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Z I M P L O W

A N N U A L

R E P O R T

Mission, Vision and Core Values


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.
Dependability
Our customers, employees and suppliers must be able to count on us.
Fun
Embracing a positive attitude and spontaineity.

Zimplow Limited

ii

2011 Annual Report

Contents

Directorship and Administration

Notice to Shareholders

Chairmans Review

Report of The Directors

Corporate Governance

Financial Highlights

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

Zimplow Limited

2011 Annual Report

Directorship and Administration



DIRECTORS:








P Devenish
Z Kumwenda*
A Kurauone
B Mitchell*
D Mkonto*
E Mlambo
T Moyo
N Nhira
Z L Rusike (Chairman)
F Rwakonda* (Appointed 22 August 2011)

* Executive

D Mkonto

GROUP SECRETARY:


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:

Zimplow Limited

Year ended 31 December 2011

2011 Annual Report

Notice to Shareholders
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 February
2012.
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 1059
BULAWAYO
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.

Zimplow Limited

2011 Annual Report

Chairmans Review
INTRODUCTION

Zimplow net income before tax for the twelve months

The much anticipated upturn in the economy for 2011 fiz-

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

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

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

ity challenges which intensified towards the end of 2011

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

and local cost increases, led by electricity tariffs worsened

increase. The effective tax rate for the year under review

the situation.

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


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

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

December 2011 as compared to attributable income after

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

tax of US$2,34 million for 2010.

pressures on margins. I am delighted as your chairman to


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

Net cash flow from operating activities decreased from

months ended 31 December 2011.

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


months ended December 31 2011. The decrease was

OPERATIONS

mainly due to an advance corporation tax payment of

Mealie Brand volumes for the 12 months ended 31 De-

US$443 thousand dollars.

cember 2011 increased by 27% to 74 thousand implements, as compared with 59 thousand implements for the

PROSPECTS

12 months ended 31 December 2010. Spare parts vol-

The year 2012 is expected to exert more cost pressures

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

that will be brought about by huge wage demands. The


full impact of electricity tariff increases by the Zimbabwe

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

Electricity Supply Authority of 51% and increases in all

the 12 months ended 31 December 2011 to 146 tonnes

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

as compared with 127 tonnes for the 12 months ended

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

31 December 2010. Mild steel bolts in units increased by

pursuing its growth strategies aimed at improving local and

34% in 2011 while high tensile bolts in units substantially

regional competitiveness.

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


in 2010.

ACKNOWLEDGEMENTS
My appreciation goes to fellow Board members for the

Tassburg volume sales increased by 47% to 107 tonnes

clarity of direction they continue to offer to the business.

for the 12 months ended 31 December 2011 as compared

The CEO, management and employees deserve credit for

to 73 tonnes for the same period in 2010.

achieving yet another commendable set of results.

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


African animal traction distribution company African Traction and Associated Technologies(AFRITRAC), the results
of which have been consolidated. The subsidiary contributed US$1.5 million to turnover and $145 thousand dollars
to income before tax, over a ten month period.

Z L Rusike
Chairman
22 February 2012

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 Limited

2011 Annual Report

Report of the Directors


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
Equity dividend proposed/paid
Retained earnings brought forward
Retained earnings carried forward

2 730 282
(686 851)
4 171 468
6 214 899

2 342 001
(700 000)
1 829 467
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 22
February 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
Z. Rusike

Chief Executive Officer


Z. Kumwenda

Zimplow Limited

2011 Annual Report

Corporate Governance
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 COMMITTEE
This 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.

Zimplow Limited

2011 Annual Report

Financial Highlights

Year Ended
31 December 2011
US$

Year Ended
31 December 2010
US$

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

(US$ per share)

(US$ per share)

Basic earnings

0.01

0.01

Operating cash flow

0.01

0.01




Turnover

Ordinary Share Performance

Weighted average number of shares

Zimplow Limited

334 743 344

2011 Annual Report

327 071 924

Independent Auditors Report


Chartered Accountants (Zimbabwe)
Derry House
Cnr Fife Street/6th Avenue
P.O. Box 437, Bulawayo
Tel: +263 9 76111
Fax: +263 9 72359

REPORT OF THE INDEPENDENT AUDITORS


To the members of
ZIMPLOW LIMITED

REPORT ON THE FINANCIAL STATEMENTS


We have audited the accompanying consolidated financial statements of Zimplow Limited set out on pages 10 to 53,
which comprise the consolidated statement of financial position as at 31 December 2011, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for
the year then ended, the notes to the financial statements which include a summary of significant accounting policies and
other explanatory information.
DIRECTORS RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
The Groups directors are responsible for the preparation and fair presentation of these financial statements in accordance
with International Financial Reporting Standards (IFRS) and in the manner required by the Companies Act (Chapter 24:03)
and the relevant statutory instruments (SI 33/99 and SI 62/96) and for such internal control as the directors determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
AUDITORS RESPONSIBILITY
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted
our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free from material misstatement.
BASIS OF OPINION
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation
of the financial statements.

Zimplow Limited

2011 Annual Report

Independent Auditors Report continued


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

Zimplow Limited

2011 Annual Report

Consolidated Statement of Comprehensive Income


for the year ended 31 December 2011

Notes

Year Ended
31 Dec 2011
US$

Year Ended
31 Dec 2010
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)

3 464 529

2 776 062

Finance income

249 237

161 049

Finance costs

(78 493)

(14 858)

Profit before taxation

3 635 273

2 922 253

Income tax expense

(904 991)

(580 252)

Operating profit

6.1

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


Income tax relating to components of other

(135 147)

comprehensive income.
6.1
Other comprehensive (loss)/income for the year, net of tax

4 546
(160 353)

(19)
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

Zimplow Limited

10

2011 Annual Report

Consolidated Statement of Financial Position


as at 31 December 2011

Notes

31 Dec 2011
US$

31 Dec 2010 31 Dec 2009


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


Foreign currency translation reserve
18.2

76 496
(69 065)

101 702
-

101 597
-

Retained earnings

6 161 945

4 171 468

1 829 467

Equity attributable to owners of the parent


Non-controlling interests
19
Total equity

13 725 199
512 633
14 237 832

11 342 051
-
11 342 051

8 997 645
-
8 997 645

6.3

621 484

599 833

618 860

12.1
12.2

1 171 111
378 982

804 488
378 421

980 708
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

2 863 605

2 667 362

2 668 756

Available for sale financial assets


8
Goodwill
9

147 976
41 625
3 053 206

177 728
-
2 845 090

177 604
-
2 846 360

Non Current Liabilities


Deferred tax liability
Current Liabilities
Trade and other payables
Provisions

ASSETS
Non Current Assets
Property, plant and equipment

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

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

Cash and bank balances

Chairman
Z L Rusike
22 February 2012

Chief Executive Officer


Z. Kumwenda

Zimplow Limited

11

2011 Annual Report

Zimplow Limited

12

2011 Annual Report

7 066 581

Balance at 31 December 2009

32 716 7 036 174 552 333

1 829 467

(392 486)
2 221 953
-

76 496

2 677 328
(686 851)

(69 065) 6 161 945

(69 065)



-


-
2 342 001
105

-
101 702
4 171 468

101 597



(25 206)




101 597

* Being deemed cost adjustment to Tassburg assets that were identified on the consolidation of the fixed asset register.

Balance at 31 December 2011

552 333

Profit for the year


Payment of dividend
Share based payment
transaction(note 17.1)
Issue of Ordinary Shares on
acquistion of Afritrac(note 20)
Non Controlling Interest arising
from acqusition of Afritrac(note 20.4)
Other comprehensive income;
Effects of foreign currency translation
Fair value loss on AFS financial asset

Adjustment*

2 300
Payment of dividend


Profit for the year


Other comprehensive income for the year


Balance at 31 December 2010
32 707 7 036 174

32 707 (32 707)

Re-denomination of share capital

Payment of dividend
Profit for the year
Other comprehensive income for the year

7 066 581

Balance at 1 January 2009


(392 486)
2 221 953
101 597

(69 065)
(25 206)

552 342

(65 400)

2 677 328
(686 851)

(65 400) 13 725 199

-
-

(65 400)

-
-

-
2 300
-
-
- 2 342 001
-
105
- 11 342 051

- 8 997 645

-
-
-

- 7 066 581

US$

Total

(392 486)
2 221 953
101 597

(135 147)
(25 206)

525 761

552 342

(65 400)

2 730 282
(686 851)

512 633 14 237 832

(66 082)

525 761

52 954


2 300

2 342 001

105
11 342 051

8 997 645

7 066 581


Share
Capital
Share Available for Foreign Currency
Retained Share Based Attributable
Non

Capital
Reserve Premium sale reserve
Translation
earnings
Payment to owners of Controlling

Reserve
Reserve the Parent
Interest

US$
US$
US$
US$
US$
US$
US$
US$
US$

for the year ended 31 December 2011

Consolidated Statement of Changes in Equity

Consolidated Statement of Cashflows


for the year ended 31 December 2011

Notes

Year Ended
31 Dec 2011
US$

Year Ended
31 Dec 2010
US$

3 464 529

2 776 062

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)

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

Purchase of property, plant and equipment

(510 762)

(282 984)

Proceeds on disposal of property,plant and equipment

38 207

56 042

20.6

355 919

Net cash invested

(116 636)

(226 942)

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


Effects of exchange rates on the balance of cash held in foreign operations

3 033 588
(132 002)

1 039 951
-

Cash and cash equivalents at 31 December 2011

3 947 912

3 033 588

Operating cashflow per share (US$)

0.01

0.01

CASH FLOWS FROM OPERATING ACTIVITIES


Operating profit before dividends, interest,
taxation and exchange gains/losses
Adjustment for non cash items:

456 689

CASH FLOWS FROM INVESTING ACTIVITIES

Net cash inflow on acquisition of subsidiary

CASH FLOWS FROM FINANCING ACTIVITIES

Zimplow Limited

13

2011 Annual Report

Notes to the Financial Statements


for 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 the
household 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 Firsttime 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 has
elected 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.

Zimplow Limited

14

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
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.

Zimplow Limited

15

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
IAS 24 Related Party Disclosures (as revised in 2009)
IAS 24 (as revised in 2009) has been revised on the following two aspects: (a) IAS 24 (as revised in 2009) has changed
the definition of a related party and (b) IAS 24 (as revised in 2009) introduces a partial exemption from the disclosure
requirements for government-related entities.
The Company and its subsidiaries are not government-related entities. The application of the revised definition of related
party set out in IAS 24 (as revised in 2009) in the current year has resulted in the identification of related parties that
were not identified as related parties under the previous Standard. Specifically, associates of the ultimate holding company
of the Company are treated as related parties of the Group under the revised Standard whilst such entities were not
treated as related parties of the Group under the previous Standard. The related party disclosures set out in note 14 to
the consolidated financial statements have been changed to reflect the application of the revised Standard. Changes have
been applied retrospectively.

Amendments to IFRS 3 Business Combinations
As part of Improvements to IFRSs issued in 2010, IFRS 3 was amended to clarify that the measurement choice regarding
non-controlling interests at the date of acquisition is only available in respect of non-controlling interests that are
present ownership interests and that entitle their holders to a proportionate share of the entitys net assets in the event
of liquidation. All other types of non-controlling interests are measured at their acquisition-date fair value, unless another
measurement basis is required by other Standards. In addition, IFRS 3 was amended to provide more guidance regarding
the accounting for share-based payment awards held by the acquirees employees. Specifically, the amendments specify
that share-based payment transactions of the acquiree that are not replaced should be measured in accordance with IFRS
2 Share-based Payment at the acquisition date (market-based measure).

Amendments to IAS 32 Classification of Rights Issues
The amendments address the classification of certain rights issues denominated in a foreign currency as either equity
instruments or as financial liabilities. Under the amendments, rights, options or warrants issued by an entity for the
holders to acquire a fixed number of the entitys equity instruments for a fixed amount of any currency are classified as
equity instruments in the financial statements of the entity provided that the offer is made pro rata to all of its existing
owners of the same class of its non-derivative equity instruments. Before the amendments to IAS 32, rights, options or
warrants to acquire a fixed number of an entitys equity instruments for a fixed amount in foreign currency were classified
as derivatives. The amendments require retrospective application.
The application of the amendments has had no effect on the amounts reported in the current and prior years because the
Group has not issued instruments of this nature.

Amendments to IFRIC 14 Prepayments of a Minimum Funding Requirement

IFRIC 14 addresses when refunds or reductions in future contributions should be regarded as available in accordance
with paragraph 58 of IAS 19; how minimum funding requirements might affect the availability of reductions in future
contributions; and when minimum funding requirements might give rise to a liability. The amendments now allow
recognition of an asset in the form of prepaid minimum funding contributions. The application of the amendments has
not had no effect on the amounts reported in the current and prior years because the Group has not entered into any
transactions of this nature.

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16

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
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 equity
instruments. 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.

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2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
IFRS 9 issued in November 2009 introduces new requirements for the classification and measurement of financial assets.
IFRS 9 amended in October 2010 includes the requirements for the classification and measurement of financial liabilities
and for derecognition.
Key requirements of IFRS 9 are described as follows:
IFRS 9 requires all recognised financial 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 significant effect of IFRS 9 regarding the classification and measurement of financial 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 financial
statements. SIC-12 Consolidation Special Purpose Entities has been withdrawn upon the issuance of IFRS 10. Under IFRS
10, there is only one basis for consolidation, that is control. In addition, IFRS 10 includes a new definition of control that
contains three elements: (a) power over an investee, (b) exposure, or rights, to variable returns from its involvement with
the investee, and (c) the ability to use its power over the investee to affect the amount of the investors returns. Extensive
guidance has been added in IFRS 10 to deal with complex scenarios.
IFRS 11 replaces IAS 31 Interests in Joint Ventures. IFRS 11 deals with how a joint arrangement of which two or more
parties have joint control should be classified. SIC-13 Jointly Controlled Entities Non-monetary Contributions by
Venturers has been withdrawn upon the issuance of IFRS 11. Under IFRS 11, joint arrangements are classified as joint
operations or joint ventures, depending on the rights and obligations of the parties to the arrangements. In contrast,
under IAS 31, there are three types of joint arrangements: jointly controlled entities, jointly controlled assets and jointly
controlled operations.

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2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
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 the
impact 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 nonfinancial 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 be
reclassified 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.

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2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
The amendments to IAS 12 are effective for annual periods beginning on or after 1 January 2012. The directors anticipate
that the application of the amendments to IAS 12 in future accounting periods may result in adjustments to the amounts
of deferred tax liabilities recognised in prior years regarding the Groups investment properties of which the carrying
amounts are presumed to be recovered through sale. However, the directors have not yet performed a detailed analysis of
the impact of the application of the amendments and hence have not yet quantified the extent of the impact.
The amendments to IAS 19 change the accounting for defined benefit plans and termination benefits. The most significant
change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments require the
recognition of changes in defined benefit obligations and in fair value of plan assets when they occur, and hence eliminate
the corridor approach permitted under the previous version of IAS 19 and accelerate the recognition of past service costs.
The amendments require all actuarial gains and losses to be recognised immediately through other comprehensive income
in order for the net pension asset or liability recognised in the consolidated statement of financial position to reflect the
full value of the plan deficit or surplus.
The amendments to IAS 19 are effective for annual periods beginning on or after 1 January 2013 and require retrospective
application with certain exceptions. The directors anticipate that the amendments to IAS 19 will be adopted in the Groups
consolidated financial statements for the annual period beginning 1 January 2013 and that the application of IAS 19 will
not affect the amounts reported in the current and prior years because the Group has not entered into any transactions of
this nature.
2.2 Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards.
Transition to International Financial Reporting Standards (IFRS)
The Group is resuming presentation of IFRS Financial Statements after early adoption of revised IFRS 1 First time Adoption
of International Financial Reporting Standards isssued on 20 December 2010. The Group failed to present IFRS Financial
Statements for the year ended 31 December 2009 due to effects of sever hyper inflation as defined in IFRS 1. The opening
Statement of Financial Position was reported in the prior year as not being compliant with International Accounting
Standards (IAS ) 21, The effects of changes in Foreign Exchange Rates and IAS 29 Financial Reporting in Hyper Inflationery
economies. The Groups previous functional currency, the Zimbabwean Dollar (ZW$) was subjected to severe hyper
inflation before the date of transition to IFRS because it had both of the following characteristics:
(a) a reliable general price index was not available to all entities with transactions and balances in the Zimbabwe Dollar
and
(b) exchangeability between the ZW$ and relative stable foreign currency did not exist. The Group changed its
functional and presentation currency from the ZW$ to the United States Dollar (US$) with effect from 1 January
2009.
Deemed Cost Exemption
The Group elected to measure certain items of property, plant and equipment, trade and other receivables, inventories and
trade and other payables at fair values as the deemed cost of those assets and liabilites in the opening IFRS statement of
financial position.
Comparative financial information
The financial statements comprise of three satements of financial position, two statements of comprehensive income,
changes in equity and cashflows as a result of the retrospective application of the Amended IFRS 1. The comparative
statement of the comprehensive income, changes in equity and cashflows are for 12 months.

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20

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
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.

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21

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
Basis of Consolidations and business combinations
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies so as to
obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated
from the effective date on which control is transferred to the Group. They are de-consolidated from the effective date that
control ceases. The acquisition method of accounting is used to account for the acquisition of subsidiaries and business
units by the Group. The cost of an acquisition is measured at the aggregate of the fair values, at the date of exchange,
of assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange for control of the
acquiree or business unit. Acquisition related costs are recognised, as incurred, in the Statement of Comprehensive
Income, as part of profit or loss for the period.
Inter-Group transactions, balances and unrealised gains on transactions between Group entities are eliminated. Unrealised
losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies
of subsidiaries and business units are changed where necessary to ensure consistency with the policies adopted by the Group.
Non controlling interests in the net assets of consolidated subsidiaries are identified separately from the Groups
equity therein. The interest of noncontrolling shareholders may be initially measured either at fair value or at the non
controlling interests proportionate share of the acquirees identifiable net assets. The choice of measurement basis is made
on an acquisition by acquisition basis. Subsequent to acquisition, noncontrolling interests consist of the amount
attributed to such interests at initial recognition and the noncontrolling interests share of changes in equity since the
date of the combination. Total comprehensive income is attributed to non controlling interest even if this results in the
non controlling interest having a deficit balance.
Changes in the Groups interest in a subsidiary that do not result in a loss of control are accounted for as equity
transactions. 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 classified 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 benefit 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, to
reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known,
would have affected the amounts recognised as of that date.

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22

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
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, allocated
to 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 arrangements
Equity-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 sharebased 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.

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2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the
goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at
the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty
renders 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 portion
of the replacement awards that is included in measuring the consideration transferred in a business combination equals
the market-based measure of the acquiree awards multiplied by the ratio of the portion of the vesting period completed to
the greater of the total vesting period or the original vesting period of the acquiree award. The excess of the market-based
measure of the replacement awards over the market-based measure of the acquiree awards included in measuring the
consideration transferred is recognised as remuneration cost for post-combination service.
However, when the acquiree awards expire as a consequence of a business combination and the Group replaces those
awards when it does not have an obligation to do so, the replacement awards are measured at their market-based measure
in accordance with IFRS 2. All of the market-based measure of the replacement awards is recognised as remuneration cost
for post-combination service.
At the acquisition date, when the outstanding equity-settled share-based payment transactions held by the employees of
an acquiree are not exchanged by the Group for its share-based payment transactions, the acquiree share-based payment
transactions are measured at their market-based measure at the acquisition date. If the share-based payment transactions
have vested by the acquisition date, they are included as part of the non-controlling interest in the acquiree. However, if
the share-based payment transactions have not vested by the acquisition date, the market-based measure of the unvested
share-based payment transactions is allocated to the non-controlling interest in the acquiree based on the ratio of the
portion of the vesting period completed to the greater of the total vesting period or the original vesting period of the
share-based payment transaction. The balance is recognised as remuneration cost for post-combination service.
Foreign currency translations
The Groups consolidated financial statements are presented in United States dollars, which is also the parent companys
functional currency. Each entity in the Group determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency.
i) Transactions and balances
Transactions in foreign currencies are initially recorded by the Group entities at their respective functional
currency spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the functional currency spot rate of exchange at the reporting date.

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24

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
All differences arising on settlement or translation of monetary items are taken to the income statement with
the exception of monetary items that are designated as part of the hedge of the Groups net investment of a
foreign operation. These are recognised in other comprehensive income until the net investment is disposed, at
which 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 carrying
amount and fair value less cost to sell and are no longer depreciated.

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2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
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 benefits associated with the transaction will flow 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.

Zimplow Limited

26

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
Subsequent costs are included in an assets carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can
be measured reliably. All other repairs and maintenance are recognised in profit or loss in the Statement of Comprehensive
Income 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;
Office 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 is
adjusted in future periods to allocate the assets revised carrying amount, less any residual value, on a systematic basis,
over its remaining useful life.

Zimplow Limited

27

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
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

Zimplow Limited

28

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
An internally-generated intangible asset arising from development (or from the development phase of an internal project)
is recognised if, and only if, all of the following have been demonstrated:
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial 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:
Raw materials - purchase costs on weighted average cost
Finished goods and work in progress - costs of direct materials, labour and a proportion of manufacturing overheads based
on normal operating capacity but excluding borrowing costs.
Net realisable value is the estimated selling price in the ordinary course of the business, less estimated costs of
completion and the estimated costs necessary to make the sale.
Cash and cash equivalents
Cash and cash equivalents comprise cash at banks, cash on hand and short term highly liquid deposits with an original
maturity of three months or less.
For presentation purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents
as defined above, net of outstanding bank overdrafts.

Zimplow Limited

29

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
Provisions
Provisions are recognised when the Group has a legal or constructive obligation as a result of past events, and when 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.
Where the effect of the time value of money is considered material, the amount of a recognised provision represents the
present value of the expenditures expected to be required to settle the obligation.
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the
estimated liability for annual leave as a result of services rendered by the employees up to the reporting period end date.
Dividend distribution
Dividend distribution to the Groups shareholders is recognised as a liability in the Groups financial statements in the
period in which the dividends are approved by the Groups shareholders and declared.
Key management
Key management include Group executive directors and management having authority and responsibility for planning,
directing and controlling the activities of Zimplow Limited, in its parent entity capacity, as well as its Group member
entities.
Group entity members
The Groups member entities at the reporting period end, all incorporated, registered and operating (where applicable) as
trading concerns in Zimbabwe, include:
Bulawayo Steel Products (Pvt) Ltd
African Traction and Associated Technologies trading concern in South Africa,
Taxation
The tax expense for the period comprises current and deferred tax. Tax is recognised in the statement of comprehensive
income in profit or loss, except to the extent that it relates to items recognised directly as other comprehensive income. In
this case, the tax is also recognised in other comprehensive income.
Current tax
The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit as reported in the
Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in
other periods and it further excludes items that are permanently non - taxable or non - deductible. The Groups liability for
current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting period end date.
Deferred tax
Deferred tax is recognised on 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, and is accounted for using the
liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and 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 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.

Zimplow Limited

30

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries
and associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets
arising from deductible temporary differences associated with such investments and interests are only recognised to the
extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary
differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting period end date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rate that are expected to apply in the year when the asset is
realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the
reporting date. Deferred tax relating to items recognised outside prifit or loss is recognised outside profit or loss. Deferred
tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in
equity.Deferred tax assets and deferred tax liablities are offset, if a legally enforceable right exists to set off current tax
asset against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation
authority.
Value added tax
Revenues, expenses and assets are recognised net of the amount of Value Added Tax except:
Where the Value Added Tax incurred on a purchase of assets or services is not recoverable from the taxation
authority, in which case the Value Added Tax is recognised as part of the cost of acquisition of the asset or as part
ofthe expense item applicable; and
With receivables and payables that are stated with the amount of Value Added Tax included. The net amount of
Value Added Tax recoverable from, or payable to the taxation authority is included as part of receivables orpayables
in the Statement of Financial Position as at the end of the reporting period.
Employee benefits
Defined contribution plans
Current contributions to the Zimplow Pension Fund, which is a defined contribution fund, and contributions to
the National Social Security Authority (NSSA), which are determined by legislation (as promulgated under the
National Social Security Act 1989), are recognised as an expense when employees have rendered service
entitling them to the contributions .The Groups obligations under the NSSA scheme are limited to specific
contributionslegislated from time to time.
Termination benefits
The Group recognises gratuity and other termination benefits in the financial statements when it has a presentobligation
relating to termination.

Zimplow Limited

31

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
Financial instruments
Initial recognition
The Groups financial assets falling within the scope of IAS 39: Financial Instruments: Recognition and Measurement
include cash and short term deposits, trade and other receivables, and equity investments in a portfolio of quoted
companies on the Zimbabwe Stock Exchange (ZSE). Financial assets are recognised initially at fair value plus transaction
costs, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.Debt and
equity instruments are classified as either financial liabilities or as equity in accordance with the substance of contractual
arrangements.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or
convention in the market place (regular way purchases) are recognised on the trade date, i.e. the date that the Group
commits to purchase or sell the assets. Group management, in line with guidance prescribed in IAS 39, determines the
classification of its financial assets at initial recognition. The Group has not taken out any derivative instruments.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification.
The Groups non cash and cash equivalent financial asset profile is classified and measured as follows:
Financial assets
Available for sale financial assets (AFS)
Listed shares held by the Group that are traded in an active market are classified as being Avalaible For Sale and are
stated at fair value. The fair value of the ZSE traded investments is recognised with direct reference to trading prices
as published on the Stock Exchange. Gains and Losses arising from the changes in fair value are recognised in other
comprehensive income and accumulated in the Available For Sale revaluation reserve with the exception of impairment
losses. Where the investments are disposed of or are determined to be impaired, the cumulative gain or loss previously
accumulated in the Available for Sale revaluation reserve is reclassified to profit or loss. Dividends on AFS equity
instruments are recognised in profit or loss in the statement of Comprehensive Income when the Groups right to receive
the dividends is established.
Loans and receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active
market are classified as loans and receivables. Loans and receivables 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
shortterm receivables when the recognition of interest would be immaterial.
Derecognition of financial assets
The Group 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 ownership of the asset to another entity. If
the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the
transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have
to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group
continues to recognise the financial asset and also recognises a collateralised borrowing for any related proceeds received.

Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting period end date. Financial assets are

Zimplow Limited

32

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
impaired where there is objective evidence that, as a result of one or more loss events that occurred after the initial
recognition of the financial asset, the estimated future cash flows of the investment have been impacted. Assets that are
assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence
of impairment for a portfolio of receivables include the Groups 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. Forlisted equity investments classified as Available
For Sale, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective
evidence of impairment. Where there is evidence of impairment, the cumulative loss - measured as the difference between
the aquisition costs and the current fair value, less any impairment loss on that investment previously recognised in profit
or loss, is removed from Available For Salereserve and recognised in profit or loss.
For financial assets carried at amortised cost, the amount of the impairment is the difference between the assets
carryingamount and the present value of estimated future cash flows, discounted at the financial assets original effective
interest rate.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 considered 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 profit or loss.
With reference to the Groups financial asset portfolio, 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
pre viously 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.
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 Group are recorded at the proceeds received, net of direct issue costs and are
presented in the Statement of Changes in Equity as owner based equity transactions.
Financial liabilities
Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities.
The Groups financial liabilities are limited to trade and other payables, and interest bearing loans and borrowings. The
Groups management has not designated any financial liabilities as financial liabilities at fair value through profit or loss.
The Groups financial liabilities and borrowings are initially measured at fair value, net of transaction costs.
Financial liabilities are subsequently measured at amortised cost using the effective interest method, with the interest
expense recognised on an effective yield basis.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Groups obligations are discharged, cancelled or they
expire.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset/ liability and of allocating
interest income/ expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash receipts/ payments (including all fees on points paid or received that form an integral part of the effective

Zimplow Limited

33

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset/ liability,
or, where appropriate, a shorter period.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the Statement of Financial Position if,
and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle
on a net basis, or to realise the assets and settle the liabilities simultaneously.

3. Operating Profit

Year Ended
Year Ended

31 Dec 2011
31 Dec 2010

US$
US$
Profit for the year is atttributable to:
Owners of the parent
2 677 328
2 342 001
Non controlling interests
52 954
-

2 730 282
2 342 001
The operating profit before taxation is arrived at
After charging;
Administration expenses

2,498,749

1 874 733

85,435

68 165

29,516

29 516

Plant and equipment

272 812

241 714

302,328

271 230

40,658

45 094

Other emoluments

294 555

200 400

335 213

245 494

Selling expenses

694,921

512 689

Discount to customers

71,723

203 257

Allowance for credit losses

14,681

12 925

275

3,361,767

2 697 176

64,117

11 261

52,831
3,478 715

86 716
2 795 153

Auditors remuneration: Current year


Depreciation of property, plant and equipment:
Buildings

Directors emoluments
Fees

Research and development costs


Staff costs:
Salaries and allowances
Net Exchange loss
Provisions for gratuity
National Social Security Authority

After crediting:

Share-based payments (see note 17)


Equity-settled share-based payments
65 400
Net Exchange gain

-
15,917

Profit on disposal of property, plant and equipment

Zimplow Limited

34

2011 Annual Report

8 167
40 594

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)

4. Segment information
The Farming implements segment is a manufacturer and distributor of animal drawn implements for the agricultural
sector; The Fastenors segment is a manufacturer and distributor of metal fasteners,wood screws,veranda bolts and high
tensile bolts to the mining, construction, agricultural sectors and house hold furniture industry. Information reported to
the Groups Chief operating decision maker for the purpose of resource allocation and assessment of segment performance
is more specifically focused on the type of product produced.
The following is an analysis of the Groups revenue and results from operations by reportable segments for the year ended
31 December 2011.

Revenue

F
arming Implements

Fasteners

Adjustment

Total

External customers
Inter segment

12 507 843
675 038

2,995,463
325,114


(1,000,152)

15 503 306
-

Total revenue

13,182,881

3,320,577

(1,000,152)

15 503 306

3 206 804

274 097

(16 372)

3 464 529

Finance income

249,237

Finance costs

(78,493)

Income taxes

(904 991)

Groups income after tax

2 730 282

Results
Reportable segment profit
Unallocated items:

Segment profit represents the profit earned by each segment without allocation of the central administration costs
and directors salaries. This is the measure reported to the chief operating decision maker for the purpose of resource
allocation and assessment of segment performance.

Zimplow Limited

35

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)

4. Segment information continued


The following is an analysis of the Groups revenue and results from operations by reportable segments for the year ended
31 December 2010


Revenue

F
arming Implements

Fasteners

Adjustment

Total

2 523 839

12,298,300

33,228

(33,228)

9,774,461

2,557,067

(33,228)

12,298,300

2,643,070

151,642

(18,650)

2,776,062

Finance income

161,049

Finance costs

(14,858)

Income taxes

(580,252)

Groups income after tax

2,342,001

Year Ended
31 Dec 2011
US$

Year Ended
31 Dec 2010
US$

External customers

9,774,461

Inter segment

Total revenue
Results
Reportable segment profit
Unallocated items:

Segment Assets and Liabilities




Segment Assets
Farming Implements

14 249 081

11 282 200

Fasteners

2,645,381

2 347 068

Other (Eliminations)

(149 065)

(135 616)

16 745 397

13 493 652

1 504 108

1 225 191

527 492

433,376

Other (Eliminations)

(145 519)

(106 799)

Total Segment Liabilities

1 886 081

1 551 768

Total Segment Assets


Segment Liabilities
Farming Implements
Fasteners

Zimplow Limited

36

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)

4. Segment information continued


Other Segment information
Depreciation and Amortisation


Farming Implements

Year Ended 31/12/2011


US$
231,424

Year Ended 31/12/2010


US$
212 074

70,904
302,328

59 156
271 230

Fasteners


Additions to non current assets



Year Ended 31/12/2011
Year Ended 31/12/2010

US$

Farming Implements

US$

419,694
91,068

45 467

510,762

Fasteners

237 517
282 984

Transfer prices between operating segments are set on an arms length basis in a manner similar to transactions with third
parties. Internal transactions are appropriately eliminated on consolidation and data aggregation.
Geographic information
Revenue from external customers (based on customer location)

US$

US$

Local

11,235,468

8 635 365

4,267,838

3 662 935

15,503,306

12 298 300

Foreign

Total

The Groups operations are located in Zimbabwe( the entitys country of domicile) and South Africa.
The Groups disclosed segment information, is limited to financial position data as at 31 December 2011, and financial
performance data for the twelve month period to 31 December 2011.

Zimplow Limited

37

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)

5. Share Capital
5.1 Reconciliation of authorised and Issued share capital

Year Ended 2011


Year Ended 2010 Year Ended 2009

Shares

Shares

500 000 000

500 000 000

500 000 000

Ordinary shares at 0.0001 US cents each

500 000 000

500 000 000

500 000 000

Ordinary shares issued and fully paid

327 071 924

327 071 924

298 210 425

9 205 704

28 861 499

336,277,628

327 071 924

327 071 924

US$

US$

US$

32 716

32 707

Capital reserves

7 036 174

7 036 174

7 066 581

Share premium

552 333

7 621 223

7 068 881

7 066 581


Authorised
Increase in ordinary shares

Afritrac Acquisition - 28 February 2011


Tassburg Aquisition - 31 December 2008

Issued share capital and reserves comprise of;
Issued share capital

Shares


5.2 Subject to Section 183 of the Companies Act (Chapter 24:03), and to the limitations of the Zimbabwe Stock Exchange,
the unissued shares are 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.
5.3 Share options granted under the Companys employee share option plan
At 31 December 2011, executives and senior employees held options over 16 350 000 ordinary shares of the Company, of
which 40% will expire in 2016, another 40% in 2017 and 20% will expire in 2018.
Share options granted under the Companys employee share option plan carry no rights to dividends and no voting rights.
Further details of the employee share option plan are provided in note 17.
5.4 At 31 December 2011, the directors of the Group held directly and indirectly, the following shares:
Name

Year Ended 2011 Year Ended 2010

Z. Kumwenda

14 530

15 609

D. Mkonto

1 213

1 213

B. Mitchell

63 501 000

63 500 000

1 084 980

1 203 464

N. Nhira

P. Devenish
1 213
1 213
A. Kurauone
1 000
-
E. Mlambo
1 000
-
T. Moyo
1 000
-
Z. Rusike
1 000
-
F. Rwakonda
1 000
-

Zimplow Limited

38

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)

6. Taxation

31 Dec 2011

31 Dec 2010

US$

US$

Zimbabwe income tax

811,253

582 097

Foreign income tax @ 28%

40 983

Deferred taxation

26 196

(19 045)

Withholding tax

26,559

17 200

904 991

580 252

(4,546)
(4,546)

19
19

902 996

602 010

11,420

(1 497)

Income taxed at special rate

(63,338)

(33 626)

Export Promotion Incentive

(13,629)

(3 816)

40 983

26,559
904 991

17 200
580 271

6.1 Charge based on income for the year

Income tax expense reported in the income statement


Consolidated statement of other comprehensive income
Deferred tax related to items charged or credited directly to OCI during the year:
Fair value gain on available for sale financial assets
Income tax charged directly to other comprehensive income
6.2 Reconciliation of tax charge
Tax on profit for the year at 25.75% ( inclusive of 3% AIDS Levy ) (20.6%-2010)
Tax effect on expenses that are not deductible in
determining taxable profit

Effect of different tax rates between current and deferred tax


Effect of tax on foreign subsidiary @28%
Withholding Tax

The tax rate used for the 2011 reconciliation is 25.75% in comparison to 20.6% in 2010 as the entity did not manage to
export a greater number of implements due to high local demand and competition in the export market.
6.3. Deferred tax liability
Key components of deferred tax:

31 Dec 2011

31 Dec 2010

31 Dec 2009

568 079

567 465

590 395

Prepayments

23,416

16 429

13 030

Deferred Income

(4,648)

(5 386)

(845)

4,454

17 795

17 929

13,342
16 841

3 530
-

(1 649)
-

621 484

599 833

618 860

Accelerated wear and tear

Gain on financial assets


Net exchange gain
Share based payment expense

Zimplow Limited

39

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)

7. Property, plant and equipment





Land &
Plant &
Motor Office furniture
Buildings
Machinery
vehicles
& computer
-freehold
equipment
US$
US$
US$
US$

At cost/valuation
At 1 January 2009

Total

US$

630 000

1 760 185

444 829

65 143

2 900 157

Additions

2 511

19 425

268 584

52 552

343 072

Disposals

(84 811)

(84 811)

632 511

1 779 610

628 602

117 695

3 158 418

2 300

2 300

Additions

(30)

11 984

213 869

57 161

282 984

Disposals

(51 706)

(15)

(51 721)

632 481

1 793 894

790 765

174 840

3 391 981

Additions

2 595

22 753

421 239

64 175

510 762

Acquisition through business

2 213

7 491

1 142

10 846

(262)

(886)

(135)

(1 283)

(123 841)

(1 737)

(125 578)

637 027

1 816 647

1 094 768

238 285

3 786 728

(7 369)

(53 213)

(233 048)

(26 345)

(319 975)

(29 475)

(96 465)

(84 665)

(13 747)

(224 352)

At 31 December 2009
Adjustment*

At 31 December 2010

combination
Effects of foreign currency exchange
Disposals
At 31 December 2011
Accumulated depreciation
At 1 January 2009
Charge for the year

Impairment losses recognised


in profit and loss

Disposals

59 100

59 100

At 31 December 2009

(36 844)

(154 113)

(258 613)

(40 092)

(489 662)

Charge for the year

(29 516)

(98 099)

(121 275)

(22 340)

(271 230)

36 267

36 273

At 31 December 2010

(66 360)

(252 212)

(343 621)

(62 426)

(724 619

Charge for the year

(27 631)

(100 516)

(142 040)

(32 141)

(302 328)

121

365

51

536

102 700

588

103 288

At 31 December 2011

(93 870)

(352 728)

(382 596)

(93 928)

(923 123)

Carrying amount
At 31 December 2009

595 667

1 625 497

369 989

77 603

2 668 756

At 31 December 2010

566 121

1 541 682

447 144

112 414

2 667 362

At 31 December 2011

543 158

1 463 919

712 172

144 357

2 863 605

Disposals

Effects of foreign currency exchange


Disposals

(4 435)

(4 435)

*Being deemed cost adjustment to Tassburgs assets that were identified on the consolidation of the fixed assets register

Zimplow Limited

40

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
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;
Office furniture and computer equipment: 4 to 10 years.
The Groups property, plant and equipment are not encumbered and do not form collateral on any borrowing and loan
facilities in place.
Capital commitments

Year Ended 2011 Year Ended 2010


Authorised but not yet contracted

US$
326 560

US$
808 499

52 200

326 560

860 699

Authorised and contracted


Capital commitments are expected to be financed through the utilisation of funds generated by the Groups operating
activities.

8. Quoted Available for Sale Financial Assets

Year Ended

Year Ended

Year Ended



Opening balance

2011
US$
177 728

2010
US$
177 604

Fair value adjustment

(29,752)

124

119 526

Closing balance

147,976

177 728

177 604

2009
US$
58 078

The fair value of the Groups investments in listed equity shares at 31 December 2011 is determined by reference to
published price quotations in an active market.

9. Goodwill

Year Ended 2011

Year Ended 2010

Year Ended 2009

US$

US$

US$

47 200

47 200

Year Ended 2011

Year Ended 2010

Year Ended 2009

US$

US$

US$

combinations occurring during the year (note 20)

47 200

Effect of foreign currency exchange differences

(5 575)

Balance at end of year

41 625

Cost
Accumulated impairment losses

Cost
Balance at beginning of year
Additional amounts recognised from business

Zimplow Limited

41

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)

10. Inventories


Raw materials

Year Ended 2011


US$
2 661 601

Year Ended 2010


US$
1 695 798

Year Ended 2009


US$
2 738 055

Finished goods

1 611 287

1 368 212

1 814 104

Spares and components

2,785,062

2 308 453

1 276 992

7,057,950

5 372 463

5 829 151

The cost of inventory recognised as an expense during the year was US$ 8,737,971 . ( Prior year 31 December 2010 was
US$ 6 801 772.). The amount of write down of inventories recognised as an expense is US$12 001 which is recognised in
cost of sales.

11. Trade and other receivables


Year Ended
2011
US$
1,359,589

Year Ended
2010
US$
1 282 027

Year Ended
2009
US$
398 528

- Foreign trade receivables

751 622

688 410

539 796

- Allowance for doubtful debts (local & foreign)

(14,681)

(12 925)

Other receivables and prepayments

589,798

284 999

225 554



Trade receivables
- Local trade receivables


2 686 329
2 242 511
1 163 878
Ageing of receivables that are past due but not impaired
30- 60 days
532,732
401 586
203 021
61 - 90 days
37,684
62 420
91- 120 days
-
8 242
-
Over 120 days
1,050
45 336
731
Total
571,466
517 584
203 752
Movement in the allowance for doubtful debts

Balance at beginning of the year
Impairment losses recognised on receivables
Amounts recovered during the year
Balance at end of the year

Year Ended 2011


US$
12 295
14 681
(12 295)
14 681

Year Ended 2010


US$
-
12 295
-
12 295

Year Ended 2009


US$
-

Local trade receivables


The average credit period on local sales of goods is 30 days. No interest is charged on local trade receivables for the first
30 days from the date of invoice. Thereafter, interest is charged at 15% per annum on the outstanding balance.
Before accepting any new local customer, the Group uses an internal credit scoring system to assess the potential
customers credit quality and defines credit limits by customer. Limits and scoring attributed to customers are constantly
reviewed.Included in the Groups local trade receivables balance are debtors with a carrying amount of US$ 14 681 which
are past due at the reporting period end date for which the Group has provided for them as doubtful debts. The Group has
insured these balances and are therefore recoverable. The average age of these receivables is 45 days.

Zimplow Limited

42

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
Foreign trade receivables
The credit period on foreign sales of goods ranges between 60 90 days. No interest is charged on outstanding foreign
trade receivables.
Before accepting any new foreign (export) customer, members of the Groups executive team and foreign sales
administrators deliberate the prospective customers credit worthiness. Members of the Groups executive team, its foreign
sales administrators and marketing managers often meet prospective foreign customers in order to conduct background
and screening checks and attach a credit quality rating before accepting credit trading customers. Credit limits are defined
for each foreign customer and set by the executive team. Credit limits and customer quality are constantly reviewed.

12. Trade, other payables and provisions


12.1 Trade and other payables

Local trade payables

Year Ended 2011


US$
354,817

Year Ended 2010


US$
210 678

Year Ended 2009


US$
112 715

Foreign trade payables

306,404

415 852

548 414

Other payables and accrued expenses

509 890

177 958

319 579

1 171 111

804 488

980 708


Local trade payables

The average credit period on local purchases of key manufacturing inputs ranges between 7 30 days (from date of
invoice).
Foreign trade payables
The average credit period on foreign purchases of key manufacturing inputs is 30 days (from date of invoice). The Group
has financial risk management policies in place to ensure that trade payables are paid within the credit time frame.
12.2 Provisions employee benefits

Year Ended 2011
Year Ended 2010 Year Ended 2009

Balance at 1 January 2011

US$
378,421

US$
140 627

US$
-

65,121

311 566

140 627

Reductions arising from payments

(64,560)

(73 772)

Balance at 31 December 2011

378,982

378 421

140 627

Additional provision recognised

The provision for employee benefits represents annual leave, long service leave entitlements accrued and compensation
claims made by the Groups employees. The effect of the time value of money in settling the above employee benefit
obligations is considered immaterial.

13. Cash and bank balances





Cash at bank and on hand

Year Ended 2011


US$
3,407,355

Year Ended 2010


US$
2 971 156

Year Ended 2009

540,557

62 432

114 103

3,947,912

3 033 588

1 039 951

Foreign cash at bank (other than US$)


925 848

Short term deposits are made for varying periods of between one day and three months, depending on the immediate and
short term cash requirements of the Group, and earn interest at the respective short term deposit.

Zimplow Limited

43

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
The Group has an investment with Renaissance Merchant Bank amounting to USD$420 027. This amount matured on 7
May 2011, and the bank is still to meet this obligation.
At 31 December 2011, the Group had available US$ 2 500 000 of undrawn committed borrowing facilities in respect
of which all conditions precedent had been met.

14. Related Party Disclosures


Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been
eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related
parties are disclosed below.
The remuneration of directors and other members of key management during the 12 month reporting period to 31
December 2011 are as follows:

Year Ended
Year Ended

2011
2010

US$
US$
Short term employee benefits
335 213
245 494
The remuneration of directors and key executives is determined by the Groups Remuneration Committee havingregard to
the performance of individuals and market trends.
Rental payments to lessors (under operating lease arrangements):



CT Bolts premises B Mitchell (Group shareholder)
Tassburg premises M Pringle Wood (Group shareholder)
Afritrac Premises - Volanto Beleggings CC
Refer to note 2.4 for further details on the Groups operating lease arrangements.

Year Ended
2011
US$
75 686
77 640
6 857

Year Ended
2010
US$
56 210
59 268
-

Loans from shareholders (Afritrac)


M C McMaster
2 176
S Labushange
3 792
M E McMacmaster
8 661
O Guzardi
11 596
Loans owing by related Parties
Volanto Beleggings CC
77 147
Volanto CC is a company owned by the previous shareholders of Afritrac namely:
M C McMaster
S Labushange
M E McMacmaster
O Guzardi

Zimplow Limited

44

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)

15. Operating Lease Arrangements


Operating leases relate to premises occupied by CT Bolts (Bulawayo and Harare) , Afritrac(SA) and Tassburg (Harare).

Year Ended
Year Ended

2011
2010

US$
US$
Payments recognised as an expense

160 183

115 478

The non cancellable nature of the Groups leases would ordinarily necessitate disclosures in accordance with IAS 17: 35
(Leases). In this regard, future minimum lease payment commitments over prescribed periods would need to be disclosed
in accordance with the particulars of lease arrangements. Given the contingent rental payment terms in place throughout
most of the current reporting period and in place as at period end, the aforementioned disclosures are not considered
relevant and accordingly do not form part of the note.
The Groups contingent rental payment terms, introduced in January 2010, are based on a percentage of the monthly
turnover of CT Bolts. Payments are remitted monthly, in arrears, to the former owner of the business unit. Set payment
terms are not leveraged or indexed to any external sources and are considered to relate only to the Zimbabwean economic
environment.
Application Guidance to IAS 39: Financial Instruments: Recognition and Measurement states that operating lease
payments based on turnover is a common contingent rental term within leases that is categorised as an embedded
derivative. Such embedded derivatives are however considered closely related to the host lease contract and accordingly,
do not have to be separated from the lease contract as a whole. The Group, as lessee, therefore continues to expense such
contingent payments as they arise.

16. Financial Instruments


16.1 Capital Management
T
he Group manages its capital to ensure that entities in the group will be able to continue as going concerns while
maximising return to stakeholders through the optimisation of the debt and equity balance. The Groups strategy remains
unchanged from 2010. The capital structure of the Group had no long term debt in 2011. The Group is not subject to any
externally imposed capital requirements. The Groups Audit Commitee reviews the capital structure. As part of this review,
the commitee considers the cost of capital and risks associated with each cost of capital.The capital structure of the group
consist of issued capital,reserves,retained earnings and Non-controlling interests. as detailed in the statement of changes
in equity
Capital comprises equity attributable to the equity holders of the parent. The Group does not have a non controlling
interest element in its business acquisitions.
The primary objective of the Groups capital management is to ensure that it maintains a strong credit rating and positive
capital ratios in order to support the application of its business model and maximise shareholder value.
The Group manages its capital structure and considers making related adjustments to it in line with changes in prevailing
and forecast economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payout to
shareholders, return capital to shareholders or issue new shares.

Zimplow Limited

45

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
The Group monitors capital levels and appropriateness with reference to a gearing ratio. The Groups policy is to keep its
gearing ratio between 15% and 35%. As at 31 December 2011, the Group did not have any interest bearing loans and
borrowings.
16.2 Financial Risk Management
The Groups activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate
risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Groups activities involve the analysis,
evaluation, acceptance and management of some degree of risk or a combination of risks. Taking an acceptable level of
risk is core to a business and operational risks are considered an inevitable consequence of being in business. The Groups
aim, in line with its risk management programme, is therefore aligned with achieving an appropriate balance between risk
and return, and minimising potential adverse effects on the Groups financial performance.
Risk management is a dynamic process that requires the ongoing analysis efforts of the Groups Directors. The Groups
Board of Directors and Executive Committee fulfil the entitys risk appetite formulation and management process in
consultation with management of the Groups operating units.
The Groups Directors are of the opinion that the entity does not have significant exposure to financial risk.
Market risk
Foreign exchange risk
The Group operates regionally and is exposed to foreign exchange risk arising from various currency exposures, primarily
with respect to the the South African Rand and the Botswana Pula. Foreign exchange risk arises when future commercial
transactions or recognised assets and liabilities are denominated in a currency that is not the entitys functional currency.

The carrying amount of the Groups foreign currency denominated monetary assets and liabilities as at the reporting
period end date, are as follows:

Year Ended 2011

Year Ended 2010
Assets
S African Rand Botswana Pula S Africa Rand Botswana Pula
Trade and other receivables

69 1 162

57,441

540 707

15 404

Cash and cash equivalents

530 660

9,897

62 148

283

1 221 822

67,338

602 855

15 687

Trade and other payables

306 404

117 572

Total net position

915 418

67,338

485 283

15 687

Total assets
Liabilities

The table below details the Groups sensitivity to the strengthening of the US$ against the South African Rand and
the Botswana Pula by 10%, with all other variables held constant. The analysis was applied to monetary items at the
reporting period end date, as denominated in respective currencies.

Zimplow Limited

46

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)


Year Ended 2011

Year Ended 2010

S African Rand Botswana Pula
Total
S African Rand Botswana Pula
Total


impact
impact
impact
impact

US$
US$
US$
US$
US$
US$
Profit before taxation
16,538
6,734
23,272
40 645
6 955
47 600
Effect on equity
12 279
5000
17 279
30 179
5 164
35 343
Price risk
The Group is exposed to equity securities price risk because of investments held by the Group and classified on the
Statement of Financial Position as available for sale. The Groups listed equity securities are susceptible to market price
risk arising from uncertainties about future values of the investment securities. The Group manages the equity price risk
through diversification and placing limits on individual and total equity instruments. The Groups Executive Committee
regularly reviews its investment portfolio and considers disposing equity securities when related investee share prices
would potentially disadvantage the Groups position. Similarly, the Group acquires equity securities when gains are
anticipated. At the reporting period end date, the exposure to listed equity securities at fair value was US$ 147,976. A
decrease of 10% on the Zimbabwe Stock Exchange (ZSE) market index, marked as having a similar reducing impact on the
specific equity securities within the Groups investment portfolio at 31 December 2011, would have an approximate pre tax
negative impact in value of US$ 14,798 on other comprehensive income and equity attributable to the Group, depending
on whether or not the decline is significant and prolonged. Alternatively, an increase of 10% in the Groups listed security
investment portfolio value would positively impact profit or loss and equity by a similar amount.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Groups interest rate risk arises from medium long term borrowing arrangements.
Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Alternatively, borrowings issued at
fixed rates expose the Group to fair value interest rate risk. Borrowings are settled as promptly as possible if interest rates
are unfavourable and the Group always strives to negotiate the most favourable rates and tenures to avoid both cash flow
and fair value interest rate risk. The Group endeavours to maximise interest rates on investments and minimise interest
rates on borrowings. The Group policy is to adopt a non speculative policy on managing interest rate risk.
A 50 basis point increase or decrease (equivalent to a 0.5% absolute interest rate change) is considered by management
as a reasonable possible change in interest rate terms and would therefore be representative of an approximate loan
sensitivity analysis. This is mainly attributable to the Groups exposure to interest rates on its variable rate borrowings.The
Group did not have any borrowings at the end of the year.
Credit risk
Credit risk relates to the risk that a trade counterparty will not meet its obligations under a financial instrument or
customer contract, leading to a financial loss being incurred. Potential concentrations of credit risk consist principally of
short term cash and cash equivalent investments and trade receivables.Credit risk related to cash deposits and equity
security investments held in listed concerns: The Group deposits short term cash surpluses only with major banks and
financial institutions of high credit standing and within investment limits assigned to each counterparty. Investment
limits with banks and financial institutions are assigned by the Groups Executive Committee in an effort to minimise
the concentration of risk and therefore mitigate financial loss through potential counterparty failure. The Groups Board
of Directors reviews the limits and investment placements on a periodic basis and approve the Committees proposals
accordingly, or alternatively rejects related proposals and effects changes to Group policy. The Group similarly adopts
the aforementioned approach in formulating policy over equity security investments. The Groups maximum exposure to
credit risk for the affected components of the Statement of Financial Position at 31 December 2011 is the aggregate of the
carrying amounts as shown therein;

Zimplow Limited

47

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
Credit risk related to trade receivables: Trade receivables comprise a relatively large and widespread customer base. Group
entities perform ongoing credit evaluations of the financial condition of their customers. Credit limits are established for
all customers based on internal credit rating assessments after extensive prospective customer background and credit
reference checks are performed. Outstanding customer receivables are regularly monitored and a full time credit control
department exists to independently perform this function. The Group does not have any significant credit risk exposure
to any single counterparty or any group ofcounterparties having similar characteristics. Accordingly, the Group has no
significant concentration of credit risk which has not been adequately provided for. The Groups maximum exposure to
credit risk at 31 December 2011 and further specific credit risk mitigating activities adopted by the entity are as shown in
note 11.
Liquidity risk
Liquidity risk relates to a risk of a shortage of corporate funds being experienced. Prudent liquidity risk management
includes maintaining sufficient cash and marketable securities, the availability of funding from an adequate amount
of committed credit facilities and the ability to close out market positions. The Group maintains flexibility in funding
by maintaining funding availability under committed credit lines. The Groups objective is to maintain a beneficial
balance between continuity of funding and flexibility through the use of bank overdrafts and bank loans, whilst always
considering the need for potential funding source diversification through the introduction of finance lease or hire purchase
arrangements, or the issuance of preference shares.As at the reporting period end date, the Groups external funding
sources were limited to bank overdrafts and interest bearing loans and borrowings. The Group has access to financing
facilities, the total unused amount of which is US$ 2 500 000 at 31 December 2011. The Group expects to meet its core
trading based obligations from operating cash flows and proceeds from the realisation of its financial assets.
The table below summarises the maturity profile of the Groups financial liabilities at 31 December 2011 based on
contractual undiscounted payments:

On demand
Less than

3 months
Total

US$
US$
Trade and other payables
135,701
1 035 410
1 171 111

Fair value of financial instruments
The estimated net fair values of all financial instruments approximate the carrying amounts shown in the financial
statements, largely due to the short term nature of these instruments.

17. Share-based payments


17.1 Employee share option plan of the Company
17.1.1 Details of the employee share option plan of the Company
The Company has a share option scheme for executives and senior employees of the Group and its subsidiaries. In
accordance with the terms of the plan, as approved by shareholders at a previous annual general meeting, executives
and senior employees with more than five years service with the Group may be granted options to purchase ordinary
shares at an exercise price of US$0.09 per ordinary share.

Zimplow Limited

48

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
Each employee share option converts into one ordinary share of the Company on exercise. No amounts are paid or
payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights.
Options may be exercised at any time from the date of vesting to the date of their expiry.
The number of options granted is calculated in accordance with the performance-based formula approved by
shareholders at the previous annual general meeting and is subject to approval by the remuneration committee.

In respect of any option, the grantee shall be limited to exercising the option, and the right to exercise the option
shall only accrue, as follows:
(i) 40% was granted in 2011, vest after 1 year, and will expire after 5 years (i.e 2016).
(ii) 40% will be granted in 2012, vest after 1 year, and will expire after 5 years (i.e 2017).
(iii) 20% willl be granted in 2013, vest after 1 year, and will expire after 5 years (i.e 2018).
17.1.2 Fair value of share options granted in the year
The Group was unable to estimate reliably the fair value of the equity instruments at the measurement date due
to lack of information in the economy that would enable the Group to estimate the risk free rate over the next 10
years as required by binomial option pricing model. Share options for the Group have been measured at their intrinsic
value. The intrinsic value of a share option at any point in time is the difference between the market price (US$0.08)
of the underlying shares and exercise price of the option (US$0.09).The intrinsic value of the share options was
( US$65 400 ) in 2011 and nil in 2010.
17.1.3 Movements in shares options during the year
The following reconciles the share options outstanding at the beginning and end of the year:


Balance at beginning of the year
Granted during the year(40% of 16 350 000)
Balance at the end of the year

2011
Number of Options
-
6 540 000
6 540 000

2010
Number of Options
-

18. Reserves (net of income tax)


18.1 Equity-settled employee benefits reserve under the Companys employee share option plan


Year Ended
Year Ended
Year Ended

2011
2010
2009

US$
US$
US$
Balance at the beginnning
-
-
-
Arising on share based payments (intrinsic value recognition) (65 400)
-
-
Balance at the end of the year (65 400)
-
-

Zimplow Limited

49

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
The above equity-settled employee benefits reserve relates to share options granted by the Company to its employees
under its employee share option plan. Further information about share-based payments to employees is set out in
note 17.
18.2 Foreign currency translation reserve


Year Ended
Year Ended
Year Ended

2011
2010
2009

US$
US$
US$
Balance at the beginnning
-
-
-
Exchange differences arising on translating the foreign operations
(69 065)
-
Income tax relating to gains arising on translating
the net assets of foreign operations
-
-
Balance at the end of year
(69 065)
-
-
Exchange differences relating to the translation of the results and net assets of the Groups foreign operations from
their functional currencies to the Groups presentation currency are recognised directly in other comprehensive
income and accumulated in the foreign currency translation reserve. Exchange differences previously accumulated
in the foreign currency translation reserve (in respect of translating both the net assets of foreign operations and
hedges of foreign operations) are reclassified to profit or loss on the disposal of the foreign operation.

19. Non Controlling interests





Balance at the beginning of the year
Non-controlling interests arising on the acquisition
of Afritrac (see note 20)
Share of profit for the current year
Exchange differences arising on translating the foreign operations
Balance at end of year

Zimplow Limited

50

Year Ended
2011
US$
-

Year Ended
2010
US$
-

525 761
52 954
(66 082)
512 633

2011 Annual Report

Year Ended
2009
US$
-

-
-
-
-
-
-
-

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)

20. Business combinations


20.1 Subsidiaries acquired
African Traction and Associated Technologies
Principal activity
Date of acquisition
potential of voting Consideration

equity interests
Transfered
Import and sale of farming
28 February 2011
49%
552 342
implements and tools

Afritrac was acquired so as to continue the expansion of the Groups activities on agricultural implements. By virtue
of agreement Zimplow Limited is the majority shareholder in Afritrac holding 49%, the remainder of the shareholding
is held by the previous shareholders in their individual capacity at 12.75% each.Zimplow has the power to govern the
financial reporting ,appoint or remove the majority of the members of the board of directors.
20.2 Consideration transferred

Cash
Equity
Total

US$
-
552,342
552,342

The Group issued 9 205 704 ordinary shares as consideration for the 49% interest in Afritrac. The fair value of the
shares is the published price of the shares of the Group at the acquisition date, which was 0.06 US cents each. The
fair value of the consideration given is therefore US$552 342.

A
cquisition-related costs amounting to US$11 500 have been excluded from the consideration transferred and have
been recognised as an expense in the current year, within the other expenses line item in the consolidated statement
of comprehensive income.
20.3 Assets acquired and liabilities recognised at the date of acquisition

Current assets
Cash and & cash equivalents
Trade and other receivables
Inventories

US$
355,919
272,775
658,505

Non-current assets
Plant and equipment

10,845

Current liabilities
Trade and other payables
(265 552)
Tax payable
(1 588)
Net assets
1 030 904

Zimplow Limited

51

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)
20.4 Non-controlling interests
The non-controlling interest (51% ownership interest in African Traction and Associated Technologies) recognised
at the acquisition date was measured by reference to the fair value of the net assets acquired and amounted to
US$525 761.
20.5 Goodwill arising on acquisition

Consideration transferred
Plus: non-controlling interests (51 % in Afritrac)
Less: fair value of identifiable net assets acquired

US$
552,342
525,761
(1,030,904)

Goodwill arising on acquisition


47 200


Goodwill arose in the acquisition of Afritrac because the cost of the combination included a control premium. In
addition, the consideration paid for the combination effectively included amounts in relation to the benefit of
expected synergies, revenue growth, future market development and the assembled workforce of Afritrac. These
benefits are not recognised separately from goodwill because they do not meet the recognition criteria for identifiable
intangible assets.
20.6 Net cash inflow on acquisition of subsidiaries

Consideration paid in cash
Less: cash and cash equivalent balances acquired

US$
-
355 919

355 919

Zimplow Limited

52

2011 Annual Report

Notes to the Financial Statements


for the year ended 31 December 2011 (continued)

21. Events after the reporting date


Non-adjusting events
On the 22 of February 2012, the directors of the Group proposed a dividend of $900 000.

22. Earnings per share


Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity shareholders
of the Group by the weighted average number of ordinary shareholders outstanding during the year.
The following reflects the income and share data used in the basic earnings per share computations:


Profit attributable to ordinary shareholders of the Group

Year Ended
31 December 2011
2 730 282

Year Ended
31 December 2010
2 342 001

Number of shares for basic earnings per share (thousands)

334 743 344

327 071 924

Weighted average number of shares(thousands)

334 743 344

327 071 924

Basic earnings per share (US$)

0.01

0.01

Diluted earnings per share

0.01

0.01

The Group did not have any dilutive shares during the year.
The following potential ordinary shares are anti dilutive and are therefore excluded from the weighted number of ordinary
shares for the purposes of diluted earnings per share.
The Group had share options of 16 350 000 , that could potentially become dilutive. How ever the average market price for
the year of US$0.08 was less than the issue price of the share options of US$0.09

Zimplow Limited

53

2011 Annual Report

Consolidated Statement of Value Added


for the year ended 31 December 2011
Value added is a measure of the wealth the Group has been able to create by adding value to the cost of raw materials,
products and services purchased. The statement summarises the total wealth created and shows how it was shared by
employees and other parties who contributed to the Groups operations. The calculation takes into account the amount
retained and reinvested in the Group for the replacement of assets and further development of operations.



Turnover

Year Ended
Year Ended
31 December 2011 December 2010
31
US$
US$
15,503,306
12 298 300

Less: Cost of material and services

(7 654 362)

(6 309 664)

7 848 944

5 988 636

APPLIED AS FOLLOWS:

Employee remuneration/benefits

3,414,598

44

2 795 153

46

Government taxes

900 445

11

580 271

10

Providers of capital dividends

686,851

Balance retained in the Group

2 847 049

36

2 613 212

44

Depreciation

302 328

271 230

Fair value adjustment on equity

(25,206)

(124)

Retained income

2 569 927

2 342 106

7 848 944

5 988 636

Zimplow Limited

54

100

2011 Annual Report

100

Shareholders Analysis
for the year ended 31 December 2011

SIZE OF SHAREHOLDING:

1 5 000

No of Shareholders
668

%
60.95

No. of Shares held


933,659

%
0,28

5 001 10 000

90

8.21

673,002

0.20

10 001 25 000

1132

10.22

1,769,846

0.53

25 001 50 000

48

4.38

1,725,121

0.51

50 001 100 000

38

3.47

2,699,371

0.80

100 001 500 000

90

8.21

18,955,290

5.64

500 001 1 000 000

25

2.28

18,096,871

5.38

Over 1 000 000

25

2.28

291,424,468

86.66

1,096

100.00

336 277 628

100.00

TYPE OF SHAREHOLDERS:
Nominees Local

81

7.39

150,966,862

44.89

Investments and Trusts

50

4.56

4,795,282

1.42

Local Companies

135

12.32

93,147,039

27.7

Banks

25

2.26

16 584 298

7.79

Local Individual Residents

724

66.06

14,019,398

4.17

Nominees Foreign

10

0.91

10,847,093

3.23

Pension Funds

45

4.11

28,090,741

8.35

New Non Residents

25

2.28

16,603,959

4.94

Non Residents

18

1.27

12 781 481

0.78

1 5,008,016
1

4.46

Insurance Companies

11

Employee Share Trust

0.09

1,253,107

0.37

Government/Quasi-Government

0.09

1,430,724

0.43

Fund Managers

10

0.91

97,150

0.03

Deceased Estates

0.27

18,257

0.01



1 096 100.00
336,277,628

100.00

TOP 10 LARGEST SHAREHOLDERS:


TFS Nominees (Pvt) Ltd

106,669,555

31.72

CTB Investments

63,500,000

18.88

Datvest Nominees (Pvt) Ltd

29,242,030

8.70

Yumiko Investments (Pvt) Ltd

20,943,406

6.23

Old Mutual Life Assurance Zim

14,052,196

4.18

Barclays Zimbabwe Nominees P/L-NNR

10,980,770

3.27

Stanbic Nominees (Pvt) Ltd

8,738,394

2.60

National Social Security Authority (NSSA NPS)

6,942,378

2.06

Mining Industry Pension Fund

6,880,067

2.05

Chitepo Bernard Norman

4,402,491

1.31
272,351,287

Zimplow Limited

55

80.99

2011 Annual Report

Financial Review 2011


for the year ended 31 December 2011
Year Ended
31 Dec 2011
US$

Year Ended
31 Dec 2010
US$

15,503,306

12 298 300

Profit before tax

3 635 273

2 922 253

Taxation

(904 991)

(580 252)

Profit after tax

2 730 282

2 342 001

24%

24%

13 692 191

10 648 562

Current liabilities

1 886 081

1 551 768

Net current assets

11 806 110

9 096 794

Total assets employed

16 745 397

13 493 652

Total equity

13 725 199

11 342 051

0.01

0.01

0.0027

0.0021

Income retained for the year

0.01

0.01

Net asset value


Shares In Issue
No. of ordinary shares issued

0.04

0.04

336,277,628

327 071 924

0.11

0.07

0.06

0.02

0.08

0.067

503

457




Summary of Results
Turnover

Return on investment (%)


Financial Status
Current assets

Current ratio (times)

US$ Per Ordinary Share


Basic earnings
Dividends

Market price (US$)


highest (01/11/2011)

Market price (US$)


lowest (12/01/2011)

Market price (US$)


- end of year

Staff Complement
Average number of employees

Zimplow Limited

56

2011 Annual Report

Financial Calendar
Result and dividend announcement for the year ended 31 December 2011 23 February 2012
Annual General Meeting 28 March 2012

Dividend notice
In line with the Groups dividend policy, a final dividend number 68 of 0.27 United States cents per share (2010 0.21 United States cents per share), was proposed by directors on 22nd of February 2012.
The dividend will be payable out of the profits of the Group for the year ended 31 December 2011.
Payment will be on or about 14 March 2012 to ordinary shareholders registered in the books of the Group at the
close of business on Thursday 08 March 2012.
The share register will be closed from 9 to 11 March 2012, both days inclusive and will reopen on Monday 12
March 2012.

BY ORDER OF THE BOARD


D MKONTO
Company Secretary
39 Steelworks Road
P.O. Box 1059
BULAWAYO

Zimplow Limited

57

2011 Annual Report

ZIMPLOW LIMITED - Annual Report 2011

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