6-3&1035 - BNPC

A N N U A L R E P O R T • 2 0 1 3 / 1 4

STRATEGIC FOUNDATIONS

VISIONTo be the lead catalyst in the transformation of Botswana into a Prosperous, Productive and

Innovative nation.

MISSIONTo empower stakeholders in the use of productivity and quality best practices for personal

and collective success.

SLOGANTogether, we transform Botswana

VALUES BEHAVIOURSTEAM SPIRIT To improve accountability and contribution to team results.

RESULTS FOCUS To commit to the achievement of service quality.

LEARNING ORIENTATION

• To develop and improve staff skills and competencies.• To align the Centre’s products to market demands

INTEGRITY • To achieve consistent and transparent application of BNPC policies and procedures.

• To present a professional (smart) front at all times.CARING ORGANISATION

• To achieve improved society results.• To deliver to the Centre’s Corporate Social Responsibility.• To improve staff wellness.

QUALITY POLICY STATEMENT

Quality is the responsibility of every BNPC employee.

All BNPC employees, management and staff alike, are committed to providing transformation services through continuous improvement of BNPC’s Quality Management System.

This commitment is embedded throughout BNPC’s mission journey, embracing core values and guiding principles to deliver its vision as well as the following objectives for quality:

• To operate quality management system that meets the requirements of ISO 9001:2008;• To achieve a minimum of 75% customer satisfaction rating.

COPYRIGHT POLICY STATEMENTNo part of this information shall be reproduced, stored in a retrieval system, or transmitted, in any form or by any means,

electronic, mechanical, photocopying or otherwise, without the prior permission of the BNPC.

Copyright 2014 © Botswana National Productivity Centre.

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Botswana National Productivity Centre | Annual Report 2013/14

Board of Directors 4-6

BNPC Executive Committee (EXCOM) 8-9

Chairperson’s Report 10-11

Corporate Governance 12-14

About Botswana National Productivity Centre 15

Executive Director’s Report 16-23

Financial Statements 25-57

Income and Expenditure 58

TABLE OF CONTENTS

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BOARD OF DIRECTORS

Board Chairperson - is the Deputy Permanent Secretary to the President and Director, Directorate of Public Service Management (DPSM). Mr Morupisi has vast experience in the Public Service where he has held several high profile positions including Director –Ministry Management and Deputy Permanent Secretary (Ministry of Agriculture), Permanent Secretary (Ministry of Works and Transport and Ministry of Infrastructure, Science and Technology).

Academic Qualifications• MSc Animal Science (Reproductive Physiology and Breeding –

Mexico State University (US), • BSC (Agriculture) – University of Swaziland

Board Directorships • Botswana National Productivity Centre • Botswana International University of Science & Technology • Botswana Public Officers’ Pension Fund • Botswana Institute of Development Management

BNPC Deputy Board Chairperson and Chairperson of the Board HR Committee - is a professional Human Resources Practitioner, who has worked in both the Public and Parastatal sectors. From 1989 until his recent retirement, Mr Meti was the Human Resources Development Manager at Botswana Development Corporation (BDC). He has a wealth of experience in human resources management and labour relations amassed over several years between the Department of Labour and BDC.

Academic QualificationsMPA (Labour Management Relations) - University of Southern California (USA).

Board Directorships• Botswana National Productivity Centre • Excom Member- Institute of Human Resource Management • Boccim Member-HLCC Sectoral Committee of MLHA• Chairperson-SADC-DFRC/DFIs HR Forum• Chairperson - Botswana Hotel Development Company -BDC• Chairperson - Talana Farms (BDC)• Board Member - Residential Holdings -BDC• Chairperson- Mdz Security Services• Council - Member - ABM University College HRC• Board HRC Member - BURS• Industry Advisor - Limkokwing University• Member - H R D Advisory Council- Reference Group

Botswana National Productivity Centre Executive Director. His responsibilities are, among others, to lead, direct and provide overall strategic direction to the Centre. He has a wealth of experience in leadership, policy formulation, development and evaluation acquired over several years in the Public Service including the Ministry of Education and Skills Development as a Teacher and Administrator, and later becoming Deputy Permanent Secretary at the Ministry of Education and Skills Development, and Office of the President.

Academic Qualifications Master of Arts (Educational Leadership and Management) - University of Bristol (UK), Bachelor of Philosophy (International Management and Policy Education - University of Birmingham (UK), Diploma in Secondary Education (Mathematics and Science Education) - University of Botswana and Swaziland.

Board DirectorshipsBotswana National Productivity Centre

Chairperson of the Board Tender Committee, who is a Water Engineer by Profession, is the Permanent Secretary for the Ministry of Local Government and Rural Development. Prior to being promoted to his current post, he held several other key posts including Deputy Permanent Secretary in the same ministry, Council Secretary - Central District Council and North East District Council. Academic Qualifications• MSc (Water and Waste Engineering) - Loughborough University

(UK); • Higher National Diploma (Water and Waste Engineering)-Kenya

Polytechnic, • Diploma (Water Engineering) - Botswana Polytechnic.• Board Directorships • Botswana National Productivity Centre

Board DirectorshipsBotswana National Productivity Centre

Mr Carter N Morupisi Chairperson

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Mr Simon T MetiDeputy Chairperson

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Mr Boipolelo Khumomatlhare Board Member

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Mr Baeti M Molake Executive Director

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BOARD OF DIRECTORS

Chairperson of the Board Audit and Finance Committee - is the Finance Manager for the Debswana Jwaneng Mine. She is a member of the executive management team responsible for the financial management function of the Mine. Prior to joining Debswana, Mrs Lekoma worked for the Associated Fund Administrators Botswana as Finance Manager and before that she was a General Manger (Finance) at Botswana Meat Commission.

Academic Qualifications• Bachelor of Commerce degree - University of Botswana (awarded

the Vice Chancellor’s prize for being the best graduating student in 1992).

Professional Qualifications• Fellow Member – Association of Chartered Certified Accountants

(UK)• Fellow Member – Botswana Institute of Accountants• Member of the Institute of Internal Auditors

Board Directorships • Botswana National Productivity Centre• Mainline Carriers Botswana (Pty) Ltd • Botswana Road Services (Pty) Ltd – Non-Executive Director • Black Crow (Pty) Ltd • Small Business Council • Botswana Institute of Accountants

Member of the Board HR Committee - is the General Corporate Counsel at the Botswana Power Corporation (BPC). Her responsibilities portfolio include providing legal advice to the Chief Executive Officer, the Board and its Committees, and ensuring the Corporation’s compliance to the Botswana Power Corporation Act. Ms Makepe has previously worked for Local Enterprise Agency (LEA) as a Legal Manager and a founding team member of the organisation. She helped draft and review legal agreements and contracts to ensure the Authority’s compliance to the Small Business Act. She has also worked for the Office of Ombudsman as a Senior Legal Investigator.

Academic Qualifications • Bachelor of Laws (LLB) - University of Botswana

Professional Bodies• Member of the Law Society of Botswana • Member of the Editorial Committee of the Botswana Review of

Ethics Law and HIV/AIDS (BRELA) Journal; 2008

Board Directorships • Botswana National Productivity Centre

Member of the Board Audit and Finance Committee - is a Lecturer in the Department of Computer Science of the University of Botswana (UB). Dr Malema lectures in, among others, Computer Architecture, Machine Organisation, Assembly Language, Introduction to Networks and Operating Systems, Introduction to Computing and Research Methods, as well as in the Department of Continuous Education (Diploma in Accounting and Business Studies), of the University of Botswana. He is a Founder and Coordinator of Microsoft IT Academy at UB.

Academic Qualifications • PhD (Computer Engineering) University of Adelaide (Australia), • M.S Electrical Engineering and Computer Science - University of

Illinois at Chicago (USA) and • B.S Computer Engineering - Valparaiso University (USA).

Professional Bodies He is member of the Institute of Electrical and Electronics Engineers (IEEE).

Board Directorships Botswana National Productivity Centre

Member of the Board Audit and Finance and Board Strategy Management Committees - is the Deputy Executive Director at the Botswana Confederation of Commerce, Industry and Manpower (BOCCIM), whose portfolio of responsibilities include supervising the Training Department, Membership Services Department, Advocacy and Lobbying. He has a wealth of experience in, among others, Advocacy, Lobbying, and Economic Policy Analysis.

Academic Qualifications • MSc (Strategic Management) - University of Derby (UK), • Post Graduate Diploma (Law) - University of Namibia and • Post Graduate Diploma (Business Administration) - Milpark

Business School/Thames Valley University – London (UK).

Board Directorships• Botswana National Productivity Centre• Bolux Group• Botswana Bureau of Standards Council• Member: Botswana Bureau of Standards, Staff Affairs Committee• National Committee on Trade Policy and Negotiations• Botswana Business Coalition on Aids• Botswana International University of Science and Technology

Mrs Victoria M Lekoma Board Member

Mrs Ditshetsa K MakepeBoard Member

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Dr Gabofetswe A Malema Board Member

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Mr Norman Moleele Board Member

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Member of the Board HR Committee - is a Senior Programme Administrator & Internal Communications Officer at the National Development Bank (NDB). Mr Sehurutshe, who joined NDB from Junior Achievement Botswana, juggles the NDB Corporate Strategy Administration, Enterprise Performance Management, and Administration of the Bank’s Portfolio of Projects with a part time job, presenting Botswana Television’s weekly programme – ‘The Eye’.

Academic Qualifications Bachelor of Arts (Economics) - University of Botswana. He has a Foundation Certificate in (PRINCE2® Project Management), SADC-DFRC Certificate (Project Management), and PMBOK (Project Management).

Board Directorships Botswana National Productivity Centre

Member of the Board Tender Committee - is the Deputy National Coordinator at the National AIDS Coordinating Agency (NACA), whose areas of focus include effective and efficient response to HIV/AIDS, strategic leadership and guidance, and sustainable response programmes. Prior to joining NACA, Mr Tlhoiwe was Deputy Permanent Secretary for Ministry of Education and Skills Development, and a District Commissioner based in Gaborone. Mr Tlhoiwe is a career education administrator who spent 22 years as a head teacher at two (2) Junior Secondary schools and three (3) Senior Secondary schools.

Academic Qualifications • MEd (International Management and Policy

Education) - University of Birmingham (UK), • Bachelor of Philosophy - University of

Birmingham (UK), • Diploma (Secondary Education) -University of

Botswana

Board Directorships • Botswana National Productivity Centre• Ba Isago University College• Botswana Society for the Deaf• Joint Forum for Productivity Awareness• Annestine School for the Disabled

Chairperson of the Board Strategy Management Committee - is the Deputy Managing Director at Botswana Bureau of Standards (BOBS), responsible for, among other duties, managing the Department of Business Development. Before joining BOBS Fako had a long career in the public service where he was a director in several government ministries including Ministry of Local Government; Roads Department, Ministry of Works and Transport and Ministry of Works and Transport.

Academic Qualifications• MSc. (Engineering Construction Management)

-University of Birmingham (UK); • Certificate in Project Analysis Graduate School of

USA Department of Agriculture (USA); • BSc. (Civil Engineering) - South Dakota State

University (USA), • Diploma (Civil Engineering) -Technical Training

School (Lesotho). •Board DirectorshipsBotswana National Productivity Centre

A member of the Board Tender Committee- is the Permanent Secretary for the Ministry of Labour and Home Affairs. Prior to being promoted to his current post, Mr Bagopi was Deputy Commissioner of Police – Botswana Police Service (BPS). He had previously served as Director of Traffic Branch and Director Departmental Management Services at the BPS.

Academic Qualifications• Diploma (Applied Criminology and Police Studies)

University of Botswana and Cambridge University (UK),

• Diploma (Traffic Safety and Traffic Management (VTI Sweden) and

• Certificate in law; University of Botswana.

Board Directorships • Botswana National Productivity Centre• Rural Development Council • Botswana Public Officers Pension Fund • Rural Development Council • Public Service Wages Policy Committee • Trustee and member of Audit Committee -BPOPF• HRDAC

Member for the Board Strategy Committeeis the Deputy Permanent Secretary for the Ministry of Trade and Industry. Prior to joining the Public Service she worked for Bank of Botswana

Board Directorships Botswana National productivity Centre

BOARD OF DIRECTORS

Ms Ruth B Seipone Board Member

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Mr Ikwatlhaeng G Bagopi Board Member

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Mr Fraiser Tlhoiwe Board Member

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Mr Omphile J V Sehurutshe Board Member

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Mr Theko T Fako Board Member

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EXECUTIVE COMMITTEE (EXCOM)

Mr Rox S Rabalone Finance Manager

Mr Baeti M Molake Executive Director

Mr Leslie A TlhalerwaCorporate Services Manager

and Board Secretary

Mrs Tebogo S KesupileGeneral Manager

Mr Ramakoba S Motlaloso Public Relations Executive

Mr David G Moloi Human Resources Manager

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EXECUTIVE COMMITTEE (EXCOM)

Mr John P D Phatshwe Public Service Manager

Mr Lebotse M Chelaneh Enterprise Support Manager

Mrs Matlho Jennifer Kgosi Marketing Manager

Mr Teedzani Majaule Productivity & Quality Manager

Dr Phumzile Magagula-Thobokwe Information & Research Services

Manager

Mr Julius K Bolokwe Francistown Regional Office Manager

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BOARD CHAIRPERSON’S REPORT

Stakeholder EngagementThe period under review has seen a major shift in how the Centre conducts its business by moving towards a more robust stakeholder engagement. This move resulted in a better understanding of the BNPC’s mandate and an improved interaction between the BNPC and its stakeholders such as the media, private sector and government ministries.

Setting the Strategic DirectionDuring the year under review, the BNPC Board of Directors identified and prioritised key strategic areas to assist the Centre to achieve its mandate of improving national productivity levels. The prioritised areas included Work Ethic and Mindset Change, Labour Management Relations, Process Improvement and Customer Service.

All these areas speak to the national challenge of poor work ethic that has a

negative impact on Botswana’s ability to compete with other countries, especially in attracting foreign direct investment.

Work Ethic and Mindset ProjectAs a key stakeholder, the Government of Botswana has sponsored the BNPC’s Work Ethic and Mindset Project, to enable the Centre to build capacity in the public service for rolling out the Smart Work Ethics Training Programme within the government ministries. This three-phase project has been designed to promote national awareness on the challenges of poor work ethic, train and build capacity for facilitators in the public service sector and support other key agencies to implement work-based programmes.

Labour Management Relations (LMR) InterventionThe Centre has developed a Labour Management Relations (LMR) product

On behalf of the Botswana National Productivity Centre (BNPC)

Board of Directors, Management and Staff, I have the honour in

conformance with the BNPC ACT of 1993-Section 17, to present

the Centre’s 2013/14 Annual Report to the Minister for Presidential

Affairs and Public Administration, for tabling and presentation

before Parliament.

Mr Carter N Morupisi| Board Chairperson

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BOARD CHAIRPERSON’S REPORT

to respond to Botswana’s complex industrial relations landscape by way of promoting awareness on the subject, targeting both employees and employers. Such awareness is generally expected to result in high levels of productivity. This being a new product, the challenge has been on the capacity of the BNPC, in terms of human resources, to effectively deliver the product. By the end of the report period the Centre had only one person doing the training. However, efforts are underway to recruit an Industrial Relations expert to deal with the resource constraint.

Customer Service BNPC has been on a major rollout drive of an all encompassing Customer Care training programme to up-skill personnel from tourism organisations and those in support services such as the Botswana Police Service and the Department of Immigration. A total of 107 personnel from tourism entities were trained by the end of the reporting period. This was an acknowledgement of the higher potential of this sector to diversify the economy. The objective of the training was to provide employees in the tourism industry with skills that would enable them to interact well with their customers, and to ultimately improve the quality of the sector’s service delivery.

Strategic PartnershipsDuring the year under review the Centre partnered with the Centre for the Development of Enterprise (CDE) to assist with the Private Sector Development Programme (PSDP). Thus the Centre has been working with selected companies that have been enrolled in the PSDP.

Internationally, the Centre’s partnership with the World Economic Forum has been growing over the years as witnessed in the release of annual Global Competitiveness reports. Meanwhile in October 2013, the Centre participated in the SADC Regional Competiveness

Conference held in Gaborone which singled out regional integration as a key factor for the region’s competitiveness. In addition, the Centre participated in the May 2013 World Economic Forum Africa Conference held in Capetown, South Africa. The forum brought competitiveness experts from Africa to explore how they can work together to make the continent attractive for foreign investment.

Locally, we take pride in being in partnership with Botswana Confederation of Commerce, Industry and Manpower (BOCCIM) and the Botswana Public Service College. We are of the view that such ties would propel our institutions to great heights through cross pollination of ideas to improve the country’s economy.

Way FowardThe future of the Centre lies in its ability to reposition itself so as to remain relevant to the economy. The major challenge for the Centre is the dwindling financial resources in the face of the reduced annual government grants. A rethink of the Centre’s funding model to reduce dependence on Goverment will also go a long way in ensuring longterm financial sustainability.

Carter N Morupisi

Board Chairperson

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BOARD OF DIRECTORSThe Botswana National Productivity Centre’s (BNPC/the Centre) Board of Directors (the Board) subscribes to and promotes the principles of good corporate governance and best practice and, as such, it ensures that its Directors are regularly familiarised with and live the principles.

The role of the Board is, amongst others, to set the strategic direction to guide Management and ensure that they adhere to good corporate governance and to monitor progress of the Centre’s activities.

The Executive Management is responsible for implementing the Centre’s strategic plan and maintaining adequate control of all systems such as risk management and quality management. The Management is also responsible for the Centre’s operational performance against agreed milestones, and ultimately reporting progress to the Board.

The Board comprises the Chairperson, Vice Chairperson, the Executive Director and independent non-executive Directors, who represent key stakeholders including the Government, the employers and employees (Labour Unions). Each Director is expected to fulfil their fiduciary responsibilities for the benefit of the Centre by, among others, expressing their independent views during the deliberations of the Board.

BOARD COMMITTEESBoard committees have been established to deal with specific mandates of the Board at greater detail and make appropriate recommendations to the Board, where necessary. The standing committees of the Board are: Audit and Finance Committee; Human Resources Committee; Tender Committee and Strategy Management Committee, whose roles and responsibilities are enunciated in their respective charters.

BOARD AND COMMITTEE MEETINGSThe Board and its sub committees each convenes, at least, four meetings in a year to discuss Board business, and additional meetings are held as and when necessary. The challenge however, has been the inability of meetings to take place as scheduled due to quorum problems.

BOARD RESIGNATIONSMs R B Seipone retired from the Public Service on 31 October 2013 and therefore left the Board. At the time of reporting her replacement had not been made.

ATTENDANCE OF THE BOARD AND SUB COMMITTEE MEETINGSThe table below shows attendance by members of the Board and its sub committees

during the year.

CORPORATE GOVERNANCE

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NAME BOARD OF DIRECTORS HUMAN RESOURCES COMMITTEE TENDER COMMITTEE AUDIT AND FINANCE

COMMITTEESTRATEGY

MANAGEMENT COMMITTEE

1 Mr C N Morupisi 1/2* - - - -

2 Mr S T Meti 0/2* 4/4 - - -

3 Mrs V T Lekoma 1/2* - - 4/4 -

4 Mr F Tlhoiwe 1/2* - 2/2 - -

5 Dr G A Malema 2/2* - - 4/4 -

6 Mr N Moleele 2/2* - - 2/4 3/3

7 Mr B Khumomatlhare 2/2* - 2/2 - -

8 Mr T T Fako 2/2* - - - 3/3

9 Ms R B Seipone 0/2* - - - 1/2

10 Mr O J V Sehurutshe 1/2* 1/1 - - -

11 Mr I G Bagopi 0/2* - 1/2 - -

12 Mrs D K Makepe 2/2* 4/4 - - -

13 Mr B M Molake 2/2* 3/4 2/2 4/4 3/3

Key- = not applicable*During the year under review BNPC Board of Directors met twice instead of the statutory requirement of four times.

Internal ControlsThe Board, through its Audit & Finance Committee, is responsible for managing the Centre’s internal control and risk management systems. It ensures that there is a continuous process for identifying, evaluating and managing significant risks faced by the Centre. Management reviews key risks and reports to the Committee on a quarterly basis, while the Board reviews process quarterly to ensure that it conforms to good corporate practices.

It should, however, be recognised that the system is designed to provide reasonable, but not absolute assurances about the effectiveness of internal controls.

Based on the information availed by management and Internal Audit function during the year under review, the Board is of the opinion that the system of internal controls can be reasonably relied upon.

Internal Audit FunctionThe Centre’s Internal Audit function reports administratively to the Executive Director and functionally to the Audit and Finance Committee of the Board. The function provides

assurance that significant risks are reasonably managed and effective controls are put in place to manage the identified risks.

The purpose, authority and responsibility of the Internal Audit function are formally spelt out in the Internal Audit Charter, which has been approved by the Board and is consistent with the requirements of the Institute of Internal Auditors (IIA).

During the year under review, the Internal Audit function performed audits as per the approved annual plan and was reasonably satisfied with the level of internal controls and improvements initiated by the Centre’s management.

Risk Management ReviewDuring the year under review, the Centre identified, evaluated and monitored the risks and proposed mitigation strategies for the respective risks, which were reviewed semi-annually during strategy reviews.

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It should be noted that although operational compliance and governance, Human Resource and Information Technology were identified as risks impacting on the achievement of BNPC strategy, lack of adequate funding and mandate delivery are key to the Centres’

sustainability and continuing operations, hence emphasis is placed on them - with all other risks revolving around them. It is believed that minimisation of funding challenges for the

Centre will disentangle other consequent risks.

Risk Management Register

Risk Category

Risk Description Causes of Risk Consequence of Risk Progress Inherent Risk

Priority No:

Strategic 1. Inability of the Centre to implement its strategy

2. Weak appreciation of the BNPC mandate by some stakeholders

Lack of adequate resources for the Centre

( acquisition of requisite skills to match broad mandate of the Centre)

Inappropriate positioning and reporting of BNPC to a Department within Office of the President makes communication and engagement with stakeholders difficult.

•Sustainability

•Impact on the economy

•Relevance

•Delivery of mandate

•Strategic plan reviewed in April 2013

•New strategic imperatives identified

•BNPC Act review

High 1

Financial 1. Inadequate funding/ dependence on government grants for funding

2. Reliance on customer demand

Lack of sustainable funding model appropriate for a productivity institution

Short term sustainability

•Continuity of business operations

•Cash flow and liquidity concerns

•Pressure to generate revenue may cause the Centre to deviate from its mandate

•Going concern

•Management pressure to compromise on other deliverables.

•Preparation of Budget estimates

• Budget rationalisation done annually following release of budget by government

•Project funding approach adopted

•Presentation of the position paper on the funding situation

•Shareholder engagement

•Expenditure control and rationalisation

•Prioritisation and suspension of other initiatives/deliverables.

High 1


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ABOUT BOTSWANA NATIONAL PRODUCTIVITY CENTRE

ABOUT BNPCThe Botswana National Productivity (BNPC/The Centre) is a parastatal organisation established through an Act of Parliament in 1993. The statutory mandate of the Centre is to enhance the national level of productivity consciousness, as an advocacy function, and to enable individuals and organisations, through training and consulting, to be productive. This is expected to enable both Botswana, as a country, and her institutions to be globally competitive. The Centre has a tripartite Board, which comprises representatives of core stakeholders, which are government, employers and workers’ organisations, as well as the University of Botswana and the Botswana Bureau of Standards.

BNPC’s Mandate:• Stimulate and generate productivity consciousness in Botswana • Promote increased productivity in all sectors of the economy • Improve and develop standards of management in all aspects and at all levels • Promote good labour management relations

Foster equitable productivity gain sharing between management, workers and consumers

BNPC is made up of four programmes and four departments, and a Regional Office in Francistown namely:

• Productivity and Quality Programme,• Public Service Programme,• Enterprise Support Programme), • Information and Research Services Programme, • Finance Department, • Marketing Department, • Human Resource Department, • Corporate Services Department and Directorate,• Francistown Regional Office

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EXECUTIVE DIRECTOR’S REPORT

This section of the Annual Report reviews the activities of the Botswana National Productivity Centre. Performance during the year 2013-14 marks the second year of implementation of the 2012/2013 – 2015/2016 Strategic

Plan, of which review is based on an assessment of key strategic goal areas that deliver to clients. These goal areas are:

• ProductivityandQuality• WorkEthicandMindsetChange• LabourManagementRelations• ServiceExperience• MarketingandCommunication• ProductivityInformation

PRODUCTIVITY AND QUALITY

BNPC provides productivity and quality consulting solutions to all sectors of the economy to enhance the quality of life.

During the year under review, a total of thirty-seven (37) companies received productivity and quality training and consulting solutions. The beneficiaries of the BNPC interventions were mainly from government. The interventions included Strategic Management, Supervisory Development, Customer Service, Project Management and Quality Management Systems (ISO 9001:2008), machinery process efficiency improvement, providing labour productivity baseline data and developing measures to improve overall productivity see Figure 1 on page 17.

Capability to Support the Diamond Industry to Improve ProductivityIn line with national aspirations to build a Diamond Centre in Gaborone, BNPC has acquired capacity and capability to support the diamond industry to improve productivity. During the year under review competency and capacity to improve productivity included improving process efficiency of machinery, providing baseline data of labour productivity and developing measures to improve overall productivity. BNPC intends to provide support for the relocation of the Diamond Trading Company (DTC) from London to Botswana through providing necessary support to sight-holders and DTCB.

MrBMMolake|ExecutiveDirector

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ChallengesThe effective delivery of interventions assumes that organisations will be handheld and assisted at their various bases. The geographical spread of entities being assisted makes the process very challenging given resource implications. Assistance therefore has largely been skewed towards entities near and around Gaborone and Francistown.

WORK ETHIC AND MINDSET INITIATIVE

RationaleBotswana’s global competitiveness continues to be challenged by a less than desirous work ethic in the national labour force, which has resulted in the country not reaping benefits of labour productivity. In response, BNPC focused some of its efforts towards improving the national work ethic, through a three-phase project; promoting national awareness on the challenges of poor work ethic, training and capacity building in key sectors, and supporting agencies to implement work-based programmes.

Training and Capacity Building ComponentBNPC partnered with the Public Service to build capacity for rolling out the Smart Work Ethics Training Programme within the ministries. The programme is a licensed product of Smart Work Ethics, a division of The Smart Solutions Group Inc., in United State of America. The product was adapted to respond to the apparent deficiency in work ethics in today’s labour pool. It was designed to change individual workers’ behaviours after the realisation that workforce readiness – a productive workforce - requires not only technical skills, but also soft skills such as attitude, attendance, responsibility, accountability, and initiative. These soft skills combine to make up a strong work ethic. A total of two hundred and thirty seven (237) ministry facilitators were trained to lead the roll-out of the programme in their respective ministries.

Targeted Support to Implementing AgenciesThis component, which is a work-place initiative supporting work ethic improvement for prioritised sectors and their clusters, was delayed and did not start during the year under review as originally planned. Instead, elements of the programme were integrated into other initiatives, including the customer service programme delivered to the tourism industry.

Media Campaign and Advocacy to Raise Awareness on Work Ethic The Work Ethic Communication Campaign was carried out with the assistance of an external service provider. BNPC also worked with both public and private media houses including radio, television and print to sensitise the public on the importance of a good work ethic. In addition, presentations were made to selected stakeholders, among them secondary school heads, teachers and local authorities’ leadership.

ChallengesDelays were experienced in the implementation of the programme as a result of slow buy-in and participation by stakeholders. This had a negative impact on the rolling out of the programme in ministries as only those who have been adequately capacitated can implement the programme. A significant delay has also been experienced in the national campaign as a result of inadequacy of funds allocated for the campaign.

0

5

10

15

20

25

30

35

40

Parastatals

Parastatals

Public

Public

Figure 1: Enterprises Empowered by Sector

Private

Private

Total

Total

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Way forwardTraining of facilitators in ministries will continue. Assistance in the form of mentoring and coaching will be availed to the ministries during the rollout of the programme.

The technical design of the campaign was outsourced, while implementation was led and delivered by internal resources. Monitoring and evaluation of the campaign will be undertaken by both the BNPC and the service provider to gauge effectiveness.

LABOUR MANAGEMENT RELATIONS

BNPC has developed a Labour-Management Relations product, aimed at sensitising both employees and employers about the importance of good labour-management relations in order for them to attain high levels of productivity. The product targets government, parastatal and private sectors.

During the year under review the Centre trained a total of 175 participants on industrial relations. Most of the participants were from the Department of Roads, which engaged the centre to train its staff in various parts of the country. The Figure 2 shows distribution of participants trained per sector.

ChallengesThe major challenge with respect to the rolL out of Labour Management was capacity to effectively deliver on this key initiative. Only one (1) resource person was available during the year under review.

Way forwardTraining of facilitators in Labour Management Relations and recruitment of a specialist in the field will be prioritised during the coming financial year. In addition, possibilities of partnering with key stakeholders will be considered.

SERVICE EXPERIENCE

The BNPC provides consulting solutions to all sectors of the economy to improve thecustomer’sserviceexperienceforhigherlevelsofcompetitiveness.

Support for the Tourism Cluster: Customer Care BNPC has been supporting the tourism cluster since 2010 with training, consulting and research. During the year under review, BNPC was awarded a contract to train personnel from the following organisations in the cluster:

· Tourism and Hospitality · Public Transport Sector · Veterinary Services (employees working at cordon fence gates along the main tourism

routes)· Filling station attendants in selected towns and in selected areas· BURS, Department of Immigration and Botswana Police Services (Personnel working at

points of entry)

0 50 100 150 200

Figure 2: No. of Participants Trained per Sector

Parastatal

Parastatal

Government

GovernmentUnions

Unions

Private SectorPrivate Sector

Total Trained Total Trained


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The objective was to improve service within the industry, and to create welcoming and service focused ports of entry. During the year under review, 107 participants from tourism establishments in Gaborone, Francistown and Maun were trained. Over and above these, customer care training was also carried out at various Veterinary Gates across the country, covering 95 personnel. In total 748 participants are expected to be trained over a period of 18 months.

Support for Organisations: Quality Management Systems During the year under review Public Procurement and Asset Disposal Board (PPADB) was successfully supported towards ISO 9001:2008 certification by the Botswana Bureau of Standards Body (BOBS), after they benefitted from the BNPC Quality Management Systems intervention.

Kweneng District Council (KDC) was also supported towards ISO 9001:2008 certification by the Botswana Bureau of Standards Body (BOBS). The deployment of a Quality Management System at the Council had reached compliance stage by the end of the year. It is expected that certification will be achieved during the next financial year.

The Department of Meteorology also started a journey towards ISO 9001:2008 implementation through the assistance of BNPC. The scope included documentation of standard operating procedures, two rounds of internal quality audits, at Sir Seretse Khama International Airport, Francistown and Maun airports, to determine compliance to the implemented system. BNPC will continue to support the department during the next financial year until certification.

The Health Inspectorate at the Ministry of Health also engaged the services of BNPC to assist with their objective to be ISO 9001:2008 certified. During the year under review, the department documented their policy document and standard operating procedures. Support will continue to be provided during the next financial year.

MARKETING AND COMMUNICATION

The Marketing Programme is tasked with implementing the Marketing and Communication Strategic Objective of the Centre. The work includes guiding the strategic focus of the Centre, product development, increasing financial contribution of the Centre’s services and products, initiating and maintaining strategic partnerships, ensuring customer focus and managing stakeholder relations, as well as brand management. An additional responsibility is to ensure theCentre’sgoodstandingwiththeBotswanaQualificationsAuthority(BQA).

During the year under review, the Centre realigned the Marketing Strategy to the Centre’s new strategic focus. A key shift has been in the repositioning of the Marketing Programme to enable it to be more strategic in nature and add value to the business of the Centre. This saw the addition of new initiatives designed to improve marketing and communication such as sourcing and maintaining strategic partnerships, joint project delivery, sourcing project funding, developing and maintaining a new database, developing a communication plan in alignment with the new strategic focus, campaigns to support key projects and accrediation of new training and consulting products. Some of the highlights are summarised below.

Strategic PartnershipsBNPC has partnered with the Centre for Development of Enterprise (CDE) in the implemenetation of Private Sector Development Programme (PSDP). In the year under review, the Centre collaborated with the Channell Corporation through CDE to provide guidance to the Women’s Entrepreneurship Development Programme (WED).

During the year under review the Centre also partnered with the National Strategy Office (NSO) implement the National Cluster Programme. BNPC sits in the Technical Committee of the Programme and also directly provides assistance to the Beef and Tourism Cluster initiatives.


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Customer Satisfaction The Centre has committed itself to providing a minimum of 75% customer satisfaction to its clients. This commitment is made through the Quality Policy, a key component of the ISO 9001:2008 standard accreditation, which the Centre continues to maintain. During the year under review, the Centre attained an average customer satisfaction rating of of 85%, surpasing the set target. In the next fiancial year, the Centre plans to revamp its customer satisfaction system to expand its scope to areas previously not covered such as internal customer satisfaction as well as brand equity.

Annual Customer SatisfactionOther reforms in the coming year will include revamping the Centre’s website to make it more interactive, execution of joint projects, securing project funding and the implementaion of robust campaigns.

Challenges During the year under review the Centre was not in a position to fully fund its extensive and

costly marketing and communication needs. However, efforts are in place to implement the least costly/high value initiatives to enhance the Centre’s image and impact in the economy, as well as communicate the Centre’s work and spread the productivity message. Another key challenge is staffing, as currently the Programme consists of only two (2) staff members, yet requirements of the work necessitate a fully fldeged unit. It is anticipated that restructing of the Centre may resolve this challenge.

The Centre is continuing to experience a decline in the occupancy of its facilities (conference rooms and hostels), which are old, dilapidated and in desperate need of refurbishment. The accommodation and conferencing industry has seen new entrants in the last 24 months, who have added to the already stiff competition. Occupancy of the Centre’s conference rooms remains below the industry average at 35%, and the hostels at 10%. This is in spite of the Centre being strategically located in the City Centre, as well as offering below market prices for these facilities. Funding refurbishment of the facilities would enhance their income earning capacity, and directly contribute to the funding needs of the Centre.

PRODUCTIVITY RESEARCH AND INFORMATION

Competitiveness ProjectDuring the year under review the Centre continued to lobby, as well as educate various stakeholders on key issues pertaining to Botswana’s Productivity and Competitiveness. Through the Centre’s partnership with the World Economic Fo-rum, it has been possible to facilitate the data collection for the Global Competi-tiveness Reports, thus enabling Botswana to benchmark with the best countries in the world in effort to improve its global competitiveness rankings. In this re-gard, the Centre organised dissemination forums to create awareness on the sub-ject and to provide an opportunity for participants to contribute ideas towards improving the country’s competitiveness.

Amongst the key forums organised were a media workshop held in August 2013 where members of the media were sensitised on key productivity and quality related issues affecting Botswana’s global competitiveness, focusing mainly on the work ethic challenge. Twenty five (25) journalists from the country’s main media houses participated in the

0

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20

30

40

50

60

70

80

90

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Baseline Apr-Jun Jul-Sep Oct -Dec Jan - Mar Annual Average

Figure 3: Annual Customer Satisfaction

Perc

enta

ge ª%

)


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event. Following this interaction there has been an improvement in the quality and quantity of articles appearing on the subject thus contributing to increased awareness. Other dissemination activities are detailed in the Table 1below.

Table 1: 2013-14 Competitiveness Project Activities

ACTIVITY TIME LOCATION

2013 Executive Opinion Survey 11 February 30 - April 2013Gaborone & Francistown

2013 Global Technology Report Launch

11 April 2013 Gaborone

2013 T&T Report Presentation at HATAB

04 May 2013 Kasane

Secondary Data Stakeholders Workshop

29 May 2013 Gaborone

Journalist Workshop 31 July 2013 Gaborone

2013-14 GCR Launch 04 September 2013 Gaborone

Seminar on Work Ethic & Competitiveness

18 March 2014 Francistown

Resource CentreThe BNPC Resource Centre continued to provide services to both internal and external clients in pursuit of enhancing productivity knowledge, and availinginformation on Productivity tools and techniques. Membership showed slight increases compared to the previous year as shown in Figure 4 below.

Figure 4: Resource Centre Membership

Challenges The past year was challenging owing to financial constraints hence it was not possible to conduct the planned research projects or to purchase up-to-date material in terms of DVDs and books.

To a large extent the research human resources expended their time on supporting ongoing projects at the Centre, particularly the Customer Care project for the Tourism sector and the Smart Work Ethics programme offered to the public service.


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The Centre recognises productivity as being critical to the attainment of its mandate. To that extent, the Centre specifically has an objective dealing withproductivity entitled “to Build a Productivity Culture” through which it intends to support the organisational strategy under Theme 3 that deals with Organisational Excellence.

In an endeavour to achieve organisational excellence, the Centre has amongst others identified the need for productivity growth and employee satisfaction as critical to the attainment of its mandate.

Table 2: BNPC Staff Complement for the Year Ended 31 March 2014

Programme/Department Approved Occupied Vacancy

Directorate 7 7 0

Corporate Services 26 26 0

Enterprise Support Programme 9 7 2

Finance Department 11 11 0

Francistown regional Office 5 5 0

Productivity and Quality Awareness Programme

7 6 1

Public Service Programme 6 5 1

Human Resources Department 4 4 0

Information and Research Services 12 10 2

Marketing Department 2 2 2

TOTAL 90 84 6

INTERNAL CAPACITY

InitiativesDuring the year under review the Centre identified the following as some of the initiatives that are critical to the attainment of its mandate; the review of conditions of employment, the work ethic programme, employee assistance programme, and labour management relations project.

Capacity BuildingThe improvement of staff skills and competencies is invariably also critical to the attainment of the mandate. To that extent, a commitment was made “to capacitate employees with requisite skills and competencies to enable them deliver to the strategy”. That was accompanied by the commitment and undertaking to raise staff competency level to 75%, as it is expected that will enable them to perform to expected standards.

Figure 5: Number of Employees trained per internvention


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In endeavour to equip and capacitate employees with requisite skills, BNPC conducted training for its employees as per Figure 5 on page 22.

For the period under review, six (6) employees acquired various qualifications as follows; one (1) Master in Commerce (Project Management), one (1) Master of Public Administration (Human Resource Management), one (1) Master of Business Administration, one (1) Association of Chartered Certified Accountants (ACCA), one (1) Chartered Institute of Management Accountant (CIMA) and one (1) Bachelor of Commerce (Human Resource Management). The attainment of the above qualifications will go a long way in enhancing the competency level of employees and hence, assist them to appreciate the significance and importance of raising levels of productivity at work.

Staff RetentionThe total approved establishment at the Centre is 90 and of the total, 84 positions were filled while six (6) were vacancies for the period under review. The Centre was able to maintain staff turn-over within the acceptable international average of 10% by maintaining its average at around 2% for the year under review.

Mr B M Molake Executive Director


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FINANCIAL STATEMENTS2013-2014

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Business operation Promoting increased productivity, improving standards of management and labour management relations and generally stimulating productivity consciousness in Botswana.

Registered address Plot 21222/21254

Giraffe Road

Gaborone

Auditors PricewaterhouseCoopers

Secretary L Tlhalerwa

Bankers Bank of Baroda (Botswana) Limited

Standard Chartered Bank Botswana Limited

Stanbic Bank Botswana Limited

GENERAL INFORMATION

Statement of responsibility by the Board of Directors 26

Report of the independent auditors 27

Statement of comprehensive income 28

Statement of financial position 29

Statement of changes in funds 30

Statement of cash flows 31

Significant accounting policies 32-39

Notes to the financial statements 40-54

Detailed income statement AnnexureI

Notes to detailed income statement AnnexureII

FINANCIAL REPORT TABLE OF CONTENTS

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STATEMENT OF RESPONSIBILITY BY THE BOARD OF DIRECTORS

The Directors are required by the Botswana National Productivity Centre Act, 1993 to maintain adequate accounting records and are responsible for the content and integrity of the financial statements and related financial information included in this report. It is their responsibility to ensure that the financial statements fairly present the state of affairs of the centre as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with the International Financial Reporting Standards. The External Auditors are engaged to express an independent opinion on the financial statements.

The financial statements are prepared in accordance with the International Financial Reporting Standards and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates.

The Directors acknowledge that they are ultimately responsible for the system of internal financial control established by the Centre and places considerable importance on maintaining a strong control environment. To enable the Directors to meet these responsibilities, the Board sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the Centre and all employees are required to maintain the highest ethical standards in ensuring the Centre’s business is conducted in a manner that in all

reasonable circumstances is above reproach. The focus of risk management in the centre is on identifying, assessing, managing and monitoring all known forms of risk across the centre. While operating risk cannot be fully eliminated, the centre endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The Directors are of the opinion, based on the information and explanations given by management that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The Directors have reviewed the Centre’s cash flow forecast for the year to 31 March 2015 and, in the light of this review and the current financial position, they are satisfied that the centre has or has access to adequate resources to continue in operational existence for the foreseeable future.

The External Auditors are responsible for independently reviewing and reporting on the centre’s financial statements. The financial statements have been examined by the centre’s external auditors and their report is presented on page 27. The financial statements set out on pages 28 to 54, which have been prepared on the going concern basis, were approved by the Board on 27th October 2014 and were signed on its behalf by:

Director Director

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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BOTSWANA NATIONAL PRODUCTIVITY CENTRE

Report on the financial statementsWe have audited the accompanying annual financial statements of Botswana National Productivity Centre, which comprise the statement of financial position as at 31 March 2014, and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 28 to 54.

Directors’ Responsibility for the Financial StatementsThe directors are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards, 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.

Auditor’s ResponsibilityOur 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 about 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 auditor’s 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 of financial statements that give a true and fair view 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.

OpinionIn our opinion, the financial statements give a true and fair view of, the financial position of Botswana National Productivity Centre as at 31 March 2014, and its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Emphasis of MatterWithout qualifying our opinion, we draw attention to Note 21 to these financial statements, which states that as of 31 March 2014 Botswana National Productivity Centre’s current liabilities exceeded its total assets by P 598,627. This indicates the existence of a material uncertainty which may cast significant doubt about the ability of the Centre to continue as a going concern. Its ability to continue in operation is dependent on the continued financial support of the Government of Botswana.

Individual practisingmember: A S Edirisinghe Gaborone Membership number: 20030048 27 October 2014

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2014 2013 Notes P P

RevenueGrant received 26,295,935 29,755,784

Sale of services 7,022,520 5,011,628

Other operating income 4 548,649 437,909

Administrative expenses 4 (43,892,814) (49,750,366)

Operating deficit 4 (10,025,710) (14,545,045)

Finance income 6 255,961 586,893

Netdeficitbeforeincometaxexpense (9,769,749) (13,958,152)

Income tax expense 8 - -

Net deficit for the year (9,769,749) (13,958,152)

Other comprehensive incomeAmortisation of capital grants 14 1,546,016 1,404,247

Capital grants transferred to income on disposal of assets 14 193,905 105,739

Other comprehensive income for the year 1,739,921 1,509,986

Total comprehensive loss for the year (8,029,828) (12,448,166)

STATEMENT OF COMPREHENSIVE INCOMEfor the year ended 31 March 2014

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STATEMENT OF FINANCIAL POSITIONas at 31 March 2014

2014 2013

Notes P P

ASSETSNon-current assetsProperty, plant and equipment 10 6,851,303 8,160,822

Current assetsInventories 11 293,574 301,679

Trade and other receivables 12 2,843,293 1,521,215

Cash and cash equivalents 13 5,178,791 14,636,974

8,315,658 16,459,868

Total assets 15,166,961 24,620,690

FUNDS AND LIABILITIESCapital grants and reservesCapital grants 14 6,319,911 8,059,832

Revaluation reserve 15 2,343,475 2,343,475

Accumulated deficit (9,262,013) (1,232,185)

(598,627) 9,171,122

Current liabilitiesTrade and other payables 16 15,765,588 15,449,568

15,765,588 15,449,568

Total funds and liabilities 15,166,961 24,620,690

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STATEMENT OF CHANGES IN FUNDSfor the year ended 31 March 2014

Capital grants

Unutilised capital grants

Revaluation reserve

Accumulated (deficit) /

surplus

Total funds

P P P P P

For the year ended 31 March 2013

Balance at 1 April 2012 5,182,780 2,901,042 2,343,475 11,215,981 21,643,278

Comprehensive income

Received during the year 1,485,996 - - - 1,485,996

Transfer from unutilised capital grants 658,557 (658,557) - - -

Net deficit for the year - - - (13,958,152) (13,958,152)

Other comprehensive income

Amortisation of capital grants (1,404,247) - - 1,404,247 -

Transfer to income (105,739) - - 105,739 -

Total comprehensive loss 634,567 (658,557) - (12,448,166) (12,472,156)

Balance at 31 March 2013 5,817,347 2,242,485 2,343,475 (1,232,185) 9,171,122

For the year ended 31 March 2014

Balance at 1 April 2013 5,817,347 2,242,485 2,343,475 (1,232,185) 9,171,122

Comprehensive income

Transfer from unutilised capital grants 430,402 (430,402) - - -

Net deficit for the year - - - (9,769,749) (9,769,749)

Other comprehensive income

Amortisation of capital grants (1,546,016) - - 1,546,016 -

Transfer to income (193,905) 193,905 -

Total comprehensive loss (1,309,519) (430,402) - (8,029,828) (9,769,749)

Balance at 31 March 2014 4,507,828 1,812,083 2,343,475 (9,262,013) (598,627)

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STATEMENT OF CASH FLOWSfor the year ended 31 March 2014

2014 2013

Notes P P

Cash flows from operating activitiesOperating deficit (10,025,710) (14,545,045)

Adjustment for non cash items:

Depreciation of property plant and equipment 10 1,546,016 1,404,247

Profit on disposal of property, plant and equipment (45,407) (53,609)

Changes in working capital

Inventories 8,105 (74,664)

Trade and other receivables (1,322,078) (127,112)

Trade and other payables 316,020 7,449,332

Net cash used in operating activities (9,523,054) (5,946,851)

Cash flows from investing activities

Acquisition of property, plant and equipment 10 (430,402) (2,144,553)

Proceeds from disposal of property, plant and equipment 239,312 159,348

Interest received 6 255,961 586,893

Net cash used in investing activities 64,871 (1,398,312)

Cash flows from financing activities

Capital grant received during the year 14 - 1,485,996

Cash generated from financing activities - 1,485,996

Net decrease in cash and cash equivalents (9,458,183) (5,859,167)

Cash and cash equivalents at beginning of year 14,636,974 20,496,141

Cash and cash equivalents at end of year 13 5,178,791 14,636,974

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SIGNIFICANT ACCOUNTING POLICIESfor the year ended 31 March 2014

General information

Botswana National Productivity Centre (‘the Centre’) promotes productivity, improves standards of management and labour management relations and stimulates productivity consciousness in Botswana. The Centre is a parastatal organisation which has been legislated under Botswana National Productivity Centre Act 1993 and domiciled in Botswana. The address of registered office of the Centre is Plot 21222/21254, Giraffe Road, Gaborone.

The financial statements set out on pages 28 to 54 have been approved by the Board of Directors on 27th October 2014.

1 Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

1.1 Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards. They have been prepared under the historical cost convention, as modified by the revaluation of Residential properties.

The preparation of financial statements in conformity with IFRS requires the use of certain accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management’s best knowledge of the current events and actions, actual results may ultimately differ from those estimates. It also requires management to exercise its judgment in the process of applying the Centre’s accounting policies.

Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.

1.1.1 Adoption of standards in the current financial year

(a) New and amended standards adopted by the Centre

The following new standards, amendments and interpretations to existing standards are mandatory for the Centre’s accounting periods beginning on or after 1 April 2013. These have been adopted by the Centre during the year.

• Amendment to IFRS 7 Financial Instruments: Disclosures – Asset and Liability offsetting –The IASB has published an amendment to IFRS 7, ‘Financial instruments: Disclosures’, reflecting the joint requirements with the FASB to enhance current offsetting disclosures. These new disclosures are intended to facilitate comparison between those entities that prepare IFRS financial statements to those that prepare financial statements in accordance with US GAAP (effective from 1 January 2013).

• IFRS 13 – Fair value measurement-This standard aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs or US GAAP (effective from 1 January 2013).

• Amendments to IAS 1 Presentation of Financial Statements, on presentation of items of OCI - The IASB has issued an amendment to IAS 1, ‘Presentation of financial statements’. The main change resulting from these amendments is a requirement for entities to group items presented in other comprehensive income (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The amendments do not address which items are presented in OCI (effective from 1 July 2012).

• Amendment to IAS 1, ‘Presentation of financial statements’- The amendment clarifies the disclosure requirements for comparative information when an entity provides a third balance sheet either: as required by IAS 8, ‘Accounting policies, changes in accounting estimates and errors’; or voluntarily (effective from 1 January 2013).

• Amendment to IAS 16, ‘Property, plant and equipment’- The amendment clarifies that spare parts and servicing equipment are classified as property, plant and equipment rather than inventory when they meet the definition of property, plant and equipment (effective from 1 January 2013).

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SIGNIFICANT ACCOUNTING POLICIESfor the year ended 31 March 2014 (continued)

1.1 Basis of preparation (continued)

• Amendments to IAS 19 - Employee benefits-This amendment makes significant changes to the recognition and measurement of defined benefit pension expense and termination benefits, and to the disclosures for all employee benefits (effective from 1 January 2013).

(b) New and amended standards applicable to the current period but not relevant to the Centre

Management assessed the relevance of the following amendments and interpretations with respect to the Centre’s operations and concluded that they are not relevant to the Centre.

• Amendments to IFRS 1, ‘First time adoption’ on government loans - This amendment addresses how a first-time adopter would account for a government loan with a below-market rate of interest when transitioning to IFRS. It also adds an exception to the retrospective application of IFRS, which provides the same relief to first-time adopters granted to existing preparers of IFRS financial statements when the requirement was incorporated into IAS 20 in 2008 (Effective from 1 January 2013).

• Amendments to IFRS 1, ‘First time adoption of IFRS’- The amendment clarifies that an entity may apply IFRS 1 more than once under certain circumstances. The amendment clarifies that an entity can choose to adopt IAS 23, ‘Borrowing costs’, either from its date of transition or from an earlier date. The consequential amendment (as a result of the amendment to IAS 1) clarifies that a first-time adopter should provide the supporting notes for all statements presented (Effective from 1 January 2013).

• IAS 27 (revised 2011) – Separate financial statements- This standard includes the provisions on separate financial statements that are left after the control provisions of IAS 27 have been included in the new IFRS 10 (Effective from 1 January 2013).

• IAS 28 (revised 2011) – Associates and joint ventures- This standard includes the requirements for joint ventures, as well as associates, to be equity accounted following the issue of IFRS 11 (Effective from 1 January 2013).

• IFRS 10 Consolidated financial statements-This standard builds on existing principles by identifying the concept of control as the determining factor in

whether an entity should be included within the consolidated financial statements. The standard provides additional guidance to assist in determining control where this is difficult to assess. This new standard might impact the entities that a group consolidates as its subsidiaries (effective from 1 January 2013).

• IFRS 11 – Joint arrangements- This standard provides for a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form. There are two types of joint arrangements: joint operations and joint ventures. Joint operations arise where a joint operator has rights to the assets and obligations relating to the arrangement and hence accounts for its interest in assets, liabilities, revenue and expenses. Joint ventures arise where the joint operator has rights to the net assets of the arrangement and hence equity accounts for its interest. Proportional consolidation of joint ventures is no longer allowed (effective from 1 January 2013).

• IFRS 12 – Disclosures of interests in other entities- This standard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles (effective from 1 January 2013).

• IFRIC 20 - Stripping costs in the production phase of a surface mine-In surface mining operations, entities may find it necessary to remove mine waste materials (‘overburden’) to gain access to mineral ore deposits. The Interpretation considers when and how to account separately for these two benefits arising from the stripping activity, as well as how to measure these benefits both initially and subsequently (effective from 1 January 2013).

1.1.2 Adoption of standards in future financial periods

The following new standards, amendments and interpretations to existing standards are mandatory for the Centre’s accounting periods beginning on or after 1 April 2014. These have not been early adopted by the Centre.

(a) New standards, amendments and interpretations which are relevant to the Centre’s operations

The following new standards, amendments and interpretations to existing standards are mandatory for the Centre. These have not been early adopted by the Centre.

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• IAS 16, ‘Property, plant and equipment’, and IAS 38, ‘Intangible assets’- Both standards are amended to clarify how the gross carrying amount and the

accumulated depreciation are treated where an entity uses the revaluation model. The carrying amount of the asset is restated to the revalued amount. The split between gross carrying amount and accumulated depreciation is treated in one of the following ways: either the gross carrying amount is restated in a manner consistent with the revaluation of the carrying amount, and the accumulated depreciation is adjusted to equal the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses; or the accumulated depreciation is eliminated against the gross (effective from 1 July 2014)

• IAS 24, ‘Related party disclosures’- The standard is amended to include, as a related party, an entity that provides key management personnel services to the reporting entity or to the parent of the reporting entity (‘the management entity’) (effective from 1 July 2014).

• IFRS 9 – Financial Instruments (2009) - This IFRS is part of the IASB’s project to replace IAS 39. IFRS 9 addresses classification and measurement of financial assets and replaces the multiple classification and measurement models in IAS 39 with a single model that has only two classification categories: amortised cost and fair value (effective from 1 January 2015).

• IFRS 9 – Financial Instruments (2010) - The IASB has updated IFRS 9, ‘Financial instruments’ to include guidance on financial liabilities and derecognition of financial instruments. The accounting and presentation for financial liabilities and for derecognising financial instruments has been relocated from IAS 39, ‘Financial instruments: Recognition and measurement’, without change, except for financial liabilities that are designated at fair value through profit or loss (effective from 1 January 2015).

• Amendments to IFRS 9 – Financial Instruments (2011) - The IASB has published an amendment to IFRS 9, ‘Financial instruments’ that delays the effective date to annual periods beginning on or after 1 January 2015. The original effective date was for annual periods beginning on or after from 1 January 2013. This amendment is a result of the board extending its timeline for completing the remaining phases of its project to replace IAS 39 (for example, impairment and hedge accounting) beyond June 2011, as well as the delay in the insurance project. The amendment confirms the importance of allowing entities to apply the requirements of all the phases of the project to replace IAS 39 at the same time. The requirement to

restate comparatives and the disclosures required on transition have also been modified (effective from 1 January 2015).

• Amendment to IFRS 13, ‘Fair value measurement’- When IFRS 13 was published, paragraphs B5.4.12 of IFRS 9 and AG79 of IAS 39 were deleted as consequential amendments. This led to a concern that entities no longer had the ability to measure short-term receivables and payables at invoice amounts where the impact of not discounting is immaterial. The IASB has amended the basis for conclusions of IFRS 13 to clarify that it did not intend to remove the ability to measure short-term receivables and payables at invoice amounts in such cases (effective from 1 July 2014).

• Amendments to IAS 32 – The IASB has issued amendments to the application guidance in IAS 32, ‘Financial instruments: Presentation’, that clarify some of the requirements for offsetting financial assets and financial liabilities on the balance sheet. However, the clarified offsetting requirements for amounts presented in the statement of financial position continue to be different from US GAAP (effective from 1 January 2014).

• IASB issues narrow-scope amendments to IAS 36, ‘Impairment of assets- These amendments address the disclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less cost of disposal (effective from 1 January 2014).

• Amendment to IAS 19 regarding defined benefit plan- These narrow scope amendments apply to contributions from employees or third parties to defined benefit plans. The objective of the amendments is to simplify the accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary (effective from 1 July 2014).

(b) New standards, amendments and interpretations which are not relevant to the Centre’s operations

Management assessed the relevance of the following new amendments and improvements with respect to the Centre’s and group’s operations and concluded that they are not relevant to the Centre.


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• Amendments to IFRS 10, consolidated financial statements’, IFRS 12 and IAS 27 for investment entities - The amendments mean that many funds and similar entities will be exempt from consolidating most of their subsidiaries. Instead they will measure them at fair value through profit or loss. The amendments give an exception to entities that meet an ‘investment entity’ definition and which display particular characteristics. Changes have also been made in IFRS 12 to introduce disclosures that an investment entity needs to make (effective from 1 January 2014).

• Amendment to IFRS 2, ‘Share based payment’- The amendment clarifies the definition of a ‘vesting condition’ and separately defines ‘performance condition’ and ‘service condition’ (effective from 1 July 2014).

• Amendment to IFRS 3, ‘Business combinations’- The standard is amended to clarify that an obligation to pay contingent consideration which meets the definition of a financial instrument is classified as a financial liability or as equity, on the basis of the definitions in IAS 32, ‘Financial instruments: Presentation’. The standard is further amended to clarify that all non-equity contingent consideration, both financial and non-financial, is measured at fair value at each reporting date, with changes in fair value recognised in profit and loss. Consequential changes are also made to IFRS 9, IAS 37 and IAS 39 (effective from 1 July 2014)

• Amendment to IFRS 8, ‘Operating segments’-The standard is amended to require disclosure of the judgements made by management in aggregating operating segments. This includes a description of the segments which have been aggregated and the economic indicators which have been assessed in determining that the aggregated segments share similar economic characteristics. The standard is further amended to require a reconciliation of segment assets to the entity’s assets when segment assets are reported (effective from 1 July 2014).

• Amendment to IAS 39 on novation of derivatives- The IASB has amended IAS 39 to provide relief from discontinuing hedge accounting when novation of a hedging instrument to a CCP meets specified criteria. Similar relief will be included in IFRS 9, ‘Financial Instruments’ (effective from 1 January 2014).

• IFRS 14- The IASB has issued IFRS 14, ‘Regulatory deferral accounts’ (‘IFRS 14’), an interim standard on the accounting for certain balances that arise from rate-

regulated activities (‘regulatory deferral accounts’). Rate regulation is a framework where the price that an entity charges to its customers for goods and services is subject to oversight and/or approval by an authorised body (effective from 1 January 2016).

• IFRIC 21 – Accounting for levies-IFRIC 21, ‘Levies’, sets out the accounting for an obligation to pay a levy that is not income tax. The interpretation addresses diversity in practice around when the liability to pay a levy is recognized (effective from 1 January 2014).

1.2 Property, plant and equipment

All property, plant and equipment except for residential properties are included at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Buildings comprise mainly office premises, and residential properties. Residential properties are shown at fair value, based on periodic valuations by external independent valuers.

Residential properties are valued at least triennially. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. All other property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Increase in the carrying amount arising on revaluation of residential properties is credited to other comprehensive income and shown as revaluation reserve in statement of changes in funds. Decrease that offset previous increases of the same assets are charged against fair value and other reserves; all other decreases are charged to the income statement. The revaluation surplus included in equity in respect of an item of property, plant and equipment is transferred directly to retained earnings when the asset is derecognised.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Centre and the cost of the item can be measured reliably.


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1.2 Property, plant and equipment (continued)

All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Depreciation is calculated using the straight-line method to allocate the cost /valuation

of each asset to their residual values over their estimated useful lives as follows: Buildings 10 yearsPlant and machinery 4 yearsFurniture and fixtures 6 yearsMotor vehicles 4 - 7 yearsOffice equipment 4 yearsIT equipment 4 yearsResidential properties 10 yearsLibrary books 4 years

Generator included in the Plant and machinery is depreciated using straight-line method over 10 years. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (Policy number 1.3).

Gains and losses on disposals are determined by comparing proceeds with carrying amounts. These are included in the income statement.

1.3 Impairment of non-financial assets

Non-financial assets are reviewed annually for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at the end of each reporting period date.

As a minimum, management considers the existence of the following external and internal indicators at the end of each reporting period date which individually or collectively may indicate impairment on non-financial assets.

External sources of information

◊ An unexpected significant decline in market value of an asset.

◊ A significant change in the technological, market, economic or legal environment within which the Centre operates or in the market to which an asset has been dedicated, that adversely affects the Centre.

◊ Market interest rates or other market rates of return on investments have increased during the period, and those increases are likely to affect the discount rate used in calculating an asset’s value in use and decrease the asset’s recoverable amount materially.

◊ The carrying amount of the net assets of the Centre is more than its market capitalisation.

Internal sources of information

◊ Evidence is available of obsolescence or physical damage of an asset.◊ Significant changes with an adverse effect on the Centre have taken place during

the period, or are expected to take place in the near future, in the extent to which, or manner in which, an asset is used or is expected to be used.

◊ Evidence is available from internal reporting that indicates that the economic performance of an asset is, or will be, worse than expected.

1.4 Inventories

Inventories consist of office consumables and are stated at the lower of cost and net realisable value. Cost is determined using the weighted average costing method.

1.5 Financial assets

1.5.1 Classification

The Centre classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available for sale. The


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1.5 Financial assets (continued)

classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading.

A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable

payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. The Centre’s loans and receivables comprise ‘trade receivables’ and ‘cash and cash equivalents’ in the balance sheet (Policy number 1.6 and 1.7).

Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this

category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the reporting period date.

There are no financial assets classified as fair value through profit or loss and available-for-sale at the balance sheet date.

1.5.2 Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade date, the date on which the Centre commits to purchase or sell the asset. Loans and receivables are carried at amortised cost using the effective interest method. The Centre assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Centre has transferred substantially all risks and rewards of ownership. Impairment testing of trade receivables is described in policy number 1.6.

1.5.3 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

1.5.4 Impairment of financial assets The Centre assesses at each balance sheet date whether there is objective evidence

that a financial asset or a group of financial assets is impaired. Impairment testing of trade receivables is described in policy number 1.6.

1.6 Trade receivables

Trade receivables are amounts due from customers for sale of services sold in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment.

A provision for impairment of trade receivables is established when there is objective evidence that the Centre will not be able to collect all amounts due according to the original terms of the 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 the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in profit or loss.

When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited to profit or loss.

1.7 Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts.


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1.8 Provisions

Provisions claims are recognised when the Centre has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

1.9 Government grants

Government grants are assistance by government in the form of transfers of resources to an entity in return for past or future compliance with certain conditions relating to the operating activities of the Centre.

Revenue grants are related to income of the Centre. Revenue grants should be recognised in the income statement over the period necessary to match them with the related costs that they are intended to compensate. The timing of such recognition in the income statement will depend on the fulfillment of any conditions attaching to the grants.

Capital grants are related to assets of the Centre. Capital grants should either be offset

against the carrying amount of the relevant asset or presented as deferred income in the balance sheet. The income statement will affect either by reducing depreciation charge or by deferred income being recognised as income systematically over the useful life of the related asset.

1.10 Trade accounts payable

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade accounts payable are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

1.11 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The financial statements are presented in Botswana Pula, which is the Centre’s functional and the presentation currency.

(b) Transactions and balances

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

Foreign exchange gains and losses that relate to cash and cash equivalents are presented in the income statement within “finance income or cost”. All other foreign exchange gains and losses are presented in the statement of comprehensive income within administration expenses.

1.12 Revenue recognition

Revenue is recognised using fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Centre’s activities.

Revenue comprises of grant and sale of services such as consultancy, course fees, accommodation and conference facilities. Revenue is shown net of value-added tax, returns, rebates and discounts. Revenue is recognised as follows:


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1.12 Revenue recognition (continued)

1.12.1 Grants

Capital grants and revenue grants – please refer policy number 1.9

1.12.2 Sale of services

Revenue from sale of services such as consultancy, course fees, rental for accommodation and conference facilities are recognised as it accrues unless

collectability is in doubt.

1.12.3 Interest income

Interest income is recognised using the effective interest method. When a loan and receivable is impaired, the Centre reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loan and receivables are recognised using the original effective interest rate.

1.12.4 Rental income

Leases where a significant portion of the risks and rewards of ownership are retained

by the lessor are classified as operating leases. Payments received under operating leases are credited to the income statement on a straight-line basis over the period of the lease.

1.13 Employee benefits

All employees of the Centre, other than contracted staff, belong to a defined contribution scheme to which the Centre contributes. Contributions to the scheme are expensed as and when incurred and included under staff costs in the income statement. A liability is recognised to the extent of any unpaid contributions to the fund managers.

The Centre pays gratuity to contracted staff in accordance with their respective contracts of employment.

1.14 Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.


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2 Financial risk management

2.1 Financial risk factors

The Centre’s activities may expose it to a variety of financial risks such as market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Centre’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Centre’s financial performance.

(a) Market risk

(i) Foreign currency risk As the Centre has no significant financial assets or liabilities denominated in

foreign currencies, the Centre’s income and operating cash flows are substantially independent of changes in foreign currency exchange rates.

(ii) Cash flow and fair value interest rate risk

Fluctuation in interest rates impact on the value of short-term cash investments giving rise to interest rate risk. The cash is managed to ensure surplus funds are invested in a manner to achieve maximum returns while minimising risk.

At 31 March 2014, if the prime interest rate had increased / (decreased) by 0.5% with

all other variables held constant, net surplus for the year would have been P 12,798 (2013: P 29,344) higher / lower, mainly as a result of interest income on interest bearing assets.

(iii) Price risk

The Centre is not exposed to price risk and other price risks such as equity price risk, prepayment risk, and residual value risk.

(b) Credit risk

Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions. If customers are independently rated, these ratings are used. If there is no independent rating, the finance manager assesses the credit quality of the customer, taking into account its financial position, past experience and other factors.

The credit quality of financial assets is disclosed in Note 9.2 (c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying operations, management maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecasts of the Centre’s cash and cash equivalents (Note 13) on the basis of expected cash flow. In addition, the Centre’s liquidity management policy involves projecting cash flows required to meet major cash flow commitments and considering the level of liquid assets necessary to meet these obligations; monitoring balance sheet liquidity ratios against best financial practices and maintaining debt financing plans.

The table below analyses the Centre’s financial liabilities based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 March 2014

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As 31 March 2014

Less thansix months

PTotal

P

Trade and other payables 1,658,774 1,658,774

Total 1,658,774 1,658,774

As 31 March 2013Less than

sixmonthsP

TotalP

Trade and other payables 9,028,993 9,028,993

Total 9,028,993 9,028,993

2.2 Capital risk management

The Centre is a Government organisation with the main object being promoting increased productivity, improving standards of management and labour management relations and generally stimulating productivity consciousness in Botswana. As such all operations of the Centre are funded by Government and therefore not subject to capital risk.

2.3 Fair value estimation of financial instruments Financial instruments consist of trade receivables, bank and cash balances and

other payables resulting from normal business operations. The nominal value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.

3. Critical accounting estimates and judgments

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

3.1 Critical accounting estimates and assumptions

The Centre makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within financial year are discussed below.

Impairment loss on debtors

The Centre reviews its debtors to assess impairment on a continuous basis. In determining whether an impairment loss should be recorded in the income statement, the Centre makes judgments as to whether there is any observable data indicating that there is measurable decrease in estimated cash flows

from debtors. Management uses estimates based on historical loss experience of assets. The assumptions used for estimating the amount and timing of cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience.

NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 March 2014 (continued)

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3. Critical accounting estimates and judgments (continued)

Residual value and useful lives of property, plant and equipment The Centre determines the estimated useful lives and related depreciation charges for

its plant and equipment. This estimate is based on projections about the continued existence of a market for its services and the ability of the Centre to penetrate a sufficient portion of that market in order to operate profitably. The Centre increases the depreciation charge where the useful lives are less than previously estimated, or it will appropriately impair, technically obsolete or non-strategic assets that have been abandoned or identified for sale. Residual values are based on current estimates of the value of these assets at the end of their useful lives.


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2014 2013

P P

4 Operating deficit

The following items have been (credited) / charged in arriving at the operating deficit:

(i) Other operating income

Rental income (436,929) (312,748)

Profit on disposal of property, plant and equipment (45,407) (53,609)

Other income (66,313) (71,552)

(548,649) (437,909)

(ii)Expensesbynature

Changes in inventories of stationary and consumables 8,105 (74,664)

Auditors’ remuneration 52,489 98,159

Board expenses 160,052 232,569

Depreciation 1,546,016 1,404,247

Hire of equipment 355,243 375,452

Impairment of trade and other receivables 80,744 92,295

Operating lease rentals 266,465 279,576

Remuneration paid to directors and key management 6,717,375 6,137,820

Repairs and maintenance 1,191,654 8,313,124

Staff cost (Note 5) 25,972,068 24,149,532

Project expenses 1,404,166 -

Insurance 508,019 519,558

Travel 848,191 1,104,151

Computer expenses 311,155 328,197

Utilities 596,071 564,271

Other expenses 3,883,106 6,151,415

Total cost of selling and administrative expenses 43,892,814 49,750,366


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2014 2013 P P

5 Staff costs

Salaries and wages 20,806,401 19,850,156

Pension costs 1,155,620 1,208,991

Staff gratuity 4,010,047 3,090,385

25,972,068 24,149,532

2014 2013 6 Finance income P P

Interest income - Bank 255,961 586,893

7 Pension fund

The Centre operates a defined contribution pension plan for its employees which provides for a pension based on the length of service. The plan is administered by Alexander Forbes (Botswana) Ltd. Provision is made for gratuity for all contracted management employees in terms of their respective employment contracts.

A defined contribution plan is a pension plan under which the Centre pays fixed contributions into a separate entity. The Centre has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

8 Income tax

Botswana National Productivity Centre being a Centre wholly owned by the Government of Botswana, is exempt from tax under the provision of paragraph (ii) of part I of the second schedule of the Income Tax Act 1995 as amended.


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9 Analyses of financial instruments

9.1 Financial instruments by category

The accounting policies for financial instruments have been applied to the line items below:

Loans and receivables

2014 2013

P P Assets as per the statement of financial positionTrade and other receivables 2,843,293 1,521,215

Cash and cash equivalents 5,178,791 14,636,974

8,022,084 16,158,189

Other financial liabilities at amortised cost

2014 2013

P P Liabilities as per the statement of financial positionTrade and other payables 2,022,403 2,709,616


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9.2 Credit quality of financial assets

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to historical information about counterparty default rates:

Rating 2014 2013

P P

Internally assessed

Trade receivables Group 1 2,518,778 1,076,964

Group 2 45,117 165,259

2,563,895 1,242,223

Deposits and Prepayments Not rated 214,226 165,398

Other receivables Not rated 65,172 113,594

Cash at bank

Standard Chartered Bank Botswana Limited Not rated 5,211,964 12,873,754

Bank of Baroda (Botswana) Limited Not rated 517,287 503,005

Stanbic Bank Botswana Limited Not rated (555,536) 1,256,009

5,173,715 14,632,768

Key:

Internal ratings

Group 1 = new customers (less than 6 months).

Group 2 = existing customers / other receivables (more than 6 months) with no defaults in the past.

There are no credit ratings available in Botswana for financial institutions. The above banks are reputed companies and have reported sound financial results and continued compliance with minimum capital adequacy requirements. None of the financial assets that are fully performing have been re-negotiated during the year.


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9.3 TheCentre’sexposuretoforeigncurrencyriskisanalysedbelow:

All amounts in Botswana Pula

As at 31 March 2014

Financial instruments BWP ZAR Total

Trade and other receivables 2,843,293 - 2,843,293

Cash and cash equivalents 6,145,067 31,013 6,176,080

8,988,360 31,013 9,019,373

Trade and other payables 15,765,588 - 15,765,588

All amounts in Botswana Pula

As at 31 March 2013

Financial instruments BWP ZAR Total

Trade and other receivables 1,521,215 - 1,521,215

Cash and cash equivalents 14,605,800 31,174 14,636,974

16,127,015 31,174 16,158,189

Trade and other payables 15,449,568 - 15,449,568


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10 Property, plant and equipmentBuilding

improvementsPlant and

machineryFurniture

and fixturesMotor

vehiclesOffice

equipmentIT equipment Residential

propertiesLibrary

booksTotal

(cost) (cost) (cost) (cost) (cost) (cost) (valuation) (cost) (cost / valuation)

P P P P P P P P P

At 01 April 2012

Cost / valuation 2,892,613 2,257,079 1,888,768 1,898,178 1,633,389 2,538,344 2,000,000 1,424,440 16,532,811

Accumulated depreciation (1,117,775) (484,059) (1,456,674) (972,981) (1,437,911) (2,319,000) (33,333) (1,184,823) (9,006,556)

Net book amount 1,774,838 1,773,020 432,094 925,197 195,478 219,344 1,966,667 239,617 7,526,255

Year ended 31 March 2013

Net book amount at beginning of year 1,774,838 1,773,020 432,094 925,197 195,478 219,344 1,966,667 239,617 7,526,255

Additions 74,917 62,643 20,206 1,205,568 679,576 62,888 - 38,755 2,144,553

Disposals - - - (69,822) (6,453) (137) - (29,327) (105,739)

Depreciation charge (257,882) (195,617) (130,053) (300,684) (116,160) (115,019) (205,900) (82,932) (1,404,247)

Net book amount at end of year 1,591,873 1,640,046 322,247 1,760,259 752,441 167,076 1,760,767 166,113 8,160,822

At 31 March 2013

Cost / valuation 2,967,530 2,319,722 1,908,974 2,815,882 2,305,658 2,594,637 2,000,000 1,433,867 18,346,270

Accumulated depreciation (1,375,657) (679,676) (1,586,727) (1,055,623) (1,553,217) (2,427,561) (239,233) (1,267,754) (10,185,448)

Net book amount 1,591,873 1,640,046 322,247 1,760,259 752,441 167,076 1,760,767 166,113 8,160,822

Year ended 31 March 2014

Net book amount at beginning of year 1,591,873 1,640,046 322,247 1,760,259 752,441 167,076 1,760,767 166,113 8,160,822

Additions 36,486 95,214 99,030 - 41,122 158,550 - - 430,402

Disposals - - (2,507) (190,001) (1,397) - - - (193,905)

Depreciation charge (263,962) (209,450) (122,620) (320,679) (244,375) (115,366) (200,000) (69,564) (1,546,016)

Net book amount at end of year 1,364,397 1,525,810 296,150 1,249,579 547,791 210,260 1,560,767 96,549 6,851,303

At 31 March 2014

Cost / valuation 3,004,016 2,414,936 1,954,079 2,235,048 2,311,142 2,718,888 2,000,000 1,433,867 18,071,976

Accumulated depreciation (1,639,619) (889,126) (1,657,929) (985,469) (1,763,351) (2,508,628) (439,233) (1,337,318) (11,220,673)

Net book amount 1,364,397 1,525,810 296,150 1,249,579 547,791 210,260 1,560,767 96,549 6,851,303


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10 Property, plant and equipment (continued)

Residential properties included under staff housing were revalued on 24 January 2012 by Property Development and Valuation Surveyors, an independent valuer. Residential properties were valued at P 2,000,000 based on open market value. The resulting surplus of P 877,045 has been recognised in other comprehensive income and has been credited to the revaluation reserve within statement of changes in funds.

If the residential properties were carried at cost before the above revaluation adjustment, the respective carrying amount would be as follows;

2014 2013

P P

Cost 795,729 795,729

Accumulated depreciation (795,729) (795,729)

- - 2014 2013

11 Inventories P P

Stores and consumables (at cost) 293,574 301,679

12 Trade and other receivables 2014 2013 P P

Trade receivables 2,914,650 1,508,294 Less: provision for impairment (350,755) (266,071)

2,563,895 1,242,223 Deposits and prepayments 214,226 165,398 Other receivables 108,365 160,727 Less: provision for impairment (43,193) (47,133)

2,843,293 1,521,215

As at 31 March 2014 all trade receivables that are past due are impaired.

As of 31 March 2014, trade receivables of P 350,755 (2013: P 266,071) were impaired and provided for in full. The aging of these receivables are as follows:

Over 60 days 350,755 266,071


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Movement of the provision for impairment of other receivables are as follows:

2014 2013

P P

Balance at beginning of year 47,133 84,295

Reversal for the year (3,940) (37,162)

Balance at end of year 43,193 47,133

The creation and release of provision for impairment of trade and other receivables have been included in administrative expenses in the income statement. Unwind of discount, when applicable, is included in “finance costs” in the income statement (Note 6). Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash.

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above. The Centre does not hold any collateral as security.

2014 2013

P P

13 Cash and cash equivalents

Bank balances 3,000,214 9,363,518

Cash on hand 5,076 4,206

Gratuity trust account 2,173,501 5,269,250

5,178,791 14,636,974

12 Trade and other receivable (continued)Movement of the provision for impairment of trade receivables are as follows:

2014 2013 P P

Balance at beginning of year 266,071 173,776 Amount provided during the year 84,684 92,295 Balance at end of year 350,755 266,071


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13 Cash and cash equivalents (continued)

For the purpose of the cash flow statement, the year-end cash and cash equivalents comprise the following:

2014 2013

P P

Cash at bank 5,173,715 14,632,768

Cash on hand 5,076 4,206

5,178,791 14,636,974

2014 2013

P P

14 Capital grants

Capital grants (Note 14.1) 4,507,828 5,817,347

Unutilised capital grants (Note 14.2) 1,812,083 2,242,485

6,319,911 8,059,832

14.1 Capital grants

The Centre receives grants from Government based on the budget requirements approved by the Board. These funds are not refundable by the Centre to the Government.

2014 2013 P P

Capital grants at beginning of year 5,817,347 5,182,780

Received during the year - 1,485,996

Amortisation of capital grants (1,546,016) (1,404,247)

Transfer from unutilised capital grants 430,402 658,557

Transfer to income on disposed property, plant and equipment (193,905) (105,739)

Capital grants at end of year 4,507,828 5,817,347


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14.2 Unutilised capital grants

Unutilised capital grants represent the amounts not fully utilised during the year and carried forward for utilisation in future periods. These are segregated from the capital grants to monitor the unutilised portion and match utilisation with the assets acquired.

2014 2013

P P

Unutilised capital grants at beginning of year 2,242,485 2,901,042

Transfer to capital grants (430,402) (658,557)

Unutilised capital grants at end of year 1,812,083 2,242,485

2014 2013

P P

15 Revaluation reserve

Balance at end of year 2,343,475 2,343,475

The revaluation reserve arises as a result of revaluation of residential properties to reflect the current market value. There are no restrictions on the utilisation of the revaluation reserve.

2014 2013

P P

16 Trade and other payables

Trade payables 123,954 486,109

Other accounts payable 1,898,449 2,223,507

Provisions (Note 16.1) 7,755,061 6,420,575

Deferred grant 5,988,124 6,319,377

15,765,588 15,449,568


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16.1 Provisions

Leave pay Gratuity Total P P P

Balance at the beginning of year 2,089,410 4,331,165 6,420,575 Provisions for the year 702,796 4,010,047 4,712,843 Payments made during the year (590,824) (2,787,533) (3,378,357)

Balance at end of year 2,201,382 5,553,679 7,755,061

Gratuity

Certain employees receive terminal gratuities in accordance with their contracts of employment. An accrual is made for the estimated liability towards such employees up to the reporting date.

Leave pay

Paid absences are accounted for on an accrual basis over the period in which employees have provided services.

2014 2013

P P

17 Related party transactions

(i) Remuneration paid to Board of Directors and key management 6,717,375 6,137,820

(ii) Board sitting fees paid to board members 27,048 30,429


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18 Events after reporting period

There were no material events that occurred after the reporting period that require disclosure or adjustment to the financial statements.

19 Operating lease commitments

Operating lease payments represent rentals payable by the centre for certain of its office properties. Leases are negotiable for an average term of two years and rentals are fixed for an average of two years.

The future aggregate minimum lease payments under non-cancellable operating lease commitments are as follows:

2014 2013

P P

Not later than 1 year 292,845 343,692

Between two and five years 676,472 869,673

969,317 1,213,365

20 Contingencies

The Centre has issued a guarantee to Bank of Baroda (Botswana) Limited to a maximum extent of P 6,100,000 for a facility to provide the staff of the centre with motor vehicles, computers, and personal loans. Total advances obtained by eligible employees through the scheme amounted to P 4,759,113 as at 31 March 2014 (2013: P 4,418,051).

As at the year end, two employees of the Centre have lodged cases against Botswana National Productivity Centre for unfair grading and labour practices and for wrongful placement after a restructuring practice with the Industrial Court. The total claim lodged amounts to P 500,934.

21 Going Concern

As of 31 March, the Centre had accumulated losses of P9,262,013 and its liabilities exceeded its assets by P598,627. The ability of the Centre to continue as a going concern is dependent on the continued financial support of the Government of Botswana. The financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlements of liabilities, contingent obligations and commitments will occur in the ordinary course of business.


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2014 2013

Notes P P

Revenue

Grant received 26,295,935 29,755,784

Sale of services 1 7,022,520 5,011,628

Other operating income

Rental income 436,929 312,748

Profit on disposal of property, plant and equipment 45,407 53,609

Other income 66,313 71,552

548,649 437,909

Administrative expenses

Advertising (198,313) (478,720)

Auditors’ remuneration (52,489) (98,159)

Bank charges (40,726) (84,556)

Board expenses (160,052) (232,569)

Cleaning (192,766) (129,663)

Computer expenses (311,155) (328,197)

Consulting fees (49,646) (53,584)

Consumables - -

Depreciation (1,546,016) (1,404,247)

General expenses (233,360) (310,705)

Hire of equipment (355,243) (375,452)

Impairment of trade debtors (80,744) (92,295)

Insurance (508,019) (519,558)

Legal expenses (347,566) (326,484)

DETAILED INCOME STATEMENT ANNEXURE Ifor the year ended 31 March 2014

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2014 2013

Notes P P

Operating lease rentals (266,465) (279,576)

Participants catering (398,881) (444,642)

Petrol and oil (83,213) (129,154)

Postage costs (23,771) (54,040)

Printing and stationery (361,120) (401,265)

Project expenses (1,404,166) -

Promotions (369,754) (1,394,349)

Recruitment expenses (35,023) (67,202)

Remuneration paid to directors and key management (6,717,375) (6,137,820)

Repairs and maintenance (1,191,654) (8,313,124)

Security costs (130,292) (148,720)

Staff costs (25,972,068) (24,149,532)

Staff welfare (9,112) (56,938)

Subscriptions (906,785) (1,035,288)

Telephone and fax (360,357) (379,256)

Training - staff (142,421) (656,849)

Travel (local) (426,757) (513,917)

Travel (overseas) (421,434) (590,234)

Utilities (596,071) (564,271)

(43,892,814) (49,750,366)

Operating deficit (10,025,710) (14,545,045)

“This detailed income statement does not form part of the audited financial statements covered by the audit opinion on pages 27.”

DETAILED INCOME STATEMENT ANNEXURE Ifor the year ended 31 March 2014 (continued)

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2014 2013

P P

1 Sale of services

Consulting 559,458 304,317

Course fees 3,269,495 3,923,865

Accommodation 302,631 510,911

Conference facilities 279,574 272,535

Project income 2,611,362 -

7,022,520 5,011,628

NOTES TO DETAILED INCOME STATEMENT ANNEXURE IIfor the year ended 31 March 2014

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INCOME AND EXPENDITUREfor the year ended 31 March 2014

58


NOTES

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HEAD OFFICEP/Bag 00392, Gaborone, BotswanaPlot 21222/21254, Giraffe Road, GaboroneTel: (267) 362 6300, Fax: (267) 391 3501 / 390 6390Email: [email protected]

FRANCISTOWN OFFICEP/Bag T2, Tatitown, BotswanaPlot 9597, Off Thaphama Traffic CircleBank of Botswana Building (First Floor)Tel: (267) 241 5808/241 5500, Fax: (267) 241 6101Email: [email protected]

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