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

VISION To be a market leader in the design, sourcing and distribution of at least one of our products in eight countries south of the Sahara for all our products by 2020.

CORE VALUES Integrity Being absolutely truthful and accepting responsibility for our actions. Quality Being professional and quality oriented in everything we do. Teamwork Working together to achieve a common goal. Dependability Our customers, employees and suppliers must be able to count on us. Fun Embracing a positive attitude and spontaineity.

Zimplow Limited

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2010 Annual Report


Contents

2

Directorship and Administration

3

Notice to Shareholders

4

Chairman’s Review

5

Report of The Directors

6

Corporate Governance

7

Financial Highlights

8

Independent Auditor’s Report

10

Statement of Comprehensive Income

11

Statement of Financial Position

12

Statement of Changes In Equity

13

Statement of Cash Flows

14

Notes to the Financial Statements

47

Statement of Value Added

48

Shareholders’ Analysis

49

Financial Review 2010

50

Financial Calendar

Zimplow Limited

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2010 Annual Report


Directorship and Administration

Z L Rusike (Chairman) OM Chidawu - (Resigned on 21 April 2010) P Devenish N Kudenga - (Resigned on 31 March 2010) Z Kumwenda* A Kurauone B Mitchell* D Mkonto* E Mlambo T Moyo P Whata - (Resigned on 21 April 2010) N Nhira

* Executive

D Mkonto

COMPANY SECRETARY:

TRANSFER SECRETARIES:

Corpserve (Private) Limited Cnr 1st Street / Union Avenue, Harare

AUDIT COMMITTEE:

A Kurauone (Chairman) T Moyo N Nhira

REMUNERATION COMMITTEE:

Z L Rusike (Chairman) P Devenish E Mlambo

EXECUTIVE COMMITTEE:

Z Kumwenda B Mitchell D Mkonto F Rwakonda

REGISTERED OFFICE:

39 Steelworks Road, Heavy Industrial Sites, PO Box 1059, Bulawayo

AUDITORS:

Ernst & Young Derry House, 6th Avenue / Fife Street, Bulawayo

BANKERS:

African Banking Corporation Limited Barclays Bank of Zimbabwe Limited Kingdom Bank Limited Merchant Bank of Central Africa Limited National Merchant Bank Limited

CURRENCY OF FINANCIAL STATEMENTS:

United States Dollars

PERIOD OF FINANCIAL STATEMENTS:

Zimplow Limited

Year ended 31 December 2010

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2010 Annual Report


Notice to Shareholders SIXTIETH ANNUAL GENERAL MEETING Notice is hereby given that the Sixtieth Annual General Meeting of shareholders will be held at the CT Bolts Division Office, Falcon Street and Wanderer Road, Bulawayo on 30 March 2011 at 10:00 hours to transact the following business: AGENDA Ordinary Business 1. To approve the minutes of the Annual General Meeting held on 21 April 2010. 2. To receive and adopt the directors’ report and audited financial statements for the year ended 31 December 2010. 3. To elect directors Messrs A. Kurauone, Z. Rusike, E Mlambo, and T Moyo retire from office in accordance with the company’s Articles of Association , and Mr P. Devinish who retire from office by rotation. All being available, they offer themselves for re-election. 4. To approve the payment of final dividend number 67 of US$0.0021 per share proposed on 23 February 2011. 5. To approve the remuneration of directors for the year ended 31 December 2010. 6. To fix the auditors’ remuneration for the year ended 31 December 2010. 7. To appoint auditors for the financial year ending 31 December 2011. By order of the Board D Mkonto (Mrs) Company Secretary 39 Steelworks Road P.O. Box 1059 BULAWAYO 23 February 2011 A member entitled to attend and vote is entitled to appoint one or more proxies to act in the alternative and to attend and vote and speak in his stead. Such proxy need not be a member of the company. Proxy forms must be lodged at the registered office of the company not less than forty-eight hours before the time of the meeting.

Zimplow Limited

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2010 Annual Report


Chairman’s Review Introduction

Prospects

It is with both satisfaction and relief that I am able to review the company’s performance for the year just ended. Satisfaction that the after-tax profit is not that far removed from last year’s exceptional performance and relief that the business managed to overcome the much anticipated downturn expected in 2010. Admittedly, substantial price increases in steel and coal coupled with the depreciation of the United States Dollar and increase in labour costs have mitigated against the ability of the company to maintain the margins achieved in 2009. As reported in our interim results, margins are aligning themselves to international levels. The company managed to compensate decreasing margins with stronger volumes.

While the 2010 results reflected cost and margins realignment, there remains room to improve profitability within the Company. We expect growth in revenue in 2011 at the back of improved market share for both the fastener and agricultural divisions. It would appear that the region will experience normal to above normal rainfall and this should provide the company with good export volumes. The Company’s financial position is supportive of strategic acquisitions and these will be pursued by the board in 2011.

Operations Mealie Brand implement volumes were up 16% over last year an achievement that is commendable considering that it is starting from a higher base achieved in 2009. Local volumes were up 14% and exports increased by 18%. The proportion of implements exported was 50.3%. Volume throughput increased by 16% to 3 263 tonnes this year. CT Bolts key volumes increased by 108% from prior year. Tassburg volumes were 128% higher than last year.

Acknowledgments I would like to thank my co-directors who have continued to offer sound advice and direction to the company’s affairs, their contribution is much appreciated. Credit is also extended to all levels of management and employees for their united role in achieving these results.

Z L Rusike Chairman 23 February 2011

Financial Review Company revenue of USD12.3 million is 36% ahead of last year. Domestic revenue increased by 53% while exports increased by 6,8% from prior year figures. All divisions recorded increases in revenue. C.T. Bolts and Mealie Brand recorded improved profitability while Tassburg recorded a loss mainly attributable to stock write downs of US$91 489. It is pleasing to note that all operating divisions generated positive cash from operations. Total net cash increase for the year was US$1.9 million.

Zimplow Limited

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2010 Annual Report


Report of the Directors Your directors’ report on the operations of Zimplow Limited for the year ended 31 December 2010 is as follows: PROFIT AND APPROPRIATION The profit and relative appropriations are as follows: 31 December 2010 31 December 2009 US$ US$ Profit after taxation 2 342 001 2 221 953 Equity dividend proposed/paid (700 000) (392 486) Retained earnings brought forward 1 829 467 Retained earnings carried forward 4 171 468 1 829 467 DIVIDEND A final dividend number 67 of US$0.0021 per share was proposed on 23 February 2011. SHARE CAPITAL The unissued ordinary shares of 172 928 076 have been placed under the control of the directors, in terms of Extraordinary General Meetings of Members held on 30 August 1989, 10 November 2004, 16 November 2005 and 14 November 2007. RE-DENOMINATION OF SHARE CAPITAL At an extra ordinary general meeting held on 21 April 2010 shareholders by special resolution approved the re-denomination of share capital from 500 000 000 ordinary shares of Z$0.00005 nominal value each to 500 000 000 ordinary shares of US$0.0001 each. US$32 707 was transfered from capital reserves of the company to the issued share capital to fund the redenomination FIXED ASSETS Capital expenditure for the year ended 31 December 2010 totalled US$ 282 984. Capital commitments for the year to 31 December 2011 amount to US$ 860 699. DIRECTORATE The names of the directors and secretary are those in office at the time of the printing of this Notice (23 February 2011). AUDITORS Messrs Ernst & Young remain in office until the conclusion of the Annual General Meeting on 30 March 2011, at which members will be asked to fix their remuneration for the year under review and to appoint the auditors for the ensuing year. Messrs Ernst & Young have indicated their willingness to continue in office. For and on behalf of the Board

Chairman Z. Rusike

Chief Executive Officer Z. Kumwenda

Zimplow Limited

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2010 Annual Report


Corporate Governance BOARD OF DIRECTORS The board of directors consists of a non-executive chairman, three executive directors and six non-executive directors. The chairman of the various committees are all non-executive directors. The board meets regularly to review results, dictate policy, formulate overall strategy and approve the budgets. They have introduced structures of corporate governance, certain functions and responsibilities have been delegated to the following committees. Their terms of reference and composition are regularly reviewed.

AUDIT COMMITTEE The audit committee liaises with the company’s external auditors. The external auditors have unrestricted access to the audit committee. The annual, half yearly statements and financial reporting matters are reviewed by the committee at appropriate intervals.

REMUNERATION COMMITTEE This committee sets the remuneration of the executive directors and approves guidelines for the company’s pay reviews.

EXECUTIVE COMMITTEE The executive committee sits between board meetings to deliberate and consider detailed operational issues of the company which includes strategy implementation.

DIRECTORS’ RESPONSIBILITY STATEMENT The directors are responsible for: 1. Selecting appropriate accounting policies and applying them consistently. 2. Making judgements and estimates that are both reasonable and prudent. 3. Stating whether applicable accounting standards have been followed subject to any material departures disclosed and explained in the financial statements. 4. Preparing the financial statements on a “going concern” basis unless it is inappropriate to presume that the company will continue in business. 5. Safeguarding the assets of the company and taking reasonable steps for the prevention and detection of fraud and other irregularities. 6. Keeping proper accounting records.

Zimplow Limited

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2010 Annual Report


Financial Highlights

Year Ended 31 December 2010 US$

Year Ended 31 December 2009 US$

12 298 300

9 061 718

Profit before taxation

2 922 253

2 819 253

Profit after taxation

2 342 001

2 221 953

Total assets

13 493 652

10 970 752

Market capitalisation

21 913 886

8 176 823

(US$ per share)

(US$ per share)

Basic earnings

0.01

0.01

Operating cash flow

0.01

0.01

327 071 924

327 071 924

Turnover

Ordinary Share Performance

Weighted average number of shares

Zimplow Limited

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2010 Annual Report


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

REPORT OF THE INDEPENDENT AUDITORS To the members of ZIMPLOW LIMITED We have audited the accompanying financial statements of Zimplow Limited as set out on pages 10 to 46, which comprise the statement of financial position as at 31 December 2010, and the statement of comprehensive income, the statement of changes in equity and statement of cash flows for the year ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes. Directors’ responsibility for the financial statements The company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards (IFRS) and in the manner required by the Companies Act (Chapter 24:03) and the relevant Statutory Instruments (SI 33/99 and SI 62/96). This responsibility also includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, 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.

Zimplow Limited

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2010 Annual Report


Independent Auditor’s Report continued Basis for qualified opinion An adverse audit opinion was issued on the statement of comprehensive income and cash flows relating to the prior year due to non-compliance with International Accounting Standard (‘IAS”) 29 ( Financial Reporting in Hyperinflationary Economies) and International Accounting Standard (‘IAS’ 21 (The Effects of Changes in Foreign Exchange Rates) for the reasons stated in note 2. Qualified opinion In our opinion, except for the effects of the matters described in the Basis for Qualified Opinion paragraph above, the financial statements presents fairly, in all material respects, the financial position of Zimplow Limited as at 31 December 2010, its financial performance and its cash flows for the year ended in accordance with International Financial Reporting Standards. Report on other legal and regulatory requirements In our opinion the financial statements have, in all material aspects, been properly prepared in compliance with the disclosure requirements of the Companies Act (Chapter 24:03) and the relevant Statutory Instruments (SI 33/99 and SI 62/96).

Chartered Accountants (Zimbabwe) Bulawayo 28 February 2011

Zimplow Limited

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2010 Annual Report


Statement of Comprehensive Income for the year ended 31 December 2010 Notes

Year Ended 31 Dec 2010 US$

Year Ended 31 Dec 2009 US$

TURNOVER

12 298 300

9 061 718

Domestic

8 635 365

5 631 169

Export

3 662 935

3 430 549

Cost of sales

(6 801 772)

(4 676 701)

Gross profit

5 496 528

4 385 017

Net operating expenses

(2 720 466)

(1 593 951)

3

2 776 062

2 791 066

Finance revenue

161 049

57 362

Finance costs

(14 858)

(29 175)

Profit before taxation

2 922 253

2 819 253

Income Tax Expense

6.1

(580 252)

(597 300)

Profit for the year

2 342 001

2 221 953

124

119 526

6.1

(19)

(17 929)

Other comprehensive income for the year, net of tax

105

101 597

Total comprehensive income for the year

2 342 106

2 323 550

0.01

0.01

Operating profit

Other Comprehensive income : Fair Value Gain on Available for Sale Financial Assets Income Tax Relating to components of other comprehensive income.

Basic and Diluted Earnings Per share ($)

Zimplow Limited

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2010 Annual Report


Statement of Financial Position as at 31 December 2010 Notes

31 Dec 2010 US$

31 Dec 2009 US$

5.1

7 068 881

7 066 581

Available for Sale Reserve

101 702

101 597

Retained Earnings

4 171 468

1 829 467

11 342 051

8 997 645

6.3

599 833

618 860

Trade and Other Payables

11.1

804 488

980 708

Provisions

11.2

378 421

140 627

Current Tax Liabilities

368 859

232 912

1 551 768

1 354 247

TOTAL EQUITY AND LIABILITIES

13 493 652

10 970 752

EQUITY AND LIABILITIES Issued Capital and Reserves

Non Current Liabilities Deferred Tax Liability Current Liabilities

ASSETS Non Current Assets Property, Plant and Equipment

7

2 667 362

2 668 756

Available for Sale Financial Assets

8

177 728

177 604

2 845 090

2 846 360

9

5 372 463

5 829 151

10

2 242 511

1 163 878

Other Current Assets

-

91 412

12

3 033 588

1 039 951

10 648 562

8 124 392

TOTAL ASSETS

13 493 652

10 970 752

Current Assets Inventories Trade and Other Receivables Cash and Bank Balances

Chairman Z L Rusike 23 February 2011

Chief Executive Officer Z. Kumwenda

Zimplow Limited

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2010 Annual Report


Statement of Changes in Equity for the year ended 31 December 2010

Share Capital US$

Capital Reserve US$

Available for sale reserve US$

Retained earnings US$

Total

Balance at 1 January 2009

-

7 066 581

7 066 581

Payment of dividend

(392 486)

(392 486)

Profit for the year

2 221 953

2 221 953

Other comprehensive income for the year

101 597

-

101 597

Balance at 31 December 2009

7 066 581

101 597

1 829 467

8 997 645

32 707

(32 707)

-

-

-

Adjustment*

2 300

-

2 300

Payment of dividend

-

-

Profit for the year

2 342 001

2 342 001

Other comprehensive income for the year

105

-

105

32 707

7 036 174

101 702

4 171 468

11 342 051

Re-denomination of share capital

Balance at 31 December 2010

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

Zimplow Limited

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2010 Annual Report

US$


Statement of Cashflows for the year ended 31 December 2010 Notes

Year Ended 31 Dec 2010 US$

Year Ended 31 Dec 2009 US$

2 776 062

2 791 066

Depreciation of property, plant and equipment

271 230

224 352

(Profit)/Loss on disposal of property, plant and equipment

(40 594)

2 173

Loss on disposal of shares

-

167

Impairment loss

-

4 435

Operating income before working capital changes

3 006 698

3 022 193

Decrease/(Increase) in inventories

456 689

(2 322 490)

(Increase)/Decrease in trade and other receivables

(1 094 022)

199 491

Increase in trade and other payables

168 372

1 004 452

Cash generated by operating activities

2 537 737

1 903 646

Finance revenue

161 049

57 362

Finance cost

(14 858)

(29 175)

Taxation paid

(463 349)

(342 455)

Net cash flows from operating activities

2 220 579

1 589 378

Purchase of property, plant and equipment

(282 984)

(343 072)

Proceeds on disposal of property,plant and equipment

56 042

23 538

Proceeds on disposal of shares

-

974

Net cash invested

(226 942)

(318 560)

Dividend paid to equity shareholders

-

(392 486)

Increase in cash and cash equivalents

1 993 637

878 332

Cash and cash equivalents at 1 January 2010

1 039 951

161 619

Cash and cash equivalents at 31 December 2010

3 033 588

1 039 951

Operating cashflow per share (US$)

0.01

0.01

CASH FLOWS FROM OPERATING ACTIVITIES Net operating income before dividends, interest, taxation and exchange gains/losses Adjustment for non cash items:

CASH FLOWS FROM INVESTING ACTIVITIES

CASH FLOWS FROM FINANCING ACTIVITIES

Zimplow Limited

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010

1. Corporate information The financial statements for the reporting period ended 31 December 2010 were authorised for issue in accordance with a resolution of the Company’s Directors on 23 February 2011. Zimplow Limited, the Company’s parent entity, is a Zimbabwe based concern. The Company operates three divisions as follows: • Mealie Brand: engaged in the manufacture and distribution of animal – drawn agricultural implements, hoes and metal fasteners. Products include ploughs, cultivators, harrows, ridgers, ground nut shellers and planters. The Mealie Brand factory is situated in Bulawayo; • CT Bolts: engaged in the manufacture and distribution of metal fasteners for the mining, construction and agricultural industries. Products include industrial screws, mild steel bolts, sockets and anchoring products, nails, nuts, washers, lags, chrome bolt covers and fittings. The CT Bolts factory is situated in Bulawayo with an operating branch located in Harare; • Tassburg: engaged in the manufacture and distribution of wood screws, veranda bolts and high tensile bolts for the household furniture, construction and mining industries. The Tassburg factory is situated in Harare.

2. Basis of preparation The financial statements have been prepared on the historical cost basis except for property, plant, equipment and financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for assets. The principal accounting policies are set below: 2.1 Adoption of standards and interpretations New and revised IFRSs applied with no material effect on the financial statements The following new and revised IFRSs have also been adopted in these financial statements.The application of these new and revised IFRSs has not had any material impact on the amounts reported for the current and prior years but may affect the accounting for future transactions or arrangements. Amendments to IFRS 2 Share-based Payment – Company Cash-settled Share-based Payment Transactions The amendments clarify the scope of IFRS 2, as well as the accounting for Company cash-settled share-based payment transactions in the separate (or individual) financial statements of an entity receiving the goods or services when another Company entity or shareholder has the obligation to settle the award. IFRS 3 (revised in 2008) Business Combinations IFRS 3(2008) has been adopted in the current year prospectively to business combinationsfor which the acquisition date is on or after 1 January 2010 in accordance with the relevant transitional provisions. The impact of the application of IFRS 3(2008) is as follows. • IFRS 3(2008) allows a choice on a transaction-by-transaction basis for the measurement of non-controlling interests at the date of acquisition (previously referred to as ‘minority’ interests) either at fair value or at the non-controlling interests’ share of recognised identifiable net assets of the acquiree.

Zimplow Limited

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) • IFRS 3(2008) changes the recognition and subsequent accounting requirements for contingent consideration. Previously, contingent consideration was recognised at the acquisition date only if payment of the contingent consideration was probable and it could be measured reliably; any subsequent adjustments to the contingent consideration were always made against the cost of the acquisition. Under the revised Standard, contingent consideration is measured at fair value at the acquisition date; subsequent adjustments to the consideration are recognised against the cost of the acquisition only to the extent that they arise from new information obtained within the measurement period (a maximum of 12 months from the acquisition date) about the fair value at the date of acquisition. All other subsequent adjustments to contingent consideration classified as an asset or a liability are recognised in profit or loss. • IFRS 3(2008) requires the recognition of a settlement gain or loss when the business combination in effect settles a pre-existing relationship between the Company and the acquiree. • IFRS 3(2008) requires acquisition-related costs to be accounted for separately from the business combination, generally leading to those costs being recognised as an expense in profit or loss as incurred, whereas previously they were accounted for as part of the cost of the acquisition. As part of Improvements to IFRSs issued in 2010, IFRS 3(2008) was amended to clarify that the measurement choice regarding non-controlling interests at the date of acquisition (see above) is only available in respect of non-controlling interests that are present ownership interests and that entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation. All other types of non-controlling interests are measured at their acquisition-date fair value, unless another measurement basis is required by other Standards. In addition, as part of Improvements to IFRSs issued in 2010, IFRS 3(2008) was amended to give more guidance regarding the accounting for share-based payment awards held by the acquiree’s employees. Specifically, the amendments specify that share-based payment transactions of the acquiree that are not replaced should be measured in accordance with IFRS 2 Share-based Payment at the acquisition date (‘market-based measure’). Amendments to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (as part of Improvements to IFRSs issued in 2009) •

The amendments clarify that all the assets and liabilities of a subsidiary should be classified as held for sale when the Company is committed to a sale plan involving loss of control of that subsidiary, regardless of whether the Company will retain a non-controlling interest in the subsidiary after the sale.

The amendments to IFRS 5 clarify that the disclosure requirements in IFRSs other than IFRS 5 do not apply to noncurrent assets (or disposal Company s) classified as held for sale or discontinued operations unless those IFRSs require (i) specific disclosures in respect of non-current assets (or disposal Company s) classified as held for sale or discontinued operations, or (ii) disclosures about measurement of assets and liabilities within a disposal Company that are not within the scope of the measurement requirement of IFRS 5 and the disclosures are not already provided in the consolidated financial statements.

Amendments to IAS 1 Presentation of Financial Statements (as part of Improvements to IFRSs issued in 2009) • The amendments to IAS 1 clarify that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or noncurrent.

Zimplow Limited

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) Amendments to IAS 7 Statement of Cash Flows (as part of Improvements to IFRSs issued in 2009) • The amendments to IAS 7 specify that only expenditures that result in a recognised asset in the statement of financial position can be classified as investing activities in the statement of cash flows. Amendments to IFRS 7 Financial Instruments: Disclosures (as part of Improvements to IFRSs issued in 2010) • The amendments to IFRS 7 clarify the required level of disclosures about credit risk and collateral held and provide relief from disclosures previously required regarding renegotiated loans. The Company has applied the amendments in advance of their effective date (annual periods beginning on or after 1 January 2011). The amendments have been applied retrospectively. Amendments to IAS 1 Presentation of Financial Statements (as part of Improvements to IFRSs issued in 2010) • The amendments to IAS 1 clarify that an entity may choose to present the required analysis of items of other comprehensive income either in the statement of changes in equity or in the notes to the financial statements. The Company has applied the amendments in advance of their effective date (annual periods beginning on or after 1 January 2011). The amendments have been applied retrospectively. Amendments to IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items •

The amendments provide clarification on two aspects of hedge accounting: identifying inflation as a hedged risk or portion, and hedging with options.

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

In prior years, in the absence of specific requirements in IFRSs, increases in interests in existing subsidiaries were treated in the same manner as the acquisition of subsidiaries, with goodwill or a bargain purchase gain being recognised, when appropriate; for decreases in interests in existing subsidiaries that did not involve a loss of control, the difference between the consideration received and the adjustment to the non-controlling interests was recognised in profit or loss. Under IAS 27(2008), all such increases or decreases are dealt with in equity, with no impact on goodwill or profit or loss. When control of a subsidiary is lost as a result of a transaction, event or other circumstance, the revised Standard requires the Company to derecognise all assets, liabilities and non-controlling interests at their carrying amount and to recognise the fair value of the consideration received. Any retained interest in the former subsidiary is recognised at its fair value at the date control is lost. The resulting difference is recognised as a gain or loss in profit or loss.

IAS 28 (revised in 2008) Investments in Associates •

The principle adopted under IAS 27(2008) (see above) that a loss of control is recognised as a disposal and reacquisition of any retained interest at fair value is extended by consequential amendments to IAS 28. Therefore, when significant influence over an associate is lost, the investor measures any investment retained in the former associate at fair value, with any consequential gain or loss recognised in profit or loss.

As part of Improvements to IFRSs issued in 2010, IAS 28(2008) has been amended to clarify that the amendments to IAS 28 regarding transactions where the investor loses significant influence over an associate should be applied prospectively.

Zimplow Limited

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) IFRIC 17 Distributions of Non-cash Assets to Owners •

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

IFRIC 18 Transfers of Assets from Customers •

The Interpretation addresses the accounting by recipients for transfers of property, plant and equipment from ‘customers’ and concludes that when the item of property, plant and equipment transferred meets the definition of an asset from the perspective of the recipient, the recipient should recognise the asset at its fair value on the date of the transfer, with the credit being recognised as revenue in accordance with IAS 18 Revenue.

Improvements to IFRSs issued in 2009 •

Except for the amendments to IFRS 5, IAS 1 and IAS 7 described earlier in section 2.1, the application of Improvements to IFRSs issued in 2009 has not had any material effect on amounts reported in the financial statements.

New and revised IFRSs in issue but not yet effective The Company has not applied the following new and revised IFRSs that have been issued but are not yet effective: Amendments to IFRS 1 Amendments to IFRS 7 IFRS 9 (as amended in 2010) IAS 24 (revised in 2009) Amendments to IAS 32 Amendments to IFRIC 14 IFRIC 19

Limited Exemption from Comparative IFRS 7 Disclosures for First-time Adopters Disclosures – Transfers of Financial Assets Financial Instruments Related Party Disclosures Classification of Rights Issues Prepayments of a Minimum Funding Requirement Extinguishing Financial Liabilities with Equity Instruments

Improvements to IFRSs issued in 2010 (except for the amendments to IFRS 3(2008), IFRS 7, IAS 1 and IAS 28 described earlier in section 2.1) 1 Effective for annual periods beginning on or after 1 July 2010. 2 Effective for annual periods beginning on or after 1 July 2011. 3 Effective for annual periods beginning on or after 1 January 2013. 4 Effective for annual periods beginning on or after 1 January 2011. 5 Effective for annual periods beginning on or after 1 February 2010. 6 Effective for annual periods beginning on or after 1 July 2010 and 1 January 2011, as appropriate. IFRS 9 Financial Instruments issued in November 2009 and amended in October 2010 introduces new requirements for the classification and measurement of financial assets and financial liabilities and for derecognition. • IFRS 9 requires all recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair values at the end of subsequent accounting periods.

Zimplow Limited

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) • The most significant effect of IFRS 9 regarding the classification and measurement of financial liabilities relates to the accounting for changes in fair value of a financial liability (designated as at fair value through profit or loss) attributable to changes in the credit risk of that liability. Specifically, under IFRS 9, for financial liabilities that are designated as at fair value through profit or loss, the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. Previously, under IAS 39, the entire amount of the change in the fair value of the financial liability designated as at fair value through profit or loss was recognised in profit or loss. IFRS 9 is effective for annual periods beginning on or after 1 January 2013, with earlier application permitted. •

The directors anticipate that IFRS 9 that will be adopted in the Company ‘s financial statements for the annual period beginning 1 January 2013 and that the application of the new Standard will have a signficant impact on amounts reported in respect of the Company s’ financial assets and financial liabilities. However, it is not practicable to provide a reasonable estimate of that effect until a detailed review has been completed.

The amendments to IFRS 7 titled Disclosures – Transfers of Financial Assets increase the disclosure requirements for transactions involving transfers of financial assets. These amendments are intended to provide greater transparency around risk exposures when a financial asset is transferred but the transferor retains some level of continuing exposure in the asset. The amendments also require disclosures where transfers of financial assets are not evenly distributed throughout the period. The directors do not anticipate that these amendments to IFRS 7 will have a significant effect on the Company ’s disclosures regarding transfers of trade receivables previously effected (see note 25.2). However, if the Company enters into other types of transfers of financial assets in the future, disclosures regarding those transfers may be affected. IAS 24 Related Party Disclosures (as revised in 2009) modifies the definition of a related party and simplifies disclosures for government-related entities. The disclosure exemptions introduced in IAS 24 (as revised in 2009) do not affect the Company because the Company is not a government-related entity. However, disclosures regarding related party transactions and balances in these financial statements may be affectedwhen the revised version of the Standard is applied in future accounting periods because some counterparties that did not previously meet the defintion of a related party may come within the scope of the Standard. The amendments to IAS 32 titled Classification of Rights Issues address the classification of certain rights issues denominated in a foreign currency as either an equity instrument or as a financial liability. To date, the Company has not entered into any arrangements that would fall within the scope of the amendments. However, if the Company does enter into any rights issues within the scope of the amendments in future accounting periods, the amendments to IAS 32 will have an impact on the classification of those rights issues. IFRIC 19 provides guidance regarding the accounting for the extinguishment of a financial liability by the issue of equity instruments. To date, theCompany has not entered into transactions of this nature. However, if the Company doesenter into any such transactions in the future, IFRIC 19 will affect the required accounting. In particular, under IFRIC 19, equity instruments issued under such arrangements will be measured at their fair value, and any difference between the carrying amount of the financial liability extinguished and the fair value of equity instruments issued will be recognised in profit or loss.

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) 2.2 Statement of compliance 1 January 2009 - December 2009 In line with the liberalisation of the national economy, the company set itself for a core trade transition and as from 01 January 2009 adopted the US$ as its functional currency, as determined and in line with guidance offered by the Institute of Chartered Accountants of Zimbabwe. The Company operated under a hyper-inflationary economy during 2008, before it changed its fuctional currency to United States Dollars. The comparative information has not been prepared in accordance with IFRS in that IAS 29 and IAS 21 has not been complied with in converting the financial information during the period of hyper inflation into an applicable measurement base at the date of reporting for the following reasons: •

The consumer price indices (CPI) for the period August to December 2008 have not been published by the Zimbabwe Statistical Office at the time of authorisation and approval of these financial statements. The liberalisation of the Zimbabwean economy and the formal adoption of alternative trade currencies as from 01 February 2009 is unlikely to result in further release of these CPI’s. Furthermore, due to the existence of multiple economic factors and market distortions which were considered to be pervasive to the national economic environment, inflation could not be accurately measured by other means.

2.3 Significant accounting judgements, estimates and assumptions The preparation of the Company’s financial statements requires the Company’s Directors and Management to make judgements, estimates and formulate assumptions that may affect the reported amounts of revenues, expenses, assets, liabilities and the disclosure of contingent liabilities/ assets at the reporting period end date. Estimates and judgements are continually evaluated, and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. Judgements In the process of applying the Company’s accounting policies, management has made the following judgements, apart from those involving estimates, which have the most significant effect on the amounts recognised in the financial statements. The Company’s Directors are of the opinion that the Statement of Financial Position represents a true and fair position of the Company. • Useful lives and residual values of property, plant and equipment The Company assesses the useful lives and residual values of property, plant and equipment each period, taking into account past experience and macro-economic changes. • Fair values The Company makes estimates and judgements in the valuation of property, plant and equipment, and the valuation of financial assets (such as trade receivables). Judgement is required in determining fair values of assets. The Company may also rely on independent opinions of experts in related specialist fields.

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) 2.4 Summary of significant accounting policies Segment reporting Operating segments provide products or services that are subject to risks and rewards that are different from those of other operating segments. Operating segments are considered reportable segments when their operating results and financial position are: • Regularly reviewed by the Company’s chief operating decision makers as part of the decision making process regarding resources to be allocated towards each segment’s operations; and • Duly assessed against internally determined key performance indicators. The Company’s reportable segments, for which internal financial management information is available and consistently reviewed, are distinctly determined across the different product types manufactured and their customer markets served. Detailed information on the reportable segments identified and presented is disclosed in note 4. Basis of Consolidations and business combinations Subsidiaries are all entities over which the Company has the power to govern the financial and operating policies so as to obtain benefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the effective date on which control is transferred to the Company. They are de-consolidated from the effective date that control ceases. The acquisition method of accounting is used to account for the acquisition of subsidiaries and business units by the Company. The cost of an acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange for control of the acquiree or business unit. Acquisition – related costs are recognised, as incurred, in the Statement of Comprehensive Income, as part of profit or loss for the period. Inter-company transactions, balances and unrealised gains on transactions between Company entities are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries and business units are changed where necessary to ensure consistency with the policies adopted by the Company. Non – controlling interests in the net assets of consolidated subsidiaries are identified separately from the Company’s equity therein. The interest of non–controlling shareholders may be initially measured either at fair value or at the non – controlling interest’s proportionate share of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition – by – acquisition basis. Subsequent to acquisition, non–controlling interests consist of the amount attributed to such interests at initial recognition and the non–controlling interest’s share of changes in equity since the date of the combination. Total comprehensive income is attributed to non controlling interest even if this results in the non controlling interest having a deficit balance. Changes in the Company’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. Any difference between the amount by which the non – controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the company. Where applicable, the cost of acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition date fair value. Subsequent changes in such fair values are adjusted against the cost of acquisition where they qualify as measurement period adjustments (refer below). All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with relevant IFRS. Changes in the fair value of contingent consideration classified as equity are not recognised.

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) The acquiree’s identifiable assets , liabilities and contigent liabilities that meet the conditions for recognition under IFRS 3 (2008) are recognised at the fair value at the acquisition date , except that; • Non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5: “Non-current Assets Held for Sale and Discontinued Operations”, which are recognised and measured at fair value less costs to sell; • Liabilities or equity instruments related to the replacement by the Company of an acquiree’s share based payment awards, which are measured in accordance with IFRS 2: “Share Based Payment” • Deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements, which are recognised and measured in accordance with IAS 12: “Income Taxes” and IAS 19: “Employee Benefits” respectively. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the set measurement period, or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date. The aforementioned measurement period is the period from the date of acquisition to the date the Company receives complete information about facts and circumstances that existed as of the acquisition date – and is subject to a maximum of one year. The early adoption by the Company, of IFRS 3 (Revised): “Business Combinations”, has resulted in the prospective application of the amended Standard’s requirements. The early adoption of IFRS 3 (Revised) has also prompted the early adoption of IAS 27 (Revised), the related requirements of which are generally applied on a retrospective basis. The nature of the amendments to the Revised Standards, as collectively applied to the Company’s scope of business combinations, did not result in any retrospective implications. The Company’s subsidiaries and acquired business units, as at the current Statement of Financial Position date, comprise one wholly owned subsidiary: Bulawayo Steel Products (Private) Limited and two business units currently trading as Company divisions: CT Bolts and Tassburg. The net assets (excluding immovable property) of Tassburg (Private) Limited were acquired on 31 December 2008. The transaction was not based on any provisional or contingent arrangements. Goodwill Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non – controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest (if any) in the entity over the fair value of the identifiable net assets recognised. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised, but is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Impairment losses relating to goodwill cannot be reversed in future periods. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company’s cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the entity are assigned to those units. Each unit to which the goodwill is so allocated: • Represents the lowest level within the entity at which the goodwill is monitored for internal management purposes; and • Is not larger than a reportable segment determined in accordance with IFRS 8: “Operating Segments”. Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates.

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised. Where goodwill forms part of the cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained. Bargain purchase gain If, after reassessment, the Company’s interest in the net fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration transferred, the amount of any non – controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree (if any), the excess is recognised immediately, in profit or loss as a bargain purchase gain Functional and presentation currency Items included in the financial statements of each of the Company’s entities are measured using the currency of the primary economic environment in which the entities operate (“the functional currency”). In line with note 2.1 on the basis of financial statement preparation, the Company’s functional and presentation currencies can be analysed as follows: 1 January 2009 – 31 December 2009 Functional and presentation currency: US$ In line with the liberalisation of the Zimbabwean economy, the Company set itself for a primary currency trade change and, as from 1 January 2009, adopted the US$ as its functional currency, as determined in line with guidance offered in IAS 21. Foreign currency translations Transactions in currencies other than the entity’s functional currency (foreign currencies) are translated into the Company’s functional currency using the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated at the related exchange rate prevailing at the period reporting end date. Foreign exchange differences arising on translation are recognised in the Statement of Comprehensive Income as part of profit or loss for the period, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges. Non – monetary assets and liabilities denominated in foreign currency are translated into functional currency at the market exchange rate prevailing at the date of the transaction. Non-current assets held for sale Non current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when a sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Non current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less cost to sell. Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of contractual arrangements. Income and revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Revenue excludes value added tax and other sales related duties, and is reduced for estimated customer returns, rebates, discounts and other similar allowances.

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) Sale of Goods Revenue from the sale of goods is recognised when all the following conditions are satisfied: The Company has transferred to the buyer the significant risks and rewards of ownership of the goods; The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; • The amount of revenue can be measured reliably; • It is probable that the economic benefits associated with the transaction will flow to the entity; and • The costs incurred or to be incurred in respect of the transaction can be measured reliably. Dividend and Interest revenue Dividend revenue from investments is recognised when the shareholder’s right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably). Interest revenue is accrued on a time proportionate basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. Other income Other income is recognised in the period that it is due and receivable. Property, plant and equipment Property, plant and equipment are measured at fair value less accumulated depreciation and impairment losses, if any, recognised after the date of a revaluation. Valuations, performed by the Company’s Directors or independent external valuers, are performed frequently enough to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. When items of property, plant and equipment are revalued, any accumulated depreciation at the date of a revaluation is restated proportionately with the change in the gross carrying amount of the asset so that the carrying amount after revaluation equals its revalued amount. Any revaluation surplus (increase in the carrying amount of an asset as a result of a revaluation) is recognised in other comprehensive income in the Statement of Comprehensive Income and accumulated in equity (revaluation reserve) in the Statement of Changes in Equity. The increase is recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss. If an asset’s carrying amount is decreased as a result of a revaluation, the decrease shall be recognised in profit or loss. The decrease, however, is recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset. The decrease recognised in other comprehensive income reduces the amount accumulated in equity as a revaluation reserve. An annual transfer, within the Statement of Changes in Equity, from the asset revaluation reserve to retained earnings, is made for the difference between depreciation based on the revalued carrying amount of the assets and depreciation based on the original cost.

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) Subsequent costs are included in an asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are recognised in profit or loss in the Statement of Comprehensive Income during the financial period in which they are incurred. Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings. Depreciation is calculated on a straight line basis over the following asset class useful life spans in order to allocate their cost or revalued amounts to their residual values: • Buildings: 50 years; • Plant and machinery: 5 to 50 years; • Motor vehicles: 5 years; • Office furniture and computer equipment: 4 to 10 years. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. The useful lives and residual values of assets are reviewed and adjusted, if appropriate, at each reporting period end date, with the effect of any changes in estimate accounted for on a prospective basis. Where the residual value of an asset increases to an amount equal to or greater than the asset’s carrying amount, depreciation will cease to be charged on the asset until its residual value subsequently decreases to an amount below its carrying amount. Impairment of non financial assets The Company assesses at each reporting period end date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company’s management makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s fair value less costs to sell and its value in use, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses of continuing operations are recognised in profit or loss in the Statement of Comprehensive Income in those expense categories consistent with the function of the impaired asset. An assessment is made at each reporting period end date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior periods. Such reversal is recognised in profit or loss unless the asset is carried at its revalued amount, in which case the reversal is treated as a revaluation increase and recognised in other comprehensive income. After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis, over its remaining useful life.

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) Leases The determination of whether an arrangement is, or contains a lease is based on the substance of the arrangement at inception date. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The Company’s lease transactions in place throughout the current reporting period only extend as far as the Company’s capacity as a lessee under operating lease arrangements. Company as a lessee Leases where the Company does not transfer substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

Contingent rentals: Contingent rentals are lease payments, or portions thereof, that are not fixed in amount but are based on the future amount of a factor that is susceptible to change other than with the passage of time. Contigent rents are recognised as an expense in the period in which they are incurred. The CT Bolts premises where the Company operates from were leased under such terms for part of the current reporting period. Details regarding lease transactions are as disclosed in note 13. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to get ready for their intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Research and development costs Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally – generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated: • The technical feasibility of completing the intangible asset so that it will be available for use or sale; • The intention to complete the intangible asset and use or sell it; • The ability to use or sell the intangible asset; • How the intangible asset will generate probable future economic benefits; • The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and • The ability to measure reliably the expenditure attributable to the intangible asset during its development.

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) The amount initially recognised for internally – generated intangible assets, is the sum of the expenditure incurred from the day when the intangible asset first meets the recognition criteria listed above. Where no internally – generated intangible asset can be recognised, development expenditure is charged to profit or loss in the period in which it is incurred. Subsequent to initial recognition, internally – generated intangible assets are reported at cost less accumulated amortisation and impairment losses, on the same basis as intangible assets acquired separately. Any expenditure capitalised is amortised over the period of expected future sales from the related project. The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use or more frequently when an indication of impairment arises during the reporting period. Inventories Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition, are accounted for as follows: Raw materials - purchase costs on weighted average cost Finished goods and work in progress - costs of direct materials, labour and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs. Net realisable value is the estimated selling price in the ordinary course of the business, less estimated costs of completion and the estimated costs necessary to make the sale. Cash and cash equivalents Cash and cash equivalents comprise cash at banks, cash on hand and short term highly liquid deposits with an original maturity of three months or less. For presentation purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Provisions Provisions are recognised when the Company has a legal or constructive obligation as a result of past events, and when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. Where the effect of the time value of money is considered material, the amount of a recognised provision represents the present value of the expenditures expected to be required to settle the obligation. Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by the employees up to the reporting period end date. Dividend distribution Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial statements in the period in which the dividends are approved by the Company’s shareholders and declared. Key management Key management include Company executive directors and management having authority and responsibility for planning, directing and controlling the activities of Zimplow Limited, in its parent entity capacity, as well as its Company member entities.

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) Company entity members The Company’s member entities at the reporting period end, all incorporated, registered and operating (where applicable) as trading concerns in Zimbabwe, include: • Bulawayo Steel Products (Pvt) Ltd • The Zimplow Trust Taxation The tax expense for the period comprises current and deferred tax. Tax is recognised in the statement of comprehensive income in profit or loss, except to the extent that it relates to items recognised directly as other comprehensive income. In this case, the tax is also recognised in other comprehensive income. Current tax The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are permanently non - taxable or non - deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting period end date. Deferred tax Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each reporting period end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rate that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognised outside prifit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets and deferred tax liablities are offset, if a legally enforceable right exists to set off current tax asset against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) Value added tax Revenues, expenses and assets are recognised net of the amount of Value Added Tax except: • Where the Value Added Tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the Value Added Tax is recognised as part of the cost of acquisition of the asset or as part of the expense item applicable; and • With receivables and payables that are stated with the amount of Value Added Tax included. The net amount of Value Added Tax recoverable from, or payable to the taxation authority is included as part of receivables or payables in the Statement of Financial Position as at the end of the reporting period. Employee benefits Defined contribution plans Current contributions to the Zimplow Pension Fund, which is a defined contribution fund, and contributions to the National Social Security Authority (NSSA), which are determined by legislation (as promulgated under the National Social Security Act 1989), are recognised as an expense when employees have rendered service entitling them to the contributions .The Company’s obligations under the NSSA scheme are limited to specific contributions legislated from time to time. Termination benefits The Company recognises gratuity and other termination benefits in the financial statements when it has a present obligation relating to termination. Financial instruments Financial assets Initial recognition The Company’s financial assets falling within the scope of IAS 39: “Financial Instruments: Recognition and Measurement” include cash and short term deposits, trade and other receivables, and equity investments in a portfolio of quoted companies on the Zimbabwe Stock Exchange (ZSE). Financial assets are recognised initially at fair value plus transaction costs, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market – place (regular way purchases) are recognised on the trade date, i.e. the date that the Company commits to purchase or sell the assets. Company management, in line with guidance prescribed in IAS 39, determines the classification of its financial assets at initial recognition. The Company has not taken out any derivative instruments. Subsequent measurement The subsequent measurement of financial assets depends on their classification. The Company’s non – cash and cash equivalent financial asset profile is classified and measured as follows: Available for sale financial assets (AFS) Listed shares held by the Company that are traded in an active market are classified as being Avalaible For Sale and are stated at fair value. The fair value of the ZSE traded investments is recognised with direct reference to trading prices as published on the Stock Exchange. Gains and Losses arising from the changes in fair value are recognised in other comprehensive income and accumulated in the Available For Sale revaluation reserve with the exception of impairment losses. Where the investments are disposed of or are determined to be impaired, the cumulative gain or loss previously accumulated in the Available for Sale revaluation reserve is reclassified to profit or loss. Dividends on AFS equity instruments are recognised in profit or loss in the statement of Comprehensive Income when the Company’s right to receive the dividends is established.

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) Loans and receivables Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for shortterm receivables when the recognition of interest would be immaterial. Derecognition of financial assets The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset, the Company continues to recognise the financial asset and also recognises a collateralised borrowing for any related proceeds received. Impairment of financial assets Financial assets are assessed for indicators of impairment at each reporting period end date. Financial assets are impaired where there is objective evidence that, as a result of one or more loss events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For asset, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables include the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables. For listed equity investments classified as Available For Sale, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment. Where there is evidence of impairment, the cumulative loss - measured as the difference between the aquisition costs and the current fair value, less any impairment loss on that investment previously recognised in profit or loss, is removed from Available For Sale reserve and recognised in profit or loss. For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. With reference to the Company’s financial asset portfolio, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the pre viously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs and are presented in the Statement of Changes in Equity as owner based equity transactions.

Zimplow Limited

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) Financial liabilities Financial liabilities are classified as either financial liabilities at fair value through profit or loss or other financial liabilities. The Company’s financial liabilities are limited to trade and other payables, and interest bearing loans and borrowings. The Company’s management has not designated any financial liabilities as financial liabilities at fair value through profit or loss. The Company’s financial liabilities and borrowings are initially measured at fair value, net of transaction costs. Financial liabilities are subsequently measured at amortised cost using the effective interest method, with the interest expense recognised on an effective yield basis. Derecognition of financial liabilities The Company derecognises financial liabilities when, and only when, the Company’s obligations are discharged, cancelled or they expire. Effective interest method The effective interest method is a method of calculating the amortised cost of a financial asset/ liability and of allocating interest income/ expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts/ payments (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset/ liability, or, where appropriate, a shorter period. Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount reported in the Statement of Financial Position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

Zimplow Limited

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2010 Annual Report


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

3. Operating Profit Year Ended 31 Dec 2010 US$

Year Ended 31 Dec 2009 US$

1 874 733

1 363 344

68 165

62 152

29 516

29 475

Plant and equipment

241 714

194 877

271 230

224 352

-

4 435

45 094

18 209

Other emoluments

200 400

158 188

245 494

176 397

Selling expenses

512 689

377 777

Discount to Customers

203 257

-

12 925

-

275

-

2 697 176

1 239 253

Provisions for Gratuity

11 261

79 732

National Social Security Authority

86 716

62 251

2 795 153

1 381 236

8 167

-

Net Exchange loss

(6 405)

Profit/(Loss) on disposal of property, plant and equipment

(2 173)

The operating profit before taxation is arrived at After charging; Administration expenses Auditors remuneration: Current year Depreciation of property, plant and equipment: Buildings

Impairment on property, plant and equipment Directors’ emoluments Fees

Selling expenses

Provision for doubtful debts Research and development costs Staff costs: Salaries and allowances

After crediting: Net Exchange gain

Zimplow Limited

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2010 Annual Report


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

4. Segment information IFRS 8 Operating Segments requires operating segments to be identified on the basis of internal reports about components of the Company that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and assess thier perfomance. In contrast the predecessor standard (IAS 14 , Segment reporting ) required an entity to identify two sets of segments (business and geographical) using a risks and returns approach , with the entity’s system of financial reporting to key management personnel serving only as the starting point for the identification of such segments. For management purposes, the Company is organised into business units based on their products, and has three reportable segments as follows: The Mealie Brand segment is a manufacturer and distributor of animal drawn implements for the agricultural sector; the CT Bolts segment is a manufacturer and distributor of metal fasteners to the mining, construction and agricultural sectors; the Tassburg segment is a manufacturer and distributor of wood screws, veranda bolts and high tensile bolts primarily for the construction sector and household furniture industry. Information reported to the Company’s Chief operating decision maker for the purpose of resource allocation and assessment of segment performance is more specifically focused on the type of product produced. The following is an analysis of the Company’s revenue and results from operations by reportable segments for the year ended 31 December 2010. Revenue

CT Bolts

Tassburg

Adjustment

Total

9 774 461

1 873 603

683 464

12 331 528

(33 228)

(33 228)

9 774 461

1 873 603

650 236

12 298 300

2 643 070

243 350

(91 708)

(18 650)

2 776 062

Finance income

161 049

Finance costs

(14 858)

Income taxes

(580 252)

Company’s income after tax

2 342 001

External customers Inter – segment Total revenue

Mealie Brand

Results Reportable segment profit Unallocated items:

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

Zimplow Limited

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2010 Annual Report


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

4. Segment information continued The following is an analysis of the Company’s revenue and results from operations by reportable segments for the year ended 31 December 2009

Revenue

Mealie Brand

CT Bolts

Tassburg

Adjustment

Total

7 626 682

1 049 571

402 782

9 079 035

(17 317)

(17 317)

7 626 682

1 049 571

385 465

9 061 718

2 647 313

132 597

21 321

(10 165)

2 791 066

Finance income

57 362

Finance costs

(29 175)

Income taxes

(597 300)

Company’s income after tax

2 221 953

Segment Assets

Year Ended 2010 US$

Year Ended 2009 US$

Mealie Brand

11 282 200

8 859 446

CT Bolts

1 277 297

896 164

Tassburg

1 069 771

1 225 307

Other (Eliminations)

(135 616)

(10 165)

13 493 652

10 970 752

1 225 191

1 053 736

CT Bolts

416 612

215 978

Tassburg

16 764

84 533

Other (Eliminations)

(106 799)

-

Total Segment Liabilities

1 551 768

1 354 247

External customers Inter – segment Total revenue Results Reportable segment profit Unallocated items:

Segment Assets and Liabilities

Total Segment Assets Segment Liabilities Mealie Brand

Zimplow Limited

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2010 Annual Report


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

4. Segment information continued Other Segment information Depreciation and Amortisation Mealie Brand

Year Ended 31/12/2010 US$ 212 074

CT Bolts Tassburg

Year Ended 31/12/2009 US$ 178 187

30 359 28 797 271 230

14 931 31 234 224 352

Additions to non current assets Year Ended 31/12/2010 Year Ended 31/12/2009

US$

US$

237 517

257 136

CT Bolts

43 779

84 986

Tassburg

1 688 282 984

950 343 072

Mealie Brand

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

US$

US$

Local

8 864 262

5 631 169

3 662 936

3 430 549

12 527 198

9 061 718

Export Total The Company’s operations are located in Zimbabwe, the entity’s country of domicile.

The Company’s disclosed segment information, in line with note 2.1 on the basis of preparation and note 2.3 on the operating environment, is limited to financial position data as at 31 December 2009, and financial performance data for the twelve month period to 31 December 2009.

Zimplow Limited

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2010 Annual Report


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

5. Share Capital 5.1 Reconciliation of authorised and Issued share capital Year Ended 2010 Year Ended 2009

Shares

Shares

Authorised

500 000 000

500 000 000

-

-

Ordinary shares at 0.0001 US cents each

500 000 000

500 000 000

Ordinary shares issued and fully paid Tassburg Aquisition - 31 December 2008

327 071 924 -

298 210 425 28 861 499

327 071 924

327 071 924

Increase in ordinary shares

5.2 Subject to the right of shareholders to take up any new shares in proportion to their existing holding, to Section 183 of the Companies Act (Chapter 24:03), and to the limitations of the Zimbabwe Stock Exchange, the unissued shares are under the control of the Directors, in terms of Extraordinary General Meetings of Members held on 30 August 1989, 10 November 2004, 16 November 2005 and 14 November 2007. 5.3 At an extra ordinary general meeting held on 21 April 2010 shareholders by special resolution approved the redenomination of share capital from 500 000 000 ordinary shares of Z$0.00005 nominal value each to 500 000 000 ordinary shares of US$0.0001 each. US$32 707 was transfered from capital reserves of the company to the issued share capital to fund the re-denomination 5.4 At 31 December 2010, the directors of the company held directly and indirectly, the following shares: Name

Year Ended 2010 Year Ended 2009

Z. Kumwenda

15 609

1 015 609

D. Mkonto

1 213

638 118

B. Mitchell

63 500 000

63 500 000

1 203 464

1 203 464

N. Nhira P. Devenish

1 213

Zimplow Limited

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2010 Annual Report

1 213


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

6. Taxation

31 Dec 2010

31 Dec 2009

US$

US$

Zimbabwe income tax

582 097

552 666

Deferred taxation – current year

(19 045)

25 902

17 200

18 732

580 252

597 300

19

17 929

580 271

615 229

602 010

605 388

(1 497)

8 904

(33 626)

(11 910)

-

(4 373)

Effect of different tax rates between current and deferred tax

(3 816)

(1 512)

Withholding Tax

17 200

18 732

580 271

615 229

567 465

590 395

Prepayments

16 429

13 030

Deferred Income

(5 386)

(845)

Gain on financial assets

17 795

17 929

3 530

(1 649)

599 833

618 860

6.1 Charge based on income for the year

Withholding tax Charge based on other Comprehensive Income Fair Value Gain on Available For Sale Financial assets Total Taxation Charge 6.2 Reconciliation of tax charge Tax on profit for the year at 20.6% ( inclusive of 3% AIDS Levy ) Tax effect on expenses that are not deductible in determining taxable profit Income taxed at special rate Export Promotion Incentive

In terms of section 139 of the Finance Act Chapter 23:04 the rate of income tax is 20% if a company exports 50% of its manufactured output in units. The company exported 50.3% of its manufactured output in the year under review. 6.3. Deferred tax liability Key components of deferred tax: Accelerated wear and tear

Net exchange gain

Zimplow Limited

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2010 Annual Report


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

7. Property, plant and equipment At 1 January 2009

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

Total

US$

630 000

1 760 185

444 829

65 143

2 900 157

Additions

2 511

19 425

268 584

52 552

343 072

Disposals

-

-

(84 811)

-

(84 811)

632 511

1 779 610

628 602

117 695

3 158 418

-

2 300

-

-

2 300

Additions

(30)

11 984

213 869

57 161

282 984

Disposals

-

-

(51 706)

(15)

(51 721)

632 481

1 793 894

790 765

174 840

3 391 981

(7 369)

(53 213)

(233 048)

(26 345)

(319 975)

(29 475)

(96 465)

(84 665)

(13 747)

(224 352)

recognised in profit or loss

-

(4 435)

-

-

(4 435)

Disposals

-

-

59 100

-

59 100

(36 844)

(154 113)

(258 613)

(40 092)

(489 662)

At 31 December 2009 Adjustment*

At 31 December 2010 Accumulated depreciation At 1 January 2009 Charge for the year Impairment losses

At 31 December 2009

Charge for the year

(29 516)

(98 099)

(121 275)

(22 340)

(271 230)

-

-

36 267

6

36 273

At 31 December 2010

(66 360)

(252 212)

(343 621)

(62 426)

(724 619)

Carrying amount At 31 December 2009 At 31 December 2010

595 667 566 121

1 625 497 1 541 682

369 989 447 144

77 603 112 414

2 668 756 2 667 362

Disposals

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

The Company’s property and plant were revalued during the six month period to 31 December 2008. These amounts have been used by the Company’s Directors in establishing the deemed cost of related assets at 1 January 2009. The revaluation basis and carrying value determination at 31 December 2008 for each asset class took the following form: Land and buildings – freehold Land and buildings were formally revalued by CB Richard Ellis, an independent certified valuator, on 31 October 2008. Valuations were made, in US$, by reference to open market values. The Company’s Directors in turn, reviewed market developments that could affect the revalued amounts of land and buildings for the two month interval period November – December 2008, and effected internal adjustments to the originally established values, taking into account factors such as the unfavourable global and local economic environment prevailing at the time.

Zimplow Limited

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) Plant and machinery Plant and machinery were formally revalued by Knight Frank, an independent certified valuator, on 30 September 2008. Valuations were made, in US$, by reference to open market values. The Company’s Directors subsequently considered the entity’s throughput levels and the prevailing economic environment both locally and regionally where the entity engages in export trade, and again effected internal adjustments to the originally established values. The estimated useful life spans attached to individual assets within this asset class were reassessed. Plant and machinery are currently depreciated over a period 5 – 50 years. Motor vehicles The Company’s motor vehicles were mostly acquired in foreign set prices. The original motor vehicle acquisition values were used by the Company’s Directors in order to determine US$ based carrying values at 31 December 2008. These carrying values were taken over at 1 January 2009 as the deemed cost of vehicles and depreciation continued thereafter over their remaining useful life spans. Furniture and fittings The Company’s Directors performed an internal translation exercise on this asset class in order to determine the deemed cost of assets at 1 January 2009. Hyper – inflated asset values at 31 December 2008 were translated into US$ values using prevailing rates of exchange that were considered as being indicative, in substance, of transaction settlement rates. Remaining asset useful lives were applied to the established deemed costs determined at 1 January 2009; Computer equipment The Company’s computer equipment was mostly acquired in foreign set prices. The original equipment acquisition values were used by the Company’s Directors in order to determine US$ based carrying values at 31 December 2008. These carrying values were taken over at 1 January 2009 as the deemed cost of vehicles and depreciation continued thereafter over their remaining useful life spans.

The Company’s property, plant and equipment are not encumbered and do not form collateral on any borrowing and loan facilities in place. Capital commitments Authorised but not yet contracted

Year Ended 2010 Year Ended 2009 US$ 808 499

US$ 965 718

52 200

109 881

860 699

1 075 599

Authorised and contracted

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

8. Available for Sale Financial Assets

Year Ended

Opening balance

2010 US$ 177 604

Fair value adjustment Closing balance

Year Ended 2009 US$ 58 078

124

119 526

177 728

177 604

The fair value of the Company’s investments in listed equity shares at 31 December 2010 is determined by reference to published price quotations in an active market.

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2010 Annual Report


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

9. Inventories Raw materials

Year Ended 2010 US$ 1 695 798

Year Ended 2009 US$ 2 738 055

Finished goods

1 368 212

1 814 104

Spares and components

2 308 453

1 276 992

5 372 463

5 829 151

The cost of inventory recognised as an expense during the year was US$ 6 801 772. ( Prior year 31 December 2009 was US 4 676 701). The amount of write – down of inventories recognised as an expense is US$104 839 which is recognised in “cost of sales”.

10. Trade and other receivables Year Ended 2010 US$ 1 282 027

Year Ended 2009 US$ 398 528

- Foreign trade receivables

688 410

539 796

- Allowance for doubtful debts (local & foreign)

(12 925)

-

Trade receivables - Local trade receivables

Other receivables and prepayments 284 999 225 554 2 242 511 1 163 878 Ageing of receivables that are past due but not impaired 30 - 60 days 401 586 203 021 61 - 90 days 62 420 91- 120 days 8 242 Over 120 days 45 336 731 Total 517 584 203 752 Local trade receivables The average credit period on local sales of goods is 30 days. No interest is charged on local trade receivables for the first 30 days from the date of invoice. Thereafter, interest is charged at 15% per annum on the outstanding balance. Before accepting any new local customer, the Company uses an internal credit scoring system to assess the potential customer’s credit quality and defines credit limits by customer. Limits and scoring attributed to customers are constantly reviewed. Included in the Company’s local trade receivables balance are debtors with a carrying amount of US$ 6 932 which are past due at the reporting period end date for which the Company has provided for them as doubtful debts. The Company has insured these balances and are therefore recoverable. The average age of these receivables is 45 days.

Zimplow Limited

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) Foreign trade receivables The credit period on foreign sales of goods ranges between 60 – 90 days. No interest is charged on outstanding foreign trade receivables. Before accepting any new foreign (export) customer, members of the Company’s executive team and foreign sales administrators deliberate the prospective customer’s credit worthiness. Members of the Company’s executive team, its foreign sales administrators and marketing managers often meet prospective foreign customers in order to conduct background and screening checks and attach a credit quality rating before accepting credit trading customers. Credit limits are defined for each foreign customer and set by the executive team. Credit limits and customer quality are constantly reviewed. The Company had an amonut of US$ 5 993 in foreign trade receivables over 90 days which it had provided for as a doubtful debt as at 31 December 2010.

11. Trade, other payables and provisions 11.1 Trade and other payables Local trade payables

Year Ended 2010 US$ 210 678

Year Ended 2009 US$ 112 715

Foreign trade payables

415 852

548 414

Other payables and accrued expenses

177 958

319 579

804 488

980 708

Local trade payables The average credit period on local purchases of key manufacturing inputs ranges between 7 – 30 days (from date of invoice). Foreign trade payables The average credit period on foreign purchases of key manufacturing inputs is 30 days (from date of invoice). The Company has financial risk management policies in place to ensure that trade payables are paid within the credit time frame. 11.2 Provisions – employee benefits Balance at 1 January 2010

Year Ended 2010 US$ 140 627

Year Ended 2009 US$ -

Additional provision recognised

311 566

140 627

Reductions arising from payments

(73 772)

-

Balance at 31 December 2010

378 421

140 627

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

Zimplow Limited

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2010 Annual Report


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

12. Cash and bank balances Cash at bank and on hand

Year Ended 2010

Year Ended 2009

US$ 2 971 156

US$ 925 848

62 432

114 103

3 033 588

1 039 951

Foreign cash at bank (other than US$)

Short term deposits are made for varying periods of between one day and three months, depending on the immediate and short term cash requirements of the Company, and earn interest at the respective short term deposit rates. At 31 December 2010, the Company had available US$ 2 500 000 of undrawn committed borrowing facilities in respect of which all conditions precedent had been met.

13. Related Party Disclosures Transactions entered into with related parties for the reporting period ended 31 December 2010 are as follows: The remuneration of directors and other members of key management during the 12 month reporting period to 31 December 2010 are as follows: Year Ended Year Ended 2010 2009 US$ US$ Short – term employee benefits 245 494 158 188 The remuneration of directors and key executives is determined by the Company’s Remuneration Committee having regard to the performance of individuals and market trends. Rental payments to lessors (under operating lease arrangements): Year Ended 2010 US$ CT Bolts premises – B Mitchell (Company shareholder) 56 210 Tassburg premises – M Pringle – Wood (Company shareholder) 59 268 Refer to note 2.4 for further details on the Company’s operating lease arrangements.

Zimplow Limited

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2010 Annual Report

Year Ended 2009 US$ 30 241 24 816


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

14. Operating Lease Arrangements Operating leases relate to CT Bolts (Bulawayo and Harare) and Tassburg (Harare) Payments recognised as an expense

Year Ended 2010 US$ 115 478

Year Ended 2009 US$ 55 057

The non – cancellable nature of the Company’s leases would ordinarily necessitate disclosures in accordance with IAS 17: 35 (“Leases”). In this regard, future minimum lease payment commitments over prescribed periods would need to be disclosed in accordance with the particulars of lease arrangements. Given the contingent rental payment terms in place throughout most of the current reporting period and in place as at period end, the aforementioned disclosures are not considered relevant and accordingly do not form part of the note. The Company’s contingent rental payment terms, introduced in January 2009, are based on a percentage of the monthly turnover of CT Bolts. Payments are remitted monthly, in arrears, to the former owner of the business unit. Set payment terms are not leveraged or indexed to any external sources and are considered to relate only to the Zimbabwean economic environment. Application Guidance to IAS 39: “Financial Instruments: Recognition and Measurement” states that operating lease payments based on turnover is a common contingent rental term within leases that is categorised as an embedded derivative. Such embedded derivatives are however considered closely related to the host lease contract and accordingly, do not have to be separated from the lease contract as a whole. The Company, as lessee, therefore continues to expense such contingent payments as they arise.

15. Financial Risk Management The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Company’s activities involve the analysis, evaluation, acceptance and management of some degree of risk or a combination of risks. Taking an acceptable level of risk is core to a business and operational risks are considered an inevitable consequence of being in business. The Company’s aim, in line with its risk management programme, is therefore aligned with achieving an appropriate balance between risk and return, and minimising potential adverse effects on the Company’s financial performance. Risk management is a dynamic process that requires the ongoing analysis efforts of the Company’s Directors. The Company’s Board of Directors and Executive Committee fulfil the entity’s risk appetite formulation and management process in consultation with management of the Company’s operating units. The Company’s Directors are of the opinion that the entity does not have significant exposure to financial risk. Market risk • Foreign exchange risk The Company operates regionally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US$, the South African Rand and the Botswana Pula. Foreign exchange risk arises when future commercial transactions or recognised assets and liabilities are denominated in a currency that is not the entity’s functional currency.

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) The carrying amount of the Company’s foreign currency denominated monetary assets and liabilities as at the reporting period end date, are as follows: Year Ended 2010 Year Ended 2009 Assets S African Rand Botswana Pula S Africa Rand Botswana Pula Trade and other receivables

540 707

15 404

2 233 723

1 003 602

Cash and cash equivalents

62 148

283

837 976

589

602 855

15 687

3 071 699

1 004 191

Trade and other payables

117 572

1 557 339

Total net position

485 283

15 687

1 514 360

1 004 191

Other financial assets Total assets Liabilities

The table below details the Company’s sensitivity to the strengthening of the US$ against the South African Rand and the Botswana Pula by 10%, with all other variables held constant. The analysis was applied to monetary items at the reporting period end date, as denominated in respective currencies. Year Ended 2010 Year Ended 2009 S African Rand Botswana Pula Total S African Rand Botswana Pula Total impact impact impact impact US$ US$ US$ US$ US$ US$ Profit/(Loss) 40 645 6 955 47 600 (52 848) (13 694) (66 542) • Price risk The Company is exposed to equity securities price risk because of investments held by the Company and classified on the Statement of Financial Position as available for sale. The Company’s listed equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Company manages the equity price risk through diversification and placing limits on individual and total equity instruments. The Company’s Executive Committee regularly reviews its investment portfolio and considers diposing equity securities when related investee share prices would potentially disadvantage the Company’s position. Similarly, the Company acquires equity securities when gains are anticipated. At the reporting period end date, the exposure to listed equity securities at fair value was US$ 177 728. A decrease of 10% on the Zimbabwe Stock Exchange (ZSE) market index, marked as having a similar reducing impact on the specific equity securities within the Company’s investment portfolio at 31 December 2010, would have an approximate pre tax negative impact in value of US$ 17 773 on other comprehensive income and equity attributable to the Company, depending on whether or not the decline is significant and prolonged. Alternatively, an increase of 10% in the Company’s listed security investment portfolio value would positively impact profit or loss and equity in a similar amount. • Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s interest rate risk arises from medium – long term borrowing arrangements. Borrowings issued at variable rates expose the Company to cash flow interest rate risk. Alternatively, borrowings issued at fixed rates expose the Company to fair value interest rate risk. Borrowings are settled as promptly as possible if interest rates are unfavourable and the Company always strives to negotiate the most favourable rates and tenures to avoid both cash flow and fair value interest rate risk. The Company endeavours to maximise interest rates on investments and minimise interest rates on borrowings. The Company policy is to adopt a non – speculative policy on managing interest rate risk.

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) A 50 basis point increase or decrease (equivalent to a 0.5% absolute interest rate change) is considered by management as a reasonable possible change in interest rate terms and would therefore be representative of an approximate loan sensitivity analysis. This is mainly attributable to the Company’s exposure to interest rates on its variable rate borrowings. • Credit risk Credit risk relates to the risk that a trade counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss being incurred. Potential concentrations of credit risk consist principally of short term cash and cash equivalent investments and trade receivables. • Credit risk related to cash deposits and equity security investments held in listed concerns: The Company deposits short term cash surpluses only with major banks and financial institutions of high credit standing and within investment limits assigned to each counterparty. Investment limits with banks and financial institutions are assigned by the Company’s Executive Committee in an effort to minimise the concentration of risk and therefore mitigate financial loss through potential counterparty failure. The Company’s Board of Directors reviews the limits and investment placements on a periodic basis and approve the Committee’s proposals accordingly, or alternatively rejects related proposals and effects changes to Company policy. The Company similarly adopts the aforementioned approach in formulating policy over equity security investments. The Company’s maximum exposure to credit risk for the affected components of the Statement of Financial Position at 31 December 2010 is the aggregate of the carrying amounts as shown therein; • Credit risk related to trade receivables: Trade receivables comprise a relatively large and widespread customer base. Company entities perform ongoing credit evaluations of the financial condition of their customers. Credit limits are established for all customers based on internal credit rating assessments after extensive prospective customer background and credit reference checks are performed. Outstanding customer receivables are regularly monitored and a full time credit control department exists to independently perform this function. The Company does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Accordingly, the Company has no significant concentration of credit risk which has not been adequately provided for. The Company’s maximum exposure to credit risk at 31 December 2010 and further specific credit risk mitigating activities adopted by the entity are as shown in note 9. • Liquidity risk Liquidity risk relates to a risk of a shortage of corporate funds being experienced. Prudent liquidity risk management includes maintaining sufficient cash and marketable securities, the availability of funding from an adequate amount of committed credit facilities and the ability to close out market positions. The Company maintains flexibility in funding by maintaining funding availability under committed credit lines. The Company’s objective is to maintain a beneficial balance between continuity of funding and flexibility through the use of bank overdrafts and bank loans, whilst always considering the need for potential funding source diversification through the introduction of finance lease or hire purchase arrangements, or the issuance of preference shares.

Zimplow Limited

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2010 Annual Report


Notes to the Financial Statements for the year ended 31 December 2010 (continued) As at the reporting period end date, the Company’s external funding sources were limited to bank overdrafts and interest bearing loans and borrowings. The Company has access to financing facilities, the total unused amount of which is US$ 2 500 000 at 31 December 2010. The Company expects to meet its core trading based obligations from operating cash flows and proceeds from the realisation of its financial assets. The table below summarises the maturity profile of the Company’s financial liabilities at 31 December 2010 based on contractual undiscounted payments: On demand Trade and other payables 294 587

Less than 3 months US$ 888 322

Total US$ 1 182 909

Bank overdraft

Interest bearing loans and borrowings

Income tax payable

368 859

368 859

663 446

888 322

1 551 768

Fair value of financial instruments The estimated net fair values of all financial instruments approximate the carrying amounts shown in the financial statements, largely due to the short term nature of these instruments. Capital management Capital comprises equity attributable to the equity holders of the parent. The Company does not have a non – controlling interest element in its business acquisitions, as all business units acquired are wholly owned. The primary objective of the Company’s capital management is to ensure that it maintains a strong credit rating and positive capital ratios in order to support the application of its business model and maximise shareholder value. The Company manages its capital structure and considers making related adjustments to it in line with changes in prevailing and forecast economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend payout to shareholders, return capital to shareholders or issue new shares. The Company monitors capital levels and appropriateness with reference to a gearing ratio. The Company’s policy is to keep its gearing ratio between 15% and 35%. As at 31 December 2010, the Company did not have any interest bearing loans and borrowings.

16. Events after the reporting date Non-adjusting events On the 23 of February 2011, the directors of the company proposed a dividend of $700 000.

Zimplow Limited

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2010 Annual Report


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

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

Year Ended 31 December 2010 2 342 001

Year Ended 31 December 2009 2 221 953

Number of shares for basic earnings per share (thousands)

327 071 924

327 071 924

Weighted average number of shares(thousands)

327 071 924

327 071 924

0.01

0.01

Basic earnings per share (US$) Diluted earnings per share

The Company did not have any dilutive shares during the year. Impact of changes in Accounting Policies. Changes of the Company’s Accounting policies during the year are described in note 2.2. To the extent that those changes have had an impact on the results reported for 2010, they have had an impact on the amounts reported for earnings per share.

Zimplow Limited

ÂŤ 46 Âť

2010 Annual Report


Statement of Value Added for the year ended 31 December 2010 Value added is a measure of the wealth the company has been able to create by adding value to the cost of raw materials, products and services purchased. The statement summarises the total wealth created and shows how it was shared by employees and other parties who contributed to the company’s operations. The calculation takes into account the amount retained and reinvested in the company for the replacement of assets and further development of operations. Year Ended Year Ended 31 December 2010 31 December 2009 US$ US$ Turnover 12 298 300 9 061 718 Less: Cost of material and services

(6 309 664)

(4 244 508)

5 988 636

4 817 210

APPLIED AS FOLLOWS:

%

%

Employee remuneration/benefits

2 795 153

46

1 381 119

29

580 271

10

615 229

13

-

-

392 486

8

2 613 212

44

2 428 376

50

Government taxes Providers of capital – dividends Balance retained in the company Depreciation

271 230

224 352

(124)

(119 526)

Retained income

2 342 106

2 323 550

5 988 636 100

4 817 210

Fair value adjustment on equity

Zimplow Limited

« 47 »

2010 Annual Report

100


Shareholders’ Analysis for the year ended 31 December 2010

SIZE OF SHAREHOLDING:

1 – 5 000

No of Shareholders 656

% 58.94

No. of Shares held 924 019

% 0,28

5 001 – 10 000

96

9.03

710 127

0.22

10 001 – 25 000

127

11.46

2 083 074

0.64

25 001 – 50 000

50

4.51

1 769 985

0.54

50 001 – 100 000

45

4.42

3 204 441

0.98

100 001 – 500 000

90

7.94

19 718 519

6.03

500 001 – 1 000 000

21

1.99

14 565 585

4.45

Over 1 000 000

19

1.71

284 096 174

86.86

1,104

100.00

327 071 924

100.00

TYPE OF SHAREHOLDERS: Nominees Local

52

4.71

120 939 443

36.81

Investments and Trusts

43

3.89

115 961 846

35.41

Local Companies

129

11.68

24 076 897

9.60

Banks

25

2.26

16 584 298

7.79

Local Individual Residents

757

68.57

14 392 398

3.38

Nominees Foreign

8

0.72

13 089 473

2.92

27

2.45

10 165 088

1.30

New Non Residents

6

0.54

4 010 408

1.09

Non Residents

14

1.27

3 575 777

0.78

Insurance Companies

7

0.63

2 541 313

0.39

Employee Share Trust

2

0.18

1 261 107

0.38

Other Organisations

18

1.63

319 267

0.10

Fund Managers

14

1.27

125 576

0.04

Deceased Estates

1

0.09

16 900

0.01

London Control Accnt

1

0.09

12 133

0.00

1,104

100.00

327 071 924

100.00

Pension Funds

TOP 10 LARGEST SHAREHOLDERS: TFS Nominees (PVT) LTD

114 654 108

35.05

CTB Investments

63,500,000

19.41

Datvest Nominees (Pvt) Ltd

26 567 340

8.12

Yumiko Investments (Pvt) Ltd

21 651 009

6.62

Old Mutual Life Assurance Zim

14 158 412

4.33

Barclays Zimbabwe Nominees P/L-NNR

13 955 470

4.27

Scaiflow Investments (Pvt) Ltd

13 036 328

3.99

Chitepo Bernard Norman

4 217 803

1.29

National Railways of Zimbabwe Contributory P/F

3 684 920

1.13

Guramatunhu Family Trust

3 413 645

1.04

278 839 035

85.25

Zimplow Limited

« 48 »

2010 Annual Report


Financial Review 2010 for the year ended 31 December 2010 Year Ended 31 Dec 2010 US$

Year Ended 31 Dec 2009 US$

12 298 300

9 061 718

Profit before tax

2 922 253

2 819 253

Taxation

(580 252)

(597 300)

Profit after tax

2 342 001

2 221 593

24%

26%

10 648 562

8 124 392

Current liabilities

1 551 768

1 354 247

Net current assets

9 096 794

6 770 144

7

6

Total assets employed

13 493 652

10 970 752

Total equity

11 342 051

8 997 645

0.01

0.01

-

0.000012

Income retained for the year

0.02

0.001

Net asset value

0.04

0.03

327 071 924

327 071 924

0.07

0.03

0.02

0.005

0.067

0.025

457

473

Summary of Results Turnover

Return on investment (%) Financial Status Current assets

Current ratio (times)

US$ Per Ordinary Share Basic earnings Dividends

Shares In Issue No. of ordinary shares issued Market price (US$)

– highest (01/11/2010)

Market price (US$)

– lowest (12/01/2010)

Market price (US$)

- end of year

Staff Complement Average number of employees

Zimplow Limited

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2010 Annual Report


Financial Calendar Result and dividend announcement for the year ended 31 December 2010 23 February 2011 Annual General Meeting 30 March 2011

Dividend In line with the company’s dividend policy, a final dividend number 67 of US$ 0,0021 per share (2009 US$ 0,0012 per share) was declared by directors on 23rd of February 2011. The dividend is payable on the 16th of March 2011 and the share register will be closed on the 10th of March to the 11th of March 2011, both days inclusive. By order of the Board D Mkonto Company Secretary

Zimplow Limited

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2010 Annual Report


ZIMPLOW LIMITED - Annual Report 2010

Zimplow Annual Report 2010  

Report and results for the year ended 31 December 2010

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