Dairibord Holdings Limited Annual Report 2014 · 2017. 5. 8. · Dairibord Holdings Limited 9th Floor, ZB Life Towers 77 Jason Moyo Avenue/ Sam Nujoma Street P O Box 587, Harare,

www.dairibord.com

Dairibord Holdings Limited9th Floor, ZB Life Towers

77 Jason Moyo Avenue/ Sam Nujoma StreetP O Box 587, Harare, Zimbabwe

Telephone : +263 4 790801-7, 731071-8Fax : +263 4 795220 2014

Annual Report

CONTENTSScope of this ReportWe are pleased to present the annual report for Dairibord Holdings Limited, a company listed on the Zimbabwe Stock Exchange (ZSE) which include Dairibord Zimbabwe (Private) Limited, Martindale Trading (Private) Limited t/a Lyons, Dairibord Malawi Limited, Kutal Investments (Private) Limited and NFB Logistics for the year ended 31 December 2014. We published our previous annual report for the reporting period ended 31 December 2013.

This report is targeted at a broad range of our stakeholders with the aim of presenting a balanced review of material issues from our operations. The report includes our operations in Zimbabwe and Malawi. There have been very little changes in the company since our previous reporting.

This is our third report prepared using Global Reporting Initiatives (GRI) Sustainability Reporting Framework (G3.1) in measuring our progress towards sustainability. This report is prepared meeting GRI Application Level-C reporting requirements. An application level check was carried out by Institute for Sustainability Africa (Inśaf). Our next report is expected to meet G4 Reporting Guidelines requirements

Our sustainability report is integrated with our financial reports. Our financial statements are audited by Ernst & Young Chartered Accountants (Zimbabwe). An independent auditors’ report on the financial statements contained in this report appears on page 40 of this annual report.

Forward looking StatementsCertain statements in this report constitute ‘forward looking statements’. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performances, objectives or achievements of Dairibord Holdings to be materially different from future results, performance, objectives or achievements expressed or implied in forward looking statements.

The performance of Dairibord Holdings is subject to effects of changes in the operating environment and other factors. Dairibord Holdings undertake no obligation to update publicly or to release any revision of these forward looking statements to reflect the events or circumstances after the date of publication of these pages or to reflect the occurrence of unanticipated events.

We would welcome your feedback on our reporting and any suggestions you have in terms of what you would like to see incorporated in our report for 2015. To do so, please email: [email protected]

Chairman Group Chief Executive

OVERVIEW

Corporate Profile 3

Vision, Mission & Values 4

Group Structure 5

Group Brands & Markets 7

Our Business Model 8

Group Performance Summary 11

GOVERNANCE, ETHICS & ENGAGEMENTS

Chairman’s Statement 12

Group Chief Executive’s Statement 14

Corporate Governance 20

Our Sustainability Approach 27

Risk Management & Opportunities 28

Stakeholder Engagement 30

PERFORMANCE

Sustainability Performance 31

Statements of Directors’ Responsibility 38

Report of Directors 39

Independent Auditors’ Report 40

Annual Financial Statements 41-79

ANNEXURE x

Glossary of Terms 80

GRI Index 81

Shareholder Analysis 83

Notice to Shareholders 85

Shareholders’ Calendar 87

Form of Proxy Loose

Corporate Information 88

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Dairibord Holdings Limited 2014 Annual Report

2014 ACCOLADES

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Dairibord Holdings Limited is a manufacturer and marketer of quality milk, foods and beverages. The company is listed on the

Zimbabwe Stock Exchange (Z Dairibord Holdings Limited has 100% ownership in Martindale Trading (Private) Limited t/a Lyons,

Lavenson Investments (Private) Limited, NFB Logistics (Private) Limited, Kutal Investments (Private) Limited and 68.4% shareholding

in Dairibord Malawi Limited. Kutal Investments is a property holding company which leases its properties to Group companies.

Lavenson Investments (Private)Limited has a 100% ownership in Dairibord Zimbabwe (Private) Limited.

The Group produces an extensive range of products which includes liquid milks (short and long shelf life milk), foods (yoghurt, ice

creams, condiments and spreads) and beverages (cordials, ready-to-drink dairy and non-dairy, tea and mineral water) which are

marketed in both the domestic and export markets.

Dairibord Holdings Limited is one of the largest manufacturing and marketing companies in Zimbabwe with over 50 brands. The

Group has factories in Harare, Chitungwiza, Gweru and Chipinge. The operations in Malawi are located in Blantyre.

CORPORATE PROFILE

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VISION, MISSION AND VALUES

VISIONTo be the most successful foods and beverages company in Africa, commanding a position of sustainable market leadership driven by strong

brands and superior human capital.

MISSIONTo provide our customers with the best quality nutritious foods and beverages for the sustenance of good health

VALUES• Innovation: We are committed to innovation and addressing changing customers’ needs and we will continuously develop our processes

to produce a wide variety of quality new products and services.

• Commitment: Customer satisfaction is the yardstick against which our company’s performance in all spheres will be measured. Exceeding

our customer needs and expectations will be a commitment shared by every person in the company.

• Professionalism: We will recruit and develop a well trained work force in which job competence, performance and succession stability

are the primary objectives.

• Integrity: Our integrity will be displayed in all our interactions with stakeholders while embracing environmentally friendly practices.

• Responsibility: As a corporate citizen, Dairibord Holdings Limited is committed to discharging itself responsibly in all its dealings with

stakeholders.

• Accountability: We take responsibility for our own actions.

• Sensitivity: We will provide a safe and positive working environment for our employees. Openness, two way communication, personal

development, trust and recognition of achievement will be fostered to achieve our mission. Our goal is to be responsible and accountable

to our shareholders through value creation in which sustainable profitability is a key requisite. We have developed and maintained a

well-documented management system supported by an internationally recognized up-to-date enterprise wide management system.

• Fairness: We will be fair in all our dealings

• Zero Tolerance to Corruption: Our strategies and operations are anchored on principles of sound corporate governance. We shall not

tolerate any form of corrupt dealings with our stakeholders. We will embrace ethical relationships with suppliers, employees, government,

customers, consumers and regulatory authorities. To this end, the Group operates a zero tolerance to corruption policy.

• Team work. We shall nurture a spirit of team work to optimise synergies and benefit from mutual co-existence

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GROUP STRUCTURE

Dairibord Holdings Limited

Martindale Trading (Private) Limited

Lavenson Investments

(Private) Limited

Dairibord Zimbabwe (Private) Limited

Dairibord Malawi Limited

Repsol Estates

(Private) Limited

Soilmark Farming (Private) Limited

Rosenwald Estates

(Private) Limited

Goldblum Investments

(Private) Limited

Slimline Investments

(Private) Limited

Lyons Africa (Private) Limited

Lyons Zimbabwe (Private) Limited

Abrupt Enterprises

(Private) Limited

Chatmoss Enterprises

(Private) Limited

Qualinex (Private) Limited

Westside Foods

(Private) Limited

NFB Logistics (Private) Limited

Kutal Investments

(Private) Limited

100%

100%

100% 100% 100% 100% 100% 100%

100% 100% 100% 100% 100%

100% 68.4% 100% 100%

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OPERATING SUBSIDIARIES

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The table below summarises Dairibord Holdings Brands.

Product Category Product Type Brands

Dairibord Zimbabwe (Private) Limited Lyons Dairibord Malawi Limited

Liquid Milks Long Shelf Life

Cultured

Short Shelf Life

Cream

Dairibord Steri MilkDairibord Chimombe

Dairibord Lacto

Dairibord Ching’ombe

Dairibord Chambiko

Dairibord Fresh Milk

Dairibord Fresh Cream

Foods Yoghurts

Ice cream Sticks & In-hand lines

Bulk Ice Creams

Cheese

Sauces & Condiments

Dairibord YummyDairibord Froot Scoop

Nutty SquirrelSkippy ChocBigga BearSuper SplitPlus 20Monsta MouseGreen GiantMello IceDevine

Dairibord Real DairyDairibord Novelty

NapoliLyons MaidQuenchSundae Cups

Lyons Maid

Rabroy Tomato SauceRabroy Salad CreamRabroy MayonnaiseMagic WhipLyons Peanut Butter

Dairibord YoghurtDairibord YogieYuphoria

Dairibord Ice Lollies

Dairibord Bulk Ice Creams

Gouda/Cheddar

Beverages Ready To Drink

Crushes & Cordials

Bottled Water

Tea

Drinking Chocolate

NutriplusFun ‘n FreshNatural JoyPfuko-Udiwo maheu

Dairibord Aqualite

Cascade

QuenchXtra value

Quick Brew Tea Bags

Lyons Drinking Chocolate

Family Choice JuicesJuice Up

Family Choice

Logistics Refrigerated Insulated Tankers Flat Deck Passenger

GROUP BRANDS AND MARKETS

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The Group’s principal business is the manufacturing and distribution of foods and beverages. In line with our mission, the portfolio is focused on providing customers with nutritious foods and beverages for the sustenance of good health. The Group has operations in Zimbabwe and Malawi.

Our StakeholdersThe Group is committed to open and honest interaction with all its stakeholders. The Group believes in inclusivity and responsiveness through ongoing stakeholder engagement.

Our stakeholder portfolio and their key interests

Stakeholders Issues of interest

Our Customers and Consumers § Service delivery § Product quality§ Prices§ Payment terms

Investors § Value creation§ Profitability§ Sustainability

Suppliers § Import permits for raw materials and heifers§ Product quality and availability§ Prices§ Payment terms

Government and Regulators § Indigenization and economic empowerment§ Compliance with tax, safety, health , municipal and environmental regulations Local

industry support§ Employment creation

Communities § Corporate social responsibility§ Clean environment

Employees § Training and development§ Conditions of service§ Health and safety

OUR BUSINESS MODEL

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FocusStrategic priorities

Core competenciesOpportunities

• Focused on nutritious foods and beverages

• Milk supply development• New products and line extensions• Cost reduction• Investment in superior technology • Risk management

• A portfolio focused on nutrition• Competitive brands• Diversified distribution channels• Nationwide distribution network

• Milk demand exceeding supply• Consumers increasing nutrition

awareness• Regional markets fuelled by

economic growth• Business realignment for

efficiencies and effectiveness

OUR STRATEGY AT A GLANCE

OUR BUSINESS MODEL (CONTINUED)

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OUR BUSINESS MODEL (CONTINUED)

OUR VALUE CHAIN

Stage of the value chain Comments

Inputs

Raw milk

Raw milk is sourced from independent farmers who sign contracts of supply with the respective SBUs. The pricing of the milk is market determined with quality and volume premiums incorporated to promote better quality and volumes. Milk collection is the responsibility of the company.

Materials [Skimmed Milk Powder, Full Cream Milk Powder, Sugar, Orange Juices, Fruit Sets, HDPE and PET]

Some materials are sourced globally exposing the business to global commodity price volatilities. Major imports are milk powders, sugar, HDPE and Fruit sets.

Utilities [electricity, water, coal and other fuels]

Utilities availability is erratic and at high cost particularly water and electricity. The business relies on standby facilities to support operations during power and water outages.

Labour [contract and permanent]

Labour is composed of contracted and permanent employees. Unionized employees bargain for wage increases annually and these negotiations are not based on productivity but much driven by the market determined poverty datum line.

Processes

The Group undertakes value addition by converting the inputs into value added products. The Group operates 6 factories [5 in Zimbabwe and 1 in Malawi].

The logistics business provides transport services to both Group companies and third party customers.

Outputs

Our Product portfolio:

The Group’s output is divided into the following portfolios:i. Liquid Milksii. Foods iii. Beveragesiv. Logistics

Distribution Channels

• Retail: This channel is composed of large retail outlets and wholesalers.• Vending: This is a cash channel with independent vendors buying stocks for resale on a daily basis.

The Group’s fast moving lines are sold through this channel mainly yoghurt, Cascade, Fun’n Fresh, Nutriplus, Ice creams and Maheu.

• Franchises: Most franchises operate from the Group’s premises formerly operated as distribution depots.

• Sales shops: These enable the Group to sell directly to the market. The Group has sales shops at factories, in cities and major towns.

• Hospitality and institutions: The channel focuses on hotels, schools and similar institution.• Exports: Trade is done mainly with customers in Zambia, Mozambique and South Africa.

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GROUP PERFORMANCE SUMMARY 2014 2013 Increase/ US$ US$ (decrease)Financial performance Revenue 99,015,525 100,051,503 (1%)Operating profit/(loss) 1,356,521 (1,837,711) 174%Profit/(loss) before tax from continuing operations 773,808 (2,316,633) 133%Profit/(loss) for the year from continuing operations 604,096 (1,780,911) 134%Profit/(loss) for the year 604,096 (1,753,264) 134%Net cashflows generated from operating activities 4,365,900 6,020,446 (27%)Net assets 46,084,681 45,565,604 1% Share information No. No. Number of ordinary shares in issue at the end of period 358,000,858 358,000,858 Weighted average number of shares 358,000,858 357,909,191 Share performance Earnings/(loss)per share US cents US cents - Basic 0.20 (0.50) 141% - Diluted 0.20 (0.50) 140% Closing market price 8.00 15.00 (47%)Net asset value per share 12.87 12.72 1% US$ US$ Market capitalisation 28,640,069 53,700,129 (47%)

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INTRODUCTION

I am pleased to present the consolidated results of Dairibord Holdings Limited for the year ended 31 December, 2014. The results reflect the combined impact of the investments made and cost containment measures pursued by the Group.

CHAIRMAN’S STATEMENT

OPERATING ENVIRONMENT

Zimbabwe

The operating environment remained difficult as economic growth, as measured by Gross Domestic Product (GDP) growth, declined from 3.3% in 2013, to an estimated 3.1% in 2014. The year was characterised by low inflation, which decreased business revenues in the absence of compensating volume increases. The foods and non-alcoholic beverages sector was most affected, with year-on-year inflation at -2.7%, compared to the all items inflation of -0.8%.

Manufacturing remains uncompetitive and this has led to a series of company closures and capacity underutilisation. According to the Confederation of Zimbabwe Industries Manufacturing Sector Survey Report, average capacity utilization declined from 39.6% in 2013 to 36.3% in 2014. The National Social Security Authority estimates that more than 700 companies officially closed while over 10,000 jobs were lost between 2011 and 2014, further affecting disposable incomes and demand. The strong United States Dollar made Zimbabwe exports uncompetitive, while making imports cheaper, especially those from South Africa, thereby increasing price competition in the retail space.

Notwithstanding these challenges, positive developments have been noted particularly in respect to the re-engagement of the international community as well as government initiatives to enhance the country’s competitiveness. This trend is expected to create a positive impact in the medium to long term.

Malawi

The challenges in the operating environment in Malawi continued unabated, despite the coming in of a new Government. Donor flight, uncertainty and speculation led to further depreciation of the Kwacha, which closed the year at MK490 to the US dollar, compared to MK450 at 31 December, 2013. The liquidity situation continued to be tight, and the supply of utilities remained erratic. The foregoing

had a negative impact on operating efficiencies and the ability of the company to review prices.

GROUP PERFORMANCE

Milk Supply In Zimbabwe, national raw milk production for the year is reported to have grown by 1.5%, to 55.5 million litres, compared to 2013. Dairibord’s milk intake increased by 3%. This growth is attributable to the Heifer Importation Scheme which has added a cumulative 430 heifers to the national herd. Five percent (5%) of Dairibord Zimbabwe (Private) Limited’s milk intake was received from animals under the scheme. Investment in the dairy herd scheme will continue to receive support, going forward.

At Group level, total raw milk intake declined by 2%, due to a 20% decrease in Malawi. Persistent quality challenges continue to negatively impact milk intake volumes for Dairibord Malawi.

Dr. L.L. TsumbaChairman

A total of 180 heifers were imported in 2014 bringing the total number of Dairibord imported cows to 430 since 2012.

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CHAIRMAN’S STATEMENT (CONTINUED)

Volume and Revenue PerformanceVolumes sold increased by 8%, to 70,412 million litres but revenue declined 1% to $99,016 million. The mismatch between the growth in volumes sold, and revenue generated is an outcome of price adjustments to retain competitiveness, as well as a change in the product mix; affected mainly by the growth in Beverages and a decline in Foods.

Investments in Pfuko-Udiwo Maheu and Aqualite bottled water increased the contribution of Beverages to revenue from 30% in 2013, to 31%, while the contribution of high value Foods declined from 35% to 31%. The decline in the contribution of Foods was on account of production disruptions during the commissioning of new ice cream equipment. The liquid milk contribution was at 37%, up from 35% the prior year as our brands reclaimed market share. Revenue contribution from Logistics services, to third party customers, remained at 1% of Group revenue.

ProfitabilityThe Group recorded an operating profit of $1.357 million against an operating loss of $1.838 million in 2013. Although performance improved from the previous year, largely due to the positive impact of the cost containment strategies pursued by the Group, margins have remained under pressure, as consumer prices declined at a rate faster than the reduction in operating costs. An operating profit margin of 1% was achieved.

While sales volumes increased by 8%, cost of sales grew by 1% only, and overheads were down 18%. A 15% increase in the prices of milk powders on the global market negatively impacted performance. Improvement in profitability is expected going forward, on the back of declining commodity prices and further cost reduction initiatives.

Dairibord Malawi was not spared by the developments in that country’s operating environment. The company posted an operating loss of $0.351 million in 2014. Measures to turnaround the performance of the company have been put in place and the Board will continue to monitor the business.

INVESTMENTSCapital investments of $9.962 million were mainly in Pfuko-Udiwo Maheu, ice creams, Aqualite water, Steri Milk and yoghurt equipment. These investments were aimed at increasing product offerings to the consumers, increasing capacity on constrained lines and enhancing efficiencies. The investments were funded from borrowings and internal resources. The benefits of these investments will be fully realised in 2015.

BORROWINGSBorrowings closed the year at $11.076 million, up from $7.094 million in 2013. The increased borrowings were used to fund capital projects for the year. Given the funding challenges and costs, the Group will continue to monitor its gearing to ensure that borrowings are maintained at sustainable levels.

CASH FLOWSThe Group continues to generate positive net operating cash flows. Net cash generated from operations was $4.366 million, down from $6.020 million in the prior year. The decline in net cash generated was on account of increased working capital requirements to support new lines introduced during the year. Going forward, focus will be directed at enhancing cash generating channels.

SUSTAINABILITY REPORTING Dairibord Holdings scooped the Best Stakeholder Practices and Sustainability Reporting Award, and came second in the Best Governed Company Category at the 2014 Institute of Chartered Secretaries and Administrators in Zimbabwe Corporate Governance Awards forum. The Group will continue to improve its reporting, to integrate all aspects of the business for the benefit of stakeholders.

OUTLOOKThe macro-economic environment is not expected to improve significantly in the short to medium term, even though concerted efforts are underway. Industrial activity will, therefore, remain depressed.

Continued investment in research and development, in order to provide customers with nutritious foods and beverages, will remain a key growth pillar. In 2014, the Group re-launched some products such as Aqualite bottled water, and improved product offerings through the introduction of new product lines such as Pfuko-Udiwo Maheu, Devine and Napoli premium ice creams, and line extensions on the yoghurts range. The products were well received and have increased the Group’s market share in the respective product categories.

The Board is confident that from these 2014 initiatives, management has embarked on a new business model that will drive the company into the future. Volumes are set to grow, but the depressed trading environment will continue to exert pressure on prices. Input costs, mainly those linked to international commodity prices, such as fuel, petroleum based packaging materials and milk powders will move in favour of the business, and positively impact profitability in 2015.

DIVIDENDConsidering the Group’s recapitalisation plan, and increased working capital needs, the Board has resolved not to declare a dividend for the year ended 31 December 2014.

DIRECTORATEI advise that Mr Fungayi Mungoni who was appointed director of the company on 2 April 2010 will be retiring at the AGM to be held on 28 May 2015, and is not seeking re-election. Mr Mungoni was the Chairman of the Finance and Audit Committee and a member of the Remuneration Committee. On behalf of the Board, I take this opportunity to thank him for his devoted and dedicated service to the company and to wish him the very best in the future.

APPRECIATIONI take this opportunity to also express my appreciation to our various stakeholders, employees, management, and my fellow board members, for their efforts in ensuring the continuing success of Dairibord.

DR.L.L. TsumbaChairman

12 March 2015

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OPERATING ENVIRONMENT

Zimbabwe Economic growth as measured by the Gross Domestic Product (GDP) is estimated at 3.1% for 2014 from 3.3% in 2013 (Ministry of Finance). Macro-economic activity remains depressed due to low levels of investment to improve competitiveness at national level. The competitiveness gap between Zimbabwe and its major trading partners has made imports cheaper than local products.

The depreciation of the South African Rand (ZAR) against the US dollar has increased pricing pressure on local products as imports, mainly from South Africa, leveraged on the exchange rate movements during the year. Exports into the region remain depressed on account of the stronger US dollar making Zimbabwe’s products more expensive on the export market.

Year-on-year inflation for foods and non-alcoholic beverages at the end of 2014 was -2.7% compared to the all items inflation of -0.8%. The downward review of consumer prices was necessitated by the need to retain competitiveness. Middle to upper income segments of the market are on the decline as evidenced by the growth of the informal sector and down trading by consumers.

The trade deficit for 2014 was still high at $3.3 billion though 21% below 2013. The decrease in the trade deficit is attributable to depressed consumer spending and the policies introduced by Government to level the playing field between imports and local manufacturers.

Malawi The economy of Malawi remains depressed due to reduced donor funding. Foreign currency shortages persisted, with the Malawi Kwacha (MK) depreciating 9% to close the year at MK490 to the US dollar from MK450 as at the end of 2013. Year on year inflation was at 24% while cost of borrowing remained high at 39%. Erratic supply of utilities continued to impact business operations.

PERFORMANCE OVERVIEW

Revenue and volumes soldTurnover was $99.016 million, 1% below 2013, while volumes sold at 70.412 million litres were 8% ahead of 2013. The growth in volumes sold was driven by new products, line extensions and improved product supply supported by investments in lines with constrained capacity.

The decline in revenue is attributable to price adjustments and change in sales mix. Price per litre declined 8% to $1.41 from $1.53 in 2013. The mismatch between growth in volumes sold and revenue is due to the decline in Foods which is a high value per litre portfolio and growth in low value per litre Beverages and Liquid Milks. Revenue spread across the portfolio remains balanced.

The sales mix both in terms of revenue and volumes sold is shown below:

Anthony MandiwanzaGroup Chief Executive

GROUP CHIEF EXECUTIVE’S STATEMENT

PREAMBLE

The journey we started is beginning to bear fruit. The improved performance over prior year is an outcome of the investments made to enhance the Group’s product offering and reduce operating costs through efficiencies. Cost reduction initiatives culminated in improved cost per litre performance.

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50%17%

43%

40%

19%

42%

39%0%

2014 2012

Contribution to total Volumes by Portfolio 2014 vs. 2013

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Portfolio performanceThe graphs below show the performance trend between 2014 and 2013 by portfolio

Liquid MilksSales volumes for Liquid Milks grew by 8% from prior year while revenue was 6% up. Good growth was recorded for Chimombe driven by the 1 litre carton on account of improved product supply and the 250 ml sachet line extension. Lacto regained market share driven by improved product availability, product re-branding and quality enhancements.

FoodsVolumes sold and revenue realised for the Foods portfolio declined 5% and 12% respectively. Volumes were impacted by supply disruptions during commissioning of ice creams and yoghurt plants. The decrease in revenue is attributable to both supply disruptions and price adjustments.

Volumes will recover going forward on the back of investments made in ice cream in-hand lines, bulk ice creams and yoghurt line extensions. In terms of branding initiatives, Yummy yoghurt, Dairibord

bulk ice creams and cones were re-branded. A new premium range of ice cream sticks, Dairibord Devine, was launched in September 2014 and has been well received by the market.

BeveragesStrong growth was recorded for the Beverage portfolio which grew by 13% in volume terms. Growth was driven by the new product Pfuko-Udiwo Maheu and recovery of rebranded Aqualite water. Investments were made during the year to support these lines and full year impact will be realized in 2015. Revenue was 3% up, impacted by sales mix in the portfolio.

ProfitabilityOperating profit for the year was $1.357 million compared to an operating loss of $1.838 million recorded in 2013. Earnings before Tax, Interest, Depreciation and Amortization (EBITDA) margin improved to 5% from 2% in 2013. The rationalisation programme and other cost reduction initiatives had a positive impact on the cost per litre performance during the year. Materials cost per litre was 4% down, factory overheads 10% down and other overheads were 25% below prior year.

A combination of selling price adjustments and increases in costs of milk and whey powders, HDPE and stabilisers weighed down on profitability.

Strategic investments Since dollarization in 2009, the Group has invested $31.5 million to address efficiencies, quality consistency, constrained capacity, new product offerings and line extensions putting the company in a strong position for future growth. In 2014, capital investments worth $9.962 million were undertaken and major items are:

• Steri Milk Plant• Pfuko-Udiwo Maheu Plant• Ice cream in hand lines• Bulk ice creams• Aqualite bottled water• Yoghurt line extensions• Distribution capacity

The Chipinge Steri Milk project is still in progress and commissioning is expected by the end of April 2015. The Gweru plant, which produces Steri milk and Lacto, remains open until the Chipinge Steri Milk plant comes on stream. Further production and distribution rationalisation at Gweru will be made after the commissioning of the Steri Milk plant in Chipinge.

GROUP CHIEF EXECUTIVE’S STATEMENT (CONTINUED)

The Chipinge Steri Milk project is still in progress and commissioning is expected by the end of April 2015

100%

20%

40%

60%

80%

31%

31%

1%

37%

35%

28%

1%

36%

0%

2014 2012

Contribution to total Revenue by Portfolio 2014 vs. 2013

Sales Volumes by Portfolio 2014 vs. 2013 (000 litres)35,000

30,000

25,000

20,000

15,000

10,000

5,000

Liquid Milks Foods Beverages

20132014

Revenue Portfolio 2014 vs. 2013 ($000 )

35,000

40,000

30,000

25,000

20,000

15,000

10,000

5,000

Liquid Milks Foods Beverages Logistics

20132014

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Borrowings Borrowings increased by 56% to $11.076 million to support capital expenditure. This resulted in increased gearing which ended the year at 19.4% from 13.5% in 2013. The Group’s borrowings are maintained at sustainable levels in line with risk appetite. Total cost of borrowings remained at around 10.5% per annum and no changes in the cost are expected in the short to medium term.

Capital expenditure will be funded from a mixture of own resources and debt taking into account the challenges affecting the economy and the risk of high borrowings.

Cash generationDespite the demanding working capital requirements, the business generated positive cash flows. Net cash generated from operating activities was at $4.366 million compared to $6.020 million in 2013. The cash generated was used to support the investments made. Strategies are in place to ensure that cash generating channels are supported particularly the vending and sales shops channels. The quality of debtors has been enhanced through a credit policy that requires debtors to pledge collateral security. Credit insurance in export markets is also undertaken to minimize the impact of bad debts on the profitability of the business.

PropertiesThe Board resolved in 2013 to dispose of non-core assets which included residential properties. The process of disposal of the non-core assets is already in progress. Residential properties worth $1 million were disposed of in 2014 and the remainder valued at another $1 million is expected to be disposed of in 2015. Cash generated from the disposal will be deployed towards capital investments earmarked for 2015.

Milk supply

Raw milk intake for the Group was 2% below 2013. DZPL’s milk intake increased 3% versus a 1.5% growth in national milk production in Zimbabwe. DZPL dominates the milk supply market share collecting 40% of the national raw milk production.

The growth in DZPL’s milk intake ahead of growth in national output is attributable to the Heifer Programme. In 2014, the Heifer Programme contributed 5% of DZPL’s milk intake. Cumulatively, 430 heifers have been imported since the programme commenced. During the year under review, 180 heifers were imported. In Malawi, raw milk intake declined mainly due to quality challenges experienced during the year resulting in intake decreasing by 20% over 2013.

HUMAN CAPITALThe Group enjoyed cordial and harmonious employee relations during the year. There were no regrettable losses signifying a reasonable level of employee retention and satisfaction.The manpower rationalization programme has started bearing fruits as the total labour cost decreased by 3%. The increase in the number of employees from 1,418 in 2013 to 1,478 in 2014, mainly contract labour, was to support new product offerings and lines extensions. Going forward, the group’s human capital strategy will be anchored on the following pillars:• Employee Wellness programmes to improve staff well-being

including safety and health.• Alignment of remuneration with productivity. The objective is to

reinforce a performance culture through performance incentives• Attraction and retention of the best talent to support current

and future operations. Remuneration is linked to performance through the performance incentive scheme and top performers are rewarded accordingly.

• Skills development. The Group is establishing local and international capacity building partnerships in the key areas of Dairy Technology as well as leadership development. Specific initiatives include the MBA programme, graduate trainee programmes and apprenticeships across all SBUs. Exchange programmes within the Group are being undertaken for knowledge transfer and familiarization with Group operations.

Brand buildingDuring the year 2014, a new beverage brand Pfuko-Udiwo Maheu was launched and the product has gained significant market share. A new premium range of ice creams, Dairibord Devine, was also successfully launched. Line extensions and product rebrands for Yoghurts, Ice creams, Aqualite, Quench cordials and Cascade were introduced. Most of the Group’s brands remain at brand rating positions number 1 or 2 in their respective categories. In the 2014 Marketers Association of Zimbabwe (M.A.Z) annual Superbrands Awards, Dairibord Holdings received recognition and awards as follows:a) Marketing Oriented CEO of The Year Award: - 1st runner up

Anthony Mandiwanza, Group Chief Executive

b) Exceptional Launch of the Year Award: 1st runner up Dairibord Pfuko-Udiwo Maheu

c) Top 10 Business or Corporate Brands: Dairibord Zimbabwe (Private) Limited - 9th position

This is testimony to the tremendous equity the Group’s brands enjoy while confirming the work being put behind overall brand building and marketing initiatives.

In addition to the investments being made to support brands with potential, the following initiatives are being pursued to increase the equity of our brands in the market:• Continuous research and development to introduce new products

and to match existing brands to the changing consumer tastes• Cold chain facilities to support and enhance product visibility in

the market • Acquisition of distribution trucks to support increased volumes

and • Line extensions to ensure presence across all market segments


10,000

20,000

30,000

40,000

50,000

60,000

Milk Intake Statistics 2014 vs. 2013

DZPL DML GroupNational MilkProduction - Zimbabwe

22,134 4,788 26,922 55,500

21,433

2014

2013 5,981 27,424 55,700

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Sustainability performanceThe Group embraces corporate sustainability principles in its operations. Detailed performance is contained in the Group’s Sustainability Report.

In 2014, Dairibord Holdings scooped the Best Stakeholder Practices and Sustainability Reporting award and came second in the Best Governed Company Category at the 2014 Institute of Chartered Secretaries and Administrators in Zimbabwe corporate governance awards forum. Resources will be committed to ensure continuous improvement in sustainability performance going forward.

STRATEGIC BUSINESS UNIT (SBU) PERFORMANCEThe graph below shows contribution to total revenue by SBU

Dairibord Zimbabwe (Private) Limited (DZPL)DZPL maintained the leading contribution to Group turnover at 61% from 57% in 2013. Volumes and revenue were 26% and 8% above 2013 respectively.

Significant market opportunities are yet to be exhausted for DZPL across the entire portfolio. In the milks category, the brands have equity but the market gap cannot be fully exploited due to milk supply challenges.

Investments in Aqualite bottled water, Pfuko-Udiwo Maheu, Steri Milk plant refurbishment, ice-cream equipment, yoghurt line extensions and the Heifer Programme were undertaken by DZPL to tap into existing opportunities.

The cost reduction initiatives to realign the SBU started bearing fruit and this was reflected by the business returning to profitability in 2014. Performance is expected to maintain an upward trend going forward on the back of the investments made and the realignment of the business.

Lyons Sales revenue and volumes were 7% and 3% below prior year respectively. The Foods portfolio was affected mainly by competition from imports while increased product offerings by local competitors impacted the beverages portfolio.

Exports contribution to total revenue grew marginally from 5% to 6%. Exports are being pursued to diversify markets and revenue streams as well as to utilize existing capacity. Distributors have already been developed in Zambia, South Africa and Mozambique. Despite the competitiveness challenges facing local products in the export market, the Group has adopted a marginal pricing strategy to enable distributors to sell at competitive prices.

During the year, distribution channels were strengthened through investments in additional cold chain support for ice creams. Price adjustments were made to maintain competitiveness in the market.In addition to driving sales through exports, the following strategies are being deployed to grow sales volumes and increase profit margins:• Research and development to introduce new products and line

extensions. • Developing alternative and cheaper suppliers for critical materials

and• Streamlining the operating model to reduce overhead costs

NFB LogisticsSales revenue for the business was 14% above prior year at $7.955 million. NFB Logistics provides integrated logistics services to Group companies with 87% of its revenues coming from Lyons and DZPL. Third party turnover, contributing only 13% of the SBU’s revenue, declined 12% compared to prior year, as capacity was moved from third parties to support increased Group volumes.

Performance is expected to improve going forward with completion of capacity enhancement projects within the Group. The business will also focus on developing third party business to diversify revenue streams.

Dairibord Malawi LimitedDML posted a weak set of results for the year ended 31 December 2014. An operating loss of $351,000 was recorded due to a challenging macro-economic environment, erratic supply of utilities and high production costs. Interventions to restore profitability are already in place focusing on cost containment, manpower rationalisation and exports.

The performance of the business in the first quarter of 2015 is showing a positive trend.

OUTLOOKThe business has laid a solid foundation for the future. Performance going forward will be anchored on the following key business pillars:• Programmes to stimulate milk supply development. The Heifer

importation scheme will be supported through partnerships with farmers and financing institutions. A total of 500 heifers is earmarked for 2015 bringing an additional 200,000 litres per month in raw milk intake.

• Leveraging on the investments made in 2014 to support both domestic and export markets. Further investments in UHT milk and beverages will be made in 2015 to support brands with potential

• Human capital development to ensure that the skills pool is adequate to drive the business

• Cost containment. Production factories, some distribution facilities, research and development and procurement have already been consolidated. Products of Lyons and DZPL are now sold through the same distribution channels. Work is currently underway on consolidating engineering, marketing and other services. The Group will also benefit from global trends in commodity prices which are trending downwards impacting fuel, packaging and milk powder prices.

• Cash generation. Cash channels mainly sales shops and vending will be enhanced to improve the cash to credit ratio. Other strategies to improve cash generation will be deployed mainly to maintain a clean receivables portfolio and keeping working capital at optimal levels.

Revenue Contribution by SBU (2014 vs. 2013)DZPL

2014

33% 36%

61% 57%

5% 6%1% 1%

2013

Lyons DML NFB

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The economic environment in Zimbabwe and Malawi will be challenging going forward. The business model is being realigned through cost containment, building endurable brands and skills development in order to create and enhance shareholder value.

Anthony S MandiwanzaGroup Chief Executive

12 March 2015

Yummy yoghurt - 6 pack

Froot Scoop yoghurt- 6 pack

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SELECTED INVESTMENTS UNDERTAKEN IN 2014

Pfuko-Udiwo Maheu in production

Bulk Yoghurt filling machine

Aqualite in production

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Dr. Leonard L. TsumbaPhD (Economics)Chairman Non-Executive

Anthony S. MandiwanzaDip. in Food and Dairy Technology,

MBAExecutive

Thompson MabikaDip. in Management Accounting (CIMA)

Executive

Herbert MakuwaBSc (Finance), MBA

Non-Executive

Mercy R. NdoroB.Acc, MBAExecutive

CORPORATE GOVERNANCE

Board of Directors

Cleton MahembeDip. in Agriculture

Non-Executive

Sibusisiwe ChindoveBA, MSc (Food Science)

Non-Executive

Josphat SachikonyeB.Acc, FCMA, CGMA, MBL

Non-Executive

Fungayi MungoniBAcc, CA(Z), MBA

Non-Executive

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DIRECTORATE AND PROFESSIONAL ADVISORS

DAIRIBORD HOLDINGS LIMITED BOARD OF DIRECTORSDr Leonard. L. Tsumba - Chairman Anthony S. Mandiwanza - Group Chief ExecutiveCleton MahembeFungayi MungoniHerbert MakuwaJosphat Sachikonye Mercy R. Ndoro - ExecutiveSibusisiwe ChindoveThompson Mabika - Executive

DAIRIBORD ZIMBABWE (PRIVATE) LIMITED BOARD OF DIRECTORS Anthony S. Mandiwanza - ChairmanDavid HasluckDavid MillsNobert ChiromoMercy R. NdoroThompson Mabika - ExecutiveSibusisiwe P. Bango

MARTINDALE TRADING (PRIVATE) LIMITED (T/A LYONS) BOARD OF DIRECTORS Anthony S. Mandiwanza - ChairmanMichael TaperaLinda MukushaAdiel KarimaMercy R. NdoroTracey Mutaviri - ExecutiveSibusisiwe P. Bango

DAIRIBORD MALAWI LIMITED BOARD OF DIRECTORS Anthony S. Mandiwanza - Chairman Donbell MandalaChikondi Ng’ombeNyengo Webster GeorgeMisheck EsauTheodora N. Nyamandi - ExecutiveWilfred G. Lipita

NFB LOGISTICS (PRIVATE) LIMITED BOARD OF DIRECTORSAnthony S. Mandiwanza - ChairmanDavid HasluckHerbert MakuwaMercy R. NdoroPatrick MakanzaLovemore Chokoza - Executive

DAIRIBORD HOLDINGS LIMITED COMMITTEESFINANCE AND AUDIT COMMITTEEFungayi Mungoni - ChairmanCleton MahembeHerbert MakuwaMichael TaperaDavid Hasluck

REMUNERATION COMMITTEEDr L. L. Tsumba - ChairmanFungayi Mungoni

NOMINATIONS COMMITTEEDr Leonard. L Tsumba-ChairmanJosphat Sachikonye Sibusisiwe Chindove

SECRETARY AND REGISTERED OFFICEMercy R. NdoroZB Life Towers9th Floor77 Jason Moyo AvenueP O Box 587, Harare, ZimbabweE-mail: [email protected] Numbers: 263 4 790801-7, +263 4 731071-8Fax Number: +263 4 795220

AUDITORSErnst & Young Chartered Accountants (Zimbabwe)Angwa CityJulius Nyerere Way/Kwame Nkrumah AveP.O Box 62 or 702Harare

PRINCIPAL BANKERSStandard Chartered Bank of Zimbabwe LimitedBarclays Bank of Zimbabwe Limited

TRANSFER SECRETARIESCorpserve (Private) Limited4th Floor, ZB CentreCnr 1st Street and Kwame Nkrumah AvenueHarareZimbabwe

CORPORATE GOVERNANCE (CONTINUED)

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CORPORATE MANAGEMENT Anthony S. Mandiwanza - Group Chief ExecutiveAnna Dhlamini - Group Information System ManagerBernard Chakeredza - Group Chief Internal AuditorCharity Magwenzi - Group Research and Development ManagerDaphne Bope - Group Human Resources ManagerCosta Manyika - Group Procurement ExecutiveGabriel Matanga - Group Chief EngineerGilbert Takabarasha - Group Human Resources and Administration Director Imelda S. Shoko - Group Corporate Communications ManagerKudakwashe Bhaera - Group Finance ManagerLawrence Chikwehwa - Group Marketing ManagerMercy R. Ndoro - Group Finance DirectorObey Machechesa - Group Business Analyst

OPERATIONS Dairibord Zimbabwe (Private) Limited Thompson Mabika - Managing DirectorThemba Mutsvairo - Chief Operating OfficerMaurice Karimupfumbi - Financial ControllerTatenda Napata - Sales and Marketing ExecutiveTinashe Kandare - Human Resources Manager Stanley Mandizha - General Manager - Milk Supply Development UnitTabeth Kahiya - Quality Assurance ManagerMpembe Baro - Engineering Manager NFB Logistics (Private) Limited Lovemore Chokoza - Managing DirectorLeo Gandiya - Technical Operations ManagerPeter Kiropasi - Financial ControllerGeorge Mashayahanya - Transport and Logistics ManagerTerence Kasenya - Sales and Marketing Manager Martindale Trading (Private) Limited t/a Lyons Tracey Mutaviri - Managing DirectorGodfrey Nzuma - Financial Controller Karman Machame - Production ManagerGilbert Mushunje - Sales and Marketing ManagerJacob Maneswa - Quality Assurance ManagerTrymore Mudzi - Human Resources Manager

Dairibord Malawi Limited Theodora Nyamandi - Managing DirectorMadalitso Chimwere - Financial ControllerTimothy Sukali - Sales and Marketing Manager

DAIRIBORD HOLDINGS LIMITED MANAGEMENT

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GOVERNANCE AND MANAGEMENT APPROACHThe board of directors is responsible for the direction and control of the Group, setting its strategic aims, providing leadership to put them into effect, supervising management and reporting to shareholders on their stewardship. To that end it has established appropriate policies and procedures to govern the conduct of the company’s business and deliberations of the board. The board affirms its commitment to ensure that the group acts in a responsible and transparent manner from an economic, environmental and social perspective while creating sustainable value and benefits to all stakeholders.

The group continues to upholds the corporate governance manual based on the following codes of practice; Principles of Corporate Governance in Zimbabwe, the King II report on Corporate Governance for South Africa – 2002, Organisation for Economic Cooperation and Development (OECD 1999) Principles of Corporate Governance, and Principles of Corporate Governance in the Commonwealth (CACG Guidelines 1999). This manual is used as a reference point for the company’s corporate governance practices. The following is a broad review of the present structure and practices.

BUSINESS ETHICSThe group adopted a Zero Tolerance Approach to Corruption in all business dealings with all stakeholders. All cases involving corruption are carefully investigated. Depending on the case, the company may involve experts, external auditors and the police. The company adopted a policy of sustainable and responsible procurement to assess and ensure that the business deals with credible suppliers and service providers who adhere to ethical values. Where there are complaints arising from our business practices, due attention is placed. Under this policy, the Group hopes to ensure that issues of human rights in business as outlined by United Nations are also considered along the entire value chain.

COMMUNICATION WITH THE BOARDThe company provides platforms for shareholders to communicate with the Board. Some of the platforms include Annual General Meetings, press announcements of performance (interim and year end), company website, formal meetings with shareholders and investors and use of shareholders’ voting rights system.

SHARE DEALINGSDirectors and all group employees are not permitted to deal directly or indirectly in the shares of the company during:• The period from the end of the interim or annual reporting periods to the announcement of the interim and annual results.• Any period when they are aware of any negotiations or details which may affect the share price.

DIRECTORS’ DECLARATION OF INTERESTDuring the year under review, no director had any material interest that would conflict with the business objectives. Beneficial interests of directors in the shares of the company are given in the shareholders information section.

BOARD STRUCTURE AND EXPERTISEThe present Board comprises of six non-executive directors (67%) (including the chairman) and three executive directors (33%). An independent non-executive director chairs the board. The board meets at least quarterly. Members of the Board possess various expertise that include business, finance, manufacturing and human resources management.

APPOINTMENT AND RETIREMENT OF NON-ExECUTIVE DIRECTORSIn terms of the Company’s Articles of Association, a third of the non-executive directors retire from office by rotation at the Annual General Meeting and are eligible for re-election. Independent on executive directors serve for a maximum of nine years.

PROFESSIONAL ADVICEIt is Board policy that if there is a justifiable case, directors shall be entitled to seek independent professional advice at the company’s expense in the furtherance of their duties.

CORPORATE GOVERNANCE

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CORPORATE GOVERNANCE (CONTINUED)

SUB-COMMITTEES:

Committee Members Main Function

Finance & Audit Mr. Fungayi Mungoni (Chairman)Mr. Cleton MahembeMr. Herbert MakuwaMr. Dave Hasluck

The Committee monitors the company’s overall control procedures, risk management, and financial reporting. It provides direct oversight and liaison on behalf of the Board with both internal and external auditors. The Committee reviews all significant Group risks, as well as risk mitigation initiatives and their effectiveness on a quarterly basis.

Remuneration Dr. Leonard L. Tsumba (Chairman)Mr. Fungayi Mungoni

This committee is responsible for reviewing the company’s remuneration policies and approving remuneration packages for senior executives.

Nominations Dr. L.L. TsumbaMr. J. SachikonyeMrs. S. Chindove

This committee searches and receives nominations, carries out background and reference checks and makes recommendations on candidates for board membership. It reviews the adequacy of the expertise, relevance and independence of the board. The Committee also co-ordinates the evaluation of the performance of the board.

ATTENDANCE TO MEETINGS DURING 2014

Name Year of Appointment

Main Board attended

Finance & AuditAttended

NominationAttended

RemunerationAttended

Dr L.L. Tsumba 2012 4/4 1/1

Mr A. S. Mandiwanza 1997 4/4

Ms S. P. Bango * 2004 1/2

Mrs S. Chindove 2006 4/4 1/1

Mr T. Mabika 1997 4/4

Mr C. Mahembe 1997 4/4 5/5

Mr H. Makuwa 1999 3/4 5/5

Mr F. Mungoni 2010 3/4 5/5 1/1 1/1

Ms M. Ndoro 2009 3/4

Mr J. Sachikonye 2009 3/4 1/1

Mr D. Hasluck 2012 3/5

* Ms S. P. Bango retired at the AGM held on 16 May 2014 and did not seek re-election.

A1 Poster

Delight in each sip!

introducing...

A1 Poster

Delight in each sip!

introducing...

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OUR SUSTAINABILITY APPROACHManagement ApproachThe Group believes that operating in a socially and environmentally friendly manner is key to the long term success and competitiveness of the company. The business is trying all best to ensure systems are strengthened to manage and address sustainability impacts arising from our operations. As such, the group adopted the Global Reporting Initiatives (GRI) Sustainability Reporting Guidelines a tool for measuring performance in our sustainable business initiatives and practices.

Stakeholder EngagementThe Group’s stakeholder engagement strategy is part of our overall corporate strategy and risk management. Key to our operations is our stakeholders who include investors, employees, communities, government, regulators, suppliers, customers and others. The Group values these stakeholders. As such, stakeholder engagement for the purpose of capturing material concerns from our stakeholders which can help us balance our businesses approach with the long term success of the organization.

Identifying Material Issues and reporting boundaryIn measuring our sustainability performance, key performance indicators are identified through an assessment of our business in relations to material concerns of our stakeholders. As such, the choice of indicators to report on was mainly influenced by issues considered material in the context of our operating environment. In defining material issues to report on, guidance was sought from GRI’s Sustainability Reporting Framework while assessing key concerns from our stakeholders. This report covers sustainability performance for our operations in both Zimbabwe and Malawi.

Sustainability Performance DataThe systems of data collection continue to be reviewed and enhanced to improve the quality of data and measurement criteria. Therefore, any major variances are a result of development and improvement in data collection and measurement against prior years.

Inclusive businessInclusive business is the profitable integration of disadvantaged people and small & medium enterprises in the core value chain of larger companies. People and enterprises at the Base of the Pyramid (BoP) can be involved as suppliers, distributors, retailers, consumers, entrepreneurs and innovators.

The impact of the business as a commercial enterprise on the low to middle income sections of society is reflected in the business model which engages them in both upstream and downstream operations.

The diagram below shows the linkages between the business and the bottom of the pyramid stakeholders:

Farmers

• Guaranteed market for milk produced• Extension services• Credit facilities for herd development, stock feeds, equipment and other farm requirements• Lobbying to government for favourable policies

Vendors

• Opportunity to engage in trade without any capital injection• Provision of uniforms and equipment• Transportation to and from selling points• Credit facilities to enable them to buy and pay after sales

Franchises or distributors

• Credit facilities• Premises for some at Dairibord depots• Marketing support• Advisory support on how to manage their businesses

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RISK MANAGEMENTRisk Management PhilosophyRisk is embedded in the Group’s activities and is not separable from opportunity. The management of risk across the Group is not a standalone activity but rather an integral part of our operations. The risks in this report are the major uncertainties in terms of likelihood and impact. The board continues to monitor the business and the operating environment to identify and develop strategies to mitigate emerging risks.

Group Risk Management FrameworkThe Board is terminally responsible for risk governance across the Group. The Board has delegated the risk management function to the Group Finance and Audit Committee. The composition of the Finance and Audit Committee is made up of Non-Executive Directors only. The sub-committee is accountable to the main Board of Directors. The mandate of the Finance and Audit Committee regarding risk is to ensure that the Group has adequate systems to identify, measure, predict, prepare for and respond adequately to any risks that the organisation may face.

Operational StructureManagement is accountable to the Board for designing, implementing and monitoring the Group’s risk management procedures and every manager is responsible for managing risk in their areas of responsibility.

To ensure the efficient monitoring and assessment of risk management systems, the Group Chief Internal Auditor is responsible for evaluating the adequacy and operational effectiveness of the procedures. The Group Chief Internal Auditor reports to the Finance and Audit Committee.

Main risks affecting the Group and mitigating measures

Risk category Specific exposures Mitigants

Socio-political

Excessive wage demands by labor unions resulting in unsustainable wage levels

• Proactive participation in wage negotiation• Employee engagement internally to discuss their concerns• The Dairibord Employee Share Ownership scheme enables the

employees to understand the position of the business since they are shareholders as well

Legal/Regulatory

Non-compliance with tax laws • Tax health checks done annually• Frequent engagement with authorities on tax laws and other related

developments.

Non-compliance with indigenization and empowerment laws

• Annual certification for compliance is sought from the National Indigenization and Economic Empowerment Board.

Product and workplace safety below standard

• Operating standards are maintained above minimum requirements.• Certification with regulators like National Social Security Authority,

Environmental Management Agency, and Ministry of Agriculture are sought before commencing operations.

• ISO 9000: Quality Assurance procedures certified• ISO 22001: Food Safety Management Systems certification done for

DZPL and DML and being rolled out to Lyons. • Pursuing ISO 14001: Safety, Health and Environmental certification

Economic risk

Increased competition from cheaper imports due to lack of competiveness for local manufacturers and weakening of the South African Rand

• Successfully lobbied Government to confine limit liquid milk importation to processors to assist in growing local dairy industry

• Successfully lobbied government to levy duty on all liquid milk imports to level the playing field between imports and local products.

Decline in competitiveness due to the opening up of the global economy and the attractiveness of the US dollar

• Investing in new technology to improve on efficiencies• Investing in research and development to keep pace with market

changes.

Deterioration of the operating environment in Malawi threatening viability

• Focusing on exports to preserve the value of the subsidiary in Malawi• Closely monitoring performance to inform Group position on the

investment

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Risk category Specific exposures Mitigants

Business risk

Failure of the business model to create superior and sustainable performance

• Realignment of the entire business ongoing• Introducing new products to increase revenue and profitability• Cost reduction initiatives at materials and overheads level

Work stoppages/operational failure due to materials non-availability, power outages and other unforeseen eventualities

• Holding safety stocks for all critical materials• Developed more suppliers for critical materials to avoid concentration

risk.• Signed supply contracts with all dairy farmers• The Group has invested in standby generators and boreholes to ensure

consistent supply of utilities

Inadequate raw milk intake volumes • Intervening through the Heifer program• Engaging government on policies that encourage investment in the dairy

sector.

Talent risk

Loss of skilled employees • Performance based pay structure. Top performers are rewarded with both financial and non-financial incentives.

Inadequate succession planning exposing the future of the business

• 100% cover for all critical positions• Several management development programs are underway viz. MBAs,

Graduate Trainees and Food and Dairy Technology training

Commodity price risks

Negative impact on profit margins • The procurement function undertakes global procurement of materials taking advantage of lower prices during down turns in global markets.

• Supply contracts are constantly negotiated to find better terms in light of developments in the market

Investor sentiment risk

Negative investor sentiment on the company leading to share price decline on the Zimbabwe Stock Exchange.

• The Group actively participates in investor roadshows held by different securities traders to clarify on the prospects of the company

• One on one meetings are also held with interested investors or analysts at any time during the year

• Analysts’ presentations are held every year accompanying the publication of full year financial results.

Financial Risk Financial risk is comprehensively dealt with in the notes to the financial statements on page 77 to 78

RISK MANAGEMENT (CONTINUED)

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The Group’s stakeholder engagement process is integrated with our risk management process. The issues discussed during stakeholder engagements are risk weighted and those that appear to pose the most significant threats to the sustainability of the business. The table below shows the summary of key engagements held during the year:

Stakeholder Material Issues Discussed Results and Action Taken

Customers and consumers

Product qualityPricing

• Due to increasing competition, pricing and product quality have become increasingly important in the customer’s mind.

• The Group continuously reviews pricing to align with market taking into account the quality premium in our brands.

Regulatory Authorities

(ZIMRA, NSSA, SAZ, Local

Authorities)

Regulatory compliance • Compliance with regulations• Tax health checks

Effluent treatment and refuse disposal

• Work in progress on erecting effluent treatment plants. DZPL has commenced construction at an estimated cost of $285000.

• Internal refuse collection points• Recycling oils and greases to third parties

Water outages

• Water supply from local authorities will remain erratic in the short to medium term.

• Boreholes have been drilled at all strategic locations to ensure consistent supply of water

Health and safetyFactory licence renewals

• The Group is embarking on preparations for SHE certification. The construction of effluent treatment plants will enable compliance with the requirements for SHE certification.

• Routine maintenance is done to ensure that all plant and equipment at least complies with minimum health and safety requirements.

Suppliers

Raw milk supply initiatives and pricing

• Through the Milk Supply Development Unit (MSDU), farmers are continuously engaged providing the normal extension services.

• In the short to medium term, milk supply is not expected to improve and so the Group is engaging farmers on ways to improve milk supply particularly through the heifer program

• The group maintains a Quality Premium Scheme (QPS) to improve quality as well as volume at farm level.

Prices and quality for materials

• The drop in oil prices will directly reduce prices for oil linked raw materials. • The Group takes positions when prices are lower in the market. To ensure

quality, the business evaluates suppliers before putting orders and quality inspection before receiving the suppliers’ deliveries

Electricity supply • Power supply will remain erratic in the short to medium term.• The Group has invested in standby facilities

Government Ministries

Competition from imports

• The Group through industry bodies has successfully lobbied government to confine importation of liquid milks to processors and to levy import duty on imported milk products that are landing in Zimbabwe cheaper that local products.

Employees Conditions of service• The Group’s policy is to pay above the negotiated wages in line with the

performance of the business.

Investors and Analysts

The company’s performance and turnaround strategies

• The Company’s turnaround strategies are continuously communicated to the investor community

• The investor relations team holds meetings during the year to apprise investors of the developments in the market and in the company

Financial Institutions

Funding requirements,tenure and interest rates

• The Group’s focus is to finance operations through low cost diversified funding.

STAKEHOLDER ENGAGEMENT

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ENVIRONMENTAL PERFORMANCE

Management ApproachThe goals of the Group’s environmental management approach are to identify foreseeable hazards, evaluate associated risks and implement measures to control them.

Environmental management priorities• Recycling of packaging materials and other materials like used oil• Minimizing the carbon footprint• Minimizing water usage and • Reducing all forms of pollution

PerformanceInherent in the operations of the Group is the negative impact of the packaging and other consumables utilized in the revenue generating activities of the business. The table below shows the major items of waste disposed of into the environment during the year.

Material Usage

Units 2014 2013

PET Tons 454 457

HDPE Tons 1,546 1,614

Oils and Grease Tons 8 5

Plastic wrappers Tons 486 207

Detergents Tons 327 205

Paper packaging Tons 942 1,045

Polypropylene Tons 386 209

The decline in HDPE consumption was a result of a decrease in Cascade sales volumes partly due to resizing of the Cascade bottle from 500ml to 400ml and reduction in actual units sold. The decline was however diluted by the introduction of Pfuko-Udiwo Maheu. The overall growth in volumes sold increased the utilization of detergents in cleaning processes. Polypropylene replaced polystyrene due to the rebranding of yoghurt cups and 500ml ice cream tubs.

The Group continues to focus on initiatives to reduce the impact of these materials discharged on the environment. Major initiatives are:• Invested in Petrecozim, partnership by local manufacturers to collect and recycle PET packaging. The business commenced operations in May

2014 and has started exporting recycled material to China. Petrecozim is positioned to be a key player in recycling of packaging materials going forward

• Selling used oils and scrap materials to dealers certified by the Environmental Management Agency (EMA)

The table below shows recycling performance for HDPE and used oil. The increase in used oil recycling is a result of the initiatives put in place to optimize the selling of used oil to dealers certified by EMA.

Item % recycled

2014 2013

HDPE 4% 5%

Used oil 26% 6%

SUSTAINABILITY PERFORMANCE

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ENERGYThe availability of adequate energy for use in operations remains uncompetitive versus regional countries. In the Group’s areas of operation, both Malawi and Zimbabwe, power supply remains erratic and expensive. Supply side and demand side optimisation is critical. In addition to optimal utilisation of energy, the impact of the processes that generate the energy is also an area of focus for the Group given the impact of the generation processes on global warming.

To improve the efficiency in energy generation and utilization the Group undertakes the following:• Right sizing equipment to reduce energy consumption and hence carbon output. • Improving the energy efficiency rating of all the plant and equipment through planned maintenance, regular emission checks and purchase of

energy efficient plant and equipment• Investing in power factor correction units at DZPL and Lyons. • Compliance with regulators especially NSSA and EMA

The performance of the Group in this regard during the year under review was as follows:

Direct Energy use (By Primary Source)

Units 2014 2013

Direct Energy

Heavy fuels (coal) Tons 5,514 5,307

Light fuels ( diesel) “000” Litres 1,538 1,676

Light fuels (petrol) “000” Litres 166 231

Light Fuels (Gases) Tons 5 6

The increase in coal consumption was on account of the replacement of the Malawi diesel boiler with a coal powered boiler to reduce utility costs. Accordingly, diesel consumption declined due to the replacement. Petrol consumption decreased in response to cost reduction initiatives.

Indirect Energy Usage (By Primary Source)

Units 2013 2012

Indirect Energy

Electricity MWh 16,896 17,251

The decrease in electricity consumed is a direct result of the right sizing of plant and equipment and consolidation of sales and distribution operations. The strategies deployed by the Group to manage costs have minimized growth in consumption despite an increase in volumes sold.

WATERIn both Zimbabwe and Malawi, water supply from local authorities was constrained throughout the year. This situation makes water preservation critical for the business both for the environment from which it is drawn as well as the cost impact on the business

Water Withdrawals and ConsumptionThe table below shows water consumption by primary source.

Units Full year

2014 2013

Municipal Cubic metres 114,881 312,233

Borehole Cubic metres 257,209 72,300

Total Cubic metres 372,090 384,533

The increase in borehole water usage was driven by the investments made in boreholes to support operations affected by water outages.

SUSTAINABILITY PERFORMANCE (CONTINUED)

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The decrease in municipal water usage is a result of the closure of manufacturing operations in Mutare and Bulawayo.

Water consumption has improved during the year as shown by the 3% decline in volume terms against increased sales volumes for the Group. The improvement is attributable to efficiencies in the production processes. To guarantee consistent supply of water, investments were made in boreholes and this culminated in reduced utilization of municipal water.

EMMISSIONS, EFFLUENTS, AND WASTE

Greenhouse GasEmissions into the air depend on the sources of energy used and the efficiency of the equipment that convert the sources into energy. Emissions from the Group’s operations are shown below:

Carbon dioxide

Carbon emissions (Tons) 2014 2013

Direct energy 23,608 24,905

The figures mentioned above were arrived at by using the established CO2 Emissions/ton of fuel used. The changes in the emissions released into the air are in line with the underling changes in the volumes of coal, diesel, petrol and gas utilized in during the year.

Effluent DischargeDue to the nature of our products, the effluent from the Group’s operations contains milk and milk products, Lye and Acid ions which threatens the survival of plants and animals in rivers and dams if discharge is not treated. The Group has started construction of the first effluent treatment plant at DZPL and completion is expected in May 2015. The total investment is estimated at $285,000.

Developments

PET recycling company (Petrecozim (private) Limited)The PET recycling company (where both DZPL and Lyons are shareholders), started operations in May 2014. The company has already started exporting the recycled material to China. The business will be a critical player in reducing PET based pollution going forward.

SHE certification at DZPL and NFB LogisticsDZPL and NFB certification deferred to 2016 after EMA raised issues for improvement particularly around effluent treatment. The Group has already started construction of effluent treatment plant at DZPL’s Harare factory.

SOCIAL PERFORMANCE:

Human Capital Maintenance

Management ApproachThe Group strives to attract, develop and retain the best talent. To optimize performance of the human capital, the Group provides a work environment based on fairness, integrity, non-discrimination, equal opportunity, empowerment, mutual respect and human rights.

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Human capital prioritiesThe Group’s human capital strategy focuses on the following priorities:• Training and development• Healthy and safety • Linking remuneration to productivity• Respect and fair treatment of all employees Increasing the number of female employees up to senior management• Providing equal opportunity to the disadvantaged both male and female• Non-discrimination of employees on grounds of health, race, age or gender

Performance

Workforce by Employment Type

Number as at end of

2014 2013

Permanent Employees 865 894

Contract Employees 613 524

Total 1,478 1,418

The table above shows an increase in contract labour during the year. The change was necessitated by the need to support investment in new lines mainly Pfuko-Udiwo Maheu and Aqualite water. The strategy of the Group is to ensure that manning levels are directly related to volumes sold.

In terms of gender balancing, the Group has increase the number of women in its employ from 139 to 175.

Workforce by Gender

Number as at end of

2014 2013

Number of female employees 175 139

Number of male employees 1,303 1,279

Total 1,478 1,418

The Group remains committed to enhancing its skills base as well supporting students from various universities to access the much needed industrial exposure. The performance of the Group in this regard is shown graph below.

Number as at end of

2014 2013

Apprentices 15 17

Graduate Trainees 11 3

Students on attachment 18 11


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Health & Safety The Group is committed to ensuring the safety of its employees, contractors and customers. As such, the Group continues to improve its health and safety performance within its premises and where ever it conducts its business through the following: • Provision of health and safety training for all employees at every location and function • Reinforcing the objective of operating with no injuries or fatalities• Regular review of factory designs to implement measures that improve occupational safety• Provision of onsite medical facilities• Factory clinics at operating factories• Medical aid support for all employees• Running awareness programs for HIV and AIDSThe performance of the Group with respect to work place health and safety is shown below:

Performance

2014 2013

Safety leading indicators

Hazards for which internal STOP Notes have been issued - -

Stoppage/Instructions issued by State - -

Safety representative training (Frequency) - 4

Number of fatal injuries - -

Number of lost time injuries 18 25

Total number of injuries 90 94

Number of lost days 237 205

Health & Safety Training and Awareness Programmes

2014 2013

Number of employees on wellness programme 14 9

Number of employees on anti-retroviral therapy 10 5

Number of employees on medical aid 675 659

Number of peer educators 30 17

HIV/AIDS awareness campaigns done during the year 11 10

Number of clinics run by the company 1 1

Number of First Aid workers 30 37

PRODUCTS RESPONSIBILITYIn line with our mission, Dairibord Holdings and its subsidiaries maintain the highest standards of food safety. The Group works with industry players, government bodies, customers and suppliers to understand the environmental, health and safety risks associated with its products and find solutions to address them. The business is well positioned to deliver quality products to the market supported by:• ISO certification. DZPL and DML are certified under ISO 22000:2005 Food Safety Management Systems. Lyons is ISO 9001:2000 certified and is expected to be ISO 2000:2005 certified in 2016. • Certification of all products by the Ministry of Health and the Standards Association of Zimbabwe.• Research and development to introduce products that do not have negative effects on the customers’ health in the long run. • Collaborating with other industry players and regulatory agencies in clean up and awareness campaigns and environmental expos. The Group has an established customer complaint handling procedure to ensure that our products will always meet consumer expectations.


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ECONOMIC PERFORMANCEKey Issues• Declining economic growth• Uncompetitive operating environment• Declining disposable incomes• Competition from imports• Exchange rate variations;This section provides selected economic performance of the group in 2014. More comprehensive economic performance is provided in the financial statements section of this report.

Key Economic Value Generated

Direct Economic Value ($ million) 2014 2013

Turnover 99.0 100.1

Profit/(loss) before tax (PBT) 0.8 (2.3)

Cash flow from operating activities 4.4 6.0

The cost reduction initiatives employed by the Group have started bearing fruit with the results for 2014 showing a return to profitability. Cashflows remain positive and investments will continue to buttress the momentum gained.

COMMUNITY INVESTMENTAs a corporate citizen, giving back to the community is part of our responsibility. Our strategy and performance regarding social responsibility are given below.

SportsDairibord Zimbabwe (Private) Limited (DZPL) this year assumed title sponsorship of the annual schools rugby to the tune of $180,420. The festival which has now been renamed the Dairibord Schools Rugby Festival is an annual festival, the biggest schools rugby event of its kind in the world.

DZPL’s sponsorship contract runs from 2014 -2018 and the event is hosted at Prince Edward School in Harare. A total of 168 boys and girls school teams participated in the 2014 festival and this saw Zimbabwe rugby fans brushing shoulders with players from the region. Dairibord’s involvement with sports in this country spans many years and this sponsorship is strategic for Dairibord and fits with the Group’s ‘sustenance of good health’ mantra.

Education Trust FundThe Dairibord Holdings Education Trust Fund established in 2006 is aimed at assisting Zimbabwe attain its manpower development goals and needs whilst developing a pool of potential employees for the Group and industry as a whole. Dairibord Holdings has an obligation to contribute positively to the national skills pool and this pool will benefit industry at large. As such, a total of 18 students were on the Dairibord Holdings Bursary scheme during the year under review, 10 of them at tertiary level while the rest were in high school.

UnderprivilegedThe Group plays a critical role by committing resources to transform the lives of those that are less privileged especially the orphans and the elderly stationed in the communities we operate in. This is done in an effort to diminish poverty and afford them their right to nutritious foods and beverages. To this end and during the year under review, Dairibord Holdings ensured that its adopted charities received a wide range of the Group’s products towards sustenance of good health.

To help the underprivileged, the Group supports the Society of the Destitute and Aged (SODA) in Highfield, Harare and children at Rekai Tangwena orphanage in Nyanga. SODA has an average of 25 inmates while Rekai Tangwena has a total of 30 orphans.


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Total spends on social investment is shown in the table below:

Support ($) 2014 2013

Sports 180,420 7,000

Education 26,653 32,000

Health and social welfare 12,000 19,000

Total 219,073 58,000

Financial Support from GovernmentThe group acknowledges that in some instances government may assist companies in distressed positions due to economic factors beyond their control through distressed companies’ fund. As such, Dairibord Holdings did not receive any such financial assistance from government during the year under review and prior.


DZPL is the title sponsor of the Annual Schools Rugby Festival

Founder of Rekai Tangwena orphanage Reverend Nerwande (extreme right) and some of the children at the home.

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STATEMENT OF DIRECTORS’ RESPONSIBILITYSTATEMENT OF DIRECTORS

The Directors are required by the Companies Act (Chapter 24:03) to prepare financial statements for each financial year giving a true and fair view of the state of affairs of the company and the Group as at the end of the financial period as well as the profit and cash flows for the same period.

The Directors are responsible for maintaining records, which disclose with reasonable accuracy the financial position of the company and the Group, and which enable them to ensure that the consolidated financial statements comply with the Companies Act (Chapter 24:03). The Directors are also responsible for safeguarding the assets of the Group and for preventing and detecting fraud and other irregularities.

The Directors consider that in the preparation of these financial statements, reasonable and prudent judgments and estimates have been made. International Financial Reporting Standards have also been followed where applicable with suitable accounting policies having been consistently applied.

The Directors recognize and acknowledge their responsibility for the Group’s systems of internal control. These systems are adequate

to provide reasonable assurance that the assets of the Group are safeguarded and that accurate records, necessary for the preparation of the financial statements, are maintained.

The Directors have satisfied themselves that the Group is in a sound financial position, and has adequate resources to continue in operational existence for the foreseeable future. Accordingly, your Directors believe that the preparation of these financial statements, on a going concern basis is appropriate.

The financial statements for the year ended 31 December 2014 have been approved by the Board of Directors and are signed on its behalf by the Chairman of the Board, Dr L.L. Tsumba and by the Group Chief Executive Mr A.S. Mandiwanza.

Dr L.L.Tsumba A. S. MandiwanzaChairman Group Chief Executive

12 March 2015

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REPORT OF THE DIRECTORSThe Directors have pleasure in submitting their twentieth annual report together with audited financial statements of the Group for the year ended 31 December 2014.

SHARE CAPITALThe authorized share capital is 425 000 000 ordinary shares of US$0.0001 each. The number of issued ordinary shares remained at 358 000 858.

RESERVESThe movement in the distributable reserves during the year is outlined below in US$:

Distributable reserves at the beginning of the year 19,646,485Profit for the period 730,456Transfer from capital reserves on sale of properties 334,948Distributable reserves at the end of the year 20,711,889

Movements in other reserves are shown in the Statement of Changes in Equity.

INVESTMENTSCairns Holdings Limited remained under curatorship and the Group did not receive any of the outstanding $800 000 from the disposal of M.E Charhons (Private) Limited done in 2012. The Judicial Manager is still searching for a suitable investor.

PROPERTY PLANT AND EQUIPMENT Expenditure on property, plant and equipment during the period was US$9.885 million. Expenditure for the year January to December 2015 is planned at US$10.5 million. This expenditure is to be financed from borrowings and from the Group’s own resources.

DIVIDENDConsidering the Group’s re-capitalisation projects, and increased working capital needs, the Board has resolved not to declare a dividend for the year ended 31 December 2014.

DIRECTORSIn accordance with article 100 of the company’s Articles of Association, Mrs S Chindove retires by rotation and being eligible, offers herself for re-election.

Mr. F. Mungoni who has served the company as non-executive director since April 2010 is also retiring in accordance with article 100 of the Company’s Articles of Association and is not seeking re-election. Mr Mungoni chaired the Finance and Audit Committee and was a member of the Remuneration Committee

AUDITORSMembers will be asked to approve the remuneration of the auditors, Ernst & Young Chartered Accountants (Zimbabwe) of $197 385, for the year ended 31 December 2014 and their re-appointment as Auditors to the company for the ensuing year.

M. NdoroCompany Secretary

12 March 2015

REPORT OF THE DIRECTORS

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF DAIRIBORD HOLDINGS LIMITED

We have audited the accompanying consolidated and company financial statements of Dairibord Holdings Limited set out on pages 41 to 79, which comprise the consolidated and company statement of financial position as at 31 December, 2014, the consolidated and company statement of comprehensive income, the consolidated and company statement of changes in equity and the consolidated and company statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Directors’ responsibility for the Consolidated Financial Statements

The company’s directors are responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards and in the manner required by the Companies Act (Chapter 24:03), 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 whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

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

Opinion

In our opinion, the consolidated and company financial statements present fairly, in all material respects, the financial position of Dairibord Holdings Limited as at 31 December, 2014, 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 consolidated 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.

Ernst & Young Chartered Accountants (Zimbabwe)Registed Public AuditorsHARARE

16 March 2015

A member firm of Ernst & Young Global Limited

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STATEMENTS OF FINANCIAL POSITIONas at 31 December 2014

GROUP COMPANY 2014 2013 2014 2013 Notes US$ US$ US$ US$ Assets Non-current assets Property, plant and equipment 11 42,326,441 39,292,974 401,905 543,962 Investment property 12 1,467,501 - - - Intangible assets 13 688,262 702,146 77,473 - Investment in subsidiaries 14 - - 17,698,183 17,698,183 Long-term loans receivable 15 - - 6,887,969 3,035,543 Other non-current financial assets 16 869,298 881,096 85,649 129,369 45,351,502 40,876,216 25,151,179 21,407,057 Current assets Inventories 17 15,147,057 13,581,960 - - Amounts owed by group companies 18.1 - - 1,251,464 1,985,239 Prepayments 1,349,774 2,219,906 11,996 98,612 Trade and other receivables 19 11,613,141 7,687,376 339,794 430,989 Short-term loans receivable 15.2 - - 3,935,762 3,030,292 Cash and cash equivalents 20 1,414,341 2,455,632 36,637 64,176 29,524,313 25,944,874 5,575,653 5,609,308 Assets classified as held for sale 21.2 919,551 980,208 - - 30,443,864 26,925,082 5,575,653 5,609,308 Total assets 75,795,366 67,801,298 30,726,832 27,016,365 Equity and liabilities Equity Share capital 22.1 35,800 35,800 35,800 35,800 Share premium 22.2 1,379,664 1,379,664 1,379,664 1,379,664 Non - distributable reserves 22.3 23,121,201 23,483,902 17,016,597 17,016,597 Reserves of assets classified as held for sale 460,874 491,274 - - Retained earnings / (Accumulated losses) 20,711,889 19,646,485 272,043 (25,487)Equity attributable to owners of the parent 45,709,428 45,037,125 18,704,104 18,406,574 Non - controlling interests 375,253 528,479 - - Total equity 46,084,681 45,565,604 18,704,104 18,406,574 Non-current liabilities Interest - bearing borrowings 23.1 6,511,313 2,992,425 6,420,860 2,680,007 Deferred tax liability 25 3,194,811 3,333,882 34,303 67,051 9,706,124 6,326,307 6,455,163 2,747,058 Current liabilities Trade and other payables 26 15,336,804 11,672,253 706,277 636,180 Interest - bearing borrowings 23.2 4,565,037 4,101,216 4,384,132 4,101,216 Amounts owed to group companies 18.2 - - 428,918 989,433 Income tax payable 102,720 135,918 48,238 135,904 20,004,561 15,909,387 5,567,565 5,862,733 Total liabilities 29,710,685 22,235,694 12,022,728 8,609,791 Total equity and liabilities 75,795,366 67,801,298 30,726,832 27,016,365

DR. L. L. TSUMBA A. S. MANDIWANZA Chairman Group Chief Executive

12 March 2015

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STATEMENTS OF COMPREHENSIVE INCOMEfor the year ended 31 December 2014 GROUP COMPANY 2014 2013 2014 2013 Notes US$ US$ US$ US$Continuing operations Revenue 99,015,525 100,051,503 2,498,469 2,894,906 Cost of sales (76,595,970) (75,854,282) - - Gross profit 22,419,555 24,197,221 2,498,469 2,894,906 Other operating income 3 364,398 255,050 1,231,930 2,243,484 Selling and distribution expenses (10,863,429) (11,509,372) - - Administration expenses (10,329,543) (11,554,021) (3,368,165) (3,237,470)Other operating expenses 4 (234,460) (3,226,589) - (60,908) Operating profit/(loss) 5 1,356,521 (1,837,711) 362,234 1,840,012 Finance costs 6 (792,305) (751,649) (794,510) (622,823) Finance income 7 209,592 272,727 775,173 708,310 Profit /(loss) before taxation from continuing operations 773,808 (2,316,633) 342,897 1,925,499 Income tax (expense)/credit 8 (169,712) 535,722 (45,367) (179,642) Profit/(loss) for the year from continuing operations 604,096 (1,780,911) 297,530 1,745,857 Discontinued operations Profit after tax for the year from discontinued operations 21 - 27,647 - - Profit /(loss) for the year 604,096 (1,753,264) 297,530 1,745,857 Other comprehensive income: Other comprehensive income to be reclassified to profit or loss in subsequent periods Exchange differences on translating foreign operations (85,019) (566,497) - - Other comprehensive income for the year, net of tax (85,019) (566,497) - - Total comprehensive income/(loss) for the year 519,077 (2,319,761) 297,530 1,745,857 Profit (loss) attributable to: Equity holders of the parent 730,456 (1,772,011) 297,530 1,745,857 Non-controlling interests (126,360) 18,747 - - 604,096 (1,753,264) 297,530 1,745,857 Total comprehensive income /(loss) attributable to: Equity holders of the parent 672,303 (2,159,495) 297,530 1,745,857 Non-controlling interests (153,226) (160,266) - - 519,077 (2,319,761) 297,530 1,745,857 Earnings /(loss) per share (cents) Basic earnings /(loss) for the year attributable to ordinary equityholders of the parent 0.20 (0.50) Diluted earnings/(loss) for the year attributable to ordinary equity holders ofthe parent 0.20 (0.50) Earnings /(loss)per share for continuing operations (cents) Basic earnings/(loss) from continuing operations attributable to ordinary equityholders of the parent 0.20 (0.50) Diluted earnings/(loss) from continuing operations attributable to ordinaryequity holders of the parent 0.20 (0.50)

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STATEMENTS OF CASHFLOWSfor the year ended 31 December 2014

GROUP COMPANY 2014 2013 2014 2013 Notes US$ US$ US$ US$ Operating activities Profit/(loss) before tax from continuing operations 773,808 (2,316,633) 342,897 1,925,499 Profit before taxation from discontinued operations - 27,647 - - Profit/(loss) before tax 773,808 (2,288,986) 342,897 1,925,499 Adjusted for: Depreciation of property, plant and equipment 11 3,914,217 3,523,497 205,673 146,134 De-recognition/ impairment of property, plant and equipment 11 207,735 1,074,524 - - Amortisation of intangible assets 13 91,357 91,736 - - (Profit)/loss on disposal of property, plant and equipment and assets held for sale (144,559) 19,790 (12,867) (237) Profit on disposal of a discontinued operation 21 - (27,647) - - Finance income (209,592) (272,727) (775,173) (708,310) Dividend received - (893) - (1,261,035) Inventory written off 17 824,805 2,009,571 - - Allowances for credit losses 19 187,256 493,838 - - Unrealised exchange loss 6,038 15,014 - - Finance costs 792,305 751,649 794,510 622,823 - - Working capital adjustments : Increase in inventories (2,438,307) (1,017,872) - - (Increase)/decrease in trade and other receivables and prepayments (2,064,375) 4,050,431 (89,468) (1,867) Increase in amounts owed by group companies - - (4,024,122) (1,238,366) (Decrease)/increase in amounts owed to group companies - - (560,506) 13,346 Decrease in intercompany short term loans receivable - - - 1,301,227 Increase /(decrease) in trade and other payables 3,584,795 (756,437) 70,103 34,558 5,525,483 7,665,488 (4,048,953) 833,772 Interest paid (792,305) (751,649) (794,510) (622,823)Income tax paid (367,278) (893,393) (165,796) (155,302) Net cashflows generated from /(used in) operating activities 4,365,900 6,020,446 (5,009,259) 55,647 Investing activities Purchase of plant and equipment 11 (9,885,174) (4,682,670) (65,416) (68,222)Purchase of intangible assets 13 (77,473) - (77,473) - Increase in long term loans receivable - - - (47,347)Decrease in other non-current financial assets - - - 95,381 Proceeds from sale of property, plant and equipment 142,321 65,535 14,667 2,657 Proceeds from sale of assets classified as held for sale 173,069 246,620 - - Dividends received - 893 311,000 950,035 Finance income 209,592 272,727 775,173 708,310 Net cashflows (used in)/generated from investing activities (9,437,665) (4,096,895) 957,951 1,640,814 Financing activities Proceeds from borrowings 9,437,114 9,440,906 9,351,804 9,081,441 Repayment of borrowings (5,428,214) (9,325,959) (5,328,035) (9,269,942)Proceeds from exercise of share options - 25,500 - 25,500 Dividends paid - (1,655,711) - (1,610,014) Net cashflows generated from /(used in) financing activities 4,008,900 (1,515,264) 4,023,769 (1,773,015) Net (decrease)/increase in cash and cash equivalents (1,062,865) 408,287 (27,539) (76,554)Net foreign exchange difference 21,574 (22,184) - - Cash and cash equivalents at 1 January 2,455,632 2,069,529 64,176 140,730 Cash and cash equivalents at 31 December 20 1,414,341 2,455,632 36,637 64,176

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STATEMENTS OF CHANGES IN EQUITYfor the year ended 31 December 2014

GROUP

COMPANY

Attributable to equity holders of the parent Non - Reserves of Non - Share Share distributable assets classified Retained controlling Total Capital Premium reserves as held for sale earnings Total interests equity US$ US$ US$ US$ US$ US$ US$ US$ ( note 22.3 ) As at 1 January 2013 35,770 1,343,364 24,373,490 - 23,028,510 48,781,134 734,442 49,515,576 (Loss)/profit for the period - - - - (1,772,011) (1,772,011) 18,747 (1,753,264)Other comprehensive loss - - (387,484) - - (387,484) (179,013) (566,497)Total comprehensive loss - - (387,484) - (1,772,011) (2,159,495) (160,266) (2,319,761)Dividends paid - - - - (1,610,014) (1,610,014) (45,697) (1,655,711)Transfer to held for sale reserve - - (491,274) 491,274 - - - - Exercise of share options 30 36,300 (10,830) - - 25,500 - 25,500 As at 31 December 2013 35,800 1,379,664 23,483,902 491,274 19,646,485 45,037,125 528,479 45,565,604 Profit/(loss) for the period - - - - 730,456 730,456 (126,360) 604,096 Other comprehensive loss - - (58,153) - - (58,153) (26,866) (85,019)Total comprehensive income - - (58,153) - 730,456 672,303 (153,226) 519,077 Transfer to retained earnings on sale of assets - - - (334,948) 334,948 - - - Transfer to held for sale reserve - - (304,548) 304,548 - - - - As at 31 December 2014 35,800 1,379,664 23,121,201 460,874 20,711,889 45,709,428 375,253 46,084,681

Retained Non earnings/ Share Share distributable (Accumulated Capital Premium reserves losses) Total US$ US$ US$ US$ US$ (note 22.3) As at 1 January 2013 35,770 1,343,364 17,027,427 (161,330) 18,245,231 Profit for the period - - - 1,745,857 1,745,857 Other comprehensive income - - - - - Total comprehensive income - - - 1,745,857 1,745,857 Exercise of share options 30 36,300 (10,830) - 25,500 Dividends paid - - - (1,610,014) (1,610,014) As at 31 December 2013 35,800 1,379,664 17,016,597 (25,487) 18,406,574 Profit for the period - - - 297,530 297,530 Other comprehensive income - - - - - Total comprehensive income - - - 297,530 297,530 As at 31 December 2014 35,800 1,379,664 17,016,597 272,043 18,704,104

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1. Corporate informationThe consolidated financial statements of Dairibord Holdings Limited and its subsidiaries (collectively, the Group) for the year ended 31 December 2014 were authorised for issue on 12 March 2015 in accordance with a resolution of the directors. Dairibord Holdings Limited is a company incorporated and domiciled in Zimbabwe whose shares are publicly traded through the Zimbabwe Stock Exchange. The registered office is located at ZB Life Towers, 9th Floor, 77 Jason Moyo Avenue in Harare. The Group’s principal activities are the manufacturing, processing, marketing and distribution of milk products, foods and beverages.

2.1 Basis of preparationThe consolidated financial statements are based on the statutory records that are maintained under the historical cost convention, except for land and buildings and investment property that have been measured at fair value. The consolidated financial statements are presented in United States Dollars (US$).

Statement of complianceThe consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and the International Financial Reporting Interpretations Committee (IFRIC) interpretations, as issued by the International Accounting Standards Board (IASB).

2.2 Basis of consolidationThe consolidated financial statements comprise the financial statements of Dairibord Holdings Limited and its subsidiaries as at 31 December 2014. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:• Power over the investee (i.e. existing rights that give it the

current ability to direct the relevant activities of the investee)• Exposure, or rights, to variable returns from its involvement

with the investee, and• The ability to use its power over the investee to affect its returns

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:• The contractual arrangement with the other vote holders of the

investee• Rights arising from other contractual arrangements• The Group’s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income and financial position from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:• Derecognises the assets (including goodwill) and liabilities of the

subsidiary.• Derecognises the carrying amount of any non – controlling

interest.• Derecognises the cumulative translation differences, recorded

in equity• Recognises the fair value of the consideration received• Recognises the fair value of any investment retained• Recognises any surplus or deficit in profit or loss.• Reclassifies the parent’s share of components previously

recognized in other comprehensive income to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities.

2.3 Changes in accounting policies and disclosuresThe accounting policies adopted are consistent with those of the previous financial year, except for the following IFRS and amendments to IFRS effective as of 1 January 2014:• Investment Entities (Amendments to IFRS 10,IFRS 12 and IAS 27)• IAS 32 Offsetting Financial Assets and Financial Liabilities –

Ammendments to IAS 32• IAS 36 Impairment of Assets-Recoverable Amount Disclosures

for Non-Financial Assets –Ammendments to IAS 36• Novation of Derivatives and Continuation of Hedge Accounting –

Amendments to IAS 39

NOTES TO THE FINANCIAL STATEMENTS

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2.3 Changes in accounting policies and disclosures (continued)The adoption of the standards is described below:

Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) These amendments provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under IFRS 10 Consolidated Financial Statements and must be applied retrospectively, subject to certain transition relief. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. These amendments have no impact on the Group, since none of the entities in the Group qualifies to be an investment entity under IFRS 10.

Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32 These amendments clarify the meaning of ’currently has a legally enforceable right to set-off’ and the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting and is applied retrospectively. These amendments have no impact on the Group, since none of the entities in the Group has any offsetting arrangements.

IAS 36 Impairment of Assets-Recoverable Amount Disclosures for Non-Financial Assets –Amendments to IAS 36The amendments to IAS 36 Impairment of Assets clarify the disclosure requirements in respect of fair value less costs of disposal. The amendments remove the requirement to disclose the recoverable amount for each cash-generating unit for which the carrying amount of goodwill or intangible assets with indefinite useful lives allocated to that unit is significant. In addition, the IASB added two disclosure requirements:• Additional information about the fair value measurement of

impaired assets when the recoverable amount is based on fair value less costs of disposal.

• Information about the discount rates that have been used when the recoverable amount is based on fair value less costs of disposal using a present value technique. The amendments harmonise disclosure requirements between value in use and fair value less costs of disposal.

The amendment did not have an effect on the Group as the Group does not have goodwill or intangible assets with indefinite useful life and recoverable amount for assets that were impaired during the year was not significant.

Novation of Derivatives and Continuation of Hedge Accounting – Amendments to IAS 39 These amendments provide relief from discontinuing hedge

accounting when novation of a derivative designated as a hedging instrument meets certain criteria and retrospective application is required. These amendments have no impact on the Group as the Group did not have derivatives during the current year or prior periods and does not apply hedge accounting.

IFRIC 21 Levies IFRIC 21 clarifies that an entity recognises a liability for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached. Retrospective application is required for IFRIC 21. This interpretation has no impact on the Group as it has applied the recognition principles under IAS 37 Provisions, Contingent Liabilities and Contingent Assets consistent with the requirements of IFRIC 21 in prior years.

Annual Improvements 2010-2012 Cycle In the 2010-2012 annual improvements cycle, the IASB issued seven amendments to six standards, which included an amendment to IFRS 13 Fair Value Measurement. The amendment to IFRS 13 is effective immediately and, thus, for periods beginning at 1 January 2014, and it clarifies in the Basis for Conclusions that short-term receivables and payables with no stated interest rates can be measured at invoice amounts when the effect of discounting is immaterial. This amendment to IFRS 13 had no impact on the Group as these principles were already applied.

Annual Improvements 2011-2013 CycleIn the 2011-2013 annual improvements cycle, the IASB issued four amendments to four standards, which included an amendment to IFRS 1 First-time Adoption of International Financial Reporting Standards. The amendment to IFRS 1 is effective immediately and, thus, for periods beginning at 1 January 2014, and clarifies in the Basis for Conclusions that an entity may choose to apply either a current standard or a new standard that is not yet mandatory, but permits early application, provided either standard is applied consistently throughout the periods presented in the entity’s first IFRS financial statements. This amendment to IFRS 1 has no impact on the Group, since the Group is an existing IFRS preparer.

2.4 Significant accounting judgements, estimates and assumptionsThe preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

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2.4 Significant accounting judgements, estimates and assumptions(continued)that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Such estimates and assumptions are based on historical experience and various other factors that are believed to be reasonable in the circumstances and constitute management’s best judgement at the date of the financial statements.

Estimates and assumptionsThe key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are described below: The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about the future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

i. Useful lives and residual values of property, plant and equipmentThe Group assesses useful lives and residual values of property, plant and equipment each year taking into consideration past experience, technology changes and the local operating environment. Residual values were reassessed during the year and were still in line with those determined last year. Refer Note 2.5 (i) for the useful lives of property, plant and equipment and Note (ii) below for the carrying amount of property, plant and equipment balances.

ii. Revaluation of land and buildings and investment propertyThe Group measures freehold land and buildings and investment property at revalued amounts with changes in fair value being recognised in other comprehensive income for land and buildings and profit or loss for investment property. The Group engaged independent valuation specialists to determine fair value of freehold land and buildings as at 31 December 2012. Land and buildings were valued by reference to market-based evidence, using comparable prices adjusted for specific market factors such as nature, location and condition of the property. Refer note 11 for the carrying amount of land and buildings and estimates and assumptions used to determine the fair values. The investment property was transferred from land and buildings at the end of the year and the fair value determined when the property was still part of land and buildings was not materially different from the fair value at year end (date of transfer) and no fair value adjustments were recorded.

iii) Impairment of non-financial assetsImpairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its values in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. Refer note 11 and note 13 for the carrying amounts of non-financial assets.

iv) Allowance for credit lossesThe Group estimates allowance for credit losses based on individual receivable recoverability and the length of time the receivable has been outstanding. Refer note 19 for more detail on the allowance for credit losses.

2.5 Summary of significant accounting policiesa) Business combinations and goodwill Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. If the business combination is achieved in stages, the fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date and any resulting gain or loss is recognised in profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.

Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable


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2.5 Summary of significant accounting policies (continued)a) Business combinations and goodwill (continued)assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms part of a 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.

b) Foreign currency translationThe consolidated financial statements are presented in United States Dollars, which is also the parent company’s functional currency. Each entity in the Group determines its own functional currency and items included in the consolidated financial statements of each entity are measured using that functional currency.

Transactions and balancesTransactions in foreign currencies are initially recorded by the Group entities at their respective functional currency rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rate of exchange ruling at the reporting date.

All differences arising on settlement or translation of monetary items are taken to profit or loss with the exception of monetary items that are designated as part of the hedge of the Group’s net investment in a foreign operation. These are recognised in other comprehensive income until the disposal of the net investment, at which time, the cumulative amount is reclassified to profit or loss. 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 translation of non-monetary items measured at fair value 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 are also recognised in other comprehensive income or profit or loss, respectively).

Group companiesOn consolidation the assets and liabilities of foreign operations are translated into United States Dollars at the rate of exchange prevailing at the reporting date and their statements of comprehensive income are translated at exchange rates prevailing at the date of the transactions. The exchange differences arising from translation are recognised in other comprehensive income and presented in the foreign currency translation reserve in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests.

On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.

c) Revenue and other income recognitionRevenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, and value added tax. The Group assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements has pricing latitude and is also exposed to inventory and credit risks. The specific recognition criteria described below must also be met before revenue is recognised:

Sale of goodsRevenue from the sale of goods is recognised when all the following conditions have been satisfied:i. the entity has transferred to the buyer the significant risks and

rewards of ownership of the goods, usually on delivery of the goods;

ii. the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

iii. the amount of revenue can be measured reliably;iv. it is probable that the economic benefits associated with the

transaction will flow to the entity; and


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2.5 Summary of significant accounting policies (continued)c) Revenue and other income recognition (continued)Sale of goods (continued)v. the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Interest incomeFor all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the statement of comprehensive income.

Dividend incomeRevenue is recognised when the Group’s right to receive payment is established, which is generally when the shareholders approve the dividend.

d) TaxesCurrent income taxCurrent income tax assets and liabilities for the current and prior periods are measured at the amount expected to be received from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the Group operates and generates taxable income.

Current income tax relating to items recognised directly in equity or other comprehensive income is recognised in equity or other comprehensive income and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred taxDeferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences, except:- Where the deferred tax liability arises from the initial recognition

of goodwill or of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither the accounting profit nor taxable profit or loss ; and

- In respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and

it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:- Where the deferred tax asset relating to the deductible

temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

- In respect of deductible temporary differences associated with investments in subsidiaries and associates, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates 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 profit or loss is recognised outside profit or loss in correlation to the underlying transaction either in other comprehensive income or directly in equity.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new information about facts and circumstances changed. The adjustment would either be treated as


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2.5 Summary of significant accounting policies (continued)d) Taxes (continued)Deferred tax (continued)a reduction to goodwill (as long as it does not exceed goodwill) if it occurred during the measurement period or recognised in profit or loss if it is incurred after the measurement period.

Value added taxRevenues, 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 of the expense item as applicable

- 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 or payables in the statement of financial position.

e) Pensions and other post-employment benefits and termination benefits

Pensions and other post-employment benefitsRetirement benefits are provided for Group employees through independently administered defined contribution funds, including the National Social Security Authority Scheme in Zimbabwe and National Social Security Fund in Malawi. Contributions to the defined contribution fund are recognised in profit or loss as they fall due. The cost of retirement benefits applicable to the National Social Security Authority Scheme and National Social Security Fund is determined by the systematic recognition of legislated contributions.

Termination benefitsTermination benefits are employee benefits provided in exchange for the termination of an employee’s employment as a result of either an entity’s decision to terminate an employee’s employment before the normal retirement date or an employee’s decision to accept an offer of benefits in exchange for the termination of employment. The Group recognises termination benefits as a liability and an expense at the earlier of when the offer of termination cannot be withdrawn or when the related restructuring costs are recognised under IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

Termination benefits are measured according to the terms of the termination contract.

Where termination benefits are due more than 12 months after the reporting period, the present value of the benefits shall be determined. The discount rate used to calculate the present value shall be determined by reference to market yields on high quality corporate bonds at the end of the reporting period.

f) Share-based payment Employees (including senior executives) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments (‘equity-settled transactions’).

Equity-settled transactionsThe cost of equity – settled transactions with employees is measured by reference to the fair value at the date on which they are granted. The fair value is determined by an external valuer. The cost of equity – settled transactions is recognised together with a corresponding increase in equity, over the period in which the performance and / or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ( ‘ the vesting date’).

The cumulative expense recognised for equity – settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The charge or credit recognised in profit or loss for a period represents the movements in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of the earnings per share (note 9).

g) Financial assetsInitial recognitionFinancial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets, as appropriate. The Group determines the classification of its financial assets at initial recognition. All financial assets are recognised initially at fair value plus, in the case of investments not at fair value through profit and loss, directly attributable transaction costs. 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 trades) are recognised on the trade dates i.e. the date that the Group commits to purchase or sell the asset.


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2.5 Summary of significant accounting policies (continued)g) Financial assets (continued)The Group’s financial assets include cash and short term deposits, trade and other receivables and loans and receivables.

Subsequent measurementThe subsequent measurement of financial assets depends on their classification as follows:

Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement such financial assets are subsequently measured at amortised cost using the effective interest rate method (EIR), less impairment.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of comprehensive income. The losses arising from impairment are recognised in the statement of comprehensive income in other operating expenses.

Impairment of financial assetsThe Group assesses at each reporting date whether there is any indication that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that have occurred after initial recognition of the asset (an incurred ‘loss event’) and that the loss event has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

Financial assets carried at amortised costFor financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an

individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in profit or loss. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of finance income in the statement of comprehensive income.

Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future write off is later recovered, the recovery is credited to finance costs in the statement of comprehensive income.

Derecognition of financial assetsA financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised when:• The rights to receive cash flows from the asset have expired.• The Group has transferred its rights to receive cash flows from

the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.


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2.5 Summary of significant accounting policies (continued)g) Financial assets (continued)Derecognition of financial assets (continued)When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset.

In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

h) Financial liabilitiesInitial recognition and measurementFinancial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss or loans and borrowings, as appropriate. The Group determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs.The Group’s financial liabilities include trade and other payables and loans and borrowings.

Subsequent measurementThe measurement of financial liabilities depends on their classification as follows:

Interest bearing borrowingsAfter initial recognition, interest bearing borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the statement of comprehensive income Trade and other payables Trade and other payables are subsequently measured at amortised cost using the effective interest rate method. Other classifications of financial liabilities are not applicable to the Group.

Derecognition of financial liabilitiesA financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

Offsetting of financial instrumentsFinancial assets and financial liabilities are offset and the net amount reported in the consolidated 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.

i) Property, plant and equipmentProperty is measured at fair value less subsequent accumulated depreciation and subsequent impairment losses recognised after the date of the revaluation. Valuations are performed frequently to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Plant, furniture, fittings, equipment and motor vehicles are stated at cost less accumulated depreciation and accumulated impairment losses, if any.

A revaluation surplus is recorded in other comprehensive income and credited to the asset revaluation reserve in equity, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss, in which case the increase is recognised in profit or loss. A revaluation deficit is recognised in profit or loss, except to the extent that it offsets an existing surplus on the same asset recognised in the asset revaluation reserve.

Cost includes the cost of replacing part of the plant and equipment and borrowing cost for long term construction projects if the recognition criteria are met. When significant parts of property plant and equipment are required to be replaced at intervals, the Group recognizes such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repairs and maintenance costs are recognised in profit or loss as incurred.


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2.5 Summary of significant accounting policies (continued)i) Property, plant and equipment (continued)The Group’s policy is to depreciate property, plant and equipment evenly over the expected life of each asset, with the exception that no depreciation is charged on land and assets under construction and not yet in use. The expected useful lives of the property, plant and equipment are as follows:Freehold Buildings 40 yearsPlant 3 -10 yearsFurniture, fittings and equipment 2 – 10 yearsMotor vehicles - Light 5 years - Heavy vehicles and trailers 8 years

The carrying amounts of property, plant and equipment are reviewed at each reporting date to assess if they are recorded in excess of their recoverable amounts and where carrying values exceed the estimated recoverable amounts, assets are written down to their recoverable amounts.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in profit or loss in the year the asset is derecognised.

The assets’ residual values, useful lives and depreciation methods are reviewed and adjusted if appropriate, at each financial year end. Adjustments are made prospectively as a change in accounting estimate.

j) Impairment of non-financial assetsThe Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the recoverable amount of the asset. An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s (CGU) fair value less costs of disposal 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 or CGU 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 values using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair

value less costs of disposal, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated, by valuation multiples, quoted public share prices for publicly traded entities or other available fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group’s cash generating units, to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods a long term growth rate is calculated and applied to projected future cash flows after the fifth year.

Impairment losses of continuing operations, including impairment on inventories, are recognised in profit or loss in those expense categories consistent with the functions of the impaired assets, except for a property previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income, up to the amount of any previous revaluation.

For assets excluding goodwill, an assessment is made at each reporting 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 Group estimates the asset’s or cash generating unit’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.

Such reversal is recognised in profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.

k) Investment propertiesInvestment properties are measured initially initial at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the period in which they arise, including the corresponding tax effect. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer applying a


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2.5 Summary of significant accounting policies (continued)k) Investment properties (continued)valuation model recommended by the International Valuation Standards Committee.

Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of de-recognition.

Transfers are made to (or from) investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner-occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use.

l) LeasesThe determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date. The arrangement is assessed for whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

Group as a lesseeOperating lease payments are recognised as an operating expense in profit or loss on a straight line basis over the lease term.

Group as a lessorLeases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned. m) Borrowing costsBorrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its 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.

n) InventoriesInventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and conditions are accounted for as follows:• Materials and consumables are valued at the purchase cost on a

weighted average basis.• Finished goods and work in progress are valued at the

direct materials costs, labour and an appropriate portion of manufacturing overheads based on normal operating capacity, but excluding borrowings costs.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

o) Cash and cash equivalentsCash and cash equivalents in the statement of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three months or less.

p) ProvisionsProvisions are recognised when the Group has a present obligation (legal or constructive) as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

The expense relating to any provision is presented in profit or loss net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

q) Non-current assets held for sale and discontinued operationsNon-current assets and disposal groups classified as held for sale are measured at lower of their carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the 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,


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2.5 Summary of significant accounting policies (continued) q) Non-current assets held for sale and discontinued operations (continued)which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

In the statement of comprehensive income, income and expenses from discontinued operations are reported separately from income and expenses from continuing operations, down to the level of profit after taxes, even when the Group retains a non-controlling interest in the subsidiary after that sale. The resulting profit or loss (after taxes) is reported separately in the statement of comprehensive income.

Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.

r) Intangible assetsIntangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair values as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in profit or loss in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortised over their useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. Currently the Group intangible assets consist of assets assessed as finite and are amortised over a period of 10 years.

The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful lives or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category that is consistent with the function of the intangible assets.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite

is made on a prospective basis.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.

Research and development costsResearch costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:• The technical feasibility of completing the intangible asset so

that the asset will be available for use or sale• Its intention to complete and its ability to use or sell the asset• How the asset will generate future economic benefits• The availability of resources to complete the asset• The ability to measure reliably the expenditure during

development

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation is recorded in cost of sales. During the period of development, the asset is tested for impairment annually.

s) Fair value measurementThe Group measures non-financial assets such as land and buildings and investment property, at fair value at reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:• In the principal market for the asset or liability, or• In the absence of a principal market, in the most advantageous

market for the asset or liability

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using


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2.5 Summary of significant accounting policies (continued)s) Fair value measurement (continued)the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

• Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

• Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

t) Current versus non-current classificationThe Group presents assets and liabilities in statement of financial position based on current/non-current classification.

An asset is classified as current when it is:• Expected to be realised or intended to be sold or consumed in

normal operating cycle• Held primarily for the purpose of trading• Expected to be realised within twelve months after the reporting

period, or• Cash or cash equivalent unless restricted from being exchanged

or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:• It is expected to be settled in normal operating cycle• It is held primarily for the purpose of trading• It is due to be settled within twelve months after the reporting

period, or

• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

The Group classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as non-current assets and liabilities.

2.6 Standards and amendments issued but not yet effectiveStandards issued but not yet effective up to the date of issuance of the consolidated financial statements are listed below.

This listing is of standards and interpretations issued, which the Group reasonably expects to be applicable at a future date. The Group intends to adopt those standards when they become effective.

IFRS 9 Financial Instruments – classification and measurement – On 24 July 2014, the International Accounting Standards Board (IASB) issued the final version of IFRS 9-Financial Instruments bringing together the classification and measurement, impairment and hedge accounting phases of the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The classification and measurement requirements address specific application issues arising in IFRS 9 (2009) that were raised by preparers, mainly from the financial services industry. The expected credit loss model addresses concerns expressed following the financial crisis that entities recorded losses too late under IAS 39. IFRS 9 stipulates that financial assets are measured at amortised cost, fair value through profit or loss, or fair value through other comprehensive income, based on both the entity’s business model for managing the financial assets and the financial asset’s contractual cash flow characteristics. Apart from the ‘own credit risk’ requirements, classification and measurement of financial liabilities is unchanged from existing requirements. IFRS 9 is applicable for annual periods beginning on or after 1 January 2018, but early adoption is permitted. The Group is currently assessing the impact of IFRS 9.

IFRS 15- Revenue from Contracts with Customers IFRS 15 Revenue from Contracts with Customers, replaces all existing IFRS revenue requirements. The core principle of IFRS 15 is that revenue is recognised to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.


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2.6 Standards and amendments issued but not yet effective (continued)IFRS 15- Revenue from Contracts with Customers (continued)IFRS 15 establishes a five-step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or the industry. The standard’s requirements will also apply to the recognition and measurement of gains and losses on the sale of some non-financial assets that are not an output of the entity’s ordinary activities (e.g., sales of property, plant and equipment or intangibles). Extensive disclosures will be required, including disaggregation of total revenue; information about performance obligations; changes in contract asset and liability account balances between periods and key judgements and estimates.

The standard is effective for annual periods beginning on or after 1 January 2017, but early adoption is permitted. The Group is still assessing the impact of the standard on its contracts with customers.

IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and AmortisationThe IASB issued amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets prohibiting the use of revenue-based depreciation methods for fixed assets and limiting the use of revenue-based amortisation methods for intangible assets. The amendments are effective prospectively. The amendment becomes effective for annual periods beginning on or after1 January 2016 and will not have any impact on the Group as depreciation is not based on revenue methods.

IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture – Amendments to IFRS 10 and IAS 28The amendments address the conflict between IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary that is sold or contributed to an associate or joint venture. The amendments clarify that the gain or loss resulting from the sale or contribution of assets that constitute a business, as defined in IFRS 3 Business Combinations, between an investor and its associate or joint venture, is recognised in full. Any gain or loss resulting from the sale or contribution of assets that do not constitute a business, however, is recognised only to the extent of unrelated investors’ interests in the associate or joint venture.

The amendments are effective for annual periods beginning on or after 1 January 2016 and must be applied prospectively. The amendments are not expected to affect the Group as it does not have investments in joint ventures and associates.

IFRS 11 Accounting for Acquisitions of Interests in Joint Operations – Amendments to IFRS 11The amendments require an entity acquiring an interest in a joint operation in which the activity of the joint operation constitutes a business to apply, to the extent of its share, all of the principles in IFRS 3, and other IFRSs, that do not conflict with the requirements of IFRS 11. Furthermore, entities are required to disclose the information required in those IFRSs in relation to business combinations.

The amendments also apply to an entity on the formation of a joint operation if, and only if, an existing business is contributed by the entity to the joint operation on its formation. Furthermore, the amendments clarify that for the acquisition of an additional interest in a joint operation in which the activity of the joint operation constitutes a business; previously held interests in the joint operation must not be remeasured if the joint operator retains joint control.

The amendments are applied prospectively and are effective for annual periods beginning on or after 1 January 2016. The Group will consider the amendments when it enters into transactions where the amendments are applicable.

Applying the Consolidation Exception - Amendments to IFRS 10, IFRS 12 and IAS 28The amendments address issues that have arisen in applying the investment entities exception under IFRS 10.

The amendments to IFRS 10 clarify that the exemption from presenting consolidated financial statements applies to a parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its subsidiaries at fair value. Furthermore, the amendments to IFRS 10 clarify that only a subsidiary of an investment entity that is not an investment entity itself and that provides support services to the investment entity is consolidated. All other subsidiaries of an investment entity are measured at fair value.

The amendments to IAS 28 allow the investor, when applying the equity method, to retain the fair value measurement applied by the investment entity associate or joint venture to its interests in subsidiaries.

The amendments are effective for annual periods beginning on or after 1 January 2016 and are not expected to affect the Group as no Companies within the Group meet the definition of an investment entity.


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2.6 Standards and amendments issued but not yet effective (continued)IAS 19 Defined Benefit Plans: Employee Contributions — Amendments to IAS 19IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. IAS 19 requires such contributions that are linked to service to be attributed to periods of service as a negative benefit.

The amendments clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to recognise such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service.

Examples of such contributions include those that are a fixed percentage of the employee’s salary, a fixed amount of contributions throughout the service period, or contributions that depend on the employee’s age.

The amendments is effective for annual periods beginning on or after 1 July 2014 and are not expected to affect the Group as it does not have defined benefit schemes.

IAS 27 Equity Method in Separate Financial Statements – Amendments to IAS 27Amendments to IAS 27 Separate Financial Statements allow an entity to use the equity method as described in IAS 28 to account for its investments in subsidiaries, joint ventures and associates in its separate financial statements. Therefore, an entity must account for these investments either:• At cost• In accordance with IAS 39 Or• Using the equity methodThe entity must apply the same accounting for each category of investments.

The amendments must be applied retrospectively and are effective for year ends beginning on or after 1 January 2016. The parent entity will consider the amendment when it becomes effective.

IAS 1 Disclosure Initiative – Amendments to IAS 1The amendments to IAS 1 Presentation of Financial Statements clarify, rather than significantly change, existing IAS 1 requirements.

The amendments clarify• The materiality requirements in IAS 1• That specific line items in the statement(s) of profit or loss and OCI

and the statement of financial position may be disaggregated.

• That entities have flexibility as to the order in which they present the notes to financial statements

• That the share of OCI of associates and joint ventures accounted for using the equity method must be presented in aggregate as a single line item, and classified between those items that will or will not be subsequently reclassified to profit or loss. Furthermore, the amendments clarify the requirements that apply when additional subtotals are presented in the statement of financial position and the statement(s) of profit or loss and other comprehensive income.

The amendments are effective for annual periods beginning on or after 1 January 2016 and early application is encouraged.

Improvements to existing standards

2010- 2012 annual cycle of improvements (issued December 2013) In December 2013, the IASB issued two cycles of Annual Improvements to IFRSs that contain changes to 9 standards. The changes are effective from 1 July 2014 either prospectively or retrospectively. A summary of each amendment is described below:

IFRS 2 Share based payment (Amendments to definitions relating to vesting conditions)Performance conditions and service conditions are defined in order to clarify various issues. The issues relate to performance conditions which must contain a service condition and a performance target which must be met while the counterparty renders service. The amendment also clarifies that a performance target may relate to the operations of an entity or to those of an entity in the same group. The amendment is not expected to have a material impact on the Group financial statements as the current share based payments scheme vested in 2011.

IFRS 3 Business Combinations - Scope for joint venturesThe amendment clarifies that joint arrangements are outside the scope of IFRS 3, not just joint ventures, and the scope exception applies only to the accounting in the financial statements of the joint arrangement itself. Amendment will be considered by the Group when it becomes effective to the extent applicable.

IFRS 3 Business Combinations - Accounting for contingent consideration in a business combinationContingent consideration in a business acquisition that is not classified as equity is subsequently measured at fair value through profit or loss whether or not it falls within the scope of IFRS 9 Financial Instruments. The amendment will not affect the Group as it does not have any contingent consideration paid or payable under business combinations.


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2.6 Standards and amendments issued but not yet effective (continued)IFRS 8 Operating Segments - Aggregation of operating segments and reconciliation of the total of the reportable segment assets to the entity’s total assets.

Aggregation of operating segmentsOperating segments may be combined/ aggregated if they are consistent with the core principle of the standard, if the segments have similar economic characteristics and if they are similar in other qualitative respects. If they are combined, the entity must disclose the economic characteristics (e.g., sales and gross margins) used to assess whether the segments are ‘similar’. The amendment will not have a material impact on the Group financial statements as no segments are combined.

Reconciliation of the total of the reportable segment assets to the entity’s total assetsThe reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker, similar to the required disclosure for segment liabilities. The amendment will not have a material impact on the Group financial statements as the Group is currently providing the reconciliation.

IFRS 13 Fair value measurement - Portfolio exceptionThe amendment clarifies that the portfolio exception in IFRS 13 can be applied to financial assets, financial liabilities and other contracts. The amendment is not expected to affect the Group as it does not have financial assets, financial liabilities and other contracts that meet this criteria.

IAS 16 Property, plant and equipment and IAS 38 Impairment - Revaluation method-proportionate restatement of accumulated depreciationThe amendment clarifies that revaluation can be performed by adjusting the gross carrying amount of the asset to market value or by determining the market value of the carrying amount and adjusting the gross carrying amount proportionately so that the resulting carrying amount equals the market value The amendment also clarified that accumulated depreciation/ amortisation is the difference between the gross carrying amount and the carrying amount of the asset (i.e., gross carrying amount –accumulated depreciation/amortisation = carrying amount).

The amendment to IAS 16.35(b) and IAS 38.80(b) clarifies that the accumulated depreciation/amortisation is eliminated so that the gross carrying amount and carrying amount equal the market value. The Group revalues its land and buildings and will consider the amendment when it becomes effective.

IAS 24 Related party disclosures - Key management personnelThe amendment clarifies that a management entity – an entity that provides key management personnel services – is a related party subject to the related party disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incurred for management services. Amendment will not affect the Group as it has no management entity providing key management services to the Group. IAS 40 Investment property - Clarifying the interrelationship of IFRS 3 and IAS 40 when classifying investment property or owner occupied property - Amendment to IAS 40The description of ancillary services in IAS 40 differentiates between investment property and owner occupied property. IFRS 3 is used to determine if the transaction is the purchase of an asset or a business combination. The Group will consider the amendment when it enters into transactions (after the effective date of the amendment) where the amendment is applicable.

2012 – 2014 Annual improvement cycle (issued September 2014)In September 2014, the IASB issued Annual Improvements to IFRSs 2012-2014 Cycle, which contains five amendments to four standards, excluding consequential amendments. The amendments are effective for annual periods beginning on or after 1 January 2016. Below is a list of those amendments;

IFRS 7 – Servicing Contracts Paragraphs 42A - H of IFRS 7 require an entity to provide disclosures for any continuing involvement in a transferred asset that is derecognised in its entirety. The Board was asked whether servicing contracts constitute continuing involvement for the purposes of applying these disclosure requirements. The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. An entity must assess the nature of the fee and arrangement against the guidance for continuing involvement in paragraphs IFRS 7.B30 and IFRS 7.42C in order to assess whether the disclosures are required.

The Group will consider the amendment, where applicable, when it becomes effective.

IFRS 7 – Applicability of the offsetting disclosures to condensed interim financial statements.In December 2011, IFRS 7 was amended to add guidance on offsetting of financial assets and financial liabilities. In the effective date and transition for that amendment, paragraph 44R of IFRS 7 states that “[A]n entity shall apply those amendments for annual periods beginning on or after 1 January 2013 and interim periods within those annual periods.


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2.6 Standards and amendments issued but not yet effective (continued)IFRS 7 – Applicability of the offsetting disclosures to condensed interim financial statements. (continued)The interim disclosure standard, IAS 34, does not reflect this requirement, however, and it is not clear whether those disclosures are required in the condensed interim financial report.

The amendment removes the phrase ’and interim periods within those annual periods’ from paragraph 44R, clarifying that these IFRS 7 disclosures are not required in the condensed interim financial report. However, the Board noted that IAS 34 requires an entity to disclose ‘an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the entity since the end of the last annual reporting period’. Therefore, if the IFRS 7 disclosures provide a significant update to the information reported in the most recent annual report, the Board would expect the disclosures to be included in the entity’s condensed interim financial report.

The Group will consider the amendments in preparing its interim financial statements when they become effective.

IAS 34 Disclosure of information ‘elsewhere in the interim financial reportIAS 34 requires entities to disclose information in the notes to the interim financial statements ‘if not disclosed elsewhere in the interim financial report’. However, it is unclear what the Board means by ‘elsewhere in the interim financial report’.

The amendment states that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the greater interim financial report (e.g., in the management commentary or risk report).

The Board specified that the other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time. If users do not have access to the other information in this manner, then the interim financial report is incomplete.

The Group will consider the amendment, when it becomes effective, when preparing its interim financial report.

IAS 19 – Discount rate Regional market rates IAS 19 requires an entity to recognise a post-employment benefit obligation for its defined benefit plans. This obligation must be discounted using market rates on high quality corporate bonds

or using government bond rates if a deep market for high quality corporate bonds does not exist. Some entities thought that the assessment of a deep market was based at a country level (e.g., Greece) while others thought it was based at a currency level (e.g., the euro).

The amendment to IAS 19 clarifies that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used.

The amendment must be applied for annual periods beginning on or after 1 January 2016, with earlier application permitted. The amendment will not affect the Group as the Group does not have defined benefit pension schemes.

IFRS 5 – Changes in methods of disposal Assets (or disposal groups) are generally disposed of either through sale or through distribution to owners. The amendment to IFRS 5 clarifies that changing from one of these disposal methods to the other should not be considered to be a new plan of disposal, rather it is a continuation of the original plan. There is therefore no interruption of the application of the requirements in IFRS 5.

The amendment must be applied prospectively to changes in methods of disposal that occur in annual periods beginning on or after 1 January 2016, with earlier application permitted.

The Group will consider the amendment, if applicable, when they become effective.

2.7 General disclosuresThe following exchange rates were used in the preparation of these financial statements:

USD 1: Statement of Statement of financialposition comprehensiveincome

Malawi Kwacha 490.00 440.00South African Rand 11.88 10.83EURO 0.80 0.75


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GROUP COMPANY 2014 2013 2014 2013 US$ US$ US$ US$

3 Other operating income

Royalties - - 900,000 900,000 Dividends received - 893 200,000 1,261,035 Profit on disposal of property, plant and equipment & assets classified as held for sale 144,519 - 12,867 237 Profit on disposal of scrap 46,450 62,129 - - Sundry income 173,429 192,028 119,063 82,212

364,398 255,050 1,231,930 2,243,484 4 Other operating expenses

Loss on disposal of property, plant and equipment - 19,790 - - Exchange loss on foreign currency translation 26,725 62,492 - 5,908 Retrenchment costs - 764,053 - 55,000 De-recognition of plant components 207,735 - - - Impairment - Plant and equipment - 1,074,524 - - - Inventory - 1,305,730 - -

234,460 3,226,589 - 60,908

5 Operating profit/(loss) is stated after charging the following:

Audit fees 197,385 278,640 39,000 94,990 Depreciation of property, plant and equipment 3,914,217 3,523,496 205,673 146,133 Amortisation of intangible assets 91,357 91,736 - - Directors emoluments for services as directors 191,585 171,896 88,460 87,490

Employee benefits expense

- Salaries and wages 16,514,912 17,063,936 1,852,397 1,567,981 - Pension costs 180,188 184,796 71,617 68,982 - National Social Security Authority 199,042 161,984 8,785 6,084 16,894,142 17,410,716 1,932,799 1,643,047 6 Finance costs

Interest on borrowings 792,305 751,649 794,510 622,823 7 Finance income

Interest received on loans and investments 209,592 272,727 775,173 708,310

8 Taxation

Current income tax: - Current income tax charge 185,679 356,305 48,219 135,918

- Prior year under provision 24,796 - 24,796 - Capital gains tax 65,709 - 5,100 - Deferred tax (credit)/charge (106,472) (924,010) (32,748) 11,751 Withholding tax - 31,983 - 31,973 169,712 (535,722) 45,367 179,642

Tax rate reconciliation Standard rate 25.75% 25.75% 25.75% 25.75% Effect of withholding tax - (0.39%) - 0.62% Prior year income tax charge under provision 3.18% - 7.17% - Effect of higher tax rate in Malawi (0.23%) (0.12%) - - Disallowed expenses 2.47% (1.22%) 1.25% 0.62% Profit of disposal of properties (7.78%) - - - Profit on disposal of shares (2.74%) 1.04% (6.17%) (1.00%) Dividends from subsidiary companies - - (15.02%) (18.19%) Depreciation on passenger motor vehicle excess cost ineligible for tax allowances 1.32% (2.30%) 0.19% 2.20% Other non-taxable /non-deductible items (0.04%) 0.37% 0.06% (0.69%)

Effective tax rate 21.93% 23.13% 13.23% 9.31%


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9 Earnings /(loss) per share

Basic earnings/ (loss) per share amounts are calculated by dividing net profit/ (loss) for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted earnings/(loss) per share amounts are calculated by dividing the net profit /(loss) attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

The following reflects the income and share data used in the basic and diluted earnings/(loss) per share computations:

Group 2014 2013 US$ US$

Net profit /(loss) attributable to ordinary equity holders of the parent from continuing operations 730,456 (1,790,921) Profit attributable to ordinary equity holders of the parent from discontinued operation - 18,910

Net profit/(loss) attributable to ordinary equity holders of the parent for basic earnings 730,456 (1,772,011)

2014 2013 No. No. Weighted average number of ordinary shares for basic earnings / (loss) per share* 358,000,858 357,909,191

Effectofdilution: Share options - 294,176

Weighted average number of ordinary shares adjusted for the effect of dilution* 358,000,858 358,203,367

*The weighted average number of shares take into account the weighted average effect of changes in share transactions during the year.

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial statements.

To calculate earnings / (loss) per share amounts for the discontinued operation (Note 21), the weighted average number of ordinary shares for both basic and diluted amounts is as per the table above. The following table provides the profit amount used:

Group 2014 2013 US$ US$ Net profit /(loss) attributed to ordinary equity holders of the parent from a discontinued operation for the basic and diluted earnings per share calculations (Note 21.1) - 18,911

Group and Company 2014 2013 US$ US$ 10 Dividend

Final dividend paid for prior year

- 1,655,711


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11 Property, plant and equipment

GROUP COMPANY Freehold Plant and Capital Furniture Motor Furniture Motor land and equipment work in and vehicles Total and vehicles Total buildings progress Fittings Fittings US$ US$ US$ US$ US$ US$ US$ US$ Cost or valuation At 1 January 2013 19,015,910 22,937,164 - 884,009 4,763,975 47,601,058 396,785 699,760 1,096,545 Additions - 2,861,175 - 64,889 1,756,606 4,682,670 6,247 61,975 68,222 Disposals - (45,867) - (3,648) (130,847) (180,362) (652) (20,000) (20,652) Transfer to assets classified as held for sale (996,360) - - - - (996,360) - - - Exchange adjustments (366,086) (490,792) - (24,866) (61,701) (943,445) - - - At 31 December 2013 17,653,464 25,261,680 - 920,384 6,328,033 50,163,561 402,380 741,735 1,144,115 Additions 57,933 6,275,567 2,809,213 92,495 649,966 9,885,174 5,416 60,000 65,416 Transfer to assets classified as held for sale (613,364) - - - - (613,364) - - - Transfer to investment property (Note 12) (1,530,311) - - - - (1,530,311) - - - De-recognition of assets (Note 11.4) - (384,050) - - - (384,050) - - - Disposals (442,225) (84,053) - (22,473) (145,163) (693,914) - (17,500) (17,500) Exchange adjustments (89,876) (138,810) - 7,649 (30,985) (252,022) - - - At 31 December 2014 15,035,621 30,930,334 2,809,213 998,055 6,801,851 56,575,074 407,796 784,235 1,192,031 Accumulated depreciation and impairment

At 1 January 2013 - (4,690,879) - (415,559) (1,617,098) (6,723,536) (141,369) (330,882) (472,251) Depreciation charge for the year (81,342) (2,605,687) - (160,995) (675,473) (3,523,497) (57,626) (88,508) (146,134) Impairment - (1,074,524) - - - (1,074,524) - - - Disposals - 19,586 - 3,648 71,803 95,037 652 17,580 18,232 Assets held for sale (Note 21.2) 16,152 - - - - 16,152 - - - Exchange adjustments 39,789 224,470 - 22,939 52,583 339,781 - - - At 31 December 2013 (25,401) (8,127,034) - (549,967) (2,168,185) (10,870,587) (198,343) (401,810) (600,153) Depreciation charge for the year (98,043) (2,879,572) - (179,986) (756,616) (3,914,217) (95,367) (110,306) (205,673) De-recognition of assets (Note 11.4) - 176,315 - - - 176,315 - - - Transfer to held for sale 5,720 - - - - 5,720 - - - Transfer to investment property (Note 12) 62,810 - - - - 62,810 - - - Disposals 18,460 73,381 - 22,422 100,925 215,188 - 15,700 15,700 Exchange adjustments 2,220 49,255 - (10,471) 35,134 76,138 - - - At 31 December 2014 (34,234) (10,707,655) - (718,002) (2,788,742) (14,248,633) (293,710) (496,416) (790,126)

Net book value

At 31 December 2014 15,001,387 20,222,679 2,809,213 280,053 4,013,109 42,326,441 114,086 287,819 401,905 At 31 December 2013 17,628,063 17,134,646 - 370,417 4,159,848 39,292,974 204,037 339,925 543,962


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11.1 Reconciliation of opening and closing carrying amounts 2014 2013 2014 2013

US$ US$ US$ US$ Net carrying amount at 1 January 39,292,974 40,877,522 543,962 624,294 Cost 50,163,561 47,601,058 1,144,115 1,096,545 Accumulated depreciation and impairment (10,870,587) (6,723,536) (600,153) (472,251) Movement for the year:

Additions 9,885,174 4,682,670 65,416 68,222 Net carrying amount of disposals (478,726) (85,325) (1,800) (2,420) Depreciation charge for the year (3,914,217) (3,523,497) (205,673) (146,134) De-recognition (207,735) - - - Impairment - (1,074,524) - - Assets held for sale (note 21.2) (607,644) (980,208) - - Transfer to investment property (1,467,501) - - - Net exchange adjustment (175,884) (603,664) - -

Net carrying amount at 31 December 42,326,441 39,292,974 401,905 543,962 Cost 56,575,074 50,163,561 1,192,031 1,144,115 Accumulated depreciation and impairment (14,248,633) (10,870,587) (790,126) (600,153)

11.2 Property revaluation The valuation of property was performed in line with market values on 31 December 2012. If land and buildings were measured using cost model, the carrying amount would be $8,854,985 (2013 : $9,082,036)

The revalued property consists of commercial, residential and industrial buildings in Zimbabwe and Malawi.

Fair value of the properties was determined by using market comparable method. This means that valuations performed by the valuer are based on active market prices, significantly adjusted for difference in the nature, location or condition of the specific property. As at date of revaluation on 31 December 2012, the properties’ fair values were based on valuations performed by CB Richard Ellis,an accredited independent valuer.

Significant unobservable data

Price per square metre US$400 - US$1,250 (2013:US$400 - US$1 250)

Significant increases (decreases) in estimated price per square metre in isolation would result in a significantly higher/(lower) fair value. Refer Note 31 for fair value hierachy and Note 22.3 for the movement in the revaluation reserve.

11.3 Property secured against borrowings

Property with a carrying amount of $14,474,839 (2013: $12,728,653) is encumbered against interest bearing borrowings (Note 23).

11.4 Assets written off During the year, some specific plant and machinery parts which had become obsolete in the production process were replaced in line with technology

changes. The replaced parts with a carrying amount of $207 735 were de-recognised.

11.5 Capitalised borrowings costs Borrowings costs of $559 628 were capitalised during the year on the qualifying expenditure of $8.1 million. The interest capitalised was computed using the

specific interest rate on the borrowings .The costs also include charges incurred in raising the borrowings for the capital projects.


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GROUP COMPANY 2014 2013 2014 2013 US$ US$ US$ US$12 Investment property

Balance at 1 January 2014 - - - - Transfer from property, plant and equipment 1,467,501 - - - Cost (Note 11) 1,530,311 - - - Accumulated depreciation (Note 11) (62,810) - - - Fair value adjustment - - - - Balance at 31 December 2014 1,467,501 - - - The Group’s investment property comprises of 11 commercial properties located across the country. During the year, these commercial properties were

transformed into rental earning properties and were accordingly transferred from property, plant and equipment to investment property.

The properties were revalued at 31 December 2012 and management believes the carrying amount of the property approximates fair value at year end. Refer Note 11 for the valuation technique and key unobservable inputs used to value the investment property.

Revenue and expenses relating to investment property GROUP COMPANY 2014 2013 2014 2013 US$ US$ US$ US$ Rental income from leasing 97,635 - - - Operating costs (30,564) - - - Net income 67,071 - - -

13 Intangible assets Cost At 1 January 925,738 925,738 - - Additions 77,473 - 77,473 -

At 31 December 1,003,211 925,738 77,473 -

Amortisation At 1 January (223,592) (131,856) - - Charge for the year (91,357) (91,736) - -

At 31 December (314,949) (223,592) - -

Net book value 688,262 702,146 77,473 -

Reconciliation of opening and closing carrying amounts

Net carrying amount at 1 January 702,146 793,882 - - Cost 925,738 925,738 - - Accumulated amortisation (223,592) (131,856) - -

Movement for the year: Additions 77,473 - 77,473 - Amortisation (91,357) (91,736) - - Net carrying amount at 31 December 688,262 702,146 77,473 - Cost 1,003,211 925,738 77,473 - Accumulated amortisation (314,949) (223,592) - -

The intangible assets consist of computer software.

14 Investments in subsidiaries Lavenson Investments (Private) Limited - - 6,259,870 6,259,870 Martindale Trading (Private) Limited - - 1 1 Dairibord Malawi Limited - - 1,207,807 1,207,807 Kutal Investments (Private) Limited - - 9,153,012 9,153,012 NFB Logistics (Private) Limited - - 1,077,493 1,077,493 - - 17,698,183 17,698,183


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GROUP COMPANY 2014 2013 2014 201315 Loans receivable US$ US$ US$ US$

15.1 Long-term loans receivable Dairibord Zimbabwe (Private) Limited - - 8,467,968 2,303,311 NFB Logistics (Private) Limited - - 259,897 495,554 Martindale Trading (Private) Limited - - 1,071,314 1,631,970 - - 9,799,179 4,430,835 Less : Amounts falling due within one year - - (2,911,210) (1,395,292) - - 6 887 969 3,035,543 The long term loans receivable relate to loans that were issued to subsidiaries at an all-in cost of between 9.6% and 11% per annum and are repayable by 2019. The holding company raises loans from banks for onlending to subsidiaries.

15.2 Short-term loans receivable Dairibord Zimbabwe (Private) Limited - - 1,024,552 1,485,000 NFB Logistics (Private) Limited - - - 150,000 - - 1,024,552 1,635,000 Add : Amounts falling due within one year of long term loans receivable - - 2,911,210 1,395,292 - - 3,935,762 3,030,292 Short term loans receivable were issued at an all-in cost of 11% per annum for a tenor of between 30 days and 180 days.

16 Other non-current financial assets

Loans receivable 869,298 881,096 85,649 129,369 The loans receivable represent the non-current portion of loans which were issued to staff under a motor vehicle loan scheme and to farmers under a heifer funding programme. The motor vehicle loans are repayable over 5 years from date of issue at an interest rate of 9.5% per annum whilst the loans to farmers are repayable over 2.5 years at an interest rate of 15%. The short term portion of these loans is included in other receivables.

17 Inventories

Packaging and raw materials (at cost) 10,740,497 9,335,016 - - Spares and general consumables (at cost) 2,704,557 2,804,629 - - Finished goods (at lower of cost and net realisable value) 1,702,003 1,442,315 - - Total inventories 15,147,057 13,581,960 - -

The amount of inventories recognised as an expense for the period was $55,320,994 (2013 :$53,481,599 ).

During 2014, stock losses amounting to US$ 824 805 (2013 : US$2 009 571) was recognised as an expense in cost of sales.

18 Group companies

The following balances arise from normal trading activities:

18.1 Amounts owed by group companies

NFB logistics (Private) Limited - - 624,482 299,436 Martindale Trading (Private) Limited - - 288,810 1,493,432 Chatmoss Enterprises (Private) Limited - - 52,905 140,238 Slimline Investments (Private) Limited - - 73,655 - Qualinex Investments (Private) Li,ited - - 33,118 - Dairibord Malawi Limited - - 100,534 52,133 Dairibord Zimbabwe (Private) Limited - - 77,960 - - - 1,251,464 1,985,239


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GROUP COMPANY 2014 2013 2014 201318 Group companies (continued) US$ US$ US$ US$

18.2 Amounts owed to group companies Goldblum Investments (Private) Limited - - 428,918 306,296 Dairibord Zimbabwe (Private) Limited - - - 683,137 - - 428,918 989,433 All group transactions are conducted on an arm’s length basis and are interest free, with no fixed repayment terms.

19 Trade and other receivables Trade receivables 8,242,338 6,100,796 - - Other receivables 3,370,803 1,586,580 339,794 430,989 11,613,141 7,687,376 339,794 430,989 As at 31 December 2014, receivables of $664,561 (2013 : $842,007) were provided for. The following is a movement in the impairment of receivables balance:

Opening balance 842,007 549,533 Charge for the year 187,256 493,838 Bad debts written off (362,709) (167,921) Reversal for the year (1,993) (33,443) At 31 December 664,561 842,007 The ageing analysis of trade receivables was as follows :

Neither past Past due but due nor not impaired Total impaired 30-60 days 60 +days US$ US$ US$ US$

At 31 December 2014 8,242,338 5,981,185 1,466,689 794,464

At 31 December 2013 6,100,795 4,848,880 1,011,457 240,458 Trade credit is generally offered on 30 day credit terms and no interest is charged within the credit period. See note 32.1 on credit risk of trade receivables to understand how the Group manages and measures credit quality of trade receivables that are neither past due nor impaired.

20 Cash and cash equivalents

Cash at banks and on hand 1,414,341 2,455,632 36,637 64,176


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GROUP 2014 2013 US$ US$a) The income statement from discontinued operation Revenue - - Expenses - -

Operating profit - - Profit on disposal of assets - 27,647

Profit before tax - 27,647 Tax expense - -

Profit for the period from discontinued operation - 27,647

Share of profit attributable to equity holders of the parent 18,911 Earnings per share (cents): Basic earnings for the year, from discontinued operation 0.005 Diluted earnings for the year, from discontinued operation 0.005

b) The statement of cashflows from discontinued operations The net cashflows incurred by Mulanje Peak Foods (Private) Limited) are as follows: Operating - -

Investing - 246,620

Net cash inflow - 246,620 21.2 Assets classified as held for sale On 31 December 2013, certain residential properties were classified as held for sale following a Board resolution to sell some residential properties and

invest the cash in plant and machinery. Properties worth $668 301 had been sold by 31 December 2014 and management is confident the remaining proper-ties will be sold in the current year and hence remained classified as held for sale as at 31 December 2014. At 31 December 2014, additional properties were classified as held for sale which management believes will be sold by 31 December 2015.

Group 2014 2013 The major classes of assets classified as held for sale are as follows: US$ US$ Property 919,551 980,208 Reconciliation of assets held for sale

Opening balance 980,208 256,305 Disposals (668,301) (256,305) Transfer from property, plant and equipment (Note 11.1) 607,644 980,208 Closing balance 919,551 980,208 The assets are part of the properties segment.

There were no liabilities directly associated with the assets held for sale.

21 Discontinued operations and assets held for sale

21.1 Discontinued operations The business of Mulanje Peak Foods (Private) Limited was consistently not operating profitably making it difficult for management to derive any growth from it. In November 2011, the Board of directors of Dairibord Malawi Limited resolved to dispose the company. The disposal of the related assets was completed in 2013. The income statement and cashflows from the discontinued operations are shown below:


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22 Issued capital and reserves Group and Company22.1 Share capital 2014 2013 Authorised shares No. No.

Ordinary shares of US$0.0001 each 425,000,000 425,000,000 No. US$ Ordinary shares issued and fully paid At 1 January 2013 357,700,858 35,770 Share options exercised during the year 300,000 30 At 31 December 2013 358,000,858 35,800 Share options exercised during the year - - At 31 December 2014 358,000,858 35,800 Subject to the limitations imposed by the Companies Act (Chapter 24:03) in terms of a resolution passed by the company in general meeting, the unissued shares have been placed at the disposal of the directors. Share option Scheme The directors are empowered to grant share options to certain employees of the company. The options granted are exercisable within 6 years from date of grant and they all vested in 2011. Movements in the year Opening balance 465,286 765,286 Exercised during the year - (300,000) 465,286 465,286 Exercisable at 31 December 465,286 465,286 The following table lists the inputs to the model used to value the options in 2010: - The exercise price of the option (US$) 0.085 - The market price of the option (US$) 0.085 - The expected volatility of the share price (%) 72.21 - The dividend yield (%) - - Risk free rate (%) 5 - The term of the option (years) 6 - Utility factor 1.63 - Exit rate - - Vesting period (Years) 1 Group and Company 2014 2013 US$ US$22.2 Share premium At 1 January 1,379,664 1,343,364 Share options exercised during the year - 36,300 At 31 December 1,379,664 1,379,664


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22.3 Non-distributable reserves

Group Attributable to equity holders of the parent

Foreign Foreign Share currency currency Asset Other Option translation conversion revaluation capital Total

reserve reserve reserve reserve reserves reserves US$ US$ US$ US$ US$ US$

Balance at 1 January 2013 27,627 (3,739,645) 18,641,370 9,326,354 117,784 24,373,490 Other comprehensive income - (387,484) - - - (387,484) Gross - (387,484) - - - (387,484) Income tax effect - - - - - - Transfer to held for sale (491,274) (491,274) Exercise of share options (10,830) - - - - (10,830) Balance at 31 December 2013 16,797 (4,127,129) 18,641,370 8,835,080 117,784 23,483,902 Other comprehensive income - (58,153) - - - (58,153) Gross - (58,153) - - - (58,153) Income tax effect - - - - - -

Transfer to held for sale reserve - - (304,548) - (304,548) Balance at 31 December 2014 16,797 (4,185,282) 18,641,370 8,530,532 117,784 23,121,201 Company Foreign Share currency Option conversion reserve reserve Total US$ US$ US$ Balance at 1 January 2013 27,627 16,999,800 17,027,427 Exercise of share options (10,830) - (10,830)

Balance at 31 December 2013 16,797 16,999,800 17,016,597 Exercise of share options - - - Balance at 31 December 2014 16,797 16,999,800 17,016,597 Nature and purpose of reserves Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of the foreign

subsidiary.

Foreign currency conversion reserve The foreign currency conversion reserve arose as a result of change in functional currency from the Zimbabwe dollar to the United States dollar.It

represents the residual equity in existence as at the change over period and has been designated as non - distributable reserve.

Asset revaluation reserve The asset revaluation reserve is used to record increases in the fair value of land and buildings and decreases to the extent that such decreases relate to an increase on the same asset previously recognised in equity. Other capital reserves This relates to the profit made on the acquisition of additional interest in Dairibord Malawi Limited.

Share option reserve The share option reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key management

personnel, as part of their remuneration. Refer to Note 22.1 for further details of these plans.

Reserves of assets held for sale The reserve relates to the revaluation surplus on assets classified as held for sale. In 2013 , the reserve was disclosed as part of revaluation reserve.


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a) 37.5% secured loan This is made up of two loans totalling MK 140,532,913 (US$ 330,941) which were used in financing the acquisition of plant and equipment. The loans are

repayable by 30 August 2016 in monthly instalments of MK 2,988,018 (US$6,567 ). The loan is secured over assets purchased.

b) PTA Bank - 2011 Loan This loan was utilised to purchase plant and equipment. The total loan facility amounts to US$4,023,000 and is secured by immovable property of Kutal

Investment (Private) Limited (Refer below for details) and assets purchased.

c) PTA Bank - 2014 Loan The loan financed the new capital projects undertaken during the year at Dairibord Zimbabwe (Private) Limited. This loan, together with the loan in (b)

above, is secured over immovable property worth US$7,7 million and the assets funded. The total facility available is US$6 million.

d) Secured loan This loan was used to fund part of the capital projects at Dairibord Zimbabwe (Private) Limited. The loan repayment is over 2.5 years and started in

November 2014. The loan is secured over property worth US$2,4 million

e) Bank Loan Zimbabwe This loan was used to acquire plant and equipment at Dairibord Zimbabwe (Private) Limited. The loan is repayable in full by August 2016.

It is secured over property with a value of US$4,499,490.

f) 11% Debenture This loan was used to fund the heifer importation programme for farmers (refer Note 16 ). The amount drawn down last year was repaid during the year.

g) Bank Loan Zimbabwe This was made up of various short term loans secured by immovable property of Kutal Investment (Private) Limited as indicated in note (e) above. The

current facility amounts to US$500 000 and expires on 8 May 2015 and is subject to renewal.

h) Bank Loan Zimbabwe-unsecured This loan was utilised for working capital. The current facility amounts to US$2 million and is subject to renewal on 30 September 2015.

i) 9.6% secured loan This loan was used to purchase delivery trucks and to lend to farmers under the heifer importation programme. The loan was paid off during the year. The

loans receivable from the farmers under programme are included in other receivables (Refer Note 16)

Borrowing cost % GROUP COMPANY United States Malawi 2014 2013 2014 2013 dollar Kwacha Maturity US$ US$ US$ US$ 23 Interest bearing borrowings23.1 Long term borrowings

a) Bank loan Malawi 37.5% Aug 2016 271,358 312,418 - - b) PTA Bank - 2011 Loan 11% Dec 2016 1,999,297 2,999,314 1,999,297 2,999,314 c) PTA Bank - 2014 Loan 10.6% May 2019 5,012,672 - 5,012,672 - d) Secured loan 10.6% Dec 2016 941,023 - 941,023 - e) Bank loan Zimbabwe-secured 10% Aug-Sept 2016 1,852,000 1,136,000 1,852,000 1,136,000 f) Debentures -offshore (unsecured) 11% - 100,000 - 100,000 10,076,350 4,547,732 9,804,992 4,235,314 Less : Amounts falling due within one year (3,565,037) (1,555,307) (3,384,132) (1,555,307) 6,511,313 2,992,425 6,420,860 2,680,007

23.2 Short term borrowings

g) Bank loan Zimbabwe - secured 10% - 600,000 - 600,000 h) Bank loan Zimbabwe - unsecured 11% Sep 2015 1,000,000 1,555,000 1,000,000 1,555,000 i) Secured loan 10.6% - 390,909 - 390,909 1,000,000 2,545,909 1,000,000 2,545,909 Add: Portion of long term loans falling due within one year 3,565,037 1,555,307 3,384,132 1,555,307 4,565,037 4,101,216 4,384,132 4,101,216 Total interest bearing borrowings 11,076,350 7,093,641 10,804,992 6,781,223


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24 Borrowings powers

The directors may borrow any sum of money not exceeding the aggregate of twice the issued and paid up share capital of the company and the aggregate of the amounts standing to the credit of all the reserve accounts and share premium account. Banking facilities

At 31 December 2014 , the banking facilities in place in Zimbabwe amounted to $16 500,000 (2013 : $13 000 000). The facilities expire between 8 May 2015 and 31 August 2017.

In Malawi the banking facilities amounted to MK 260,000,000 (US$ 530,612). The facilities expire by August 2016. GROUP COMPANY 2014 2013 2014 2013 US$ US$ US$ US$

25 Deferred taxation

Deferred tax relates to the following: Property , investment property and property classified as held for sale 578,173 515,726 - - Plant and equipment 3,990,900 3,605,342 61,829 88,322 Intangible assets 157,278 180,803 - - Inventory - (22,896) - - Accounts receivable (27,080) (52,178) - - Unrealised loss on exchange - (4,503) - - Unutilised tax loss (1,578,553) (765,149) - - Prepayments 247,803 32,775 - - Provisions (173,710) (156,038) (27,526) (21,271) 3,194,811 3,333,882 34,303 67,051 Reconciliation of deferred tax Opening balance as of 1 January 3,333,882 4,381,462 67,051 55,300 Tax expense recognised in other comprehensive income - - - - Tax (credit)/expense recognised in profit or loss (106,472) (924,010) (32,748) 11,751 Effect of exchange rate change (32,599) (123,570) - - Closing balance as at 31 December 3,194,811 3,333,882 34,303 67,051 The Group has tax losses which arose in two subsidiaries of US$6,027,066 (2013:US$2,971,452) that are available for offset against future taxable profits. Deffered tax asset has been recognised for the whole amount of the tax losses. 26 Trade and other payables Trade payables 12,405,144 8,770,915 - - Other payables 2,931,660 2,901,338 706,277 636,180 15,336,804 11,672,253 706,277 636,180 Terms and conditions of trade and other payables: Trade and other payables are non - interest bearing and are on 14 - 30 day terms.


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GROUP 2014 2013 US$ US$ 27 Commitments and contigencies Capital commitments : Authorised and contracted for 1,528,753 2,410,000 Authorised and not contracted for 8,967,526 11,010,961 10,496,279 13,420,961 The Group’s capital expenditure will be financed from internally generated cash and loans. Litigation The Group is a respondent in various employee claims for unfair dismissal and vendor litigations. The total estimated liability is US$320,000. On the basis of legal advice the claims are not valid and there will be no outflow of resources. Operating lease commitments - Group as lessee The Group entered into a commercial lease on a commercial building. The lease is for a one year period with a renewal option included in the contract. There are no restrictions placed upon the Group in entering into the lease. Future minimum rentals payable under the operating leases as at 31 December are as follows : Within one year 160,000 177,228 Operating lease commitments -Group as Lessor The Group entered into commercial leases with tenants on commercial buildings. The leases are for a one year period with a renewal option included in the contract. There are no restrictions placed upon the Group in entering into the lease. Future minimum rentals receivable under the operating leases as at 31 December are as follows : Within one year 152,000 - 28 Related party disclosures 28.1 The consolidated financial statements include the financial statements of Dairibord Holdings Limited and the subsidiaries listed in the following table : % equity Interest Country of Name Incorporation 2014 2013 Dairibord Malawi Limited Malawi 68.4 68.4 Martindale Trading (Private) Limited Zimbabwe 100 100 Lavenson Investments ( Private ) Limited Zimbabwe 100 100 NFB Logistics ( Private ) Limited Zimbabwe 100 100 Kutal Investments ( Private ) Limited Zimbabwe 100 100 28.2 Company US$ US$ Management fees received from subsidiaries 2,498,469 2,894,906 Royalties received from subsidiaries 900,000 900,000 Loans issued to subsidiaries 9,545,717 4,603,717 Interest income on loans to subsidiaries 755,862 598,540 Refer Note 15 and 18 for loans receivable from subsidiaries and related party balances respectively.


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28.3 Compensation to key management personnel

GROUP 2014 2013 US$ US$ Group Short term employee benefits 3,043,197 3,034,414 Pension contributions 53,152 43,924 Total compensation paid 3,096,349 3,078,338 Motor vehicle loan balances 235,473 290,882 Company Short term employee benefits 1,561,193 1,498,829 Pension contributions 27,683 24,985 Total compensation paid 1,588,876 1,523,814 Motor vehicle loan balances 108,776 123,356

The motor vehicle loans were issued at an interest rate of 9.5% , and on the same terms as to all other employees. Refer Note 16 for more detail. There are 465 286 outstanding share options currently excercisable which were issued to key management personnel in 2010. 29 Pension and retirement plans 29.1 Defined contribution funds All employees of the Group are eligible to be members of defined contributions funds. 29.2 National Social Security Authority Scheme This is a scheme estabilished under the National Social Security Authority Act (1989). Contributions per employee is 3.5% per month up to a maximum pensionable salary of $700. This scheme is a defined contribution scheme from the Group’s perspective. 29.3 Pension costs charged to the income statement during the year National Social Security Authority Scheme - Zimbabwe 199,042 161,984 Defined contribution funds 180,188 184,796 379,230 346,780


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30 Material partly-owned subsidiary

Financial information of subsidiary that has material non-controlling interests are provided below: Portion of equity interest held by non-controlling interests:

Name Country of incorporation 2014 2013 and operation Daribord Malawi Limited Malawi 31.6% 31.6%

US$ US$ 2014 2013

Accumulated balances of material non-controlling interest: 375,253 528,479

(Loss)/profit allocated to non-controlling interest (126,360) 18,747

The summarised financial information of the subsidiary is provided below. This information is based on amounts before inter-company eliminations.

Dairibord Malawi Limited summarised statement of profit or loss for 2014 2014 2013

US$ US$ Revenue 4,980,585 6,291,022 Cost of sales (3,779,227) (4,524,050) Administrative expenses (1,584,394) (1,600,319) Finance costs (157,946) (100,032) (Loss)/profit before tax (540,982) 66,621 Income tax credit/(expense) 141,109 (7,296) (Loss)/profit for the year (399,873) 59,325

Total comprehensive income (399,873) 59,325

Attributable to non-controlling interests (126,360) 18,747

Dividends paid to non-controlling interests - 45,697

Dairibord Malawi Limited summarised statement of financial position as at 31 December 2014

2014 2013 US$ US$ Inventories and cash and bank balances (current) 865,735 1,207,598 Property, plant and equipment and other non-current financial assets (non-current) 1,809,011 1,883,476 Trade and other payables (current) (991,864) (708,517) Interest-bearing loans and borrowings (current) (180,905) (104,176) Interest-bearing loans and borrowings and deferred tax liabilities (non-current) (314,469) (605,979)

Total equity 1,187,508 1,672,402 Attributable to equity holders of parent 812,255 1,143,923 Non-controlling interest 375,253 528,479

Summarised cash flow information for the year ending 31 December 2014

Operating 241,929 188,953

Investing (310,017) (406,378) Financing (14,869) 66,078 Net decrease in cash and cash equivalents (82,957) (151,347)


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31 Fair value measurement

The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities.

Quantitative disclosures fair value measurement hierarchy for assets:

GROUP Fair value measurement using Quoted prices Significant Significant in active observable unobservable Total market (level 1) Inputs (level 2) Inputs (Level 3)

Assets measured at fair value Level 1 Level 2 Level 3 US$ US$ US$ US$ Revalued land and buildings (Note 11) 15,001,387 - - 15,001,387 Investment property (Note 12) 1,467,501 - - 1,467,501 There have been no transfers between Level 1 and Level 2.

Quantitative disclosures fair value measurement hierarchy for liabilities as at 31 December 2013:

Fair value measurement using Quoted prices Significant Significant in active observable unobservable Total market (level 1) Inputs (level 2) Inputs (Level 3) Assets measured at fair value Level 1 Level 2 Level 3 US$ US$ US$ US$ Revalued property (Note 11) 17,628,063 - - 17,628,063 There have been no transfers between Level 1 and Level 2.


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32 Financial Risk Management objectives and policies The Group’s principal financial liabilities comprise trade payables and interest-bearing borrowings. The main purpose of these financial instruments is to raise

finance for the Groups’s operations. The Group has various financial assets such as trade receivables and cash which arise directly from its operations. The main risk arising from the Group’s financial instruments are interest rate risk, liquidity risk, foreign currency risk and credit risk. These risks are managed

as follows :

32.1 Credit risk Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract leading to a financial loss. The Group

is exposed to credit risk from its operating activities (primarily for trade receivables and loan notes) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Trade receivables Customer credit risk is managed by each business unit subject to the Group’s establised policy , procedures and control relating to customer credit risk

management. Credit limits are established for all customers based on internal rating criteria. Credit quality of the customer is assessed through extensive credit verification procedures and individual credit limits are defined in accordance with this assessment. Customers with outstanding balances are regularly monitored.

The requirement for impairment is analysed at each reporting date on an individual basis for all customers. The maximum exposure to credit risk at the

reporting date is the carrying amount of each class of financial asset disclosed in note 19. The Group evaluates the concentration of credit risk as low since the balances are widely spread.

Cash balances The Group only deposits cash with financial institutions with high credit ratings. The maximum exposure to risk is equal to the carrying amount of cash and

bank balances as disclosed in note 20.

32.2 Liquidity risk The Group consistently monitors its risk to a shortage of funds.This requires that the Group considers the maturity of both its financial investments and

financial assets e.g accounts receivables, other financial assets and projected cash flows from operations.The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and debentures.

The table below summaries the maturity profile of the Group and Company’s financial liabilities as at 31 December 2014 based on contractual undiscounted payments :

GROUP Year ended 31 December 2014 On 0 to 3 3 to 12 1 to 5 + 5 Total demand months months years years Liabilities US$ US$ US$ US$ US$ US$

Interest bearing borrowings - 1,292,640 3,994,683 7,357,433 - 12,644,756 Trade and other payables - 15,336,804 - - - 15,336,804 - 16,629,444 3,994,683 7,357,433 - 27,981,560

Year ended 31 December 2013 Liabilities Interest bearing borrowings - 1,290,970 3,110,399 3,655,601 - 8,056,970 Trade and other payables - 11,672,253 - - - 11,672,253 - 12,963,223 3,110,399 3,655,601 - 19,729,223

COMPANY Year ended 31 December 2014 Liabilities Interest bearing borrowings - 1,270,027 3,926,844 7,176,528 - 12,373,399 Trade and other payables - 706,277 - - - 706,277 Amounts owed to Group companies - 428,918 - - - 428,918 - 2,405,222 3,926,844 7,176,528 - 13,508,594 Year ended 31 December 2013 Liabilities Interest bearing borrowings - 1,234,597 2,956,993 3,379,831 - 7,571,421 Trade and other payables - 636,180 - - - 636,180 Amounts owed to Group companies - 989,433 - - - 989,433 - 2,860,210 2,956,993 3,379,831 - 9,197,034


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32.3 Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.

The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenues or expenses are denominated in a different currency), and the groups net investment in subsidiaries . The Group limits exposure to exchange rate fluctuations by either pre-paying for purchases or retaining stock until the foreign currency to settle the related liability has been secured.

The following table demonstrates the sensitivity to a reasonable possible change in the Euro and Rand exchange rate ,

Effect Change in on profit Effect rates before tax on equity 2014 +10% 30,311 22,506 -10% (55,698) (41,356) 2013 +10% (2,240) (1,663) -10% 2,240 1,663 Because of the investment in Malawi , the Group’s statement of financial position can be affected siginificantly by movements in the Malawi Kwacha.

The following table represents the effect on profit before tax and equity to a reasonable change in the Malawi Kwacha to United States Dollar on the

consolidation of Malawi operations: Effect

Change in on profit Effect on rates before tax equity 2014 +10% (58,513) 190,458 -10% 48,124 (156,079) 2013 +10% (152,038) (106,427) -10% 152,038 106,427 32.4 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 group manages its interest cost and risk by using fixed rate debts.

32.5 Capital management The primary objective of the company’s capital management is to ensure that the company maintains a healthy capital ratio in order to support the

business and maximize shareholder value. The group manages its capital structure and makes adjustments to it in light of changes in the economic enviroment. To maintain or adjust the capital

structure the Group may adjust the dividend payment to shareholders, return capital to shareholders, or issue new shares. No changes were made to the objectives , policies or processes during the year ended 31 December 2014.

The Group monitors capital using a gearing ratio , which is net debt divided by total capital plus net debt. The Group’s policy is to keep the gearing ratio up to a maximum of 50%. The Group includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations.

2014 2013 US $ US $ Interest bearing borrowings (Note 23) 11,076,350 7,093,641 Trade and other payables (Note 26) 15,336,804 11,672,253 Less cash and short-term deposits (Note 20) (1,414,341) (2,455,632) Net Debt 24,998,813 16,310,262 Equity 46,084,681 45,565,604 Capital and debt 71,083,494 61,875,866 Gearing ratio 35.2% 26.4%


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33 Segment Information 33.1 For management purposes , the Group is currently primarily organised into business units based on business activity. The Group has four operating

segments as follows : Manufacturing - manufactures foods and beverages

Distribution - logistical services and distribution of goods Properties - leasing of properties

Corporate - resource allocation Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance

assessment. Adjustments and Year ended 31 December 2014 Manufacturing Logistics Properties Corporate eliminations Group US$ US$ US$ US$ US$ US$ Revenue External customers 97,893,279 1,024,611 97,635 - - 99,015,525 Inter-segment 5,032,010 6,934,229 627,821 - (12,594,060) - Total revenue 102,925,289 7,958,840 725,456 - (12,594,060) 99,015,525 Results Depreciation 3,176,965 456,271 75,309 205,672 - 3,914,217 Operating (loss)/profit (342,643) 756,928 792,336 362,243 (212,343) 1,356,521 Segment assets 54,866,576 5,879,432 21,061,287 30,726,832 (36,738,761) 75,795,366 Segment liabilities 33,258,157 2,816,080 642,315 12,022,727 (19,028,594) 29,710,685 Capital expenditure 9,631,248 334,500 22,711 142,889 (168,701) 9,962,647 Adjustments and Year ended 31 December 2013 Manufacturing Logistics Properties Corporate eliminations Group US$ US$ US$ US$ US$ US$ Revenue External customers 98,891,078 1,160,425 - - - 100,051,503 Inter-segment 2,208,278 5,839,297 783,168 - (8,830,743) - Total revenue 101,099,356 6,999,722 783,168 - (8,830,743) 100,051,503 Results Depreciation (2,908,095) (395,964) (73,305) (146,133) - (3,523,497) Operating (loss)/profit (456,781) 1,033,421 705,338 1,840,013 (4,959,702) (1,837,711) Segment assets 48,216,127 5,037,371 20,186,328 27,016,365 (32,654,893) 67,801,298 Segment liabilities 25,849,699 2,310,970 421,943 8,609,799 (14,956,717) 22,235,694 Capital expenditure 2,950,364 1,664,084 - 68,222 - 4,682,670 The adjustments and eliminations columns relate to inter-segments transactions and balances which are eliminated on consolidation.

33.2 Geographic Information Revenue from external customers GROUP 2014 2013 US$ US$

Zimbabwe 94,034,940 93,760,480 Malawi 4,980,585 6,291,022 99,015,525 100,051,502 The revenue information above is based on the location of the operations Non -current assets Zimbabwe 43,542,493 38,992,742 Malawi 1,809,011 1,883,476 45,351,504 40,876,218

Non current assets consist of land and buildings, investment property , plant and equipment, intangible assets and investments.

34 Events after the reporting date There are no significant events which occurred after 31 December 2014 and before the approval of the financial statements.



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DML – Dairibord Malawi Limited

DZPL – Dairibord Zimbabwe (Private) Limited

GDP – Gross Domestic Product

IFRS – International Financial Reporting Standards

ISO – International Standards Organisation

MBA – Masters of Business Administration

NSSA – National Social Security Authority

PBT Margin – Profit before Tax Margin

SADC – Southern Africa Development Community

SAZ – Standards Association of Zimbabwe

SBU – Strategic Business Unit

SKU – Stock Keeping Unit

ZSE – Zimbabwe Stock Exchange

ZIMRA – Zimbabwe Revenue Authority

GLOSSARY OF TERMS


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GRI Indicator Page No.

1 STRATEGY AND ANALYSIS

1.1 Statement from the most senior decision maker of the organisation about the relevance of sustainability to the organisation and its strategy. 12

2 ORGANISATIONAL PROFILE

2.1 Name of organisation Cover

2.2 Primary brands, products, and/or services 7

2.3 Operational Structure of the organisation 5

2.4 Location of the organisation’s head office 88

2.5 Number of countries where the organisation operates, and names of countries with either major operations or that are specifically relevant to the sustainability issues covered in the report. 3

2.6 Nature of ownership and legal form 3

2.7 Markets served including (geographic breakdown, sectors served, and types customers/beneficia-ries) 3

2.8 Scale of the reporting organisation, including:

• Number of employees• Net sales• Capitalisation broken down in terms of debt and equity• Quantity of products or services provided

34, 41-42

2.9 Significant Changes during the reporting period regarding size, structure or ownership including:

• The location of, or changes in operations, including facility opening, closings and expansion.• Changes in the share capital structure and other capital formation, maintenance, and alteration

operations.

12-13

2.10 Awards received in the reporting Period 2, 16, 17

3 REPORT PARAMETERS

Report Profile

3.1 Reporting period for information provided 1

3.2 Date of the most recent previous report 1

3.3 Reporting cycle 1

3.4 Contact point for questions regarding the report or its content 1

Report Scope and Boundary

3.5 Process for defining report content , including:

• Determining materiality;• Prioritizing topics within the report; and• Identifying stakeholders the organisation expects to use the report.

1, 8, 27

3.6 Boundary of the report (e.g., countries, divisions, subsidiaries, leased facilities, joint ventures, suppliers) 1

3.7 Any specific limitations on the scope or boundary of the report. 27

3.8 Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, and other entities that can significantly affect comparability from period to period and/between organisations. 45

3.9 Explanation of the effects of any re-statements of information provided in earlier reports, and the reasons for such re-statement (e.g. mergers/acquisitions, change of base years/periods, nature of business, measurement methods)

N/A

3.10 Significant changes from previous reporting periods in the scope, boundary, or measurement methods applied in the report. N/A

3.11 GRI Index (i.e. this table) 81

GRI Index


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GRI Index

4 GOVERNANCE, COMMITMENTS AND ENGAGEMENTS

Governance

4.1 Governance structure of the organisation including committees under the highest governance body responsible for specific tasks, such as setting strategy or organisational oversight. 20-24

4.2 Whether Chair of the Board executive or non executive? 20

4.3 Organisations with unitary board structure, state the number of members of the highest governance body that are independent and/or non executive members. 23

4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the highest governance board. 23

Stakeholder Engagement

4.14 List of stakeholders engaged by the organisation. 30

4.15 Basis for identification of and selection of stakeholders with who to engage. 8, 30

ECONOMIC PERFORMANCE INDICATORS

Economic Performance

EC1

(Core)

Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and community investments, retained earnings, and payments to capital providers and government.

41-79

EC4

(Core)

Significant financial assistance received from government.37

ENVIRONMENTAL PERFORMANCE INDICATORS

Materials

EN1

(Core)

Material used by weight or volume.31

EN2

(Core)

Percentage materials used that are recycles materials.31

Energy

EN3

(Core)

Direct energy consumption by primary energy source.32

EN4

(Core)

Indirect energy consumption by primary source.32

Water

EN8

(Core)

Total water withdrawn by source.32

Emissions, Effluents, and Waste

EN16

(Core)

Total direct and indirect greenhouse gas emissions by weight.33

SOCIAL PERFORMANCE INDICATORS

Employment

LA1

(Core)

Total workforce by employment type, employment contract, and region.34

LA7

(Core)

Rate of injury, occupational diseases, lost days, and absenteeism, and number of work related fatalities by region. 35

GRI Indicator Page No.


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SHAREHOLDER ANALYSIS 31 DECEMBER 2014

Number of Issued Shareholders % Shares % Size of Shareholding 1 5 000 5 190 89.3% 3,894,857 1.1% 5 001 10 000 139 2.4% 1,027,426 0.3% 10 001 25 000 127 2.2% 2,176,658 0.6% 25 001 50 000 106 1.8% 3,914,747 1.1% 50 001 100 000 93 1.6% 6,527,188 1.8% 100 001 200 000 48 0.8% 6,763,546 1.9% 200 001 500 000 50 0.9% 15,670,281 4.4% 500 001 1 000 000 22 0.4% 16,062,635 4.5% 1 000 001 above 38 0.6% 301,963,520 84.3% 5 813 100.00 358,000,858 100.00

Trade Classification Investment and Trust 238 4% 85,988,688 24%Local companies 190 3% 70,672,247 20%Insurance Companies 12 0% 54,060,207 15%Nominees Local 82 1% 38,248,945 11%Pension Funds 122 2% 33,886,767 9%Local individual residents 5 164 89% 33,371,696 9%Employee share trust 5 0% 10,000,000 3%New non - residents 11 0% 9,370,203 3%Nominees foreign 2 0% 5,148,550 1%Fund managers 23 0% 999,883 0%Banks 3 0% 861,776 0%Other 65 1% 15,391,896 5% 5 813 100.00 358,000,858 100.00

Top Ten Shareholders Stanbic Nominees (Private) Limited NNR 77,746,399 21.7%Serrapin Investments (Private) Ltd 47,542,780 13.3%Old Mutual Life Assurance Company Zimbabwe Limited 46,796,378 13.1%SCB Nominees 28,336,763 7.9%Stanbic Nominees (Private) Limited NNR 27,510,513 7.7%Mining Industry Pension Fund 17,667,266 4.9%Fed Nominees (Private) Limited 20,333,340 5.7%Scrimpton Investments (Private) Ltd 10,513,330 2.9%National Social Security Authority 3,351,778 0.9%Mandiwanza Antony 2,653,900 0.7%Other 75,548,411 21.2% 358,000,858 100.0% Directors’ Shareholding Dr L. L. Tsumba - S. Chindove 2,637,879 T. Mabika 1,893,832 C. Mahembe 138,575 H. Makuwa 100 A. S. Mandiwanza 9,419,115 J. H. K. Sachikonye 266 M. R. Ndoro 3,165,119 F. Mungoni -


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SHAREHOLDER ANALYSIS 31 DECEMBER 2013

Number of Issued Shareholders % Shares % Size of Shareholding 1 - 5 000 5 190 89.3% 3,894,857 1.1% 5 001 - 10 000 139 2.4% 1,027,426 0.3% 10 001 - 25 000 127 2.2% 2,176,658 0.6% 25 001 - 50 000 106 1.8% 3,914,747 1.1% 50 001 - 100 000 93 1.6% 6,527,188 1.8% 100 001 - 200 000 48 0.8% 6,763,546 1.9% 200 001 - 500 000 50 0.9% 15,670,281 4.4% 500 001 - 1 000 000 22 0.4% 16,062,635 4.5% 1 000 001 - above 38 0.6% 301,963,520 84.3% 5 813 100.00 358,000,858 100.00

Trade Classification Investment and Trust 238 4% 85,988,688 24%Local companies 190 3% 70,672,247 20%Insurance Companies 12 0% 54,060,207 15%Nominees Local 82 1% 38,248,945 11%Pension Funds 122 2% 33,886,767 9%Local individual residents 5 164 89% 33,371,696 9%Employee share trust 5 0% 10,000,000 3%New non - residents 11 0% 9,370,203 3%Nominees foreign 2 0% 5,148,550 1%Fund managers 23 0% 999,883 0%Banks 3 0% 861,776 0%Other 65 1% 15,391,896 5% 5 817 100.00 358,000,858 100.00

Top Ten Shareholders Stanbic Nominees (Private) Limited NNR 73,814,099 20.6%Old Mutual Life Assurance Company Zimbabwe Limited 51,491,696 14.4%Serrapin Investments (Private) Limited 48,042,780 13.4%Fed Nominees (Private) Limited 20,333,340 5.7%Mining Industry Pension Fund 17,667,266 4.9%Standard Chartered Nominnes 15,886,491 4.4%National Social Security Authority 11,123,595 3.1%Scrimpton Investments (Private) Limited 10,513,330 2.9%DZL Holdings Employee Share Trust 10,000,000 2.8%Old Mutual Zimbabwe Limited 8,289,832 2.3%Other 90,838,429 25.5% 358,000,858 100.0% Directors’ Shareholding Dr L. L. Tsumba - S. P. Bango 9,500 S. Chindove 2,637,879 T. Mabika 2,021,389 C. Mahembe 138,575 H. Makuwa 100 A. S. Mandiwanza 9,419,115 J. H. K. Sachikonye 266 M. R. Ndoro 3,165,119 F. Mungoni -


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Notice is hereby given that the twentieth Annual General Meeting of members of Dairibord Holdings Limited will be held in the Mirabelle Room, Meikles Hotel, on Thursday 28 May 2015 at 11:30 am.

AGENDA

Ordinary Business

1. To receive and adopt the Financial Statements for the year ended 31 December 2014, together with reports of the Directors and Auditors thereon.

2. To elect Directors of the Company

In accordance with article 100 of the Company’s Articles of Association, Mrs. S Chindove retires by rotation and being eligible, offers herself for re-election.

Mr. F. Mungoni who has served the company as non-executive director since April 2010 is also retiring in accordance with Article 100 of the Company’s Articles of Association, and is not seeking re-election.

In accordance with article 107 of the Company’s Articles of Association, Mrs. Rachel Kupara and Mr. David Hasluck who were appointed directors of the company with effect from 12 March 2015 retire, and being eligible offer themselves for election.

3. To approve the remuneration of the auditors for the past audit and to re-appoint Ernst & Young Chartered Accountants (Zimbabwe) as auditors for the current year.

4. To approve the remuneration of the directors for the past year.

Special Business

5. Amendments to Articles of Association

To consider and if deemed fit, pass with or without amendment, the following resolutions as special resolutions:

5.1 That a new Article, Article 11(A) be inserted as follows:

“Notwithstanding any contrary provisions in the Companies Act (Chapter 24:03) and these Articles of Association, the Company shall issue securities in dematerialized form, convert certificated securities to dematerialized securities, and allow its securities to be traded in dematerialized form, provided that no certificated securities shall be converted to their dematerialized form without the consent of the holder thereof”.

5.2 That a new Article, Article 143 (A) be inserted as follows:

“Any documents and or notices required to be sent to members in terms of sections 141 to 143 above or in terms of any other provision of these Articles of Association may, not withstanding anything to the contrary be sent by electronic means to the electronic address last furnished by such members and shall be posted on the Company’s official website. Such documents and or notices shall be forwarded to the members concerned within the prescribed time frames. Provided, should a member request a hard copy, such document as requested shall be availed in hard copy format to the member”.

5.3 That article 133 be amended to read as follows:

“Any dividend, interest or other monies payable in respect of the shares may be paid through any and all approved national payment systems and such payment may be notified to the recipient by communication to his electronic address, or in the case of joint holders, to the electronic address of that one of the joint holders who is first named on the register of members or to such person or to such electronic address as the holder or joint holders may direct. Any one of two or more joint holders may give effectual receipts for any dividends, bonuses or other money payable in respect of the shares held by them as joint holders.

EXPLANATORY NOTES TO THE PROPOSED RESOLUTIONS

Dematerialisation of securities

The implementation and licensing of a Central Securities Depository has necessitated conversion of listed certificated securities into their electronic form before any trading on the Zimbabwe Stock Exchange (ZSE) can be effected. The Companies Act (Chapter 24:03) and the Company’s Articles of Association recognize paper share certificates. However, the Securities and Exchange Act (24:25) through provision of section 72 allows securities to be dematerialized. In order to comply with the requirements of the above, it is recommended that the Company passes the necessary resolution.

NOTICE TO SHAREHOLDERS


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Electronic shareholder documents and notice

The technological developments in electronic communication, that have happened over the years, have ushered in efficiencies while the cost associated with the preparation and delivery of physical copies of annual reports, shareholder notices and related documents has increased. The company would want to be able to send electronic documents in place of physical documents to its members.

Notes

1 In terms of the Companies Act (Chapter 24:03) a member entitled to attend and vote at a meeting is entitled to appoint a proxy to attend and vote on a poll and speak in his stead. A proxy need not be a member of the Company.

2 In terms of clause 77 of the Company’s Articles of Association, instruments of proxy must be lodged at the registered office of the company at least forty –eight hours before the time appointed for holding the meeting.

3 Members are requested to advise the Transfer Secretaries in writing of any change of address.

By order of the board

M. Ndoro

Company Secretary

12 March 2015

NOTICE TO SHAREHOLDERS (continued)


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SHAREHOLDERS’ CALENDAR2014 Annual Report Published April 2015

Nineteenth Annual General Meeting 28 May 2015

Interim report for 6 months to 30 June 2015 and dividend announcement August 2015

Financial Year End 31 December 2015

Publication of the results for the 12 months ending 31 December 2015 and dividend announcement March 2016


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Dairibord Holdings LimitedCompany Registration No. 2168/94www.dairibord.com

Registered OfficeZB Life Towers9th Floor77 Jason Moyo AvenueHarare

Postal AddressP O Box 587, Harare, ZimbabweTelephone Numbers: 263 4 790801-7, +263 4 731071-8Fax Number: +263 4 795220

Company SecretaryMercy R NdoroE-mail: [email protected]

AuditorsErnst & Young Chartered Accountants (Zimbabwe)Angwa CityJulius Nyerere Way/Kwame Nkrumah AveP.O Box 62 or 702Harare

Principal BankersStandard Chartered Bank of Zimbabwe LimitedBarclays Bank of Zimbabwe Limited

Transfer SecretariesCorpserve (Private) Limited4th Floor, ZB CentreCnr 1st Street and Kwame Nkrumah AvenueHarareZimbabwe

Sustainability Reporting Advisors Institute of Sustainability Africa (Insaf)52 Northampton Crescent EastleaHarareZimbabwe

CORPORATE INFORMATION

Form of proxy Annual General Meeting of the members of Dairibord Holdings Limited will be held in the Stewart Room, Meikles Hotel, on Thursday 28 May 2015 at 11:30 am.

We/ I....................................................................................................................... of.............................................................................................................................

................................................................................................................................................................................................................................................................

being a member / members of the above named Company, hereby appoint ........................................................................................................................................

of..............................................................................................................................................................................................................................................................

or failing him the Chairman of the Meeting as our/ my proxy to vote for us/ me on our/ my behalf at the Annual General Meeting of the company which will be held for the purpose of considering and if deemed fit, passing with or without modification, the resolution passed thereat and at any adjournment thereof, and / or abstain from voting in respect of the ordinary shares registered in our / my name in the following manner.

NOTESi In terms of Section 129 of the Companies Act, a member of the company is entitled to appoint one or more proxies to act in the alternative to attend, vote and speak in

his stead. A proxy need not be a member of the company.

ii Clause 77 of the Articles provides that instruments of proxy must be signed and returned to reach the registered office of the company not less than forty eight (48) hours before the time for holding meeting.

iii A shareholder may insert the names of two alternative proxies of the shareholder’s choice in the space provided, or may elect for the Chairman of the meeting to act for him/her. The person whose name appears first on the Form of Proxy, and whose name has been deleted, will be entitled to act as proxy to the exclusion of those whose names follow.

iv A shareholder’s instruction to the proxy must be indicated by the insertion of a cross in the appropriate space provided. If no cross is placed in the appropriate block(s) the proxy holder will be entitled to vote for against or abstain from voting as that proxy holder may deem fit.

v The person signing the form of proxy must sign any alteration to this Form of Proxy.

vi The completion and lodging of this form will not preclude the relevant shareholder from attending the AGM and voting thereat in person to the exclusion of any proxy appointed in terms here of, should such shareholder wish to do so.

vii The authority of the person signing the Form of Proxy: a) Under a power of attorney; or b) on behalf of a company; must be attached to the Form of Proxy unless the power of attorney has already been registered by Dairibord Holdings Limited or in the case of a company, this Form

of Proxy is sealed by it.

SIGNED THIS [ ] DAY OF [ ]

....................................................SIGNATURE OF MEMBER [ Number of shares Held = ...............................................]

The Company SecretaryDairibord Holdings LimitedP.O. Box 587HarareZimbabwe

Or hand deliver to:Dairibord Holdings Limited9th Floor, ZB Life Towers77 Jason Moyo Avenue/ Sam Nujoma StreetHarareZimbabwe

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DairibordHoldingsMore Than Just Milk

www.dairibord.com

Dairibord Holdings Limited9th Floor, ZB Life Towers

77 Jason Moyo Avenue/ Sam Nujoma StreetP O Box 587, Harare, Zimbabwe

Telephone : +263 4 790801-7, 731071-8Fax : +263 4 795220 2013

Annual Report

Documents

Dairibord Holdings Limited Annual Report 2014 · 2017. 5. 8. · Dairibord Holdings Limited 9th Floor, ZB Life Towers 77 Jason Moyo Avenue/ Sam Nujoma Street P O Box 587, Harare,