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Z I M P L O W A N N U A L R E P O R T
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Zimplow Limited ii 2011 Annual Report
MISSION
To avail quality, affordable and reliable steel products on time everytime to the mining, farming,construction and manufacturing sectors.
VISION
To be a market leader in the design, sourcing and distribution of at least one of our products in eight
countries south of the Sahara for all our products by 2020.
CORE VALUES
Integrity
Being absolutely truthful and accepting responsibility for our actions.
Quality
Being professional and quality oriented in everything we do.
Teamwork
Working together to achieve a common goal.
DependabilityOur customers, employees and suppliers must be able to count on us.
Fun
Embracing a positive attitude and spontaineity.
Mission, Vision and Core Values
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Zimplow Limited 1 2011 Annual Report
2 Directorship and Administration
3 Notice to Shareholders4 Chairmans Review
5 Report of The Directors
6 Corporate Governance
7 Financial Highlights
8 Independent Auditors Report
10 Consolidated Statement of Comprehensive Income
11 Consolidated Statement of Financial Position
12 Consolidated Statement of Changes In Equity
13 Consolidated Statement of Cash Flows
14 Notes to the Financial Statements
54 Consolidated Statement of Value Added
55 Shareholders Analysis
56 Financial Review 2011
57 Financial Calendar
Contents
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Zimplow Limited 2 2011 Annual Report
DIRECTORS: P Devenish
Z Kumwenda*
A KurauoneB Mitchell*
D Mkonto*
E Mlambo
T Moyo
N Nhira
Z L Rusike (Chairman)
F Rwakonda* (Appointed 22 August 2011)
* Executive
GROUP SECRETARY: D Mkonto
TRANSFER SECRETARIES: Corpserve (Private) Limited
Cnr 1st Street / Union Avenue, Harare
AUDIT COMMITTEE: A Kurauone (Chairman)
T Moyo
N Nhira
REMUNERATION COMMITTEE: Z L Rusike (Chairman)
P Devenish
E Mlambo
EXECUTIVE COMMITTEE: Z Kumwenda
B Mitchell
D Mkonto
F Rwakonda
REGISTERED OFFICE: 39 Steelworks Road, Heavy Industrial Sites,
PO Box 1059, Bulawayo
AUDITORS: Ernst & Young
Derry House, 6th Avenue / Fife Street, Bulawayo
BANKERS: African Banking Corporation Limited
Barclays Bank of Zimbabwe Limited
Kingdom Bank Limited
Merchant Bank of Central Africa Limited
National Merchant Bank Limited
CURRENCY OF FINANCIAL STATEMENTS: United States Dollars
PERIOD OF FINANCIAL STATEMENTS: Year ended 31 December 2011
Directorship and Administration
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Zimplow Limited 3 2011 Annual Report
SIXTH SECOND ANNUAL GENERAL MEETING
Notice is hereby given that the Sixth second Annual General Meeting of shareholders will be held at the CT Bolts Division
Office, Falcon Street and Wanderer Road, Bulawayo on 28 March 2012 at 10:00 hours to transact the following business:
AGENDA
Ordinary Business
1. To approve the minutes of the Annual General Meeting held on 30 March 2011.
2. To receive and adopt the directors report and audited financial statements for the year ended 31 December 2011.
3. To elect directors Mr F. Rwakonda, who retire from office in accordance with the Groups Articles of Association ,
and Mr Z Kumwenda and Mrs D Mkonto who retire from office by rotation.
All being available, they offer themselves for re-election.
4. To approve the payment of final dividend number 68 of 0.27 United States cents per share proposed on 22 February2012.
5. To approve the remuneration of directors for the year ended 31 December 2011.
6. To fix the auditors remuneration for the year ended 31 December 2011.
7. To appoint auditors for the financial year ending 31 December 2012.
BY ORDER OF THE BOARD
D MKONTO
Company Secretary
39 Steelworks Road
P.O. Box 1059BULAWAYO
22 February 2012
A member entitled to attend and vote is entitled to appoint one or more proxies to act in the alternative and to attend and
vote and speak in his stead. Such proxy need not be a member of the Group. Proxy forms must be lodged at the registered
office of the Group not less than forty-eight hours before the time of the meeting.
Notice to Shareholders
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Zimplow Limited 4 2011 Annual Report
INTRODUCTION
The much anticipated upturn in the economy for 2011 z-
zled out particularly in the second half of the year. Liquid-
ity challenges which intensied towards the end of 2011
and local cost increases, led by electricity tariffs worsened
the situation.
In spite of these and other challenges, the Company man -
aged to grow both volumes and prot in the face of serious
pressures on margins. I am delighted as your chairman to
report and comment on a pleasing set of results for the 12
months ended 31 December 2011.
OPERATIONS
Mealie Brand volumes for the 12 months ended 31 De-
cember 2011 increased by 27% to 74 thousand imple-
ments, as compared with 59 thousand implements for the
12 months ended 31 December 2010. Spare parts vol-
umes decreased by 11% in 2011 when compared to 2010.
C.T. Bolts mild steel volume sales increased by 15% for
the 12 months ended 31 December 2011 to 146 tonnes
as compared with 127 tonnes for the 12 months ended
31 December 2010. Mild steel bolts in units increased by
34% in 2011 while high tensile bolts in units substantially
increased by 87% in 2011 as compared to the same period
in 2010.
Tassburg volume sales increased by 47% to 107 tonnes
for the 12 months ended 31 December 2011 as compared
to 73 tonnes for the same period in 2010.
On 1 March 2011 the company acquired 49% of a South
African animal traction distribution company African Trac-
tion and Associated Technologies(AFRITRAC), the resultsof which have been consolidated. The subsidiary contrib-
uted US$1.5 million to turnover and $145 thousand dollars
to income before tax, over a ten month period.
FINANCIAL REVIEW
Group Revenue for the 12 months ended December 31,
2011 increased by 26% to US15.5 million as compared
to US$12, 3 million for the same period in 2010. This
increase was due to improved local market as well as
additional revenue from the new acquisition. Domestic
revenue increased by 30% while foreign revenue improved
by 17%.
Zimplow net income before tax for the twelve months
ended 31 December 2011 was US$3, 64 million as com-
pared to net income before tax for the 12 months to 31 De-
cember 2010 of US$2, 92 million. This represents a 24%
increase. The effective tax rate for the year under review
was 25% compared to 20% in 2010 and this resulted in
attributable prot of US$2,73 million for the year ended 31
December 2011 as compared to attributable income after
tax of US$2,34 million for 2010.
Net cash ow from operating activities decreased from
US$2, 2 million in 2010 to US$1, 8 million for the 12
months ended December 31 2011. The decrease was
mainly due to an advance corporation tax payment of
US$443 thousand dollars.
PROSPECTS
The year 2012 is expected to exert more cost pressures
that will be brought about by huge wage demands. The
full impact of electricity tariff increases by the Zimbabwe
Electricity Supply Authority of 51% and increases in all
utilities will be fully felt in 2012. Additionally, the rainfall
patterns in the region have been erratic.The Group is still
pursuing its growth strategies aimed at improving local and
regional competitiveness.
ACKNOWLEDGEMENTS
My appreciation goes to fellow Board members for the
clarity of direction they continue to offer to the business.
The CEO, management and employees deserve credit for
achieving yet another commendable set of results.
Z L Rusike
Chairman
22 February 2012
Chairmans Review
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Zimplow Limited 5 2011 Annual Report
Your directors report on the operations of Zimplow Limited for the year ended 31 December 2011 is as follows:
PROFIT AND APPROPRIATION
The profit and relative appropriations are as follows:
31 December 2011 31 December 2010
US$ US$
Profit for the year 2 730 282 2 342 001
Equity dividend proposed/paid (686 851) (700 000)
Retained earnings brought forward 4 171 468 1 829 467
Retained earnings carried forward 6 214 899 4 171 468
DIVIDEND
A final dividend number 68 of 0.27 United States cents (2010-0.21 United States cents) per share was proposed on 22February 2012.
SHARE CAPITAL
The unissued ordinary shares of 163 722 372 have been placed under the control of the directors, in terms of
Extraordinary General Meetings of Members held on 30 August 1989, 10 November 2004, 16 November
2005 and 14 November 2007.
PROPERTY, PLANT AND EQUIPMENT
Capital expenditure for the year ended 31 December 2011 totalled US$ 510 762. Capital
commitments for the year to 31 December 2012 amount to US$ 326 560.
DIRECTORATE
The names of the directors and secretary are those in office at the time of the printing of this
Notice (22 February 2012).
AUDITORS
Messrs Ernst & Young remain in office until the conclusion of the Annual General Meeting on 28 March
2012, at which members will be asked to fix their remuneration for the year under review and to appoint the
auditors for the ensuing year. Messrs Ernst & Young have indicated their willingness to continue in office.
For and on behalf of the Board
Chairman Chief Executive Officer
Z. Rusike Z. Kumwenda
Report of the Directors
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Zimplow Limited 6 2011 Annual Report
BOARD OF DIRECTORS
The board of directors consists of a non-executive chairman, four executive directors and six non-executive directors. The
chairman of the various committees are all non-executive directors. The board meets regularly to review results, dictate
policy, formulate overall strategy and approve the budgets. They have introduced structures of corporate governance,
certain functions and responsibilities have been delegated to the following committees. Their terms of reference and
composition are regularly reviewed.
AUDIT COMMITTEE
The audit committee liaises with the Groups external auditors. The external auditors have unrestricted access to the
audit committee. The annual, half yearly statements and financial reporting matters are reviewed by the committee at
appropriate intervals.
REMUNERATION COMMITTEEThis committee sets the remuneration of the executive directors and approves guidelines for the Groups pay reviews.
EXECUTIVE COMMITTEE
The executive committee sits between board meetings to deliberate and consider detailed operational issues of the Group
which includes strategy implementation.
DIRECTORS RESPONSIBILITY STATEMENT
The directors are responsible for:
1. Selecting appropriate accounting policies and applying them consistently.2. Making judgements and estimates that are both reasonable and prudent.
3. Stating whether applicable accounting standards have been followed subject to any material departures disclosed
and explained in the financial statements.
4. Preparing the financial statements on a going concern basis unless it is inappropriate to presume that the Group
will continue in business.
5. Safeguarding the assets of the Group and taking reasonable steps for the prevention and detection of fraud and
other irregularities.
6. Keeping proper accounting records.
Corporate Governance
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Zimplow Limited 7 2011 Annual Report
Financial Highlights
Year Ended Year Ended
31 December 2011 31 December 2010US$ US$
Turnover 15 503 306 12 298 300
Profit before taxation 3 635 273 2 922 253
Profit after taxation 2 730 282 2 342 001
Total assets 16 745 397 13 493 652
Market capitalisation 26 902 210 21 913 886
Ordinary Share Performance (US$ per share) (US$ per share)
Basic earnings 0.01 0.01
Operating cash flow 0.01 0.01
Weighted average number of shares 334 743 344 327 071 924
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Zimplow Limited 8 2011 Annual Report
Chartered Accountants (Zimbabwe)
Derry House
Cnr Fife Street/6th Avenue
P.O. Box 437, Bulawayo
Tel: +263 9 76111
Fax: +263 9 72359
REPORT OF THE INDEPENDENT AUDITORS
To the members of
ZIMPLOW LIMITED
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying consolidated financial statements of Zimplow Limited set out on pages 10 to 53,
which comprise the consolidated statement of financial position as at 31 December 2011, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for
the year then ended, the notes to the financial statements which include a summary of significant accounting policies and
other explanatory information.
DIRECTORS RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The Groups directors are responsible for the preparation and fair presentation of these financial statements in accordance
with International Financial Reporting Standards (IFRS) and in the manner required by the Companies Act (Chapter 24:03)
and the relevant statutory instruments (SI 33/99 and SI 62/96) and for such internal control as the directors determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
AUDITORS RESPONSIBILITY
Our responsibility is to express an opinion on these consolidated 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.
BASIS OF OPINION
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditors judgment, 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 entitys preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policiesused and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation
of the financial statements.
Independent Auditors Report
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Zimplow Limited 9 2011 Annual Report
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
AUDIT OPINION
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
Zimplow Limited as at 31 December 2011, and its financial performance and its cash flows for the year then ended in
accordance with International Financial Reporting Standards.
Report on other legal and regulatory requirements
In our opinion, the financial statements have, in all material respects, been properly prepared in compliance with the
disclosure requirements of the Companies Act (Chapter 24:03) and the relevant Statutory Instruments (SI 33/99 and SI
62/96).
Registered Public Auditors
Bulawayo
28 February 2012
Independent Auditors Report continued
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Zimplow Limited 10 2011 Annual Report
Notes Year Ended Year Ended
31 Dec 2011 31 Dec 2010
US$ US$
TURNOVER 15 503 306 12 298 300
Domestic 11 235 468 8 635 365
Export 4 267 838 3 662 935
Cost of sales (8 737 971) (6 801 772)
Gross profit 6 765 335 5 496 528
Net operating expenses (3 300 806) (2 720 466)
Operating profit 3 3 464 529 2 776 062Finance income 249 237 161 049
Finance costs (78 493) (14 858)
Profit before taxation 3 635 273 2 922 253
Income tax expense 6.1 (904 991) (580 252)
Profit for the year 2 730 282 2 342 001
Other comprehensive income :
Fair value (loss)/gain on available
for sale financial assets (29 752) 124
Exchange differences on translating foreign operations (135 147) -
Income tax relating to components of other
comprehensive income. 6.1 4 546 (19)
Other comprehensive (loss)/income for the year, net of tax (160 353) 105
Total comprehensive income for the year 2 569 929 2 342 106
Profit attributable to:
Owners of the parent 2 677 328 2 342 001
Non-controlling interests 52 954 -2 730 282 2 342 001
Total comprehensive income attributable to:
Owners of the parent 2 583 057 2 342 106
Non-controlling interests (13 128) -
2 569 929 2 342 106
Earnings per share ($)
Basic 22 0.01 0.01
Diluted 22 0.01 0.01
Consolidated Statement of Comprehensive Incomefor the year ended 31 December 2011
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Zimplow Limited 11 2011 Annual Report
Notes 31 Dec 2011 31 Dec 2010 31 Dec 2009
US$ US$ US$
EQUITY AND LIABILITIES
Issued share capital and reserves 5.1 7 621 223 7 068 881 7 066 581
Share based payment reserve 18.1 (65 400) - -
Available for sale reserve 76 496 101 702 101 597
Foreign currency translation reserve 18.2 (69 065) - -
Retained earnings 6 161 945 4 171 468 1 829 467
Equity attributable to owners of the parent 13 725 199 11 342 051 8 997 645
Non-controlling interests 19 512 633 - -
Total equity 14 237 832 11 342 051 8 997 645
Non Current Liabilities
Deferred tax liability 6.3 621 484 599 833 618 860
Current Liabilities
Trade and other payables 12.1 1 171 111 804 488 980 708
Provisions 12.2 378 982 378 421 140 627
Current tax liabilities 335 988 368 859 232 912
1 886 081 1 551 768 1 354 247
TOTAL EQUITY AND LIABILITIES 16 745 397 13 493 652 10 970 752
ASSETS
Non Current Assets
Property, plant and equipment 7 2 863 605 2 667 362 2 668 756
Available for sale financial assets 8 147 976 177 728 177 604
Goodwill 9 41 625 - -
3 053 206 2 845 090 2 846 360
Current Assets
Inventories 10 7 057 950 5 372 463 5 829 151
Trade and other receivables 11 2 686 329 2 242 511 1 163 878
Other current assets - - 91 412
Cash and bank balances 13 3 947 912 3 033 588 1 039 951
13 692 191 10 648 562 8 124 392
TOTAL ASSETS 16 745 397 13 493 652 10 970 752
Chairman Chief Executive Officer
Z L Rusike Z. Kumwenda22 February 2012
Consolidated Statement of Financial Positionas at 31 December 2011
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Zimplow Limited 12 2011 Annual Report
Share
Capital
Share
Available
forForeignCurrency
Retained
ShareBased
Attributable
N
on
Total
Capital
Reserve
Premium
salereserve
Translation
earnings
Payment
toownersof
Controlling
Reserve
Reserve
theParent
Interest
US$
US$
US$
US$
US$
US$
US$
US$
U
S$
US$
Balanceat
1January2009
7066581
-
-
-
7066581
7066581
Paymentof
dividend
(392486)
-
(392486)
(392486)
Profitforth
eyear
2221953
-
2221953
2221953
Othercomp
rehensiveincomefortheyear
101
597
-
-
101597
101597
Balanceat
31December2009
7066581
101597
1829467
-
8997645
8997645
Re-denominationofsharecapital
32707
(32707)
-
-
-
-
Adjustment
*
2300
-
-
2300
2300
Paymentof
dividend
-
-
-
-
Profitforth
eyear
2342001
-
2342001
2342001
Othercomp
rehensiveincomefortheyear
105
-
-
105
105
Balanceat
31December2010
327077
036174
101702
4171468
-
11342051
11342051
Profitforth
eyear
2677328
-
2677328
529
54
2730282
Paymentof
dividend
(686851)
-
(686851)
(686851)
Sharebased
payment
transaction(note17.1
)
(65400)
(65400)
(65400)
IssueofOrd
inaryShareson
acquistionofAfritrac(note20)
9
552333
-
552342
552342
NonContro
llingInterestarising
froma
cqusitionofAfritrac(note20.4
)
-
5257
61
525761
Othercomp
rehensiveincome;
Effectsoffo
reign
currencytranslation
(69065)
-
(69065)
(66082)
(135147)
FairvaluelossonAFS
financialasset
(252
06)
-
-
(25206)
(25206)
Balanceat
31December2011
32716
7036174
552333
76496
(69065)
6161945
(65400)
13725199
5126
33
14237832
*BeingdeemedcostadjustmenttoTassburgassetsthatwereidentifiedontheconsolid
ationofthefixedassetregister.
ConsolidatedStatementofC
hangesinEquity
fortheye
arended31December2011
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Zimplow Limited 13 2011 Annual Report
Notes Year Ended Year Ended
31 Dec 2011 31 Dec 2010
US$ US$
CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit before dividends, interest,
taxation and exchange gains/losses 3 464 529 2 776 062
Adjustment for non cash items:
Depreciation and amortisation of non current assets 302 328 271 230
Income recognised in respect of share option scheme (65 400) -
Profit on disposal of property, plant and equipment (15 917) (40 594)
Operating income before working capital changes 3 685 540 3 006 698
(Increase)/decrease in inventories (1 026 982) 456 689
Increase in trade and other receivables (171 043) (1 094 022)
Increase in trade and other payables 101 632 168 372
Cash generated by operating activities 2 589 147 2 537 737
Finance income received 249 237 161 049
Finance costs paid (78 493) (14 858)
Taxation paid (910 078) (463 349)
Net cash flows from operating activities 1 849 813 2 220 579
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (510 762) (282 984)
Proceeds on disposal of property,plant and equipment 38 207 56 042
Net cash inflow on acquisition of subsidiary 20.6 355 919 -
Net cash invested (116 636) (226 942)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid to owners of the company (686 851) -
Increase in cash and cash equivalents 1 046 326 1 993 637
Cash and cash equivalents at 1 January 2011 3 033 588 1 039 951
Effects of exchange rates on the balance of cash held in foreign operations (132 002) -
Cash and cash equivalents at 31 December 2011 3 947 912 3 033 588
Operating cashflow per share (US$) 0.01 0.01
Consolidated Statement of Cashflowsfor the year ended 31 December 2011
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Zimplow Limited 14 2011 Annual Report
Notes to the Financial Statementsfor the year ended 31 December 2011
1. Corporate information
The financial statements for the reporting period ended 31 December 2011 were authorised for issue in accordance
with a resolution of the Groups Directors on 22 February 2011.
Zimplow Limited, the Groups parent entity, is a Zimbabwe based concern. The Group operates three divisions and one
Subsidiary as follows:
Mealie Brand: engaged in the manufacture and distribution of animal drawn agricultural implements, hoes and
metal fasteners. Products include ploughs, cultivators, harrows, ridgers, ground nut shellers and planters. The Mealie
Brand factory is situated in Bulawayo;
CT Bolts: engaged in the manufacture and distribution of metal fasteners for the mining, construction and
agricultural industries. Products include industrial screws, mild steel bolts, sockets and anchoring products, nails,
nuts, washers, lags, chrome bolt covers and fittings. The CT Bolts factory is situated in Bulawayo with an operating
branch located in Harare;
Tassburg: engaged in the manufacture and distribution of wood screws, veranda bolts and high tensile bolts for thehousehold furniture, construction and mining industries. The Tassburg factory is situated in Harare.
African Traction and Associated technologies Afritrac: engaged in the distribution of animal drawn agricultural
implements and tools is situated in South Afica.
2. Basis of preparation
The financial statements have been prepared on the historical cost basis except for property, plant, equipment and
financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration given in exchange for assets.
The Group has achieved explicit and unreserved compliance with IFRS after early adoption of the revised IFRS 1 First-
time Adoption of International Financial Reporting Standards issued on 20 December 2010. The Group failed to express
a statement of explicit and unreserved compliance with IFRS for the financial year ended 31 December 2009 due to the
effects of severe hyperinflation as defined in IFRS 1 (Revised).
On 20 December 2010, the IASB amended IFRS 1 in order to:
- provide relief for first-time adoptors of IFRS from having to reconstruct transactions that occurred before their date
of transition to IFRS; and
- provide guidance for entities emerging from severe hyperinflation to either resume presenting IFRS financial
statements or topresent IFRS financial statements for the first time.
IFRS 1 (Revised) is applicable for periods beginning on or after 1 July 2011, early adoption is permitted. The Group haselected to early adopt the amendments to IFRS 1. The effect of the application of the amendments to IFRS 1 is to render
the opening statement of financial position, prepared on 1 January 2009 (date of transition to IFRS) IFRS compliant.
The opening statement of financial position was reported in the prior year as not being compliant with IFRS due to the
inability to comply with International Accounting Standard IAS 21 The Effects of Changes in Foreign Exchange Rates and
IAS 29; Financial Reporting in hyperinflationary Economies.
The Groups previous functional currency, the Zimbabwe dollar (ZW$), was subjected to severe hyperinflation before the
date of transition to IFRS because it had both of the following characteristics:
(a) a reliable general price index was not available to all entities with transactions and balances in the ZW$; and
(b) exchangeability between the ZW$ and a relatively stable foreign currency did not exist.
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Zimplow Limited 15 2011 Annual Report
The Group changed its functional currency from Zimbabwe dollars on 1 January 2009.The Group has adopted 1 January
2009 as the effective date of currency normalisation and the date of transition to reporting in terms of International
Financial Reporting Standards.The Group elected to measure certain items of trade and other receivables, inventories and trade and other payables at fair
value and to use the fair value as the deemed cost of those assets and liabilities in the opening IFRS statement of financial
position. The determination of balances for the opening statement of financial position is summarised below :
Financial assets and liabilities - Fair value as agreed by the shareholders, i.e. willing buyer willing seller.
Accounts receivable - Settlement amounts agreed with debtors in United States dollars.
Property, plant and equipment - Property was valued at gross replacement value and reassessed in line with subsequent
market trends and necessary adjustments were made. Plant and equipment was reconstructed based on archived
information from suppliers invoices denominated in United States dollars.
Payables - Settlement amounts agreed with creditors in United States dollars.
Bank balances - All ZW$ bank accounts were written off to nil. Opening balances represented actual United States dollars.
The financial statements comprise three statements of financial position, two statements of comprehensive income,
changes in equityand cash flows as a result of the application of the Amendments to IFRS 1.In preparing its opening
IFRS statement of financial position, the Group has not adjusted amounts previously determined in accordance with the
Guidance on Change in Functional Currency - 2009, which was drafted jointly by the Public Accountants and Auditors
Board (PAAB), Zimbabwe Accounting Practices Board (ZAPB) and the Zimbabwe Stock Exchange (ZSE). This guidance was
adopted as the local standard for reporting by most listed entities and other incorporated entities in Zimbabwe reporting
subsequent to severe hyperinflation. As amounts have not changed from those presented in previously issued financial
statements, reconciliations have not been presented, because the amendments to IFRS 1 effectively endorsed the approach
adopted in the guidance paper issued by the PAAB, ZAPB and the ZSE, which dealt with conversion of local currency
balances to stable foreign currency after a period of severe hyperinflation.The principal accounting policies are set below:
2.1 Adoption of standards and interpretations
New and revised IFRSs applied with no material effect on the financial statements
The following new and revised IFRSs have also been adopted in these financial statements.The
application of these new and revised IFRSs has not had any material impact on the amounts reported
for the current and prior years but may affect the accounting for future transactions or arrangements.
Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards - Additional Exemptions for
Firsttime Adopters (as part of improvements to IFRS issued in 2009): The amendments provide two exemptions when
adopting IFRS forthe first time relating to oil and gas assets, and the determination as to whether the arrangement
contains a lease. Not applicable.
Amendments to IAS 1 Presentation of Financial Statements (as part of Improvements to IFRSs issued in 2010)
The amendments to IAS 1 clarify that an entity may choose to disclose an analysis of other comprehensive income by item
in the statement of changes in equity or in the notes to the financial statements. In the current year, for each component
of equity, the Group has chosen to present such an analysis in the statement of changes in Equity.
Notes to the Financial Statementsfor the year ended 31 December 2011 (continued)
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Zimplow Limited 16 2011 Annual Report
Notes to the Financial Statementsfor the year ended 31 December 2011 (continued)
IAS 24 Related Party Disclosures (as revised in 2009)
IAS 24 (as revised in 2009) has been revised on the following two aspects: (a) IAS 24 (as revised in 2009) has changedthe definition of a related party and (b) IAS 24 (as revised in 2009) introduces a partial exemption from the disclosure
requirements for government-related entities.
The Company and its subsidiaries are not government-related entities. The application of the revised definition of related
party set out in IAS 24 (as revised in 2009) in the current year has resulted in the identification of related parties that
were not identified as related parties under the previous Standard. Specifically, associates of the ultimate holding company
of the Company are treated as related parties of the Group under the revised Standard whilst such entities were not
treated as related parties of the Group under the previous Standard. The related party disclosures set out in note 14 to
the consolidated financial statements have been changed to reflect the application of the revised Standard. Changes have
been applied retrospectively.
Amendments to IFRS 3 Business Combinations
As part of Improvements to IFRSs issued in 2010, IFRS 3 was amended to clarify that the measurement choice regarding
non-controlling interests at the date of acquisition is only available in respect of non-controlling interests that are
present ownership interests and that entitle their holders to a proportionate share of the entitys net assets in the event
of liquidation. All other types of non-controlling interests are measured at their acquisition-date fair value, unless another
measurement basis is required by other Standards. In addition, IFRS 3 was amended to provide more guidance regarding
the accounting for share-based payment awards held by the acquirees employees. Specifically, the amendments specify
that share-based payment transactions of the acquiree that are not replaced should be measured in accordance with IFRS
2 Share-based Payment at the acquisition date (market-based measure).
Amendments to IAS 32 Classification of Rights Issues
The amendments address the classification of certain rights issues denominated in a foreign currency as either equity
instruments or as financial liabilities. Under the amendments, rights, options or warrants issued by an entity for the
holders to acquire a fixed number of the entitys equity instruments for a fixed amount of any currency are classified as
equity instruments in the financial statements of the entity provided that the offer is made pro rata to all of its existing
owners of the same class of its non-derivative equity instruments. Before the amendments to IAS 32, rights, options or
warrants to acquire a fixed number of an entitys equity instruments for a fixed amount in foreign currency were classified
as derivatives. The amendments require retrospective application.
The application of the amendments has had no effect on the amounts reported in the current and prior years because the
Group has not issued instruments of this nature.
Amendments to IFRIC 14 Prepayments of a Minimum Funding Requirement
IFRIC 14 addresses when refunds or reductions in future contributions should be regarded as available in accordance
with paragraph 58 of IAS 19; how minimum funding requirements might affect the availability of reductions in future
contributions; and when minimum funding requirements might give rise to a liability. The amendments now allow
recognition of an asset in the form of prepaid minimum funding contributions. The application of the amendments has
not had no effect on the amounts reported in the current and prior years because the Group has not entered into any
transactions of this nature.
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IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
The Interpretation provides guidance on the accounting for the extinguishment of a financial liability by the issue of equityinstruments. Specifically, under IFRIC 19, equity instruments issued under such arrangement will be measured at their fair
value, and any difference between the carrying amount of the financial liability extinguished and the consideration paid
will be recognised in profit or loss.
The application of IFRIC 19 has had no effect on the amounts reported in the current and prior years because the Group
has not entered into any transactions of this nature.
Improvements to IFRSs issued in 2010
Except for the amendments to IFRS 3 and IAS 1 described earlier, the application of Improvements to IFRSs issued in 2010
has not had any material effect on amounts reported in the consolidated financial statements.
New and revised IFRSs in issue but not yet effective
The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective:
Amendments to IFRS 7 Disclosures Transfers of Financial Assets (1)
IFRS 9 Financial Instruments (2)
IFRS 10 Consolidated Financial Statements (2)
IFRS 11 Joint Arrangements (2)
IFRS 12 Disclosure of Interests in Other Entities (2)
IFRS 13 Fair Value Measurement (2)
Amendments to IAS 1 Presentation of Items of Other Comprehensive Income (3)
Amendments to IAS 12 Deferred Tax Recovery of Underlying Assets (4)
IAS 19 (as revised in 2011) Employee Benefits (2)
IAS 27 (as revised in 2011) Separate Financial Statements (2)
IAS 28 (as revised in 2011) Investments in Associates and Joint Ventures (2)
(1) Effective for annual periods beginning on or after 1 July 2011.
(2) Effective for annual periods beginning on or after 1 January 2013.
(3) Effective for annual periods beginning on or after 1 July 2012.
(4) Effective for annual periods beginning on or after 1 January 2012.
The amendments to IFRS 7 increase the disclosure requirements for transactions involving transfers of financial
assets. These amendments are intended to provide greater transparency around risk exposures when a financial asset
is transferred but the transferor retains some level of continuing exposure in the asset. The amendments also require
disclosures where transfers of financial assets are not evenly distributed throughout the period. The amendments to IFRS
7 increase the disclosure requirements for transactions involving transfers of financial assets. These amendments are
intended to provide greater transparency around risk exposures when a financial asset is transferred but the transferor
retains some level of continuing exposure in the asset. The amendments also require disclosures where transfers of
financial assets are not evenly distributed throughout the period.
The directors do not anticipate that these amendments to IFRS 7 will have a significant effect on the Groups disclosures
regarding transfers of trade receivables. However, if the Group enters into other types of transfers of financial assets in the
future, disclosures regarding those transfers may be affected.
Notes to the Financial Statementsfor the year ended 31 December 2011 (continued)
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Notes to the Financial Statementsfor the year ended 31 December 2011 (continued)
IFRS 9 issued in November 2009 introduces new requirements for the classification and measurement of financial assets.
IFRS 9 amended in October 2010 includes the requirements for the classification and measurement of financial liabilities
and for derecognition.Key requirements of IFRS 9 are described as follows:
IFRS 9 requires all recognised nancial assets that are within the scope of IAS 39 Financial Instruments: Recognition
and Measurement to be subsequently measured at amortised cost or fair value. Specifically, debt investments that
are held within a business model whose objective is to collect the contractual cash flows, and that have contractual
cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at
amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are
measured at their fair values at the end of subsequent accounting periods.
The most signicant effect of IFRS 9 regarding the classication and measurement of nancial liabilities relates to
the accounting for changes in the fair value of a financial liability (designated as at fair value through profit or loss)attributable to changes in the credit risk of that liability. Specifically, under IFRS 9, for financial liabilities that are
designated as at fair value through profit or loss, the amount of change in the fair value of the financial liability
that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless
the recognition of the effects of changes in the liabilitys credit risk in other comprehensive income would create or
enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liabilitys credit risk
are not subsequently reclassified to profit or loss. Previously, under IAS 39, the entire amount of the change in the
fair value of the financial liability designated as at fair value through profit or loss was presented in profit or loss.
IFRS 9 is effective for annual periods beginning on or after 1 January 2013, with earlier application permitted.
The directors anticipate that IFRS 9 will be adopted in the Groups consolidated financial statements for the annual period
beginning 1 January 2013 and that the application of IFRS 9 may have significant impact on amounts reported in respect
of the Groups financial assets and financial liabilities. . However, it is not practicable to provide a reasonable estimate of
that effect until a detailed review has been completed.
In May 2011, a package of five Standards on consolidation, joint arrangements, associates and disclosures was issued,
including IFRS 10, IFRS 11, IFRS 12, IAS 27 (as revised in 2011) and IAS 28 (as revised in 2011).
Key requirements of these five Standards are described below.
IFRS 10 replaces the parts of IAS 27 Consolidated and Separate Financial Statements that deal with consolidated financialstatements. SIC-12 Consolidation Special Purpose Entities has been withdrawn upon the issuance of IFRS 10. Under IFRS
10, there is only one basis for consolidation, that is control. In addition, IFRS 10 includes a new definition of control that
contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns from its involvement with
the investee, and (c) the ability to use its power over the investee to affect the amount of the investors returns. Extensive
guidance has been added in IFRS 10 to deal with complex scenarios.
IFRS 11 replaces IAS 31 Interests in Joint Ventures. IFRS 11 deals with how a joint arrangement of which two or more
parties have joint control should be classified. SIC-13 Jointly Controlled Entities Non-monetary Contributions by
Venturers has been withdrawn upon the issuance of IFRS 11. Under IFRS 11, joint arrangements are classified as joint
operations or joint ventures, depending on the rights and obligations of the parties to the arrangements. In contrast,
under IAS 31, there are three types of joint arrangements: jointly controlled entities, jointly controlled assets and jointly
controlled operations.
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In addition, joint ventures under IFRS 11 are required to be accounted for using the equity method of accounting, whereas
jointly controlled entities under IAS 31 can be accounted for using the equity method of accounting or proportionate
accounting.
IFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements,
associates and/or unconsolidated structured entities. In general, the disclosure requirements in IFRS 12 are more extensive
than those in the current standards.
These five standards are effective for annual periods beginning on or after 1 January 2013. Earlier application is permitted
provided that all of these five standards are applied early at the same time.
The directors anticipate that these five standards will be adopted in the Groups consolidated financial statements for the
annual period beginning 1 January 2013. The application of these five standards may have significant impact on amounts
reported in the consolidated financial statements.However, the directors have not yet performed a detailed analysis of theimpact of the application of these Standards and hence have not yet quantified the extent of the impact.
IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value
measurements. The Standard defines fair value, establishes a framework for measuring fair value, and requires disclosures
about fair value measurements. The scope of IFRS 13 is broad; it applies to both financial instrument items and non-
financial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair
value measurements, except in specified circumstances. In general, the disclosure requirements in IFRS 13 are more
extensive than those required in the current standards. For example, quantitative and qualitative disclosures based on
the three-level fair value hierarchy currently required for financial instruments only under IFRS 7 Financial Instruments:
Disclosures will be extended by IFRS 13 to cover all assets and liabilities within its scope.
IFRS 13 is effective for annual periods beginning on or after 1 January 2013, with earlier application permitted.
The directors anticipate that IFRS 13 will be adopted in the Groups consolidated financial statements for the annual
period beginning 1 January 2013 and that the application of the new Standard may affect the amounts reported in the
financial statements and result in more extensive disclosures in the financial statements.
The amendments to IAS 1 retain the option to present profit or loss and other comprehensive income in either a single
statement or in two separate but consecutive statements. However, the amendments to IAS 1 require additional
disclosures to be made in the other comprehensive income section such that items of other comprehensive income are
grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss; and (b) items that will bereclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive
income is required to be allocated on the same basis.
The amendments to IAS 1 are effective for annual periods beginning on or after 1 July 2012. The presentation of items
of other comprehensive income will be modified accordingly when the amendments are applied in the future accounting
periods.
The amendments to IAS 12 provide an exception to the general principles in IAS 12 that the measurement of deferred tax
assets and deferred tax liabilities should reflect the tax consequences that would follow from the manner in which the
entity expects to recover the carrying amount of an asset. Specifically, under the amendments, investment properties that
are measured using the fair value model in accordance with IAS 40 Investment Property are presumed to be recovered
through sale for the purposes of measuring deferred taxes, unless the presumption is rebutted in certain circumstances.
Notes to the Financial Statementsfor the year ended 31 December 2011 (continued)
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Notes to the Financial Statementsfor the year ended 31 December 2011 (continued)
The amendments to IAS 12 are effective for annual periods beginning on or after 1 January 2012. The directors anticipate
that the application of the amendments to IAS 12 in future accounting periods may result in adjustments to the amounts
of deferred tax liabilities recognised in prior years regarding the Groups investment properties of which the carryingamounts are presumed to be recovered through sale. However, the directors have not yet performed a detailed analysis of
the impact of the application of the amendments and hence have not yet quantified the extent of the impact.
The amendments to IAS 19 change the accounting for defined benefit plans and termination benefits. The most significant
change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments require the
recognition of changes in defined benefit obligations and in fair value of plan assets when they occur, and hence eliminate
the corridor approach permitted under the previous version of IAS 19 and accelerate the recognition of past service costs.
The amendments require all actuarial gains and losses to be recognised immediately through other comprehensive income
in order for the net pension asset or liability recognised in the consolidated statement of financial position to reflect the
full value of the plan deficit or surplus.
The amendments to IAS 19 are effective for annual periods beginning on or after 1 January 2013 and require retrospective
application with certain exceptions. The directors anticipate that the amendments to IAS 19 will be adopted in the Groups
consolidated financial statements for the annual period beginning 1 January 2013 and that the application of IAS 19 will
not affect the amounts reported in the current and prior years because the Group has not entered into any transactions of
this nature.
2.2 Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards.
Transition to International Financial Reporting Standards (IFRS)
The Group is resuming presentation of IFRS Financial Statements after early adoption of revised IFRS 1 First time Adoption
of International Financial Reporting Standards isssued on 20 December 2010. The Group failed to present IFRS Financial
Statements for the year ended 31 December 2009 due to effects of sever hyper inflation as defined in IFRS 1. The opening
Statement of Financial Position was reported in the prior year as not being compliant with International Accounting
Standards (IAS ) 21, The effects of changes in Foreign Exchange Rates and IAS 29 Financial Reporting in Hyper Inflationery
economies. The Groups previous functional currency, the Zimbabwean Dollar (ZW$) was subjected to severe hyper
inflation before the date of transition to IFRS because it had both of the following characteristics:
(a) a reliable general price index was not available to all entities with transactions and balances in the Zimbabwe Dollar
and
(b) exchangeability between the ZW$ and relative stable foreign currency did not exist. The Group changed its
functional and presentation currency from the ZW$ to the United States Dollar (US$) with effect from 1 January
2009.
Deemed Cost Exemption
The Group elected to measure certain items of property, plant and equipment, trade and other receivables, inventories and
trade and other payables at fair values as the deemed cost of those assets and liabilites in the opening IFRS statement of
financial position.
Comparative financial information
The financial statements comprise of three satements of financial position, two statements of comprehensive income,
changes in equity and cashflows as a result of the retrospective application of the Amended IFRS 1. The comparative
statement of the comprehensive income, changes in equity and cashflows are for 12 months.
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Reconciliation of previosuly prepared financial statements to IFRS compliant financial statements
In preparing its opening IFRS statement of financial position, the Group has not adjusted the
amounts previously determined in accordance with the Guidance on Change in Functional
Currency 2009. Since the amounts have not changed, reconciliations have not been presented.
2.3 Significant accounting judgements, estimates and assumptions
The preparation of the Groups financial statements requires the Groups Directors and Management to make judgements,
estimates and formulate assumptions that may affect the reported amounts of revenues, expenses, assets, liabilities and
the disclosure of contingent liabilities/ assets at the reporting period end date. Estimates and judgements 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. However, uncertainty about these assumptions and estimates could
result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the
future.
Judgements
In the process of applying the Groups accounting policies, management has made the following judgements, apart from
those involving estimates, which have the most significant effect on the amounts recognised in the financial statements.
The Groups Directors are of the opinion that the Statement of Financial Position represents a true and fair position of the
Group.
Useful lives and residual values of property, plant and equipment
The Group assesses the useful lives and residual values of property, plant and equipment each period,
taking into account past experience and macro-economic changes.
Fair values The Group makes estimates and judgements in the valuation of property, plant and equipment, and the valuation of
financial assets (such as trade receivables). Judgement is required in determining fair values of assets. The Group may
also rely on independent opinions of experts in related specialist fields.
Impairment of Goodwill
Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to
which goodwill has been allocated. The value in use calculation requires the directors to estimate the future cash
flows expected to arise from the cash generating unit and a suitable discount rate inorder to calculate present value.
The carrying amount of goodwill as at 31 December 2011 was US$41 625. No impairment was recognised during the
year.
2.4 Summary of significant accounting policies
Segment reporting
Operating segments provide products or services that are subject to risks and rewards that are different from those of
other operating segments. Operating segments are considered reportable segments when their operating results and
financial position are:
Regularly reviewed by the Groups chief operating decision makers as part of the decision making process regarding
resources to be allocated towards each segments operations; and
Duly assessed against internally determined key performance indicators.
The Groups reportable segments, for which internal financial management information is available and consistently
reviewed, are distinctly determined across the different product types manufactured and their customer markets served.Detailed information on the reportable segments identified and presented is disclosed in note 4.
Notes to the Financial Statementsfor the year ended 31 December 2011 (continued)
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Notes to the Financial Statementsfor the year ended 31 December 2011 (continued)
Basis of Consolidations and business combinations
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies so as to
obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated
from the effective date on which control is transferred to the Group. They are de-consolidated from the effective date that
control ceases. The acquisition method of accounting is used to account for the acquisition of subsidiaries and business
units by the Group. The cost of an acquisition is measured at the aggregate of the fair values, at the date of exchange,
of assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange for control of the
acquiree or business unit. Acquisition related costs are recognised, as incurred, in the Statement of Comprehensive
Income, as part of profit or loss for the period.
Inter-Group transactions, balances and unrealised gains on transactions between Group entities are eliminated. Unrealised
losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies
of subsidiaries and business units are changed where necessary to ensure consistency with the policies adopted by the Group.
Non controlling interests in the net assets of consolidated subsidiaries are identified separately from the Groups
equity therein. The interest of noncontrolling shareholders may be initially measured either at fair value or at the non
controlling interests proportionate share of the acquirees identifiable net assets. The choice of measurement basis is made
on an acquisition by acquisition basis. Subsequent to acquisition, noncontrolling interests consist of the amount
attributed to such interests at initial recognition and the noncontrolling interests share of changes in equity since the
date of the combination. Total comprehensive income is attributed to non controlling interest even if this results in the
non controlling interest having a deficit balance.
Changes in the Groups interest in a subsidiary that do not result in a loss of control are accounted for as equitytransactions. Any difference between the amount by which the non controlling interests are adjusted and the fair value
of the consideration paid or received is recognised directly in equity and attributed to owners of the Group.
Where applicable, the cost of acquisition includes any asset or liability resulting from a contingent consideration
arrangement, measured at its acquisition date fair value. Subsequent changes in such fair values are adjusted against the
cost of acquisition where they qualify as measurement period adjustments (refer below). All other subsequent changes in
the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant
IFRS. Changes in the fair value of contingent consideration classified as equity are not recognised.
The acquirees identifiable assets , liabilities and contigent liabilities that meet the conditions for recognition under IFRS 3
(2008) are recognised at the fair value at the acquisition date , except that;
Non-current assets (or disposal groups) that are classied as held for sale in accordance with IFRS 5: Non-current
Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell;
Liabilities or equity instruments related to the replacement by the Group of an acquirees share based payment
awards, which are measured in accordance with IFRS 2: Share Based Payment
Deferred tax assets or liabilities and liabilities or assets related to employee benet arrangements, which are
recognised and measured in accordance with IAS 12: Income Taxes and IAS 19: Employee Benefits respectively.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those
provisional amounts are adjusted during the set measurement period, or additional assets or liabilities are recognised, toreflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known,
would have affected the amounts recognised as of that date.
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The aforementioned measurement period is the period from the date of acquisition to the date the Group receives
complete information about facts and circumstances that existed as of the acquisition date and is subject to a maximum
of one year.Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition
date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non controlling
interest in the acquiree and the fair value of the acquirers previously held equity interest (if any) in the entity over the
fair value of the identifiable net assets recognised. Following initial recognition, goodwill is measured at cost less any
accumulated impairment losses. Goodwill is not amortised, but is reviewed for impairment annually or more frequently
if events or changes in circumstances indicate that the carrying value may be impaired. Impairment losses relating to
goodwill cannot be reversed in future periods.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocatedto each of the Groups cash-generating units that are expected to benefit from the synergies of the combination,
irrespective of whether other assets or liabilities of the entity are assigned to those units. Each unit to which the goodwill
is so allocated:
Represents the lowest level within the entity at which the goodwill is monitored for internal management purposes;
and
Is not larger than a reportable segment determined in accordance with IFRS 8: Operating Segments.
Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates.
Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is
recognised. Where goodwill forms part of the cash-generating unit and part of the operation within that unit is disposed
of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when
determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on
the relative values of the operation disposed of and the portion of the cash-generating unit retained.
Bargain purchase gain
If, after reassessment, the Groups interest in the net fair value of the acquirees identifiable net assets exceeds the sum
of the consideration transferred, the amount of any non controlling interest in the acquiree and the fair value of the
acquirers previously held equity interest in the acquiree (if any), the excess is recognised immediately, in profit or loss as a
bargain purchase gain
Share-based payment arrangementsEquity-settled share-based payments to employees and others providing similar services are measured at the fair value
of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-
based transactions are set out in note 17.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Groups estimate of equity instruments that will eventually vest, with a
corresponding increase in equity (equity-settled employee benefits reserve). At the end of each reporting period, the
Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original
estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a
corresponding adjustment to the equity-settled employee benefits reserve.
The policy described above is applied to all equity-settled share-based payment transactions that were granted on and
after 31 July 2011.
Notes to the Financial Statementsfor the year ended 31 December 2011 (continued)
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Notes to the Financial Statementsfor the year ended 31 December 2011 (continued)
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the
goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at
the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterpartyrenders the service.
For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially at the
fair value of the liability. At the end of each reporting period until the liability is settled, and at the date of settlement, the
fair value of the liability is remeasured, with any changes in fair value recognised in profit or loss for the year.
Share-based payment arrangements of the acquiree in a business combination
When the share-based payment awards held by the employees of an acquiree (acquiree awards) are replaced by the
Groups share-based payment awards (replacement awards), both the acquiree awards and the replacement awards are
measured in accordance with IFRS 2 Share-based Payment(market-based measure) at the acquisition date. The portionof the replacement awards that is included in measuring the consideration transferred in a business combination equals
the market-based measure of the acquiree awards multiplied by the ratio of the portion of the vesting period completed to
the greater of the total vesting period or the original vesting period of the acquiree award. The excess of the market-based
measure of the replacement awards over the market-based measure of the acquiree awards included in measuring the
consideration transferred is recognised as remuneration cost for post-combination service.
However, when the acquiree awards expire as a consequence of a business combination and the Group replaces those
awards when it does not have an obligation to do so, the replacement awards are measured at their market-based measure
in accordance with IFRS 2. All of the market-based measure of the replacement awards is recognised as remuneration cost
for post-combination service.
At the acquisition date, when the outstanding equity-settled share-based payment transactions held by the employees of
an acquiree are not exchanged by the Group for its share-based payment transactions, the acquiree share-based payment
transactions are measured at their market-based measure at the acquisition date. If the share-based payment transactions
have vested by the acquisition date, they are included as part of the non-controlling interest in the acquiree. However, if
the share-based payment transactions have not vested by the acquisition date, the market-based measure of the unvested
share-based payment transactions is allocated to the non-controlling interest in the acquiree based on the ratio of the
portion of the vesting period completed to the greater of the total vesting period or the original vesting period of the
share-based payment transaction. The balance is recognised as remuneration cost for post-combination service.
Foreign currency translations
The Groups consolidated financial statements are presented in United States dollars, which is also the parent companys
functional currency. Each entity in the Group determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency.
i) Transactions and balances
Transactions in foreign currencies are initially recorded by the Group entities at their respective functional
currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the functional currency spot rate of exchange at the reporting date.
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Notes to the Financial Statementsfor the year ended 31 December 2011 (continued)
All differences arising on settlement or translation of monetary items are taken to the income statement with
the exception of monetary items that are designated as part of the hedge of the Groups net investment of a
foreign operation. These are recognised in other comprehensive income until the net investment is disposed, atwhich time, the cumulative amount is reclassified to the income statement. Tax charges and credits attributable
to exchange differences on those monetary items are also recorded in other comprehensive income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using
the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in
a foreign currency are translated using the exchange rates at the date when the fair value is determined. The
gain or loss arising on retranslation of non-monetary items is treated in line with the recognition of gain or loss
on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is
recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or
profit or loss, respectively).
For the purposes of presenting consolidated financial statements, the assets and liabilities of the Groups foreign operations
are translated into the parent companys functional currency using exchange rates prevailing at the end of each reporting
period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates
fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used.
Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (attributed to
non-controlling interests as appropriate).
On the disposal of a foreign operation (i.e. a disposal of the Groups entire interest in a foreign operation, or a disposal
involving loss of control over a subsidiary that includes a foreign operation, a disposal involving loss of joint control over
a jointly controlled entity that includes a foreign operation, or a disposal involving loss of significant influence over an
associate that includes a foreign operation), all of the exchange differences accumulated in equity in respect of that
operation attributable to the owners of the Company are reclassified to profit or loss.
Non-current assets held for sale
Non current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use. This condition is regarded as met only when a sale is highly
probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be
committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the
date of classification.
Non current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carryingamount and fair value less cost to sell and are no longer depreciated.
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Income and revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue excludes value added tax and
other sales related duties, and is reduced for estimated customer returns, rebates, discounts and other similar allowances.
Sale of Goods
Revenue from the sale of goods is recognised when all the following conditions are satisfied:
The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over the goods sold;
The amount of revenue can be measured reliably;
It is probable that the economic benets associated with the transaction will ow to the entity; and
The costs incurred or to be incurred in respect of the transaction can be measured reliably.
Dividend and Interest revenue
Dividend revenue from investments is recognised when the shareholders right to receive payment has been established
(provided that it is probable that the economic benefits will flow to the Group and the amount of revenue can be
measured reliably).
Interest revenue is accrued on a time proportionate basis, by reference to the principal outstanding and at the effective
interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life
of the financial asset to that assets net carrying amount.
Other income
Other income is recognised in the period that it is due and receivable.
Property, plant and equipment
Property, plant and equipment are measured at fair value less accumulated depreciation and impairment losses, if any,
recognised after the date of a revaluation. Valuations, performed by the Groups Directors or independent external valuers,
are performed frequently enough to ensure that the fair value of a revalued asset does not differ materially from its
carrying amount.
When items of property, plant and equipment are revalued, any accumulated depreciation at the date of a revaluation
is restated proportionately with the change in the gross carrying amount of the asset so that the carrying amount after
revaluation equals its revalued amount.
Any revaluation surplus (increase in the carrying amount of an asset as a result of a revaluation) is recognised in other
comprehensive income in the Statement of Comprehensive Income and accumulated in equity (revaluation reserve) in
the Statement of Changes in Equity. The increase is recognised in profit or loss to the extent that it reverses a revaluation
decrease of the same asset previously recognised in profit or loss.
If an assets carrying amount is decreased as a result of a revaluation, the decrease shall be recognised in profit or loss.
The decrease, however, is recognised in other comprehensive income to the extent of any credit balance existing in the
revaluation surplus in respect of that asset. The decrease recognised in other comprehensive income reduces the amount
accumulated in equity as a revaluation reserve.
An annual transfer, within the Statement of Changes in Equity, from the asset revaluation reserve to retained earnings,
is made for the difference between depreciation based on the revalued carrying amount of the assets and depreciation
based on the original cost.
Notes to the Financial Statementsfor the year ended 31 December 2011 (continued)
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Notes to the Financial Statementsfor the year ended 31 December 2011 (continued)
Subsequent costs are included in an assets 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 Group and the cost of the item can
be measured reliably. All other repairs and maintenance are recognised in profit or loss in the Statement of ComprehensiveIncome during the financial period in which they are incurred.
Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings.
Depreciation is calculated on a straight line basis over the following asset class useful life spans in order to allocate their
cost or revalued amounts to their residual values:
Buildings: 50 years;
Plant and machinery: 5 to 50 years;
Motor vehicles: 5 years;
Ofce furniture and computer equipment: 4 to 10 years.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is
derecognised.
The useful lives and residual values of assets are reviewed and adjusted, if appropriate, at each reporting period end date,
with the effect of any changes in estimate accounted for on a prospective basis. Where the residual value of an asset
increases to an amount equal to or greater than the assets carrying amount, depreciation will cease to be charged on the
asset until its residual value subsequently decreases to an amount below its carrying amount.
Impairment of non financial assets
The Group assesses at each reporting period end date whether there is an indication that an asset may be impaired. If any
such indication exists, or when annual impairment testing for an asset is required, the Groups management makes an
estimate of the assets recoverable amount. An assets recoverable amount is the higher of an assets or cash generating
units fair value less costs to sell and its value in use, and is determined for an individual asset, unless the asset does not
generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying
amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable
amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses of continuing operations are recognised in profit or loss in the Statement of Comprehensive Income in
those expense categories consistent with the function of the impaired asset.
An assessment is made at each reporting period end date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is
estimated.
A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the
assets recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the
asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have
been determined, net of depreciation, had no impairment loss been recognised for the asset in prior periods. Such reversal
is recognised in profit or loss unless the asset is carried at its revalued amount, in which case the reversal is treated as
a revaluation increase and recognised in other comprehensive income. After such a reversal, the depreciation charge isadjusted in future periods to allocate the assets revised carrying amount, less any residual value, on a systematic basis,
over its remaining useful life.
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Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at
inception date. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
and rewards of ownership to the lessee. All other leases are classified as operating leases.
The Groups lease transactions in place throughout the current reporting period only extend as far as the Groups capacity
as a lessee under operating lease arrangements.
Group as a lessee
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where
another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are
consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are
incurred.
Contingent rentals:
Contingent rentals are lease payments, or portions thereof, that are not fixed in amount but are based on the future
amount of a factor that is susceptible to change other than with the passage of time. Contigent rents are recognised as an
expense in the period in which they are incurred. The CT Bolts premises where the Group operates from were leased under
such terms for part of the current reporting period. Details regarding lease transactions are as disclosed in note 15.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability.
The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where
another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are
consumed.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a
substantial period of time to get ready for their intended use or sale are capitalised as part of the cost of the respective
assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs
that an entity incurs in connection with the borrowing of funds.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying
assets is deducted from the borrowing costs eligible for capitalisation.
Intangible assets
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation
and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives.
The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of
any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are
acquired separately are carried at cost less accumulated impairment losses.
Internally-generated intangible assets - research and development expenditure
Notes to the Financial Statementsfor the year ended 31 December 2011 (continued)
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Notes to the Financial Statementsfor the year ended 31 December 2011 (continued)
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from development (or from the development phase of an internal project)
is recognised if, and only if, all of the following have been demonstrated:
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benets;
the availability of adequate technical, nancial and other resources to complete the development and to use or sell
the intangible asset; and
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the
date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible
asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.
Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation
and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.
Intangible assets acquired in a business combination
Intangible assets that are acquired in a business combination are recognised separately from goodwill and are initially
recognised at their fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less
accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired
separately.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from its use or disposal.
Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal
proceeds and the carrying amount of the asset, arerecognised in profit or loss when the asset is derecognised.
Inventories
Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present
location and condition, are accounted for as follows:
Recommended