Sub-Total

16,850,641

27,601,348

8,394,940

14,014,131

66,861,06066,861,060

Impairment

-

-

-

-

2015

8,135,900

13,979,033

6,714,915

13,795,816

42,625,66442,625,664

Impairment

-

-

-

-

Foreign currency riskThe 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:-

The following exchange rates were applied at the reporting date:-

Description

Trade receivables

Finance lease obligations

Trade payables

Trade payables

Trade payables

Trade payables

Subtotal

1,472,883

-

(4,116,758)

(50,139)

(27,114)

(5,611,084)

(8,332,212)

(8,332,212)

Pula equivalent

2016

16,549,244

-

(46,255,707)

(797,453)

(340,303)

(4,316,219)

(35,160,438)

(35,160,438)

1,092,681

(4,393,143)

(847,016)

-

(166,931)

(1,037,050)

(5,351,459)

(5,351,459)

11,206,993

(45,060,085)

(8,687,344)

-

(1,834,409)

(874,041)

(45,248,886)

(45,248,886)

Foreign Currency

USDUSDUSDGBP

EUROZAR

ForeignCurrency

Amount 2016

Pula equivalent

2015

ForeignCurrency

Amount 2015

-

20161 BWP

Rand

GBP

EUR

US Dollars

1.2999

0.0629

0.0797

0.0890

2015

1.1865

0.0667

0.0910

0.0975

Sensitivity analysisA 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.


Fair value hierarchyFinancial 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:-

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.

Effect on profit2016

USD GBPEURO ZAR

2,700,588

72,496

30,937

392,383

Effect on profit2015

USD EURO ZAR

371,999

166,767

103,705

29. Fair value information


Assets 2016

Deferred taxation

Property,plant and equipment



Inventory

Loans and receivables

10,269,278

1,260,977,735

77,401,715

388,428,068

11,417,380

1,748,494,176

10,269,278

1,260,977,735

-

-

11,417,380

1,282,664,393

-

-

-

-

-

-

-

-

-

-

-

-

-

-

77,401,715

388,428,068

-

465,829,783

Carrying values

Financial assets

designated at fair value

Other nonassets / assets and

liabilities

Financial financialliabilities at

amortised cost

Liabilities 2016


Deferred revenue


Government Data Network Liability


117,933,799

112,027,931

2,037,189

158,682,479

390,681,398

-

112,027,931

-

158,682,479

270,710,410

-

-

-

-

-

117,933,799

-

2,037,189

-

119,970,988

-

-

-

-

-

Carrying values

Financial assets



liabilities


amortised cost

Assets 2015

Deferred taxation

Property,plant and equipment



Inventory


10,269,278

910,705,731

43,994,561

88,255,346

9,369,145

1,062,594,061

10,269,278

910,705,731

-

-

9,369,145

930,344,154

-

-

-

-

-

-

-

-

-

-

-

-

-

-

43,994,561

88,255,346

-

132,249,907

Carrying values

Financial assets



liabilities


amortised cost

Liabilities - 2015


Deferred revenue



60,603,143

46,409,823

45,060,085

152,073,051

-

-

-

-

44,474,670

-

45,060,085

89,534,755

-

-

-

-

Carrying values

Financial assets



liabilities


amortised cost

16,128,473

46,409,823

-

62,538,296


Supplementary Statement of Profit or Loss and of the Comprehensive Income

for the year ended 31st March 2016

Note(s) 2016(P) 2015(P)

RevenueSale of goods and rendering of services


Amortisation of Government Grant

15

184,448,543

74,696,000

9,631,622

118,197,372

60,314,489

-

268,776,165 178,511,861

Cost of salesPURCHASES

GROSS PROFIT

(107, 025, 392)

161,750,773

(145,871,484)

32,640,377

Other incomeRebate received

Tender Fees and Sundry Income

UASF Subsidy

Interest received

4,232,114

201,506

3,492,305

1,680,887

-

403,433

-

808,693

9,606,812 1,212,126

18

Expenses (Refer to Next Page)

Operating profit (loss)

Finance costs

(145,448,014)

25,909,571

(1,083,089)

(102,117,272)

(68,264,769)

(595,880)

Profit (loss) before taxation

Taxation

Profit (loss) for the year

24,826,482

3,423,400

21,403,082

(68,860,649)

(9,726,666)

(59,133,983)

19

20

The supplementary information presented does not form part of the financial statements and is unaudited


Notes 2016(P) 2015(P)

Operating expenses

AdvertisingLeviesAuditors remunerationBad debtsBank chargesCleaningConsulting FeesConsumablesDepreciation and amortisationSalaries and WagesEntertainmentSeminars and EventsForeign Exchange Gians and LossesTender CostsOther ExpensesRecruitment CostsSponsorships (Social Responsibilty)Directors’ FeesHireInsuranceLease rentalsLegal expensesMedical expensesMotor vehicle expensesFuelPrinting and stationeryUniform and ClothingRepairs and maintenanceSecurityStaff welfareSubscriptionsTelephone and faxTrainingTransport and freightTravel

21

(5,099,038)(330,198)(375,000)(707,777)(238,208)

(1,317,147)(9,030,363)

(158,186)(12,475,659)(52,555,868)

-(1,239,271)(2,130,519)

(73,217)(252,689)(268,086)

(5,003,994)(681,585)

(3,208,100)(1,591,904)(3,096,731)(1,920,332)(1,896,990)

(41,543)(2,173,055)(1,499,567)

(51,740)(10,798,350)

(5,603,754)(2,648,964)(3,085,475)(3,555,909)(1,427,112)(3,221,466)(7,690,217)

(145,448,014)

(4,787,965)(210,128)(275,000)

-(161,121)(722,134)

(4,390,525)-

(3,088,782)(45,877,825)

(65,857)(1,932,041)

473,070(450,587)

(4,297,125)(608,255)

(1,868,200)(397,405)

(1,604,264)(466,060)

(4,215,233)(353,316)

(1,140,796)(400,208)(947,398)

(2,828,390)(62,164)

(1,286,885)(978,240)

(1,314,829)(864,144)

(2,771,441)(2,324,959)(2,810,057)

(102,117,272)

(102,117,272)

Supplementary Statement of Profit or Loss and of the Comprehensive Income for the year ended 31st March 2016

The accounting policies on the pages 19 to 29 form an integral part of the financial statements.


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Driving Connectivity& Economic Growth

BOTSWANA FIBRE NETWORKPlot 74769, Unit 3

Mowana Mews, CBD Gaborone, Botswana[ T ] +267 - 399 5500 [ F ] +267 - 392 3414

[ E ] [email protected] [ W ] www.BoFiNet.co.bw

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