CONTENTS PAGEsera.co.zw/wp-content/uploads/2017/03/IDC-Financial... · 2017-03-28 · processing,...

1

CONTENTS PAGE

Group Profile 2

Corporate and Group Management 3

Corporate Profile and Mission 4 - 5

Letter to the Ministry of Industry and Commerce 6

Notice to the Shareholder 7

Chairman’s Statement 8 - 10

General Manager’s Report 11 - 15

Report of the Directors 16 - 17

Corporate Governance 18

Directors’ Responsibility Statement 21

Report of the Independent Auditors 22 - 23

Statements of Financial Position 24 - 25

Income Statements 26 - 27

Statements of Other Comprehensive Income Statements of Changes in Equity 28 - 29

Statements of Cash Flows 30 - 31

Notes to the Financial Statements 32 - 99

2

I D C Z A N N U A L R E P O R T | 3 1 D E C 2 0 1 5

GROUP PROFILEFor the year ended 31 December 2015

Shareholders 100% owned by the Government of Zimbabwe

Board of Directors H. Nkala (Chairman) G. Zvaravanhu (Mrs) (Vice Chairman) J. Mushayavanhu R. Mafoti (Prof) S.M. Fallala (Dr)

S. D. Mangoma M. N. Ndudzo (General Manager)

vMr S. D. Mangoma retired on 5 December 2015 Registered Office 93 Park Lane

PO Box CY 1431 Causeway Harare Telephone 263 4 706971/5 or 250405 E-mail [email protected]

Auditors KPMG Chartered Accountants (Zimbabwe) Mutual Gardens

100 The Chase (West) Emerald Hill Harare

Bankers Agricultural Development Bank of Zimbabwe t/a AgribankHurudza House14-16 Nelson Mandela Avenue

vHarare Stanbic Bank of Zimbabwe Limited 77 Park Lane, SSC Building

CNR J Nyere/S Nunjoma Harare

ZB Bank Limited

Cnr First Street/Speke Avenue, Harare

Lawyers Chitewe Law Practice

212A Sam Nujoma StreetAvondale,Harare

Mhishi Legal Practice9th Floor, Old Mutual CentreCorner J Moyo/ Third StreetHarare

Chikwengo & Taongai Law Chambers15 Orkney RoadEastleaHarare

3


CORPORATE AND GROUP MANAGEMENTBoard CommitteesBusiness Development Committee

Prof. R. Mafoti (Chairman), Mr S. D. Mangoma, Mr M. N. Ndudzo.

Finance & Audit CommitteeMrs G Zvaravanhu (Chairman), Dr S.M. Fallala, Mr M. N. Ndudzo.

Nomination CommitteeMr H. Nkala (Chairman), Mr J. Mushayavanhu, Mrs G Zvaravanhu, Prof. R. Mafoti, Dr S.M. Fallala, Mr M. N. Ndudzo.

Remuneration & Human Resources CommitteeMr J Mushayavanhu (Chairman), Mr S. D. Mangoma, Mr M. N. Ndudzo.

Risk Management CommitteeDr S.M. Fallala (Chairman), Mrs G Zvaravanhu, Prof. R. Mafoti, Mr M. N. Ndudzo.

Corporate ManagementM. N. Ndudzo (General Manager)C .T. Mutingwende (Corporate Services Executive) T. Ngwebu (Senior Manager: Development Finance & Investment Analysis)F. Mupazviriho (Ms) (Manager: Business Intelligence & Market Research)N. Musungwa (Finance Manager)C. Mutiti (Internal Audit Manager)G. Tapfuma (Projects Manager: Agro Processing)R. Shoko (Mrs) (Projects Manager: Chemicals, Knowledge & Green Industries)B. Mushohwe (Projects Manager: Minerals Beneficiation)D. Sibanda (Public Relations and Administration Manager)L. Koni (Corporate Secretary and Compliances Manager)

* F. Mupazviriho (Ms) seconded to Sunway City as Acting General Manager on 1 July 2015* R. Shoko (Mrs) seconded to Almin Metal Industries Limited as Acting General Manager on 8 December 2015:

Subsidiary CompaniesR. Shoko (Mrs) (Acting General Manager, Almin Metal Industries Limited)M. S. Kachere (Group Managing Director, Chemplex Corporation Limited)G. Zivanai (General Manager, Ginhole Investments (Private) Limited t/a Last Hope Estate)B .N. Kumalo (Group Managing Director, Motec Holdings (Private) Limited)F. Mupazviriho (Ms) (Acting General Manager, Sunway City (Private) Limited)G. Tapfuma (Acting Managing Director, Zimglass Industries Limited)P. Sanangurai (General Manager, Allied Insurance Company (Private) Limited)

Associated and Other CompaniesM. Abbasi (Chief Operating Officer, Modzone Enterprises (Private) Limited)B. Mushohwe (Acting Managing Director, Motira (Private) Limited)Wang Yong (Managing Director, Sino-Zimbabwe Cement Company (Private) Limited)S. Mangani (General Manager, Surface Wilmar Investments (Private) Limited)A. R. Hassim (Group Managing Director, Stone Holdings (Private) Limited)C. Nkiwane (General Manager, Zimbabwe Grain Bag (Private) Limited)J. Mushangari (Managing Director, Olivine Holdings (Private) Limited)*J. Mushangari resigned in February 2016

4

The Industrial Development Corporation of Zimbabwe Limited was incorporated through its enabling Act (Chapter 14.10) in 1963 to invest in industry as a state agency. The Industrial Development Corporation of Zimbabwe Limited Act was amended in 1984 to allow the Corporation to promote investment and economic co-operation across borders. The Corporation identifies and develops industrial project opportunities into commercially viable ventures in partnership with local, regional and internationa l investors, and technology and market access partners.

Having been in business for the last 52 years, the Corporation has transformed and built an investment portfolio, with the core being in the sectors of motor and transport, fertiliser and chemicals, cement, aluminium and base mineral processing, agro-processing and glass products. It also has investments in textiles, granite processing, packaging, insurance and real estate.

The main objectives of the Corporation are:“with the approval of the Minister to establish and conduct industrial undertakings; to facilitate, promote, guide and assist in the financing of new industries and industrial undertakings, expansion schemes, better organisation and modernisation of existing industries; to undertake the development of management and technical expertise in the carrying out of the operations in industry and industrial undertakings, including the development of expertise in project analysis, evaluation of investment opportunities and provision of consultancy services; and to take such measures as may be necessary or expedient to enable the Corporation to exercise control over enterprises in which it has made an investment.”

It is a legal requirement for the IDC that:a) “the economic requirements of Zimbabwe may be met and industrial development within Zimbabwe may be planned, expedited and conducted on sound business principles”

b) “every application or proposal dealt with by it is considered strictly on its economic merits, irrespective of all other considerations whatsoever”;

and that“so far as may be practicable, the Corporation shall not be required to provide an unduly large proportion of the capital which is necessary for such establishment or development.”

Corporate VisionTo contribute to the transformation of Zimbabwe to a value adding and beneficiating middle income economy.

Corporate MissionTo identify, develop, mobilize resources and finance industrial project opportunities into commercially viable ventures in partnerships with local, regional and international investors, and technology and market access partners.

Corporate Values• Transparency• Innovation• Gender sensitivity• Environmental protection• Professionalism and integrity• Fair Play• Empowerment• Teamwork

The Corporation identifies and develops industrial

project opportunities into commercially viable ventures


CORPORATE PROFILE AND MISSION

5

GR

OU

P SU

BSI

DIA

RY

& A

SSO

CIA

TED

CO

MPA

NIE

S


GR

OU

P I

NV

ESTM

ENT

AN

D S

HA

REH

OLD

ING

, ST

RU

CTU

RE

AN

D S

ECTO

R C

OM

PO

SITI

ON

IDC

–H

EA

D O

FFIC

E93

Par

klan

eH

AR

AR

E

Mot

or &

Tra

nspo

rtFe

rtili

zer

& C

hem

ical

s

Min

eral

Pro

cess

ing

Food

Pro

cess

ing

Inve

stm

ent S

ervi

ces

Mot

ec H

oldi

ngs

(Priv

ate)

Lim

ited

Gro

up 1

00%

Che

mpl

ex C

orpo

ratio

n Li

mite

d G

roup

100

%Tr

adin

g D

ivis

ion

–C

hem

plex

Mar

ketin

g-

Ani

mal

& P

ublic

Hea

lth

Dor

owa

Min

eral

s (P

rivat

e) L

imite

d 10

0%Zi

mba

bwe

Pho

spha

te In

dust

ries

100%

GD

Hau

lage

(Priv

ate)

Lim

ited

100%

Zim

babw

e Fe

rtiliz

er C

ompa

ny 5

0%S

able

Che

mic

als

(Priv

ate)

Lim

ited

35%

G &

W In

dust

rial M

iner

als

(Pvt

) Ltd

100

%A

llied

Insu

ranc

e C

ompa

ny (P

vt) L

td 6

3%

Sto

ne H

oldi

ng (P

vt)

Ltd

Gro

up 4

9%C

ontra

ctin

g D

ivis

ion

-Min

aco

Non

-Fer

rous

Met

al F

abri

catio

n an

d Li

ght E

ngin

eeri

ng

Zim

rock

Inte

rnat

ion

(Priv

ate)

Lim

ited

100%

Qua

rryi

ng E

nter

pris

es (P

rivat

e) L

imite

d 55

%M

arlin

Gra

nite

Moz

ambi

que

Lim

itada

49%

Min

aco

Zim

babw

e (P

vt) l

td 1

00%

Will

oval

e M

azda

Mot

or In

dust

ries

(Priv

ate)

Lim

ited

91%

Dev

en E

ngin

eerin

g (P

rivat

e) L

imite

d 10

0%

Mot

ira (

Priv

ate)

Lim

ited

Trac

tors

99.

86%

Am

tec

(Priv

ate)

Lim

ited

27.5

%

Cot

ton

Val

ue A

dditi

on

Afro

ran

Spi

nner

s (P

vt) L

td 1

7%

Irazi

m T

extil

es (P

vt) L

td 1

00%

Trav

an B

lank

ets

(Pvt

) Ltd

100

%

Mod

zone

Ent

erpr

ises

( P

vt )

Ltd

Gro

up 1

7,62

%

Sin

o-Zi

mba

bwe

Cem

ent C

ompa

ny (

Pvt

) Ltd

35%

Lupa

ne G

as D

evel

opm

ent C

ompa

ny

Rea

l Est

ate

Dev

elop

men

t

Sun

way

City

(P

vt)

Ltd

Gro

up 9

9.98

%

Alm

in M

etal

Indu

strie

s Lt

d G

roup

51%

Zim

glas

s H

oldi

ngs

Ltd

Gro

up

Gla

ss M

anuf

actu

ring

Zim

glas

s In

dust

ries

(Pvt

) Ltd

100

% (U

nder

Liq

uida

tion)

Indu

stria

l San

ds (P

vt) L

td 1

00%

Nat

iona

l Gla

ss (P

vt) L

td 1

00%

(Dor

man

t)H

eade

nd E

nter

pris

es (P

vt) L

td 9

.93%

(Dor

man

t)

Zim

babw

e C

oppe

r In

dust

ries

100%

Inve

sys

Inve

stm

ents

(Pvt

) Ltd

100

%t/a

IDC

Agr

otec

h In

dust

rial H

oldi

ngs

Gro

up

Sur

face

Inve

stm

ents

(Pvt

) Ltd

10%

Sw

ive

Tech

nolo

gies

(Dor

man

t)

Cor

ridor

Dev

elop

men

ts (P

vt) L

td 2

0%E

xim

p In

vest

men

ts (P

ty) L

td, N

amib

ia 1

00%

Pac

kagi

ng

Zim

babw

e G

rain

Bag

(P

vt) L

td 4

9%

Gin

hole

Inve

stm

ents

(Pvt

) Ltd

t/a L

ast H

ope

Est

ate

100%

Sun

way

Con

stru

ctio

n C

ompa

ny (P

vt) L

td 1

00%

Sun

way

Pro

fess

iona

l Ser

vice

s (P

vt) L

td 1

00%

Sun

way

Rea

l Est

ate

(Pvt

) Ltd

100

%

MIN

ISTR

Y O

F IN

DU

STR

Y A

ND

CO

MM

ER

CE

GO

VER

NM

EN

T O

F ZI

MB

AB

WE

MIN

ISTR

Y O

F FI

NA

NCE

6


The Honourable M. BimhaMinister of Industry and Commerce P.O. Box 8434 CausewayHarare

Dear Sir

Industrial Development Corporation of Zimbabwe Limited Annual Report No 52

I have the honour, on behalf of the Industrial Development Corporation of Zimbabwe Limited, to submit the Corporation’s Annual Report and Accounts for the twelve months ended 31 December 2015 in terms of Section 19(1) of the Corporation’s Act (Chapter 14:10).

Yours faithfully

H. NkalaChairman28 September 2016

LETTER TO MINISTER OF INDUSTRY AND COMMERCE

7


NOTICE TO THE SHAREHOLDER

Notice is hereby given that the 52nd Annual General Meeting of the Shareholder will be held

in the IDC Board Room, 93 Park Lane, Harare on Thursday 29 September 2016 at 12:00 hours

for transacting the following:-

1. Tabling of Proxies, Quorum and Constitution of the meeting.

2. To approve the minutes of the previous Annual General Meeting held on 29 October 2015.

3. To receive, consider and adopt the financial statements and the reports of the directors and auditors for the financial year ended 31 December 2015.

4. To approve the remuneration of the directors for the year ended 31 December 2015.

5. To re-appoint KPMG Chartered Accountants and approve the remuneration of the auditors for the year ended 31 December 2015.

6. Appointment, Resignation and Retirement of Directors.

7. To consider the non-declaration of dividends as recommended by the Directors.

8. To transact all such other business as may be transacted at an Annual General Meeting.

Proxies: Members are entitled to appoint one or more proxies to act on their behalf and to attend, vote and speak in their place. A proxy need not be a member of the company.

By Order of the Board

C. T. MutingwendeCorporate Secretary

05 September 2016

8


CHAIRMAN’S STATEMENTfor the Year Ended 31 December, 2015

1.0 OPERATING ENVIRONMENTThe operating environment during the period under review was characterised by very tight market liquidity, declining disposable incomes and subdued aggregate demand; low savings and a dominant informal sector. The South African Rand depreciated, resulting in cheaper imports into the country and uncompetitive exports to that country.

The operating business environment further remained challenging on account of the high operating costs environment in the country and the unclear interpretation of the indigenisation and economic empowerment regulations, while company closures, and thus de-industrialisation continued. Manufacturing capacity utilisation remained low. Foreign direct investment flows remained the lowest in the region. There were some improvements on infrastructure with the completion of the resurfacing of the Plumtree to Mutare Highway and start of works at the Kariba South Extension project and rehabilitation of the small thermal units.

The Supreme Court labour ruling on three months’ notice of employment termination and the subsequent labour law amendments put the country in a more pragmatic direction that could unlock national competitiveness and potentially, industrial revival.

2.0 INFLATION Annual inflation decelerated from -1.3% in January 2015 to -3.3% in October 2015, before accelerating slightly to -2.5% in December 2015 and averaged around -2.4% for the year.

3.0 RECAPITALISATION The IDCZ Rights Issue Calls of a total of USD83 million made to address the Group’s technical insolvency at the last three (3) AGMs, being the 49th ; 50th and 51st AGMs held on 31 October 2013; 25 September 2014 and 29 October 2015 respectively, were not accommodated in the respective National Budgets.

The Ministry of Industry and Commerce’s bid for USD100 million as a revolving fund seed capital for resuscitating the manufacturing sector through the Corporation’s DFI function could also not be accommodated due to lack of fiscal space and priority, while the ZIDERA OFAC sanctions on the Corporation disabled efforts in mobilising offshore funding.

4.0 GROUP FINANCIAL PERFORMANCEThe Group’s revenue decreased from US$97 389 190.00 in 2014 to US$93 844 849.00 in 2015 due to subdued demand for the group’s products on account of the general decline in disposable incomes, and in the case of the Group’s flagship investment, Chemplex Corporation Limited, due to subdued seasonal fertilizer off-take as a result of the Elnino induced dry and extremely hot spell before the new year, and lack of funding for farmers. The hot and dry spell forced farmers to postpone the buying of inputs, and left Zimbabwe Fertilizer Company (Pvt) Ltd and the fertilizer industry with an estimated stock of over 100 000 tonnes, which at US$500.00 per tonne, meant a high stocking and storage cost that had not been foreseen.

The Zimbabwe Glass Industries Limited and Willowvale Motor Industries (Pvt) Ltd factories remained closed, Zimbabwe Glass Industries (Pvt) Ltd being under Judicial Management. The performance by Chemplex Corporation Limited and Almin Metal Industries Limited was marginally above budget and above the previous year, while the performance of the Associates, Sino-Zimbabwe Cement Company (Pvt) Ltd, Surface Investments and Zimbabwe Grain Bag (Pvt) Ltd was way above budget and the previous year. The subsidiary Sunway City (Pvt) Ltd got the Special Economic Zone (SEZ) designation as an ICT hub but its performance was below budget due to non-availability of developed stands, and declining customer affordability.

9


CHAIRMAN’S STATEMENT (continued)The additional retrenchment costs at Motec Holdings Group and Chemplex Corporation Limited, and interest cost agreed in settlement of debt arrangement at Zimbabwe Glass Industries Limited, and the huge impairments on holding values of all Subsidiaries that have continued to incur losses, meant the Group continued to incur losses despite the topline improvement.

The injection of new loans of a total of US$49 million at Chemplex Corporation Limited, being US$5 million at Dorowa Minerals (Pvt) Ltd, US$5 million at Zimbabwe Phosphates Industries Limited, US$15 million at Zimbabwe Fertilizer Company (Pvt) Ltd and yet to be concluded US$24 million at Sable Chemicals (Pvt) Ltd, whilst welcome, for retooling and boosting capacity, adds to the already burdensome US$150 million plus gross group debt burden. The Board’s plea is for the Shareholder to convert these into equity at the earliest point possible, to avoid reversal of the emerging turnaround.

5.0 OUTLOOK

The challenges in the economy are likely to persist well into 2016, characterised by liquidity constraints, subdued aggregate demand and a deflationary environment. There is therefore need to implement the ZimAsset blueprint with more vigour and resoluteness.

Concerted appeals against the stranglehold of the OFAC sanctions on the operations of the Group and seizure of funds should continue for the sanctions to be eased-off or removed altogether. Whilst they subsist, the plea to the shareholder is for some accommodation on the US$83 million Rights Issue Call as already approved at the Corporation’s previous AGMs, in order to mitigate the group technical insolvency and creditor recovery action, in particular in relation to Zimbabwe Glass Industries Limited. Other measures requiring shareholder approval and support are contained in the Corporation’s Strategic Turnaround Plan that is to be considered by Cabinet.

The Group will take further action to reduce overhead costs in line with reduced revenue inflows. The consummation of new FDI investor transactions at Surface-Wilmar Investments and Olivine Industries (Pvt) Ltd is expected to see the two companies achieving sustained turnaround and growth as is already evident at Surface-Wilmar Investments, which transaction was concluded first before moving to Olivine Industries (Pvt) Ltd. Efforts and discussions to similarly bring in new investors into the Motec Holdings group are on-going and expected to come to fruition in the ensuing year.

6.0 DIRECTORATETwo Directors, Messrs S. Mutasa and K. Katsande, retired from the Board effective from 8th June, 2015. A third Director, Mr S.D. Mangoma, also retired from the Board effective from 5th December, 2015. The Honourable Minister of Industry and Commerce then re-appointed the remaining Six (6) Directors for a second three year term running from 5 December, 2015 up to 5 December, 2018. The re-appointed Directors are, Mr H. Nkala (Chairman), Mrs G. Zvaravanhu (Vice Chairman), Dr M.S. Fallala; Mr J. Mushayavanhu; Professor R. Mafoti and Mr M.N Ndudzo (Executive). As the three retirees have not yet been replaced, the Minister is expected to fill the vacancies at the earliest possible point. I take the opportunity to thank the Minister of Industry and Commerce for the confidence he has reposed in us as we forge ahead with the transformation and turnaround of the Corporation under difficult conditions

10


7.0 ACKNOWLEDGEI take the opportunity to thank my colleagues on the parent Board, and the Directors of subsidiary and associated companies for their contribution during 2015, and urge them to re-double their efforts in the ensuing years.

I also thank the entire IDCZ group Management and Staff for their loyalty and contributions, and equally thank all stakeholders for their continued support for mutual benefit.

Yours faithfully

H. Nkala (Mr)CHAIRMAN28 September 2016

11


GENERAL MANAGER’S REPORT FOR THE YEAR ENDED 31 DECEMBER 2015

1.0 IDCZ CAPITAL FUND: DFI LENDING ROLEWhile loan appraisal systems and procedures were put in place in 2014, seed capital could not be secured from Treasury and off-shore mobilization initiatives were inhibited by Office of Foreign Assets Control (OFAC) sanctions, hence the function could not be operationalized during the year.

2.0 LITIGATION2.1 Chemplex Corporation (Private) Limited

The company negotiated with its bank creditors to reschedule to medium term a greater portion of what was owed to them and this improved the company’s technical solvency and provided the much needed cash flow relief, but did not resolve the high gearing requiring fresh capital injection.

2.2 ROMSIT

The amount outstanding as at 31 December 2015 was US$10 165 864.59. Efforts to recover through diplomatic means did not materialize during the year and other collection options would be considered in the coming year.

2.3 Zimbabwe Glass Industries (Private) Limited

The company was put on final liquidation during the year and the Corporation as co-principal debtor and guarantor expected the sale of assets to start in 2016, proceeds of which would be applied to settle the consortium debt.

2.4 Willowvale Motor Industries (Private) Limited

The debt owed to FBC Bank Limited was converted into a 10 year mortgage loan.

2.5 Interfin/CFX Curator Claim on Guarantee

The curator for Interfin Banking Corporation, formerly CFX Bank Limited in liquidation, filed a claim at the High Court for ZAR 909 969.02 in respect of a guarantee the Corporation had previously issued on 22 May, 2009 to Bonnezim (Private) Limited, now liquidated, which was limited and repaid, but they claim was unlimited. The Corporation filed its defence.

3.0 PERFORMANCE REPORTS BY SECTORAggregate demand for goods and services remained subdued due to company closures and loss of jobs against a high cost production base due to use of multi-currency, low capacity utilisation and antiquated plant and equipment. This made potential exports uncompetitive and this was further compounded by Office of Foreign Assets Control (OFAC) sanctions on the Group.

3.1 Agro-Processing

3.1.1 Fertiliser & Chemicals

Chemplex got US$12.5 million from the Reserve Bank of Zimbabwe (RBZ) Afreximbank line of credit of which US$5 million was earmarked for the rehabilitation of plant and equipment

12


at Dorowa Minerals (Private) Limited while the other US$7.5 million was for the rehabilitation of Zimbabwe Phosphate Industries (Private) Limited (ZimPhos) sulphuric and phosphoric acid plants all in an effort to rump up phosphate fertilizer production and reduce the price of the product.

The search for industry sector investors was pursued during the year with no success and would be intensified during 2016.

3.1.2 Food Processing

The sector comprises Surface Investments (Private) Limited and Olivine Industries (Private) Limited who are major players in the processing of cooking oil in Zimbabwe.

Preliminary regulatory processes were undertaken during the year to ensure that Olivine Industries (Private) Limited is capitalized through a rights issue and also to rationalize operations between the two companies to maximize on efficiencies in 2016.

3.2 Mineral Processing

3.2.1 Cement

The cut throat competition which started in 2014 continued during the year as evidenced by vicious price wars and undercutting with some cement landing cheaper in the country from South Africa.

However, despite the stiff competition, Sino-Zimbabwe Cement Company (Private) Limited (SZCC) improved its production efficiencies to remain relevant in the market and match regional parity.

The brick manufacturing project was still work in progress due to slow progress in the transfer of land by Ministry of Lands and Rural Resettlement to IDCZ which should be the Corporation’s equity contribution in the joint venture.

3.2.2 Ceramic Products & Tourism

Efforts to find a joint venture partner did not yield results during the year and would continue in the following year.

Focus was put into unbundling Ginhole Investments (Private) Limited into bricks and ceramic products, real estate and tourism facilities due to the estate’s proximity to the Hwange National Park, Dete Growth Point and Bulawayo-Victoria Falls railway line and high way.

3.2.3 Dimension Stone

A professional valuation was carried out to pave way for the disposal of IDCZ’s 49% stake. Negotiations with a local consortium of business people from Mutoko did not materialize during the year. Efforts to dispose the stake would be intensified in 2016 including persuading the existing majority shareholder to exercise their pre-emptive rights.

3.2.4 Glass/Silica Sand

Zimbabwe Glass Industries (Private) Limited was put on final liquidation during the year after which disposal of assets to settle creditors is expected to gather momentum in 2016.

3.3 Motor & Transport

The main challenge remained subdued demand for new vehicles which remained below 4000 units in the absence of lease finance and lack of fiscal space for Government, a major buyer of new vehicles.

13


3.3.1 Motor Assembly

Willowvale Motor Industries (WMI) complete knocked down (CKD) operations remained closed during the year and with the cessation of Mazda’s CKD agreement, it proved difficult during the year to entice replacement Original Equipment Manufacturers (OEM) due to low offtake volumes and lack of confidence on the policy front.

3.3.2 After Sales Service, Engineering and Retail

There was renewed interest to acquire an equity stake in Amtec from Manwell Investments (Private) Limited (Doves) represented by Mr F. Matsika during the year. The expectation was to finalize this proposal during 2016.

The proposal to assemble Yutong bus kits at Deven Engineering (Private) Limited could not be consummated on account of lack of working capital to fund the purchase of kits from China.

3.3.3 Tractors While the Overseas Development Assistance (ODA) balance of US$500 000 from Iran remained outstanding and with quality, efficient and reliable product supply concerns on Iran Tractor Manufacturing Company (ITMCO), Motira (Private) Limited changed its strategy to one with reliable product mix from South African suppliers and acquisition and refurbishment of run down carcasses for resale.

3.4 Non-Ferrous Metal Fabrication

3.4.1 Aluminium

The main challenge faced by the company during the year was non-payment for irrigation equipment supplied to Government thereby constraining the company in terms of working capital. There was stiff competition from cheap, low quality Chinese imports as well as competition from local individuals on raw material (aluminium) which was being exported to South Africa for a better price.

There was no progress on the disposal of Industrial Development Corporation of Zimbabwe Limited 51% stake in Almin Metal Industries (Private) Limited during 2015 and efforts would be intensified in the coming year to dispose the stake.

3.4.2 Copper

There was no progress on the disposal of plant & equipment for Zimbabwe Copper Industries (Private) Limited under liquidation. The liquidator was making frantic efforts to dispose the assets as a block to maximize proceeds as opposed to disposing as scrap.

3.5 Textiles

Cotton production has declined dramatically in recent years due to unattractive low international commodity prices of cotton lint, hence the sector remained unattractive for investors. This has seen key players winding or scaling down operations.

There was no progress on the liquidation of Modzone Enterprises (Private) Limited subsidiaries Irazim Textiles (Private) Limited and Travan Blankets (Private) Limited during the year under consideration while Afroran (Private) Limited which has fairly new plant and equipment had working capital challenges during the year.

14


3.6 Polypropylene Packaging

Due to the Elnino induced drought for the 2015/2016 season, the expectation was increased demand for grain packaging for drought relief programs as compared to the 2014/15 season whose demand for the same product remained subdued.

Industrial Development Corporation of Zimbabwe Limited’s disposal of 49% stake in Zimbabwe Grain Bag (Private) Limited remained abortive during the year due to liquidity constraints in the local market and the re-investment capital requirements in the company which tended to scare investors in the absence of a management control agreement with the majority shareholder.

There is need to persuade the current majority shareholder to exercise pre-emptive rights in 2016.

3.7 Insurance

Allied Insurance (Private) Limited met the US$1.5 million capitalisation requirement in December 2014 through an injection of office premises by one of the shareholders.

However, the increase of capital levels by the regulator to US$3 million during the beginning of the year was going to be a tall order for existing shareholders, making it imperative to look for strategic fit partners in the industry in 2016.

3.8 Real Estate

Government announced the designation of the Sunway City (Private) Limited Integrated Park as a Special Economic Zone during the year and the expectation is for the necessary legislative framework to be finalized in the following year to consummate this status.

This is likely to give traction to efforts of luring potential joint venture partners, investors and anchor tenants in 2016.

4.0 SHORT-TIME WORKING AND RETRENCHMENTSIn the wake of reduced capacity utilization averaging 35% during the year, managing staff related costs became a common feature in the economy and consequently Industrial Development Corporation of Zimbabwe Limited Group hence short-time working hours and retrenchments continued to take centre stage as a way of fostering group turnaround.

5.0 CAPACITY BUILDINGThe Corporation staff continued to benefit under Southern African Development Community-Development Finance Resource Centre (SADC- DFRC) capacity building workshops and other relevant ones which were run locally during the year.

6.0 DIRECTORATEThe terms for Mr. H. Nkala, Prof. Mafoti, Mr. J Mushayavanhu and Dr. M. Fallala were extended for 3 years from 05 December 2015 to 05 December 2018. Mrs G. Zvaravanhu was appointed Deputy Chairperson effective from 12 October 2015 and her term as director runs up to 30 April 2017. Mr. S.D. Mangoma retired from the Board on 5 December 2015.

DividendThe directors do not propose to declare a dividend as the Corporation recorded a loss for the year ended December 2015.

15


7.0 ACKNOWLEDGEMENTI thank the group management and staff for their invaluable contribution during 2015 and urge them to soldier on in 2016 as the implementation of ZIMASSET and our turnaround 4D Strategy continues.

M. N. NdudzoGeneral Manager

28 September 2016

16


REPORT OF THE DIRECTORSFor the year ended 31 December 2015

The directors have pleasure in submitting their fifty second report, together with the audited financial statements for the twelve months ended 31 December 2015.

Share CapitalThe authorised share capital remained at 50 000 000 ordinary shares of US$2 each with a value of US$100 000 000 as per section 13(1) of the IDC Act (Chapter 14:10).

The issued shares remained at 4 172 054 ordinary shares of US$2 each with a value of US$8 344 108.

Group Income and Appropriations 2015 2014

Loss from operations (2 474 632) (10 316 387)Net finance charges (6 934 844) (13 110 824)Share of (loss)/income: associated companies (476 883) 1 051 248Fair value gain/(loss): Investment property 13 409 (128 469)Impairment loss: assets (83 421) (3 212 410)Impairment of investments 101 215 (601 412)Exceptional items - (7 554 021)Exchange (losses)/gain 21 368 (137 384) _________________ _________________Loss before taxation (9 833 788) (34 009 659)Income tax credit/(charge) 1 651 500 (4 921 353)Loss from discontinued operations (1 207 450) - _________________ _________________Loss after taxation (9 389 738) (38 931 012)Other comprehensive income (6 061 735) 106 476 _________________ _________________ (15 451 473) (38 824 536) Attributable to:- Non-controlling Interest (841 105) (1 574 166)Owners of the parent (14 610 368) (37 250 370)

_________________ _________________ (15 451 473) (38 824 536) _________________ _________________

DirectorateThe terms for Mr. H. Nkala, Prof. Mafoti, Mr. J Mushayavanhu and Dr. M. Fallala were extended for 3 years from 05 December 2015 to 05 December 2018. Mrs G. Zvaravanhu was appointed Deputy Chairperson effective from 12 October 2015 and her term as director runs up to 30 April 2017. Mr. S.D. Mangoma retired from the Board on 5 December 2015.

DividendThe directors do not propose to declare a dividend as the Corporation recorded a loss for the year ended December 2015.

17


REPORT OF THE DIRECTORS (Continued)AuditorsAt the 52nd Annual General Meeting scheduled for 29 September 2016, the directors will fix the remuneration of the auditors for the past audit, and appoint auditors for the ensuing year.

For and on behalf of the Board

C T MutingwendeCorporate Secretary

28 September 2016

18


CORPORATE GOVERNANCE

Corporate Governance ReportThe Industrial Development Corporation of Zimbabwe Limited is a registered limited liability entity, subject to the provi-sions of the IDC Act (Chapter 14:10) of 1963 as amended. None of the provisions of the Companies Act (Chapter 24:03) or any other law relating to companies shall apply to the Corporation except in respect of specific provisions as may be enacted by Presidential Proclamation. For its role in catalysing industrialisation, the IDCZ is classified as a Development Finance Institution (DFI) and shall not be wound up except by or under the authority of an Act.

Board of DirectorsThe Board of Directors is appointed by the Minister of Industry and Commerce. The IDC Act determines the constitu-tion, rights, powers and obligations of the board. Of the nine directors led by a non-executive chairman, six are from the private sector, two from the public sector. All directors except for the General Manager are non-executive.

The Board meets at least quarterly. The five existing Board Committees meet ahead of the normal board meetings. All board committees are chaired by non-executive directors. The board has reserved certain items for its review including approval of performance results; greenfield and expansion projects development (i.e. structuring joint ventures and appropriate financing thereof) and related material agreements; disposals of investments; budgets and long-range plans, and senior executive appointments and remuneration. The Board thus retains full control by approving targets and monitors performance on an annual basis.

The Board’s assessment of the IDCZ’s position is presented in its Annual Report which addresses matters of concern and interest to stakeholders, including non-financial matters, reports on both positive and negative aspects of IDCZ’s activities. The Annual Report is tabled in Parliament by the Minister of Industry & Commerce and is available to the public.

The Board subscribes to the need to conduct business in line with generally accepted corporate practices prescribed by the Codes of Best Practice (Cadbury Report, King III and Zimbabwe Corporate Governance Code for State Enter-prises & Parastatals), all relevant legislation, regulations, relevant International Financial Reporting Standards, and in accordance with its Corporate Values.

Business Development CommitteeThe committee oversees the active search for and identification of greenfield and expansion investment opportunities for implementation by the Corporation, through new or special purpose implementation vehicles, or through existing investment vehicles. All commercial projects identified for implementation must pass the hurdle of a return above the Corporation’s cost of capital.As the Corporation sheds its enterprise management role to focus on its core mandate of establishing new, and expanding existing, industries and industrial undertakings, and secures debt free funding for this purpose from divestures, new equity from Government as shareholder and appropriate long term debt, the Corporation will consider and undertake investment into third party, walk in, greenfield and expansion projects, in addition to its own identified projects.

Finance & Audit CommitteeThe Committee deals with accounting matters, financial reporting and internal controls. It meets at least quarterly and reviews the financial statements before they are submitted to the Board. The Committee monitors proposed changes to accounting policies, reviews internal control and reporting matters, reviews Internal Audit and Independent External Auditors’ reports. The Committee has access to both the external audit partner and the internal audit manager, who also attend its meetings. All significant findings during the audit are brought to the attention of the Board. The Internal Audit Department is required to cover each Corporation’s investment at least four times per annum.

19


The Corporation has the agreement of partners in associated and other companies for the Internal Audit Department to conduct audits at those investments commencing in 2001.

Nomination CommitteeThe committee recommends to the Board names of qualified persons, from a database built for the purpose, for appointment as non-executive directors in Corporation investments, with a view to achieving a skill, gender and geographical mix on these boards.

Remuneration & Human Resources CommitteeThe Committee is responsible for review of executive management remuneration in line with the Remunera-tion Policy approved by the Board. The Remuneration Policy was put in place in terms of sections 12 and 23 of the IDC Act (Chapter 14:10), after considering the practices of commercialised and privatised Govern-ment owned companies, IDCZ subsidiaries and other holding companies of a size and standing similar to the Corporation.

The policy is aimed at ensuring that the remuneration practices at the Corporation are competitive to enable the Corporation to attract and retain high calibre executives while protecting the interests of the shareholder.

Risk Management CommitteeThe Committee identifies risks faced by the Corporation and its investments and proactively seeks solutions and measures to manage the risks which are recommended to both the Corporation and its investments.

20


Corporate Governance (continued)Attendance Register

The record of attendance by the directors was as follows:-

BOARD FINANCE & AUDIT

COMMITEE

RISK MANAGE-

MENT COMMITTEE

REMUNERA-TION & HUMAN RESOURCES COMMITTEE

NOMINA-TION

COMMITTEE

BUSINESS DEVEL-

OPMENT COMMITTEE

No. of meetings 4 4 3 2 0 3H. Nkala 4 NM NM NM 0 NM

Mrs G.Zvaravanhu 1 3 3 NM 0 NM

M.S.Fallala Dr. 3 4 3 NM 0 NM

*K.Katsande 1 1 NM NM 0 NM

*S.D.Mangoma 3 NM NM 2 NM 2

R.Mafoti (Prof) 1 NM 0 NM 0 3J.Mushayavanhu 3 NM NM 2 0 NM

*S. Mutasa 0 NM NM 0 NM NMM.N.Ndudzo 4 4 3 2 0 3

*S. Mutasa and *K Katsande retired on 8 June 2015*S.D. Mangoma retired 5 December 2015

NM: Not a member of that board committee O: No meeting were held for nominations committee

Code of Conduct and Business Ethics Charter The IDC Code of Conduct and Business Ethics Charter form an integral component of the contracts of service of employees, and provides guidance regarding the behaviour expected from employees.

……………...... ………………… ………………..H. Nkala Mrs G Zvaravanhu R Mafoti (Prof)Board Chairman and Nominations Committee Chairman

Finance and Audit Committee Chairman

Business Development Committee Chairman

……………...... ……………......J Mushayavanhu M S Fallala (Dr)Remuneration and Human Resources Committee Chairman

Risk Management Committee Chairman

28 September 2016

21


DIRECTORS’ RESPONSIBILITY STATEMENTfor the year ended 31 December 2015

The Directors of the Corporation are required by the Industrial Development Corporation Act to maintain adequate accounting records and to prepare financial statements that present fairly the state of affairs of the Corporation and its investments at the end of each financial year and of the profit and cash flows for the period. In preparing the accompanying financial statements, International Financial Reporting Standards have been followed. Suitable accounting policies have been used and consistently applied, and reasonable and prudent judgments and estimates have been made.

The Directors consider that the Group will return to profitability and that the Corporation will be able to discharge its liabilities as they fall due but have disclosed the existence of a material uncertainty that may cast significant doubt on the ability of the Corporation and its subsidiaries to continue as going concerns in note 21 to the financial statements. The Directors have submitted their strategic turnaround document to Government as its sole shareholder and as per request, for consideration of its recapitalization and other policy assistance needs. Meanwhile, the Corporation Board has adopted and is implementing a 4D (Dilution, Disposal, Dissolution and Development) Strategy. Refer to note 21 for further details.

The Board recognises and acknowledges its responsibility for the Group’s systems of internal financial control. The Group maintains internal controls and systems that are designed to safeguard its assets, prevent and detect errors and fraud and ensure the completeness and accuracy of records. The Group’s Finance and Audit Committee has met the External Auditors to discuss their reports on the results of their work, which include assessments of the relative strengths and weaknesses of key control areas.

The financial statements for the year ended 31 December 2015, which appear on pages 32 to 99, have been approved by the Board of Directors at its meeting held on 28 September 2016 and were signed on behalf of the Board, by the Chairman of the Board, and General Manager.

………………… …………………..H Nkala M N NdudzoChairman General Manager

28 September 2016 28 September 2016

22


REPORT OF THE INDEPENDENT AUDITORSTo the members of Industrial Development Corporation of Zimbabwe Limited We have audited the Group and Corporation financial statements of Industrial Development Corporation of Zimbabwe Limited (“the Corporation”) which comprise the statements of financial position as at 31 December 2015, and the statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, as set out on pages 32 to 99.

Director’s responsibility for the financial statements

The directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the provisions of the Industrial Development Corporation Act (Chapter 14:10), and for such internal control as directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ 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, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by 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 qualified audit opinion.

Basis for Qualified Opinion

1.Notes 6 and 7 to the financial statements disclose property, plant and equipment and investment properties respectively. It is the Group’s accounting policy to carry property, plant and equipment (excluding motor vehicles) at revalued amounts. International Financial Reporting Standards require that, in these circumstances, revaluations shall be made with sufficient regularity to ensure that the carrying amount does not differ materially from the fair value at year end. Valuations were last performed on 31 December 2012 and the economic environment in Zimbabwe has changed significantly since that date, but the directors did not determine the fair value of land and buildings at year end. We were unable to quantify the effect of this

23


matter or to determine whether the Group values of land and buildings of:

• $89 246 020 (2014: $97 522 662) included in the property, plant and equipment balance; and• $5 671 178 (2014: $5 830 650) included in the investment properties balance and the related revaluation reserve, are materially misstated.

2. As disclosed in note 8.3, the board of directors made a decision to liquidate Zimbabwe Glass Industries (Private) Limited (Zimglass), a wholly owned subsidiary, during the year ended 31 December 2015, which has been classified as a discontinued operation. The values shown in note 8.3(c) and 8.5 were derived from the Zimglass financial statements for the year ended 31 December 2014 and the assets and liabilities of Zimglass have not been valued subsequently. Consequently, we were unable to determine whether any adjustments to these amounts were necessary.

3. Note 8.1 explains that Industrial Sands (Private) Limited (Industrial Sands) was classified as a wholly owned subsidiary of the Industrial Development Corporation Limited and its financial results were included in the Group financial statements, despite being disclosed as a wholly owned subsidiary of Zimglass in prior years. Documentation in place is not clear on whether Industrial Sands is owned by the Corporation or by Zimglass. The note further explains that the directors are in the process of regularising the legal documentation. We were not provided with further evidence to show that Industrial Sands is owned by the Corporation or to otherwise support its classification as a subsidiary of the Corporation.

The matters described in 1, 2 and 3 above are considered material to the Group and the Corporation financial state-ments but these matters are not considered pervasive to these financial statements.

Qualified Opinion

In our opinion, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph, these financial statements give a true and fair view of the consolidated and separate financial position of Industrial Development Corporation of Zimbabwe Limited as at 31 December 2015, and of its consolidated and separate finan-cial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the provisions of the Industrial Development Corporation Act (Chapter 14:10).

Emphasis of matter

We draw your attention to note 22 to the financial statements which indicates that the Corporation and the Group incurred total loss net of tax of $13 608 899 (2014: $24 456 223) and $15 451 473 (2014: $38 824 536) respectively and at that date the Corporation and the Group’s current liabilities exceeded their current assets by $42 935 920 (2014: $35 473 722) and $74 810 825 (2014: $82 406 461) respectively. The note states that this, along with other matters, indicates the existence of a material uncertainty which may cast significant doubt on the ability of the Corporation and its subsidiaries to continue as going concerns. Our opinion is not modified in respect of this matter.

KPMG Chartered Accountants (Zimbabwe)Harare28 September 2016

24


Statements of Financial Position as at 31 December 2015

Group Corporation Note 2015 2014 2015 2014 US$ US$ US$ US$ASSETS Non-current assets Property, plant and equipment 6 104 323 365 119 240 241 129 537 175 108Investment properties 7 5 671 178 5 830 650 - -Intangible assets 6.1 4 030 23 355 - -

Non-current portion of land held for sale 10 13 070 352 12 918 388 - -Investment in subsidiaries 8.1 - - 54 163 887 68 784 236Investment in associates 8.2 19 046 721 24 865 208 12 923 804 12 923 804Non-current financial assets - - 1 019 588 -Available for sale financial assets 8.4 1 082 750 1 091 533 937 171 991 373Loans receivable 16 4 446 506 2 212 663 4 823 271 3 586 850 _________________ _________________ _______________ _______________

147 644 902 166 182 038 73 997 258 86 461 371 _________________ _________________ _______________ _______________

Current assets Inventories 9 26 128 540 21 562 508 - -Trade and other receivables 11 21 115 743 21 780 537 64 474 103 675Group balances receivables 11 - - 1 212 205 1 915 239Loans receivable 16 1 362 283 1 530 299 1 530 309 1 530 299Non-current assets held for sale 8.5 14 694 502 665 061 1 482 686 975 108Cash and cash equivalents 12 2 262 299 3 706 438 73 022 40 627 _________________ _________________ _______________ _______________

65 563 367 49 244 843 4 362 696 4 564 948 _________________ _________________ _______________ _______________

_________________ _________________ _______________ _______________

TOTAL ASSETS 213 208 269 215 426 881 78 359 954 91 026 319 _________________ _________________ _______________ _______________

EQUITY AND LIABILITIES Capital and reserves Issued capital 13 8 344 108 8 344 108 8 344 108 8 344 108Non distributable reserve 13 99 457 687 97 773 740 109 034 771 109 034 771Revaluation reserve 13(c) 18 110 366 24 805 613 - -Mark to market reserve (211 874) (157 672) (211 874) (157 672)Accumulated losses (109 713 658) (100 287 208) (98 208 225) (84 653 528) _________________ _________________ _______________ _______________

Equity attributable to owners of the parent 15 986 629 30 478 581 18 958 780 32 567 679 _________________ _________________ _______________ _______________

Non - controlling interests 14 108 360 14 899 838 - - _________________ _________________ _______________ _______________

Total equity 30 094 989 45 378 419 18 958 780 32 567 679 _________________ _________________ _______________ _______________

Non-current liabilitiesLoans and borrowings 14.1 26 339 585 18 896 323 8 601 803 14 750 652Deferred tax liability 5 16 399 502 19 500 835 3 500 755 3 669 318 _________________ _________________ _______________ _______________

42 739 087 38 397 158 12 102 558 18 419 970 _________________ _________________ _______________ _______________

25


Statements of Financial Position (continued) as at 31 December 2015 Group Corporation

Note 2015 2014 2015 2014 US$ US$ US$ US$

Current liabilitiesTrade and other payables 15 50 038 596 71 491 501 18 037 322 17 366 421Liabilities held for sale 8.5 35 601 494 - - -Group balances payable 15 - - 245 625 308 306Loans and borrowings 14.2 49 037 340 55 737 342 29 011 717 21 610 473Bank overdrafts 12 4 955 459 3 621 314 3 952 753 470Current tax liability 741 304 801 147 - - _________________ _________________ _______________ _______________

140 374 193 131 651 304 47 298 616 40 038 670 _________________ _________________ _______________ _______________

Total liabilities 183 113 280 170 048 462 59 401 174 58 458 640 _________________ _________________ _______________ _______________

TOTAL EQUITY AND LIABILITIES 213 208 269 215 426 881 78 359 954 91 026 319 _________________ _________________ _______________ _______________

……………………………………………… ………………………………………………

H. Nkala M.N. NdudzoChairman General Manager28 September 2016 28 September 2016

26


Stat

emen

ts o

f pro

fit o

r los

s an

d ot

her c

ompr

ehen

sive

inco

me

for t

he y

ear e

nded

31

Dec

embe

r 201

5

Gro

up

Cor

pora

tion

N

ote

2015

20

14

2015

20

14

U

S$

US$

U

S$

US$

Con

tinui

ng o

pera

tions

Rev

enue

3.

1 93

844

849

97

389

190

88

1 65

6 99

9 90

5C

ost o

f sal

es

(7

5 62

4 55

5)

(81

580

973)

-

-

_

____

____

____

____

__

____

____

____

____

__

____

____

____

_ __

____

____

____

_

Gro

ss p

rofit

18 2

20 2

94

15 8

08 2

17

881

656

999

905

Oth

er in

com

e 3.

2 5

638

539

3 78

3 12

6 2

847

787

789

703

Sel

ling

and

dist

ribut

ion

expe

nses

(7 6

03 5

18)

(4 5

06 7

60)

- -

Adm

inis

trativ

e ex

pens

es

3.3

(18

729

947)

(2

5 40

0 97

0)

(1 8

38 8

57)

(1 6

76 9

15)

Net

fina

nce

cost

s 3.

4 (6

934

844

) (1

3 11

0 82

4)

(1 4

85 9

64)

(1 5

56 9

63)

Inve

stm

ent p

rope

rty fa

ir va

lue

gain

/(los

s)

7 13

409

(1

28 4

69)

- -

Sha

re o

f los

s of

equ

ity-a

ccou

nted

inve

stee

s n

et o

f tax

8.

2 (4

76 8

83)

1 05

1 24

8 -

-Im

pairm

ent o

f ass

ets

(8

3 42

1)

(3 2

12 4

10)

472

034

(5

771

631

)Im

pairm

ent o

f inv

estm

ents

101

215

(601

412

) (1

4 59

4 80

4)

(15

675

464)

Oth

er o

pera

ting

expe

nses

3.

5 -

(7 5

54 0

21)

- (1

650

730

)E

xcha

nge

loss

21 3

68

(137

384

) 3

8 42

9 (1

78 0

78)

___

____

____

____

__

____

____

____

____

__

____

____

____

____

__

____

____

____

__

Loss

from

con

tinui

ng o

pera

tions

(9 8

33 7

88)

(34

009

659)

(1

3 67

9 71

9)

(24

720

174)

Inco

me

tax

cred

it/(e

xpen

se)

4 1

651

500

(4 9

21 3

53)

125

022

3

57 2

22

_

____

____

____

____

__

____

____

____

____

__

____

____

____

__

____

____

____

____

Loss

afte

r tax

(8 1

82 2

88)

(38

931

012)

(1

3 55

4 69

7)

(24

362

952)

Dis

cont

inue

d op

erat

ions

Loss

from

dis

cont

inue

d op

erat

ions

, net

of t

ax

8.4

(1 2

07 4

50)

- -

-

_

____

____

____

____

__

____

____

____

___

____

____

____

____

__

____

____

____

__

Loss

for t

he y

ear

(9

389

738

) (3

8 93

1 01

2)

(13

554

697)

(2

4 36

2 95

2)

__

____

____

____

___

____

____

____

____

_ __

____

____

____

__

____

____

____

____

Attr

ibut

able

to:

Equ

ity h

olde

rs’ i

nter

est

(8

548

898

) (3

7 35

6 56

6)

(13

554

697)

(2

4 36

2 95

2)

N

on -

cont

rolli

ng in

tere

sts

(8

40 8

40)

(1 5

74 4

46)

- -

____

____

____

____

__

____

____

____

____

_ __

____

____

____

__

____

____

____

____

(9 3

89 7

38)

(38

931

012)

(1

3 55

4 69

7)

(24

362

952)

____

____

____

____

_ __

____

____

____

___

____

____

____

____

__

____

____

____

__

27


Stat

emen

ts o

f pro

fit o

r los

s an

d ot

her c

ompr

ehen

sive

inco

me

for t

he y

ear e

nded

31

Dec

embe

r 201

5

Gro

up

Cor

pora

tion

N

ote

2015

20

14

2015

20

14

U

S$

US$

U

S$

US$

Lo

ss fo

r the

yea

r

(9

389

738

) (3

8 93

1 01

2)

(13

554

697)

(2

4 36

2 95

2)

Item

s th

at w

ill n

ot b

e re

clas

sifie

d to

pro

fit o

r los

sIm

pairm

ent o

f ass

ocia

te

(5

818

193

) -

- -

Rev

alua

tion

of p

rope

rty, p

lant

and

equ

ipm

ent -

net

of t

ax

(1

89 3

40)

221

713

- -

Item

s th

at a

re o

r may

be

recl

assi

fied

to p

rofit

or l

oss

Avai

labl

e fo

r sal

e fin

anci

al a

sset

-net

of t

ax

(5

4 20

2)

(93

271)

(5

4 20

2)

(93

271)

Loss

on

reva

luat

ion

of c

onst

ruct

ion

inve

ntor

ies

-

(21

966)

-

-

Oth

er c

ompr

ehen

sive

(los

s)/in

com

e fo

r the

yea

r net

of t

ax

(6

061

735

) 10

6 47

6 (5

4 20

2)

(93

271)

___

____

____

____

__

____

____

____

____

__

____

____

____

____

__

____

____

____

__

Tota

l los

s fo

r the

yea

r net

of t

ax

(1

5 45

1 47

3)

(38

824

536)

(1

3 60

8 89

9)

(24

456

223)

____

____

____

____

_ __

____

____

____

___

____

____

____

____

__

____

____

____

__

Attr

ibut

able

to:

Equ

ity h

olde

rs o

f the

par

ent

(1

4 61

0 36

8)

(37

250

370)

(1

3 60

8 89

9)

(24

456

223)

Non

- co

ntro

lling

inte

rest

s

(8

41 1

05)

(1 5

74 1

66)

- -

_

____

____

____

____

__

____

____

____

____

__

____

____

____

__

____

____

____

____

(15

451

473)

(3

8 82

4 53

6)

(13

608

899)

(2

4 45

6 22

3)

__

____

____

____

___

____

____

____

____

_ __

____

____

____

__

____

____

____

____

28


Stat

emen

ts o

f cha

nges

in e

quity

G

roup

For t

he y

ear e

nded

31

Dec

embe

r 201

5

A

ttrib

utab

le to

the

equi

ty h

olde

rs o

f the

par

ent

Non

dis

trib

utab

le

Rev

alua

tion

Mar

k to

mar

ket

Acc

umul

ated

N

on c

ontr

ollin

g To

tal

Issu

ed c

apita

l re

serv

e re

serv

e re

serv

e lo

sses

To

tal

inte

rest

s eq

uity

US

$ U

S$

US

$ U

S$

US

$ U

S$

US

$ U

S$

Bal

ance

as

at 1

Jan

uary

201

5

8 34

4 10

8 97

773

740

24

805

613

(1

57 6

72)

(100

287

208

) 30

478

581

14

899

838

45

378

419

Loss

for t

he p

erio

d

- -

- -

(8 5

48 8

98)

(8 5

48 8

98)

(840

840

) (9

389

738

)O

ther

com

preh

ensi

ve in

com

e

- -

(6 0

07 2

68)

(54

202)

-

(6 0

61 4

70)

(265

) (6

061

735

)Tr

ansf

er (f

rom

)/to

Rev

enue

Res

erve

s

- 1

683

947

(687

979

) -

(877

552

) 11

8 41

6 49

627

16

8 04

3

____

____

____

_ ___

____

_ ___

__

____

____

____

__

____

____

____

_ __

____

____

____

__

____

____

____

__

____

____

____

__

____

____

____

__

Bal

ance

at 3

1 D

ecem

ber 2

015

8

344

108

99

457

687

18

110

366

(2

11 8

74)

(109

713

658

) 15

986

629

14

108

360

30

094

989

__

____

____

____

_____

____

___

____

____

____

__

____

____

____

_ __

____

____

____

___

____

____

___

___

____

____

____

__

____

____

____

__

For t

he y

ear e

nded

31

Dec

embe

r 201

4

Attr

ibut

able

to th

e eq

uity

hol

ders

of t

he p

aren

t

Non

dis

trib

utab

le

Rev

alua

tion

Mar

k to

mar

ket

Acc

umul

ated

N

on c

ontr

ollin

g To

tal

Is

sued

cap

ital

re

serv

e re

serv

e re

serv

e lo

sses

To

tal

inte

rest

s eq

uity

US

$

US

$ U

S$

US

$ U

S$

US

$ U

S$

US

$ B

alan

ce a

s at

1 J

anua

ry 2

014

8 34

4 10

8

97 7

95 6

76

24 7

90 2

08

(64

401)

(6

3 17

5 25

1)

67 6

90 3

40

16 0

81 5

01

83 7

71 8

41

Loss

for t

he p

erio

d

- -

- -

(37

356

566)

(3

7 35

6 56

6)

(1 5

74 4

46)

(38

931

012)

Oth

er c

ompr

ehen

sive

inco

me

-

(21

936)

22

1 40

4 (9

3 27

1)

- 10

6 19

7 27

9 10

6 47

6A

cqui

sitio

n of

Sub

sidi

ary

NC

I

- -

- -

- -

431

114

431

114

Tran

sfer

(fro

m)/t

o R

even

ue R

eser

ves

-

- (2

05 9

99)

24

4 60

9 38

610

(3

8 61

0)

-A

djus

tmen

t to

non-

dist

ribut

able

rese

rve

-

- -

- -

- -

-

____

____

____

_ ___

____

____

___

____

____

____

__

____

____

____

_ __

____

____

____

__

____

____

____

__

____

____

____

__

____

____

____

__

Bal

ance

at 3

1 D

ecem

ber 2

014

8 34

4 10

8

97 7

73 7

40

24 8

05 6

13

(157

672

) (1

00 2

87 2

08)

30 4

78 5

81

14 8

99 8

38

45 3

78 4

19

____

____

____

__ ___

____

____

____

__

____

____

____

__

____

____

___

____

____

____

____

_ __

____

____

____

__

____

____

____

__

____

____

____

____

____

____

__

____

____

____

__

____

____

____

__

____

____

____

__

29


Sta

tem

ent o

f cha

nges

in e

quity

For t

he y

ear e

nded

31

Dec

embe

r 201

5

Cor

pora

tion

N

on d

istr

ibut

able

A

ccum

ulat

ed

Mar

k to

mar

ket

Is

sued

cap

ital

rese

rve

loss

re

serv

e To

tal

U

S$

US

$ U

S$

US

$ U

S$

Bal

ance

as

at 1

Jan

uary

201

5 8

344

108

109

034

771

(84

653

528)

(1

57 6

72)

32 5

67 6

79

Tota

l com

preh

ensi

ve lo

ss

- -

(13

554

697)

-

(13

554

697)

Oth

er c

ompr

ehen

sive

inco

me

- -

- (5

4 20

2)

(54

202)

__

____

____

___

____

____

____

__

____

____

____

__

____

____

____

_ __

____

____

____

__

At 3

1 D

ecem

ber 2

015

8 34

4 10

8 10

9 03

4 77

1 (9

8 20

8 22

5)

(211

874

) 18

958

780

__

____

____

____

__

____

____

____

_ __

____

____

____

__

____

____

___

____

____

____

____

_

For t

he y

ear e

nded

31

Dec

embe

r 201

4

N

on d

istr

ibut

able

A

ccum

ulat

ed

Mar

k to

mar

ket

Is

sued

cap

ital

rese

rve

loss

re

serv

e To

tal

U

S$

US

$ U

S$

US

$ U

S$

Bal

ance

as

at 1

Jan

uary

201

4 8

344

108

109

034

771

(60

290

576)

(6

4 40

1)

57 0

23 9

02Lo

ss fo

r the

per

iod

- -

(24

362

952)

-

(24

362

952)

O

ther

com

preh

ensi

ve in

com

e -

- -

(93

271)

(9

3 27

1)

____

____

____

_ __

____

____

____

__

____

____

____

__

____

____

___

____

____

____

____

At 3

1 D

ecem

ber 2

014

8 34

4 10

8 10

9 03

4 77

1 (8

4 65

3 52

8)

(157

672

) 32

567

679

__

____

____

____

__

____

____

____

_ __

____

____

____

__

____

____

___

____

____

____

____

_

30


Statements of cash flows For the year ended 31 December 2015 Group Corporation Note 2015 2014 2015 2014 US$ US$ US$ US$ CASH FLOWS FROM OPERATING ACTIVITIESLoss before tax (11 041 238) (34 009 659) (13 679 719) (24 720 174)

-from continuing operations (9 833 788) (34 009 659) - --from discontinued operations (1 207 450) - - -

Adjustments for: -Exchange (gains)/losses (21 369) 137 384 (38 429) 178 078-Depreciation on property, plant and equipment 6 5 048 749 6 240 903 36 630 59 306-Impairment losses (58 602) 3 813 822 12 139 243 22 525 275-Amortisation of intangible assets 19 326 30 869 - --Dividend received - - (742 136) (690 336)-Net finance costs 3.4 6 934 844 13 110 824 1 485 964 1 556 963-Loss/(profit) on disposal of plant & equipment 145 868 (22 557) - --Provision for credit losses 11 (4 335 184) 687 200 - --Intercompany balances written off - - - 18 690-Share of profit/(loss) of associates 8.2 476 883 (1 051 248) - --Fair value adjustment on investment property 27 398 128 469 - - ______________ ______________ ______________ ______________

Operating gain/(deficit) before working capital changes (2 803 325) (10 933 993) (798 447) (1 072 198)Working capital adjustments (Increase)/decrease in inventories (4 566 032) 1 641 719 - -Decrease in trade and other receivables 664 794 1 424 913 510 515 719 087Increase in trade and other payables and liabilities 14 148 589 7 055 947 670 901 1 455 664held for sale

______________ ______________ ______________ ______________

Cash from operating activities 7 444 026 (811 414) 382 969 1 102 553Taxation paid - - (43 543) (52 924)

______________ ______________ ______________ ______________

Net cash (outflow)/inflow used in operating activities 7 444 026 (811 414) 339 426 1 049 629 INVESTING ACTIVITIES Purchases of property, plant and equipment (3 341 256) (328 712) (13 576) (7 937)Loans receivable (2 065 827) 2 689 729 - -Proceeds on disposal of associate - 640 000 10 000 -(Increase)/decrease in non-current portionof land held for sale (151 964) 785 271 - -Purchase of intangible assets - (4 215) - -Proceeds on disposal of property, plant and equipment 1 528 321 533 198 177 635 770Dividend received - - 742 136 690 336Net finance costs 3.4 (6 934 844) (13 110 824) (1 485 964) (1 556 963)Net cash outflows from _______________ ______________ ______________ ______________investing activities (10 965 570) (8 795 553) (747 227) (238 794) _______________ ______________ ______________ ______________

Net cash (outflows)/inflows in before financing (3 521 544) (9 606 967) (407 801) 810 835

31


Statements of cash flows (Continued)For the year ended 31 December 2015

Group Corporation 2015 2014 2015 2014 US$ US$ US$ US$ NoteFINANCING ACTIVITIESInterest bearing borrowings: Proceeds from secured loans 743 260 9 107 632 1 252 395 166 449 Repayments of loans and borrowings - - (62 681) (1 372 992) ______________ ______________ ______________ ______________

Net cash (outflow)/inflow from financing activities 743 260 9 107 632 1 189 714 (1 206 543) ______________ ______________ ______________ ______________

Net (decrease)/increase in cash and cash equivalents (2 778 284) (499 335) 781 913 (395 708)Cash and cash equivalents at 1 January 85 124 584 459 (712 843) (317 135) ______________ ______________ ______________ ______________

Cash and cash equivalents at end of year (2 693 160) 85 124 69 070 (712 843) Made up of the following -Bank overdrafts (4 955 459) (3 621 314) (3 952) (753 470)-Cash at bank 2 262 299 3 706 438 73 022 40 627 ______________ ______________ ______________ ______________

Cash and cash equivalents (2 693 160) 85 124 69 070 (712 843) ______________ ______________ ______________ ______________

32


NOTES TO THE FINANCIAL STATEMENTSFor the year ended 31 December 2015

1. CORPORATE INFORMATION The consolidated and separate financial statements of Industrial Development Corporation of Zimbabwe Limited for the year ended 31 December 2015 were authorised for issue by the Board on 28 September, 2016.

Industrial Development Corporation of Zimbabwe Limited has investments in the following sectors; motor and transport, fertilizer and chemicals, cement, aluminium, granite and base mineral processing. It also has invest-ments in textiles, packaging and real estate.

2.1 BASIS OF PREPARATION The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and in accordance with the Industrial Development Corporation Act (Chapter 14.10).

The financial statements have been prepared on a historical cost basis, except for investment properties, land and buildings and certain financial instruments that have been measured at fair value. The financial statements are presented in the United States Dollar (USD), which is the company’s functional and reporting currency.The financial statements have been prepared on the going concern basis which the Directors believe to be appropriate having taken into consideration the points set out in the Directors’ report.

2.2 BASIS OF CONSOLIDATIONThe consolidated financial statements consist of the financial statements of Industrial Development Corpora-tion of Zimbabwe Limited and its subsidiaries and associates as at 31 December 2015.

(a) SubsidiariesSubsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control and continue to be consolidated until the date that such control ceases. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the subsidiaries. Specifically, the Group controls the subsidiaries if and only if the Group has: • Power over the subsidiary (i.e. existing rights that give power over the current ability to direct the relevant activities of the subsidiary); • Exposure, or rights to variable returns from its involvement with the subsidiary; and • The ability to use its power over the investee to affect its returns.

When the Group has less than a majority of the voting or similar rights of a subsidiary, the Group considers all relevant facts and circumstances in assessing whether it has power over a subsidiary, including: • The contractual arrangement with the other vote holders of the subsidiary. • Rights arising from other contractual arrangements. • The Group’s voting rights and potential voting rights.

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

The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

33


NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)(b) Transactions eliminated on consolidation

All intra –group balances, income and expenses, unrealized gains and losses and dividend resulting from intra-group transactions are eliminated in full.

(c) Non-controlling interests (NCI)Non-controlling interest are measured at their proportionate share of the fair values of the assets and liabilities recognised.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

(d) Loss of ControlIf the Group loses control over a subsidiary, it;

• Derecognises the assets (including goodwill) and liabilities of the subsidiary.• Derecognises the carrying amount of any non-controlling interest, including components of other comprehensive income attributable to them.• Derecognises the cumulative translation differences, recorded in equity. • Recognises the distribution of shares to the new owners of the subsidiary that is the owners of the former parent if the loss of control involves such a distribution. • Recognises the fair value of the consideration received.• Recognises the fair value of any investment retained.• Recognises any surplus or deficit in profit and loss.• Reclassifies the parent’s share of component previously recognized in other comprehensive income to profit or loss or retained earnings, as appropriate.

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

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is measured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability will be recognised in accordance with IAS 39 either in profit or loss or as a charge to other compre-hensive income. If the contingent consideration is classified as equity, it will not be remeasured. Subsequent settlement is accounted for within equity. In instances where the contingent consideration does

CONTENTS PAGEsera.co.zw/wp-content/uploads/2017/03/IDC-Financial... · 2017-03-28 · processing,...

Documents

Transcript of CONTENTS PAGEsera.co.zw/wp-content/uploads/2017/03/IDC-Financial... · 2017-03-28 · processing,...