Metal Fabricators of Zambia PLC Directors’ Report and ... · Metal Fabricators of Zambia (ZAMEFA) Plc was incorporated in 1968 and was privatized in 1996. The Company became listed

Metal Fabricators of Zambia PLC

Directors’ Report and Financial Statements

For the year ended 31 December 2014

Table of contents

Financial highlights 1

General Company information 2-3

Directors’ report 4-9

Directors’ tatement of responsibility for financial Statements 10

Independent auditor’s report 11

Financial statements:

Statement of profit or loss and other comprehensive income 12

Statement of financial position 13

Statement of changes in equity 14

Statement of cash flows 15

Notes to the financial statements 16-46

Notice of Annual General Meeting 47

Proxy form 48

Metal Fabricators of Zambia Plc(Incorporated in Zambia)

Directors’ Report and Financial StatementsFor the year ended 31 December 2014

1

Financial Performance2014 2013

Turnover 1,075,672 938,585Operating profit for the year 27,973 15,730Net (loss) profit for the year (4,801) 787(Loss) earnings per share (0.18) 0.03Net cash generated from (used in) operating activities 86,951 (172,468)Capital expenditure 20,094 13,936

Financial Position

Cash and bank balances 58,282 26,713Total assets 639,468 586,834Long term loan 63,886 16,596Short term borrowings and bank overdrafts 145,760 221,013Shareholders’ equity 157,889 141,085Issued ordinary shares 27,090 27,090

Metal Fabricators of Zambia Plc(Incorporated in Zambia)Directors’ Report and Financial StatementsFor the year ended 31 December 2014 (in thousands of Zambian Kwacha except for the (loss) earnings per share)

2

Directorate

The Directors who held office during the year and to the date of this report were:

A.B. Munyama - ChairmanL.A. Corte - Director G.K. Chibuye - DirectorR.M. Chabala (Mrs) - DirectorK.J. Zimmer - DirectorJ. Duplessis - Director Director G.K. Chibuye declared material interest in a transportation company namely Hercules Equipment which had a copper haulage contract with Zamefa during the year under review. Senior Management

R.M. Chabala Country ManagerD. Marshall Plant Manager (Appointed January, 2014) E. De Kock Financial Controller S. Sikombe Human Resources Manager and Company SecretaryJ. Duplessis Chief Commercial OfficerE. Mangoni Finance Manager Business address and registered office

Metal Fabricators of Zambia Plc is incorporated in the Republic of Zambia under the Zambian Companies Act as a public limited liability company and is domiciled in Zambia. The address of its registered office and the principal place of business is:

Plot 1400H. Figov RoadPO Box 90295LuanshyaRepublic of Zambia

Telephone: +260-212-591012Facsimile: +260-212-510023

Bankers

Standard Chartered Bank Zambia PLCBarclays Bank of Zambia PLCCitibank Zambia LimitedStandard Bank of South Africa LimitedStanbic Bank Zambia Limited

Transfer Secretaries

Sharetrack Zambia

Auditors

Deloitte & Touche

Metal Fabricators of Zambia Plc

General Company information

3

Company Profile

Metal Fabricators of Zambia (ZAMEFA) Plc was incorporated in 1968 and was privatized in 1996. The Company became listed on the Lusaka Stock Exchange (LuSE) in September 2004.

The ultimate parent company for ZAMEFA is General Cable Corporation, a company incorporated in the United States of America and listed on the New York Stock Exchange.

The principal shareholder of ZAMEFA is Phelps Dodge Africa Cable Corporation (PDACC), a wholly owned subsidiary of General Cable Corporation (General Cable). PDACC owns 75.4% of the total issued shares of ZAMEFA and the remainder is held by a broad portfolio of investors comprising local, foreign institutions and individuals, including employees of the Company.

General Cable Corporation is a global leader in the development, design, manufacture, marketing and distribution of copper, aluminium and fibre optic wire and cable products for the energy, industrial, specialty and communications markets. It is a company with a very broad product range and global reach in the wire and cable industry. General Cable and its affiliates have served various wire and cable markets for over 150 years.

The Company continues to hold full certifications for ISO 9001 (for quality management systems), ISO 14001 (for environmental management systems) and OHSAS 18001 (for occupational health and safety management systems). Additionally the Company continues to hold the South African Bureau of Standards (SABS) permit for its range of low voltage power distribution cables.

Exports continue to be the main source of revenues for the Company. During the year under review, exports accounted for 76% of the total sales revenues with South Africa still being the dominant market.


General Company information (continued)

4

The Directors present their report together with the audited financial statements of the Company for the year ended 31 December 2014.

Principal activities

The principal activities of the Company continue to be the manufacture of copper rod and copper and aluminium electrical conductors for sale to customers in the domestic and foreign markets. The Company also continues to manufacture and sell telecommunications cables.

In the opinion of the Directors, all the activities of the Company substantially fall within the manufacturing sector.

Share capital

There were no changes in the issued share capital of the Company during the year.

Results and dividends

2014 2013K ‘000 K ‘000

Net sales 1,075,672 938,585

Operating profit for the year 27,973 15,730

Net (loss) profit for the year (4,801) 787

The loss for the year has been adjusted against retained earnings. The Directors recommend a declaration and approval of a dividend of K nil (2013: K 3,251,000).

In 2011, the company embarked on a capital equipment modernisation program in order to modernize the operation and make it more efficient. In 2014, over K20 million was invested in capital equipment. The process of modernization is nearing completion, however, the Company still has additional commitments to complete the process. In view of this, at a board meeting held on 17th February 2015, the directors proposed that no dividend be paid.

Review of operations

(i) Financial performance:

The Company recorded an operating profit for the year of K27,973,000 compared to K15,730,000 during the prior year.

Net loss for the year amounted to K4,801,000 compared a net profit of K787,000 in 2013. This was mainly due to high foreign exchange losses attributed to the depreciation of the Zambian Kwacha.


Directors’ report For the year ended 31 December 2014

5

Review of operations (continued)

(ii) Marketing

Zambia has had a decade of rapid economic growth. A combination of prudent macroeconomic management and steep increase in copper prices helped drive investments in the copper industry and related infrastructure to achieve an average annual growth of about 6.4% during the last decade. Though the economy is dependent on copper, the agricultural sector is the major employer. This sector’s potential to contribute to the country’s development remains largely underexploited.

Zambia’s economic growth has not translated into significant poverty reduction. Sixty percent of the population lives below the poverty datam line and 42% are considered to be in extreme poverty. Likewise, the absolute number of poor has increased from about six million in 1991 to 7.9 million in 2013, primarily due to population growth. The urban picture is far better than the rural: in the Copperbelt and Lusaka provinces, for example, poverty rate is fairly low (22% and 34% respectively), whereas in the rest of the country, which is dominated by agriculture, poverty rates are greater than 70%.

The Rural Electrification Authority (REA) was established by an Act of Parliament No. 20 of 2003. Its primary aim is to provide electricity infrastructure to the whole nation targeting rural communities as mandated by Government.During the first quarter of 2014, the Zambian Government Public Investment and project budget released more funding for Investment and Special Projects. Within 2014 ZAMEFA secured USD 16 million direct sales from ZESCO mostly driven by REA projects. In addition ZAMEFA capitalized by selling both ACSR Conductors and LV Cables to numerous REA Turnkey approved contractors, while securing around $2 million in direct cable sales to REA.

Despite ongoing labor related challenges in South Africa and rising unrest in East Africa, ZAMEFA managed to exceed copper rod budget for 2014. This was mainly due to the successfull implemention of growth strategy in Kenya, sales to newly established Ethiopian markets and ongoing sales in Angola and Botswana.

Zambia’s mining industry continues to develop. Catchphrases such as, “Africa’s second-biggest copper producer”, “top profitable”, “biggest smelter”, etc. describe the ongoing growth within this segment. ZAMEFA continues to support and supply the Mining industry in both Zambia and DRC beyond 2014 budget.

ZAMEFA continues to utilise the Luanshya and Lusaka sales outlets as well as strategic distributors to sustain growth in the local domestic market. In addition to this, the Company appointed a business development manager in Kenya in order to take advantage of the growing domestic market in that country.

ZAMEFA strives to smooth out unsystematic risk by diverstifying its third party customer base both in the local and export markets. In line with this strategy the Company sales numerous market sectors within thirteen different countries with specific customer oriented sales strategies.

Finally, during 2014 ZAMEFA Sales and Marketing drive included numerous billboard advertisements in both Lusaka and Copperbelt. ZAMEFA also invested in LED Billboard trailers within the capital and Kitwe. Together with ZNBC TV2, ZAMEFA also utilized radio media as advertising base. ZAMEFA is currently sponsoring both Breakfast show and Evening drive Business news sections.

(iii) Manufacturing/Operational.

In order to maintain global manufacturing excellence the Company has sustained and continued to reinforce the Lean Enterprise System in order to achieve repeatability and consistency in the processes, eliminating waste, reducing variations and breaking constraints on a daily basis. During the year under review, Metal Fabricators of Zambia Plc (Zamefa) partnered with the government through the Japan International Cooperation Agency (JICA) in the implementation of the “5’S” improvements. Additionally, the Company also assumed the chairmanship of the Southern region Kaizen club.


Directors’ report For the year ended 31 December 2014 (continued)

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(iii) Manufacturing/Operational (continued)

The production of Aluminium ACSR significantly increased as a result of higher demand from ZESCO, from an average monthly production of 40.1 tons - early 2013 to 281 tons - per month in 2014. In order to achive this, the Company sustained machine improvements on the Cook, Hefei and Olympic machines which were started in 2013.

In the year 2014, the Company invested over K20 million in machinery. The investment was aimed at improving capacity and quality and replace old equipment which had become expensive to maintain, so that the Company can remain competitive.

Zamefa equally retained its SABS certification for low voltage power cables and ACSR aluminium products, following a successful audit conducted by the South African Bureau of Standards (SABS) in June 2014.

Three process engineers were sent for a six week training program at one of the General Cable Corporation plants in North America in order to strengthen their technical competencies.

(iv) Human resources.

During the year the Company employed a monthly average of 338 people.

The Company has remained focused on the technical skills training and development of its employee base focused on key business imperatives. In 2014 the focus of the Company was aligned to strengthening the shop floor with the multi-skill training program for machine operators and Technicians tailored to meet the new challenges and the dynamics in modern equipment implementation in the plant. Further the Company will invest in enhancement of the Lean Manufacturing training at all levels of the entire workforce through the effective adherence to work routines and procedure compliance as per Zamefa Management System.

During the year under review the Company embarked on rebranding its Work Cultural Model through the introduction of the “Wired As One” concept focused on the 6 core values of 1. People 2. Respect 3. Responsibility 4. Integrity 5. Responsiveness 6. Safety. Further, the Pay-for-Performance initiatives such as the Monthly Based Bonus scheme and the Variable pay for sales and marketing personnel were enriched and will continue to be promoted to achieve the Key Performance Indicators in order to accomplish both the strategic and generic growth of the business.

Outlook for the Future

The Company expects competition from both old and new players in the market. However, the Board and management are optimistic that with the current investments in Human Resource, equipment modernization and increased productivity, the Company will remain competitive and be able to deliver value for all stakeholders.



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(iv) Human resources (continued).

Average number and remuneration of employees

The total remuneration paid to employees during the year amounted to K30,275,000 (2013: K26,855,000) and the average number of employees was as follows:

Month Number Month Number

January 335 July 341

February 335 August 339

March 340 September 333

April 343 October 334

May 345 November 331

June 345 December 333

Safety, health and environment

The company continues to hold full certifications for ISO 14001:2004 (Environmental Management System) and OHSAS 18801:2007 (Occupational Health and Safety), and continuously improves these systems as part of the integrated Zamefa Management System, reviewing and deploying appropriate Safety, Health and Environmental policies and procedures across the organization. Regarding Safety, in the first 6 months of the year 2014 no injury was recorded, however; at the end of July, one lost time injury was reported in the Engineering and Maintenance Workshop. The root cause was identified; the training of the workers reinforced and all associates advised not to leave the Grinder switch in the on position before plugging into a socket. Thereafter, no additional incident was recorded. Housekeeping has been re–enforced through weekly housekeeping inspections by respective heads of departments and Job Safety Analysis implementation and revision to suit specific tasks.

The Company continued to manifest environmental stewardship and pursue proactive Safety, Health and Environmental programs that have been deployed across the group through the parent company, General Cable Corporation. The programs include Behaviour Based Safety (BBS) whereby the employees on a daily basis observe each other on safety, health and environmental aspects pertaining to their work with the sole objective of ensuring that good work behaviours/culture become a norm both at the workplace and at home in line with the policy “Zero and Beyond”. Other programs include Hazard Evaluation Risk Analysis (HERA), Lock Out Tag Out and Try Out (LOTOTO), and Human Factor Analysis Classification System (HFACS), Potential Risk Detection (PRD), Human Factor Intervention Matrix, Face to Face Safety Dialogue, People Caring about People and Practical Safety Demonstrations conducted weekly every Thursday and leading excellence regarding Safety, Health and Environment. Notwithstanding this, the Company had some minor non-conformances when the Zambia Environmental Management Agency (ZEMA) conducted an audit during the year under review, these were still in the processing of being closed off at year end. The Company has continued to have a comprehensive Malaria Prevention Program that includes in-door residual spraying in associates houses and factory, above all issuing out of mosquito nets to all associates and control of breeding sites in and around the plant.



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(iv) Human resources (continued).

The Company continues to operate an on-site clinic with a full-time doctor and nurse. The Company has a workplace HIV/AIDS and malaria policy and programs for prevention of common diseases. The clinic provides HIV/AIDS counselling as well as VCT services. The Company also registers all its employees on a medical scheme with Luanshya Mine Hospital for referral cases. Furthermore the Company has engaged all associates families in respective programs e.g. alcohol abuse, HIV and Aids, fire prevention and first aid management. The Company rolled out an intensive alcohol screening exercise to all associates and contractors in order to have an alcohol-free work environment.

Corporate governance

The Company recognises its responsibility for fostering a strong ethical environment so that its affairs are conducted according to the highest standards of personal and corporate conduct. This responsibility is characterised and reflected in the Code of Business Ethics and Policies, which is distributed throughout the Company and has been subscribed by all employees.

The Board composition is balanced so that no one individual can dominate decision making. The depth of experience and diversity of the Board ensures robust deliberations on all issues of material importance to the Company.

The roles of Chairman and Managing Director are separate. The Chairman is an independent non-executive Director appointed by the Board.

Corporate social responsibility

The Company remains committed to the principles of good corporate citizenship and has continued in its quest to invest in structured social programs to address specific needs of its surrounding communities in which it conducts business. Working in partnership with local government authorities the Company considers various social projects on the basis of sustainability and ability to benefit the majority of residents in the community.

In line with the above-mentioned framework the Company undertook and supported the following community based projects:

� Donated materials and invested in the refurbishment of the Orthopedic Ward at the Roan Antelope Government Hospital in Luanshya District.

� Contributed to the National Tree Planting Initiative by partnering with Green Initiative (Zambia) and the Luanshya Municipal Council in the procurement and planting of 4, 000 trees in strategic locations such as Government Schools, Health Centers and Recreation Facilities within the district and at the Civic Centre.

� Material and logistical/financial support to the National HIV/AIDS counseling and testing programs in the community.

� Logistical and material support to the Ministry of Health to combat epidemics such as Typhoid, dysentery and Rabies.

� Residual Malaria spray.



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Gifts and donations

The Company recognises its responsibility to the community where it operates and provides assistance in various forms to a variety of non-political institutions and organisations in the community. During the year the Company made donations to charitable causes in an aggregate sum of K370,000 (2013: K136,000).

Exports

The Company exported goods amounting to K813,363,000 (2013: K729,223,000) from Zambia during the year.

Property, plant and equipment

Additions to property, plant and equipment during the year amounted to K20,094,000 (2013: K13,936,000).

Research and development

The Company uses and relies on Technical Development and Research Centres of General Cable Corporation where it derives benefits on Research and Development aspects.

General Cable Corporation Divesture announcement

On October 29, 2014, General Cable Corporation announced their intent to divest all of their manufacturing operations in Asia Pacific and Africa in order to simplify their geographic manufacturing footprint and reduce organizational complexity.

Auditors

The Company’s auditors, Messrs Deloitte & Touche, have indicated their willingness to continue in office. Therefore, in accordance with the Companies Act, a resolution for their reappointment will be proposed at the annual general meeting.

By order of the Board

Stephen SikombeCompany Secretary 27 February 2015 Luanshya



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Section 164 (6) of the Companies Act, 1994 requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and the profit or loss for that period. The Directors are responsible for the maintenance of adequate accounting records and the preparation and integrity of the financial statements and related information. The independent external auditors, Messrs Deloitte & Touche, have audited the financial statements and their report appears on page 11.

The Directors are also responsible for the systems of internal control. These are designed to provide reasonable, but not absolute assurance as to the reliability of the financial statements, and to adequately safeguard, verify and maintain accountability for assets, and to prevent and detect material misstatements. The systems are implemented and monitored by suitably trained personnel with an appropriate segregation of authority and duties. Nothing has come to the attention of the Directors to indicate that any material breakdown in the functioning of these controls, procedures and systems have occurred during the period under review.

The financial statements are prepared on a going concern basis. Nothing has come to the attention of the Directors to indicate that the Company will not remain a going concern in the foreseeable future. The Directors confirm that the following statement is in accordance with a resolution of the Directors.

In the opinion of the Directors:

(a) the statement of profit or loss is drawn up so as to give a true and fair view of the loss of the Company for the financial year ended 31 December 2014;

(b) the statement of financial position is drawn up so as to give a true and fair view of the state of affairs of the Company as at 31 December 2014;

(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due; and

(d) the financial statements have been prepared in accordance with International Financial Reporting Standards and the Companies Act, 1994 (as amended).

Signed on behalf of the Board by:

_______________________ _______________________ Director Director

27 February 2015


Directors’ statement of responsibility for financial statementsFor the year ended 31 December 2014

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INDEPENDENT AUDITOR’S REPORT

To the members of Metal Fabricators of Zambia Plc

Report on the financial statements

We have audited the accompanying financial statements of Metal Fabricators of Zambia Plc, as set out on pages 12-46, which comprise the statement of financial position as at 31 December 2014, the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Directors’ responsibility for the financial statements

The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and the Companies Act, 1994 (as amended), 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.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 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 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 entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of Metal Fabricators of Zambia Plc as at 31 December 2014 and its financial performance and cash flows for the year then ended, in accordance with International Financial Reporting Standards and the Companies Act, 1994 (as amended).

Report on other legal requirements

The Companies Act, 1994 (as amended) requires that in carrying out an audit, we consider and report to you on the following matter:

We confirm that the accounting and other records and registers required by the Act have been properly kept in accordance with the Act.

DELOITTE & TOUCHE

F. M. NCHIMUNYAPARTNER

P.O. Box 20416 Deloitte & ToucheKitwe Fookes House Zambia Zambia Tel: +260 212 22 966/362/818 Fax +260 212 227 140

12

Statement of profit or loss and other comprehensive income

Notes 2014 2013K ‘000 K ‘000

Revenue 6 1,075,672 938,585

Cost of sales (1,001,743) (879,934)

Gross profit 73,929 58,651

Other income 2,275 239

Distribution costs (21,811) (16,879)

Administrative expenses (26,420) (26,281)

Operating profit 7 27,973 15,730

Finance costs

Interest income

9

9

(11,875)

4,631

(5,729)

6,289

Net foreign exchange losses (27,427) (11,520)

(Loss) profit before income tax (6,698) 4,770

Income tax credit (expense) 10 1,897 (3,983)

(Loss) profit for the year (4,801) 787

Other comprehensive income

Items that will not be reclassfied subsequently to the profit or loss

Revaluation surplus on property, plant and equipment 30,636 -

Deferred tax on revaluation surplus on property, plant and equipment (6,127) -

Other comprehensive income for the year 24,509 -

Total comprehensive income for the year 19,708 787

(Loss) earnings per share

Basic and diluted (Kwacha per share) 11 ( 0.18) 0.03

Dividends:

Proposed final dividend for the year 12 - 3,251


Financial statementsFor the year ended 31 December 2014

13

Statement of financial position

Notes 2014 2013K ‘000 K ‘000

Assets

Non-current assetsProperty, plant and equipment 13 127,580 85,901

Current assetsInventories 15 99,544 107,837

Trade and other receivables 16 349,547 362,902

Other financial assets 25 4,515 3,481Cash and bank balances 17 58,282 26,713

Total current assets 511,888 500,933

Total assets 639,468 586,834

Equity and liabilities

Capital and reservesShare capital 20 271 271Revaluation reserve 21 52,880 29,758Proposed dividend 12 - 3,251Retained earnings 104,738 107,805

Total equity 157,889 141,085

Non-current liabilitiesLong term loan 19 63,886 16,596Deferred tax liabilities 22 7,797 8,324Retirement benefit obligations 23 2,503 1,743

Total non current liabilities 74,186 26,663

Current liabilitiesBank overdrafts 19 84,362 175,881Short term borrowing 19 61,398 45,132Trade and other payables 18 258,617 197,727Current income tax liabilities 10 3,016 346

Total current liabilities 407,393 419,086

Total liabilities 481,579 445,749

Total equity and liabilities 639,468 586,834

The financial statements on pages 12 to 46 were approved for issue by the Board of Directors on 27 February 2015 and signed on its behalf by:

___________________ ___________________Director Director



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Statement of changes in equity

NotesShare

capitalRevaluation

reserve Retained

earnings Proposed dividend Total

K’000 K’000 K’000 K’000 K’000

Year ended 31 December 2013

At start of the year 271 30,207 109,820 5,736 146,034

Profit for the year - - 787 - 787

Realised on disposal of property, plant and equipment - (449) 449 - -

Dividends: 12

- Final for 2012 – paid - - - (5,736) (5,736)

- Final for 2013 – proposed - - (3,251) 3,251 -

At end of the year 271 29,758 107,805 3,251 141,085

Year ended 31 December 2014

At start of the year 271 29,758 107,805 3,251 141,085

Loss for the year - (4,801) - (4,801)

Other comprehensive income net of tax - 24,509 24,509

Realised on disposal of property, plant and equipment - (1,387) 1,734 - 347

Dividend:

- Final for 2013 - paid 12 - - - (3,251) (3,251)

At end of the year 271 52,880 104,738 - 157,889



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Statement of cash flows

Notes 2014 2013K ‘000 K ‘000

Cash flows from operating activities

Cash generated from (used by) operations 24 95,935 (164,755)Interest received 9 4,631 6,289Interest paid 9 (11,875) (5,729)Income tax paid 10 (1,740) (8,273)

Net cash generated by (used in) operating activities 86,951 (172,468)

Cash flows from investing activities

Purchase of property, plant and equipment 13 (20,094) (13,936)Proceeds from disposal of property, plant and equipment 3,887 650

Net cash used in investing activities (16,207) (13,286)

Cash flows from financing activities

Increase in short term borrowings 19 16,266 45,132Proceeds from long term loan 19 39,329 15,879Dividends paid 12 (3,251) (5,736)

Net cash generated by financing activities 52,344 55,275

Net increase (decrease) in cash and cash equivalents 123,088 (130,479)

Movement in cash and cash equivalents

At start of the year (149,168) (18,689)Increase (decrease) in cash and cash equivalents 123,088 (130,479)

At end of the year 17 (26,080) (149,168)

Comprising of:

Cash and bank balances 58,282 26,713Bank overdraft (84,362) (175,881)

Net cash and cash equivalents 17 (26,080) (149,168)



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Notes to the financial statements

1. General information

Metal Fabricators of Zambia Plc (ZAMEFA) is a Public Company incorporated in the Republic of Zambia. The address of its registered office and principal place of business is disclosed on page 2.The principal activities of the Company are disclosed in the report of the Directors on page 4.

2. Adoption of new and revised International Financial Reporting Standards

2.1 Standards and Interpretations affecting amounts reported and/or disclosed in the financial statements

In the current year, the Company has adopted the new and revised Standards and Interpretations issued by the International Accounting Standards Board and the International Financial Reporting Interpretations Committee of the International Accounting Standards Board that are relevant to its operations and are effective for annual reporting periods beginning on 1 January 2014.

� Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities;� Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities;� Amendments to IAS 36 Recoverable Amount Disclosures for Non-Financial Assets;� Amendments to IAS 39 Novation of Derivatives and Continuation of Hedge Accounting; and� IFRIC 21 Levies.

The adoption of these new and revised Standards and Interpretations did not have a significant impact on the financial statements of the Company.

2.2 Standards in issue, not yet effective

At the date of authorisation of these financial statements, the following relevant Standards were in issue but not yet effective:

Pronouncement Issued Effective date

IFRS 9 Financial Instrument: Disclosures

� Contains accounting requirements for financial instruments, replacing IAS 39 Financial Instruments: Recognition and Measurement

November 2013

Annual periods beginning on or after 1 January 2018

IFRS 15 Revenue from Customers with Contracts

� Provides a single, principles based five-step model to be applied to all contracts with customers

May 2014

Applicable to an entity’s first annual IFRS Financial statements for a period beginning on or after 1 January 2017



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IAS 19 Employee Benefits

� Amendments clarifies the requirements that relate to how contributions from employees or third parties that are linked to service should be attributed to periods of service.

November 2013

Annual periods beginning on or after 1 July 2014

� Amendments resulting from Annual Improvements 2012-2014 (Clarifies high quality bonds used in estimating the discount rate)

September 2014


IFRS 3 Business Combinations

� Amendments resulting to Annual Improvements 2010-2012 Cycle (Requires fair value measurement for contingent consideration at each reporting date)

December 2013


� Annual Improvements 2011-2013 Cycle (Clarifies exclusion from its scope the accounting for the formation of a joint arrangement)

December 2013


IFRS 13 Fair Value Measurement

� Amendments resulting from Annual Improvements 2010-2012 Cycle (Clarifies measurement of certain short-term receivables and payables on an undiscounted basis)

December 2013


� Annual Improvements 2011-2013 Cycle (Clarifies scope of the portfolio exception in paragraph 52)

December 2013




Notes to the financial statements (continued)

Adoption of new and revised International Financial Reporting Standards (continued)

2.2. Standards in issue, not yet effective (continued)

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IAS 16 Property, Plant and Equipment

� Amendments resulting from Annual Improvements 2010-2012 Cycle (proportionate restatement of accumulated depreciation on revaluation)

December 2013


� Amends the definition of a bearer plant and requires biological assets that meet the definition of a bearer plant to be accounted for as property, plant and equipment in accordance with this standard

June 2014 Annual periods beginning on or after 1 January 2016

IAS 24 Related Party Disclosures

� Amendments resulting from Annual Improvements 2010-2012 Cycle (management entities)

December 2013


IAS 38 Intangible Assets

� Amendments resulting from Annual Improvements 2010-2012 Cycle (proportionate restatement of accumulated depreciation on revaluation)

December 2013


IFRS 5 Non-current Assets Held and Discontinued Operation

� Amendments resulting from Annual Improvements 2012-2014 Cycle (Clarifies the reclassification of an asset from held for sale to held for distribution or vice versa.)

September 2014


IFRS 7 Financial Instruments; Disclosure

� Amendments resulting from Annual Improvements 2012-2014 (Clarifies on offsetting disclosures.)

September 2014







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IAS 1 Presentation of Financial Statements

� Amendments resulting from Annual Improvements 2012-2014 (Amendments to address perceived impediments to preparers exercising their judgments in presenting their Financial reports)

September 2014


The directors anticipate that these Standards in future periods will have no significant impact on the financial statements of the Company.

3 Summary of significant accounting policies

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

(a) Statement of compliance The financial statements are prepared in compliance with International Financial Reporting Standards (IFRS). (b) Basis of preparation

The financial statements have been prepared on the historical cost basis except for certain properties and financial instruments that are 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.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset of liability at the measurement date. Fair value for the measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2 Share based payments, leasing transactions that are within the scope of IAS 17 Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 Inventories or value in use in IAS 36 Impairement of assets.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

� Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;






20


3 Summary of significant accounting policies (continued)

(b) Basis of preparation (continued)

� Level 2 inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly ; and

� Level 3 inputs are unobservable inputs for the asset or liability.

The financial statements are presented in Zambian Kwacha (K), rounded to the nearest thousand.

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving higher degree of judgement or complexity, or where assumptions and estimates are significant to the financial statements are disclosed in note 5.

The principal accounting policies are set out below:

(c) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts and value added tax during the year.

Sale of goods

Revenue from the sale of goods is recognised when goods are delivered to customers and title has passed, at which time all the following conditions are satisfied:

� The Company has transferred to the buyer the significant risks and rewards of ownership of the goods;� The Company 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 economic benefits associated with the transaction will flow to the Company; and � The costs incurred or to be incurred in respect of the transaction can be measured reliably.

Interest Income

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.

Interest income is accrued on a time 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’s net carrying amount on initial recognition.

(d) Foreign currencies

In preparing financial statements, transactions in currencies other than the Zambian kwacha are recognized at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date.



21



(d) Foreign currencies (continued)

Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences on monetary items are recognized in profit or loss in the period in which they arise except for:

� exchange differences on foreign currency borrowings relating to assets under construction for future productive use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on those foreign currency borrowings;

� exchange differences on transactions entered into in order to hedge certain foreign currency risks; and

� exchange differences on monetary items receivable from or payable to foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in foreign operation), which are recognized initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.

(e) Property, plant and equipment

Buildings held for use in the production or supply of goods or services, or for administrative purposes, are stated in the statement of financial position at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are performed at least every five years such that the carrying amounts do not differ materially from those that would be determined using fair values at the end of each reporting period.

Any revaluation increase arising on the revaluation of such buildings is recognized in other comprehensive income and accumulated in equity, except to the extent that it reverses a revaluation decrease for the same asset previously expensed. A decrease in the carrying amount arising on the revaluation of such land and buildings is recognized in profit or loss to the extent that it exceeds the balance, if any, held in the properties revaluation reserve relating to a previous revaluation of that asset. Properties in the course of construction for production, supply or administrative purposes are carried at cost, less any recognized impairment loss. Cost includes professional fees that are capitalized in accordance with Company’s accounting policy. Such properties are classified to the appropriate categories of property, plant and equipment when completed and ready for intended use. Depreciation of these assets, on the same basis as other property assets, commences when the assets are ready for intended use.

Depreciation on revalued buildings is recognized in the profit and loss. On the subsequent sale or retirement of a revalued property, the attributable revaluation surplus remaining in the properties revaluation reserve is transferred directly to retained earnings.

Land is not depreciated

Fixtures and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.



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(e) Property, plant and equipment (continued)

Depreciation is recognized in profit or loss so as to write off the cost or valuation of assets (other than leasehold land and properties under construction) less their residual values over their useful lives, using the straight-line method as follows:

� Buildings 50 Years � Plant and machinery 10 Years � Furniture, fixtures and fittings 4-10 years� Motor vehicles 4 years

The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss. On disposal of revalued assets, amounts in the revaluation surplus relating to that asset is transferred to retained earnings. Impairment of tangible assets At each reporting date, the Company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any.

Recoverable amount is the higher of fair value less costs to sell and value in use. 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. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in the profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal on impairment loss is recognised immediately in the profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

(f) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined by the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity), but excludes borrowing costs. Net realisable value is the estimate of the selling price in the ordinary course of business, less the costs of completion and selling expenses.



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(g) Financial instruments Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

(i) Financial assets

Financial assets are classified into the following specified categories: financial assets at a fair value through profit or loss (FVTPL), ‘held-to-maturity investments’, ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and it is determined at the time of initial recognition. The Company’s principal financial assets are receivables and bank and cash balances.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Income is recognised on an effective interest basis for debt instruments other than those financial assets designed as at FVTPL.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables (including trade and other receivables, and amounts due from related parties) are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the effect of discounting is immaterial.

Impairment of financial assets

Financial assets other than those at “fair value through profit and loss” (FVTPL), are assessed for indicators of impairment at each reporting date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.



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(g) Financial instruments (continued)

(i) Financial assets (continued)

For certain categories of financial assets, such as trade receivables, assets are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment 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.

For financial assets that are carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amounts and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in the profit or loss. For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve. In respect of AFS debt securities, impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss. Derecognition of financial assets The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of the ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for the amount it may have to pay. If the Company retains substantially all the risks and rewards of ownership of the transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.



25




(i) Financial assets (continued)

On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.

On derecognition of a financial asset other than in its entirety (e.g. when the Company returns an option to repurchase part of a transferred asset), the Company allocates previous carrying amounts of the financial asset between the part it continues to recognise under continuing involvement and the party it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.

(ii) Financial liabilities and equity instruments

Classification as debt or equity

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company entity are recognised at the proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

Financial liabilities

Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’.

The Company’s principal financial liabilities are trade and other payables and borrowings.

Other financial liabilities Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost using the effective interest method.



26




(ii) Financial liabilities and equity instruments (continued)

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Derecognition of financial liabilities

The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

(iii) Derivative financial instruments The Company enters into derivative financial instruments to manage its exposure to foreign exchange rate risks. Derivatives are initially measured at fair value at the date the derivative contracts are entered into and subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

(h) Employee benefits

Retirement benefit costs and termination benefits The Company and all its employees contribute to the National Pension Scheme Authority (NAPSA), which is a defined contribution scheme. The Company’s contributions to the defined contribution schemes are charged to the profit or loss in the year to which they relate. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. The Company 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.

The Company also operates a staff gratuity scheme for its employees. Under this scheme , the employees are entitled to gratuity payment based on the number of years worked and their terminal salaries at end of contract. The liability recognised in the statement of financial position in respect of the gratuity scheme is the past service cost that the Company would have incurred at the reporting date.



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(i) Income tax

Income tax expense represents the sum of the tax currently payable and deferred tax. Current tax The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit before tax’ as reported in the statement of profit or loss and other comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Deferred tax Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised on surpluses arising from the revaluation of property, plant and equipment. Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax for the year

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.



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(j) Provisions Provisions are recognised when the Company has a present legal and constructive obligation as a result of past events, for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

In the normal course of business, contingent liabilities may arise from litigation and other claims against the Company. Where the potential liabilities have a low probability of crystalising or are very difficult to quantify reliably, they are treated as contingent liabilities. Such liabilities are disclosed in the notes but are not provided for in the financial statements.

(k) Share capital

Ordinary shares are classified as equity.

(l) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

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.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

(m) Dividends

Dividends payable to the Company’s shareholders are charged to equity in the period in which they are declared. Proposed dividends are shown as a separate component of equity until declared.

(n) Revaluation reserve

The surplus arising on revaluation of property, plant and equipment is recognised in other comprehensive income. On the subsequent sale or retirement of a revalued asset, the attributable revaluation surplus is transferred directly to retained earnings. No transfer is made from the revaluation to retained earnings except when an asset is derecognised.

(o) Comparatives

Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year.



29


4 Financial risk management The Company’s activities expose it to a variety of financial risks, including credit risk, foreign currency exchange rates and interest rates. The Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on its financial performance.

Risk management is carried out by the management under policies approved by the Board of Directors. The Board provides written principles for overall risk management, as well as written policies covering specific areas such as foreign exchange risk, interest rate risk, credit risk, use of derivative and non-derivative financial instruments and investing excess liquidity. Market risk

(i) Foreign exchange risk

The Company operates internationally and is exposed to foreign exchange risks arising from various currency exposures especially with respect to the United States Dollar and the South African Rand.

Liabilities Assets

2014K’000

2013K’000

2014K’000

2013K’000

United States Dollar 453,358 266,831 180,692 40,336

South African Rand 8,644 14,555 111,336 180,698

462,002 281,386 292,028 221,034

The Company manages foreign exchange risk arising from certain future commercial transactions and recognised assets and liabilities using forward contracts, but has not designated any derivative instruments as hedging instruments.

At 31 December 2014, if the Kwacha had weakened/strengthened by 5% against the US Dollar with all other variables held constant, post tax loss for the year would have been K13,633,304 lower/higher (2013: K9,060,000 lower), mainly as a result of US Dollar payables, receivables, bank balances and borrowings.

At 31 December 2014, if the Kwacha had weakened/strengthened by 5% against the South African Rand with all other variables held constant, post tax loss for the year would have been K5,134,587 higher/lower (2013: K6,645,000 lower), mainly as a result of Rand denominated trade payables, receivables and bank balances. (ii) Interest rate risk management

The Company’s only interest bearing assets are short term bank deposits. The Company has borrowings at floating rates and certain payables for copper cathode purchases also attract interest at floating rates. At 31 December 2014, an increase/decrease of 50 basis points would have resulted in an increase/decrease in post-tax profit of K1,800,000 (2013: K862,000 decrease/increase).



30


4 Financial risk management (continued)

Credit risk

Credit risk arises mainly from trade and other receivables. The credit risk on liquid funds is limited because counter parties are banks with high credit rating. Exposure to credit risk is managed through trading with customers with an appropriate credit history, regular review of credit limits and debtors recoverability. The Board of Directors is involved in the review of debtors’ position.

The company’s maximum exposure to credit risk at 31 December 2014 is as follows:

2014 2013

K’000 K’000

Trade receivables280,014 258,498

Cash and bank balances58,282 26,713

Sundry receivables 3,573 2,204

341,869 287,415

No collateral is held for any of the above assets.

None of the above assets are impaired except as noted below:

2014 2013

K’000 K’000

Past due receivables but not impaired:

- by 31 to 60 days 64,782 28,972

- by 61 to 90 days 33,317 15,637

- over 90 days 105,002 101,549

Total past due but not impaired 203,101 146,158

Impaired receivables 6,211 4,330

Receivables are reviewed for impairment every reporting date on an account by account basis and provisions made when it is probable that economic benefits in relation to particular receivables will not flow to the Company.



31



Liquidity risk

Prudent liquidity risk management includes maintaining sufficient cash and the availability of funding from an adequate amount of committed credit facilities.

Management monitors rolling forecasts of the Company’s liquidity reserve on the basis of expected cash flow.

The table below analyses the Company’s financial liabilities that will be settled on a net basis into relevant maturity groupings based on the remaining period at the statement of financial position date to the contractual maturity date.

1-12 months 1-5 Years K ‘000 K ‘000

At 31 December 2014:

- Trade and other payables 257,327 -

- Borrowings 145,760 63,886

403,087 63,886

At 31 December 2013:

- Trade and other payables 197,727 -

- Borrowings 221,013 16,596

418,740 16,596

The table below analyses the Company’s financial assets that are receivable on a net basis into relevant maturity groupings based on the remaining period at the statement of financial position date to the contractual maturity date.

1 – 3 months

2014K’000

2013 K’000

Receivables and cash and cash equivalents 341,869 287,415



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Capital risk management

The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders or issue new capital.

Consistent with others in the industry, the Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by equity. Net debt is calculated as total borrowings less cash and cash equivalents. Equity comprises of issued capital, reserves and retained earnings.

2014 2013

The gearing ratio at year end was as follows: K’000 K’000

Net cash and cash equivalents (note 17)Short term borrowings

26,080 61,398

149,16845,132

Long term loan 63,886

151,364

16,596

210,896

Equity 157,889 141,085

Gearing ratio 96% 149%

Categories of financial instruments

Financial assets

Loans and receivables: Receivables and cash and cash equivalents

Derivative financial instruments at fair value 341,869

4,515 287,415 3,481

Financial liabilities 346,384 290,896

At amortized cost:

Payables and borrowings 466,973 435,336



33



Fair value measurements

This note provides information about how the Company determines fair value of various financial assets and financial liabilities

Fair value of the Company’s financial liabilities that are measured at fair value on a recurring basis

Some of the Company’s financial assets are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets are determined (in particular, the valuation technique and inputs)

Financial assets Fair values Fair value

hierarchy Valuation technique and key inputs2014 2013

Foreign currency forward contracts

K’000

4,515

K’000

3,481 Level 2

Discounted cash flow. Future cash flows are estimated based on forward exchange rates (from observable forward exchange rates at the end of the reporting period) and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.

There were no transfers between level 1 and level 2 in the period.

Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis (but fair values disclosures are required).

Except as detailed in the table below, the directors consider that the carrying amounts of financial assets and financial liabilities recognised in the financial statements approximate fair values.

2014 2013Carrying amount Fair value

Carrying amount Fair value

Financial assetsLoans and receivables: K’000 K’000 K’000 K’000

Trade and other receivables 283,587 283,587 362,902 362,902

Financial liabilitiesFinancial liabilities held at amortised cost:Bank loans 145,760 145,760 221,013 221,013

Loans from related parties 63,886 63,886 16,596 16,596

Trade and other payables 257,327 257,327 197,727 197,727

466,973 466,973 435,336 435,336



34


4 Financial risk management (continued

Fair value measurements (continued) Fair value hierarchy at 31 Dec 2014

Level 1 Level 2 Level 3 TotalK’000 K’000 K’000 K’000

Financial assets

Loans and receivables:

Trade and other receivables - - 283,587 283,587

Derivative financial instruments

Hedges

Total

-

-

4,515

4,515

-

283,587

4,515

288,102


Financial liabilities held at amortised cost:

Bank loans - - 145,760 145,760Loans from related parties - - 63,886 63,886Trade and other payables - - 257,327 257,327

Total - - 466,973 466,973

Fair value hierarchy at 31 Dec 2013Level 1 Level 2 Level 3 Total

K’000 K’000 K’000 K’000Financial assets

Loans and receivables:

Trade and other receivables - - 260,702 260,702

Derivative financial instruments

Hedges

Total

-

-

3,481

3,481

-

260,702

3,481

264,183


Financial liabilities held at amortised cost:

Bank loans - - 221,013 221,013Loans from related parties - - 16,596 16,956Trade and other payables - - 197,727 197,727

Total - - 435,336 435,336



35


5 Critical accounting estimates and judgements

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

Critical accounting estimates and assumptions are as follows:

(i) Income taxes

The Company is subject to income taxes in Zambia. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company recognises liabilities for anticipated tax based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact on the income tax and deferred tax provisions in the period in which such determination is made.

(ii) Impairment losses on trade receivables

Impairment losses are based upon historical patterns of losses. In determining whether an impairment loss should be recorded in the statement of comprehensive income, the Company makes judgements as to whether there is any observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of trade receivables before a decrease can be identified with an individual trade receivable in that portfolio. This evidence may include observable data indicating that there has been an adverse change in the payment status of trade receivables in their group, or local economic conditions that correlate with defaults on assets in that group.

(iii) Estimate of assets lives, residual values and depreciation methods

Property, plant and equipment are depreciated over their useful lives taking into account residual values. Useful lives and residual values are assessed annually. Useful lives are affected by technology innovations, maintenance programmes and future productivity. Future market conditions determine the residual values. Depreciation is calculated on a straight line basis which may not represent the actual usage of the asset.

2014 2013

6 Analysis of sales by category K’000 K’000

Wires and cables 589,162 466,142Copper rods 486,510 472,443

1,075,672 938,585



36

Notes to the financial statements (continued) 7 Operating profit

The following items have been charged in arriving at operating profit:2014 2013

K’000 K’000Inventories expensed 945,122 825,445

Employee benefits expense (Note 8) 30,275 26,855Depreciation on property, plant and equipment (Note 13) 7,134 6,386Provision for doubtful debts 3,876 3,234Directors’ remuneration - as Managers 3,371 3,315

- as Directors 208 182Auditors’ remuneration and expenses 418 380Gifts and donations 370 136

After crediting:

Gain on disposal of property, plant and equipment (1,970) (238)

8 Employee benefits expense

The following items are included within employee benefits expense:

Salaries and wages 26,976 24,428Retirement benefits costs:- Terminal benefits and long service gratuities (Note 23) 2,348 1,570- National Pension Scheme Authority 941 794- Defined contribution scheme 10 63

30,275 26,855

9 Finance (costs) incomeInterest on bank overdrafts (7,960) (4,731)

Interest on loans from related partiesOther interest expense

(1,869) (2,046)

(131) (867)

Finance costs (11,875) (5,729)

Interest income 4,631 6,289

Net finance (costs) income (7,244) 560



37


10 Income tax expense 2014 2013

K’000 K’000

Current income tax (4,410) (5,576)

Deferred income tax (note 22) 6,307 1,593

1,897 (3,983)Included under current liabilities

Payable in respect of the current year 4,410 5,576Payable in respect of prior years 346 3,043Paid during the year (1,740) (8,273)

At end of the year 3,016 346

Reconciliation of the tax charge


Tax at 35% and 15% (1,340) 1,044

Tax effect of expenses not deductible for tax purposes:

Tax rate difference on domestic & export income (940) 2,215Other 383 724

Income tax expense (1,897) 3,983

2014 2013

11 Earnings per share K ‘000 K ‘000

Net (loss) profit (4,801) 787

Weighted average number of ordinary shares in issue ( thousands) 27,090 27,090

Basic and diluted (loss) earnings per share (Kwacha) (0.18) 0.03 12 Dividends

At the Annual General Meeting to be held on 27 March 2015, the Directors do not propose a dividend in respect of the year ended 31 December 2014. A dividend amounting to K0.12 per share in respect of the year ended 31 December 2013 was paid during the year.



Income tax assessments have been agreed with the Zambia Revenue Authority (ZRA) up to and including the year ended 31 December 2008. Self-assessment tax returns have been filed with ZRA for the subsequent year ends. During the year, the Company made a loss of K37,789,000 which is available for carry forward up to a maximum period of five years for set off against future profits for the same source for taxation purposes. The loss will expire in 2019.

38


13 Property, plant and equipment

Buildings Plant and

machineryMotor

vehicles

Furniture,fixtures &

equipment

Capitalwork in

progress TotalK’000 K’000 K’000 K’000 K’000 K’000

COST OR VALUATION

Balance at 1 January 2013 38,234 54,902 1,799 2,978 17,268 115,181AdditionsReclassifications

-8,824

-5,285

-683

-258

13,936(15,050)

13,936-

Disposals (450) - - - - (450)

Balance at 31 December 2013 46,608 60,187 2,482 3,236 16,154 128,667

Additions - - - - 20,094 20,094

Revaluation increase 26,645 - - - - 26,645

Reclassifications 944 5,580 408 1,178 (8,110) -

Disposals (1,750) - (408) - - (2,158)

Balance at 31 December 2014 72,447 65,767 2,482 4,414 28,138 173,248

DEPRECIATION

Balance at 1 January 2013 2,497 29,755 1,380 2,786 - 36,418Charge for the yearEliminated on disposals

932(38)

5,088-

254-

112-

--

6,386(38)

Balance at 31 December 2013 3,391 34,843 1,634 2,898 - 42,766

Charge for the year 1,014 5,508 362 250 - 7,134

Eliminated on disposal (172) - (69) - - (241)

Eliminated on revaluation (3,991) - - - - (3,991)

Balance at 31 December 2014 242 40,351 1,927 3,148 - 45,668

CARRYING AMOUNT

At 31 December 2014 72,205 25,416 555 1,266 28,138 127,580

At 31 December 2013 43,217 25,344 848 338 16,154 85,901

In accordance with Section 193 of the Companies Act, 1994 the Register of Land and Buildings is available for inspection by members and their duly authorised agents at the registered office of the Company.

The property, plant and equipment have been pledged to secure borrowings of the Company (See note 19).



39


13 Property, plant and equipment (continued)

The Company’s leasehold land and buildings are stated at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. The revaluation of the Company’s freehold land and buildings was performed by Messrs RM Fumbeshi and Company on 27 October 2014, independent valuers not related to the Company. Messrs RM Fumbeshi and Company are members of the Royal Institute of Chartered Surveyors, and they have appropriate qualifications and recent experience in the fair value measurement of properties in the relevant locations.

The fair value of the freehold land was determined based on the market comparable approach that reflects recent transaction prices for similar properties.

There has been no change to the valuation technique during the year.

Details of the Companies land and buldings and information about their fair value hierarchy as at 31 December 2013 and 2014 are as follows:

Level 2 Level 3 Fair Value as at 31/12/2014

K’000 K’000 K’000

Buildings - 72,205 72,205

Level 2 Level 3 Fair Value as at 31/12/2013

Buildings - 43,217 43,217

In the opinion of the Directors, the amounts at which the property, plant and equipment are stated are not in excess of those recoverable from their future use. If the buildings were stated on the historical cost basis, the amounts would be as follows:

2014K’000

2013K’000

Cost 13,780 12,853Accumulated depreciation (945) (708)

Carrying amount 12,835 12,145

14 Capital commitments

Authorised but not contracted for 5,539 24,900

Capital commitments will be financed by internally generated funds.



40


2014K’000

2013K’000

15 Inventories

Finished goods 40,747 30,351Raw materials 22,196 40,330Engineering stores and indirect materials 17,809 13,779Work in progress 16,803 13,788Goods in transit 1,989 9,589

99,544 107,83716 Trade and other receivables

Third party trade receivables 118,086 99,545Amounts due from related companies (Note 27) 168,139 163,283Provision for doubtful debts (6,211) (4,330)

280,014 258,498VAT recoverable 45,934 70,230Duty rebate 17,793 21,621Prepayments 2,233 10,349Sundry receivables 3,573 2,204

349,547 362,902

Movements on the provision for doubtful debts are as follows:

At start of the year 4,330 3,120

Provision for the year 3,876 3,234

Bad debts written off (1,995) (2,024)

At end of the year 6,211 4,330

The average credit period on sale of goods is 45 days. No interest is charged on overdue trade receivables. 13.8 % of trade receivables over 120 days have been provided for based on estimated irrecoverable amounts from the sale of goods, determined by reference to past default experience.

Included in the Company’s trade receivable balance are debtors with a carrying amount of K203,101,000 (2013: K146,158,000) which are past due at reporting date for which the Company has not provided for as the amounts are still considered recoverable. The Company does not hold collateral over these balances.

Receivables are reviewed for impairment every reporting date on an account by account basis and provisions made when it is probable that economic benefits in relation to particular receivables will not flow to the Company. There is concentration of credit risk as 40% of the debtors’ balance is receivable from one customer, General Cable Phoenix S A (Pty) Limited, a related party (Note 27(vi)). The Directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.



41


17 Cash and bank balances2014

K’0002013

K’000

Bank balances 58,132 26,567

Cash in hand 150 146

58,282 26,713

Bank overdraft (Note 19) (84,362) (175,881)

Cash and cash equivalents (26,080) (149,168)

For the purposes of the cash flow statement, cash and cash equivalents comprise cash and bank balances net of bank overdrafts as above.

Bank balances are held in United States Dollars, South African Rands and Zambian Kwacha current accounts and do not earn interest.

18 Trade and other payables2014

K’0002013

K’000

Third party trade payables 219,845 164,363Amounts due to related companies (Note 27) 30,104 31,007Accrued expenses and other payables 6,509 2,267Dividend payable 2,159 90

258,617 197,727

The carrying amount of the payables and accrued expenses approximate to their fair values. Certain payables for copper cathode purchases attract interest at floating rates

19 Borrowings

Secured - at amortised cost

(i) Bank overdraft (note 17) 84,362 175,881

(ii) Short term borrowings 61,398 45,132

(iii) Unsecured long term loan at amortised cost

General Cable Corporation (Note 27)

At the beginning of the year 16,596 -Received during the year 39,329 15,879Exchange losses 7,961 717




42

The Company has overdraft facilities with Standard Chartered Bank Zambia Plc, Barclays Bank Zambia Plc and Stanbic Bank Zambia Ltd of US$6 million US$3.5 million and US$30 million respectively. All three overdraft facilities are secured against the Company’s property, plant and equipment and inventory. The overdraft facility for Standard Chartered Bank Zambia Plc carries interest at 1 month LIBOR plus 1.5% while the one for Barclays Bank Zambia Plc is at 2.75% plus 3 months Libor per annum whereas that for Stanbic Bank Zambia Plc carries interest at 2 months LIBOR plus 3% per annum.

The short term borrowings relate to a revolving Invoice Financing Facility with Standard Chartered Bank Zambia Plc of US$18.5 million and has a maximum tenure of 120 days. The facility is secured against the Company’s property, plant and equipment, inventories and ultimante holding company guarantee. Interest is payable at Libor plus 2.5% per annum.

The unsecured long term loan is drawn down from a US$25 million long term loan from General Cable Corporation, the ultimate holding company. Interest is payable at 3 month Libor [plus 3% per annum. The loan facility is for a tenure of five years.

20 Share capital

Authorised:2014

K’0002013

K’000

27,200,000 ordinary shares of K0.01 each 272 272

Issued and fully paid

27,090,000 ordinary shares of K0.01 each 271 271

21 Revaluation reserve

The revaluation reserve represents the surplus on the revaluation of buildings net of deferred income tax and is non-distributable.

2014K’000

2013K’000

At the beginning of the yearIncrease arising on revaluation of propertiesDeferred tax arising on revaluation Reversal of deferred tax liability in respect of disposals

29,75830,636(6,127)

347

30,207---

Transfers to retained earnings in respect of disposals (1,734) (449)

52,880 29,758




19 Borrowings (continued)

43

22 Deferred income tax

Deferred income tax is calculated using the enacted income tax rates of 35% and 15%.

The following are the major deferred tax liabilities and assets recognised by the Company and the movement thereon, during the current and prior reporting periods:

Year ended 2014 At 01.01.2014Recognised

in profit orloss

Recognisedin other

comprehensive income

At 31.12.2014

K’000 K’000 K’000 K’000Deferred income tax liabilitiesProperty, plant and equipment: - on historical cost basis 5,478 (140) - 5,338 - on revaluation surpluses 5,590 - 5,780 11,370

11,068 (140) 5,780 16,708

Deferred income tax assets Provisions (171) (456) - (627)Unrealised exchange losses (2,573) 1,847 (726)Tax losses - (7,558) - (7,558)

(2,744) (6,167) - (8,911)

Net deferred income tax liability 8,324 (6,307) 5,780 7,797

Year ended 2013At

1.1.2013K’000

Recognised in profit or

loss K’000

At 31.12.2013

K’000

Deferred income tax liabilitiesProperty, plant and equipment: - on historical cost basis 5,512 (34) 5,478 - on revaluation surpluses 5,680 (90) 5,590

11,192 (124) 11,068

Deferred income tax assets Provisions (171) - (171)Unrealised exchange losses (1,104) (1,469) (2,573)

(1,275) (1,469) (2,744)

Net deferred income tax liability 9,917 (1,593) 8,324




44

23 Retirement benefit obligations 2014K’000

2013K’000

At start of the year 1,743 4,113Charged to profit or loss (Note 8) 2,348 1,570Payments during the year (1,588) (3,940)


24 Cash generated from operationsReconciliation of profit before income tax to cash generated from (used in) operations:


Adjustments for:

Interest income (Note 9) (4,631) (6,289)Interest expense (Note 9) 11,875 5,729Depreciation (Note 13) 7,134 6,386Increase in provision for doubtful debts (Note 16) 3,876 3,234Gain on disposal of property, plant and equipment (1,970) (238)Increase (decrease) in retirement benefit obligations 760 (2,370)Exchange loss on long term loan 7,961 717Changes in working capital - decrease (increase) in trade and other receivables 9,479 (156,807) - increase in other financial assets (1,034) (3,481) - decrease (increase) in inventories 8,293 (30,281) - increase in trade and other payables 60,890 16,787 - (decrease) in other financial liabilities - (2,912)

Cash generated from (used in) from operations 95,935 (164,755)

25 Other financial assets

Derivatives designated as hedging instruments carried at fair value

Foreign currency forward contracts 4,515 3,090Commodity hedges - 391

4,515 3,481

26 Contingent liabilities

The Company had pending legal proceedings at 31 December 2014. The Directors believe that there will be no material losses arising from the pending legal proceedings against the Company.




45



27 Related party transactions

The Company is a subsidiary of Phelps Dodge Africa Cable Corporation (PDACC), a company incorporated in the United States of America. The ultimate parent of the Company is General Cable Corporation.

The Company has transacted with the following related Group companies:

Name of related party Country of registration Relationship

General Cable Corporation

Phelps Dodge International Corporation (PDIC)

United States of America

United States of America

Ultimate holding company

Holding company

National Cables (Pty) Limited

General Cable Phoenix South Africa (Pty) Ltd (GCPSA)

Phelps Dodge International Thailand (PDTL)

Zamefa RSA

South Africa

South Africa

Thailand

South Africa

Fellow subsidiary

Fellow subsidiary

Fellow subsidiary

Fellow subsidiary

The following transactions were carried out with related parties:

(i) Purchase of goods and services 2014K’000

2013K’000

GCPSA – Purchase of raw material and finished goods 33,529 23,522National Cables (Pty) Limited– Purchase of finished goods 16,321 2,366General Cables International Thailand– Purchase of raw material 15,477 8,205PDIC – Purchase of raw materials, spares and others 4,843 8,338PDIC – Technical assistance fees 1,536 1,320General Cables International– Purchase of equipment - 785

71,706 44,536

ii) Sale of goods and equipment

National Cables (Pty) LtdGeneral Cable Phoenix South Africa (Pty) Ltd Zamefa R.S.A

265,865 101,466

14,563

235,722 84,074

-

381,894 319,796

iii) Key management compensation

Salaries and other employment benefits 5,602 5,116


46


27 Related party transactions (continued)

iv) Directors’ remuneration 2014K’000

2013K’000

Fees for services as director 208 182

v) Outstanding balances arising from purchases of goods/services goods/services/Interest on loans

Payables to General Cable Phoenix South Africa 16,656 20,763Payables to National Cables (Pty) Limited 6,175 52Payables to Phelps Dodge International Corporation 3,001 3,290Payables to General Cable Corporation 2,536 816Payables to General Cable Thailand 1,736 6,080Payables to Phelps Dodge International Corporation- Brazil - 6

30,104 31,007

vi) Outstanding loans from related parties

Loan from General Cable Corporation 63,886 16,596

vii) Outstanding balances arising from sale of goods/services

Receivables from General Cable Phoenix South Africa (Pty) Ltd 111,752 119,155Receivables from National Cables (Pty) Limited 54,416 44,128Receivables from Zamefa RSA 1,971 -

168,139 163,283

28 Events after reporting date

There were no significant events after the reporting date.



47

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the Annual General Meeting of the members of Metal Fabricators of Zambia PLC in respect of the year ended 31 December 2014 will be held at the Radisson Blu Hotel, Lusaka, Zambia on Thursday, 27 March 2015 at 10:00 hours to transact the following business:-

1. Minutes of the previous Annual General Meeting

To consider and adopt the minutes of the Annual General Meeting held on 27 March 2014.

2. Directors’ Report and Financial Statements

To receive and adopt the Directors’ report and the audited financial statements for the year ended 31December 2014 together with the report thereon of the auditors.

3. Dividend

To ratify the Board of Directors proposed dividend.

4. Election of Directors

To elect and re-elect Directors of the Company in accordance with the Companies Act and the Articles of Association of the Company.

5. Appointment of Auditors

To appoint the auditors of the Company for the 2015 financial year and to authorize the Directors to set their remuneration.

6. Other Business

To transact such other business as may properly be transacted at an Annual General Meeting of members.

A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend, speak and vote in his/her stead. The proxy need not be a member of the Company. Proxy forms should be forwarded to reach the Company’s registered office or the Transfer Secretaries not less than 48 hours before the time appointed for holding the meeting.

By order of the Board

Stephen Sikombe Company Secretary Luanshya


Notice to shareholders

48

For the 2015 Annual General Meeting

27 March 2015 at 10:00Radisson Blu Hotel,

2014


Form of Proxy

49


Form of Proxy

For the 2015 Annual General Meeting (Continued)

50

Documents

Metal Fabricators of Zambia PLC Directors’ Report and ... · Metal Fabricators of Zambia (ZAMEFA) Plc was incorporated in 1968 and was privatized in 1996. The Company became listed