Cottco Holdings Limited 2014 annual report

2014 Annual Report

www.cottcoholdings.co.zw

Conte

ntsNotice To Shareholders 2Proxy Form And Change Of Address Notice 3Vision, Mission And Value Statements 6Group Profile 7Corporate Information 9Board Of Directors 10Group Companies’ Board Composition 13Board Committees And Group Management 13Corporate Governance Statement 15Chairman’s Statement 18Directors’ Responsibility Statement 21Managing Director’s Report 23Cottco In The Community 26Directors’ Report 27Independent Auditor’s Report 31Statement Of Profit Or Loss 32Statements Of Comprehensive Income 33Statements Of Financial Position 34Group Statement Of Changes In Equity 35Company Statement Of Changes In Equity 36Statements Of Cash Flows 37Group Primary Segment Reports 38Group Secondary Segment Reports 39Accounting Policies 40Notes To The Financial Statements 48Shareholders’ Analysis 76Shareholders’ Calendar 76

Distributionof InputsWe equip our farmers with the resourcesthey require to grow premium quality cotton.Our journey starts with the end in mind

Cottco Holdings Limited 2014 Annual Report | 1 |

Notice is hereby given that the 6th Annual General Meeting of the members of Cottco Holdings Limited will be held at the Rainbow Towers,Harare, Zimbabwe on Friday, 29 August 2014 at 11:30 hours for the following business:

ORDINARY BUSINESS

1. FINANCIAL STATEMENTSTo receive and adopt the financial statements for the year ended 31 March 2014 together with the reports of the Directors and the auditorsthereon.

2. ELECTION OF DIRECTORSDuring the year, the following Directors were appointed to the Board: Messrs F Kembo, J Maposa, A Adam, C Chihuri, D Ncube and Ms R Maunze. In terms of Article 32.1 of the Company's Articles of Association, all the Directors who were appointed after the annual general meeting will be retiring. The retiring Directors, being eligible, offer themselves for re-election.

3. DIRECTORS' REMUNERATIONTo approve the fees paid to the Directors for the the year ended 31 March 2014.

4. AUDITORSTo approve the remuneration of the auditors and to consider the re-appointment of KPMG as auditors for the ensuing year.

NOTE: A member entitled to attend and vote at the meeting may appoint any person or persons to attend and speak in his stead. A proxyneed not be a member of the Company. Proxies must be lodged with the Secretary at least 48 hours before the time of holding themeeting.

BY ORDER OF THE BOARD

P ManamikeCOMPANY SECRETARY

26 June 2014

REGISTERED OFFICE1 Lytton RoadWorkingtonHarare

Notice toShareholders

| 2 | Cottco Holdings Limited 2014 Annual Report

Change ofAddress Notice6th Annual General Meeting


Proxy Form6th Annual General Meeting

NAME: (In full block letters) _________________________________________________________________________________________

_______________________________________________________________________________________________________________

NEW ADDRESS: _________________________________________________________________________________________________

_______________________________________________________________________________________________________________

_______________________________________________________________________________________________________________

OLD ADDRESS: _________________________________________________________________________________________________

_______________________________________________________________________________________________________________

_______________________________________________________________________________________________________________

I/We ________________________________________________________________________________________________________________

being the registered holder/holders of_______________________________________________________________________________________

shares in Cottco Holdings Limited hereby appoint ______________________________________________________________________

Of __________________________________________________________________________________________________________________or failing him, the Chairman of the meeting, as my/our proxy to vote on my/our behalf at the sixth annual general meeting of the Company to beheld on Friday, 29 August 2014 at 11:30 hours and at any adjournment thereof. Signed this

__________________________________________________________________ day of ________________________________________ 2014

Signature of shareholder ________________________________________________________________________________________________

NOTE: A member entitled to attend and vote at the meeting may appoint any person or persons to speak in his stead. A proxy need not be amember of the Company. Proxies must be lodged with the Secretary at least forty-eight hours before the meeting.


STAMP

STAMP

Transfer Secretaries

Cottco Holdings Limited

First Transfer Secretaries (Private) Limited

P O Box 11

Harare Zimbabwe

Transfer Secretaries

Cottco Holdings Limited

First Transfer Secretaries (Private) Limited

P O Box 11

Harare Zimbabwe

CottonPlantingThe journey begins with planting at the righttime and using the best inputs to ensure agood harvest


Our Vision,Mission andValue Statements

Our VisionTo be a dominant agro-industrial business in our chosen markets.

Our ValuesWe believe in honesty and integrity• trust is the foundation of our business.

We believe in innovation, teamwork and mutual respect• together we achieve exceptional results.

We are passionate about delivering world class quality productsand services• it is the cornerstone of our success.

We cherish our role as creators and custodians of wealth• it is our legacy for present and future generations.

Our MissionTo be the leading producers, processors and marketers of agro-industrial commodities and brands of world-class quality in themarkets we serve. We are dedicated to achieving superior returnsfor our shareholders and to pursuing growth opportunities byoptimising our competencies and leveraging on our resource base.We foster innovation and all round excellence in everything we do.


PREAMBLECottco Holdings Limited is an agro-industrial group which wasincorporated in Zimbabwe in July 2008 and subsequently reversel isted on the Zimbabwe Stock Exchange in September 2008, inplace of The Cotton Company of Zimbabwe Limited (Cottco)through a Group restructuring exercise.

INVESTMENTSCottco Holdings Limited wholly owns The Cotton Company ofZimbabwe Limited (Cottco), which has six ginneries across Zimbabwe.Cottco is the single largest ginner of cotton in Southern Africa, and isinvolved in every facet of cotton production and sales. This includesthe provision of agronomic advisory services, processing and selling ofplanting seed, supply of chemicals and fertiliser, ginning, warehousingas well as marketing of l int and cotton seed in global and localmarkets.

GroupProfile

Group Structure

100%

CottcoInternational(Proprietary)

Limited

100% 100%

Zambrano Investments

(Private)Limited

Incorporating

100%

COMPANY PRINCIPAL ACTIVITIES PRODUCTS MARKETS

Cottco Africa, Asia and EuropeGinning of seed cotton and selling of lint and by products of the ginningprocess.

Lint, ginned seed, delinted seed and linters.

Exhort AfricaProcessing of frozen vegetables. Frozen carrots, beans, peas, cauliflower, sweetcorn, broccoli etc.

Zambrano Investment vehicle for inflation hedged assets. Quoted shares. Zimbabwe

PRINCIPAL ACTIVITIES

Cottco International Investment company International operations. Africa


ExtensionServicesWe take pride in our ability to share ourspecialised expertise with our valued farmers


Registered Office Company Secretary

1 Lytton Road P ManamikeWorkingtonHarareP.O. Box 2697HARAREZIMBABWETel: 263-4-771981-5Fax: 263-4-753854Email: [email protected]: www.cottcoholdings.com

Auditors Transfer Secretaries

KPMG Chartered Accountants (Zimbabwe) First Transfer Secretaries Mutual Gardens No. 1 Armagh Avenue100 The Chase (West) Off Enterprise Road, EastleaEmerald Hill HARARE HARARE ZIMBABWEZIMBABWE

Main Bankers

Lawyers

Gill Godlonton & Gerrans Kantor & Immerman Atherstone & CookBeverly Court 19 Selous Avenue 7th Floor100 Nelson Mandela Avenue HARARE Mercury HouseHARARE ZIMBABWE George Silundika AvenueZIMBABWE HARARE

ZIMBABWE

CorporateInformation

African Export-Import Bank72 (B) El Maahad El Eshteraky StreetHeliopolisCAIRO 11341EGYPT

Standard Chartered Bank Zimbabwe LimitedAfrica Unity SquareSam Nujoma StreetHARAREZIMBABWE

CBZ Bank Limited60 Kwame Nkrumah AvenueHARAREZIMBABWE

African Banking Corporation Limited1 Endeavor CrescentMount Pleasant Business ParkHARAREZIMBABWE

Development Bank of Southern AfricaHalfway HouseNSSF BuildingMidrand, 1685SOUTH AFRICA

Ecobank Zimbabwe LimitedSam Levy’s Office ParkBlock A, 2 Piers RoadBorrowdaleHARAREZIMBABWE


Boardof Directors

Mr Freeman Kembo (Chairman) Mr Collins Chihuri (Managing Director)Mr James Maposa (Deputy Chairman)

Ms Rufaro Maunze

Dr Douglas NcubeMr Ayoob Adam

Mr Pious Manamike (Company Secretary)


Mr Freeman Kembo (Chairman)Freeman has been on the Cottco Holdings Limited board since December2013. He holds a Bachelor of Accountancy (Honours) degree from theUniversity of Zimbabwe. Freeman is a member of the Institute of CharteredAccountants of Zimbabwe having qualified in 1984. He is also a fellowof the Chartered Institute of Management Accountants (CIMA). Freemanis a former partner in the assurance and accountancy practice of Coopersand Lybrand, now PricewaterhouseCoopers. On leaving Coopers andLybrand, Freeman joined Intermarket Discount House Limited as thefinance director. He was pivotal in creating the Intermarket FinancialServices Group which was involved in retail and wholesale banking, lifeassurance, mortgage finance, reinsurance and stock broking. Freemanleft the Intermarket Group in 2002 and is involved in various consortiumswhich acquired businesses in brick manufacturing, clothing manufacturing,coal mining and motor spares. Freeman sits on a number of boardsamong them OK Zimbabwe Limited, Beta Holdings Limited and QutonSeed Company (Private) Limited.

Mr James Maposa (Deputy Chairman)James has been on the Cottco Holdings Limited board since December2013. He is currently the country manager for Anglo American Corporation’sUnki Platinum Mines, previously having been the managing director ofAnglo American Corporation Zimbabwe. He has extensive experience inthe mining industry in which he has served for over 27 years. During thisperiod he served two terms as President of the Chamber of Mines. Jameshas served on a number of boards including Bindura Nickel CorporationLimited, Zim Alloys and National Foods Holdings Limited. He is currentlyserving on the boards of Hippo Valley Tongaat Hulett, Anglo AmericanCorporation Zimbabwe, South Ridge Limited and Medical InvestmentsLimited (Avenues Clinic). He is also the chairman of the Anglo AmericanPension Funds. He is an Honours graduate of the University of Kent atCanterbury and of the University of Stellenbosch Business School.

Mr Collins Chihuri (Managing Director)Collins was appointed Managing Director of The Cotton Company ofZimbabwe Limited (Cottco) in January 2014. He rejoined Cottco after asix year stint with an industry competitor where he was the chief operatingofficer.

Collins holds a Masters in Business Administration and a Bachelor ofAccountancy (Honours) degree, both from the University of Zimbabwe.He also holds a certificate in Humanitarian and Development Studieswith the same university. He is a Chartered Secretary and a CharteredManagement Accountant.

Collins, who has a wealth of experience covering finance and administration,corporate services and operations management, started his workingcareer as a graduate trainee with Anglo American in 1988, rising to thelevel of company secretary in 1993. Collins joined Cottco as the companysecretary in December 1997, and headed the operations division fromJanuary 2005 up to December 2007.

Mr Ayoob AdamAyoob has been on the Cottco Holdings Limited board since February2014. He is the founder and chief executive officer of Equivest AssetManagement (Private) Limited since its inception in 2001. Ayoob attaineda BCompt degree from the University of South Africa and qualified asChartered Certified Accountant (FCCA) in 2000 after working atPricewaterhouseCoopers for 5 years. Ayoob has sat on the boards ofseveral companies including Baines Avenue Clinic and the previouslylisted ZSE counter Tractive Power Holdings Limited.

Ms Rufaro MaunzeRufaro has been a Cottco Holdings Limited board member since February2014. She holds a Masters degree in Development Finance withStellenbosch Business School, is a holder of an Honours degree fromthe University of South Africa, and is also a member of the Institute ofChartered Accountants of Zimbabwe having qualified in 2004. Afterqualifying, Rufaro pursued a career in Australia, initially as a seniormanager in the Deloitte Sydney office where she was part of a core expertteam that led the transition of various entities from Australian GAAP toIFRS. Following this, she worked as the national director for technicaltraining and advisory for PFK Australia. In 2008 Rufaro joined WestpacBanking Corporation, Australia’s second largest commercial bank, whereshe held various leadership positions both in finance and strategicoperations. On her return to Zimbabwe, Rufaro established TsambeBusiness Advisory, a boutique strategic advisory organisation thatspecialises in the development and delivery of tailored business solutionsfor organisations across a number of sectors which include internationaldevelopment, manufacturing, private equity, financial services andtelecoms. Rufaro is the former chairperson of the Australia Africa BusinessCouncil which she remains actively involved in since her return toZimbabwe.

Dr Douglas NcubeDouglas has been on the Cottco Holdings Limited board since February2014. His first job, in 1973, was as a cotton specialist for the then RhodesiaCotton Growers’ Association where he was seconded to the Departmentof Agriculture in the Ministry of Internal Affairs. His first work station wasin Gokwe before he was transferred in 1975 to head office in Harare tobecome responsible for the national cotton extension effort. After Zimbabwegained its independence, Douglas rose through the ranks to becomechief of crop production in 1983. In 1984, he joined the Cotton MarketingBoard as assistant general manager (operations) before moving to TriangleSugar Corporation as their cotton gin manager between 1987 and 1996.He moved back to Harare to work for Cargill as general manager (cotton)from June 1996 to 1999. He relocated to the United Kingdom in August2000 to pursue PhD studies and while there he worked for the Royal Mailas manager and lectured International Studies at Regent’s College inLondon.

Douglas returned to Zimbabwe in September 2010 to join MandiRukuniSeminar as an agricultural consultant and academic programmescoordinator for Masters and PhD degrees. He is a fellow and councillorof the Zimbabwe Institute of Management. He is also a member of severalagricultural associations including the African Agricultural Economics andthe International Association of Agricultural Economics. He is also amember of the Institute of Directors, Zimbabwe.

Douglas holds a PhD in Agricultural Business and Management from theUniversity of Derby, England; a Masters in Farm Business Managementfrom the Imperial College, USA; an MBA from Nottingham Trent University,England; a diploma in Agricultural Sciences, and various other certificatesand diplomas in management and education.

Mr Pious Manamike (Company Secretary)Pious was appointed Company Secretary in August 2008. He joined theGroup in 2005 after holding various positions in finance and administrationfor 15 years. He holds a Bachelor of Accountancy (Honours) degree fromthe University of Zimbabwe, a Masters in Business Administration fromMidlands State University and is a Chartered Secretary. He is a pastpresident of the Institute of Chartered Secretaries and Administrators inZimbabwe (ICSAZ).


Board of Directors (continued)

CottonHarvestingPicking cotton too early or too late can make orbreak the yield, so timing is everything


Subsidiaries

The Cotton Company of Zimbabwe LimitedF Kembo - ChairmanJ P Maposa - Deputy ChairmanC Chihuri - Managing Director*A AdamD NcubeR Maunze

* Executive Director

Exhort Enterprises (Private) LimitedC Chihuri - Chairman*D Rambanepasi*

Zambrano Investments (Private) LimitedC Chihuri - Chairman*D Rambanepasi*

Cottco International (Proprietary) LimitedC Chihuri - Chairman*D Rambanepasi*

Group Companies’Board Composition

Board Committees

Audit CommitteeA Adam - ChairmanR MaunzeD Ncube

Remuneration CommitteeJ Maposa - ChairmanF KemboC Chihuri

Investment CommitteeF Kembo - ChairmanJ MaposaA AdamC ChihuriR Maunze

Technical CommitteeD Ncube - ChairmanA AdamR Maunze

Group Management

Cottco Holdings LimitedC Chihuri - Managing DirectorD Rambanepasi - Head of FinanceP Manamike - Company Secretary

The Cotton Company of Zimbabwe LimitedC Chihuri - Managing DirectorD Rambanepasi - Head of FinanaceP Piki - Head of OperationsC Pitara - Engineering ExecutiveK Zvihwati - Acting Head of Ginning and SalesT Guta - Human Resources ExecutiveM Mubaiwa - TreasurerM Mundandishe - Information Technology ExecutiveN Mushangwe - Financial Controller

Board Committeesand Group Management


Buying theCropThe most rewarding experience for all farmers isseeing the fruits of their labour translate intohandsome earnings. We aim to be the partner ofchoice for all our farmers


The Group is committed to the principles of ethics, transparency,responsibility, integrity and accountability in dealings with its stakeholders.

The primary objective of corporate governance systems is to ensure thatDirectors, Executives and Management carry out their responsibilitieseffectively and efficiently. The Group's structures are therefore continuouslyreviewed and updated to ensure compliance with applicable laws andgenerally accepted corporate governance practices.

FINANCIAL STATEMENTSThe Directors recognise that they are responsible for the preparation andintegrity of the financial statements and related information contained inthe annual report in a manner that fairly presents the state of affairs andthe results of the Group's operations.

The annual financial statements have been independently audited by theCompany's external auditors. Their report is presented on page 31.

INTERNAL CONTROLThe Group has developed and continues to maintain and develop systemsof internal control. These controls are designed to provide reasonable,but not absolute, assurance as to the reliability of the financial statementsto safeguard, verify and maintain accountability of assets and to preventand detect misstatement and loss. The internal auditors have been taskedto ensure compliance with policies, procedures and internal controls andsystems through continuous programmes that are designed to cover allrisks and provide regular feedback to executive management and theAudit Committee. The internal audit function had free and unrestrictedaccess to the Audit Committee.

BOARD OF DIRECTORSAll companies in the Group have unitary board structures. The boardsof active companies meet regularly, retaining full and effective controlover the respective companies and monitoring the performance ofexecutive management.

To ensure unity of objectives and proper co-ordination, each companyelects management representatives to sit on the various boards. Eachboard is responsible for maintaining the direction and control of its companythrough:

• Setting and playing a prominent role in strategic development as wellas determining the strategic direction of the company and/or theGroup;

• Determining performance targets and the remuneration of ExecutiveManagement;

• Monitoring management’s performance against targets;• Liaising with internal and external auditors on the financial and business

affairs of the company;• Reviewing, deciding and acting on material business transactions

and/or matters; and• Promoting ethical conduct in the business affairs of the Group.

The composition of each board ensures a well balanced team with abroad range of business and industry expertise.

The Board of Cottco Holdings Limited comprises five non-executiveDirectors and one executive Director. The Chairman of the Board is anon-executive Director. All Directors have access to outside professionaladvice through the Company Secretary who is responsible to the Boardfor ensuring that correct procedures are followed.

The Managing Director is responsible for the day-to-day management ofthe Company. There is clear separation of responsibility between theBoard and Management.

ATTENDANCE OF BOARD MEETINGSThe Board met eight times during the year under review. The number ofDirectors' meetings and the number attended by each Director during theperiod are:

Held AttendedBL Nkomo (Chair) 8 8I Chagonda 7 7CC Chitiyo 7 6P St L Devenish 8 8CB Mudzimuirema 8 8AF Nhau 7 7LF Preston 7 1JP Rooney 7 4F Kembo 1 1JP Maposa 1 1V Lapham 1 1

Board meetings are held at least once every quarter.

BOARD COMMITTEESThe Board has established committees to assist in discharging its dutiesas follows:

1. Audit Committee;2. Remuneration Committee;3. Investment Committee; and4. Technical Committee.

Audit CommitteeThe Audit Committee consists of three non-executive Directors and ischaired by one of them. The Audit Committee is responsible for:

• Internal and external audit policy;• Reviewing the performance of external auditors;• Reviewing the scope, adequacy and effectiveness of the internal audit

function;• Reviewing and acting on matters relating to financial and

internal control, fraud, regulatory compliance, accounting policies,financial reporting and disclosure;

• Reviewing financial statements prior to publication and adoption bythe Board of Directors;

• Reviewing material financial transactions and projects prior to adoptionby the Board of Directors; and

CorporateGovernance Statement


Corporate Governance Statement (cont’d)


• Reviewing business risks and the adequacy of the Group’s riskmanagement systems and processes.

Both the internal audit function and the external auditors have unrestrictedaccess to the Audit Committee and all of their significant findings arebrought to the attention of the Audit Committee and the Board.

The Audit Committee meets at least once every quarter.

The Committee met four times during the year. Members' attendance ofthese meetings is shown below:

Held AttendedCC Chitiyo (Chair) 4 4I Chagonda 4 4P St L Devenish 4 4CB Mudzimuirema 4 4AF Nhau 4 4JP Rooney 4 3

Remuneration CommitteeThe Remuneration Committee consists of two non-executive Directors,as well as the Managing Director, and is chaired by a non-executiveDirector.

The Committee's tasks are to review, assess and make recommendationsto the main Board on the following matters:

• The Group’s remuneration policies in general;• Remuneration packages for top management, especially executive

Directors;• Incentive schemes including share incentive plans;• Measurement criteria for the performance of executive Directors; and• The development of people and succession planning.

The Remuneration Committee met three times during the year. Members'attendance of these meetings is shown below:

Held AttendedBL Nkomo (Chair) 2 2CC Chitiyo 2 2P St L Devenish 2 2J Maposa 1 1F Kembo 1 1C Chihuri 1 1

Investment CommitteeThe Investment Committee consists of four non-executive Directors andone executive Director.

The Committee is responsible for:

• Providing advice to the Board in establishing policies related toinvestments and making recommendations thereon to the Board forapproval;

• Reviewing, approving and recommending to the Board investmenttransactions that management may consider within the investmentguidelines;

• Monitoring the management of investment funds;• Evaluating investment performance, taking into account investment

policies, guidelines and risk levels;• Monitoring as required, staff's compliance with guidelines and processes

of the investment policy; and• Reviewing annually the continued appropriateness of the investment

policy and recommending to the Board any proposed modifications.

The Investment Committee meets, largely, on an ad hoc basis. It mettwice during the year.

Held AttendedAF Nhau (Chair) 1 1CC Chitiyo 1 1P St L Devenish 1 1CB Mudzimuirema 1 1JP Rooney 1 1I Chagonda 1 1F Kembo (Chair) 1 1J Maposa 1 1A Adam 1 1C Chihuri 1 1R Maunze 1 1

Technical CommitteeThe Technical Committe was established during the last quarter of thefinancial year. It consists of three non-executive Directors.

The Committee is responsible for:

• Regularly reviewing the Group’s inputs scheme strategy;• Evaluat ing the perfomance of inputs and pest ic ides;• Reviewing the integrity of the Group’s crop forecasts; and• Evaluating the Group’s intake strategy.

The Technical Committee meets at least once every quarter.

Held AttendedD Ncube (Chair) 1 1F Kembo 1 1A Adam 1 1C Chihuri 1 1R Maunze 1 1

SHARE DEALINGS BY DIRECTORS, MANAGEMENT AND STAFFThe Group's policy concerning dealings in the shares of Cottco HoldingsLimited and its listed subsidiaries, by Directors, Management, Staff andtheir immediate families, stipulates the periods when they can or cannotdeal in its shares.

DIRECTORS' INTERESTSThe Directors of the Company are required to disclose, in writing, anymaterial interest in any significant contract with the Group that may resultin a conflict or potential conflict of interest. No such conflicts were reportedduring the year.

EMPLOYEE RELATIONSThe Group has formally constituted works councils in each operatingcompany. These deal with issues that affect the employees directly andprovide platforms for:

• Productivity improvements;• Information sharing and dissemination;• Enhancing good employer/employee relations;• Consultation and dispute/conflict resolution; and• Collective bargaining.

GinningThe ginning process involves theseparation of lint from seed cottonto produce lint and ginned seed

Cottco Holdings Limited 2014 Annual Report | 17|

Chairman’sStatement

Freeman Kembo

OVERVIEWThe financial year ended 31 March 2014 was a challenging one for theGroup and was characterised by macro-economic uncertainties, increasedvolatility in the agri-commodity sector and an acute decline in cottonproduction which was observed across the Sub-Saharan Africa region.The liquidity challenges that the economy has endured over the yearspersist.

In December 2013, we announced the unbundling of the Group whichreceived immense shareholder support and successfully raised US$45million. The net proceeds were used to recapitalise the Cotton businessin order to underwrite its profitable growth and escalate cash flowgeneration. The actions we took this year were designed to ensure thatthe Group is well positioned for long-term growth, to deliver strongand consistent financial results.

Through pursuing improved agronomic practices and continued investmentin our farmers, agricultural policy and human capital, Cottco Holdingscontinues to maintain its market leadership position. The Group continuesto change lives and transform communities for the better through itsflagship contract farming scheme which, over the years, has empoweredthe majority of families in cotton producing areas. This has been achievedby providing them with production means and access to cash income.We continue to recognise the importance of our Zimbabwean farmersto the growth of the cotton industry and are committed to remaining theirpartner of choice.

OPERATIONS REVIEW

Continuing operations

CottonThe year under review witnessed an acute decline in cotton productionin Zimbabwe and the region. National cotton output declined from 250,000tonnes in 2012/13 to 145,000 tonnes in the 2013/14 season, a decreaseof 42%. The decline was attributed to a myriad of factors, chief among

them poor rainfall distribution across the country and a reduction in inputssupport by the cotton industry on speculation of poor industry complianceand excessive side-marketing. The Cotton business recorded intakevolumes of 35,000 tonnes.

Despite the Cotton business achieving lower than expected intakevolumes, inputs scheme recoveries improved by 9% in line withexpectation. Impairment losses attributable to the inputs scheme thereforedeclined and a loss of US$2.8 million recorded in the current year onlyrepresents an increase in our provision on account of current year inputsscheme receivables. Improvements in on-farm yields continue to remaina focus area.

International lint prices firmed marginally from 80 US cents per poundlast year to an average of 89 US cents per pound. The outlook for cottonprices remains bearish as production is forecast to outpace globalconsumption for a fifth consecutive year running. Demand for the Cottonbusiness's lint however remains strong.

Discontinued operations

SeedThe Seed business’ results for the first 10 months of the year recordeda 1% decrease in revenue despite growth in maize and wheat volumeswhich grew by 16% and 31%, respectively. Soya bean and cotton seedsales were however negative with declines of 39% and 11%, respectively.

Fast Moving Consumer Goods (FMCG)The FMCG business' profit before tax improved by 65% for the 10 monthsto January 2014. The company's improved financial performance wasdriven by changes to the business's product mix.

FINANCIAL RESULTSThe Group's interests in Seed Co Limited (Seed Co) and Olivine HoldingsLimited (Olivine) were disposed of in January 2014 as part of the Group'sunbundling process. The Group's financial performance for the year


ended 31 March 2014 therefore only incorporates the results of SeedCo and Olivine for the 10 months ended 31 January 2014, which wasthe effective date of disposal. All assets and liabilities of both Seed Coand Olivine were derecognised after this date. Both entities are disclosedin the group statement of profit or loss as discontinued operations.

Revenue from continuing operations amounted to US$42 million (2013:US$129.1 million), a decrease of 67%. The decrease in revenue wasmainly driven by a 77% decrease in sales volumes recorded by theCotton business, a direct result of the reduced intake volumes recorded.

Group operating margins declined from an operating profit of $5.9 millionto an operating loss of US$22.3 million owing to low production volumesand the resultant low cost absorption. Margins also declined due to higherseed cotton prices versus declining lint prices.

Cotton business’ impairment charges at US$6.9 million (last year: US$14.2million) were 51% lower than last year. The quantum of increase in theallowance for credit losses was not repeated in the current year as anotable improvement in inputs scheme recoveries was achieved.

The Group realised a gain of US$37.2 million arising from the disposalof its interests in Seed Co and Olivine.

Profit for the year amounted to US$14.9 million against a loss of US$2.1million last year.

The Group's debt at 31 March 2014 amounted to US$41.6 millioncompared to US$126 million at 31 March 2013. Net proceeds amountingto US$32.8 million which had been received as at 31 March 2014 wereapplied to the Group's borrowings. A further decline in borrowings isexpected in the coming financial year when the Group's recapitalisationprocesses are concluded.

OUTLOOKWe have refocused the Group to drive resurgent performance in theCotton business driven by a stronger balance sheet and complementedby reforms in the cotton industry's regulations. The stipulation of minimumfunding thresholds for all ginners by the Agricultural Marketing Authorityshould underpin an increase in cotton crop production. The aforementionednational effort to resuscitate the cotton industry is motivated by the factthat cotton remains a significant foreign currency earner in the agriculturalsector.

International lint prices are expected to continue to soften as the worldmarket responds to uncertainties on China's stock policies. Despite theodds, the World Bank is projecting global economic growth of 2.8%. Ascotton is a consumption crop and not a food crop, its prospects areclosely tied to the health of the global economy.

Ongoing cost reduction measures in the Cotton business are bearingfruit and will continue to do so into the future. With a significant portionof the Group's debt having been eliminated, finance costs, which havein the past hamstrung the Group's financial performance, will declinesignificantly. The Group's funding model has also evolved and we will,in the coming year, exploit available opportunities in supply chain financingto further reduce the costs of financing.

DIRECTORATEFollowing the restructuring of the Group, the entire board stepped downwhile Messrs Freeman Kembo, James Maposa, Ayoob Adam, CollinsChihuri, Dr Douglas Ncube and Ms Rufaro Maunze were appointed tothe Board during the year. My fellow Directors and I wish the outgoingboard all the best in their future endeavours and thank them most sincerelyfor their valuable contribution to the Group's successful capital raisinginitiatives.

DIVIDENDIn light of the ongoing recapitalisation of the business, the Directors havedecided not to declare a dividend for the year ended 31 March 2014.

APPRECIATIONOn behalf of the Board, I would like to offer my heartfelt thanks to theCottco Holdings team for their loyalty, commitment and tireless effortsin pushing the Group forward under difficult conditions. I wish to alsothank my fellow Directors on the Board, our shareholders, businesspartners and stakeholders for their unstinting support. We will continueto build on our distinctive strengths and valuable experience gainedthrough tough times to deliver value to our shareholders.

F KemboCHAIRMAN

26 June 2014


Chairman’s Statement (cont’d)

Lint SelectionThe lint is carefully selected andgraded by our experienced staff


ACCOUNTING RECORDS AND FINANCIAL STATEMENTSThe Directors are responsible for the maintenance of adequate accountingrecords as well as the preparation and integrity of the financial statementsand related information contained in the annual report in a manner thatfairly presents the state of affairs and the results of the Group's operations.

EXTERNAL AUDITORS' ROLEThe external auditors are responsible for carrying out an independentaudit of the financial statements in accordance with International Standardson Auditing and reporting their findings thereon.

SYSTEMS OF INTERNAL CONTROLThe Directors are also responsible for the Group's systems of internalfinancial control. These are designed to provide reasonable, but notabsolute, assurance as to the reliability of the financial statements andto safeguard, verify and maintain accountability of assets and to preventand detect misstatement and loss. Nothing has come to the attention ofthe Directors to indicate that any material breakdown in the functioningof these controls, procedures and systems has occurred during the yearunder review.

GOING CONCERNAfter reviewing the Group's budgets and related financial projections, theDirectors have no reason, in all material respects, to believe that theGroup will not continue to operate in the foreseeable future. Accordingly,these financial statements have been prepared on a going concern basis.

ACCOUNTING POLICIESIn preparing the Group financial statements set out on pages 32 to 75,appropriate accounting policies have been applied, as have the relevantInternational Financial Reporting Standards, unless otherwise stated,and are supported where necessary by reasonable and prudent judgementand estimates.

APPROVAL OF FINANCIAL STATEMENTSThe financial statements for the year ended 31 March 2014 have beenapproved by the Board of Directors and are signed on its behalf by:

F Kembo C ChihuriCHAIRMAN MANAGING DIRECTOR

26 June 2014

Directors’Responsibility Statement




ManagingDirector’s Report

Collins Chihuri

OVERVIEWThe year ended 31 March 2014 was an eventful year for the business.The Group was restructured resulting in a complete disinvestment fromSeed Co Limited (Seed Co) and Olivine Holdings Limited (Olivine) whilethe cotton industry experienced an unprecedented decline in productionvolumes. On the positive side, The Cotton Company of Zimbabwe Limited(Cottco) received a much needed injection of capital from its shareholders.

OPERATIONS REVIEW

Continuing operationsThe Cotton business performed below expectation as the national cropslumped to 145,000 tonnes. This acute decrease in cotton output wasnot unique to Zimbabwe as the same was observed across the region.The regional phenomenon was attributed to a number of factors, chiefamong them poor rainfall distribution. Most of our cotton growing areasexperienced prolonged mid-season dry spells which culminated in pooron farm yields.

Side marketing continued to be a problem, a situation that deterioratedwhen the industry realised the quantum of the volume shortfall onexpected national production. Errant industry players capitalised on theirpoorly funded inputs schemes and offered higher producer prices andinduced rampant side marketing. Cottco's intake volumes consequentlydeclined to 35,000 tonnes.

Discontinued operationsThe Group's interests in Seed Co and Olivine were disposed of duringthe year. While their performance results for the ten months to 31 January

2014 have been consolidated into the Group's statement of profit or loss,their financial performance is distinctly disclosed as discontinued operationsin compliance with International Financial Reporting Standards. TheGroup's strategic investment in Seed Co paid off as its disposal successfullyraised US$30.4 million for the recapitalisation of Cottco and a gain ofUS$45.6 million was realised on its disposal.

Olivine continued to wrestle with working capital constraints and,consequently, the company reported a loss. As at 31 March 2014, theGroup's entire interest in Olivine was transferred to a trust which will holdOlivine shares on behalf of shareholders until they are disposed of.

PEOPLEPursuant to the strategic initiatives to right size the business, the Companywill, in the new financial year, finalise a business restructuring exercisedesigned to remodel the business along its seasonal cycle. Critical skillshave been identified and a retention program is in place. The focus,going forward, is on improving the effectiveness of our people througha combination of employee wellness programmes, harmonious industrialrelations and talent management.

SAFETY, HEALTH AND ENVIRONMENTWe remain committed to conducting business in a sustainable mannerand we continuously examine the way in which we do business andendeavour to create a positive impact on the environment. Throughour field operations we train our growers to adopt sustainable methodsof agriculture and we continue to raise awareness on the safe applicationand disposal of pesticides and herbicides.

Safety awareness continued to be an area of focus. No fatalities wererecorded during the year while work-related injuries declined by 46%.

The business continues to provide free annual medical consultations toall employees whilst the company's HIV and AIDS awareness programsare bearing fruit. The voluntary counselling and testing sessions conductedat all our depots were received positively by our staff.

ISO CERTIFICATIONI am pleased to report that, following audits performed during the year,certification for ISO 9001:2008 was retained. We shall strive to ensurethat the renowned Cottco brand remains visible.

OUTLOOKThe recapitalisation of Cottco has paved way for a stronger and morecompetitive business. Focus will remain on increasing our productionvolumes while containing costs. Improved service delivery to our farmerswill remain central to the business as farmer retention will be essential

in maintaining our market leadership. We will continue to leverage onour 45 year old heritage and experience for the benefit of all ourstakeholders.

ACKNOWLEDGEMENTSI wish to pay tribute to the Board, our stakeholders and employees fortheir effort and commitment during the past year.

C ChihuriMANAGING DIRECTOR

26 June 2014

Managing Director’s Report (cont’d)




Contributing to the country's economic and social development remainsa key component of the Company's culture. Through various initiativesand activities, the Group fulfilled this commitment during the year.

The Schools Rugby Festival (2001 - 2013)Through Cottco, the Group is proud to have sponsored the annual schoolsrugby festival for the last 12 years. The festival, which was run underthe auspices of the Zimbabwe Rugby Union, aimed to develop youngtalent and to increase the visibility of the sport to rural schools where thegame was virtually unknown. As the sport increased in popularity, wenoted, with pride, the positive impact it had on the health and educationof children at participating schools.

Under Cottco's sponsorship, the rugby festival grew to become a majorrugby event in Africa and became recognised worldwide as an excellentexample of rugby development. The success of the rugby festival indeveloping world-class talent is evidenced in the likes of Tendai 'Beast'Mtawarira, Brian Mujati, Daniel Hondo, Pete Benade and TonderaiChavhanga who all played at the rugby festival during their formativeyears.

The festival held in the financial year ended 31 March 2014 is the lastone that the Group will be sponsoring. As a business we are fullyconvinced that we have taken schools rugby to great heights and nowwe move on to other areas in need of young talent development, withspecific focus on disadvantaged communities.

Sasakaritanda Secondary School Project, SanyatiThe Group believes its future depends on the sustainable developmentof our communities. In pursuit of this objective, a borehole and waterpump were donated to the Sanyati community of Sasikaritanda. Prior tothis, residents in the area were subjected to an 8 km walk to the nearest

source of water, and in some instances, school children had to bringwater from home to school for their own use.

Developmental Impact of the Inputs Credit SchemeThe Group, through Cottco, pioneered small scale contract farming in1992. Today, Cottco's inputs credit scheme is the largest in the countryand supports in excess of 105,000 hectares of land belonging to over65,000 families who are mostly located in the semi-arid regions of thecountry. Mutually beneficial engagements with farmers have continuedto exist which have made cotton contract farming a success story thatis being replicated across the agricultural sector.

The beneficiaries of Cottco's inputs scheme are the unbanked ruralpopulation who would otherwise have no income and no access toproduction means. Through the contract farming scheme, our growersare provided with inputs on credit and receive agronomic advice fromour experienced agronomists who are involved at every stage of cottonproduction.

As a result of this financial support, Cottco growers have over the yearsreceived an average annual income of US$48 million. This income streamhas sustained many rural growth points and towns such as Gokwe,Checheche in Chipinge, Mount Darwin, Muzarabani and Sanyati. Theimproved standard of life and literacy levels in all our cotton communitiesis testament to the positive socio-economic impact of our contract farmingscheme. The direct and indirect benefits of Cottco's inputs credit scheme,which are acknowledged by our farmers, communities and government,have therefore necessitated its continued existence. From its success,we have drawn the courage and fulfillment to continue financing asegment of the population that most financial institutions have dared notto.

Cottcoin the Community

The Directors have pleasure in presenting their report together with theaudited financial statements for the year ended 31 March 2014.

PRINCIPAL ACTIVITIESCottco Holdings Limited is an agro-industrial group with interests in cottonginning and marketing. The Company was incorporated in July 2008 thenas AICO Africa Limited and was reverse listed on the Zimbabwe StockExchange in September 2008, in place of The Cotton Company ofZimbabwe Limited. The Company changed its name to Cottco HoldingsLimited during the year.

DIRECTORS' RESPONSIBILITY STATEMENTThe Directors believe that the financial information that has been presentedfairly reflects the underlying performance of the Group and its entities forthe year ended 31 March 2014 and its financial position as of that date.

SHARE CAPITALThe authorised share capital of the Company is 1,500,000,000 ordinaryshares of US$0.01 per share, of which 1,094,957,266 are issued andfully paid.

Movements in the issued share capital for the year were as follows:

31 March 31 March2014 2013

Number of Number ofshares shares

Issued share capital as at 1 April 2013 534,125,676 534,125,676Rights issue 560,831,590 -Issued share capital as at 31 March 2014 1,094,957,266 534,125,676

RESERVESThe movements in the reserves of the Group are as shown in the statementof changes in equity.

DIRECTORS' SHAREHOLDINGThe details of Directors' shareholding are shown in the shareholderanalysis report accompanying the f inancial statements.

IMPAIRMENTThe statement of profit or loss includes impairment losses amountingto US$9.2 million for the Group. Of this amount, US$6.9 million wasrecorded in the Cotton business, while US$2.2 million was recorded inthe Seed business. Impairment losses were in respect of trade and otherreceivables, inventories, inputs scheme receivables as well as property,plant and equipment.

OPERATING RESULTSThe results for the year are summarised below and are set out inmore detail in the accompanying financial statements. Commentaryon these results is also provided in the Chairman's and Managing Director'sreports.

Restated31 March 31 March

2014 2013US$'000 US$'000

Profit/(loss) before taxation 2,988 (10,179)Income tax (expense)/credit (320) 507Profit/(loss) after tax - continuing operations 2,668 (9,672)Profit after tax from discontinued operations 12,188 7,581Profit/(loss) for the year 14,856 (2,091)

Attributable to:Equity holders of the parent 5,851 (6,711)Non-controlling interest 9,005 4,620

14,856 (2,091)

Share capital 10,950 5,341Capital reserves 26,511 21,190Retained earnings (5,883) 46,777Equity attributable to equity holders of the parent 31,578 73,308Non-controlling interest - 39,944Total equity 31,578 113,252

CAPITAL EXPENDITURECapital expenditure for the year ended 31 March 2014 amounted toUS$0.7 million for continuing operations.

DISPOSAL OF INTEREST IN SUBSIDIARYDuring the year under review, the Company completely disinvestedfrom Seed Co Limited through a partial disposal of its shareholdingand a distribution of the balance of the shares through a dividend inspecie.

DISCONTINUED OPERATIONSThe intended sale of the frozen vegetables business, ExhortEnterprises (Private) Limited, and/or its assets has not yieldeddesired results. There has been a lot of interest but the liquiditychallenges appear to have imposed a dearth of capacity to fund theacquisition of this asset. This business was discontinued four years agoand only a minimal cost is required to maintain the property and other

Directors’Report


assets therein. There was no trading in this business during the yearunder review and there are no plans to resume operations in the interim.

TREASURYThe Group’s capital raising initiatives were concluded during the year.The capital raised was applied to extinguishing loans in Cottco which hadbeen guaranteed by AICO Africa Limited. Subsequent to thisrecapitalisation, the Board saw the need to further restructure Cottco’sbalance sheet in order to strengthen the business and pursuant to this,the Group has commenced negotiations with potential investors and themarket will be continously apprised of developments on this front.

DIVIDENDSIn light of the ongoing recapitalisation of the business, the Directors havedecided not to declare a dividend for the year ended 31 March 2014.

DIRECTORSAll Directors of the Company stepped down during the year and newDirectors were appointed in their places. The new Directors are Messrs

F Kembo, J Maposa, A Adam, C Chihuri, D Ncube and Ms R Maunze.In terms Article 32.1 of the Company's Articles of Association all thenew Directors will step down at the forthcoming Annual GeneralMeeting but, being eligible, offer themselves for re-election.

AUDITORSMembers will be asked to approve the remuneration of the auditors forthe year ended 31 March 2014 and to consider the reappointment ofKPMG as auditors for the ensuing year.

For and on behalf of the Board

P ManamikeCOMPANY SECRETARY

26 June 2014

Directors’ Report (cont’d)


LintOur premium quality lint is in demand and issold to diverse markets all over the world



The Cotton Company of Zimbabwe Limited

Exporter of the year in the agriculturalsector for four consecutive years.

The Cotton Company of Zimbabwe Limited

Exporter of the year in the agriculturalsector for four consecutive years.

KPMGMutual Gardens100 The Chase (West), Emerald HillP O Box 6, HarareZimbabwe

Telephone +263 (4) 303700+263 (4) 302600

Fax +263 (4) 303699

KPMG, a Zimbabwean partnership and a member firm of the

KPMG network of independent member firms affiliated with

KPMG international, a Swiss co-operative.

IndependentAuditor’s Report


We have audited the consolidated and separate financial statements of Cottco Holdings Limited, which comprise the consolidated statement offinancial position as at 31 March 2014, and the consolidated statements of comprehensive income, changes in equity and cash flows for the yearthen ended, as well as the notes to the financial statements which include a summary of significant accounting policies and other explanatory notes,as set out on pages 32 to 75.

Directors' responsibility for the consolidated financial statementsCottco Holdings Limited's directors are responsible for the preparation and fair presentation of these financial statements in accordance withInternational Financial Reporting Standards and in the manner required by the provisions of the Zimbabwe Companies Act (Chapter 24:03), andfor such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from materialmisstatement, whether due to fraud or error.

Auditor's responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with InternationalStandards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The proceduresselected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whetherdue to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentationof the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used andthe 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.

OpinionIn our opinion, these consolidated financial statements present fairly, in all material respects, the consolidated and separate financial position ofCottco Holdings Limited as at 31 March 2014, and its consolidated and separate financial performance and cash flows for the year then ended inaccordance with International Financial Reporting Standards and in the manner required by the Zimbabwe Companies Act (Chapter 24:03).

KPMG Chartered Accountants (Zimbabwe)Harare8 August 2014

Group CompanyRestated

31 March 31 March 31 March 31 March2014 2013 2014 2013

Note US$'000 US$'000 US$'000 US$'000

Continuing operationsRevenue 1 42,001 129,072 - -

Cost of sales (41,285) (88,635) - -

Gross profit 716 40,437 - -

Other operating income 1,048 726 505 19,201

Operating expenses (24,080) (35,305) (5,293) (2,518)Administration expenses (15,526) (13,840) (5,258) (2,498)Distributing and selling expenses (1,532) (7,973) (35) (9)Other operating expenses (7,022) (13,492) - (11)

(Loss)/profit from operations 2 (22,316) 5,858 (4,788) 16,683

Investment income 3 67 274 516 813Other gains and losses 4 1,419 (198) (28,289) -Interest expense (13,409) (16,113) - (1,176)Gain/(loss) on disposal of Group entities 10,11 37,227 - (4,918) -

Profit/(loss) before taxation 2,988 (10,179) (37,479) 16,320

Taxation 5 (320) 507 (3,347) 431

Profit/(loss) after taxation from continuing operations 2,668 (9,672) (40,826) 16,751

Profit from discontinued operations 6 12,188 7,581 - -

Profit/(loss) for the year 14,856 (2,091) (40,826) 16,751

Attributable to:

Equity holders of the parent 5,851 (6,711) (40,826) 16,751Non-controlling interest 9,005 4,620 - -

14,856 (2,091) (40,826) 16,751

Earnings/(loss) per shareBasic earnings/(loss) per share (US cents) 7 0.93 (1.26) (6.51) 3.14Diluted earnings/(loss) per share (US cents) 7 0.92 (1.21) (6.43) 3.01

Earnings/(loss) per share - continuing operationsBasic earnings/(loss) per share (US cents) 7 0.43 (1.81) (6.51) 3.14Diluted earnings/(loss) per share (US cents) 7 0.42 (1.74) (6.43) 3.01

Earnings/(loss) per share - discontinued operationsBasic earnings/(loss) per share (US cents) 7 0.51 1.42 - -Diluted earnings/(loss) per share (US cents) 7 0.50 1.36 - -


Statementsof Profit or Lossfor the year ended 31 March 2014


Statementsof Comprehensive Incomefor the year ended 31 March 2014

Group CompanyRestated


US$'000 US$'000 US$'000 US$'000

Profit/(loss) for the year 14,856 (2,091) (40,826) 16,751

Other comprehensive loss

Items that will never be reclassified to profit or lossImpairment of property, plant and equipment (net of tax) (2,493) - - -Revaluation of property, plant and equipment (net of tax) - 897 - -

(2,493) 897 - -Items that may be reclassified to profit or lossExchange differences on translating foreign operations (net of tax) (2,085) (7,268) - -Change in fair value of available for sale investments (net of tax) - - (15,230) (35,429)Movement in capital reserve - - - 4,879

(2,085) (7,268) (15,230) (30,550)

Other comprehensive loss (net of tax) (4,578) (6,371) (15,230) (30,550)

Total comprehensive income/(loss) 10,278 (8,462) (56,056) (13,799)

Total comprehensive income/(loss) attributable to:Equity holders of the parent 2,926 (9,389) (56,056) (13,799)Non-controlling interest 7,352 927 - -

10,278 (8,462) (56,056) (13,799)

Group Company31 March 2014 31 March 2013 31 March 2014 31 March 2013

Note US$'000 US$'000 US$'000 US$'000

ASSETS

Non-current assetsProperty, plant and equipment 8 29,867 103,321 13 167Intangible assets 15 20 - -Investment property 9 - 332 - -Other financial assets 18 5 1,157 - -Investments held in subsidiaries 10 - - 11,056 106,282Investment held in joint venture 11 - - - 12,460Other receivables 12 808 997 - -Total non-current assets 30,695 105,827 11,069 118,909

Current assetsBiological assets 14 - 620 - -Inventories 15 23,414 70,343 - -Inputs scheme receivables 16 6,501 10,610 - -Trade and other receivables 17 7,615 92,643 4,397 131Other financial assets 18 - 52 - -Assets classified as held for sale 28 15,373 1,454 5,724 -Bank and cash balances 19 759 6,735 155 542Balances owed by Group companies 22 - - 17 6,062Total current assets 53,662 182,457 10,293 6,735

Total assets 84,357 288,284 21,362 125,644

EQUITY AND LIABILITIES

Capital and reservesShare capital 23 10,950 5,341 10,950 5,341Capital reserves 23 26,511 21,190 97,140 104,544Retained earnings (5,883) 46,777 (91,845) 9,732Equity attributable to equity holders of the parent 31,578 73,308 16,245 119,617

Non-controlling interest - 39,944 - -

Total equity 31,578 113,252 16,245 119,617

Non-current liabilitiesBorrowings 24 5,809 11,805 - -Deferred tax liabilities 13 331 14,144 - 641Finance lease liabilities 27 - 314 - -Total non-current liabilities 6,140 26,263 - 641

Current liabilitiesBorrowings 24 27,984 62,595 - 3,984Trade and other payables 25 7,618 30,683 851 273Provisions 26 2,403 - - -Finance lease liabilities 27 - 985 - -Taxation payable 359 2,461 (74) 40Bank overdrafts 19 7,808 51,578 - -Liabilities classified as held for sale 28 467 467 - -Balances owed to Group companies 22 - - 4,340 1,089Total current liabilities 46,639 148,769 5,117 5,386

Total equity and liabilities 84,357 288,284 21,362 125,644


Statementsof Financial Positionas at 31 March 2014

F Kembo - CHAIRMAN26 June 2014

C Chihuri - MANAGING DIRECTOR26 June 2014

ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT Non- TOTALShare Capital Retained Total controlling EQUITY

capital reserves earnings interestUS$'000 US$'000 US$'000 US$'000 US$'000 US$'000

Balance as at 31 March 2012 5,341 26,515 51,695 83,551 41,243 124,794

Changes in equity for 2013

Total comprehensive (loss)/income (Loss)/profit - - (6,711) (6,711) 4,620 (2,091) Other comprehensive loss - (2,923) 245 (2,678) (3,693) (6,371) - (2,923) (6,466) (9,389) 927 (8,462)

Transactions with equity holders of the parent Contributions and distributions Share-based payment transactions - 97 - 97 86 183 Acquisition of interest in foreign subsidiary - (45) (50) (95) 95 - Disposal of interest in foreign subsidiary - (2,454) - (2,454) (822) (3,276) Dividend paid and recieved within the Group - - 1,598 1,598 - 1,598 Dividend paid - - - - (1,585) (1,585)

- (2,402) 1,548 (854) (2,226) (3,080)

Balance as at 31 March 2013 5,341 21,190 46,777 73,308 39,944 113,252


Total comprehensive (loss)/income Profit - - 5,851 5,851 9,005 14,856 Other comprehensive loss - (2,504) (421) (2,925) (1,653) (4,578) - (2,504) 5,430 2,926 7,352 10,278

Transactions with equity holders of the parent Contributions and distributions Share-based payment transactions - (1,705) - (1,705) - (1,705) Issue of shares 5,609 9,530 - 15,139 - 15,139 Disposal of interest in local subsidiary - - 2,662 2,662 (47,296) (44,634) Dividend paid - - (60,752) (60,752) - (60,752) 5,609 7,825 (58,090) (44,656) (47,296) (91,952)

Balance as at 31 March 2014 10,950 26,511 (5,883) 31,578 - 31,578


Group Statementof Changes in Equityfor the year ended 31 March 2014

Share Capital Retained Totalcapital reserves earnings equity

US$'000 US$'000 US$'000 US$'000

Balance as at 31 March 2012 5,341 134,997 (7,019) 133,319


Total comprehensive (loss)/income Profit - - 16,751 16,751 Other comprehensive loss - (30,550) - (30,550)

- (30,550) 16,751 (13,799)

Transactions with equity holders of the parent Contributions and distributions Share-based payment transactions - 97 - 97 Balance as at 31 March 2013 5,341 104,544 9,732 119,617


Total comprehensive loss Loss - - (40,826) (40,826) Other comprehensive loss - (15,230) - (15,230)

- (15,230) (40,826) (56,056)

Transactions with equity holders of the parent Contributions and distributions Share-based payment transactions - (1,704) - (1,704) Issue of shares 5,609 9,530 - 15,139 Dividend paid - - (60,751) (60,751) 5,609 7,826 (60,751) (47,316)

Balance as at 31 March 2014 10,950 97,140 (91,845) 16,245


CompanyStatement of Changes in Equityfor the year ended 31 March 2014


Notes US$'000 US$'000 US$'000 US$'000

Cash flows from operating activitiesOperating cash flows before re-investing in working capital 20 28,250 31,277 (6,140) (1,165)Working capital movements 21 (10,578) 17,860 5,607 (16,909)Interest paid (20,878) (24,090) - -Net taxation paid (8,708) (5,433) (1,629) -Net cash (utilised in)/generated from operations (11,914) 19,614 (2,162) (18,074)

Cash flows from investing activitiesInterest received 185 297 25 -Dividend received - - - 18,143Proceeds from disposal of property, plant and equipment 3,752 130 57 -Proceeds from sale of investments, including cash and cash equivalents disposed of 65,945 175 23,370 -Acquisition of property, plant and equipment (6,657) (10,931) - (53)Acquisition of other investments - (953) (32,831) -Net cash inflow/(outflow) from investing activities 63,225 (11,282) (9,379) 18,090

Cash flows from financing activitiesProceeds from issue of share capital 15,139 - 15,139 -Proceeds from issue of share options - 22 - -Net third party borrowings (paid)/raised (28,656) (3,652) (3,985) 232Increase in finance lease liabilities - (205) - -Dividends paid - (1,585) - -Net cash (outflow)/inflow from financing activities (13,517) (5,420) 11,154 232

Net increase/(decrease) in cash and cash equivalents 37,794 2,912 (387) 248

Cash and cash equivalentsBalance at the beginning of the year (44,843) (47,054) 542 294Effect of exchange rate fluctuations on cash held - (701) - -Cash and cash equivalents at the end of the year 19 (7,049) (44,843) 155 542


Statementsof Cash Flowsfor the year ended 31 March 2014

BUSINESS SEGMENTCotton FMCG Seed Other Total Consolidation Total Discontinued Continuing

business business business investment eliminations operations operationsUS$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000

31 March 2014

Revenue 42,001 21,129 109,506 - 172,636 - 172,636 130,635 42,001

(Loss)/profit from operations (19,497) 60 24,431 (4,104) 890 1,285 2,175 24,491 (22,316)Investment income 43 4 114 516 677 (491) 186 119 67Other gains/(losses) 1,368 9 712 (28,324) (26,235) 28,330 2,095 676 1,419Interest expense (13,900) (1,084) (6,673) - (21,657) 491 (21,166) (7,757) (13,409)Profit on disposal of Group entities - - - - - 37,227 37,227 - 37,227Income tax (expense)/credit 3,458 197 (5,538) (3,447) (5,330) (331) (5,661) (5,341) (320)(Loss)/profit for the year (28,528) (814) 13,046 (35,359) (51,655) 66,511 14,856 12,188 2,668

Segment net assetsSegment assets 76,022 - - 28,031 104,053 (19,696) 84,357 1,301 83,056Segment liabilities (55,251) - - (7,223) (62,474) 9,695 (52,779) (467) (52,312)

20,771 - - 20,808 41,579 (10,001) 31,578 834 30,744

Other informationCapital expenditure 676 - - - 676 - 676 - 676Depreciation 3,215 - - 56 3,271 - 3,271 - 3,271Impairment 6,903 - - 64,621 71,524 (64,621) 6,903 - 6,903

31 March 2013

Revenue 138,009 24,362 110,642 - 273,013 (9,091) 263,922 (134,850) 129,072

Profit/(loss) from operations 7,828 (984) 19,283 16,760 42,887 (18,724) 24,163 18,305 5,858Investment income 1,379 61 217 814 2,471 (1,919) 552 278 274Other gains/(losses) 18 (66) 381 (215) 118 - 118 316 (198)Interest expense (16,832) (1,873) (7,418) (1,176) (27,299) 1,907 (25,392) (9,279) (16,113)Income tax (expense)/credit (171) 880 (2,912) 431 (1,772) 240 (1,532) (2,039) 507(Loss)/profit for the year (7,778) (1,982) 9,551 16,614 16,405 (18,496) (2,091) 7,581 (9,672)

Segment net assetsSegment assets 109,051 24,380 157,449 126,402 417,282 (128,998) 288,284 (1,387) 286,897Segment liabilities (86,580) (13,952) (76,486) (7,825) (184,843) 9,811 (175,032) 467 (174,565)

22,471 10,428 80,963 118,577 232,439 (119,187) 113,252 (920) 112,332

Other informationCapital expenditure 824 403 9,651 53 10,931 - 10,931 - 10,931Depreciation 3,532 1,083 3,605 156 8,376 - 8,376 - 8,376Impairment 14,212 1,233 3,758 - 19,203 - 19,203 4,991 14,212


Group PrimarySegment Reportsfor the year ended 31 March 2014

GroupSecondary Segment Reportsfor the year ended 31 March 2014


GEOGRAPHICAL SEGMENTDiscontinued Continuing

Zimbabwe Rest of Africa Europe and Asia Total operations operationsUS$'000 US$'000 US$'000 US$'000 US$'000 US$'000

31 March 2014

Revenue from external customers 84,717 68,376 19,543 172,636 130,635 42,001

Segment assets 84,014 343 - 84,357 1,301 83,056Capital expenditure 676 - - 676 - 676

31 March 2013

Revenue from external customers 93,436 76,831 93,655 263,922 134,850 129,072

Segment assets 217,239 71,045 - 288,284 1,387 286,897Capital expenditure 4,668 6,263 - 10,931 - 10,931

Composition of geographical segments

Segment Operating companies Products and services

Zimbabwe Cottco Holdings Limited Investment companyThe Cotton Company of Zimbabwe Limited Ginning of seed cotton and selling of lint and by-products of the ginning processSeed Co Limited Development, production and selling of broad acre crop seedsQuton Seed Company (Private) Limited Development, production and selling of cotton seedsExhort Enterprises (Private) Limited Manufacturing and selling of fast moving consumer goodsOlivine Holdings (Private) Limited Manufacturing and selling of fast moving consumer goodsZambrano Investments (Private) Limited Investment company

Rest of Africa Cottco International (Proprietary) Limited Investment companySeed Co International and subsidiaries Development, production and selling of broad acre crop seeds

Europe and Asia None None

Sales for segments outside Zimbabwe are made by all Group companies and are not limited to companies operating outside the Zimbabwe geographicalsegment.

Basis of pricing inter-segment salesInter-segment transfers, segment revenue, segment expenses and segment results include transfers between business segments and geographicalsegments. Such transfers are accounted for at market prices charged to unaffiliated customers for similar goods and services. Those transfers areeliminated on consolidation.

1. REPORTING ENTITY

Cottco Holdings Limited (the “Company”) is a limited liability company incorporated in Zimbabwe and is listed on the Zimbabwe Stock Exchange.

The consolidated financial statements of the Company as at, and for the year ended, 31 March 2014 comprise the Company and its subsidiaries(together referred to as the “Group” and individually as “Group entities”), and the Group's interest in a jointly controlled entity.

The principal activities of the Group are: the buying and ginning of seed cotton, the marketing of cotton lint and ginned seed, the productionand selling of crop planting seeds, the production and selling of fast moving consumer goods (“FMCGs”), the procurement and selling of cropinputs.

2. BASIS OF PREPARATION

(a) Statement of complianceThe consolidated and separate financial statements have been prepared in compliance with International Financial Reporting Standards (IFRS)and in the manner required by the Zimbabwe Companies Act (Chapter 24:03).

The financial statements were approved by the Board of Directors on 26 June 2014.

(b) Basis of measurementThe consolidated financial statements have been prepared on the historical cost basis except for the following:

• property, plant and equipment held at valuation;• financial instruments at fair value through profit or loss are measured at fair value;• available-for-sale financial assets are measured at fair value;• biological assets are measured at fair value less estimated costs to sell; and• investment property is measured at fair value.

(c) Functional and presentation currencyThese consolidated financial statements are presented in United States dollars (US dollars), which is the Group's functional currency. Allfinancial information presented in US dollars has been rounded to the nearest thousand.

(d) Use of estimates and judgementsThe preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application ofaccounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period inwhich the estimates are revised and in any future periods affected.

Information about significant areas of estimation uncertainty and critical judgement in applying accounting policies that have the most significanteffect on the amounts recognised in the consolidated financial statements is included in the following notes:

Note 8 Property, plant and equipmentNote 9 Investment propertyNote 10 Investments held in subsidiariesNote 11 Investment held in joint ventureNote 31.4 Share-based payments

Measurement of fair valuesA number of the Group's accounting policies and disclosures require the measurement of fair values for both financial and non-financial assetsand liabilities.

The Group annually reviews significant unobservable inputs and valuation adjustments. If third-party information, such as broker quotes orpricing services, is used to measure fair values, then the Group assesses the evidence obtained from the third parties to support the conclusionthat such valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified.

AccountingPolicies



Accounting Policies (cont’d)

(d) Use of estimates and judgements (continued)

Measurement of fair values (continued)When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorisedinto different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or

indirectly (i.e. derived from prices).• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, thenthe fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significantto the entire measurement.

The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change hasoccurred.

Further information about the assumptions made in measuring fair values is included in notes 8, 9,10,11 and 31.

3. SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies set out below have been applied consistently by all entities within the Group.The accounting policies adopted by the Group are consistent with those used in the preparation of prior year consolidated financial statements.

(a) Basis of consolidation

SubsidiariesSubsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns fromits involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiariesare included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

Loss of controlWhen the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any related non-controllinginterest and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest retained in the former subsidiaryis measured at fair value when control is lost.

Acquisitions from entities under common controlBusiness combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group areaccounted for as if the acquisition had occurred at the date that common control was established. The assets and liabilities acquired arerecognised at the carrying amounts recognised previously in the Group's consolidated financial statements. The components of equity of theacquired entities are added to the same components within Group equity.

Jointly controlled entitiesA joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control,that is when the strategic financial and operating policy decisions relating to the activities of the joint venture require the unanimous consentof the parties sharing control.

Joint venture arrangements that involve a separate entity in which each venturer has an interest are referred to as jointly controlled entities.The Group reports its interests in jointly controlled entities using proportionate consolidation. The Group's share of the assets, liabilities, incomeand expenses of jointly controlled entities are combined with the equivalent items in the consolidated financial statements on a line-by-linebasis. Any goodwill arising on the acquisition of the Group's interest in a jointly controlled entity is accounted for in accordance with the Group'saccounting policy for goodwill arising on business combinations (see below).

Transactions eliminated on consolidationIntra-group balances and transactions, and any unrealised gains and losses or income and expenses arising from intra-group transactionsare eliminated in preparing the consolidated financial statements.



(a) Basis of consolidation (continued)

Discontinued operationA discontinued operation is a component of the Group's business, the operations and cash flows of which can be clearly distinguished fromthe rest of the Group and which:

• represents a separate major line of business or geographica l area of operations;• is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or• is a subsidiary acquired exclusively with a view to re-sale.

Classification as a discontinued operat ion occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale.

When an operation is classified as a discontinued operation, the comparative statement of profit or loss and other comprehensive income(OCI) is re-presented as if the operation had been discontinued from the start of the comparative year.

b) Adoption of new and revised reporting standardsThe following revised standards issued by the International Financial Reporting Interpretations Committee (IFRIC) are effective for the year:

Standard/Interpretation Subject Effective dateIAS 1 amendment Presentation of Financial Statements: Annual periods beginning on or after 1 July 2012

Presentation of Items of OtherComprehensive Income

IFRS 13 Fair Value Measurement Annual periods beginning on or after 1 January 2013

The adoption of these revised standards in the current year has not led to any changes in the Group's accounting policies. These standardsdo not have any financial effect on the recognition or measurement of transactions and events, nor the financial position or performanceof the Group. Their effects are limited to the nature and extent of disclosures to be made by the Group.

At the date of authorisation of the financial statements of Cottco Holdings Limited for the year ended 31 March 2014, the following standardsand interpretations were in issue but not yet effective:

Standard/Interpretation Subject Effective dateIAS 27 Separate Financial Statements (2013) Annual periods beginning on or after 1 January 2014IAS 32 Offsetting Financial Assets and Financial Liabilities Annual periods beginning on or after 1 January 2014IAS 36 Recoverable Amount Disclosures for Non-Financial Assets Annual periods beginning on or after 1 January 2014IFRS 9 (2009) Financial Instruments Effective date to be determinedIFRS 9 (2010) Financial Instruments Effective date to be determinedIFRS 10 Consolidated Financial Statements Annual periods beginning on or after 1 January 2014IFRIC 21 Levies Annual periods beginning on or after 1 January 2014IFRS 14 Regulatory Deferral Accounts Annual periods beginning on or after 1 January 2016IAS 19 Defined Benefit Plans: Employee Contributions Annual periods beginning on or after 1 January 2015IAS 39 Novation of Derivatives and Continuation of Hedge Accounting Annual periods beginning on or after 1 January 2014IFRS 15 Revenue from Contracts with Customers Annual periods beginning on or after 1 January 2017

The Directors are of the opinion that the impact of the application of the applicable standards and interpretations will be as follows:

Amendments to IAS 32 Financial Instruments Presentation: Offsetting Financial Assets and Financial LiabilitiesThe amendments clarify when an entity can offset financial assets and financial liabilities.This amendment is effective for annual periodsbeginning on or after 1 January 2014 with early adoption permitted. The Group will adopt the amendments for the year ending 31 March 2015.

Recoverable Amount Disclosures for Non-Financial Assets (Amendments to IAS 36)The amendments reverse the unintended requirement in IFRS 13 Fair Value Measurement to disclose the recoverable amount of every cash-generating unit to which significant goodwill or indefinite-lived intangible assets have been allocated. Under the amendments, the recoverableamount is required to be disclosed only when an impairment loss has been recognised or reversed. The amendments apply retrospectivelyfor annual periods beginning on or after 1 January 2014 with early adoption permitted. The Group will adopt the amendments for the yearending 31 March 2015.



b) Adoption of new and revised reporting standards (continued)

IFRS 9 - Financial InstrumentsIFRS 9 (2009) introduces new requirements for the classification and measurement of financial assets. Under IFRS 9 (2009), financial assetsare classified and measured based on the business model in which they are held and the characteristics of their contractual cash flows. IFRS9 (2010) introduces additions relating to financial liabilities. The effective date of IFRS 9 was 1 January 2015. The effective date has beenpostponed and a new date is yet to be specified. The Group will adopt the standard in the first annual period beginning on or after the mandatoryeffective date (once specified). The impact of the adoption of IFRS 9 has not yet been estimated as the standard is still being revised.TheGroup will assess the impact once the standard has been finalised and the effective date is known.

IFRS 15 - Revenue from Contracts with CustomersIFRS 15 specifies how and when an IFRS reporter will recognise revenue as well as requiring such an entity to provide users of financialstatements with more informative, relevant disclosures. The standard provides a single, principles based five step model to be applied to allcontracts with customers. The core principle of IFRS 15 is that an entity will recognise revenue to depict the transfer of promised goods orservices to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods orservices. This core principle is delivered in a five step model framework:

• Identify the contract(s) with a customer;• Identify the performance obligations in the contract;• Determine the transaction price;• Allocate the transaction price to the performance obligations in the contract; and• Recognise revenue when (or as) the entity satisfies a performance obligation.

Application of this guidance will depend on the facts and circumstances present in a contract with a customer and will require the exercise ofjudgement.

c) Property, plant and equipmentProperty, plant and equipment is measured at cost or valuation less accumulated depreciation and impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the costof materials, direct labour and any other costs directly attributable to bringing the asset to the location and condition necessary for it to becapable of operating in the manner intended by management.

Items of property, plant and equipment are revalued at least once every five years, or earlier if it becomes apparent that their fair values differmaterially from their carrying amounts.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plantand equipment.

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable thatthe future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The cost of the day-to-day servicing of property, plant and equipment is recognised in profit or loss when incurred.

Depreciation is recognised in profit or loss on a straight line basis over the useful life of each item of property, plant and equipment as follows:

Buildings 15 - 50 yearsPlant and equipment 5 - 40 years

Land and capital work in progress are not depreciated.

Depreciation methods, useful lives and residual values of items of property, plant and equipment are reassessed at each reporting date.Depreciation is not charged when the carrying amount of an item of property, plant and equipment becomes equal to or less than the residualvalue.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in profit or loss when the item isderecognised.



d) Research and development costsResearch and development costs are recognised in profit or loss in the period in which they are incurred.

e) Impairment

Financial assetsA financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on theestimated future cash flows of that asset.

Objective evidence that financial assets are impaired includes:• default or delinquency by a debtor;• restructuring of an amount due to the Group on terms that the Group would not consider otherwise;• indications that a debtor or issuer will enter bankruptcy;• adverse changes in the payment status of borrowers or issuers;• the disappearance of an active market for a security; or• observable data indicating that there is measurable decrease in expected cash flows from a group of financial assets.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amountand the present value of the estimated future cash flows discounted at the original effective interest rate.

Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve toprofit or loss. The amount reclassified is the difference between the acquisition cost (net of any principal repayment and amortisation) andthe current fair value, less any impairment loss previously recognised in profit or loss.

An impairment loss in respect of financial assets other than those at amortised cost is calculated as the difference between its carrying amountand its current fair value.

Significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groupsthat share similar credit risk characteristics.

All impairment losses are recognised in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an eventoccurring after the impairment loss was recognised. For available for sale financial assets that are equity securities, the reversal is recogniseddirectly in equity. For other financial assets the reversal is recognised in profit or loss.

Non-financial assetsThe carrying amounts of the Group's non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting dateto determine whether there is any indication of impairment. If any such indication exists then the asset's recoverable amount is estimated.For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated at eachreporting date.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups.Impairment losses are recognised in profit or loss in other gains or losses. Impairment losses recognised in respect of cash-generating unitsare allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the otherassets in the unit (group of units) on a pro rata basis.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessingvalue in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current marketassessments of the time value of money and the risks specific to the asset.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessedat each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been achange in the estimates used to determine the recoverable amount.

f) Investment propertyInvestment property, which is property held for capital appreciation, is measured initially at its cost, including transaction costs. Subsequentto initial recognition, investment property is measured at fair value. Gains and losses arising from changes in the fair value of investmentproperty are included in profit or loss in the period in which they arise.



g) Biological assetsBiological assets are measured at fair value less costs to sell, with any change therein recognised in profit or loss. Costs to sell include allcosts that would be necessary to sell the assets.

In cases where, upon initial recognition of a biological asset, the fair value of such asset is not available and alternative estimates of fair valueare determined to be unreliable, then such a biological asset is measured at cost less accumulated depreciation and accumulated impairmentlosses. Thereafter, once the fair value of such biological asset becomes reliably measurable, it is subsequently measured at fair value lesscosts to sell.

h) Inventories and storesInventories are measured at the lower of cost and net realisable value. Cost is determined on the following bases:

Inventory category Basis of valuation

Seed cotton Actual weighted average cost.

Packaging, stores and consumables At weighted average cost.

Lint and ginned seed The proportion that the realised value of each product bears to the weighted average costs of the seed cotton, ginning and other direct production costs.

Planting seed Actual seed cost, other direct material costs and processing related costs.

Linters and delinted seed The proportion that the realised sales value of each product bears to the weightedaverage costs of the ginned seed and other direct mechanical delinting costs.

FMCG's Actual weighted average cost.

i) Foreign currencies

Foreign currency transactionsForeign currency transactions (which are currencies other than the functional currency), on initial recognition, are translated at the exchangerates ruling on the date of the transaction. Subsequent to that, all foreign currency denominated financial assets and liabilities are translatedat each balance sheet date, using the exchange rates ruling at that date. Accordingly, foreign currency denominated income and expensesare recorded at exchange rates ruling on the date of the transaction.

Exchange differences are recognised in profit or loss in the period in which they arise.

Translation of foreign operationsAssets, liabilities, income and expenses of foreign operations, are translated into US dollars at exchange rates ruling at the reporting date.The income and expenses of foreign operations, excluding operations in hyperinflationary economies, are translated to US dollars at exchangerates ruling on the date of the transaction.

Foreign currency differences arising from translation of foreign operations are recognised directly in equity as a non-distributable foreigncurrency translation reserve (FCTR). The FCTR is part of capital reserves. When a foreign operation is disposed of, in part or in full, the relevantamount in the FCTR is transferred to profit or loss.

j) Financial instrumentsThe Group's financial instruments are classified into the following categories: fair value through profit or loss (FVTPL), held-to-maturity, andloans and receivables. Classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

The Group does not hold or issue derivative financial instruments.

Financial assets - recognition and de-recognitionFinancial assets are recognised initially at fair value, when the Group has rights or other access to economic benefits.

The Group de-recognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights toreceive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset aretransferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over thetransferred asset. Any interest in such de-recognised financial assets that is created or retained by the Group is recognised as a separateasset or liability. The Group de-recognises a financial liability when its contractual obligations are discharged or cancelled, or expire.

Financial assets - measurementSubsequent to initial recognition, these instruments are measured as set out below:

Financial assets at fair value through profit or loss (FVTPL)A financial asset is classified as at FVTPL where it is held for trading. A financial asset is classified as held for trading if: it has been acquiredprincipally for the purpose of selling in the near future; or it is a part of an identified portfolio of financial instruments that the Group managestogether and has a recent actual pattern of short term profit taking.

Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognised in profit or loss. The net gain or loss recognisedin profit or loss incorporates any dividend or interest earned on the financial asset. Financial assets at FVTPL consist of listed securities. Thefair value is determined with reference to market prices.

Accounting Policies (cont’d)j) Financial instruments (continued)

Loans and receivablesTrade receivables, inputs scheme receivables, loans and other receivables are measured at fair value on initial recognition, and are subsequentlymeasured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognisedin profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference betweenthe asset's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initialrecognition.

Held-to-maturity debt securitiesAt subsequent reporting dates, debt securities for which the Group has expressed the intention and ability to hold to maturity (held-to-maturitydebt securities) are measured at amortised cost using the effective interest rate method, less any impairment losses. An impairment loss isrecognised in the profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between theinvestment's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initialrecognition. Impairment losses are reversed in subsequent periods when an increase in the investment's recoverable amount can be relatedobjectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the investment atthe date the impairment is reversed shall not exceed what the amortised cost would have been had the impairment not been recognised.

Cash and cash equivalentsCash and cash equivalents comprises cash balances, call deposits and investments in money market instruments. The carrying amount ofcash and cash equivalents approximates their fair value. Any gain or loss arising from marking to market is recognised in profit or loss.

Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management strategy are included as a componentof cash and cash equivalents.

Investments in subsidiaries (Financial assets)These assets are initially recognised at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they aremeasured at fair va lue and changes therein, other than impairment losses and foreign currency differences on debt instruments, are recognisedin OCI and accumulated in the capital reserve. When these assets are de-recognised, the gain or loss accumulated in equity is reclassifiedto profit or loss.

Financial liabilities - recognition and measurementFinancial liabilities are recognised when there is an obligation to transfer benefits and that obligation is a contractual liability to deliver cashor another financial asset or to exchange financial instruments with another entity on potentially unfavourable terms. Where these criteria nolonger apply, a financial liability is no longer recognised. Financial liabilities are recognised, initially, at fair value. Subsequent to initial recognition,these instruments are measured as set out below:

BorrowingsBorrowings are recorded at amortised cost and less any payments made.

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of thecost of that asset. Capitalisation of borrowing costs ceases when substantially all activities necessary to prepare the qualifying asset for itsintended use or sale are complete.

Trade and other payablesTrade and other payables are stated at cost adjusted for payments made to reflect the value of the anticipated economic outflow of resources.

OffsetIf a legally enforceable right exists to set-off recognised amounts of financial assets and liabilities, which are in determinable monetary amountsand the Group intends to settle on a net basis, the relevant financial assets and liabilities are offset.

k) PrepaymentsPrepayments are stated at cost. Cost is determined by reference to the actual amount paid.

l) Leases

Leased assetsLeases in terms of which the Group assumes substantially all risks and rewards of ownership are classified as finance leases. Upon initialrecognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments.Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Other leases are operating leases and, except for investment property, the leased assets are not recognised in the Group's statement offinancial position. Investment property held under an operating lease is recognised in the Group's statement of financial position at its fair value.

Lease paymentsPayments made under the operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentivesreceived are recognised as an integral part of the total lease expense, over the term of the lease. Minimum lease payments made underfinance leases are apportioned between the finance expense and the reduction of the outstanding liability.

The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remainingbalance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of thelease when the lease adjustment is confirmed.

m) ProvisionsA provision is recognised in the statement of financial position when the Group has a legal or constructive obligation as a result of a past event,and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determinedby discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, whereappropriate, the risk specific to the liability.



Accounting Policies (cont’d)n) Taxation

Income taxIncome tax comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to items recogniseddirectly to equity, in which case it is recognised in equity.

Current taxCurrent tax comprisies the expected tax payable or receivable on the taxable income or loss for the year, using rates enacted or substantiallyenacted at the reporting date and any adjustments to tax payable in respect of previous years.

Deferred taxDeferred tax is provided for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes andthe amounts used for taxation purposes. Temporary differences are not provided for on the initial recognition of assets or liabilities that affectneither accounting nor taxable profit or loss. The amount of deferred tax provided is based on the expected manner of realisation or settlementof the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the reporting date.

Deferred tax is not recognised for:• temporary differences on the initial recognit ion of assets or liabilit ies in a t ransaction that is not a business combination and that affects

neither accounting nor taxable profit or loss;• temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control

the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and• taxable temporary differences arising on the init ial recognition of goodwill.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the unusedtax losses and credits can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefitwill be realised.

o) Employee benefits

PensionsPensions are provided for employees through pension funds to which both the Group and its employees contribute. The schemes include boththe Group schemes and the national social security schemes of the respective countries in which the Group entities operate.

The pension fund is a defined contribution plan. Obligations for contributions to defined contribution pension plans are recognised as anexpense in profit or loss as they are incurred.

Equity compensation benefitsThe fair value of any options granted to employees of the Group is determined at the grant date using the Black-Scholes-Merton valuationmodel. The fair value of share options granted to employees is recognised as an expense with a corresponding increase in equity over theperiod in which the options are expected to vest. The amount recognised as an expense is adjusted to reflect the number of options expectedto vest.

Termination benefitsTermination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benef its and when the Grouprecognises costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the end of the reporting period, thenthey are discounted.

p) Segment reportingA segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or providingproducts or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are differentfrom those of other segments. The Group's primary format for segment reporting is based on the Group's business segments.

q) RevenueRevenue is recognised when the significant risks and rewards of ownership have been transferred to the customer, recovery of the considerationis probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement withthe goods, and the amount of revenue can be measured reliably. Revenue is measured net of returns, trade discounts and volume rebates.

The timing of the transfer of risks and rewards varies depending on the individual terms of the sales agreement. No revenue is recognised ifthere are significant uncertainties regarding recovery of the consideration due, measurement of the associated costs incurred to earn therevenue or the possible return of the goods.

r) Intangible assets

GoodwillGoodwill is stated at cost less any accumulated impairment losses. Goodwill arising on business combinations represents the excess of thecost of acquisition over the fair value of the net identifiable assets acquired. The excess of the fair value of assets acquired over the purchaseconsideration is recognised directly in profit or loss on recognition. Goodwill is tested for impairment on an annual basis.

Business combinations involving entities under the common control of the Group do not give rise to goodwill in the consolidated financialstatements. Instead, surpluses or deficits arising between the fair value of assets acquired and the purchase consideration are recogniseddirectly in equity as a non-distributable reserve.

s) Earnings per shareThe Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit orloss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinaryshares outstanding for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees.

GroupContinuing operations Discontinued operations Total

Restated Restated Restated31 March 31 March 31 March 31 March 31 March 31 March

2014 2013 2014 2013 2014 2013US$'000 US$'000 US$'000 US$'000 US$'000 US$'000

1 Revenue

Sale of goods by geographical locationZimbabwe 19,015 20,670 65,703 72,765 79,737 93,435Rest of Africa 3,443 14,747 64,932 62,085 63,719 76,832Europe and Asia 19,543 93,655 - - 29,180 93,655

42,001 129,072 130,635 134,850 172,636 263,922

2 (Loss)/profit from operations

(Loss)/profit from operations is stated after charging:

2.1 Cost of sales 41,285 88,635 73,400 80,904 114,685 169,539Inventories consumed 23,936 59,671 34,975 69,347 58,911 129,018Direct costs 17,349 28,964 38,425 11,557 55,774 40,521

2.2 Other costs Staff costs 11,120 12,242 14,676 17,870 25,796 30,112Depreciation of property, plant and equipment 3,271 3,688 3,532 4,688 6,803 8,376Armortisation of intangible assets 3 - - - 3 -

Remuneration of directors 513 496 418 446 931 942Fees 502 397 311 330 813 727Other 11 99 107 116 118 215

Auditor’s remuneration 190 258 13 461 242 719

CompanyRestated

31 March 2014 31 March 2013US$'000 US$'000

2.3 Other costs Staff costs 3,068 -Depreciation of property, plant and equipment 56 156

Remuneration of directors 257 304Fees 246 205Other 11 99

Auditor’s remuneration 16 15


Notes to theFinancial Statementsfor the year ended 31 March 2014

Notes to the Financial Statements (cont’d)for the year ended 31 March 2014


31 March 31 March 31 March 31 March 31 March 31 March2014 2013 2014 2013 2014 2013

US$'000 US$'000 US$'000 US$'000 US$'000 US$'000

2.4 Impairment losses 6,903 14,212 2,341 4,991 9,244 19,203Property, plant and equipment - - - 687 - 687Trade and other receivables 1,225 495 2,210 3,071 3,435 3,566Inputs scheme receivables 2,841 11,980 131 131 2,972 12,111Inventory 2,682 1,701 - 1,102 2,682 2,803Other 155 36 - - 155 36

Impairment losses comprise of amounts provided for and balances written off. The write offs amounted to US$1.365 million. These are madeup of US$1.202 million and US$0.163 relating to trade receivables and inventory, respectively.



US$'000 US$'000 US$'000 US$'000 US$'000 US$'0003 Investment income

3.1 GroupInterest received - third party 67 274 117 278 184 552Dividends received - - - - - -Total 67 274 117 278 184 552

Interest received - third partyBank deposits 36 274 117 228 153 502Other loans and recievables - - - 50 - 50Held-to-maturity investments 31 - - - 31 -Total 67 274 117 278 184 552

Investment income earned on financial assets analysed by categoryLoans and receivables including bank and cash balances 32 274 117 217 149 491Held to maturity investments 31 - - - 31 -Investment income earned on non-financial assets 4 - - 61 4 61Total 67 274 117 278 184 552




US$'000 US$'000 US$'000 US$'000 US$'000 US$'0004 Other gains and losses

4.1 GroupProfit on disposal of property, plant and equipment 1,409 - 36 35 1,445 35Gains on disposal of investments 13 1 - - 13 1Foreign exchange gains - 17 641 192 641 209Changes in fair value of financial assets (3) (216) - 89 (3) (127)Total 1,419 (198) 677 316 2,096 118

Changes in fair value of financial assetsChange in fair value of financial assets designated at FVTPL (3) (216) - - (3) (216)Realised gains on financial assets - - - 89 - 89Total (3) (216) - 89 (3) (127)

Company31 March 2014 31 March 2013

US$'000 US$'000

4.2 CompanyProfit on disposal of property, plant and equipment 41 -Impairment of investment classified as held for sale (787) -Impairment of investments in subsidiary and joint venture (27,543)Total (28,289) -



US$'000 US$'000 US$'000 US$'000 US$'000 US$'000

5 Taxation

5.1 Charge/(credit) based on profit/(loss) for the yearCurrent income tax 100 65 6,463 3,276 6,563 3,341Deferred income tax (note 13) (1,546) (667) (1,122) (1,506) (2,668) (2,173)Residents' tax on interest 435 95 - 275 435 370Capital gains tax 1,331 - - - 1,331 -Net tax charge/(credit) 320 (507) 5,341 2,045 5,661 1,538



US$'000 US$'000 3.2 Company

Interest received - third party 516 813

Interest received - third partyBank deposits 25 -Other loans and receivables 491 813Total 516 813

Investment income earned on financial assets analysed by categoryLoans and receivables including bank and cash balances 516 813





5 Taxation (continued) US$'000 US$'000 US$'000 US$'000 US$'000 US$'000

5.2 Reconciliation of tax charged/(credited) to profit/(loss)

Standard tax on profit/(loss) 3,169 2,697 5,497 3,275 8,666 5,972Effect of:- Revenue that is exempt from tax - - (990) (976) (990) (976)- Revenue that is taxed at special rates 135 95 275 - 410 95- Expenses that are not deductible in

determining taxable profit 2,995 1,671 103 (217) 3,098 1,454- Unused tax losses and tax offsets not recognised as tax assets (6,310) (4,664) 793 (37) (5,517) (4,701)- Subsidiaries taxed at non-standard rates of tax - (71) (337) - (337) (71)- Recognition of previously unrecognised assessable tax losses 331 (235) - - 331 (235)Total tax charge/(credit) 320 (507) 5,341 2,045 5,661 1,538

Standard rate of tax 25.75% 25.75% 25.75% 25.75% 25.75% 25.75%

Effective income tax rate 0.46% -5.60% -24.97% -16.04% 11.94% -11.75%


US$'000 US$'000

5.3 Charge/(credit) based on profit/(loss) for the year

Current income tax 1,717 -Deferred income tax - (431)Residents' tax on interest 393 -Capital gains tax 1,237 -Net tax charge/(credit) 3,347 (431)

5.4 Reconciliation of tax charged/(credited) to profit/(loss)Standard tax on profit/(loss) 9,650 4,202Effect of:- Unused tax losses and tax offsets not recognised as tax assets (6,303) (4,633)Total tax charge/(credit) 3,347 (431)

Standard rate of tax 25.75% 25.75%

Effective income tax rate 8.93% -2.65%

6 Discontinued operations

6.1 Group unbundling and capital raiseIn January 2014 the Group raised US$45.0 million for the recapitalisation of its subsidiary, The Cotton Company of Zimbabwe Limited. Thiswas done through a series of transactions as follows:a) A portion of the Group's interest in Seed Co Limited (Seed Co) was disposed of to third parties for US$30.4 million. Of this amount,

7 million shares with a fair value of US$7.1 million were in the process of being disposed of as at 31 March 2014. These shares arerecognised at fair value in current assets held for sale.



6 Discontinued operations (continued)

6.1 Group unbundling and capital raise (continued)b) The remaining Seed Co shares were distributed to Cottco Holdings Limited shareholders through a dividend in specie.c) The Group raised US$15.1 million through a rights issue.d) The Group warehoused its interest in Olivine Holdings (Private) Limited (Olivine) in a Trust for the benefit of the shareholders.

As a result of the above transactions, the Group unbundled and Cottco Holdings Limited remains with one operating company, The CottonCompany of Zimbabwe Limited. Seed Co and Olivine are reported as discontinued operations.

6.2 Results of discontinued operationsDuring the year, discontinued operations recorded a profit after tax of US$12.2 million which has been included in the Group statementof profit or loss from discontinued operations. The analysis of the performance of the discontinued operations is shown below.

Exhort Exhort Seed Co Seed Co Olivine Olivine Total TotalEnteprises Enteprises Limited Limited Holdings Holdings Discontinued Discontinued

(Pvt) Limited (Pvt) Limited (Pvt) Limited (Pvt) Limited operations operations31 March 31 March 31 March 31 March 31 March 31 March 31 March 31 March

2014 2013 2014 2013 2014 2013 2014 2013US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000

6.3 Revenue - - 109,506 110,642 21,129 24,208 130,635 134,850Cost of sales - - (55,206) (59,769) (18,194) (21,135) (73,400) (80,904)Other operating income - - 488 2,381 46 139 534 2,520Expenses - (20) (30,357) (33,971) (2,922) (4,172) (33,279) (38,163)

Loss from operations - (20) 24,431 19,283 59 (960) 24,490 18,303

Other expenses (43) (2) (5,847) (6,820) (1,071) (1,861) (6,961) (8,683)

(Loss)/profit before tax (43) (22) 18,584 12,463 (1,012) (2,821) 17,529 9,620

Income tax credit/(charge) - 6 (5,538) (2,912) 197 867 (5,341) (2,039)(Loss)/profit after tax (43) (16) 13,046 9,551 (815) (1,954) 12,188 7,581

Attributable to:

Equity holders of the parent (43) (16) 4,041 9,551 (815) (1,954) 3,183 7,581Non-controlling interest - - 9,005 - - - 9,005 -

(43) (16) 13,046 9,551 (815) (1,954) 12,188 7,581

6.4 Cash flows from discontinued operations

Net cash (utilised in)/generated from operations (42) - 3,239 8,480 (1,138) (3,339) 2,059 5,141Net cash inflow/(outflow) from investing activities 42 - (6,058) (9,388) (174) (334) (6,190) (9,722)Net cash inflow/(outflow) from financing activities - - 15,243 (3,556) 1,004 4,691 16,247 1,135Effect of exchange rate fluctuations on cash held - - (4,388) (701) - - (4,388) (701)Net increase/(decrease) in cash and cash equivalents - - 8,036 (5,165) (308) 1,018 7,728 (4,147)



OlivineSeed Co Holdings (Pvt)Limited Limited Total

31 March 2014 31 March 2014 31 March 20146 Discontinued operations (continued) US$'000 US$'000 US$'000

6.5 Effects of disposal on the financial position of the Group

Property, plant and equipment (45,725) (13,880) (59,605)Investment property (332) - (332)Goodwill (187) - (187)Other intangibles - (7) (7)Deferred tax assets (394) (2,795) (3,189)Other financial assets (837) - (837)Prepayments - (963) (963)Biological assets (748) - (748)Inventories (40,032) (4,505) (44,537)Inputs scheme receivables (5,580) - (5,580)Prepayments (5,211) (507) (5,718)Trade and other receivables (72,567) (863) (73,430)Bank and cash balances (9,604) (40) (9,644)Borrowings - long term 4,391 3,487 7,878Deferred tax liabilities 9,085 3,256 12,341Finance lease obligations 10 - 10Borrowings - short term 120 3,649 3,769Trade and other payables 14,657 4,187 18,844Taxation 3,715 - 3,715Overdraft 38,719 576 39,295

Net assets and liabilities (110,520) (8,405) (118,925)

Proceeds 29,881 - 29,881Dividend in specie 60,751 - 60,751

90,632 - 90,632




7 Earnings/(loss) per shareThe calculation is based on the following data:

Weighted average number of ordinary shares in issue (thousands)

For the purposes of basic earnings per share 627,598 534,126 627,598 534,126

Add dilutive impact of shares 6,851 22,443 6,851 22,443

For the purposes of diluted earnings per share 634,449 556,569 634,449 556,569

Earnings/(loss) per shareEarnings/(loss) for the purposes of basic and

diluted earnings per share (US$’000) 5,851 (6,711) (40,826) 16,751

Basic earnings/(loss) per share (US cents) 0.93 (1.26) (6.51) 3.14

Diluted earnings/(loss) per share (US cents) 0.92 (1.21) (6.43) 3.01

Earnings/(loss) per share from continuing operationsEarnings/(loss) from continuing operations for the purposes of basic and diluted earnings per share (US$’000) 2,668 (9,672) (40,826) 16,751

Basic earnings/(loss) per share (US cents) 0.43 (1.81) (6.51) 3.14

Diluted earnings/(loss) per share (US cents) 0.42 (1.74) (6.43) 3.01

Earnings/(loss) per share from discontinued operationsEarnings from discontinued operations for the purposes of basic and diluted earnings per share (US$’000) 3,183 7,581 - -

Basic earnings/(loss) per share (US cents) 0.51 1.42 - -

Diluted earnings/(loss) per share (US cents) 0.50 1.36 - -



Land and Plant and Capital workbuildings equipment in progress Total

US$'000 US$'000 US$'000 US$'000

8 Property, plant and equipment

8.1 Group

Cost/valuation31 March 2012 86,299 50,407 880 137,586Additions 3,132 8,508 293 11,933Disposals - (295) - (295)Capitalised during the period - - (1,002) (1,002)Transfers in/(out) - 171 (171) -Reclassified to investment property 57 64 - 121Revaluation 698 510 - 1,208Exchange rate movements (3,515) (2,303) - (5,818)31 March 2013 86,671 57,062 - 143,733Additions 439 6,193 26 6,658Disposals (2,626) (1,844) - (4,470)Capitalised during the period - 108 (108) -Transfers in/(out) - (334) 334 -Disposal attributable to subsidiary and joint venture (39,758) (35,859) (36) (75,653)Transfer to assets classified as held for sale (10,477) (2,367) - (12,844)Exchange rate movements (166) (401) - (567)31 March 2014 34,083 22,558 216 56,857

Accumulated depreciation and impairment31 March 2012 9,825 22,744 - 32,569Charge for the year 2,243 6,133 - 8,376Impairment - 50 - 50Impairment reversals from profit or loss - (199) - (199)Transfer to assets classified as held for sale 1 30 - 31Exchange rate movements (6) (409) - (415)31 March 2013 12,063 28,349 - 40,412Charge for the year 1,299 5,504 - 6,803Disposals (696) (1,296) - (1,992)Disposal attributable to subsidiary and joint venture (3,382) (12,665) - (16,047)Transfer to assets classified as held for sale (1,511) (545) - (2,056)Exchange rate movements (5) (125) - (130)31 March 2014 7,768 19,222 - 26,990

Carrying amount at 31 March 2012 76,474 27,663 880 105,017Carrying amount at 31 March 2013 74,608 28,713 - 103,321Carrying amount at 31 March 2014 26,315 3,336 216 29,867

Capital commitments

Authorised and contracted for - 103 - 103Authorised and not contracted for 26 3,293 - 3,319Total 26 3,396 - 3,422



8 Property, plant and equipment (continued)

Financing of capital commitmentsCapital commitments will be financed out of a combination of the Group’s resources and borrowings from both local and offshore financialinstitutions.

Proceeds from insurance payoutsThere were no material proceeds from insurance payouts during the year.

Revaluation of property, plant and equipmentA revaluation of land and buildings was performed by an independent professional valuer. There were no changes made to the carryingamounts of the assets as the Directors believe that the carrying amounts of the assets approximate their fair values. Plant and equipmentwas last revalued in 2009. The Directors did not deem it necessary to revalue plant and equipment as they believe that their fair values donot differ materially from their carrying amounts.

Significant estimates and judgementsThe revalued amount is determined by reference to recent arm's length market transactions.

Residual values and useful lives of items of property, plant and equipment are reviewed annually at the reporting date.

Residual values are determined with reference to an active market of similar items of property, plant and equipment taking into account theoperating conditions and expected wear and tear. Where an active market does not exist, the residual value is assumed to be nil at whichpoint the useful lives of affected assets are extended to levels consistent with this assumption.

Useful lives of items of property, plant and equipment are determined with reference to expected duration of the assets' utility to the Group,taking into account the operating conditions, expected wear and tear and the Group’s asset replacement policy.

EncumbrancesLand and buildings with a carrying amount of US$5.734 million are held as loan security. This security is considered sufficient to cover theloan.



8 Property, plant and equipment (continued)

Land and Plant and buildings equipment Total

US$'000 US$'000 US$'000

8.2 Company

Cost/valuation31 March 2012 152 523 675Additions - 53 5331 March 2013 152 576 728Disposals (152) (528) (680)31 March 2014 - 48 48

Accumulated depreciation and impairment31 March 2012 152 253 405Charge for the year - 156 15631 March 2013 152 409 561Charge for the year - 56 56Disposals (152) (430) (582)31 March 2014 - 35 35

Carrying amount at 31 March 2012 - 270 270Carrying amount at 31 March 2013 - 167 167Carrying amount at 31 March 2014 - 13 13

Group Company31 March 31 March 31 March 31 March

2014 2013 2014 2013US$'000 US$'000 US$'000 US$'000

9 Investment property

Balance at 31 March 2013 332 332 - -Derecognised upon disposal of investment in Seed Co Limited (332) - - -Balance at 31 March 2014 - 332 - -

The investment property comprised a residential property leased to a third party by Seed Co, which is no longer part of the Group.

Company31 March 2014 31 March 2014 31 March 2014 31 March 2013

US$'000 US$'000Proportion

Principal Place of Proportion of of votingActivity Incorporation Interests power held

10 Investments held in subsidiaries

Name of subsidiaryThe Cotton Company of Zimbabwe Limited Ginning Zimbabwe 100.00% 100.00% 10,950 36,622Seed Co Limited Seed Zimbabwe 0.00% 0.00% - 69,196Exhort Enterprises (Private) Limited Vegetables Zimbabwe 100.00% 100.00% 5 5Cottco International (Proprietary) Limited Investment Mauritius 100.00% 100.00% 100 -Zambrano Investments (Private) Limited Investment Zimbabwe 100.00% 100.00% 1 459

11,056 106,282



10 Investments held in subsidiaries (continued)

The investments in subsidiaries are designated as available-for-sale financial assets. The fair values of the unlisted subsidiaries have beendetermined with reference to their net asset values and market values, where possible. In January 2014, the Group disposed of its entireshareholding in Seed Co Limited in an unbundling process to raise capital for The Cotton Company of Zimbabwe Limited. A gain on disposalof US$45.6 million was realised as the fair value of Seed Co exceeded its net asset value. Also during the year, the Group’s investment inThe Cotton Company of Zimbabwe Limited was impaired by US$25.7 million. The fair value of the company was determined with referenceto the market capitalisation of Cottco Holdings Limited, as The Cotton Company of Zimababwe Limited is the only underlying cash generatingasset remaining in the Group.

11 Investment held in joint ventureCompany

31 March 2014 31 March 2013US$'000 US$'000

ProportionPrincipal Place of Proportion of of voting

Name of entity Activity Incorporation Interests power held

Olivine Holdings (Private) Limited FMCGs Zimbabwe 0.00% 0.00% - 12,460

The Group warehoused its interest in Olivine Holdings (Private) Limited in a trust for the benefit of its shareholders. In completing this process,the Group recorded a loss on disposal of US$8.4 million. The investment in the joint venture had been impaired by US$5.7 million during theyear.

31 March 2014 31 March 2013US$'000 US$'000

12 Other receivables 808 997

An amount of US$808,329, receivable from Barclays Bank of Zimbabwe Limited (Barclays) and originally paid as cash security forZ$57,947,498,879 owed by The Cotton Company of Zimbabwe Limited (Cottco) to Barclays, is classified as a non-current receivable at yearend. In terms of the agreement with the bank, the security will only be released when Cottco repays the underlying Zimbabwe dollar denominatedliability or when the Reserve Bank of Zimbabwe announces an official exchange rate to be used for conversion of Zimbabwe dollar denominatedbalances that existed when the Zimbabwean economy adopted the multiple currency system. As the likelihood of either of the above-statedconditions occuring within the next 12 months is assessed as low, the security continues to be reported as a non-current asset.

GroupAssets Liabilities Net Net


US$'000 US$'000 US$'000 US$'00013 Deferred tax assets/(liabilities)

13.1 Deferred tax assets and liabilities are attributed to the following:

GroupTemporary differencesProperty, plant and equipment - (7,623) (7,623) (23,997)Unrealised exchange gains - - - (83)Exchange differences in translating foreign subsidiaries - - - (244)Finance leases - (610) (610) 80Provisions - - - 1,866Increase in share-based payment reserve - - - (56)Fair value through profit or loss financial assets - - - 75Prepayments - - - (791)Assessable tax losses 8,233 (662) 7,571 9,112Unrealised profits in inventories - - - 225Reversal of impairment - 331 331 (331)

8,233 (8,564) (331) (14,144) | 58 | Cottco Holdings Limited 2014 Annual Report


13 Deferred tax assets/(liabilities) (continued)13.2 Movement in temporary differences during the year are attributed to the following

GroupRecognised in Recognised in Total Discontinued Continuing

31 March 2013 profit or loss OCI 31 March 2014 operations operationsUS$'000 US$'000 US$'000 US$'000 US$'000 US$'000

GroupTemporary differencesProperty, plant and equipment (23,997) (276) - (24,273) (32,318) 8,045Finance leases 80 - - 80 - 80Accelerated depreciation for tax purposes - - - - (56) 56Unrealised exchange differences (83) - - (83) 80 (163)Unrealised profits in inventories 225 - - 225 (83) 308Exchange difference on foreign subsidiary (244) - - (244) 225 (469)Provisions 1,866 263 - 2,129 (244) 2,373General allowance for doubtful debts - - - - 3,583 (3,583)Fair value through profit or loss financial assets 75 - - 75 (715) 790Prepayments (791) (625) - (1,416) (3,490) 2,074Reversal of impairment (331) 331 - - 297 (297)Assessable tax losses 9,112 (1,239) - 7,873 17,972 (10,099)Change in fair value of available for sale investments - - (2,357) (2,357) (2,967) 610Increase in share-based payment reserve (56) - - (56) - (56)

(14,144) (1,546) (2,357) (18,047) (17,716) (331)

CompanyAssets Liabilities Net Net

31 March 2014 31 March 2014 31 March 2014 31 March 2013 US$'000 US$'000 US$'000 US$'000

13.3 Deferred tax assets and liabilities are attributed to the following

CompanyTemporary differencesProperty, plant and equipment - - - (41)Fair value through profit or loss financial assets - - - (2,888)Prepayments - - - (4)Assessable tax losses 610 - 610 2,292Fair value through profit or loss financial assets - (610) (610) -

610 (610) - (641)

13.4 Movement in temporary differences during the year are attributed to the following

CompanyRecognised in Recognised in Total

31 March 2013 profit or loss OCI 31 March 2014Company US$'000 US$'000 US$'000 US$'000Temporary differencesProperty, plant and equipment (41) 38 - (3)Prepayments (4) 2 - (2)Assessed tax losses 2,292 (1,734) - 558Fair value through profit or loss financial assets (2,888) - 2,335 (553)

(641) (1,694) 2,335 -




US$'000 US$'000 US$'000 US$'000

14 Biological assets

Balance at 31 March 2013 620 844 - -Seasonal crops planted - at cost - 620 - -Derecognised upon disposal of Seed Co Limited (620) - - -Harvested plants transferred to inventories - (844) - -Balance at 31 March 2014 - 620 - -

Biological assets consisted of certified hybrid planting seed grown for ownresearch purposes in the Seed business which is no longer part of the Group.

15 Inventories

15.1 Inventories are broken down as follows:Raw materials 815 49,263 - -Work in progress - 1,360 - -Finished goods 1,419 2,193 - -Consumable stores 19,004 13,723 - -Bought-in merchandise 2,176 3,804 - -

23,414 70,343 - -

15.2 Movement in the allowance for obsolete inventoriesOpening balance (3,747) (4,084) - -(Increase)/decrease in provision (1,041) 337 - -Closing balance (4,788) (3,747) - -

15.3 Inventories charged to profit or loss (note 2.1) 23,936 129,018 - -

Inventories encumbered by borrowings are disclosed in note 24.

16 Inputs scheme receivables

Inputs scheme receivables 25,601 27,000 - -Allowance for doubtful debts (19,100) (16,390) - -

6,501 10,610 - -

Movement in the allowance for doubtful debtsBalance at beginning of the year (16,390) (4,279) - -Current year increase in provision (2,710) (12,111) - -Balance at the end of the year (19,100) (16,390) - -

Ageing of input receivables provided forYear 2014 (2,151) (3,680) - -Year 2013 (4,239) (9,438) - -Year 2012 (9,438) (1,768) - -Prior 2011 (3,272) (1,504) - -

(19,100) (16,390) - -

Inputs scheme receivables arise when Cottco advances inputs to farmers who grow crops for the company under contract. These are thenrecovered from the farmers as they sell their contracted crop. These receivables are seasonal. All past due inputs scheme receivables wereprovided for. Cottco achieved a recovery of 67% on its inputs scheme receivables. Unrecovered 2013 inputs scheme receivables were fullyimpaired and current year inputs scheme receivables were also impaired at the same rate. This is deemed to be a fair estimate of therecoverability of the current year`s inputs scheme receivables.




US$'000 US$'000 US$'000 US$'000

17 Trade and other receivables

Trade receivables 551 89,450 - -Other receivables 7,013 5,915 4,392 116Prepayments 1,047 6,311 5 15Allowance for doubtful debts (996) (9,033) - -

7,615 92,643 4,397 131

Ageing of past due trade and other receivables not provided for0-30 days 38 13,727 - -30-60 days - 5,682 - -60-90 days - 4,364 - -+90 days 119 34,773 - -

157 58,546 - -

Movement in the allowance for doubtful debtsBalance at beginning of the year (9,033) (5,616) - -Current year decrease/(increase) in provision 8,037 (3,417) - -Balance at the end of the year (996) (9,033) - -

Ageing of trade and other receivables provided forNot past due (790) - - -0-90 days - (1) - -+90 days (206) (9,032) - -

(996) (9,033) - -Trade receivables encumbered by borrowings are disclosed in note 24.

All trade receivables in currencies other than the US dollar are listed in note 29.

18 Other financial assets

Financial assets designated at fair value through profit or loss (FVTPL)Non-derivative financial assets designated as FVTPL - 8 - -

Held-to-maturity investments carried at amortised costShort term money market investments - 860 - -Long term loans 5 341 - -

5 1,209 - -

Other financial assets profileCurrent other financial assets - 52 - -Non-current financial assets 5 1,157 - -

5 1,209 - -

19 Cash and cash equivalents

Bank and cash balances 759 6,735 155 542Bank overdrafts (7,808) (51,578) - -Total (7,049) (44,843) 155 542




US$'000 US$'000 US$'000 US$'000

20 Cash flow from operating activities

Profit/(loss) for the period 14,856 (2,091) (40,826) 16,751Adjustment for:Income tax expense/(credit) recognised in the profit or loss 5,661 1,538 3,347 (431)Finance costs recognised in profit or loss 21,166 25,392 - 1,175Investment revenue recognised in profit or loss (185) (297) (516) (813)Dividend received - - - (18,143)Profit on disposal of property, plant and equipment (1,275) (35) (41) -(Profit)/loss on sale or disposal of a business (24,650) (3,286) 4,918 -Impairment of subsidiary 787 - 28,330 -Impairment loss recognised on trade and other recievables 1,225 3,071 - -Reversal of impairment on trade and other recievables 2,841 - - -Depreciation of property, plant and equipment and amortisation of intangibles 6,806 8,379 56 156Net foreign exchange loss/(gain) 2 (1,556) - -(Credit)/expense recognised in profit or loss in respect of equity-settled share based payments (1,705) 180 (1,389) 140Impairment charge against inventories 2,682 - - -Gain transferred from equity on sale of available for sale financial assets (10) - - -Other non-cash items 49 (18) (19) -

28,250 31,277 (6,140) (1,165)

21 Working capital movements

Change in inventories (418) 14,547 - -Change in inputs scheme receivables (4,311) 18,587 - -Change in prepayments 3,613 (1,625) 10 (3)Change in non-current assets held for sale (6,411) 70 6,044 13,761Change in trade and other receivables 1,077 (17,494) (4,276) (2)Change in trade and other payables (3,696) 5,517 578 (123)Change in non-current liabilities held for sale - - 3,251 (30,542)Change in other financial assets (432) (1,742) - -

(10,578) 17,860 5,607 (16,909)




US$'000 US$'000

22 Group companies

22.1 Group companies balances

Balances owed by Group companies - The Cotton Company of Zimbabwe Limited - 729 - Exhort Enterprises (Private) Limited - 22 - Olivine Holdings (Private) Limited - 5,277 - Cottco International (Pty) Limited 10 6 - Seed Co Limited - 23 - Yucatan Holdings (Pty) Limited 7 5Total 17 6,062

Balances owed (to)/by Group companies - The Cotton Company of Zimbabwe Limited (4,114) (680) - Yucatan Holdings (Pty) Limited (60) (39) - Zambrano Investments (Private) Limited (149) (353) - Cottco International (Pty) Limited (17) (17)Total (4,340) (1,089)

Net amounts owed (to)/by Group companies (4,323) 4,973

Significant transactions with Group companies

Interest paid to The Cotton Company of Zimbabwe Limited - (1,155)Management fees received from Group companies 422 923

Terms and conditionsAll transactions with related parties are at arms length. There are no set repayment terms nor are there any securities.The intercompany loans are non-interest bearing.





US$'000 US$'000 US$'000 US$'00022 Group companies (continued)

22.2 Transactions with and between Group companies

CottonSales to Group companies- Seed Co Limited - 3,692 - 50- Olivine Holdings (Private) Limited - - - 213Total - 3,692 - 263

Purchases from Group companies- Seed Co Limited - 5,554 - -Total - 5,554 - -

Other transactions with Group companiesCharges to Group companies- Cottco Holdings Limited - 1,175 4,811 723- Cottco International (Proprietary) Limited - - 386 349Total - 1,175 5,197 1,072

Charges from Group companies- Cottco Holdings Limited 230 17,464 705 745- The Cotton Company Zimbabwe Limited - - - 492- Cottco International (Proprietary) Limited - - 18 18Total 230 17,464 723 1,255

Net charges to/(from) Group companies- Cottco Holdings Limited (230) (16,289) 4,106 (22)- The Cotton Company Zimbabwe Limited - - - (492)- Cottco International (Proprietary) Limited - - 368 331Total (230) (16,289) 4,474 (183)

SeedSales to Group companies- Cottco Holdings Limited - - - 23- The Cotton Company Zimbabwe Limited - 5,554 - 1,033- Olivine Holdings (Private) Limited - - - 75Total - 5,554 - 1,131

Purchases from Group companies- The Cotton Company Zimbabwe Limited - 3,692 - 111Total - 3,692 - 111

Other transactions with Group companiesCharges from Group companies- Cottco Holdings Limited 10 1,598 - -Total 10 1,598 - -

Net charges to/(from) Group companies- Cottco Holdings Limited (10) (1,598) - -Total (10) (1,598) - -

FMCGSales to Group companies- Seed Co Limited - - - 75Total - - - 75



US$'000 US$'000 US$'000 US$'000

22 Group companies (continued)

22.2 Transactions with and between Group companies (continued)

Charges from Group companies- Cottco Holdings Limited - 796 - 5,252- The Cotton Company Zimbabwe Limited - - - 213Total - 796 - 5,465

Net charges to/(from) Group companies- Cottco Holdings Limited - (796) - (5,252)- The Cotton Company Zimbabwe Limited - - - (213)Total - (796) - (5,465)

Purchases from Group companies- The Cotton Company Zimbabwe Limited - - - 680Total - - - 680

Other transactions with Group companiesCharges to Group companies- The Cotton Company Zimbabwe Limited - 17,464 18 791- Seed Co Limited - 1,598 - 23- Yucatan Holdings (Proprietary) Limited - - 7 -- Olivine Holdings (Private) Limited - 796 - 5,277Total - 19,858 25 6,091

Charges from Group companies- Cottco Holdings Limited- The Cotton Company Zimbabwe Limited - 1,175 4,500 1,455- Yucatan Holdings (Proprietary) Limited - - 388 -- Zambrano Investments (Private) Limited - - - 115Total - 1,175 4,888 1,570

Net charges to/(from) Group companies- The Cotton Company Zimbabwe Limited - 16,289 (4,482) (664)- Seed Co Limited - 1,598 - 23- Yucatan Holdings (Proprietary) Limited - - (381) -- Salamax (Proprietary) Limited - - - (115)- Olivine Holdings (Private) Limited - 796 - 5,277Total - 18,683 (4,863) 4,521




23 Capital and reserves

23.1 Share capital

Authorised share capitalNumber of ordinary shares ('000) 1,500,000 1,500,000 1,500,000 1,500,000Nominal value per share (US dollar) 0.01 0.01 0.01 0.01Total value of shares in (US$'000) 15,000 15,000 15,000 15,000

23.2 Issued and fully paidNumber of sharesAt the beginning of the year ('000) 534,126 534,126 534,126 534,126Shares options exercised ('000) 560,831 - 560,831 -At the end of the year ('000) 1,094,957 534,126 1,094,957 534,126

Nominal value per share (US dollar) 0.01 0.01 0.01 0.01Total value of shares in (US$'000) 10,950 5,341 10,950 5,341

All shares rank equally with regard to the Company`s residual assets. The holders of ordinary shares are entitled to receive dividends asdeclared from time to time and are entitled to one vote per share at meetings of the Company.

Subject to the right of the shareholders to take up new shares in proportion to their existing holdings and to Section 183 of the CompaniesAct (Chapter 24:03), unissued shares are under the control of the Directors.

During the year, 560 831 590 new shares were issued through a rights offer raising US$15.1 million for the recapitalisation of The CottonCompany of Zimbabawe Limited.


US$'000 US$'000 US$'000 US$'000

23.3 Capital reserves

Capital reserves at the beginning of the period 21,190 26,515 104,544 134,997Movement for the year 5,321 (5,325) (7,404) (30,453)Balance at the end of the year 26,511 21,190 97,140 104,544

Detailed analyses of movements in capital reserves are shown in the statements of comprehensive income and the statements of changesin equity.

Nature and purpose of reservesCapital reserves are made up of the reserves described below.

Foreign currency translation reserveThe foreign currency translation reserve comprises all foreign currency differences arising from the translation of the financial statements offoreign operations as well as curency differences arising from conversion to the United States dollar upon adoption of the multicurrency system.

Fair value reserveThe fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the assets are derocognisedor impaired.

Revaluation reserveThe revaluation reserve relates to the revaluation of property, plant and equipment.




US$'000 US$'000 US$'000 US$'000

24 Borrowings

Current borrowingsUnsecured - at amortised cost- Bank loans - 11,230 - 3,894Secured - at amortised cost- Bank loans 27,984 51,365 - -

27,984 62,595 - 3,894

Non-current borrowingsUnsecured - at amortised cost - Bank loans - 1,913 - -Secured - at amortised cost - Bank Loans 5,809 9,892 - - 5,809 11,805 - -

Total borrowings Current 27,984 62,595 - 3,894 Non-current 5,809 11,805 - - 33,793 74,400 - 3,894

Unsecured borrowings - Bank loans - 13,143 - 3,894

- 13,143 - 3,894

Secured borrowings- Bank loans 33,793 61,257 - -

33,793 61,257 - -

Maturity profile of borrowingsDue within 1 year 0-3 months 26,532 53,559 - 3,894 3-6 months - 7,675 - - 6-12 months 1,452 1,361 - -

27,984 62,595 - 3,894 Due after 1 year 1 - 2 years 2,905 4,818 - - 2 - 3 years 2,904 4,094 - - 3 - 4 years - 2,893 - -

5,809 11,805 - -

Total borrowings 33,793 74,400 - 3,894

Included in borrowings is an amount of US$11 747 826 due to a syndicate of banks. The loans are secured as follows:

(i) A special notarial covering bond over the Group's cotton stocks and receivables worth US$10 million.(ii) A notarial general covering bond over the Group's cotton stocks and receivables for US$126.5 million.(iii) A notarial notarial deed of cession of book debts for US$3.5 million.(iv) A cession of the Group's insurance policies covering cotton inventories.(v) Land and buildings with a carrying amount of US$5.7 million.




US$'000 US$'000 US$'000 US$'000

25 Trade and other payables

Trade 3,557 18,136 - -Other 4,061 12,547 851 273

7,618 30,683 851 273

The Group's exposure to currency and liquidity risk related to trade and other payables is disclosed in note 29.

26 Provisions

Balance at beginning of the year - - - -Current year increase in provision 2,403 - - -Balance at the end of the year 2,403 - - -

During the year, the Group committed to a plan to restructure Cottco in order to reduce operating costs. Estimated restructuring costs, whichcomprise of employee termination benefits, are based on a detailed plan agreed between management and employee representatives.The restructuring is expected to be completed by end of July 2014.

27 Finance lease liabilities - third party

Minimum lease paymentsWithin one year - 308 - -In second to fifth year inclusive - 1,113 - -

- 1,421 - -Less unearned finance expense - (122) - -Present value of minimum lease payments - 1,299 - -

Present value minimum lease paymentsWithin one year - 985 - -In second to fifth year inclusive - 314 - -

- 1,299 - -

Included in the financial statements are:Current finance lease payables - 985 - -Non-current finance payables - 314 - -

- 1,299 - -


US$'000 US$'000 US$'000 US$'000

28 Assets classified as held for sale

28.1 Assets held for saleDue to discontinued operations (note 28.2) 1,301 1,387 - -Investment in Seed Co 6,511 - 6,511 -Land and buildings 8,966 - - -Plant and equipment 1,874 - - -Impairment (3,279) - (787) -Other - 67 - -Total assets classified as held for sale 15,373 1,454 5,724 -



28 Assets classified as held for sale (continued)

Included in assets held for sale are Cottco ginneries worth US$8.3 million and a shareholding in Seed Co amounting to US$5.7 million. TheSeed Co shares were sold subsequent to the year end. The Company intends to dispose of the immovable property at Bindura, Mutare andSanyati business units which it no longer utilises. The carrying amounts of these assets were reclassified to non-current assets held for sale.Efforts to sell the assets are still in progress and the sale is expected to be completed in the next 12 months. An impairment loss of US$2.5million was recognised in equity on reclassification at 31 March 2014 as all the assets were measured at the lower of fair values (per valuationsdone) less costs to sell and carrying amounts.

Exhort ExhortEnteprises Enteprises

(Pvt) Limited (Pvt) Limited31 March 2014 31 March 2013

US$'000 US$'000

28.2 Assets and liabilities of disposal group held for sale

Property, plant and equipment 1,286 1,372Inventories 14 14Trade and other receivables 1 1Assets classified as held for sale 1,301 1,387

Deferred tax liabilities 439 439Trade and other payables 28 28Liabilities classified as held for sale 467 467

Net assets 834 920



Notes to the Financial Statements (cont’d) for the year ended 31 March 2014

29 Financial instruments - fair values and risk management

29.1 Group

The following table shows the carrying amounts and fair values of financial assets and financial liabilities including their levels in the fair valuehierarchy.

Carrying amount Fair valueOther

Note Loans and Available financial receivables for sale liabilities Total Level 1 Level 2 Level 3 Total

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

Financial assets not measured at fair valueTrade and other receivables 17 6,568 - - 6,568 - - - -Bank and cash balances 19 759 - - 759 - - - -

7,327 - - 7,327

Financial liabilities not measured at fair valueBank overdrafts 19 - - (7,808) (7,808) - - - -Secured bank loans 24 - - (33,793) (33,793) - - - -Unsecured bank loans 24 - - - - - - - -Trade payables 25 - - (10,021) (10,021) - - - -

- - (51,622) (51,622)29.2 Company

Carrying amount Fair valueOther

Note Loans and Available financial receivables for sale liabilities Total Level 1 Level 2 Level 3 Total

US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000Financial assets measured at fair valueAvailable for sale investments:The Cotton Company of Zimbabwe Limited 10 - 10,950 - 10,950 10,950 - - 10,950Exhort Enterprises (Private) Limited 10 - 5 - 5 - - 5 5Zambrano Investments (Private) Limited 10 - 1 - 1 - - 1 1Cottco International (Proprietary) Limited 10 - 100 - 100 - - 100 100

- 11,056 - 11,056Financial assets not measured at fair valueTrade and other receivables 17 4,392 - - 4,392 - - - -Bank and cash balances 19 155 - - 155 - - - -

4,547 - - 4,547Financial liabilities not measured at fair valueTrade payables 25 - - (851) (851) - - - -

The fair of value of the investment in Cottco was determined with reference to the market value of Cottco Holdings Limited as Cottco is the onlycash generating asset remaining in the Group. Investments in Exhort Enterprises (Private) Limited, Zambrano Investments (Private) Limited andCottco International (Proprietary) Limited are based on a Directors’ valuation.


29 Financial instruments - Fair value and risk management (continued)

29.3 Financial risk management

The Group finances its operations by a mixture of retained profits and financial instruments in US dollars and foreign currencies. The Groupborrows in both local and international debt markets in US dollars and foreign currencies, mainly at fixed rates of interest. In the normal courseof its operations, the Group is exposed to currency, interest rate, liquidity and credit risks. The Group has developed a comprehensive riskmanagement process to control and monitor the risk.

(i) Currency riskThe Group undertakes certain transactions denominated in currencies other than the US dollar, hence exposure to exchange rate fluctuationsarise. The currencies giving rise to currency risks are primarily the Malawi Kwacha, Kenyan Shilling, South African Rand and Euro. The exposureto foreign currency fluctuations is managed by, where possible, matching foreign liabilities with foreign assets or revenue contracts that generatesufficient foreign currency receipts to provide a hedge against the exposure.

The Board of Directors is tasked with managing the foreign currency exposures arising in consultation with the central treasury function. Allmaterial purchases and sales in foreign currencies are transacted through the central treasury.

The Group's exposure to foreign currency risk was as follows based on notional amounts:

Group31 March 2014 31 March 2013

’000 ’000

Trade and other receivablesRand - 10,695Botswana Pula - 18,854Zambian Kwacha - 28,699

Bank and cash balancesRand 7 47Botswana Pula - 5,055Zambian Kwacha - 4,552

Trade and other payablesRand - (1,015)Botswana Pula - (17,846)Zambian Kwacha - (5,416)

Borrowings - third partyZambian Kwacha - (7,761)

Net balance sheet exposureRand 7 9,727Botswana Pula - 6,063Zambian Kwacha - 20,074

Exchange rates

Rand 10.686 9.727

(ii) Currency risk - sensitivity analysisThe Group's assets and liabilities are predominately US dollars. The net exposure of the Group to other currencies when expressed in USdollars is insignificant, and has been summarised below. Also summarised is the charge to profit or loss that would result in a movement ofany of the foreign currencies by 10%.

The Company has no foreign currency exposure.



29.3 Financial instruments - fair values and risk management (continued)

(ii) Currency risk - sensitivity analysis (continued)Group

31 March 2014 31 March 2013Foreign Foreign

Currency US$'000 Currency US$'000'000 '000

Rand 7 0.69 9,727 1,047Botswana Pula - - 6,063 745Zambian Kwacha - - 20,074 4

0.69 1,796

Charge to profit or loss if an exchange rate of any of the above currencies moved by 10%

31 March 2014 31 March 2013Profit or loss Equity Profit or loss Equity

US$'000 US$'000 US$'000 US$'000

Rand 0.07 0.07 105 105Botswana Pula - - 75 75

0.07 0.07 180 180

A change in exchange rate by 10% either way will result in a loss or gain of US$70.

29.4 Interest rate risk

The Goup borrows in both local and offshore markets. Exposure to interest rate risk on borrowings and receivables is managed on a proactivebasis. The interest rate risk profile of liabilities of the Group by currency, as at 31 March 2014 is:

Total Floating rate Fixed rate31 March 2014 31 March 2013 31 March 2014 31 March 2013 31 March 2014 31 March 2013

'000 '000 '000 '000 '000 '000

Financial liabilities 33,793 74,400 - - 33,793 74,400

29.5 Credit risk

Credit risks arise on inputs scheme and trade receivables. The risk arising on trade and inputs receivables is managed through normal credit limits, continual review and exception reporting. Adequate provision is made for doubtful debts.

At the reporting date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carryingamount of each financial asset in the balance sheet. All past due inputs scheme receivable are fully provided for.


US$'000 US$'000 US$'000 US$'000

Ageing of past due trade and other receivables not provided for0-30 days 38 13,727 - -30-60 days - 5,682 - -60-90 days - 4,364 - -+90 days 119 34,773 - -

157 58,546 - -



29.6 Liquidity risk

The Group manages liquidity through the management of working capital and cash flows. A balance between continuity of funding and flexibilityis maintained through the use of borrowings from a range of institutions with varying debt maturities.


US$'000 US$'000 US$'000 US$'000

Maturity profile of borrowingsDue within 1 year0-3 months 26,532 53,559 - 3,8943-6 months - 7,675 - -6-12 months 1,452 1,361 - -

27,984 62,595 - 3,894

Due after 1 year 1 - 2 years 2,905 4,818 - - 2 - 3 years 2,904 4,094 - - 3 - 4 years - 2,893 - -

5,809 11,805 - -

Total borrowings 33,793 74,400 - 3,894

29.7 Capital management

The Board of Directors’ policy is to maintain a strong capital base so as to maintain creditor and market confidence and to sustain futuredevelopment of the business. The Board of Directors monitors the return on capital, which the Group defines as net operating income dividedby total shareholders’ equity. Due to the prevailing operating economic conditions, the Board of Directors has set any net positive return ineach operating period as acceptable in terms of maintenance of capital.

There were no changes in the Group’s approach to capital management during the year.

The Group is not subject to externally imposed capital requirements.



30 Related party transactions

Group companiesGroup companies comprise The Cotton Company of Zimbabwe Limited, Seed Co Limited, Olivine Holdings Limited, Cottco International Limited,Exhort Enterprises (Private) Limited, Zambrano Investments (Private) Limited, and Yucatan Holdings (Proprietary) Limited. Transactionsand balances during and at year end have been disclosed in note 21.

Key management personnel

NameBekithemba Nkomo Chairman ResignedPat Devenish Group Chief Executive ResignedBernard Mudzimuirema Group Finance Director ResignedCatherine Chitiyo Non-executive Director ResignedAlbert Nhau Non-executive Director ResignedInnocent Chagonda Non-executive Director ResignedLawrence Preston Non-executive Director ResignedPatrick Rooney Non-executive Director ResignedFarai Rwodzi Non-executive Director ResignedDavid Machingaidze Managing Director ResignedAndrew Nyakonda Group Audit Executive ResignedPious Manamike Group Company Secretary Freeman Kembo Non-executive DirectorJames Maposa Non-executive DirectorCollins Chihuri Managing DirectorRufaro Maunze Non-executive DirectorDr Douglas Ncube Non-executive DirectorAyoob Adam Non-executive DirectorDacyl-Ray Rambanepasi Head of FinancePetros Piki Head of Operations

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of theentity directly or indirectly.

Transactions with key management personnel

Loans to key management personnelDuring the year, no loans were advanced to key management personnel.

31 March 2014 31 March 2013US$'000 US$'000

Compensation of key management personnelShort-term employee benefits 531 686Termination benefits 3,024 -Share-based payments - 140Total compensation paid to key management personnel 3,555 826

Termination benefits are in respect of amounts paid to key management personnel of AICO Africa Limited who resigned as part of the Group’srestructuring process.

Companies related to key management personnel

Amounts due to/(by) companies related to key management personnelThere were no amounts due to or by companies related to key management personnel at the balance sheet date.

Transactions with companies related to key management personnelThere were no transactions between the Company and companies related to key senior management personnel during the year.



31 Employee benefits

31.1 Defined contribution plansContributions to defined contribution pension plans are recognised as an expense in the income statement when incurred.

31.2 National Social Security SchemeThis is a defined contribution plan enacted under the National Social Security Act, 1989. Both the Group companies and the employeescontribute to the scheme.

31.3 Share-based payment plansThe Directors of the Company may allot or grant options up to 52.9 million shares to senior management. Each set of options is exercisableover three years beginning two years after the date the options are granted. The exercise price of the options is based on the middle marketshare price derived from the Zimbabwe Stock Exchange prices for the trading day immediately preceding the date of the offer.

The following table illustrates the number and exercise prices of the share options, as well as the movement in the share options during theyear:

31 March 2014 31 March 2013Number of Average Number of Average

options price options price'000 US cents '000 US cents

31.4 Number of share options

Balance of options at the beginning of the year 22,445 0.20 15,497 0.20Options granted during the year - 0.09 7,644 0.09Options exercised during the year - - - -Options forfeited during the year (15,594) 0.20 (696) 0.25Balance of options outstanding at the end of the year 6,851 0.21 22,445 0.20

The Group uses the Black Scholes-Merton model to value share options, which in management’s view presents a fairer basis of valuation.The current year credit to the income statement was US$1,705,421 (last year: a charge of US$180,302). Of this amount, US$316,305 (lastyear: a charge of US$40,593) was credited to and in subsidiaries.


Shareholders AnalysisAs at 31 March 2014

2014 2013Shareholders Shares held Shareholders Shares held

Number % Number % Number % Number %

Shareholders Profile0-100 3,461 25.30% 193,303 0.02% 3,531 25.50% 197,788 0.04%101-200 2,176 15.91% 326,291 0.03% 2,232 16.12% 335,735 0.06%201-500 2,896 21.16% 886,391 0.08% 2,912 21.03% 891,275 0.17%501-1 000 2,215 16.19% 1,525,665 0.14% 2,278 16.45% 1,566,734 0.29%1 001-5 000 1,840 13.45% 4,052,221 0.37% 1,820 13.14% 4,018,757 0.75%5 001-10 000 410 3.00% 2,829,475 0.26% 427 3.08% 2,961,819 0.55%10 001-50 000 352 2.57% 7,883,841 0.72% 373 2.69% 8,239,438 1.54%50 001-100 000 100 0.73% 7,032,541 0.64% 91 0.66% 6,529,287 1.22%100 001-1 000 000 143 1.05% 34,588,468 3.16% 125 0.90% 27,830,963 5.21%1 000 001-10 000 000 27 0.20% 18,058,203 1.65% 17 0.12% 12,583,271 2.36%10 000 001-100 000 000 45 0.33% 155,690,890 14.22% 35 0.25% 122,286,147 22.89%Above 100 000 000 15 0.11% 861,889,977 78.71% 8 0.06% 346,684,282 64.92%Total 13,680 100.00% 1,094,957,266 100.00% 13,849 100.00% 534,125,496 100.00%

Analysis by CategoryBanks, insurance companies, nominees and pension funds 499 3.65% 646,938,447 59.08% 442 3.19% 274,325,585 51.36%Local companies 800 5.85% 59,880,293 5.47% 862 6.22% 31,300,756 5.86%Individuals and trusts 12,341 90.21% 53,272,819 4.87% 12,462 89.98% 23,749,019 4.45%Non-resident investors 40 0.29% 334,865,707 30.58% 83 0.61% 204,750,136 38.33%Total 13,680 100.00% 1,094,957,266 100.00% 13,849 100.00% 534,125,496 100.00%

Resident 13,601 99.42% 754,104,042 68.87% 13,766 99.40% 329,375,540 61.67%Non-resident 79 0.58% 340,853,224 31.13% 83 0.60% 204,750,136 38.33%Total 13,680 100.00% 1,094,957,266 100.00% 13,849 100.00% 534,125,676 100.00%

As at 31 March 20142014 2013

Shares held Shares heldNumber % Number %

Major ShareholdersNational Social Security Authority 242,923,939 22.19% 118,625,935 22.21%Old Mutual Life Assurance Company of Zimbabwe Limited 149,737,967 13.68% 72,995,043 13.67%Standard Chartered Nominees (Private) Limited 133,880,449 12.23% 18,163,011 3.40%Les Nominees (Private) Limited 104,727,583 9.56% - 0.00%Burket Associates Limited 82,546,667 7.54% 40,266,667 7.54%Caperal Limited 55,594,709 5.08% 27,119,370 5.08%Stanbic Nominees (Private) Limited (NNR) 43,590,464 3.98% 112,551,517 21.07%Mining Industry Pension Fund 25,113,739 2.29% 12,032,187 2.25%Old Mutual Zimbabwe Limited 20,946,631 1.91% 10,217,869 1.91%Fed Nominees (Private) Limited 15,038,112 1.37% 9,011,602 1.69%Manrique Investments (Private) Limited 12,163,335 1.11% 5,933,334 1.11%Equivest Nominees (Private) Limited 10,127,621 0.92% 3,597,421 0.67%Datvest Nominees (Private) Limited 9,659,310 0.88% 8,644,511 1.62%Tagnel Nominees (Private) Limited 8,883,335 0.81% 4,333,334 0.81%Extern Nominees (Private) Limited 7,516,667 0.69% 3,666,667 0.69%Crisbibe Nominees (Private) Limited 6,833,335 0.62% 3,333,334 0.62%Stanbic Nominees (Private) Limited 6,051,512 0.55% 5,249,628 0.98%Local Authorities Pension Fund 5,727,145 0.52% 2,817,115 0.53%Hayes, Noel 5,540,792 0.51% - 0.00%Anglo American Associated Companies Pension Fund 5,428,828 0.50% - 0.00%Figurent Investments (Private) Limited - - 2,000,000 0.37%Hamburgh Investments (Private) Limited - - 2,000,000 0.37%Morray Investments Holdings Limited - - 2,000,000 0.39%Sub total 952,032,140 86.94% 464,558,545 86.98%

Other shareholders 142,925,126 13.06% 69,566,951 13.02%Total 1,094,957,266 100.00% 534,125,496 100.00%

SHAREHOLDERS' CALENDER

Annual General Meeting 29 August 2014Publication of Interim Results for the 6 months to September 2014 November 2014Publication of Audited full year results for the 12 months to March 2015 June 2015


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Cottco Holdings Limited 2014 annual report