Zimplow Financials

8/12/2019 Zimplow Financials

1/60

Z I M P L O W A N N U A L R E P O R T


2/60

Zimplow Limited ii 2011 Annual Report

MISSION

To avail quality, affordable and reliable steel products on time everytime to the mining, farming,construction and manufacturing sectors.

VISION

To be a market leader in the design, sourcing and distribution of at least one of our products in eight

countries south of the Sahara for all our products by 2020.

CORE VALUES

Integrity

Being absolutely truthful and accepting responsibility for our actions.

Quality

Being professional and quality oriented in everything we do.

Teamwork

Working together to achieve a common goal.

DependabilityOur customers, employees and suppliers must be able to count on us.

Fun

Embracing a positive attitude and spontaineity.

Mission, Vision and Core Values


3/60

Zimplow Limited 1 2011 Annual Report

2 Directorship and Administration

3 Notice to Shareholders4 Chairmans Review

5 Report of The Directors

6 Corporate Governance

7 Financial Highlights

8 Independent Auditors Report

10 Consolidated Statement of Comprehensive Income

11 Consolidated Statement of Financial Position

12 Consolidated Statement of Changes In Equity

13 Consolidated Statement of Cash Flows

14 Notes to the Financial Statements

54 Consolidated Statement of Value Added

55 Shareholders Analysis

56 Financial Review 2011

57 Financial Calendar

Contents


4/60


DIRECTORS: P Devenish

Z Kumwenda*

A KurauoneB Mitchell*

D Mkonto*

E Mlambo

T Moyo

N Nhira

Z L Rusike (Chairman)

F Rwakonda* (Appointed 22 August 2011)

* Executive

GROUP SECRETARY: D Mkonto

TRANSFER SECRETARIES: Corpserve (Private) Limited

Cnr 1st Street / Union Avenue, Harare

AUDIT COMMITTEE: A Kurauone (Chairman)

T Moyo

N Nhira

REMUNERATION COMMITTEE: Z L Rusike (Chairman)

P Devenish

E Mlambo

EXECUTIVE COMMITTEE: Z Kumwenda

B Mitchell

D Mkonto

F Rwakonda

REGISTERED OFFICE: 39 Steelworks Road, Heavy Industrial Sites,

PO Box 1059, Bulawayo

AUDITORS: Ernst & Young

Derry House, 6th Avenue / Fife Street, Bulawayo

BANKERS: African Banking Corporation Limited

Barclays Bank of Zimbabwe Limited

Kingdom Bank Limited

Merchant Bank of Central Africa Limited

National Merchant Bank Limited

CURRENCY OF FINANCIAL STATEMENTS: United States Dollars

PERIOD OF FINANCIAL STATEMENTS: Year ended 31 December 2011

Directorship and Administration


5/60


SIXTH SECOND ANNUAL GENERAL MEETING

Notice is hereby given that the Sixth second Annual General Meeting of shareholders will be held at the CT Bolts Division

Office, Falcon Street and Wanderer Road, Bulawayo on 28 March 2012 at 10:00 hours to transact the following business:

AGENDA

Ordinary Business

1. To approve the minutes of the Annual General Meeting held on 30 March 2011.

2. To receive and adopt the directors report and audited financial statements for the year ended 31 December 2011.

3. To elect directors Mr F. Rwakonda, who retire from office in accordance with the Groups Articles of Association ,

and Mr Z Kumwenda and Mrs D Mkonto who retire from office by rotation.

All being available, they offer themselves for re-election.

4. To approve the payment of final dividend number 68 of 0.27 United States cents per share proposed on 22 February2012.

5. To approve the remuneration of directors for the year ended 31 December 2011.

6. To fix the auditors remuneration for the year ended 31 December 2011.

7. To appoint auditors for the financial year ending 31 December 2012.

BY ORDER OF THE BOARD

D MKONTO

Company Secretary

39 Steelworks Road

P.O. Box 1059BULAWAYO

22 February 2012

A member entitled to attend and vote is entitled to appoint one or more proxies to act in the alternative and to attend and

vote and speak in his stead. Such proxy need not be a member of the Group. Proxy forms must be lodged at the registered

office of the Group not less than forty-eight hours before the time of the meeting.

Notice to Shareholders


6/60


INTRODUCTION

The much anticipated upturn in the economy for 2011 z-

zled out particularly in the second half of the year. Liquid-

ity challenges which intensied towards the end of 2011

and local cost increases, led by electricity tariffs worsened

the situation.

In spite of these and other challenges, the Company man -

aged to grow both volumes and prot in the face of serious

pressures on margins. I am delighted as your chairman to

report and comment on a pleasing set of results for the 12

months ended 31 December 2011.

OPERATIONS

Mealie Brand volumes for the 12 months ended 31 De-

cember 2011 increased by 27% to 74 thousand imple-

ments, as compared with 59 thousand implements for the

12 months ended 31 December 2010. Spare parts vol-

umes decreased by 11% in 2011 when compared to 2010.

C.T. Bolts mild steel volume sales increased by 15% for

the 12 months ended 31 December 2011 to 146 tonnes

as compared with 127 tonnes for the 12 months ended

31 December 2010. Mild steel bolts in units increased by

34% in 2011 while high tensile bolts in units substantially

increased by 87% in 2011 as compared to the same period

in 2010.

Tassburg volume sales increased by 47% to 107 tonnes

for the 12 months ended 31 December 2011 as compared

to 73 tonnes for the same period in 2010.

On 1 March 2011 the company acquired 49% of a South

African animal traction distribution company African Trac-

tion and Associated Technologies(AFRITRAC), the resultsof which have been consolidated. The subsidiary contrib-

uted US$1.5 million to turnover and $145 thousand dollars

to income before tax, over a ten month period.

FINANCIAL REVIEW

Group Revenue for the 12 months ended December 31,

2011 increased by 26% to US15.5 million as compared

to US$12, 3 million for the same period in 2010. This

increase was due to improved local market as well as

additional revenue from the new acquisition. Domestic

revenue increased by 30% while foreign revenue improved

by 17%.

Zimplow net income before tax for the twelve months

ended 31 December 2011 was US$3, 64 million as com-

pared to net income before tax for the 12 months to 31 De-

cember 2010 of US$2, 92 million. This represents a 24%

increase. The effective tax rate for the year under review

was 25% compared to 20% in 2010 and this resulted in

attributable prot of US$2,73 million for the year ended 31

December 2011 as compared to attributable income after

tax of US$2,34 million for 2010.

Net cash ow from operating activities decreased from

US$2, 2 million in 2010 to US$1, 8 million for the 12

months ended December 31 2011. The decrease was

mainly due to an advance corporation tax payment of

US$443 thousand dollars.

PROSPECTS

The year 2012 is expected to exert more cost pressures

that will be brought about by huge wage demands. The

full impact of electricity tariff increases by the Zimbabwe

Electricity Supply Authority of 51% and increases in all

utilities will be fully felt in 2012. Additionally, the rainfall

patterns in the region have been erratic.The Group is still

pursuing its growth strategies aimed at improving local and

regional competitiveness.

ACKNOWLEDGEMENTS

My appreciation goes to fellow Board members for the

clarity of direction they continue to offer to the business.

The CEO, management and employees deserve credit for

achieving yet another commendable set of results.

Z L Rusike

Chairman

22 February 2012

Chairmans Review


7/60


Your directors report on the operations of Zimplow Limited for the year ended 31 December 2011 is as follows:

PROFIT AND APPROPRIATION

The profit and relative appropriations are as follows:

31 December 2011 31 December 2010

US$ US$

Profit for the year 2 730 282 2 342 001

Equity dividend proposed/paid (686 851) (700 000)

Retained earnings brought forward 4 171 468 1 829 467

Retained earnings carried forward 6 214 899 4 171 468

DIVIDEND

A final dividend number 68 of 0.27 United States cents (2010-0.21 United States cents) per share was proposed on 22February 2012.

SHARE CAPITAL

The unissued ordinary shares of 163 722 372 have been placed under the control of the directors, in terms of

Extraordinary General Meetings of Members held on 30 August 1989, 10 November 2004, 16 November

2005 and 14 November 2007.

PROPERTY, PLANT AND EQUIPMENT

Capital expenditure for the year ended 31 December 2011 totalled US$ 510 762. Capital

commitments for the year to 31 December 2012 amount to US$ 326 560.

DIRECTORATE

The names of the directors and secretary are those in office at the time of the printing of this

Notice (22 February 2012).

AUDITORS

Messrs Ernst & Young remain in office until the conclusion of the Annual General Meeting on 28 March

2012, at which members will be asked to fix their remuneration for the year under review and to appoint the

auditors for the ensuing year. Messrs Ernst & Young have indicated their willingness to continue in office.

For and on behalf of the Board

Chairman Chief Executive Officer

Z. Rusike Z. Kumwenda

Report of the Directors


8/60


BOARD OF DIRECTORS

The board of directors consists of a non-executive chairman, four executive directors and six non-executive directors. The

chairman of the various committees are all non-executive directors. The board meets regularly to review results, dictate

policy, formulate overall strategy and approve the budgets. They have introduced structures of corporate governance,

certain functions and responsibilities have been delegated to the following committees. Their terms of reference and

composition are regularly reviewed.

AUDIT COMMITTEE

The audit committee liaises with the Groups external auditors. The external auditors have unrestricted access to the

audit committee. The annual, half yearly statements and financial reporting matters are reviewed by the committee at

appropriate intervals.

REMUNERATION COMMITTEEThis committee sets the remuneration of the executive directors and approves guidelines for the Groups pay reviews.

EXECUTIVE COMMITTEE

The executive committee sits between board meetings to deliberate and consider detailed operational issues of the Group

which includes strategy implementation.

DIRECTORS RESPONSIBILITY STATEMENT

The directors are responsible for:

1. Selecting appropriate accounting policies and applying them consistently.2. Making judgements and estimates that are both reasonable and prudent.

3. Stating whether applicable accounting standards have been followed subject to any material departures disclosed

and explained in the financial statements.

4. Preparing the financial statements on a going concern basis unless it is inappropriate to presume that the Group

will continue in business.

5. Safeguarding the assets of the Group and taking reasonable steps for the prevention and detection of fraud and

other irregularities.

6. Keeping proper accounting records.

Corporate Governance


9/60


Financial Highlights

Year Ended Year Ended

31 December 2011 31 December 2010US$ US$

Turnover 15 503 306 12 298 300

Profit before taxation 3 635 273 2 922 253

Profit after taxation 2 730 282 2 342 001

Total assets 16 745 397 13 493 652

Market capitalisation 26 902 210 21 913 886

Ordinary Share Performance (US$ per share) (US$ per share)

Basic earnings 0.01 0.01

Operating cash flow 0.01 0.01

Weighted average number of shares 334 743 344 327 071 924


10/60


Chartered Accountants (Zimbabwe)

Derry House

Cnr Fife Street/6th Avenue

P.O. Box 437, Bulawayo

Tel: +263 9 76111

Fax: +263 9 72359

REPORT OF THE INDEPENDENT AUDITORS

To the members of

ZIMPLOW LIMITED

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying consolidated financial statements of Zimplow Limited set out on pages 10 to 53,

which comprise the consolidated statement of financial position as at 31 December 2011, the consolidated statement of

comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for

the year then ended, the notes to the financial statements which include a summary of significant accounting policies and

other explanatory information.

DIRECTORS RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The Groups directors are responsible for the preparation and fair presentation of these financial statements in accordance

with International Financial Reporting Standards (IFRS) and in the manner required by the Companies Act (Chapter 24:03)

and the relevant statutory instruments (SI 33/99 and SI 62/96) and for such internal control as the directors determine

is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to

fraud or error.

AUDITORS RESPONSIBILITY

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted

our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical

requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are

free from material misstatement.

BASIS OF OPINION

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial

statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material

misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to

design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policiesused and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation

of the financial statements.

Independent Auditors Report


11/60


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

AUDIT OPINION

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of

Zimplow Limited as at 31 December 2011, and its financial performance and its cash flows for the year then ended in

accordance with International Financial Reporting Standards.

Report on other legal and regulatory requirements

In our opinion, the financial statements have, in all material respects, been properly prepared in compliance with the

disclosure requirements of the Companies Act (Chapter 24:03) and the relevant Statutory Instruments (SI 33/99 and SI

62/96).

Registered Public Auditors

Bulawayo

28 February 2012

Independent Auditors Report continued


12/60


Notes Year Ended Year Ended

31 Dec 2011 31 Dec 2010

US$ US$

TURNOVER 15 503 306 12 298 300

Domestic 11 235 468 8 635 365

Export 4 267 838 3 662 935

Cost of sales (8 737 971) (6 801 772)

Gross profit 6 765 335 5 496 528

Net operating expenses (3 300 806) (2 720 466)

Operating profit 3 3 464 529 2 776 062Finance income 249 237 161 049

Finance costs (78 493) (14 858)

Profit before taxation 3 635 273 2 922 253

Income tax expense 6.1 (904 991) (580 252)

Profit for the year 2 730 282 2 342 001

Other comprehensive income :

Fair value (loss)/gain on available

for sale financial assets (29 752) 124

Exchange differences on translating foreign operations (135 147) -

Income tax relating to components of other

comprehensive income. 6.1 4 546 (19)

Other comprehensive (loss)/income for the year, net of tax (160 353) 105

Total comprehensive income for the year 2 569 929 2 342 106

Profit attributable to:

Owners of the parent 2 677 328 2 342 001

Non-controlling interests 52 954 -2 730 282 2 342 001

Total comprehensive income attributable to:

Owners of the parent 2 583 057 2 342 106

Non-controlling interests (13 128) -

2 569 929 2 342 106

Earnings per share ($)

Basic 22 0.01 0.01

Diluted 22 0.01 0.01

Consolidated Statement of Comprehensive Incomefor the year ended 31 December 2011


13/60


Notes 31 Dec 2011 31 Dec 2010 31 Dec 2009

US$ US$ US$

EQUITY AND LIABILITIES

Issued share capital and reserves 5.1 7 621 223 7 068 881 7 066 581

Share based payment reserve 18.1 (65 400) - -

Available for sale reserve 76 496 101 702 101 597

Foreign currency translation reserve 18.2 (69 065) - -

Retained earnings 6 161 945 4 171 468 1 829 467

Equity attributable to owners of the parent 13 725 199 11 342 051 8 997 645

Non-controlling interests 19 512 633 - -

Total equity 14 237 832 11 342 051 8 997 645

Non Current Liabilities

Deferred tax liability 6.3 621 484 599 833 618 860

Current Liabilities

Trade and other payables 12.1 1 171 111 804 488 980 708

Provisions 12.2 378 982 378 421 140 627

Current tax liabilities 335 988 368 859 232 912

1 886 081 1 551 768 1 354 247

TOTAL EQUITY AND LIABILITIES 16 745 397 13 493 652 10 970 752

ASSETS

Non Current Assets

Property, plant and equipment 7 2 863 605 2 667 362 2 668 756

Available for sale financial assets 8 147 976 177 728 177 604

Goodwill 9 41 625 - -

3 053 206 2 845 090 2 846 360

Current Assets

Inventories 10 7 057 950 5 372 463 5 829 151

Trade and other receivables 11 2 686 329 2 242 511 1 163 878

Other current assets - - 91 412

Cash and bank balances 13 3 947 912 3 033 588 1 039 951

13 692 191 10 648 562 8 124 392

TOTAL ASSETS 16 745 397 13 493 652 10 970 752

Chairman Chief Executive Officer

Z L Rusike Z. Kumwenda22 February 2012

Consolidated Statement of Financial Positionas at 31 December 2011


14/60


Share

Capital

Share

Available

forForeignCurrency

Retained

ShareBased

Attributable

N

on

Total

Capital

Reserve

Premium

salereserve

Translation

earnings

Payment

toownersof

Controlling

Reserve

Reserve

theParent

Interest

US$

US$

US$

US$

US$

US$

US$

US$

U

S$

US$

Balanceat

1January2009

7066581

-

-

-

7066581

7066581

Paymentof

dividend

(392486)

-

(392486)

(392486)

Profitforth

eyear

2221953

-

2221953

2221953

Othercomp

rehensiveincomefortheyear

101

597

-

-

101597

101597

Balanceat

31December2009

7066581

101597

1829467

-

8997645

8997645

Re-denominationofsharecapital

32707

(32707)

-

-

-

-

Adjustment

*

2300

-

-

2300

2300

Paymentof

dividend

-

-

-

-

Profitforth

eyear

2342001

-

2342001

2342001

Othercomp

rehensiveincomefortheyear

105

-

-

105

105

Balanceat

31December2010

327077

036174

101702

4171468

-

11342051

11342051

Profitforth

eyear

2677328

-

2677328

529

54

2730282

Paymentof

dividend

(686851)

-

(686851)

(686851)

Sharebased

payment

transaction(note17.1

)

(65400)

(65400)

(65400)

IssueofOrd

inaryShareson

acquistionofAfritrac(note20)

9

552333

-

552342

552342

NonContro

llingInterestarising

froma

cqusitionofAfritrac(note20.4

)

-

5257

61

525761

Othercomp

rehensiveincome;

Effectsoffo

reign

currencytranslation

(69065)

-

(69065)

(66082)

(135147)

FairvaluelossonAFS

financialasset

(252

06)

-

-

(25206)

(25206)

Balanceat

31December2011

32716

7036174

552333

76496

(69065)

6161945

(65400)

13725199

5126

33

14237832

*BeingdeemedcostadjustmenttoTassburgassetsthatwereidentifiedontheconsolid

ationofthefixedassetregister.

ConsolidatedStatementofC

hangesinEquity

fortheye

arended31December2011


15/60


Notes Year Ended Year Ended

31 Dec 2011 31 Dec 2010

US$ US$

CASH FLOWS FROM OPERATING ACTIVITIES

Operating profit before dividends, interest,

taxation and exchange gains/losses 3 464 529 2 776 062

Adjustment for non cash items:

Depreciation and amortisation of non current assets 302 328 271 230

Income recognised in respect of share option scheme (65 400) -

Profit on disposal of property, plant and equipment (15 917) (40 594)

Operating income before working capital changes 3 685 540 3 006 698

(Increase)/decrease in inventories (1 026 982) 456 689

Increase in trade and other receivables (171 043) (1 094 022)

Increase in trade and other payables 101 632 168 372

Cash generated by operating activities 2 589 147 2 537 737

Finance income received 249 237 161 049

Finance costs paid (78 493) (14 858)

Taxation paid (910 078) (463 349)

Net cash flows from operating activities 1 849 813 2 220 579

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (510 762) (282 984)

Proceeds on disposal of property,plant and equipment 38 207 56 042

Net cash inflow on acquisition of subsidiary 20.6 355 919 -

Net cash invested (116 636) (226 942)

CASH FLOWS FROM FINANCING ACTIVITIES

Dividend paid to owners of the company (686 851) -

Increase in cash and cash equivalents 1 046 326 1 993 637

Cash and cash equivalents at 1 January 2011 3 033 588 1 039 951

Effects of exchange rates on the balance of cash held in foreign operations (132 002) -

Cash and cash equivalents at 31 December 2011 3 947 912 3 033 588

Operating cashflow per share (US$) 0.01 0.01

Consolidated Statement of Cashflowsfor the year ended 31 December 2011


16/60


Notes to the Financial Statementsfor the year ended 31 December 2011

1. Corporate information

The financial statements for the reporting period ended 31 December 2011 were authorised for issue in accordance

with a resolution of the Groups Directors on 22 February 2011.

Zimplow Limited, the Groups parent entity, is a Zimbabwe based concern. The Group operates three divisions and one

Subsidiary as follows:

Mealie Brand: engaged in the manufacture and distribution of animal drawn agricultural implements, hoes and

metal fasteners. Products include ploughs, cultivators, harrows, ridgers, ground nut shellers and planters. The Mealie

Brand factory is situated in Bulawayo;

CT Bolts: engaged in the manufacture and distribution of metal fasteners for the mining, construction and

agricultural industries. Products include industrial screws, mild steel bolts, sockets and anchoring products, nails,

nuts, washers, lags, chrome bolt covers and fittings. The CT Bolts factory is situated in Bulawayo with an operating

branch located in Harare;

Tassburg: engaged in the manufacture and distribution of wood screws, veranda bolts and high tensile bolts for thehousehold furniture, construction and mining industries. The Tassburg factory is situated in Harare.

African Traction and Associated technologies Afritrac: engaged in the distribution of animal drawn agricultural

implements and tools is situated in South Afica.

2. Basis of preparation

The financial statements have been prepared on the historical cost basis except for property, plant, equipment and

financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below.

Historical cost is generally based on the fair value of the consideration given in exchange for assets.

The Group has achieved explicit and unreserved compliance with IFRS after early adoption of the revised IFRS 1 First-

time Adoption of International Financial Reporting Standards issued on 20 December 2010. The Group failed to express

a statement of explicit and unreserved compliance with IFRS for the financial year ended 31 December 2009 due to the

effects of severe hyperinflation as defined in IFRS 1 (Revised).

On 20 December 2010, the IASB amended IFRS 1 in order to:

- provide relief for first-time adoptors of IFRS from having to reconstruct transactions that occurred before their date

of transition to IFRS; and

- provide guidance for entities emerging from severe hyperinflation to either resume presenting IFRS financial

statements or topresent IFRS financial statements for the first time.

IFRS 1 (Revised) is applicable for periods beginning on or after 1 July 2011, early adoption is permitted. The Group haselected to early adopt the amendments to IFRS 1. The effect of the application of the amendments to IFRS 1 is to render

the opening statement of financial position, prepared on 1 January 2009 (date of transition to IFRS) IFRS compliant.

The opening statement of financial position was reported in the prior year as not being compliant with IFRS due to the

inability to comply with International Accounting Standard IAS 21 The Effects of Changes in Foreign Exchange Rates and

IAS 29; Financial Reporting in hyperinflationary Economies.

The Groups previous functional currency, the Zimbabwe dollar (ZW$), was subjected to severe hyperinflation before the

date of transition to IFRS because it had both of the following characteristics:

(a) a reliable general price index was not available to all entities with transactions and balances in the ZW$; and

(b) exchangeability between the ZW$ and a relatively stable foreign currency did not exist.


17/60


The Group changed its functional currency from Zimbabwe dollars on 1 January 2009.The Group has adopted 1 January

2009 as the effective date of currency normalisation and the date of transition to reporting in terms of International

Financial Reporting Standards.The Group elected to measure certain items of trade and other receivables, inventories and trade and other payables at fair

value and to use the fair value as the deemed cost of those assets and liabilities in the opening IFRS statement of financial

position. The determination of balances for the opening statement of financial position is summarised below :

Financial assets and liabilities - Fair value as agreed by the shareholders, i.e. willing buyer willing seller.

Accounts receivable - Settlement amounts agreed with debtors in United States dollars.

Property, plant and equipment - Property was valued at gross replacement value and reassessed in line with subsequent

market trends and necessary adjustments were made. Plant and equipment was reconstructed based on archived

information from suppliers invoices denominated in United States dollars.

Payables - Settlement amounts agreed with creditors in United States dollars.

Bank balances - All ZW$ bank accounts were written off to nil. Opening balances represented actual United States dollars.

The financial statements comprise three statements of financial position, two statements of comprehensive income,

changes in equityand cash flows as a result of the application of the Amendments to IFRS 1.In preparing its opening

IFRS statement of financial position, the Group has not adjusted amounts previously determined in accordance with the

Guidance on Change in Functional Currency - 2009, which was drafted jointly by the Public Accountants and Auditors

Board (PAAB), Zimbabwe Accounting Practices Board (ZAPB) and the Zimbabwe Stock Exchange (ZSE). This guidance was

adopted as the local standard for reporting by most listed entities and other incorporated entities in Zimbabwe reporting

subsequent to severe hyperinflation. As amounts have not changed from those presented in previously issued financial

statements, reconciliations have not been presented, because the amendments to IFRS 1 effectively endorsed the approach

adopted in the guidance paper issued by the PAAB, ZAPB and the ZSE, which dealt with conversion of local currency

balances to stable foreign currency after a period of severe hyperinflation.The principal accounting policies are set below:

2.1 Adoption of standards and interpretations

New and revised IFRSs applied with no material effect on the financial statements

The following new and revised IFRSs have also been adopted in these financial statements.The

application of these new and revised IFRSs has not had any material impact on the amounts reported

for the current and prior years but may affect the accounting for future transactions or arrangements.

Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards - Additional Exemptions for

Firsttime Adopters (as part of improvements to IFRS issued in 2009): The amendments provide two exemptions when

adopting IFRS forthe first time relating to oil and gas assets, and the determination as to whether the arrangement

contains a lease. Not applicable.

Amendments to IAS 1 Presentation of Financial Statements (as part of Improvements to IFRSs issued in 2010)

The amendments to IAS 1 clarify that an entity may choose to disclose an analysis of other comprehensive income by item

in the statement of changes in equity or in the notes to the financial statements. In the current year, for each component

of equity, the Group has chosen to present such an analysis in the statement of changes in Equity.

Notes to the Financial Statementsfor the year ended 31 December 2011 (continued)


18/60



IAS 24 Related Party Disclosures (as revised in 2009)

IAS 24 (as revised in 2009) has been revised on the following two aspects: (a) IAS 24 (as revised in 2009) has changedthe definition of a related party and (b) IAS 24 (as revised in 2009) introduces a partial exemption from the disclosure

requirements for government-related entities.

The Company and its subsidiaries are not government-related entities. The application of the revised definition of related

party set out in IAS 24 (as revised in 2009) in the current year has resulted in the identification of related parties that

were not identified as related parties under the previous Standard. Specifically, associates of the ultimate holding company

of the Company are treated as related parties of the Group under the revised Standard whilst such entities were not

treated as related parties of the Group under the previous Standard. The related party disclosures set out in note 14 to

the consolidated financial statements have been changed to reflect the application of the revised Standard. Changes have

been applied retrospectively.

Amendments to IFRS 3 Business Combinations

As part of Improvements to IFRSs issued in 2010, IFRS 3 was amended to clarify that the measurement choice regarding

non-controlling interests at the date of acquisition is only available in respect of non-controlling interests that are

present ownership interests and that entitle their holders to a proportionate share of the entitys net assets in the event

of liquidation. All other types of non-controlling interests are measured at their acquisition-date fair value, unless another

measurement basis is required by other Standards. In addition, IFRS 3 was amended to provide more guidance regarding

the accounting for share-based payment awards held by the acquirees employees. Specifically, the amendments specify

that share-based payment transactions of the acquiree that are not replaced should be measured in accordance with IFRS

2 Share-based Payment at the acquisition date (market-based measure).

Amendments to IAS 32 Classification of Rights Issues

The amendments address the classification of certain rights issues denominated in a foreign currency as either equity

instruments or as financial liabilities. Under the amendments, rights, options or warrants issued by an entity for the

holders to acquire a fixed number of the entitys equity instruments for a fixed amount of any currency are classified as

equity instruments in the financial statements of the entity provided that the offer is made pro rata to all of its existing

owners of the same class of its non-derivative equity instruments. Before the amendments to IAS 32, rights, options or

warrants to acquire a fixed number of an entitys equity instruments for a fixed amount in foreign currency were classified

as derivatives. The amendments require retrospective application.

The application of the amendments has had no effect on the amounts reported in the current and prior years because the

Group has not issued instruments of this nature.

Amendments to IFRIC 14 Prepayments of a Minimum Funding Requirement

IFRIC 14 addresses when refunds or reductions in future contributions should be regarded as available in accordance

with paragraph 58 of IAS 19; how minimum funding requirements might affect the availability of reductions in future

contributions; and when minimum funding requirements might give rise to a liability. The amendments now allow

recognition of an asset in the form of prepaid minimum funding contributions. The application of the amendments has

not had no effect on the amounts reported in the current and prior years because the Group has not entered into any

transactions of this nature.


19/60


IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

The Interpretation provides guidance on the accounting for the extinguishment of a financial liability by the issue of equityinstruments. Specifically, under IFRIC 19, equity instruments issued under such arrangement will be measured at their fair

value, and any difference between the carrying amount of the financial liability extinguished and the consideration paid

will be recognised in profit or loss.

The application of IFRIC 19 has had no effect on the amounts reported in the current and prior years because the Group

has not entered into any transactions of this nature.

Improvements to IFRSs issued in 2010

Except for the amendments to IFRS 3 and IAS 1 described earlier, the application of Improvements to IFRSs issued in 2010

has not had any material effect on amounts reported in the consolidated financial statements.

New and revised IFRSs in issue but not yet effective

The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective:

Amendments to IFRS 7 Disclosures Transfers of Financial Assets (1)

IFRS 9 Financial Instruments (2)

IFRS 10 Consolidated Financial Statements (2)

IFRS 11 Joint Arrangements (2)

IFRS 12 Disclosure of Interests in Other Entities (2)

IFRS 13 Fair Value Measurement (2)

Amendments to IAS 1 Presentation of Items of Other Comprehensive Income (3)

Amendments to IAS 12 Deferred Tax Recovery of Underlying Assets (4)

IAS 19 (as revised in 2011) Employee Benefits (2)

IAS 27 (as revised in 2011) Separate Financial Statements (2)

IAS 28 (as revised in 2011) Investments in Associates and Joint Ventures (2)

(1) Effective for annual periods beginning on or after 1 July 2011.

(2) Effective for annual periods beginning on or after 1 January 2013.

(3) Effective for annual periods beginning on or after 1 July 2012.

(4) Effective for annual periods beginning on or after 1 January 2012.

The amendments to IFRS 7 increase the disclosure requirements for transactions involving transfers of financial

assets. These amendments are intended to provide greater transparency around risk exposures when a financial asset

is transferred but the transferor retains some level of continuing exposure in the asset. The amendments also require

disclosures where transfers of financial assets are not evenly distributed throughout the period. The amendments to IFRS

7 increase the disclosure requirements for transactions involving transfers of financial assets. These amendments are

intended to provide greater transparency around risk exposures when a financial asset is transferred but the transferor

retains some level of continuing exposure in the asset. The amendments also require disclosures where transfers of

financial assets are not evenly distributed throughout the period.

The directors do not anticipate that these amendments to IFRS 7 will have a significant effect on the Groups disclosures

regarding transfers of trade receivables. However, if the Group enters into other types of transfers of financial assets in the

future, disclosures regarding those transfers may be affected.



20/60



IFRS 9 issued in November 2009 introduces new requirements for the classification and measurement of financial assets.

IFRS 9 amended in October 2010 includes the requirements for the classification and measurement of financial liabilities

and for derecognition.Key requirements of IFRS 9 are described as follows:

IFRS 9 requires all recognised nancial assets that are within the scope of IAS 39 Financial Instruments: Recognition

and Measurement to be subsequently measured at amortised cost or fair value. Specifically, debt investments that

are held within a business model whose objective is to collect the contractual cash flows, and that have contractual

cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at

amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are

measured at their fair values at the end of subsequent accounting periods.

The most signicant effect of IFRS 9 regarding the classication and measurement of nancial liabilities relates to

the accounting for changes in the fair value of a financial liability (designated as at fair value through profit or loss)attributable to changes in the credit risk of that liability. Specifically, under IFRS 9, for financial liabilities that are

designated as at fair value through profit or loss, the amount of change in the fair value of the financial liability

that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless

the recognition of the effects of changes in the liabilitys credit risk in other comprehensive income would create or

enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liabilitys credit risk

are not subsequently reclassified to profit or loss. Previously, under IAS 39, the entire amount of the change in the

fair value of the financial liability designated as at fair value through profit or loss was presented in profit or loss.

IFRS 9 is effective for annual periods beginning on or after 1 January 2013, with earlier application permitted.

The directors anticipate that IFRS 9 will be adopted in the Groups consolidated financial statements for the annual period

beginning 1 January 2013 and that the application of IFRS 9 may have significant impact on amounts reported in respect

of the Groups financial assets and financial liabilities. . However, it is not practicable to provide a reasonable estimate of

that effect until a detailed review has been completed.

In May 2011, a package of five Standards on consolidation, joint arrangements, associates and disclosures was issued,

including IFRS 10, IFRS 11, IFRS 12, IAS 27 (as revised in 2011) and IAS 28 (as revised in 2011).

Key requirements of these five Standards are described below.

IFRS 10 replaces the parts of IAS 27 Consolidated and Separate Financial Statements that deal with consolidated financialstatements. SIC-12 Consolidation Special Purpose Entities has been withdrawn upon the issuance of IFRS 10. Under IFRS

10, there is only one basis for consolidation, that is control. In addition, IFRS 10 includes a new definition of control that

contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns from its involvement with

the investee, and (c) the ability to use its power over the investee to affect the amount of the investors returns. Extensive

guidance has been added in IFRS 10 to deal with complex scenarios.

IFRS 11 replaces IAS 31 Interests in Joint Ventures. IFRS 11 deals with how a joint arrangement of which two or more

parties have joint control should be classified. SIC-13 Jointly Controlled Entities Non-monetary Contributions by

Venturers has been withdrawn upon the issuance of IFRS 11. Under IFRS 11, joint arrangements are classified as joint

operations or joint ventures, depending on the rights and obligations of the parties to the arrangements. In contrast,

under IAS 31, there are three types of joint arrangements: jointly controlled entities, jointly controlled assets and jointly

controlled operations.


21/60


In addition, joint ventures under IFRS 11 are required to be accounted for using the equity method of accounting, whereas

jointly controlled entities under IAS 31 can be accounted for using the equity method of accounting or proportionate

accounting.

IFRS 12 is a disclosure standard and is applicable to entities that have interests in subsidiaries, joint arrangements,

associates and/or unconsolidated structured entities. In general, the disclosure requirements in IFRS 12 are more extensive

than those in the current standards.

These five standards are effective for annual periods beginning on or after 1 January 2013. Earlier application is permitted

provided that all of these five standards are applied early at the same time.

The directors anticipate that these five standards will be adopted in the Groups consolidated financial statements for the

annual period beginning 1 January 2013. The application of these five standards may have significant impact on amounts

reported in the consolidated financial statements.However, the directors have not yet performed a detailed analysis of theimpact of the application of these Standards and hence have not yet quantified the extent of the impact.

IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value

measurements. The Standard defines fair value, establishes a framework for measuring fair value, and requires disclosures

about fair value measurements. The scope of IFRS 13 is broad; it applies to both financial instrument items and non-

financial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair

value measurements, except in specified circumstances. In general, the disclosure requirements in IFRS 13 are more

extensive than those required in the current standards. For example, quantitative and qualitative disclosures based on

the three-level fair value hierarchy currently required for financial instruments only under IFRS 7 Financial Instruments:

Disclosures will be extended by IFRS 13 to cover all assets and liabilities within its scope.

IFRS 13 is effective for annual periods beginning on or after 1 January 2013, with earlier application permitted.

The directors anticipate that IFRS 13 will be adopted in the Groups consolidated financial statements for the annual

period beginning 1 January 2013 and that the application of the new Standard may affect the amounts reported in the

financial statements and result in more extensive disclosures in the financial statements.

The amendments to IAS 1 retain the option to present profit or loss and other comprehensive income in either a single

statement or in two separate but consecutive statements. However, the amendments to IAS 1 require additional

disclosures to be made in the other comprehensive income section such that items of other comprehensive income are

grouped into two categories: (a) items that will not be reclassified subsequently to profit or loss; and (b) items that will bereclassified subsequently to profit or loss when specific conditions are met. Income tax on items of other comprehensive

income is required to be allocated on the same basis.

The amendments to IAS 1 are effective for annual periods beginning on or after 1 July 2012. The presentation of items

of other comprehensive income will be modified accordingly when the amendments are applied in the future accounting

periods.

The amendments to IAS 12 provide an exception to the general principles in IAS 12 that the measurement of deferred tax

assets and deferred tax liabilities should reflect the tax consequences that would follow from the manner in which the

entity expects to recover the carrying amount of an asset. Specifically, under the amendments, investment properties that

are measured using the fair value model in accordance with IAS 40 Investment Property are presumed to be recovered

through sale for the purposes of measuring deferred taxes, unless the presumption is rebutted in certain circumstances.



22/60



The amendments to IAS 12 are effective for annual periods beginning on or after 1 January 2012. The directors anticipate

that the application of the amendments to IAS 12 in future accounting periods may result in adjustments to the amounts

of deferred tax liabilities recognised in prior years regarding the Groups investment properties of which the carryingamounts are presumed to be recovered through sale. However, the directors have not yet performed a detailed analysis of

the impact of the application of the amendments and hence have not yet quantified the extent of the impact.

The amendments to IAS 19 change the accounting for defined benefit plans and termination benefits. The most significant

change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments require the

recognition of changes in defined benefit obligations and in fair value of plan assets when they occur, and hence eliminate

the corridor approach permitted under the previous version of IAS 19 and accelerate the recognition of past service costs.

The amendments require all actuarial gains and losses to be recognised immediately through other comprehensive income

in order for the net pension asset or liability recognised in the consolidated statement of financial position to reflect the

full value of the plan deficit or surplus.

The amendments to IAS 19 are effective for annual periods beginning on or after 1 January 2013 and require retrospective

application with certain exceptions. The directors anticipate that the amendments to IAS 19 will be adopted in the Groups

consolidated financial statements for the annual period beginning 1 January 2013 and that the application of IAS 19 will

not affect the amounts reported in the current and prior years because the Group has not entered into any transactions of

this nature.

2.2 Statement of compliance

The consolidated financial statements have been prepared in accordance with International Financial Reporting

Standards.

Transition to International Financial Reporting Standards (IFRS)

The Group is resuming presentation of IFRS Financial Statements after early adoption of revised IFRS 1 First time Adoption

of International Financial Reporting Standards isssued on 20 December 2010. The Group failed to present IFRS Financial

Statements for the year ended 31 December 2009 due to effects of sever hyper inflation as defined in IFRS 1. The opening

Statement of Financial Position was reported in the prior year as not being compliant with International Accounting

Standards (IAS ) 21, The effects of changes in Foreign Exchange Rates and IAS 29 Financial Reporting in Hyper Inflationery

economies. The Groups previous functional currency, the Zimbabwean Dollar (ZW$) was subjected to severe hyper

inflation before the date of transition to IFRS because it had both of the following characteristics:

(a) a reliable general price index was not available to all entities with transactions and balances in the Zimbabwe Dollar

and

(b) exchangeability between the ZW$ and relative stable foreign currency did not exist. The Group changed its

functional and presentation currency from the ZW$ to the United States Dollar (US$) with effect from 1 January

2009.

Deemed Cost Exemption

The Group elected to measure certain items of property, plant and equipment, trade and other receivables, inventories and

trade and other payables at fair values as the deemed cost of those assets and liabilites in the opening IFRS statement of

financial position.

Comparative financial information

The financial statements comprise of three satements of financial position, two statements of comprehensive income,

changes in equity and cashflows as a result of the retrospective application of the Amended IFRS 1. The comparative

statement of the comprehensive income, changes in equity and cashflows are for 12 months.


23/60


Reconciliation of previosuly prepared financial statements to IFRS compliant financial statements

In preparing its opening IFRS statement of financial position, the Group has not adjusted the

amounts previously determined in accordance with the Guidance on Change in Functional

Currency 2009. Since the amounts have not changed, reconciliations have not been presented.

2.3 Significant accounting judgements, estimates and assumptions

The preparation of the Groups financial statements requires the Groups Directors and Management to make judgements,

estimates and formulate assumptions that may affect the reported amounts of revenues, expenses, assets, liabilities and

the disclosure of contingent liabilities/ assets at the reporting period end date. Estimates and judgements are continually

evaluated, and are based on historical experience and other factors, including expectations of future events that are

believed to be reasonable under the circumstances. However, uncertainty about these assumptions and estimates could

result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the

future.

Judgements

In the process of applying the Groups accounting policies, management has made the following judgements, apart from

those involving estimates, which have the most significant effect on the amounts recognised in the financial statements.

The Groups Directors are of the opinion that the Statement of Financial Position represents a true and fair position of the

Group.

Useful lives and residual values of property, plant and equipment

The Group assesses the useful lives and residual values of property, plant and equipment each period,

taking into account past experience and macro-economic changes.

Fair values The Group makes estimates and judgements in the valuation of property, plant and equipment, and the valuation of

financial assets (such as trade receivables). Judgement is required in determining fair values of assets. The Group may

also rely on independent opinions of experts in related specialist fields.

Impairment of Goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to

which goodwill has been allocated. The value in use calculation requires the directors to estimate the future cash

flows expected to arise from the cash generating unit and a suitable discount rate inorder to calculate present value.

The carrying amount of goodwill as at 31 December 2011 was US$41 625. No impairment was recognised during the

year.

2.4 Summary of significant accounting policies

Segment reporting

Operating segments provide products or services that are subject to risks and rewards that are different from those of

other operating segments. Operating segments are considered reportable segments when their operating results and

financial position are:

Regularly reviewed by the Groups chief operating decision makers as part of the decision making process regarding

resources to be allocated towards each segments operations; and

Duly assessed against internally determined key performance indicators.

The Groups reportable segments, for which internal financial management information is available and consistently

reviewed, are distinctly determined across the different product types manufactured and their customer markets served.Detailed information on the reportable segments identified and presented is disclosed in note 4.



24/60



Basis of Consolidations and business combinations

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies so as to

obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or

convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated

from the effective date on which control is transferred to the Group. They are de-consolidated from the effective date that

control ceases. The acquisition method of accounting is used to account for the acquisition of subsidiaries and business

units by the Group. The cost of an acquisition is measured at the aggregate of the fair values, at the date of exchange,

of assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange for control of the

acquiree or business unit. Acquisition related costs are recognised, as incurred, in the Statement of Comprehensive

Income, as part of profit or loss for the period.

Inter-Group transactions, balances and unrealised gains on transactions between Group entities are eliminated. Unrealised

losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies

of subsidiaries and business units are changed where necessary to ensure consistency with the policies adopted by the Group.

Non controlling interests in the net assets of consolidated subsidiaries are identified separately from the Groups

equity therein. The interest of noncontrolling shareholders may be initially measured either at fair value or at the non

controlling interests proportionate share of the acquirees identifiable net assets. The choice of measurement basis is made

on an acquisition by acquisition basis. Subsequent to acquisition, noncontrolling interests consist of the amount

attributed to such interests at initial recognition and the noncontrolling interests share of changes in equity since the

date of the combination. Total comprehensive income is attributed to non controlling interest even if this results in the

non controlling interest having a deficit balance.

Changes in the Groups interest in a subsidiary that do not result in a loss of control are accounted for as equitytransactions. Any difference between the amount by which the non controlling interests are adjusted and the fair value

of the consideration paid or received is recognised directly in equity and attributed to owners of the Group.

Where applicable, the cost of acquisition includes any asset or liability resulting from a contingent consideration

arrangement, measured at its acquisition date fair value. Subsequent changes in such fair values are adjusted against the

cost of acquisition where they qualify as measurement period adjustments (refer below). All other subsequent changes in

the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant

IFRS. Changes in the fair value of contingent consideration classified as equity are not recognised.

The acquirees identifiable assets , liabilities and contigent liabilities that meet the conditions for recognition under IFRS 3

(2008) are recognised at the fair value at the acquisition date , except that;

Non-current assets (or disposal groups) that are classied as held for sale in accordance with IFRS 5: Non-current

Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell;

Liabilities or equity instruments related to the replacement by the Group of an acquirees share based payment

awards, which are measured in accordance with IFRS 2: Share Based Payment

Deferred tax assets or liabilities and liabilities or assets related to employee benet arrangements, which are

recognised and measured in accordance with IAS 12: Income Taxes and IAS 19: Employee Benefits respectively.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the

combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those

provisional amounts are adjusted during the set measurement period, or additional assets or liabilities are recognised, toreflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known,

would have affected the amounts recognised as of that date.


25/60


The aforementioned measurement period is the period from the date of acquisition to the date the Group receives

complete information about facts and circumstances that existed as of the acquisition date and is subject to a maximum

of one year.Goodwill

Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition

date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non controlling

interest in the acquiree and the fair value of the acquirers previously held equity interest (if any) in the entity over the

fair value of the identifiable net assets recognised. Following initial recognition, goodwill is measured at cost less any

accumulated impairment losses. Goodwill is not amortised, but is reviewed for impairment annually or more frequently

if events or changes in circumstances indicate that the carrying value may be impaired. Impairment losses relating to

goodwill cannot be reversed in future periods.

For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocatedto each of the Groups cash-generating units that are expected to benefit from the synergies of the combination,

irrespective of whether other assets or liabilities of the entity are assigned to those units. Each unit to which the goodwill

is so allocated:

Represents the lowest level within the entity at which the goodwill is monitored for internal management purposes;

and

Is not larger than a reportable segment determined in accordance with IFRS 8: Operating Segments.

Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates.

Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is

recognised. Where goodwill forms part of the cash-generating unit and part of the operation within that unit is disposed

of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when

determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on

the relative values of the operation disposed of and the portion of the cash-generating unit retained.

Bargain purchase gain

If, after reassessment, the Groups interest in the net fair value of the acquirees identifiable net assets exceeds the sum

of the consideration transferred, the amount of any non controlling interest in the acquiree and the fair value of the

acquirers previously held equity interest in the acquiree (if any), the excess is recognised immediately, in profit or loss as a

bargain purchase gain

Share-based payment arrangementsEquity-settled share-based payments to employees and others providing similar services are measured at the fair value

of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-

based transactions are set out in note 17.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line

basis over the vesting period, based on the Groups estimate of equity instruments that will eventually vest, with a

corresponding increase in equity (equity-settled employee benefits reserve). At the end of each reporting period, the

Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original

estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a

corresponding adjustment to the equity-settled employee benefits reserve.

The policy described above is applied to all equity-settled share-based payment transactions that were granted on and

after 31 July 2011.



26/60



Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the

goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at

the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterpartyrenders the service.

For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially at the

fair value of the liability. At the end of each reporting period until the liability is settled, and at the date of settlement, the

fair value of the liability is remeasured, with any changes in fair value recognised in profit or loss for the year.

Share-based payment arrangements of the acquiree in a business combination

When the share-based payment awards held by the employees of an acquiree (acquiree awards) are replaced by the

Groups share-based payment awards (replacement awards), both the acquiree awards and the replacement awards are

measured in accordance with IFRS 2 Share-based Payment(market-based measure) at the acquisition date. The portionof the replacement awards that is included in measuring the consideration transferred in a business combination equals

the market-based measure of the acquiree awards multiplied by the ratio of the portion of the vesting period completed to

the greater of the total vesting period or the original vesting period of the acquiree award. The excess of the market-based

measure of the replacement awards over the market-based measure of the acquiree awards included in measuring the

consideration transferred is recognised as remuneration cost for post-combination service.

However, when the acquiree awards expire as a consequence of a business combination and the Group replaces those

awards when it does not have an obligation to do so, the replacement awards are measured at their market-based measure

in accordance with IFRS 2. All of the market-based measure of the replacement awards is recognised as remuneration cost

for post-combination service.

At the acquisition date, when the outstanding equity-settled share-based payment transactions held by the employees of

an acquiree are not exchanged by the Group for its share-based payment transactions, the acquiree share-based payment

transactions are measured at their market-based measure at the acquisition date. If the share-based payment transactions

have vested by the acquisition date, they are included as part of the non-controlling interest in the acquiree. However, if

the share-based payment transactions have not vested by the acquisition date, the market-based measure of the unvested

share-based payment transactions is allocated to the non-controlling interest in the acquiree based on the ratio of the

portion of the vesting period completed to the greater of the total vesting period or the original vesting period of the

share-based payment transaction. The balance is recognised as remuneration cost for post-combination service.

Foreign currency translations

The Groups consolidated financial statements are presented in United States dollars, which is also the parent companys

functional currency. Each entity in the Group determines its own functional currency and items included in the financial

statements of each entity are measured using that functional currency.

i) Transactions and balances

Transactions in foreign currencies are initially recorded by the Group entities at their respective functional

currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in

foreign currencies are retranslated at the functional currency spot rate of exchange at the reporting date.


27/60



All differences arising on settlement or translation of monetary items are taken to the income statement with

the exception of monetary items that are designated as part of the hedge of the Groups net investment of a

foreign operation. These are recognised in other comprehensive income until the net investment is disposed, atwhich time, the cumulative amount is reclassified to the income statement. Tax charges and credits attributable

to exchange differences on those monetary items are also recorded in other comprehensive income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using

the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in

a foreign currency are translated using the exchange rates at the date when the fair value is determined. The

gain or loss arising on retranslation of non-monetary items is treated in line with the recognition of gain or loss

on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is

recognised in other comprehensive income or profit or loss is also recognised in other comprehensive income or

profit or loss, respectively).

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Groups foreign operations

are translated into the parent companys functional currency using exchange rates prevailing at the end of each reporting

period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates

fluctuate significantly during that period, in which case the exchange rates at the dates of the transactions are used.

Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (attributed to

non-controlling interests as appropriate).

On the disposal of a foreign operation (i.e. a disposal of the Groups entire interest in a foreign operation, or a disposal

involving loss of control over a subsidiary that includes a foreign operation, a disposal involving loss of joint control over

a jointly controlled entity that includes a foreign operation, or a disposal involving loss of significant influence over an

associate that includes a foreign operation), all of the exchange differences accumulated in equity in respect of that

operation attributable to the owners of the Company are reclassified to profit or loss.

Non-current assets held for sale

Non current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally

through a sale transaction rather than through continuing use. This condition is regarded as met only when a sale is highly

probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be

committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the

date of classification.

Non current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carryingamount and fair value less cost to sell and are no longer depreciated.


28/60


Income and revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue excludes value added tax and

other sales related duties, and is reduced for estimated customer returns, rebates, discounts and other similar allowances.

Sale of Goods

Revenue from the sale of goods is recognised when all the following conditions are satisfied:

The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;

The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor

effective control over the goods sold;

The amount of revenue can be measured reliably;

It is probable that the economic benets associated with the transaction will ow to the entity; and

The costs incurred or to be incurred in respect of the transaction can be measured reliably.

Dividend and Interest revenue

Dividend revenue from investments is recognised when the shareholders right to receive payment has been established

(provided that it is probable that the economic benefits will flow to the Group and the amount of revenue can be

measured reliably).

Interest revenue is accrued on a time proportionate basis, by reference to the principal outstanding and at the effective

interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life

of the financial asset to that assets net carrying amount.

Other income

Other income is recognised in the period that it is due and receivable.

Property, plant and equipment

Property, plant and equipment are measured at fair value less accumulated depreciation and impairment losses, if any,

recognised after the date of a revaluation. Valuations, performed by the Groups Directors or independent external valuers,

are performed frequently enough to ensure that the fair value of a revalued asset does not differ materially from its

carrying amount.

When items of property, plant and equipment are revalued, any accumulated depreciation at the date of a revaluation

is restated proportionately with the change in the gross carrying amount of the asset so that the carrying amount after

revaluation equals its revalued amount.

Any revaluation surplus (increase in the carrying amount of an asset as a result of a revaluation) is recognised in other

comprehensive income in the Statement of Comprehensive Income and accumulated in equity (revaluation reserve) in

the Statement of Changes in Equity. The increase is recognised in profit or loss to the extent that it reverses a revaluation

decrease of the same asset previously recognised in profit or loss.

If an assets carrying amount is decreased as a result of a revaluation, the decrease shall be recognised in profit or loss.

The decrease, however, is recognised in other comprehensive income to the extent of any credit balance existing in the

revaluation surplus in respect of that asset. The decrease recognised in other comprehensive income reduces the amount

accumulated in equity as a revaluation reserve.

An annual transfer, within the Statement of Changes in Equity, from the asset revaluation reserve to retained earnings,

is made for the difference between depreciation based on the revalued carrying amount of the assets and depreciation

based on the original cost.



29/60



Subsequent costs are included in an assets carrying amount or recognised as a separate asset, as appropriate, only when

it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can

be measured reliably. All other repairs and maintenance are recognised in profit or loss in the Statement of ComprehensiveIncome during the financial period in which they are incurred.

Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings.

Depreciation is calculated on a straight line basis over the following asset class useful life spans in order to allocate their

cost or revalued amounts to their residual values:

Buildings: 50 years;

Plant and machinery: 5 to 50 years;

Motor vehicles: 5 years;

Ofce furniture and computer equipment: 4 to 10 years.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected

from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between

the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is

derecognised.

The useful lives and residual values of assets are reviewed and adjusted, if appropriate, at each reporting period end date,

with the effect of any changes in estimate accounted for on a prospective basis. Where the residual value of an asset

increases to an amount equal to or greater than the assets carrying amount, depreciation will cease to be charged on the

asset until its residual value subsequently decreases to an amount below its carrying amount.

Impairment of non financial assets

The Group assesses at each reporting period end date whether there is an indication that an asset may be impaired. If any

such indication exists, or when annual impairment testing for an asset is required, the Groups management makes an

estimate of the assets recoverable amount. An assets recoverable amount is the higher of an assets or cash generating

units fair value less costs to sell and its value in use, and is determined for an individual asset, unless the asset does not

generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying

amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable

amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax

discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Impairment losses of continuing operations are recognised in profit or loss in the Statement of Comprehensive Income in

those expense categories consistent with the function of the impaired asset.

An assessment is made at each reporting period end date as to whether there is any indication that previously recognised

impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is

estimated.

A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the

assets recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the

asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have

been determined, net of depreciation, had no impairment loss been recognised for the asset in prior periods. Such reversal

is recognised in profit or loss unless the asset is carried at its revalued amount, in which case the reversal is treated as

a revaluation increase and recognised in other comprehensive income. After such a reversal, the depreciation charge isadjusted in future periods to allocate the assets revised carrying amount, less any residual value, on a systematic basis,

over its remaining useful life.


30/60


Leases

The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at

inception date. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks

and rewards of ownership to the lessee. All other leases are classified as operating leases.

The Groups lease transactions in place throughout the current reporting period only extend as far as the Groups capacity

as a lessee under operating lease arrangements.

Group as a lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where

another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are

consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are

incurred.

Contingent rentals:

Contingent rentals are lease payments, or portions thereof, that are not fixed in amount but are based on the future

amount of a factor that is susceptible to change other than with the passage of time. Contigent rents are recognised as an

expense in the period in which they are incurred. The CT Bolts premises where the Group operates from were leased under

such terms for part of the current reporting period. Details regarding lease transactions are as disclosed in note 15.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability.

The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where

another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are

consumed.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a

substantial period of time to get ready for their intended use or sale are capitalised as part of the cost of the respective

assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs

that an entity incurs in connection with the borrowing of funds.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying

assets is deducted from the borrowing costs eligible for capitalisation.

Intangible assets

Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are carried at cost less accumulated amortisation

and accumulated impairment losses. Amortisation is recognised on a straight-line basis over their estimated useful lives.

The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of

any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are

acquired separately are carried at cost less accumulated impairment losses.

Internally-generated intangible assets - research and development expenditure



31/60



Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from development (or from the development phase of an internal project)

is recognised if, and only if, all of the following have been demonstrated:

the technical feasibility of completing the intangible asset so that it will be available for use or sale;

the intention to complete the intangible asset and use or sell it;

the ability to use or sell the intangible asset;

how the intangible asset will generate probable future economic benets;

the availability of adequate technical, nancial and other resources to complete the development and to use or sell

the intangible asset; and

the ability to measure reliably the expenditure attributable to the intangible asset during its development.

The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the

date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible

asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.

Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation

and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

Intangible assets acquired in a business combination

Intangible assets that are acquired in a business combination are recognised separately from goodwill and are initially

recognised at their fair value at the acquisition date (which is regarded as their cost).

Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less

accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired

separately.

Derecognition of intangible assets

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from its use or disposal.

Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal

proceeds and the carrying amount of the asset, arerecognised in profit or loss when the asset is derecognised.

Inventories

Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present

location and condition, are accounted for as follows:

Documents

Zimplow Financials