zimplow annual report 2010.pdf

7/28/2019 Zimplow Annual Report 2010.pdf

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Zimplow Limited ii 2010 Annual Report

MISSION

To avail quality, aordable and reliable steel products on time everytime to the mining, arming,construction and manuacturing sectors.

VISION

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

countries south o the Sahara or all our products by 2020.

CORE VALUES

Integrity

Being absolutely truthul and accepting responsibility or our actions.

Quality

Being proessional and quality oriented in everything we do.

Teamwork

Working together to achieve a common goal.

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

Fun

Embracing a positive attitude and spontaineity.

Mission, Vision and Core Values


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Zimplow Limited 1 2010 Annual Report

2 Directorship and Administration

3 Notice to Shareholders4 Chairmans Review

5 Report o The Directors

6 Corporate Governance

7 Financial Highlights

8 Independent Auditors Report

10 Statement o Comprehensive Income

11 Statement o Financial Position

12 Statement o Changes In Equity

13 Statement o Cash Flows

14 Notes to the Financial Statements

47 Statement o Value Added

48 Shareholders Analysis

49 Financial Review 2010

50 Financial Calendar

Contents


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Z L Rusike (Chairman)

OM Chidawu - (Resigned on 21 April 2010)

P DevenishN Kudenga - (Resigned on 31 March 2010)

Z Kumwenda*

A Kurauone

B Mitchell*

D Mkonto*

E Mlambo

T Moyo

P Whata - (Resigned on 21 April 2010)

N Nhira

* Executive

COMPANY SECRETARY: D Mkonto

TRANSFER SECRETARIES: Corpserve (Private) Limited

Cnr 1st Street / Union Avenue, Harare

AUDIT COMMITTEE: A Kurauone (Chairman)

T Moyo

N Nhira

REMUNERATION COMMITTEE: Z L Rusike (Chairman)P Devenish

E Mlambo

EXECUTIVE COMMITTEE: Z Kumwenda

B Mitchell

D Mkonto

F Rwakonda

REGISTERED OFFICE: 39 Steelworks Road, Heavy Industrial Sites,

PO Box 1059, Bulawayo

AUDITORS: Ernst & Young

Derry House, 6th Avenue / Fie Street, Bulawayo

BANKERS: Arican Banking Corporation Limited

Barclays Bank o Zimbabwe Limited

Kingdom Bank Limited

Merchant Bank o Central Arica Limited

National Merchant Bank Limited

CURRENCY OF FINANCIAL STATEMENTS: United States Dollars

PERIOD OF FINANCIAL STATEMENTS: Year ended 31 December 2010

Directorship and Administration


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SIXTIETH ANNUAL GENERAL MEETING

Notice is hereby given that the Sixtieth Annual General Meeting o shareholders will be held at the CT Bolts Division

Oce, Falcon Street and Wanderer Road, Bulawayo on 30 March 2011 at 10:00 hours to transact the ollowing business:

AGENDA

Ordinary Business

1. To approve the minutes o the Annual General Meeting held on 21 April 2010.

2. To receive and adopt the directors report and audited nancial statements or the year ended 31 December 2010.

3. To elect directors Messrs A. Kurauone, Z. Rusike, E Mlambo, and T Moyo retire rom oce in accordance with the

companys Articles o Association , and Mr P. Devinish who retire rom oce by rotation.

All being available, they oer themselves or re-election.

4. To approve the payment o nal dividend number 67 o US$0.0021 per share proposed on 23 February 2011.5. To approve the remuneration o directors or the year ended 31 December 2010.

6. To x the auditors remuneration or the year ended 31 December 2010.

7. To appoint auditors or the nancial year ending 31 December 2011.

By order o the Board

D Mkonto (Mrs)

Company Secretary

39 Steelworks Road

P.O. Box 1059

BULAWAYO23 February 2011

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 o the company. Proxy orms must be lodged at the registered

ofce o the company not less than orty-eight hours beore the time o the meeting.

Notice to Shareholders


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Introduction

It is with both satisaction and relie that I am able to

review the companys perormance or the year just ended.

Satisaction that the ater-tax prot is not that ar removed

rom last years exceptional perormance and relie that

the business managed to overcome the much anticipated

downturn expected in 2010.

Admittedly, substantial price increases in steel and coal

coupled with the depreciation o the United States Dollar

and increase in labour costs have mitigated against the

ability o the company to maintain the margins achieved

in 2009. As reported in our interim results, margins are

aligning themselves to international levels. The company

managed to compensate decreasing margins with stronger

volumes.

Operations

Mealie Brand implement volumes were up 16% over last

year an achievement that is commendable considering that

it is starting rom a higher base achieved in 2009.

Local volumes were up 14% and exports increased by 18%.

The proportion o implements exported was 50.3%.

Volume throughput increased by 16% to 3 263 tonnes this

year.CT Bolts key volumes increased by 108% rom prior year.

Tassburg volumes were 128% higher than last year.

Financial Review

Company revenue o USD12.3 million is 36% ahead o last

year. Domestic revenue increased by 53% while exports

increased by 6,8% rom prior year gures. All divisions

recorded increases in revenue. C.T. Bolts and Mealie Brand

recorded improved protability while Tassburg recorded a

loss mainly attributable to stock write downs o US$91 489.

It is pleasing to note that all operating divisions generatedpositive cash rom operations. Total net cash increase or

the year was US$1.9 million.

Prospects

While the 2010 results refected cost and margins

realignment, there remains room to improve protability

within the Company. We expect growth in revenue in 2011

at the back o improved market share or both the astener

and agricultural divisions. It would appear that the region

will experience normal to above normal rainall and this

should provide the company with good export volumes.

The Companys nancial position is supportive o strategic

acquisitions and these will be pursued by the board in 2011.

Acknowledgments

I would like to thank my co-directors who have continued

to oer sound advice and direction to the companys

aairs, their contribution is much appreciated. Credit is

also extended to all levels o management and employees

or their united role in achieving these results.

Z L Rusike

Chairman

23 February 2011

Chairmans Review


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Your directors report on the operations o Zimplow Limited or the year ended 31 December 2010 is as ollows:

PROFIT AND APPROPRIATION

The prot and relative appropriations are as ollows:

31 December 2010 31 December 2009

US$ US$

Prot ater taxation 2 342 001 2 221 953

Equity dividend proposed/paid (700 000) (392 486)

Retained earnings brought orward 1 829 467 -

Retained earnings carried orward 4 171 468 1 829 467

DIVIDEND

A nal dividend number 67 o US$0.0021 per share was proposed on 23 February 2011.

SHARE CAPITAL

The unissued ordinary shares o 172 928 076 have been placed under the control o the directors, in terms o

Extraordinary General Meetings o Members held on 30 August 1989, 10 November 2004, 16 November 2005 and

14 November 2007.

RE-DENOMINATION OF SHARE CAPITAL

At an extra ordinary general meeting held on 21 April 2010 shareholders by special resolution

approved the re-denomination o share capital rom 500 000 000 ordinary shares o Z$0.00005

nominal value each to 500 000 000 ordinary shares o US$0.0001 each. US$32 707 wastransered rom capital reserves o the company to the issued share capital to und the re-

denomination

FIXED ASSETS

Capital expenditure or the year ended 31 December 2010 totalled US$ 282 984.

Capital commitments or the year to 31 December 2011 amount to US$ 860 699.

DIRECTORATE

The names o the directors and secretary are those in oce at the time o the printing o this Notice

(23 February 2011).

AUDITORS

Messrs Ernst & Young remain in oce until the conclusion o the Annual General Meeting on 30 March 2011, at which

members will be asked to x their remuneration or the year under review and to appoint the auditors or the ensuing year.

Messrs Ernst & Young have indicated their willingness to continue in oce.

For and on behal o the Board

Chairman Chie Executive Ofcer

Z. Rusike Z. Kumwenda

Report o the Directors


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BOARD OF DIRECTORS

The board o directors consists o a non-executive chairman, three executive directors and six non-executive directors. The

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

policy, ormulate overall strategy and approve the budgets. They have introduced structures o corporate governance,

certain unctions and responsibilities have been delegated to the ollowing committees. Their terms o reerence and

composition are regularly reviewed.

AUDIT COMMITTEE

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

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

appropriate intervals.

REMUNERATION COMMITTEEThis committee sets the remuneration o the executive directors and approves guidelines or the companys pay reviews.

EXECUTIVE COMMITTEE

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

company which includes strategy implementation.

DIRECTORS RESPONSIBILITY STATEMENT

The directors are responsible or:

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 ollowed subject to any material departures disclosed

and explained in the nancial statements.

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

will continue in business.

5. Saeguarding the assets o the company and taking reasonable steps or the prevention and detection o raud and

other irregularities.

6. Keeping proper accounting records.

Corporate Governance


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Financial Highlights

Year Ended Year Ended

31 December 2010 31 December 2009US$ US$

Turnover 12 298 300 9 061 718

Prot beore taxation 2 922 253 2 819 253

Prot ater taxation 2 342 001 2 221 953

Total assets 13 493 652 10 970 752

Market capitalisation 21 913 886 8 176 823

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

Basic earnings 0.01 0.01

Operating cash fow 0.01 0.01

Weighted average number o shares 327 071 924 327 071 924


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Chartered Accountants (Zimbabwe)

Derry House

Cnr Fie Street/6th Avenue

P.O. Box 437, Bulawayo

Tel: +263 9 76111

Fax: +263 9 72359

REPORT OF THE INDEPENDENT AUDITORS

To the members o

ZIMPLOW LIMITED

We have audited the accompanying nancial statements o Zimplow Limited as set out on pages 10 to 46, which comprisethe statement o nancial position as at 31 December 2010, and the statement o comprehensive income, the statement o

changes in equity and statement o cash fows or the year ended, and the notes to the nancial statements, which include

a summary o signicant accounting policies and other explanatory notes.

Directors responsibility or the fnancial statements

The companys directors are responsible or the preparation and air presentation o these nancial 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). This responsibility also includes: designing,

implementing and maintaining internal control relevant to the preparation and air presentation o nancial statements

that are ree rom material misstatement, whether due to raud or error; selecting and applying appropriate accounting

policies; and making accounting estimates that are reasonable in the circumstances.

Auditors responsibility

Our responsibility is to express an opinion on these nancial 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 perorm the audit to obtain reasonable assurance whether the nancial statements are ree rom material

misstatement.

An audit involves perorming procedures to obtain audit evidence about the amounts and disclosures in the nancial

statements. The procedures selected depend on the auditors judgement, including the assessment o the risks o material

misstatement o the nancial statements, whether due to raud or error. In making those risk assessments, the auditor

considers internal controls relevant to the entitys preparation and air presentation o the nancial statements in order to

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

eectiveness o the entitys internal controls. An audit also includes evaluating the appropriateness o accounting policies

used and the reasonableness o accounting estimates made by management, as well as evaluating the overall presentation

o the nancial statements.

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

Independent Auditors Report


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Basis or qualifed opinion

An adverse audit opinion was issued on the statement o comprehensive income and cash fows relating to the prior

year due to non-compliance with International Accounting Standard (IAS) 29 ( Financial Reporting in Hyperinfationary

Economies) and International Accounting Standard (IAS 21 (The Eects o Changes in Foreign Exchange Rates) or the

reasons stated in note 2.

Qualifed opinion

In our opinion, except or the eects o the matters described in the Basis or Qualied Opinion paragraph above, the

nancial statements presents airly, in all material respects, the nancial position o Zimplow Limited as at 31 December

2010, its nancial perormance and its cash fows or the year ended in accordance with International Financial Reporting

Standards.

Report on other legal and regulatory requirements

In our opinion the nancial statements have, in all material aspects, been properly prepared in compliance with the

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

62/96).

Chartered Accountants (Zimbabwe)

Bulawayo

28 February 2011

Independent Auditors Report continued


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Notes Year Ended Year Ended

31 Dec 2010 31 Dec 2009

US$ US$

TURNOVER 12 298 300 9 061 718

Domestic 8 635 365 5 631 169

Export 3 662 935 3 430 549

Cost o sales (6 801 772) (4 676 701)

Gross prot 5 496 528 4 385 017

Net operating expenses (2 720 466) (1 593 951)

Operating prot 3 2 776 062 2 791 066Finance revenue 161 049 57 362

Finance costs (14 858) (29 175)

Prot beore taxation 2 922 253 2 819 253

Income Tax Expense 6.1 (580 252) (597 300)

Proft or the year 2 342 001 2 221 953

Other Comprehensive income :

Fair Value Gain on Available

or Sale Financial Assets 124 119 526

Income Tax Relating to components o other

comprehensive income. 6.1 (19) (17 929)

Other comprehensive income or the year, net o tax 105 101 597

Total comprehensive income or the year 2 342 106 2 323 550

Basic and Diluted Earnings Per share ($) 17 0.01 0.01

Statement o Comprehensive Incomeor the year ended 31 December 2010


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Notes 31 Dec 2010 31 Dec 2009

US$ US$

EQUITY AND LIABILITIES

Issued Capital and Reserves 5.1 7 068 881 7 066 581

Available or Sale Reserve 101 702 101 597

Retained Earnings 4 171 468 1 829 467

11 342 051 8 997 645

Non Current Liabilities

Deerred Tax Liability 6.3 599 833 618 860

Current Liabilities

Trade and Other Payables 11.1 804 488 980 708

Provisions 11.2 378 421 140 627

Current Tax Liabilities 368 859 232 912

1 551 768 1 354 247

TOTAL EQUITY AND LIABILITIES 13 493 652 10 970 752

ASSETS

Non Current Assets

Property, Plant and Equipment 7 2 667 362 2 668 756

Available or Sale Financial Assets 8 177 728 177 604

2 845 090 2 846 360

Current Assets

Inventories 9 5 372 463 5 829 151

Trade and Other Receivables 10 2 242 511 1 163 878

Other Current Assets - 91 412

Cash and Bank Balances 12 3 033 588 1 039 951

10 648 562 8 124 392

TOTAL ASSETS 13 493 652 10 970 752

Chairman Chie Executive OcerZ L Rusike Z. Kumwenda

23 February 2011

Statement o Financial Positionas at 31 December 2010


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Share Capital Available or Retained Total

Capital Reserve sale reserve earnings

US$ US$ US$ US$ US$

Balance at 1 January 2009 - 7 066 581 7 066 581

Payment o dividend (392 486) (392 486)

Prot or the year 2 221 953 2 221 953

Other comprehensive income or the year 101 597 - 101 597

Balance at 31 December 2009 7 066 581 101 597 1 829 467 8 997 645

Re-denomination o share capital 32 707 (32 707) - - -

Adjustment* 2 300 - 2 300

Payment o dividend - -

Prot or the year 2 342 001 2 342 001

Other comprehensive income or the year 105 - 105

Balance at 31 December 2010 32 707 7 036 174 101 702 4 171 468 11 342 051

*Being deemed cost adjustment to Tassburgs assets that were identifed on the consolidation o the fxed assets register

Statement o Changes in Equityor the year ended 31 December 2010


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Notes Year Ended Year Ended

31 Dec 2010 31 Dec 2009

US$ US$

CASH FLOWS FROM OPERATING ACTIVITIES

Net operating income beore dividends, interest,

taxation and exchange gains/losses 2 776 062 2 791 066

Adjustment or non cash items:

Depreciation o property, plant and equipment 271 230 224 352

(Prot)/Loss on disposal o property, plant and equipment (40 594) 2 173

Loss on disposal o shares - 167

Impairment loss - 4 435

Operating income beore working capital changes 3 006 698 3 022 193

Decrease/(Increase) in inventories 456 689 (2 322 490)

(Increase)/Decrease in trade and other receivables (1 094 022) 199 491

Increase in trade and other payables 168 372 1 004 452

Cash generated by operating activities 2 537 737 1 903 646

Finance revenue 161 049 57 362

Finance cost (14 858) (29 175)

Taxation paid (463 349) (342 455)

Net cash ows rom operating activities 2 220 579 1 589 378

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase o property, plant and equipment (282 984) (343 072)

Proceeds on disposal o property,plant and equipment 56 042 23 538

Proceeds on disposal o shares - 974

Net cash invested (226 942) (318 560)

CASH FLOWS FROM FINANCING ACTIVITIES

Dividend paid to equity shareholders - (392 486)

Increase in cash and cash equivalents 1 993 637 878 332

Cash and cash equivalents at 1 January 2010 1 039 951 161 619

Cash and cash equivalents at 31 December 2010 3 033 588 1 039 951

Operating cashow per share (US$) 0.01 0.01

Statement o Cashfowsor the year ended 31 December 2010


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Notes to the Financial Statementsor the year ended 31 December 2010

1. Corporate inormation

The nancial statements or the reporting period ended 31 December 2010 were authorised or issue in accordance

with a resolution o the Companys Directors on 23 February 2011.

Zimplow Limited, the Companys parent entity, is a Zimbabwe based concern. The Company operates three divisions as

ollows:

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

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

Brand actory 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 ttings. The CT Bolts actory is situated in Bulawayo with an operating

branch located in Harare;

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

2. Basis o preparation

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

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

Historical cost is generally based on the air value o the consideration given in exchange or assets.

The principal accounting policies are set below:

2.1 Adoption o standards and interpretations

New and revised IFRSs applied with no material eect on the fnancial statements

The ollowing new and revised IFRSs have also been adopted in these nancial statements.The application o these new

and revised IFRSs has not had any material impact on the amounts reported or the current and prior years but may aect

the accounting or uture transactions or arrangements.

Amendments to IFRS 2 Share-based Payment Company Cash-settled Share-based Payment Transactions

The amendments clariy the scope o IFRS 2, as well as the accounting or Company cash-settled share-based paymenttransactions in the separate (or individual) nancial statements o an entity receiving the goods or services when another

Company entity or shareholder has the obligation to settle the award.

IFRS 3 (revised in 2008) Business Combinations

IFRS 3(2008) has been adopted in the current year prospectively to business combinationsor which the acquisition date is

on or ater 1 January 2010 in accordance with the relevant transitional provisions.

The impact o the application o IFRS 3(2008) is as ollows.

IFRS 3(2008) allows a choice on a transaction-by-transaction basis for the measurement of non-controlling

interests at the date o acquisition (previously reerred to as minority interests) either at air value or at the

non-controlling interests share o recognised identiable net assets o the acquiree.


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IFRS 3(2008) changes the recognition and subsequent accounting requirements for contingent consideration.

Previously, contingent consideration was recognised at the acquisition date only i payment o the contingent

consideration was probable and it could be measured reliably; any subsequent adjustments to the contingentconsideration were always made against the cost o the acquisition. Under the revised Standard, contingent

consideration is measured at air value at the acquisition date; subsequent adjustments to the consideration are

recognised against the cost o the acquisition only to the extent that they arise rom new inormation obtained

within the measurement period (a maximum o 12 months rom the acquisition date) about the air value at the date

o acquisition. All other subsequent adjustments to contingent consideration classied as an asset or a liability are

recognised in prot or loss.

IFRS 3(2008) requires the recognition of a settlement gain or loss when the business combination in effect settles a

pre-existing relationship between the Company and the acquiree.

IFRS 3(2008) requires acquisition-related costs to be accounted for separately from the business combination,generally leading to those costs being recognised as an expense in prot or loss as incurred, whereas previously they

were accounted or as part o the cost o the acquisition.

As part o Improvements to IFRSs issued in 2010, IFRS 3(2008) was amended to clariy that the measurement

choice regarding non-controlling interests at the date o acquisition (see above) is only available in respect o

non-controlling interests that are present ownership interests and that entitle their holders to a proportionate

share o the entitys net assets in the event o liquidation. All other types o non-controlling interests are

measured at their acquisition-date air value, unless another measurement basis is required by other Standards.

In addition, as part o Improvements to IFRSs issued in 2010, IFRS 3(2008) was amended to give more guidance

regarding the accounting or share-based payment awards held by the acquirees employees. Specically, the

amendments speciy that share-based payment transactions o 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 IFRS 5 Non-current Assets Held or Sale and Discontinued Operations (as part o Improvements to IFRSs

issued in 2009)

The amendments clariy that all the assets and liabilities o a subsidiary should be classied as held or sale when the

Company is committed to a sale plan involving loss o control o that subsidiary, regardless o whether the Company

will retain a non-controlling interest in the subsidiary ater the sale.

The amendments to IFRS 5 clariy that the disclosure requirements in IFRSs other than IFRS 5 do not apply to non-

current assets (or disposal Company s) classied as held or sale or discontinued operations unless those IFRSs

require (i) specic disclosures in respect o non-current assets (or disposal Company s) classied as held or sale or

discontinued operations, or (ii) disclosures about measurement o assets and liabilities within a disposal Company

that are not within the scope o the measurement requirement o IFRS 5 and the disclosures are not already provided

in the consolidated nancial statements.

Amendments to IAS 1 Presentation o Financial Statements (as part o Improvements to IFRSs issued in 2009)

The amendments to IAS 1 clarify that the potential settlement of a liability by the issue of equity is not relevant to

its classication as current or noncurrent.

Notes to the Financial Statementsor the year ended 31 December 2010 (continued)


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Amendments to IAS 7 Statement o Cash Flows (as part o Improvements to IFRSs issued in 2009)

The amendments to IAS 7 specify that only expenditures that result in a recognised asset in the statement ofnancial position can be classied as investing activities in the statement o cash fows.

Amendments to IFRS 7 Financial Instruments: Disclosures (as part o Improvements to IFRSs issued in 2010)

The amendments to IFRS 7 clarify the required level of disclosures about credit risk and collateral held and provide

relie rom disclosures previously required regarding renegotiated loans. The Company has applied the amendments

in advance o their eective date (annual periods beginning on or ater 1 January 2011). The amendments have been

applied retrospectively.

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

The amendments to IAS 1 clarify that an entity may choose to present the required analysis of items of other

comprehensive income either in the statement o changes in equity or in the notes to the nancial statements. The

Company has applied the amendments in advance o their eective date (annual periods beginning on or ater 1

January 2011). The amendments have been applied retrospectively.

Amendments to IAS 39 Financial Instruments: Recognition and Measurement Eligible Hedged Items

The amendments provide clarication on two aspects o hedge accounting: identiying infation as a hedged risk or

portion, and hedging with options.

IAS 27 (revised in 2008) Consolidated and Separate Financial Statements

In prior years, in the absence o specic requirements in IFRSs, increases in interests in existing subsidiaries were

treated in the same manner as the acquisition o subsidiaries, with goodwill or a bargain purchase gain being

recognised, when appropriate; or decreases in interests in existing subsidiaries that did not involve a loss o control,

the dierence between the consideration received and the adjustment to the non-controlling interests was recognised

in prot or loss. Under IAS 27(2008), all such increases or decreases are dealt with in equity, with no impact on

goodwill or prot or loss.

When control o a subsidiary is lost as a result o a transaction, event or other circumstance, the revised Standard

requires the Company to derecognise all assets, liabilities and non-controlling interests at their carrying amount and

to recognise the air value o the consideration received. Any retained interest in the ormer subsidiary is recognisedat its air value at the date control is lost. The resulting dierence is recognised as a gain or loss in prot or loss.

IAS 28 (revised in 2008) Investments in Associates

The principle adopted under IAS 27(2008) (see above) that a loss o control is recognised as a disposal and re-

acquisition o any retained interest at air value is extended by consequential amendments to IAS 28. Thereore, when

signicant infuence over an associate is lost, the investor measures any investment retained in the ormer associate

at air value, with any consequential gain or loss recognised in prot or loss.

As part o Improvements to IFRSs issued in 2010, IAS 28(2008) has been amended to clariy that the amendments

to IAS 28 regarding transactions where the investor loses signicant infuence over an associate should be applied

prospectively.


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IFRIC 17 Distributions o Non-cash Assets to Owners

The Interpretation provides guidance on the appropriate accounting treatment when an entity distributes assets otherthan cash as dividends to its shareholders.

IFRIC 18 Transers o Assets rom Customers

The Interpretation addresses the accounting by recipients or transers o property, plant and equipment rom

customers and concludes that when the item o property, plant and equipment transerred meets the denition o an

asset rom the perspective o the recipient, the recipient should recognise the asset at its air value on the date o the

transer, with the credit being recognised as revenue in accordance with IAS 18 Revenue.

Improvements to IFRSs issued in 2009

Except or the amendments to IFRS 5, IAS 1 and IAS 7 described earlier in section 2.1, the application o

Improvements to IFRSs issued in 2009 has not had any material eect on amounts reported in the nancial

statements.

New and revised IFRSs in issue but not yet eective

The Company has not applied the ollowing new and revised IFRSs that have been issued but are not yet eective:

Amendments to IFRS 1 Limited Exemption rom Comparative IFRS 7 Disclosures or First-time Adopters

Amendments to IFRS 7 Disclosures Transers o Financial Assets

IFRS 9 (as amended in 2010) Financial Instruments

IAS 24 (revised in 2009) Related Party Disclosures

Amendments to IAS 32 Classication o Rights Issues

Amendments to IFRIC 14 Prepayments o a Minimum Funding Requirement

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

Improvements to IFRSs issued in 2010 (except or the amendments to IFRS 3(2008), IFRS 7, IAS 1 and IAS 28 described

earlier in section 2.1)

1 Eective or annual periods beginning on or ater 1 July 2010.

2 Eective or annual periods beginning on or ater 1 July 2011.3 Eective or annual periods beginning on or ater 1 January 2013.

4 Eective or annual periods beginning on or ater 1 January 2011.

5 Eective or annual periods beginning on or ater 1 February 2010.

6 Eective or annual periods beginning on or ater 1 July 2010 and 1 January 2011, as appropriate.

IFRS 9 Financial Instruments issued in November 2009 and amended in October 2010 introduces new requirements or the

classication and measurement o nancial assets and nancial liabilities and or derecognition.

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

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

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

cash fows that are solely payments o principal and interest on the principal outstanding are generally measured at

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

measured at their air values at the end o subsequent accounting periods.



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

the accounting or changes in air value o a nancial liability (designated as at air value through prot or loss)

attributable to changes in the credit risk o that liability. Specically, under IFRS 9, or nancial liabilities that aredesignated as at air value through prot or loss, the amount o change in the air value o the nancial liability

that is attributable to changes in the credit risk o that liability is recognised in other comprehensive income, unless

the recognition o the eects o changes in the liabilitys credit risk in other comprehensive income would create or

enlarge an accounting mismatch in prot or loss. Changes in air value attributable to a nancial liabilitys credit risk

are not subsequently reclassied to prot or loss. Previously, under IAS 39, the entire amount o the change in the

air value o the nancial liability designated as at air value through prot or loss was recognised in prot or loss.

IFRS 9 is eective or annual periods beginning on or ater 1 January 2013, with earlier application permitted.

The directors anticipate that IFRS 9 that will be adopted in the Company s nancial statements or the annual period

beginning 1 January 2013 and that the application o the new Standard will have a signcant impact on amountsreported in respect o the Company s nancial assets and nancial liabilities. However, it is not practicable to provide

a reasonable estimate o that eect until a detailed review has been completed.

The amendments to IFRS 7 titled Disclosures Transers o Financial Assets increase the disclosure requirements or

transactions involving transers o nancial assets. These amendments are intended to provide greater transparency

around risk exposures when a nancial asset is transerred but the transeror retains some level o continuing exposure

in the asset. The amendments also require disclosures where transers o nancial assets are not evenly distributed

throughout the period.

The directors do not anticipate that these amendments to IFRS 7 will have a signicant eect on the Company s

disclosures regarding transers o trade receivables previously eected (see note 25.2). However, i the Company enters

into other types o transers o nancial assets in the uture, disclosures regarding those transers may be aected.

IAS 24 Related Party Disclosures (as revised in 2009) modies the denition o a related party and simplies disclosures or

government-related entities.

The disclosure exemptions introduced in IAS 24 (as revised in 2009) do not aect the Company because the Company is

not a government-related entity. However, disclosures regarding related party transactions and balances in these nancial

statements may be aectedwhen the revised version o the Standard is applied in uture accounting periods because some

counterparties that did not previously meet the dention o a related party may come within the scope o the Standard.

The amendments to IAS 32 titled Classication o Rights Issues address the classication o certain rights issues

denominated in a oreign currency as either an equity instrument or as a nancial liability. To date, the Company has not

entered into any arrangements that would all within the scope o the amendments. However, i the Company does enter

into any rights issues within the scope o the amendments in uture accounting periods, the amendments to IAS 32 will

have an impact on the classication o those rights issues.

IFRIC 19 provides guidance regarding the accounting or the extinguishment o a nancial liability by the issue o equity

instruments. To date, theCompany has not entered into transactions o this nature. However, i the Company doesenter

into any such transactions in the uture, IFRIC 19 will aect the required accounting. In particular, under IFRIC 19, equity

instruments issued under such arrangements will be measured at their air value, and any dierence between the carrying

amount o the nancial liability extinguished and the air value o equity instruments issued will be recognised in prot or

loss.


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2.2 Statement o compliance

1 January 2009 - December 2009

In line with the liberalisation o the national economy, the company set itsel or a core trade transition and as rom 01

January 2009 adopted the US$ as its unctional currency, as determined and in line with guidance oered by the Institute

o Chartered Accountants o Zimbabwe.

The Company operated under a hyper-infationary economy during 2008, beore it changed its uctional currency to United

States Dollars. The comparative inormation has not been prepared in accordance with IFRS in that IAS 29 and IAS 21 has

not been complied with in converting the nancial inormation during the period o hyper infation into an applicable

measurement base at the date o reporting or the ollowing reasons:

The consumer price indices (CPI) or the period August to December 2008 have not been published by the Zimbabwe

Statistical Oce at the time o authorisation and approval o these nancial statements. The liberalisation o the

Zimbabwean economy and the ormal adoption o alternative trade currencies as rom 01 February 2009 is unlikely to

result in urther release o these CPIs.

Furthermore, due to the existence o multiple economic actors and market distortions which were considered to be

pervasive to the national economic environment, infation could not be accurately measured by other means.

2.3 Signifcant accounting judgements, estimates and assumptions

The preparation o the Companys nancial statements requires the Companys Directors and Management to make

judgements, estimates and ormulate assumptions that may aect the reported amounts o revenues, expenses, assets,

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

continually evaluated, and are based on historical experience and other actors, including expectations o uture eventsthat 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 o the asset or liability aected

in the uture.

Judgements

In the process o applying the Companys accounting policies, management has made the ollowing judgements, apart

rom those involving estimates, which have the most signicant eect on the amounts recognised in the nancial

statements. The Companys Directors are o the opinion that the Statement o Financial Position represents a true and air

position o the Company.

Useful lives and residual values of property, plant and equipmentThe Company assesses the useul lives and residual values o property, plant and equipment each period,

taking into account past experience and macro-economic changes.

Fair values

The Company makes estimates and judgements in the valuation o property, plant and equipment, and the valuation

o nancial assets (such as trade receivables). Judgement is required in determining air values o assets. The

Company may also rely on independent opinions o experts in related specialist elds.



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2.4 Summary o signifcant accounting policies

Segment reportingOperating segments provide products or services that are subject to risks and rewards that are dierent rom those o

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

nancial position are:

Regularly reviewed by the Companys 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 Companys reportable segments, or which internal nancial management inormation is available and consistently

reviewed, are distinctly determined across the dierent product types manuactured and their customer markets served.

Detailed inormation on the reportable segments identied and presented is disclosed in note 4.

Basis o Consolidations and business combinations

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

to obtain benets rom their activities. The existence and eect o potential voting rights that are currently exercisable

or convertible are considered when assessing whether the Company controls another entity. Subsidiaries are ully

consolidated rom the eective date on which control is transerred to the Company. They are de-consolidated rom

the eective date that control ceases. The acquisition method o accounting is used to account or the acquisition o

subsidiaries and business units by the Company. The cost o an acquisition is measured at the aggregate o the air

values, at the date o exchange, o assets given, equity instruments issued and liabilities incurred or assumed at the date

o exchange or control o the acquiree or business unit. Acquisition related costs are recognised, as incurred, in the

Statement o Comprehensive Income, as part o prot or loss or the period.

Inter-company transactions, balances and unrealised gains on transactions between Company entities are eliminated.

Unrealised losses are also eliminated but considered an impairment indicator o the asset transerred. Accounting policies

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

Company.

Non controlling interests in the net assets o consolidated subsidiaries are identied separately rom the Companys

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

controlling interests proportionate share o the acquirees identiable net assets. The choice o measurement basis is made

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

attributed to such interests at initial recognition and the noncontrolling interests share o changes in equity since thedate o the combination. Total comprehensive income is attributed to non controlling interest even i this results in the

non controlling interest having a decit balance.

Changes in the Companys interest in a subsidiary that do not result in a loss o control are accounted or as equity

transactions. Any dierence between the amount by which the non controlling interests are adjusted and the air value

o the consideration paid or received is recognised directly in equity and attributed to owners o the company.

Where applicable, the cost o acquisition includes any asset or liability resulting rom a contingent consideration

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

cost o acquisition where they qualiy as measurement period adjustments (reer below). All other subsequent changes in

the air value o contingent consideration classied as an asset or liability are accounted or in accordance with relevant

IFRS. Changes in the air value o contingent consideration classied as equity are not recognised.


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The acquirees identiable assets , liabilities and contigent liabilities that meet the conditions or recognition under IFRS 3

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

Non-current assets (or disposal groups) that are classied as held for sale in accordance with IFRS 5: Non-currentAssets Held or Sale and Discontinued Operations, which are recognised and measured at air value less costs to sell;

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

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

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

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

I the initial accounting or a business combination is incomplete by the end o the reporting period in which the

combination occurs, the Company reports provisional amounts or the items or which the accounting is incomplete.

Those provisional amounts are adjusted during the set measurement period, or additional assets or liabilities are

recognised, to refect new inormation obtained about acts and circumstances that existed as o the acquisition date that,

i known, would have aected the amounts recognised as o that date.

The aorementioned measurement period is the period rom the date o acquisition to the date the Company receives

complete inormation about acts and circumstances that existed as o the acquisition date and is subject to a maximum

o one year.

The early adoption by the Company, o IFRS 3 (Revised): Business Combinations, has resulted in the prospective

application o the amended Standards requirements. The early adoption o IFRS 3 (Revised) has also prompted the early

adoption o IAS 27 (Revised), the related requirements o which are generally applied on a retrospective basis. The nature

o the amendments to the Revised Standards, as collectively applied to the Companys scope o business combinations, did

not result in any retrospective implications.

The Companys subsidiaries and acquired business units, as at the current Statement o Financial Position date, comprise

one wholly owned subsidiary: Bulawayo Steel Products (Private) Limited and two business units currently trading as

Company divisions: CT Bolts and Tassburg. The net assets (excluding immovable property) o Tassburg (Private) Limited

were acquired on 31 December 2008. The transaction was not based on any provisional or contingent arrangements.

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 o the sum o the consideration transerred, the amount o any non controlling

interest in the acquiree and the air value o the acquirers previously held equity interest (i any) in the entity over the

air value o the identiable net assets recognised. Following initial recognition, goodwill is measured at cost less anyaccumulated impairment losses. Goodwill is not amortised, but is reviewed or impairment annually or more requently

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

goodwill cannot be reversed in uture periods.

For the purpose o impairment testing, goodwill acquired in a business combination is, rom the acquisition date, allocated

to each o the Companys cash-generating units that are expected to benet rom the synergies o the combination,

irrespective o whether other assets or liabilities o 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 o the cash-generating unit to which the goodwill relates.



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

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

o, the goodwill associated with the operation disposed o is included in the carrying amount o the operation whendetermining the gain or loss on disposal o the operation. Goodwill disposed o in this circumstance is measured based on

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

Bargain purchase gain

I, ater reassessment, the Companys interest in the net air value o the acquirees identiable net assets exceeds the sum

o the consideration transerred, the amount o any non controlling interest in the acquiree and the air value o the

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

bargain purchase gain

Functional and presentation currency

Items included in the nancial statements o each o the Companys entities are measured using the currency o theprimary economic environment in which the entities operate (the unctional currency). In line with note 2.1 on the basis

o nancial statement preparation, the Companys unctional and presentation currencies can be analysed as ollows:

1 January 2009 31 December 2009

Functional and presentation currency: US$

In line with the liberalisation o the Zimbabwean economy, the Company set itsel or a primary currency trade change

and, as rom 1 January 2009, adopted the US$ as its unctional currency, as determined in line with guidance oered in

IAS 21.

Foreign currency translationsTransactions in currencies other than the entitys unctional currency (oreign currencies) are translated into the

Companys unctional currency using the exchange rates prevailing at the date o the transaction. Monetary assets and

liabilities denominated in oreign currency are translated at the related exchange rate prevailing at the period reporting

end date. Foreign exchange dierences arising on translation are recognised in the Statement o Comprehensive Income

as part o prot or loss or the period, except when deerred in equity as qualiying cash fow hedges and qualiying net

investment hedges. Non monetary assets and liabilities denominated in oreign currency are translated into unctional

currency at the market exchange rate prevailing at the date o the transaction.

Non-current assets held or sale

Non current assets and disposal groups are classied as held or sale i 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 highlyprobable and the asset (or disposal group) is available or immediate sale in its present condition. Management must be

committed to the sale which should be expected to qualiy or recognition as a completed sale within one year

rom the date o classication.

Non current assets (and disposal groups) classied as held or sale are measured at the lower o their previous carrying

amount and air value less cost to sell.

Debt and equity instruments are classied as either nancial liabilities or as equity in accordance with the substance o

contractual arrangements.

Income and revenue recognition

Revenue is measured at the air value o the consideration received or receivable. Revenue excludes value added tax and

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


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Sale o Goods

Revenue rom the sale o goods is recognised when all the ollowing conditions are satised:

The Company has transerred to the buyer the signicant risks and rewards o ownership o the goods;

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

eective control over the goods sold;

The amount of revenue can be measured reliably;

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

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

Dividend and Interest revenue

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

(provided that it is probable that the economic benets will fow to the Company and the amount o revenue can bemeasured reliably).

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

interest rate applicable, which is the rate that exactly discounts estimated uture cash receipts through the expected lie

o the nancial 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 air value less accumulated depreciation and impairment losses, i any,

recognised ater the date o a revaluation. Valuations, perormed by the Companys Directors or independent external

valuers, are perormed requently enough to ensure that the air value o a revalued asset does not dier materially rom

its carrying amount.

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

is restated proportionately with the change in the gross carrying amount o the asset so that the carrying amount ater

revaluation equals its revalued amount.

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

comprehensive income in the Statement o Comprehensive Income and accumulated in equity (revaluation reserve) inthe Statement o Changes in Equity. The increase is recognised in prot or loss to the extent that it reverses a revaluation

decrease o the same asset previously recognised in prot or loss.

I an assets carrying amount is decreased as a result o a revaluation, the decrease shall be recognised in prot or loss.

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

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

accumulated in equity as a revaluation reserve.

An annual transer, within the Statement o Changes in Equity, rom the asset revaluation reserve to retained earnings,

is made or the dierence between depreciation based on the revalued carrying amount o the assets and depreciation

based on the original cost.



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Leases

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

inception date. Leases are classied as nance leases whenever the terms o the lease transer substantially all the risks

and rewards o ownership to the lessee. All other leases are classied as operating leases.

The Companys lease transactions in place throughout the current reporting period only extend as ar as the Companys

capacity as a lessee under operating lease arrangements.

Company as a lessee

Leases where the Company does not transer substantially all the risks and benets o ownership o the asset are classied

as operating leases. 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 o the time pattern in which economic benets rom 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 thereo, that are not xed in amount but are based on the uture

amount o a actor that is susceptible to change other than with the passage o time. Contigent rents are recognised as

an expense in the period in which they are incurred. The CT Bolts premises where the Company operates rom were leased

under such terms or part o the current reporting period. Details regarding lease transactions are as disclosed in note 13.

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

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

another systematic basis is more representative o the time pattern in which economic benets rom the leased asset areconsumed.

Borrowing costs

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

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

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

that an entity incurs in connection with the borrowing o unds.

Investment income earned on the temporary investment o specic borrowings pending their expenditure on qualiying

assets is deducted rom the borrowing costs eligible or capitalisation.

Research and development costs

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

An internally generated intangible asset arising rom development (or rom the development phase o an internal

project) is recognised i, and only i, all o the ollowing have been demonstrated:

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

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

The ability to use or sell the intangible asset;

How the intangible asset will generate probable future economic benets;

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

the intangible asset; and

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



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The amount initially recognised or internally generated intangible assets, is the sum o the expenditure incurred rom

the day when the intangible asset rst meets the recognition criteria listed above. Where no internally generated intangible

asset can be recognised, development expenditure is charged to prot 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 impairment losses, on the same basis as intangible assets acquired separately. Any expenditure

capitalised is amortised over the period o expected uture sales rom the related project.

The carrying value o development costs is reviewed or impairment annually when the asset is not yet in use or more

requently when an indication o impairment arises during the reporting period.

Inventories

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

location and condition, are accounted or as ollows:

Raw materials - purchase costs on weighted average cost

Finished goods and work in progress - costs o direct materials, labour and a proportion o manuacturing overheads based

on normal operating capacity but excluding borrowing costs.

Net realisable value is the estimated selling price in the ordinary course o the business, less estimated costs o

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 originalmaturity o three months or less.

For presentation purposes o the Statement o Cash Flows, cash and cash equivalents consist o cash and cash equivalents

as dened above, net o outstanding bank overdrats.

Provisions

Provisions are recognised when the Company has a legal or constructive obligation as a result o past events, and when

it is probable that an outfow o resources embodying economic benets will be required to settle the obligation, and a

reliable estimate o the amount o the obligation can be made.

Where the eect o the time value o money is considered material, the amount o a recognised provision represents the

present value o 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 or the

estimated liability or annual leave as a result o services rendered by the employees up to the reporting period end date.

Dividend distribution

Dividend distribution to the Companys shareholders is recognised as a liability in the Companys nancial statements in

the period in which the dividends are approved by the Companys shareholders and declared.

Key management

Key management include Company executive directors and management having authority and responsibility or planning,

directing and controlling the activities o Zimplow Limited, in its parent entity capacity, as well as its Company member

entities.


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Company entity members

The Companys 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

The Zimplow Trust

Taxation

The tax expense or the period comprises current and deerred tax. Tax is recognised in the statement o comprehensive

income in prot 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 prot or the period. Taxable prot diers rom prot as reported in the

Statement o Comprehensive Income because it excludes items o income or expense that are taxable or deductible in

other periods and it urther excludes items that are permanently non - taxable or non - deductible. The Companys liability

or current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting period end

date.

Deerred tax

Deerred tax is recognised on dierences between the carrying amounts o assets and liabilities in the nancial

statements and the corresponding tax bases used in the computation o taxable prot, and is accounted or using the

liability method. Deerred tax liabilities are generally recognised or all taxable temporary dierences, and deerred tax

assets are generally recognised or all deductible temporary dierences to the extent that it is probable that taxable

prots will be available against which those deductible temporary dierences can be utilised. Such assets and liabilitiesare not recognised i the temporary dierence arises rom goodwill or rom the initial recognition (other than in a business

combination) o other assets and liabilities in a transaction that aects neither the taxable prot nor the accounting

prot.

Deerred tax liabilities are recognised or taxable temporary dierences associated with investments in subsidiaries and

associates, and interests in joint ventures, except where the Company is able to control the reversal o the temporary

dierence and it is probable that the temporary dierence will not reverse in the oreseeable uture. Deerred tax assets

arising rom deductible temporary dierences associated with such investments and interests are only recognised to the

extent that it is probable that there will be sucient taxable prots against which to utilise the benets o the temporary

dierences and they are expected to reverse in the oreseeable uture.

The carrying amount o deerred tax assets is reviewed at each reporting period end date and reduced to the extent that it

is no longer probable that sucient taxable prots will be available to allow all or part o the asset to be recovered.

Deerred 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.

Deerred tax relating to items recognised outside prit or loss is recognised outside prot or loss. Deerred tax items are

recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deerred tax assets and deerred tax liablities are oset, i a legally enorceable right exists to set o current tax asset

against current income tax liabilities and the deerred taxes relate to the same taxable entity and the same taxation

authority.



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Loans and receivables

Trade receivables, loans and other receivables that have xed or determinable payments that are not quoted in an active

market are classied as loans and receivables. Loans and receivables are measured at amortised cost using the eectiveinterest method, less any impairment. Interest income is recognised by applying the eective interest rate, except or

shortterm receivables when the recognition o interest would be immaterial.

Derecognition o fnancial assets

The Company derecognises a nancial asset only when the contractual rights to the cash fows rom the asset expire; or it

transers the nancial asset and substantially all the risks and rewards o ownership o the asset to another entity. I the

Company neither transers nor retains substantially all the risks and rewards o ownership and continues to control the

transerred asset, the Company recognises its retained interest in the asset and an associated liability or amounts it may

have to pay. I the Company retains substantially all the risks and rewards o ownership o a transerred nancial asset,

the Company continues to recognise the nancial asset and also recognises a collateralised borrowing or any related

proceeds received.Impairment o fnancial assets

Financial assets are assessed or indicators o impairment at each reporting period end date. Financial assets are impaired

where there is objective evidence that, as a result o one or more loss events that occurred ater the initial recognition

o the nancial asset, the estimated uture cash fows o the investment have been impacted. For asset, such as trade

receivables, assets that are assessed not to be impaired individually are subsequently assessed or impairment on a

collective basis. Objective evidence o impairment or a portolio o receivables include the Companys past experience

o collecting payments, an increase in the number o delayed payments in the portolio past the average credit period, as

well as observable changes in national or local economic conditions that correlate with deault on receivables. For listed

equity investments classied as Available For Sale, a signicant or prolonged decline in the air value o the security below

its cost is considered to be objective evidence o impairment. Where there is evidence o impairment, the cumulative loss

- measured as the dierence between the aquisition costs and the current air value, less any impairment loss on that

investment previously recognised in prot or loss, is removed rom Available For Sale reserve and recognised in prot or

loss.

For nancial assets carried at amortised cost, the amount o the impairment is the dierence between the assets carrying

amount and the present value o estimated uture cash fows, discounted at the nancial assets original eective interest rate.

The carrying amount o the nancial asset is reduced by the impairment loss directly or all nancial assets with the

exception o trade receivables, where the carrying amount is reduced through the use o an allowance account. When

a trade receivable is considered uncollectible, it is written o against the allowance account. Subsequent recoveries

o amounts previously written o are credited against the allowance account. Changes in the carrying amount o the

allowance account are recognised in prot or loss.

With reerence to the Companys nancial asset portolio, i, in a subsequent period, the amount o the impairment loss

decreases and the decrease can be related objectively to an event occurring ater the impairment was recognised, the

pre viously recognised impairment loss is reversed through prot or loss to the extent that the carrying amount o 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 o an entity ater deducting all o its

liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net o direct issue costs and

are presented in the Statement o Changes in Equity as owner based equity transactions.


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3. Operating Proft

Year Ended Year Ended

31 Dec 2010 31 Dec 2009

US$ US$

The operating prot beore taxation is arrived at

Ater charging;

Administration expenses 1 874 733 1 363 344

Auditors remuneration: Current year 68 165 62 152

Depreciation o property, plant and equipment:

Buildings 29 516 29 475

Plant and equipment 241 714 194 877

271 230 224 352

Impairment on property, plant and equipment - 4 435

Directors emoluments

Fees 45 094 18 209

Other emoluments 200 400 158 188

245 494 176 397

Selling expenses

Selling expenses 512 689 377 777

Discount to Customers 203 257 -

Provision or doubtul debts 12 925 -

Research and development costs 275 -

Sta costs:

Salaries and allowances 2 697 176 1 239 253

Provisions or Gratuity 11 261 79 732

National Social Security Authority 86 716 62 251

2 795 153 1 381 236

Ater crediting:

Net Exchange gain 8 167 -

Net Exchange loss (6 405)

Prot/(Loss) on disposal o property, plant and equipment 40 594 (2 173)



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4. Segment inormation

IFRS 8 Operating Segments requires operating segments to be identied on the basis o internal reports about components

o the Company that are regularly reviewed by the chie operating decision maker in order to allocate resources to the

segments and assess thier peromance. In contrast the predecessor standard (IAS 14 , Segment reporting ) required an

entity to identiy two sets o segments (business and geographical) using a risks and returns approach , with the entitys

system o nancial reporting to key management personnel serving only as the starting point or the identication o such

segments. For management purposes, the Company is organised into business units based on their products, and has three

reportable segments as ollows:

The Mealie Brand segment is a manuacturer and distributor o animal drawn implements or the agricultural sector; the

CT Bolts segment is a manuacturer and distributor o metal asteners to the mining, construction and agricultural sectors;

the Tassburg segment is a manuacturer and distributor o wood screws, veranda bolts and high tensile bolts primarily or

the construction sector and household urniture industry. Inormation reported to the Companys Chie operating decisionmaker or the purpose o resource allocation and assessment o segment perormance is more specically ocused on the

type o product produced.

The ollowing is an analysis o the Companys revenue and results rom operations by reportable segments or the year

ended 31 December 2010.

Mealie Brand CT Bolts Tassburg Adjustment Total

Revenue

External customers 9 774 461 1 873 603 683 464 12 331 528

Inter segment (33 228) (33 228)Total revenue 9 774 461 1 873 603 650 236 12 298 300

Results

Reportable segment prot 2 643 070 243 350 (91 708) (18 650) 2 776 062

Unallocated items:

Finance income 161 049

Finance costs (14 858)

Income taxes (580 252)

Companys income ater tax 2 342 001

Segment prot represents the prot earned by each segment without allocation o the central administration costs

and directors salaries. This is the measure reported to the chie operating decision maker or the purpose o resource

allocation and assessment segment perormance.


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4. Segment inormation continued

The ollowing is an analysis o the Companys revenue and results rom operations by reportable segments or the yearended 31 December 2009

Mealie Brand CT Bolts Tassburg Adjustment Total

Revenue

External customers 7 626 682 1 049 571 402 782 9 079 035

Inter segment (17 317) (17 317)

Total revenue 7 626 682 1 049 571 385 465 9 061 718

Results

Reportable segment prot 2 647 313 132 597 21 321 (10 165) 2 791 066

Unallocated items:

Finance income 57 362

Finance costs (29 175)

Income taxes (597 300)

Companys income ater tax 2 221 953

Segment Assets and Liabilities

Year Ended Year Ended 2010 2009

Segment Assets US$ US$

Mealie Brand 11 282 200 8 859 446

CT Bolts 1 277 297 896 164

Tassburg 1 069 771 1 225 307

Other (Eliminations) (135 616) (10 165)

Total Segment Assets 13 493 652 10 970 752

Segment Liabilities

Mealie Brand 1 225 191 1 053 736

CT Bolts 416 612 215 978

Tassburg 16 764 84 533

Other (Eliminations) (106 799) -

Total Segment Liabilities 1 551 768 1 354 247


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4. Segment inormation continued

Other Segment inormation

Depreciation and Amortisation

Year Ended 31/12/2010 Year Ended 31/12/2009

US$ US$

Mealie Brand 212 074 178 187

CT Bolts 30 359 14 931

Tassburg 28 797 31 234

271 230 224 352

Additions to non current assets

Year Ended 31/12/2010 Year Ended 31/12/2009

US$ US$

Mealie Brand 237 517 257 136

CT Bolts 43 779 84 986

Tassburg 1 688 950

282 984 343 072

Transer 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 inormation

Revenue rom external customers (based on customer location) US$ US$

Local 8 864 262 5 631 169

Export 3 662 936 3 430 549

Total 12 527 198 9 061 718

The Companys operations are located in Zimbabwe, the entitys country o domicile.

The Companys disclosed segment inormation, in line with note 2.1 on the basis o preparation and note 2.3 on the

operating environment, is limited to nancial position data as at 31 December 2009, and nancial perormance data or

the twelve month period to 31 December 2009.


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5. Share Capital

5.1 Reconciliation o authorised and Issued share capitalYear Ended 2010 Year Ended 2009

Shares Shares

Authorised 500 000 000 500 000 000

Increase in ordinary shares - -

Ordinary shares at 0.0001 US cents each 500 000 000 500 000 000

Ordinary shares issued and ully paid 327 071 924 298 210 425

Tassburg Aquisition - 31 December 2008 - 28 861 499

327 071 924 327 071 924

5.2 Subject to the right o shareholders to take up any new shares in proportion to their existing holding, to Section 183o the Companies Act (Chapter 24:03), and to the limitations o the Zimbabwe Stock Exchange, the unissued shares are

under the control o the Directors, in terms o Extraordinary General Meetings o Members held on

30 August 1989, 10 November 2004, 16 November 2005 and 14 November 2007.

5.3 At an extra ordinary general meeting held on 21 April 2010 shareholders by special resolution approved the re-

denomination o share capital rom 500 000 000 ordinary shares o Z$0.00005 nominal value each to 500 000 000

ordinary shares o US$0.0001 each. US$32 707 was transered rom capital reserves o the company to the issued share

capital to und the re-denomination

5.4 At 31 December 2010, the directors o the company held directly and indirectly, the ollowing shares:

Name Year Ended 2010 Year Ended 2009

Z. Kumwenda 15 609 1 015 609

D. Mkonto 1 213 638 118

B. Mitchell 63 500 000 63 500 000

N. Nhira 1 203 464 1 203 464

P. Devenish 1 213 1 213


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6. Taxation

31 Dec 2010 31 Dec 2009

US$ US$

6.1 Charge based on income or the year

Zimbabwe income tax 582 097 552 666

Deerred taxation current year (19 045) 25 902

Withholding tax 17 200 18 732

580 252 597 300

Charge based on other Comprehensive Income

Fair Value Gain on Available For Sale Financial assets 19 17 929

Total Taxation Charge 580 271 615 229

6.2 Reconciliation o tax charge

Tax on prot or the year at 20.6% ( inclusive o 3% AIDS Levy ) 602 010 605 388

Tax eect on expenses that are not deductible in

determining taxable prot (1 497) 8 904

Income taxed at special rate (33 626) (11 910)

Export Promotion Incentive - (4 373)

Eect o dierent tax rates between current and deerred tax (3 816) (1 512)

Withholding Tax 17 200 18 732

580 271 615 229

In terms o section 139 o the Finance Act Chapter 23:04 the rate o income tax

is 20% i a company exports 50% o its manuactured output in units.

The company exported 50.3% o its manuactured output in the year under review.

6.3. Deerred tax liability

Key components o deerred tax:

Accelerated wear and tear 567 465 590 395

Prepayments 16 429 13 030

Deerred Income (5 386) (845)

Gain on nancial assets 17 795 17 929

Net exchange gain 3 530 (1 649)

599 833 618 860


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9. Inventories

Year Ended 2010 Year Ended 2009

US$ US$

Raw materials 1 695 798 2 738 055

Finished goods 1 368 212 1 814 104

Spares and components 2 308 453 1 276 992

5 372 463 5 829 151

The cost o inventory recognised as an expense during the year was US$ 6 801 772. ( Prior year 31 December 2009 was

US 4 676 701). The amount o write down o inventories recognised as an expense is US$104 839 which is recognised in

cost o sales.

10. Trade and other receivablesYear Ended Year Ended

2010 2009

Trade receivables US$ US$

- Local trade receivables 1 282 027 398 528

- Foreign trade receivables 688 410 539 796

- Allowance or doubtul debts (local & oreign) (12 925) -

Other receivables and prepayments 284 999 225 554

2 242 511 1 163 878

Ageing o receivables that are past due but not impaired

30 - 60 days 401 586 203 021

61 - 90 days 62 420

91- 120 days 8 242

Over 120 days 45 336 731

Total 517 584 203 752

Local trade receivables

The average credit period on local sales o goods is 30 days. No interest is charged on local trade receivables or the rst

30 days rom the date o invoice. Thereater, interest is charged at 15% per annum on the outstanding balance.

Beore accepting any new local customer, the Company uses an internal credit scoring system to assess the potential

customers credit quality and denes credit limits by customer. Limits and scoring attributed to customers are constantly

reviewed.

Included in the Companys local trade receivables balance are debtors with a carrying amount o US$ 6 932 which are

past due at the reporting period end date or which the Company has provided or them as doubtul debts. The Company

has insured these balances and are thereore recoverable. The average age o these receivables is 45 days.


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12. Cash and bank balancesYear Ended 2010 Year Ended 2009

US$ US$

Cash at bank and on hand 2 971 156 925 848

Foreign cash at bank (other than US$) 62 432 114 103

3 033 588 1 039 951

Short term deposits are m

zimplow annual report 2010.pdf

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