ANNUAL REPORT 2018 · Chloride (PVC), High-Density Polyethylene (HDPE), Low-Density Polyethylene...

ANNUAL REPORT 2018

1wwww.proplastics.co.zw

Contents

Company Profile 2

Proplastics Unique Proposition 2

Group Financial Highlights 3

Ratios and Statistics 4

Chairman’s Statement 5

Chief Executive Officer’s Report 7

Directorate, Executive Committees and Corporate Governance 9

Report of the Directors 12

Report of the Independent Auditors 15

Consolidated Statement of Financial Position 20

Consolidated Statement of Profit or Loss and Other Comprehensive Income 21

Consolidated Statement of Cash Flows 22

Consolidated Statement of Changes in Equity 23

Company Statement of Financial Position 24

Company Statement of Profit or Loss and other Comprehensive Income 25

Company Statement of Cash Flows 26

Company Statement of Changes in Equity 27

Notes to the Consolidated and Company Financial Statements 28-87

Shareholders’ Analysis 88

Notice to Shareholders 90

Proxy Form 91

2 www.proplastics.co.zw

Name of Company: Proplastics LimitedAddress: 5 Spurn Road Ardbennie P.O. Box CY 1199 Causeway Harare Zimbabwe

Telephone: + 263 242 621651-5Cell: +263 773894561-2Fax: + 263 242 660545E-mail: [email protected]: www.proplastics.co.zw

Description of Company: Manufacturer of Polyvinyl Chloride (PVC); High-Density Polyethylene (HDPE); Low-Density Polyethylene (LDPE) Pipes and related fittings Company Established: 1965Chief Executive Officer: Kudakwashe Leo ChigiyaE-mail: [email protected]

COMPANY PROFILE

Proplastics Limited Inimitable OfferingProplastics Limited (formerly Murray & Roberts and Masimba Industries (Private) Limited), is the only Zimbabwean plastic pipes and fittings manufacturer listed on the Zimbabwe Stock Exchange.

Proplastics Limited is Zimbabwe’s leading plastic pipe manufacturer, specialising in the production of Polyvinyl Chloride (PVC), High-Density Polyethylene (HDPE), Low-Density Polyethylene (LDPE) pipes and related fittings. The pipes are manufactured for various applications in irrigation, water and sewer reticulation, mining, telecommunications and building construction.

Proplastics Limited was established in 1965 and has over 50 years of experience in manufacturing complete range of plastic pipes and fittings in Zimbabwe with a significant market share in the SADC region. Proplastics pipes and fittings are easy to install and are adapted to a variety of conditions encountered during use. Our products are corrosion-resistant, light in weight, have zero failure rates, are energy efficient which ensures long-term performance.

We request that in your next project ‘’Invest in pipe material of choice, invest in Pipe Systems That Last; invest in Proplastics PVC and HDPE pipes and fittings.’’

Please watch out for cheap imitations and products made from recycled materials and always insist on a minimum of 50 years performance guarantee on your next purchase……remember ‘’Cheap Always Cost a Fold.’’

Proplastics Cause Top of Client’s Mind.

Proplastics Vision Unrivalled Leadership in Plastic Piping Systems.

Proplastics Mission To Deliver World Class Plastic Piping Systems.

What makes us unique Game Changing Capabilities.

Scope of the game Plastic Piping Systems.

Our Brand Expression Pipe Systems that Last.

Our Strategic Focus Areas Value | Growth | Innovation | Zero harm.

Our Behaviours Learning | Caring | Performance Driven | Excellence | Team Proplastics.

Our values Integrity | Respect | Leadership | Communication | Teamwork.

PROPLASTICS UNIQUE PROPOSITION


Turnover 50% to US$24,091,989

EBT 145% to $4,834,792

Sales volumes 5% to 5,271 tons

Profit for the year 165% to $3,597,876

Gross profit margins to 37% from 30%

Overheads 45% toUS$3,989,066

Quick ratio to 0.8:1 from 1.9 :1

ROCE to 35% from 19%

Current ratio to 1.8:1 from 3.1 :1.

ROA to 17% from 10%

Debt/Equity to 10% from 4%

EBITDA at 27% (Prior year 18%) of revenue

Cash generated from operating activities to revenue 11% (Dec. 2017 ,26%)

Dividend per share at RTGS0.56 cents (Dec 2017, US0.26 cents)

Basic EPS at RTGS1.42 cents (Dec 2017,US0.55 cents)

GROUP FINANCIAL HIGHLIGHTS

3,597,876

4,834,792

24,109,989

PAT

PBT

Turnover

Year

2015 2016 2017 2018

1,358,448

679,221

872,258

14,143,085

652,381

14,152,915

832,425

1,974,667

16,103,935$


RATIOS AND STATISTICS

Group 31 December 31 December 2018 2017 Audited Audited Earnings (US cents)

Basic earnings per share 1.42 0.55

Diluted earnings per share 1.38 0.54

Profitability

Profit before interest and tax on turnover (%) 20% 12%

Return on capital employed (%) 35% 19%

Productivity

Payroll cost on turnover (%) 9% 9%

Total average assets (excluding bank balances and cash) ($) 14,916,363 10,789,157

Finance

Debt to equity 10% 4%

Current assets to current liabilities 1.8 3.1

Share performance

Ordinary shares in issue (millions) 246 245

Share price at period end (US cents) 19.5 7.6

Market capitalisation ($-millions) 48 18.6

Other

Number of employees at year end 268 230

Definitions

Average Arithmetic average between consecutive year ends.

Earnings per ordinary shares Earnings after tax net of non-operating items, divided by the

weighted average ordinary shares in issue.

Net asset value Ordinary shareholders’ funds.

Permanent capital Ordinary shareholders’ funds.

Total liabilities Borrowings and non-interest bearing debt.


INTRODUCTION

It is my pleasure to present to you the operational and financial results for the year ended 31 December 2018.

This commentary and the accompanying financial statements were prepared in accordance with the provisions of Statutory Instrument 33 of 2019: [(Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act & Issue of Real Time Gross Settlement Electronic Dollars (RTGS Dollars) Regulations, 2019-Implementing Monetary Policy Statement of 20 February 2019], which states that the RTGS dollar is at par with the US dollar for accounting and other purposes. In February 2019, the Reserve Bank of Zimbabwe, in their monetary policy pronouncement, introduced the RTGS dollar. The effect of the pronouncement is covered in note 26 in the financial statements, Events after the reporting period.

OPERATING ENVIRONMENT

Whilst we remain optimistic about the future, the operating environment remained very challenging throughout the year. The single most difficult challenge faced by the Group was securing foreign currency for the importation of raw materials and capital equipment.

We, however, enjoyed good support from our foreign suppliers and this allowed the operations to run largely uninterrupted.

The economic challenges also negatively impacted on the construction of the new factory. Notwithstanding the challenges, we proceeded with construction and I am pleased to announce that the project will be completed in the first half of 2019. Its completion will improve production efficiencies, thereby positioning the Group well both domestically and in the region.

I would like to extend our appreciation to our bankers who have continued to support us in order to keep this dream alive.

Demand for the Group’s products was high for the greater part of the year, but was negatively affected by the economic instability that escalated in the last quarter. Notwithstanding that set back, the Group posted a solid performance overall for the period under review.

FINANCIAL PERFORMANCE

Revenue at $24,091,989 was 50% up on previous year, with volumes up 5% driven by relatively strong demand during the year, although declining in the last quarter. An increase in cost of sales was contained at 34% as efficiencies in the factory improved as a result of the investment in modern equipment over recent years paying dividends. Resultantly, the Group posted a Gross Profit of $8,895,568.

Overheads increased by 45%, mainly driven by the inflationary pressures in the economy and finance costs increased to $84,077 from $24,726, driven by costs incurred in establishing new facilities.

EBITDA improved from $2,912,061 to $5,713,962. Profit before tax rose from $1,974,667 to $4,834,792. Profit after tax was $3,597,876 up from $1,358,448 in prior year.

The financial position remains strong with total assets amounting to $21,163,981. Total borrowings were $1,271,091 at the end of the period giving a debt equity ratio of 10%.

Cash and cash equivalents closed at $1,173,304 as we used the available cash resources to secure raw materials and to fund the construction of the new factory. A total of $4,729,751 was utilized towards the construction of the factory.

CHAIRMAN’S STATEMENT

G SEBBORNCHAIRMAN


OUTLOOK

From the last quarter of 2018, demand has generally remained subdued into the first quarter of 2019. Although we welcome the recent changes contained in the monetary policy statement by the Central bank, we are still to see its impact in stimulating business performance and easing foreign currency bottlenecks.

The new factory is now 97% complete and the focus during the first half of 2019 will be on bringing in the required pieces of equipment in order to make it fully operational.

DIVIDEND DECLARATION

In view of the performance for the business, the Board proposes a final dividend of RTGS 0.56 cents per share with a scrip option. This is in addition to an interim dividend of US 0.25 cents paid during the year.

ACKNOWLEDGEMENTS

I wish to extend my appreciation to my fellow Board members for their efforts during the year as well as thank management and staff for their dedication and hard work throughout the year.

I also wish to extend my appreciation to all stakeholders for their continued support.

G. Sebborn10 April 2019


CHIEF EXECUTIVE OFFICER’S REPORT

INTRODUCTION

It is my pleasure to present to you my report on the operational performance of Proplastics Limited for the year ended 31 December 2018.

The trading environment became increasingly complex and challenging. Uncertainty over monetary policy fuelled adverse market reactions particularly in the last quarter of 2018 resulting in significant pricing distortions and subdued demand for our product. The single most difficult challenge was securing foreign currency for the importation of raw materials and capital equipment.

However, notwithstanding these challenges, the business posted a solid performance for the year characterised by growth in both volumes and revenues.

FINANCIAL PERFORMANCE

Turnover grew by 50% to $24,091,989 on the back of a 5% growth in volumes driven by relatively strong demand during the year, although a decline was recorded in the last quarter of the year. The Gross margin improved significantly to 37% from 30% in prior year owing to improved factory efficiencies as the operations benefited from the investment in modern equipment over the years. Consequently, EBITDA grew 96% to US$5,713,962.

The statement of financial position remained strong with total assets growing by 48% to US$21,163,981. Current ratio eased to 1.8:1 from 3.1:1 in prior year as the current liabilities grew by 97%. This was largely driven by foreign creditors as a result of bottlenecks on foreign payments as well as utilization of available cash resources in the construction of the new factory. Total foreign creditors at year-end amounted to US$1,126,375.

Trade and other receivables increased by 113% on the back of revenue growth, increased customer deposits as well as supplier prepayments for the new factory equipment.

Borrowings went up from US$374,667 in prior year to close the year at US$1,271,091 as we financed some of the deposits highlighted above. Consequently, the debt equity ratio increased to 10% from 4% in prior year.

Cash generated from operations came down to 11% from 26% as we used the available cash resources to secure raw materials and to fund the construction of the new factory as earlier mentioned. The Group closed the year with a balance of US$1,173,304 in cash and cash equivalents.

OPERATIONAL PERFORMANCE

Factory volumes, at 5,923 tonnes for the year, were 20% above prior year. The investment in the factory equipment over the years is yielding results as evidenced by operational efficiencies which improved from 56% prior year to 69% hence the improved gross profit margins. The power and water supply situation remained stable during the year.

The ability to secure foreign currency to fund the importation of raw materials remains the biggest challenge. We managed to source raw materials from local suppliers at times but at high premium.

Management has continued with the engagement of the Group’s suppliers to ensure continued supply of raw materials despite the challenges obtaining in the economy. Engagement efforts with the bankers and treasury will also continue to be prioritized.

SAFETY, HEALTH, ENVIRONMENT AND QUALITY MANAGEMENT SYSTEMS (SHEQMS)

SHE and Quality issues remain a top business priority as demonstrated in the recent upgrade of the Quality and Environment management systems to the new risk - based ISO standards of 2015. Proplastics keeps both the SAZ and SABS certification flags flying high and the customer’s expectation exceeded all the time. We anticipate and recognise the needs of interested parties through a rigorous evaluation of risks associated with our products, activities and processes. System reviews are conducted and appropriate actions are taken to remain competitive and achieve above average returns.

Mr. Kudakwashe ChigiyaCHIEF EXECUTIVE OFFICER


Sustainability in all our endeavors is key and that is why we value the health and safety of our employees and the environment that we operate in. To that end, the Group is currently upgrading to the new ISO 45001:2015 health and safety standard by end of 2019. This will bring a paradigm shift with regards to employee health and safety approach within the business going forward.

CORPORATE SOCIAL RESPONSIBILITY

Proplastics Limited continued with its Corporate Social Responsibility programs/initiatives as follows: -

• Maintained payment of school fees for 10 disadvantaged children at Jairosi Jiri.• Donated assorted groceries to Mathew Rusike Children’s Home.• Donated clothing and funded Christmas party for Chiedza Child Care Centre.• Donated sports kit for St. Johns preparatory hockey team.• Over and above the unveiling of industrial attachment to students from various institutions of higher learning across the country, the company has opened its doors for educational tours to enable students to learn about its industry and choose certain career paths. • The company continue to enroll student attachés from different universities and polytechnic colleges.

The above contributions genuinely helped to deliver public value outcomes by focusing on how our services can make a difference in the community.

FUTURE PROSPECTS

The biggest challenge remains availability of foreign currency to fund operations.

The Monetary policy announcement of 20 February 2019 has ushered in new trading parameters, which include the “RTGS dollar”, followed by the introduction of an interbank market to freely trade RTGS dollars and nostro. We are yet to see the full impact of the policy announcements as demand has generally remained subdued from the last quarter of 2018.

Going into the future, the sales will be driven from the civils, merchants, mining and irrigation segments.

Power supply challenges are likely to increase in the year in view of the water levels in Kariba dam.

ACKNOWLEDGEMENTS

May I take this opportunity to thank all our stakeholders who have stood with the Group over the years. Without their support, Proplastics would not be where it is today.

May I also thank the Proplastics employees, who are the real force driving this business, for their unwavering commitment throughout the year.

I wish to conclude by thanking the Board, for the wise counsel and support throughout the year.

KUDAKWASHE CHIGIYA10 April 2019

CHIEF EXECUTIVE OFFICER’S REPORT (continued)

Mr. Gregory Sebborn Non-Executive Board Chairman.

Mr. Malcolm William McCullochNon-Executive Director


DIRECTORATE, EXECUTIVE COMMITTEES AND CORPORATE GOVERNANCE

Gregory served as Managing Director of the Zimbabwe and Southern African operations of the Rennies Group of Companies. He is also a founding Director and former Group Managing Director of Zimplats Holdings Limited and Managing Director of Zimbabwe Platinum Mines. He served as a Partner at Renaissance Partners, a Russian based Investment Bank. Gregory is currently a consultant for special mining projects and developments in Africa and serves as a non-executive Director of several companies including Stanbic Bank Zimbabwe.

Malcolm is a Chartered Accountant and a past Group Chief Executive Officer ofMurray & Roberts Limited in South Africa. He is a Director of several companies in Mauritius and the SADC region including Kosto Holdings Limited, Wilderness Holdings and the Reinforcing Steel Contractors Group.

Sandra is a proven Agribusiness Specialist and Project

Manager with over twenty years of experience

in commercial crop production, donor funded

agricultural initiatives and horticultural research.

Sandra holds a Master of Science Agriculture

(Horticulture) (Cum Laude) and a Bachelor of Science

Agriculture (Horticulture) Cum Laude, Dux student

from the University of Natal, Pietermariztburg,

South Africa. In addition, Sandi holds the following

membership: - Crops life International, formerly

Agricultural Chemical Industry Association (ACIA);

Women’s University in Africa Council; African Women

in Agriculture – Zimbabwean chapter of the Graca

Machel Trust; Facilitator of Investment in Excellence

Program with the Pacific Institute and Chair of Market

Linkage Association (MLA) Zimbabwe.

Herbert is a former mining executive and until recently was an Executive Director for Mimosa Mines in Zimbabwe. Prior to that, Herbert held several senior positions with Union Carbide and Zimasco. Herbert holds a Bachelor of Science in Chemistry and a Masters of Philosophy in Process Research from the University of Zimbabwe. He also holds a Master of Science in Process Engineering Design from the University of London.

Paddy holds a Bachelor of Commerce in Accounting Science from the University of South Africa and completed his Articles of Clerkship with Deloitte & Touche. Paddy is a Director of a number of companies including Aurora Agricultural Ventures & Processors (Private) Limited.

Paschal is a qualified Chartered Accountant (Zimbabwe) and is a holder of a Masters Degree in Business Leadership (MBL) from the University of South Africa (UNISA). He served his articles with Deloitte & Touche. Paschal has previously worked for Cairns Foods where he was Finance Manager, and Rainbow Tourism Group, where he joined as Finance Manager and became Finance Director in 2004 until 2013. Prior to joining Proplastics, he was Director – Finance & Administration with ZimTrade.

Kudakwashe is a holder of a Diploma in Rubber & Plastics Technology and an MBA. Kudakwashe started his career at Proplastics in 1993 as a Graduate Trainee in Plastics Technology rising through the ranks of Quality Controller, Quality Assurance Manager and Technical Manager. During the period, he superintended pioneering of manufacturing projects. Kudakwashe left Proplastics for South Africa in 2003 to advance his career in Plastics Technology. Up to his appointment, he was employed at DPI Plastics as Process Engineer for Quality and Technical management functions. He was appointed Chief Executive Officer of the company on 29 May 2015.Mr. Kudakwashe Chigiya

Chief Executive Officer.

Mr. Paschal ChangundaFinance Director

Mr. Herbert S. MashanyareNon- Executive Director

Mrs. Sandra RobertsNon- Executive Director

Mr. Paddy Tongai Zhanda (Jnr)Non-Executive Director.


DIRECTORATE, EXECUTIVE COMMITTEES AND CORPORATE GOVERNANCE (continued)

Corporate GovernanceThe Board of Proplastics Limited is committed to adherence to the principles of good corporate governance in order to attain the goal

of responsible corporate behaviour and full accountability to its shareholders and stakeholders.

THE BOARD OF DIRECTORS

Composition And AppointmentThe Board comprises of 7 directors; 5 Non-executive and 2 Executive. The Board is chaired by a non-executive director, thus ensuring a

separation of powers and authority.

The election of non-executive Directors is subject to confirmation by shareholders. In terms of the Group’s Articles of Association and

the Companies Act (Chapter 24:03), at least one third of the Directors must retire at every Annual General Meeting and, if eligible, can

stand for re-election. Also, a Director appointed during the course of the year must retire at the annual general meeting and, if eligible,

stand for re-election.

Accountability And Delegated FunctionsThe Board meets formally at least once every quarter to review the entity’s performance. There is an agenda of matters which are brought

to its consideration and review and where appropriate, for decision so that it maintains full and effective control over strategic, financial,

operational and compliance issues. There are procedures, which allow Directors to avail themselves for independent professional advice

in the furtherance of their duties and to select non-executive Directors.

Performance Management ReportingThe entity operates in Zimbabwe in a regulated environment. Business is conducted within a well-developed control framework,

underpinned by procedures and control manuals. The Board has established a management structure which clearly defines roles,

responsibilities and reporting lines.

The business performance of the Group is reported regularly by management to the Executive Committee and the Board. Performance

trends and performance against budgets and prior periods are closely monitored. Financial information is prepared using appropriate

accounting policies which are consistently applied, in all material respects, from year to year. Where a change in accounting policy

occurs, the change is specifically noted in the financial statements.

The system of internal financial control is monitored regularly by management, the Executive Committee and the Board.

Internal Audit reports regularly to the Audit and Risk Committee of the Board. They also report to management for actioning. The scope

of the Internal Audit department includes an assessment of the risks and controls and its findings are reported to management. All

adverse findings are reported to the Chief Executive Officer for immediate management action.

The external auditors review the system of internal financial controls to the extent necessary for them to form the opinion they express

on the financial statements. They also report to the Audit and Risk Committee on matters arising from this review.

Composition of the Board

Mr. Gregory Sebborn^ Non –Executive Board Chairman

Mr. Kudakwashe Chigiya Chief Executive Officer

Mr. Paschal Changunda Finance Director

Mr. Paddy Tongai Zhanda * Non-Executive Director.

Mrs. Sandra Roberts * Non-Executive Director.

Mr. Herbert Stanley Mashanyare* Non-Executive Director.

Mr. Malcom McCulloch^ (Alt. M. Di Nicola) Non-Executive Director (effective 1 June 2018).

Mr. Bret Childs Non-Executive Director (resigned effective 1 June 2018).

(* sits on the audit Committee, ^sits on the remuneration committee)


DIRECTORATE, EXECUTIVE COMMITTEES AND CORPORATE GOVERNANCE (continued)

Board CommitteesThe Board has established and mandated a number of committees to perform work on its behalf in various key areas affecting the

business of the entity. The committees are chaired by non-executive directors. They submit reports to the main Board on the Committee’s

deliberation and findings.

The Remuneration CommitteeThe Committee is chaired by a non-executive director and Chairman of the Board, Mr. Gregory Sebborn. Its mandate is to set the

remuneration of executive directors and considers appointment of new directors and senior executives before the final approval by the

Board. The remuneration policies of the Committee are as follows: -

• To ensure that individual rewards and incentives relate directly to the performance of the individuals, the operations and

functions for which they are responsible and the Group as a whole.

• To maintain competitive rewards that enables the entity to attract and retain executives of the highest quality.

In order to determine the competitiveness of executive remuneration, the Committee receives independent professional advice on

remuneration packages and practices of comparable organisations within the region.

Audit CommitteeMrs. Sandra Roberts, an independent non-executive director, chairs this Committee which deals with compliance, internal control

and risk management.

The Committee: -• Considers changes to the Group’s accounting policies and reviews its interim and annual financial statements before the

Board, with whom ultimate responsibility remains, approves them.

• Reviews the effectiveness of the system of internal controls during the period and reports thereon to the Board.

The Board is responsible for establishing systems of internal control, which provide reasonable assurance that the entity’s

assets are safeguarded, that proper accounting records are maintained and the financial information used in the business and

for publication is reliable. They attach great importance to maintaining a strong control environment. However, any system of

internal financial control can provide only reasonable, not absolute, assurance against material misstatement or loss.

Code of ConductThe Board has approved a Code of Conduct for the entity, which sets out the entity’s core values relating to lawful and ethical conduct

of business. All employees have a copy of the Code and are expected to observe high standards of integrity and fair dealing in relation to

customers, staff and regulators in the communities in which the entity operates. Policies exist for monitoring compliance with the Code.

Going ConcernThe Board confirms that the Group has adequate resources to continue in business for the foreseeable future. Accordingly, the financial

statements have been prepared on the basis that the Group is a going concern.

Auditors

A resolution will be proposed at the Annual General Meeting to reappoint Deloitte & Touche as auditors of the Group.

Sandra RobertsChairman - Audit and Risk Committee10 April 2019


REPORT OF THE DIRECTORS

The directors have pleasure in presenting their Annual Report and the Audited Financial Statements of the Group for the year ended

31 December 2018. In the report “Group” refers to Proplastics Limited and its subsidiary companies, Promouldings (Private) Limited and

Dudway Investments (Private) Limited.

Period’s Results

Profit attributable to Shareholders $3,597,876

Final Dividend RTGS 0.56 cents per share

Capital Expenditure

Capital Expenditure for the period to 31 December 2018 amounted to $5,491,211. The budgeted capital expenditure for the period to 31

December 2019 is $3,301,330. The expenditure is to be financed from internal resources and existing facilities. Construction of the new

Factory is nearing completion, and the estimated cost of constructing the factory is four million United States Dollars (US$4,000,000). The

new factory is owned by Dudway Investments (Private) Limited, a Company which is 100% owned by Proplastics Limited. Installation

of equipment, the new extruder and mixing plant will commence in May 2019. Migration of the plant to the new factory is scheduled

to commence in June 2019 in a phased approach, which will be spread over two months. The installation of the automated material

handling system will be running over the same period. The new factory will be ready for commissioning in August 2019.

Share CapitalThe authorized share capital of the Company is US$87,500, comprising of 875,000,000 ordinary shares of a nominal value of US$0.0001

each. The issued share capital of the Company is US$24,649 divided into 246,493,024 ordinary shares of US$0.0001 each.

Auditors The auditors of the Group are Deloitte & Touche. Shareholders will be asked at the forthcoming Annual General Meeting to approve

their remuneration in respect of the past audit and to re-appoint them auditors for the coming year. The Auditors remuneration for the

past year was US$56,000.

ReservesThe movement in the Reserves of the Group is disclosed in the Consolidated Statement of Changes in Equity.

DividendThe directors recommended a final dividend of RTGS 0.56 cents per share with a scrip option for the year ended 31 December 2018

payable in respect of all the ordinary shares of the Company. Shareholders will be asked to approve the payment of this dividend, as well

as the interim dividend of US 0.25 cents per share paid in August 2018.

Borrowing Powers

In terms of the Articles of Association, the Company is authorized to borrow funds amounting to three (3) times of:

1) The total of the nominal amount of the issued and paid up share capital of the Company, and

2) The aggregate of the amounts standing to the credit of all capital and revenue reserve accounts and share premium

account and profit and loss account as set out in the latest consolidated audited statement of financial position of the

Company and its subsidiaries which has been drawn up to be laid before the members of the Company in general meeting

at the relevant time.

3) The directors confirm that during the year under review, the Company’s borrowings are within the above limits.


REPORT OF THE DIRECTORS (continued)

DirectorateThe following are the Directors of the Company and they held office for the year under review: -

Mr. Gregory Sebborn Non-Executive Board Chairman.

Mr. Kudakwashe Chigiya Chief Executive Officer.

Mr. Paschal Changunda Finance Director.

Mr. Paddy Tongai Zhanda Non-Executive Director.

Mrs. Sandra Roberts Non-Executive Director.

Mr. Herbert Stanley Mashanyare Non-Executive Director.

Mr. Malcom McCulloch (Alt. Mark Di Nicola) Non-Executive Director.

Mr. Bret Childs Non-Executive Director (resigned effective 1 June 2018).

Mr. Malcolm McCulloch, Mr. Paschal Changunda and Mrs. Sandra Roberts will retire at the conclusion of this Annual General Meeting.

Being eligible, they have offered themselves for re-election and Shareholders will be asked to re-appoint them as Directors for the

ensuing year.

Directors’ FeesShareholders will be asked to approve the remuneration of the Directors for their services as Directors during the past year. Your board

recommends that an amount of $88,375 be approved.

The Proplastics Limited Senior Executive Share Option Scheme 2015The scheme was approved by shareholders in 2015, the purpose of which is to promote the retention of senior executives responsible

for the management of the Group. The details of the movement in the outstanding option during the year to 31 December 2018 are

shown on note 8 of the financial statements.

Statement of ComplianceThe Directors are responsible for the maintenance of adequate accounting records and the preparation and integrity of the financial

statements. While full compliance with International Financial Reporting Standards (IFRSs) has been possible in prior year reporting

periods, in 2018, the Group and Company has not been able to fully comply with the IFRSs, as it was not practical to comply with

the requirements of IAS 21: The Effects of Changes in Foreign Exchange Rates. IAS 21 outlines how to account for foreign currency

transactions and operations in financial statements and also how to translate financial statements into presentation currency. An entity

is required to determine a functional currency for each of its operations if necessary, based on the primary economic environment in

which it operates and generally records foreign currency transactions using the spot rate to that functional currency at the date of the

transaction. The financial statements have been prepared partially in accordance with International Financial Reporting Standards (IFRS),

as well as the disclosure requirements of the Companies Act (Chapter 24:03) and the Zimbabwe Stock Exchange listing requirements.

Following the Monetary Policy Statement of 20 February 2019 which introduced the “RTGS dollar”, as the functional currency, the

Exchange Control Directive RU 28 of 2019 issued on 22 February 2019; which introduced an interbank market to freely trade the RTGS

Dollar and other currencies on a willing buyer willing seller basis and the Statutory Instrument 33 of 2019 issued on 22 February 2019;

which deemed all assets and liabilities that were valued in US$ immediately before 22 February to be valued in RTGS Dollars at a rate

of 1:1 for accounting and other purposes, the Public Accountants and Auditors Board (PAAB), after deliberating on the impact of these

developments on the Financial Reporting, issued guidance on the legal and regulatory Framework on Financial Reporting.

The subsequent recognition of the RTGS as a currency and its devaluation against the US$ on 20 February implies that the amounts

presented in the Financial Statements may, therefore, not reflect the opening balances in RTGS Dollars for future accounting periods as

the Financial Statements have been prepared on the basis that the RTGS currency was at par with the US$ as at 31 December 2018 in

line with the Statutory Instrument 33 of 2019 issued on 22 February 2019 but contrary to the requirements of International Financial

Reporting Standards (IFRS), which requires consideration of substance over legal form.

The Board has assessed the impact of the Group’s inability to comply with the requirements of IAS 21: The Effects of Changes in Foreign

Exchange Rates, and concluded that this will have a significant impact on the Group’s Financial Statements. Refer to note 26, Events

after reporting period.


The Group’s independent external auditors, Deloitte & Touche, have audited the financial statements and their report appears on pages

15-19. The Directors are also responsible for the systems of internal control. These are designed to provide reasonable, but not absolute,

assurance as to the reliability of the financial statements and to adequately safeguard, verify and maintain accountability of assets and

to prevent and detect material misstatement and loss.

The systems are implemented and monitored by suitably trained personnel with an appropriate segregation of authority and duties. Nothing has come to the attention of the Directors to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the year under review.

The financial statements are prepared on a going concern basis. Nothing has come to the attention of the Directors to indicate that the

Group will not remain a going concern for the foreseeable future.

G SebbornChairman10 April 2019

‘Construction of the Proplastics state of the art factory now 98% complete’.

REPORT OF THE DIRECTORS (continued)


PO Box 267HarareZimbabwe

Deloitte & ToucheRegistered AuditorsWest BlockBorrowdale Office ParkBorrowdale RoadBorrowdaleHarareZimbabwe

Tel: +263(0) 8677 000261 +263(0) 8644 041005Fax: +263 (0) 4 852130www.deloitte.com

REPORT OF THE INDEPENDENT AUDITORSTO THE SHAREHOLDERS OF PROPLASTICS LIMITEDREPORT ON THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

Adverse Opinion

We have audited the consolidated and separate financial statements of Proplastics Limited and its subsidiaries (together ‘the Group’ and

individually, ‘the Company’) set out on pages 20 to 87, which comprise the consolidated and separate statements of financial position

as at 31 December 2018, and the consolidated and separate statements of profit or loss and other comprehensive income, statements

of changes in equity, and statements of cash flows for the year then ended, and the notes to the consolidated and separate financial

statements, including a summary of significant accounting policies.

In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of our report, the

accompanying consolidated and separate financial statements do not present fairly, the consolidated and separate financial position

of the Group and Company as at 31 December 2018, and its consolidated and separate financial performance and its consolidated

and separate cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRS”) and the

requirements of the Companies Act (Chapter 24:03).

Basis for Adverse Opinion

The Group and Company transacted using a combination of United States Dollars (USD), bond notes and bond coins. An acute shortage

of USD cash, other foreign currencies, bond notes and bond coins in the country, resulted in an increase in the use of different modes

of payment for goods and services, such as settlement through the Real Time Gross Settlement (RTGS) system and mobile money

platforms. The RTGS system was employed as a mode of electronic settlement, intended to be representative of physical currency.

During the year there was a significant divergence in market perception of the relative values between bond notes, bond coins, mobile

money settlements and RTGS settlements in comparison to the USD. Although RTGS and mobile money platform settlements were

not legally recognised as currency during the year ended 31 December 2018, the substance of the economic phenomenon, from an

accounting perspective, suggested that were currency.

In October 2018, banks were instructed by the Reserve Bank of Zimbabwe (“RBZ”) to separate and create distinct bank accounts for

depositors, namely, Real Time Gross Settlement Foreign Currency Account (RTGS FCA) and Nostro Foreign Currency Account (Nostro

FCA). This resulted in a separation of transactions on the local RTGS payment platform from those relating to foreign currency (e.g.

United States Dollar, British Pound and South African Rand). Prior to this date, RTGS FCA and Nostro FCA transactions and balances were

co-mingled.

As a result of this separation, there was an increase in multi-tier pricing practices by suppliers of goods and services, indicating a

significant difference in purchasing power between the RTGS FCA and Nostro FCA balances, against a legislative framework mandating

parity. These events were indicative of economic fundamentals that would require a reassessment of the functional currency as required

by International Accounting Standard (IAS) 21- “The Effects of Changes in Foreign Exchange Rates.”

As a result of these factors, the Directors performed an assessment on the functional currency of the Group and Company in accordance

with IAS 21 and acknowledged that the functional currency of the Group and Company is no longer USD.

Subsequent to year-end, as indicated in note 26 to the consolidated and separate financial statements, a currency called the RTGS Dollar

was legislated through Statutory Instrument 33 of 2019 (“SI 33/19”) with an effective date of 22 February 2019. In addition, SI 33/19 fixed

the exchange rate between the RTGS Dollar and the USD at a rate of 1:1 for the period up to its effective date. The rate of 1:1 is consistent

with the rate mandated by the RBZ at the time it issued the bond notes as currency.


Key audit matter How our audit addressed the key audit matter

Revenue Recognition

There is a presumed fraud risk with regards to revenue recognition

as guided by International Standards on Auditing. There is a risk

that revenue might be recognised prematurely, particularly

with regards export sales. Management remuneration is partly

based on profitability of the group. Therefore, there is a risk that

sales may be deliberately overstated as a result of management

override, motivated by pressure management may feel, to

achieve planned results. The Group revenue for the year was

24,091,989 (2017: 16,103,935)

Disclosure on the revenue recognition policy has been presented

in Note 2.1 of the financial statements.

Our audit procedures incorporated a combination of tests of the

Group’s controls relating to revenue recognition and the

appropriateness of revenue recognition policies as well as

substantive procedures with respect to testing the occurrence

assertion. Our substantive procedures included, but were not

limited to, the following:

• Obtaining an understanding of the appropriateness

of management’s revenue recognition policies, particularly

regarding sales near year end and in relation to customer

discounts.

• Performing various sales analytical reviews with particular focus

on export sales to assess the reasonableness of the sales amounts

for the year.

• Selecting, reviewing and testing journal entries to revenue

ledger accounts.

• Assessing management’s revenue recognition policy for

compliance with IFRS 15: Revenue from Contracts with Customers

and consistent application thereof.

REPORT ON THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS (CONTINUED)

Basis for Adverse Opinion (Continued)

Although the directors acknowledge, in note 1.3, that there was a functional currency change and that the rates of exchange rate between the USD and local currency was not 1:1, they have maintained their functional currency as the USD and have presented the financial statements in USD using an exchange rate of 1:1, in compliance with SI 33/19. This constitutes a departure from the requirements of IAS 21, and therefore the financial statements have not been prepared in conformity with IFRS. Had the Group and Company applied the requirements of IAS 21, many of the elements of the accompanying consolidated and separate financial statements would have been materially impacted and therefore the departure from the requirements of IAS 21 is considered to be pervasive. The financial effects on the consolidated and separate financial statements of this departure have not been determined. A comparative analysis of how different exchange rates would impact on the consolidated statements of financial position has been presented in note 26 to the consolidated and separate financial statements. However, these amounts presented may not reflect the opening balances, in RTGS Dollars, going forward.

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Group and Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA) Code together with the ethical requirements that are relevant to our audit of financial statements in Zimbabwe. We have fulfilled our ethical responsibilities in accordance with these requirements and the IESBA code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our adverse opinion.


Key audit matter How our audit addressed the key audit matter

Valuation of Receivables

Due to the liquidity constraints prevalent in the economy, ther

was a risk of non-recoverability of receivables from third party

entities who failed to meet their obligations. The assessment of

the provision for doubtful debts involves significant estimation

uncertainty and judgments made by management.

The expected credit losses on trade receivables are estimated

using a provision matrix by reference to

- past default experience of the debtor ; and

- an analysis of the debtor’s current financial position.

The above are adjusted for factors that are specific to the debtors,

general economic conditions of the industry in which the debtors

operate and an assessment of both the current as well as the

forecast direction of conditions at the reporting date.

The recoverability of trade receivables has therefore been

considered a key audit matter as it is subject to significant

estimation and subjective judgement

Trade and other receivables and the related provisions are

disclosed in notes 2.1 and 7.

In evaluating the valuation of receivables, we performed the

following tests:

• Evaluated the design and implementation of controls applied

by management in determining the provision for doubtful debts;

• Tested the accuracy of the receivables age analysis and the

recoverability of amounts due from debtors through

circularisation, testing of subsequent receipts and corroborative

enquiry;

• Confirmed the existence and assessed the valuation of a sample

of receivables at year end;

• Established by way of confirmation with the Group’s legal

counsel if there were any litigations by the Group against its

debtors and their assessment of success for the Group; and

• Assessed the reasonableness of the methods and assumptions

used by the management to estimate the provision for doubtful

debts and tested these against IFRS 9: Financial Instruments

requirements.


Key Audit Matters (continued)

Other InformationThe directors are responsible for the other information. The other information comprises the Chairman’s Statement, Information on the

Directorate, Executive Committees & Corporate Governance and the Report of the Directors included in the Proplastics’ Limited’s

Financial Statements for the year ended 31 December 2018, (but does not include the consolidated and separate financial statements

and our auditor’s report thereon), which we obtained prior to the date of this auditor’s report, and the other reports, which are expected

to be made available to us after that date.

Our opinion on the consolidated and separate financial statements does not cover the other information and we do not express an

audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information

and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial

statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have

performed on the other information obtained, we conclude that there is a material misstatement of this other information, we are

required to report that fact.

As described in the Basis for Adverse Opinion section above, the Group and Company maintained their functional currency as the USD

and have presented the consolidated and separate financial statements in USD using an exchange rate of 1:1, in compliance with

SI 33/19. This constitutes a departure from the requirements of IAS 21. We have determined that the other information is materially

misstated for the same reason.


REPORT ON THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS (CONTINUED)For the year ended 31 December 2018

Responsibilities of the Directors for the Consolidated and Separate Financial Statements

The Directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements in

accordance with International Financial Reporting Standards and the requirements of the Companies Act (Chapter 24:03), and for

such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements

that are free from material misstatement, whether due to fraud or error. In preparing the consolidated and separate financial statements,

the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as

applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to

liquidate the Group and/or the Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are

free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable

assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a

material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in

the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated

and separate financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain

professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to

fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and

appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher

than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the

override of internal control.

• Obtain an understanding of internal control relevant to the audit 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 Group’s and the Company’s internal

control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related

disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence

obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s

and the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to

draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such

disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of

our auditor’s report. However, future events or conditions may cause the Group and / or the Company to cease to continue as

a going concern.

• Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the

disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events

in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the

Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and

performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant

audit findings, including any significant deficiencies in internal control that we identify during our audit.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the

consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these

matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare

circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so

would reasonably be expected to outweigh the public interest benefits of such communication.


REPORT ON THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS (CONTINUED)For the year ended 31 December 2018


Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial Statements (continued)

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the

consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters

in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances,

we determine that a matter should not be communicated in our report because the adverse consequences of doing so would

reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Charity Mtwazi.

Deloitte & Touche

Chartered Accountants (Zimbabwe)

Per. Charity Mtwazi

Partner

(PAAB Practice Certificate Number 0585)

Harare

Zimbabwe

Date: 10 April 2019


CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2018

31 December 31 December 2018 2017 Notes $ $Assets

Non-current assets

Property, plant & equipment 4 9,362,739 4,365,160

9,362,739 4,365,160Current assets

Inventories 6 6,843,511 3,724,401

Trade and other receivables 7 3,784,427 1,775,503

Cash and cash equivalents 1,173,304 4,396,251

Total current assets 11,801,242 9,896,155Total assets 21,163,981 14,261,315

Equity and liabilities Equity

Share capital 8 24,649 24,499

Reserves 8,984,242 8,678,149

Retained earnings 4,103,255 1,737,756

Total equity 13,112,146 10,440,404

Non-current liabilities

Long-term borrowings 9 848,818 -

Deferred tax 10 815,516 576,357

Total non-current liabilities 1,664,334 576,357

Current liabilities

Trade and other payables 11 5,681,188 2,764,198

Short-term borrowings 9 422,273 374,667

Current tax payable 284,040 105,689

Total current liabilities 6,387,501 3,244,554Total liabilities 8,051,835 3,820,911Total equity and liabilities 21,163,981 14,261,315

G. Sebborn K. ChigiyaChairman Chief Executive Officer10 April 2019 10 April 2019


CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEfor the year ended 31 December 2018

31 December 31 December 2018 2017 Notes $ $Revenue 12 24,091,989 16,103,935

Cost of sales (15,196,421) (11,302,224)

Gross profit 8,895,568 4,801,711Other income/(expenses) 12 12,367 (45,346)

Distribution expenses (591,002) (477,435)

Administrative expenses 13 (3,398,064) (2,279,537)

Profit before interest and tax 4,918,869 1,999,393Finance costs (84,077) (24,726)

Profit before tax 14 4,834,792 1,974,667Income tax expense 15 (1,236,916) (616,219)

Profit for the year 3,597,876 1,358,448

Attributable profit for the year 3,597,876 1,358,448

Comprehensive income

Gain on property revaluation 340,833 -

Tax effect (87,765) -

Net comprehensive income 253,068 - Total comprehensive income for the year 3,850,944 1,358,448

Earnings per share Number of shares (millions) 246 245Basic earnings per share (cents) 16 1.46 0.55Diluted earnings per share (cents) 16 1.41 0.54


CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December 2018

31 December 31 December 2018 2017 $ $Cash flows from operating activities Profit for the year before interest and tax 4,918,869 1,999,393Adjustments for: Depreciation of property, plant and equipment 795,093 912,668

Expense recognised in respect of equity-settled share based payments 18,674 6,704

Non-cash adjustments 23,015 -

Loss/(profit) on disposal of property, plant and equipment 5,596 (6,169)

Net cash from operations before working capital changes 5,761,247 2,912,596(Increase)/decrease in trade and other receivables (2,008,447) 921,397

(Increase)/decrease in inventories (3,119,110) 367,855

Increase in payables 2,916,990 545,947

Cash generated from operations 3,550,680 4,747,795Net interest paid (84,077) (24,726)

Income tax paid (913,575) (511,562)

Net cash generated from operating activities 2,553,028 4,211,507Cash flow from investing activities

Purchase of property, plant and equipment-to maintain operations (761,460) (371,472)

Purchase of property, plant and equipment-to expand operations (4,729,751) -

Proceeds from disposal of property, plant and equipment 33,777 23,313

Investments - (15)

Net cash utilised in investing activities (5,457,434) (348,174 )Cash flow from financing activities Increase/(decrease) in borrowings 896,424 (541,333)

Dividend paid (1,249,465) (367,490)

Share options exercised 34,500 -

Net cash utilised in financing activities (318,541) (908,823)Net(decrease)/increase in cash and cash equivalents (3,222,947) 2,954,510Cash and cash equivalents at the beginning of the year 4,396,251 1,441,741

Cash and cash equivalents at the end of the year 1,173,304 4,396,251


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the year ended 31 December 2018

Share Retained Total capital Reserves earnings equity $ $ $ $

Balance as at 31 December 2016 24,499 8,671,445 747,026 9442,970Dividend paid - - (367,490) (367,490)

Share based payments - 6,704 - 6,704

Share buy back - - (228) (228)

Profit for the year - - 1,358,448 1,358,448

Balance as at 31 December 2017 24,499 8,678,149 1,737,756 10,440,404

Dividend paid - - (1,249,465) (1,249,465)

Other comprehensive income - 253,069 - 253,069

Expected credit gain on adoption of IFRS9 - - 17,088 17,088


Share premium - 34,350 - 34,350

Share options exercised 150 - - 150



‘Proplastics delivering PVC pipes for an irrigation project in Mazowe’


COMPANY STATEMENT OF FINANCIAL POSITION

as at 31 December 2018

31 December 31 December 2018 2017 Notes $ $

Assets Non-current assets

Property, plant & equipment 4 7,706,365 3,027,119

Investment in subsidiary 5 1,123,289 1,123,289

8,829,654 4,150,408Current assets

Inventories 6 6,843,511 3,724,401

Trade and other receivables 7 3,783,950 1,775,503

Cash and cash equivalents 1,168,375 4,396,251

Inter-company balances in debit 5,000 -

Total current assets 11,800,836 9,896,155 Total assets 20,630,490 14,046,563

Equity and liabilities Equity

Share capital 8 24,649 24,499

Reserves 8,731,173 8,678,149

Retained earnings 4,031,868 1,686,207

Total equity 12,787,690 10,388,855

Non-current liabilities

Long-term borrowings 9 848,818 -

Deferred tax 10 488,653 329,506

Total non-current liabilities 1,337,471 329,506

Current liabilities

Trade and other payables 11 5,799,016 2,848,680

Short-term borrowings 9 422,273 374,667

Current tax payable 284,040 104,855

Total current liabilities 6,505,329 3,328,202 Total liabilities 7,842,800 3,657,708 Total equity and liabilities 20,630,490 14,046,563

G. Sebborn K. ChigiyaChairman Chief Executive Officer10 April 2019 10 April 2019


COMPANY STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

for the year ended 31 December 2018

Notes 31 December 31 December 2018 2017 $ $

Revenue 12 24,091,989 16,103,935Cost of sales (15,196,421) (11,302,224)

Gross profit 8,895,568 4,801,711Other income/(expenses) 12 12,367 (45,346)

Distribution expenses (641,034) (502,448)

Administrative expenses 13 (3,372,351) (2,273,156)

Profit before interest and tax 4,894,550 1,980,761Finance costs (84,077) (24,726)

Profit before tax 14 4,810,473 1,956,035Income tax expense 15 (1,232,435) (608,207)

Profit for the year 3,578,038 1,347,828

Comprehensive income

Other comprehensive income - -

Total Comprehensive income for the year 3,578,038 1,347,828

Earnings per share Number of shares (millions) 246 245 Basic earnings per share (cents) 16 1.45 0.55 Diluted earnings per share (cents) 16 1.41 0.54


COMPANY STATEMENT OF CASH FLOWS


31 December 31 December 2018 2017 $ $Cash flows from operating activitiesProfit for the year before interest and tax 4,894,550 1,980,761Adjustments for:

Depreciation of non-current assets 772,593 886,668

Expense recognised in respect of equity –settled share based payments 18,674 6,704

Non-cash adjustments 23,015 -

Loss/(profit) on disposal of property, plant and equipment 5,595 (6,169)

Net cash from operations before working capital changes 5,714,427 2,867,964(Increase)/decrease in trade and other receivables (2,013,447) 921,397

(Increase)/decrease in inventories (3,119,110) 367,855

Increase in payables 2,950,335 579,727

Cash generated from operations 3,532,205 4,736,943Net interest paid (84,077) (24,726)

Income tax paid (900,029) (500,710)

Net cash generated from operating activities 2,548,099 4,211,507

Cash flow from investing activities

Purchase of property, plant and equipment-to maintain operations (761,460) (371,472)

Purchase of property, plant and equipment-to expand operations (4,729,751) -

Proceeds from disposal of property, plant and equipment 33,777 23,313

Investments - (15)

Net cash utilised in investing activities (5,457,434) (348,174)

Cash flow from financing activities Increase/(decrease) in borrowings 896,424 (541,333)

Dividend paid (1,249,465) (367,490)

Share options exercised 34,500 -

Net cash utilised in financing activities (318,541) (908,823)Net(decrease)/increase in cash and cash equivalents (3,227,876) 2,954,510Cash and cash equivalents at the beginning of the year 4,396,251 1,441,741

Cash and cash equivalents at the end of the year 1,168,375 4,396,251


COMPANY STATEMENT OF CHANGES IN EQUITY


Share Retained Total Capital Reserves Earnings Equity $ $ $ $

Balance as at 31 December 2016 24,499 8,671,445 706,097 9,402,041 Dividend paid - - (367,490) (367,490)


Share buy back - - (228) (228)


Balance as at 31 December 2017 24,499 8,678,149 1,686,207 10,388,855Dividend paid - - (1,249,465) (1,249,465)

Impact of adopting IFRS 9 - - 17,088 17,088


Share premium - 34,350 - 34,350

Share option exercised 150 - - 150




ACCOUNTING POLICIES


1. GENERAL INFORMATION

Proplastics Limited is a limited Company incorporated in the Republic of Zimbabwe. The address of its registered office is 5

Spurn Road, Ardbennie, Harare. The Group consists of Proplastics Limited and its wholly owned subsidiaries, Promouldings

(Private) Limited and Dudway Investments (Private) Limited.

1.1 Nature of Business

The principal activities of the Group are manufacturing and distribution of PVC and HDPE sewer and water reticulation pipes.

1.2 Reporting period

The statutory reporting period for the Group and Company is 1 January 2018 to 31 December 2018.

1.3 Determination of functional currency

The Group’s reporting entity operate in a multi-currency environment which includes foreign currencies, the US$ (United States

Dollars), and quasi–currency instruments in the form of electronic balances, bond notes which, during the reporting period,

were officially pegged to the US$ at an official rate of 1:1. Multi-tier pricing in the market, depending on the mode of payment

(US$, Bond note, mobile money or RTGS)and persistent shortages of foreign currency resulting in delays in settling foreign

obligation at the official rate, particularly subsequent to monetary policy changes in October 2018, have triggered deliberations

on whether the US$ remains the functional currency for companies operating in Zimbabwe.

Given the environment that the Group and Company is currently operating in, the Directors have assessed in terms of IAS 21, if

there has been a change in the functional currency used by the Group and Company during the year. In their assessment the

Directors included considerations of whether the various modes of settlement may represent different forms of currency and

have taken the option of adopting the accounting treatment prescribed under Statutory Instrument (SI) 33 of 2019 and have

used an exchange rate of I: I between RTGS balances, bond notes and the US$. The following was considered:

• In October 2018, Reserve Bank of Zimbabwe (RBZ) instructed the separation and official opening of the foreign

currency accounts and RTGS accounts (FCA RTGS for local electronics and FCA Nostro for actual foreign currency

deposits or export proceeds).

• In 2019 National Budget presented in November 2018, the government announced the requirement to pay duty in

foreign currency for specified goods and services as well as payment of local taxes in foreign currency for all foreign

currency transactions.

Subsequent to year-end, the following events took place:

• The monetary policy announcement on 20 February 2019, introduces the RTGS dollar, and this is not at par with the US$.

The accounting and auditing profession evaluated the impact of the subsequent recognition of the RTGS dollar as a currency

and its devaluation against the US$ on 20 February 2019 and issued reporting guidelines. Following guidance from the Public

Accountants and Auditors Board (PAAB), the Directors decided to present the results on the position that Bond/RTGS is at par

with the US dollar in accordance with Statutory instrument 33 of 2019 issued on 22 February 2019 which for accounting and

other purposes, deemed all assets and liabilities that were valued in US$ immediately before 22 February to be valued in RTGS

dollars at a rate of 1:1. The financial statements have therefore been prepared on the basis that the RTGS currency was at par

with the US$ as at 31 December 2018, prior to the 20 February 2019 monetary policy statement. Refer to note 26, Events after

reporting period.


ACCOUNTING POLICIES


1.4. Statement of compliance

The Group and Company financial results, where practicable, have been prepared in accordance with the accounting policies

consistent with International Financial Reporting Standards (IFRS) and in the manner required by the Companies Act (Chapter

24:03). Due to the requirements of Statutory Instrument 33 of 2019, it was not practical to comply with requirements of IAS21:

The Effects of Changes in Foreign Exchange Rates. This has had a significant impact on the Group’s financial statements. Refer

to note 26 in the financial statements, Events after the reporting period.

The Group and Company annual financial statements have been prepared under the supervision of P. Changunda CA (Z), Group

Finance Director of Proplastics Limited, Registered Public Accountant, PAAB Number 2847.

2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS’s)

2.1. New and amended IFRS Standards that are effective for the current year

The following new standards, amendments and interpretations are effective for accounting periods beginning on or after 1

January 2018 and are relevant to the Group and Company. The application of these standards, amendments and interpretations

has had no material effect on the disclosures of amounts in these financial statements.

Standard/Interpretation Content Applicable for financial years beginning on/after

IFRS 9(amendments) Financial instruments( classification and

measurement)

1 January 2018

IFRS 2 (amendments) Classification and measurement of share

based payment transactions

1 January 2018

IAS 4 (amendments) Insurance contracts 1 January 2018

IFRS 15 (new) Revenue from contracts with customers 1 January 2018

IFRIC 22 (amendments) Foreign currency transactions and

advance consideration

1 January 2018

IAS 40 (amendments) Investment Property 1 January 2018


ACCOUNTING POLICIES


2 APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS’s) (continued)

2.1. New and amended IFRS Standards that are effective for the current year (continued)

IFRS 9 Financial Instruments (Classification and measurement)

IFRS 9 replaces the provisions of IAS 39 ‘Financial instruments: Recognition and measurement’ that relate to the recognition,

classification and measurement of financial instruments, impairment of financial assets and hedge accounting. The adoption

of IFRS 9 from 1 January 2018 resulted in changes in accounting policies and adjustments to the amounts recognised in the

financial statements. The new accounting policies effective from 1 January 2018 are set out below.

Initial recognition and de-recognition

A financial instrument is recognised when and only when the Group becomes a party to the contractual provisions of the

particular instrument. All financial assets and liabilities are measured at fair value on the date of initial recognition. Transaction

costs that are directly attributable to the acquisition of financial assets are expensed in profit or loss for financial assets initially

classified at fair value through profit or loss. For financial assets not classified at fair value through profit or loss, transaction costs

are added to or deducted from the fair value at initial recognition. The Group derecognises a financial asset when and only

when:

• The contractual rights to the cash flows arising from the financial assets have expired or been forfeited by the Group;

or

• It transfers the financial asset including substantially all the risks and rewards of ownership of the asset; or

• It transfers the financial asset, neither retaining nor transferring substantially all the risks and rewards of ownership of the

asset, but no longer retains control of the asset.

A financial liability is derecognised when and only when the liability is extinguished, that is, when the obligation specified

in the contract is discharged, cancelled or has expired. The difference between the carrying amount of a financial liability (or

part thereof ) extinguished or transferred to another party and consideration paid, including any non-cash assets transferred

or liabilities assumed, is recognised in statement of profit or loss. All purchases and sales of financial assets carried at fair value

through profit or loss that require delivery within the time frame established by regulation or market convention (‘regular way’

purchases and sales) are recognised at trade date, which is the date that the Group commits to purchase or sell the asset.

Classification of financial assets and liabilities

The Group classify financial assets as subsequently measured at amortised cost, fair value through other comprehensive income

or fair value through profit or loss on the basis of both:

• the Group’s business model for managing financial assets and

• the contractual cash flow characteristics of the financial asset.

The Group makes an assessment of the objective of a business model in which an asset is held at a portfolio level because this

best reflects the way the business is managed and information provided to management. The information considered includes:


ACCOUNTING POLICIES




IFRS 9 Financial Instruments (Classification and measurement) (continued)

Classification of financial assets and liabilities (continued)

• the stated policies and objectives for the portfolio and the operation of those policies in practice. In particular, whether

management’s strategy focuses on earning contractual interest revenue, maintaining a particular interest

rate profile, matching the duration of the financial assets to the duration of the liabilities that are funding those assets or

realising cash flows through the sale of the assets;

• the risks that affect the performance of the business model (and the financial assets held within that business model) and

how those risks are managed;

• how managers of the business are compensated – e.g. whether compensation is based on the fair value of the assets

managed or the contractual cash flows collected; and

• the frequency, volume and timing of sales in prior periods, the reasons for such sales and its expectations about future

sales activity. However, information about sales activity is not considered in isolation, but as part of an overall assessment

of how the Group’s stated objective for managing the financial assets is achieved and how cash flows are realised.

The Group also assesses the cash flow characteristics of the financial asset. For the purposes of this assessment, ‘principal’ is

defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of

money and for the credit risk associated with the principal amount outstanding during a particular period of time and for

other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as profit margin. In assessing whether

the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the

instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or

amount of contractual cash flows such that it would not meet this condition. In making the assessment, the Group considers:

• contingent events that would change the amount and timing of cash flows;

• leverage features;

• prepayment and extension terms;

• terms that limit the Group’s claim to cash flows from specified assets; and

• features that modify consideration of the time value of money (e.g. periodical reset of interest rates).

A financial asset is measured at amortised cost if it is held within the business model whose objective is to hold financial assets

to collect contractual cash flows for which the contractual terms give rise on specified dates to cash flows that are solely

payments of principal and interest on principal amount outstanding.

A financial asset is measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through

other comprehensive income. The Group does not hold financial assets at fair value through other comprehensive income at

the reporting date.

Financial assets and liabilities are classified as subsequently measured at amortised cost.


ACCOUNTING POLICIES





Interest income and expense

Interest income and expense are recognised in the statement of profit or loss using the effective interest method taking into

account the expected timing and amount of cash flows. Interest income and expense include the amortisation of any discount

or premium or other differences between the initial carrying amount of an interest-bearing instrument and its amount at

maturity calculated on an effective interest basis.

Financial instruments designated as at fair value through profit or loss

Financial assets carried at fair value through profit or loss (FVTPL) comprise financial assets classified as held-for-trading and

those that the Group has elected to designate at fair value through profit or loss.

Financial assets at fair value through profit or loss are initially recognised at fair value excluding transaction costs directly

attributable to their acquisition which are recognised immediately in the statement of profit or loss. After initial recognition,

financial assets at fair value through profit or loss are measured at fair value with the resulting fair value gains or losses

adjustment being recognised directly in the statement of profit or loss.

Fair value measurement considerations

The fair values of quoted financial assets are based on quoted prices. If the market for a financial asset is not active, the Group

establishes fair value using valuation techniques. These include the use of recent arm’s length transactions, reference to other

instruments that are substantially the same, discounted cash flow analysis and option pricing models.

Financial assets at amortised cost

Financial assets at amortised cost are non-derivative financial assets with fixed or determinable payments that are not quoted in

an active market, other than those classified by the Group at fair value through profit or loss. Subsequent to initial measurement,

those assets including those made to fellow group undertakings are measured at amortised cost using the effective interest

method less any impairment losses. Interest income is recognised as part of investment income.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, demand deposits and other short-term liquid investments that are readily

convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and

subsequently recorded at fair value.


ACCOUNTING POLICIES





Financial liabilities

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable

transaction costs. After initial recognition, loans and borrowings are subsequently measured at amortised cost using the

effective interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as

through the amortisation process, i.e. finance cost.

Offsetting

Financial assets and liabilities are offset and the net amount reported in the statement of financial position only when there is

a legally enforceable right to set off and there is intention to settle on a net basis or to realize the asset and settle the liability

simultaneously. Income and expense items are offset only to the extent that their related instruments have been offset in the

statement of financial position.

Loans to (from) group companies

These include loans to and from holding companies, subsidiaries, joint ventures and associates are recognised initially at fair

value plus direct transaction costs. Loans to group companies are classified as financial assets designated at fair value through

profit or loss.

Trade and other payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest

rate method.

Assets carried at amortised cost

The Group recognises a loss allowance for expected credit losses on financial assets that are measured at amortised cost. IFRS 9

replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ (ECL) model and results in credit losses being recognised

earlier than under IAS 39. The new impairment model applies to financial assets measured at amortised cost (for example trade

and other receivables held by the Group) but not to investments in equity instruments and financial assets designated at fair

value through profit or loss. As a consequence of the new standard, the Group has revised its impairment methodology under

IFRS 9 for each of these classes of assets. The impact of the change in impairment methodology on the Company’s total equity

is disclosed in note 2.1: Transitional adjustments on equity on the date of initial application of IFRS 9. The carrying amount of the

asset is reduced either directly or through use of an allowance account. The impairment loss is recognised in profit or loss. Any

subsequent reversal of an impairment loss that is required to adjust the loss allowance at reporting date is recognised in profit

or loss.

The expected credit loss is measured in a way that reflects:

• an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes.

• the time value of money.


ACCOUNTING POLICIES



2.1. New and amended IFRS Standards that are effective for the current year (continued) IFRS 9 - Financial Instruments (Classification and measurement) (continued)

Assets carried at amortised cost (continued) • reasonable and supportive information that is available without undue cost or effort at the reporting date about past

events, current conditions and forecasts of future economic conditions.

The Group measures a loss allowance at an amount equal twelve month expected credit losses on financial assets for which

credit risk has not increased significantly since initial recognition. A loss allowance for an amount equal to lifetime credit losses

is applied on trade receivables and financial assets for which credit risk has increased significantly since initial recognition.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when

estimating expected credit losses, the Group considers quantitative and qualitative information, based on the Group’s historical

experience, credit assessment and including forward-looking information. The Group’s assessment of a significant increase in

credit risk from initial recognition consists of primary and secondary risk drivers both of which are included by the Group as part

of the ongoing credit risk management.

The primary risk driver aligns to the quantitative credit risk assessments performed, such as the credit score, credit rating,

probability of default or arrears aging of a financial instrument. The secondary risk assessment considers a broad range of

qualitative risk factors based on a forward-looking view such as economic and sector outlooks. The secondary risk assessment

can be performed on a portfolio basis as opposed to a quantitative assessment which is done at a financial instrument level.

The expected credit loss model is dependent on the availability of relevant and accurate data to determine whether a significant

increase in credit risk occurred since initial recognition, the probability of default (PD), the loss given default (LGD) and the

possible exposure at default (EAD). Of equal importance is sound correlation between these parameters and forward-looking

economic conditions. In the absence of sufficient depth of data, management apply expert judgment within a governance

framework to determine the required parameters. The expert judgement process is based on available internal and external

information. Estimates regarding credit risk parameters and the impact of forward-looking information used in the calculation

of the expected credit loss amount should be reviewed at each reporting date and updated. The expected credit loss amount

depends on the specific stage where the financial instrument has been allocated to within the ECL model:

• Stage 1: At initial recognition, a financial instrument is allocated into stage 1, except for purchased or originated credit

impaired financial instruments.

• Stage 2: A financial instrument is allocated to stage 2 if there has been a significant increase in credit risk since initial

recognition of the financial instrument.

• Stage 3: A financial instrument is allocated to stage 3 if the financial instrument is in default or is considered to be credit

impaired.

The Group has elected to apply the simplified approach that uses a provision matrix when determining the lifetime expected

loss allowance for all trade receivables, contract assets and lease receivables.


ACCOUNTING POLICIES




IFRS 9 - Financial Instruments (Classification and measurement) (continued)

Significant judgments and estimates in measuring expected credit losses

In determining the expected credit loss allowances for financial assets, the following significant judgments and estimates

were considered. The availability of information and the sophistication of credit risk management systems and protocols will

influence the judgments made and estimates considered.

• The Group applies judgment in determining whether a significant increase in credit risk took place since initial

recognition of financial assets at amortised cost. Judgment was applied in identifying the qualitative and quantitative

triggers and thresholds used to identify significant increases in credit risk since initial recognition of the financial

assets. Depending on the availability of reasonable and supportable information without undue cost or effort, significant

increases in credit risk is identified through increases in behaviour risk, arrears aging and portfolio assessments.

The Company makes use of the rebuttable presumption that a significant increase in credit risk has taken place when

a financial asset is 30 days past due or one payment in arrears. The assessments are carried out on regular basis as part of

the credit risk management activities of the Group.

• The Group applies judgment in identifying default and credit-impaired financial assets. The Group considers the arrears

category where the balance has been allocated to or whether the balance is in legal review, debt review under

administration. Balances are considered to be in default when the balances have been past due for 90 days or more

or have been identified to be in default after applying expert judgment. Financial assets are credit impaired when one or

more events with a detrimental impact on the expected cash flows have taken place.

• The calculation of the expected credit loss balance is primarily influenced by the stage allocation of the balance and

the risk parameters. The Group makes use of estimates of PDs, LGDs and EADs to calculate the expected credit loss

balance for financial assets at amortised cost. Depending on the relevant information, available PDs are based on

a behavioural scoring model and historic default rate curves or are determined through internally developed statistical

models. LGDs are derived from a default recovery time series model that takes recency of payments into account or

through internally developed statistical models. EADs are determined with reference to expected amortisation schedules

and taking into account credit conversion factors as applicable for undrawn or revolving facilities.

• The ability to include forward-looking information in the measurement of expected credit loss balances is dependent on

the existence of reliable and quantifiable correlation between forward-looking factors and changes in the expected

credit loss balance. When such correlations do not exist and where applicable, management applies expert judgment

to determine an overlay provision to incorporate best estimates of the impact of forward-looking information.

Any overlay provision is based on available information and qualitative risk factors within a governed process.


ACCOUNTING POLICIES





Initial Impact of IFRS 9 on financial assets and liabilities Classification of financial assets and liabilities on the date of initial application of IFRS 9

There were no financial assets or financial liabilities which the Group had previously designated as at fair value through profit or

loss (FVTPL) under IAS 39 that were subject to reclassification or which the Group has elected to reclassify upon the application

of IFRS 9. There were no financial assets which the Group and Company has elected to designate as at FVTPL at the date of initial

application of IFRS 9.

The table below shows information relating to financial assets that have been re-classified as a result of transition to IFRS 9.

Group Company

Original Classification under IAS39

New Classification under IFRS9

Original Carrying Amount

under IAS 39

$

New Carrying amount

under IFRS 9

$

Original Carrying Amount

under IAS 39

$

New Carrying amount

underIFRS 9

$

Assets

Cash and cash

equivalents

Fair value

through profit

and loss

Fairvalue

through profit

and loss 4,396,251 4,396,251 4,396,251 4,396,251

Trade and other

receivables

Loans and

receivables 1,775,503 1,798,518 1,775,503 1,798,518

Loans and

advances to directors

Loans and

receivables Amortised cost 664,932 664,932 664,932 664,932

Total Assets 6,836,686 6,859,701 6,836,686 6,859,701

Liabilities

Provisions Loans and

receivables Amortised cost 424,430 424,430 424,430 424,430

Trade and other

payables

Loans and

receivables Amortised cost 2,339,768 2,339,768 2,336,569 2,336,569

Total Liabilities 2,764,198 2,764,198 2,760,999 2,760,999


ACCOUNTING POLICIES


APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS’s) (continued)



Initial Impact of IFRS 9 on financial assets and liabilities Classification of financial assets and liabilities on the date of initial application of IFRS 9

Group Carrying Amount under IAS 39

as at 31 December 2017$

Re-classification

$

Re-measurement

$

New Carrying amountunder IFRS 9

as at 1 January 2018 $

Trade and other receivables

Opening Balance 1,775,503 - - 1,775,503

Re-measurement - - 23,015 23,015

Closing Balance 1,775,503 - 23,015 1,798,518

Financial Liabilities -

Amortised Cost

Provision 424,430 - - 424,430

Trade and other payables 2,339,768 - - 2,339,768

Total amortised costs 2,764,198 - - 2,764,198

Company Carrying Amount under IAS 39

as at 31 December 2017$

Re-classification

$

Re-measurement

$

New Carrying amount under IFRS 9

as at 1 January 2018$

Trade and other receivables

Opening Balance 1,775,503 - - 1,775,503

Re-measurement - - 23,015 23,015

Closing Balance 1,775,503 - 23,015 1,798,518

Financial Liabilities

Amortised Cost

Provision 424,430 - - 424,430

Trade and other

payables 2,424,250 - - 2,424,250

Total amortised costs 2,848,680 - - 2,848,680

Transitional adjustment on financial assets and liabilities on the date of initial application of IFRS 9


ACCOUNTING POLICIES


APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS’s) (continued)



Transitional adjustments on financial assets and liabilities on the date of initial application of IFRS 9 (continued)

The impact of adopting IFRS 9 resulted in an increase in trade and other receivables by $ 23,015.

Reconciliation of the impaired allowance on the date of initial application of IFRS 9

Company Original

Classification

under IAS39

$

Re-classification

$

Re-measurement

$

New Carrying

amount under

IFRS 9 as at

1 January 2018

$

Trade and other receivables (188,525) - 23,015 (165,510)

Group Original Classification

under IAS39

$

Re-classification

$

Re-measurement

$

New Carrying amount under

IFRS 9 as at 1 January 2018

$

Trade and other receivables (188,525) - 23,015 (165,510)

Impact of Adopting IFRS9

Transitional adjustments on equity on the date of initial application of IFRS 9 Group Company $ $Closing balance under IAS 39 10,440,404 10,388,855 Recognition of expected credit gain 17,088 17,088

Reclassification and measurement financial instruments - -

Closing balances under IFRS 9 10,457,492 10,405,943


ACCOUNTING POLICIES



2.1 New and amended IFRSs that are effective for the current year (continued)

Impact of initial application of IFRS 9 – Financial Instruments (continued) Provision approach

Application of this standard has had no material impact on the Group and Company.

IFRS 2 (amendments) ‘Share based payment’: adds clarification on the classification and measurement of share-based payment transactions.

The amendment deals with the effects of vesting conditions on the measurement of a cash settled share-based payment and

accounting for a modification to the terms and conditions of a share-based payment that changes the classification of the

transaction from cash settled to equity settled. The amendments also consider the classification of share-based payment with

net settlement features.

The application of these amendments has had no impact on the Group’s consolidated financial statements.

IAS 4 (amendments) ‘Insurance contracts’:

Provides an additional guidance, which states that an entity choosing to apply the overlay approach retrospectively to qualifying

financial assets does so when it first applies IFRS 9. These are amendments regarding the interaction of IFRS 4 and IFRS 9.

Application of this standard will not have a material impact on the Group and Company.

Current

1-30 days

past due 31-60 days

past due 61-90 days

past due

90 dayspast due or

more

Balance as at 31 December

2018

Balance as at 31 December

2017

Defaultrate (A) 0.5324% 1.0000% 2.0008% 10.0009% 49,9998% - -

Grosscarryingamount ($000’s) (B) 568,559 61,986 18,443 34,857 260,293 944,138 1,307,148

Lifetimeexpectedcredit loss(A x B) ($) 3,027 620 369 3,486 130,146 137,648 165,510


ACCOUNTING POLICIES




IFRS 15 - Revenue from Contracts with Customers

IFRS 15 specifies how and when an entity will recognise revenue as well as requiring such entities to provide user of financial

statements with more informative, revenant disclosures. In the current year, the Group and Company has adopted IFRS 15

Revenue from Contracts with Customers (as amended in April 2018) which is effective for an annual period that begins on or

after I January 2018.

IFRS 15 introduces a five-step model to revenue recognition as follows:

• Identify the contract with the customer.

• Identify the performance obligations in the contract.

• Determine the transaction price.

• Allocate the transaction price to the performance obligations in the contracts.

• Recognise revenue when (or as) the entity satisfies a performance obligation.

Guidance is provided on topics such as the point in which revenue is recognised, accounting for variable consideration, costs of

fulfilling and obtaining a contract and various related matters. New disclosures about revenue are also introduced. The standard

is set to replace IAS 18, IAS 11, IFRIC 13, IFRIC 15, IFRIC 18 and SIC 31.

The Group and Company has applied IFRS15 in accordance with the fully retrospective transitional approach without using

the practical expedient for completed contracts in IFRS 15:C5 (a) and (b). or for modified contracts in IFRS 15:C5(c) but using

the expedient in IFRS 15:C5(d) allowing both non-disclosure of the amount of the transaction price allocated to the remaining

performance obligation, and an explanation of when it expects to recognise that amount as revenue for all reporting periods

presented before the date of initial application.

IFRS 15 uses the term contract asset and contract liability to describe what might more commonly be known as ’accrued

revenue’ and ’deferred revenue’, however the Standard does not prohibit an entity from using alternative descriptions in the

statement of financial position. The Group and Company has adopted the terminology used in IFRS 15 to describe such balanc-

es. The Group and Company’s accounting policies for its revenue streams are disclosed in note3.5 below. Apart from providing

more extensive disclosures for the Group revenue transactions, the application of IFRS 15 has not had a significant impact on

the Group and Company’s financial statements.

Application of this standard did not have a material impact on the Group and Company.

IFRIC 22 (Amendments): Foreign Currency Transactions and Advance Consideration

IFRIC 22 addresses how to determine the ‘date of transaction’ for the purpose of determining the exchange rate to use on initial

recognition of an asset, expense or income, when consideration for that item has been paid or received in advance in a foreign

currency which resulted in the recognition of a non-monetary asset or non-monetary liability (e.g. a non-refundable deposit or

deferred revenue).

The Interpretation specifies that the date of transaction is the date on which the entity initially recognises the non-monetary

asset or non-monetary liability arising from the payment or receipt of advance consideration. If there are multiple payments or

receipts in advance, the Interpretation requires an entity to determine the date of transaction for each payment or receipt of

advance consideration.


Standard/Interpretation Content Applicable for financial years beginning on/after

IFRS 16 (new) Leases 1 January 2019

Amendments to IFRS 9 Prepayment Features with Negative

Compensation 1 January 2019

Amendments to IAS 28 Long-term Interests in Associates

and Joint Ventures 1 January 2019

Annual Improvements to IFRS Amendments to IFRS 3 Business

Combinations, IFRS 11 Joint Arrangements 1 January 2019

Standards 2015-2017 Cycle IAS 12 Income Taxes and

IAS23 Borrowing Costs 1 January 2019

Amendments to IAS 19 Employee Benefits Plan Amendment, Curtailment

or Settlement 1 January 2019

IFRS 10 Consolidated Financial Statements

and IAS 28 (amendments)

Sale or Contribution of Assets between

an Investor and its Associate

or Joint Venture Effective date not set

IFRIC 23 Uncertainty over Income Tax Treatments 1 January 2019

ACCOUNTING POLICIES




IAS 40 (amendments):

Provides that Transfers to, or from, investment property should only be made when there is a change in use, evidenced by one

or more of the following:

• Commencement of owner-occupation (transfer from investment property to owner-occupied property).

• Commencement of development with a view to sale (transfer from investment property to inventories).

• End of owner-occupation (transfer from owner-occupied property to investment property).

• Commencement of an operating lease to another party (transfer from inventories to investment property)

• End of construction or development (transfer from property in the course of construction/development to investment

property. When an entity decides to sell an

• Investment property without development, the property is not re-classified as inventory but is dealt with as investment

property until it is de-recognised.

Application of this standard will not have an impact on the Groupn and Company.

2.2 New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2018 and not early adopted

The following new standards, amendments and interpretations have been issued but are not yet effective and are relevant to

the Group and Company’s operations:


ACCOUNTING POLICIES



2.2 New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2018 and not early adopted (continued)

The directors do not expect that the adoption of the standards listed above will have a material impact on the financial

statements of the Group in future periods, except as noted below:

IFRS 16 - Leases

The IASB issued IFRS 16 in January 2016. IFRS 16 replaces IAS 17 ’Leases’ and its related interpretations for reporting periods

beginning on or after 1 January 2019.

Operating leases The Group as lessee: IFRS 16 introduces a ‘right-of - use’ model whereby the lessee recognises a right of use asset and an

associated financial obligation to make lease payments for all leases with a term of more than 12 months. The asset will be

amortised over the lease term and the financial liability measured at amortised cost with interest recognised in profit and loss

using the effective interest rate method.

The Group will not be affected as a lessor as the Group does not have leases classified as operating leases.

The Group carried out an assessment of the impact of IFRS 16 and below is a table, which shows the impact at consolidated

Group position as well as at entity level.

Finance leases The main differences between IFRS 16 and IAS 17 with respect to assets formerly held under a finance lease is the measurement

of the residual value guarantees provided by the lessee to the lessor. IFRS 16 requires that the Group recognise as part of its

lease liability only the amount expected to be payable under a residual value guarantee, rather than the maximum amount

guaranteed as required by IAS 17. On initial application, the Group will present equipment previously included in property,

plant and equipment within the line item for right-of-use assets and the lease liability, previously presented within borrowing,

will be presented in a separate line for lease liabilities. Based on an analysis of the Group’s finance leases as at 31 December

2018 on the basis of the facts and circumstances that exist at that date, the directors of the Company have assessed that the

impact of this change will not have an impact on the amounts recognised in the Group’s consolidated financial statements as

the group does not hold any finance leases.

Group Company

Increase of assets 216,789 5,058,132

Increase of liabilities 216,789 5,058,132


ACCOUNTING POLICIES




Amendments to IFRS 9 - Prepayment Features with Negative Compensation The amendments to IFRS 9 clarify that for the purpose of assessing whether a prepayment feature meets the SPPI condition,

the party exercising the option may pay or receive reasonable compensation for the prepayment irrespective of the reason for

prepayment. In other words, prepayment features with negative compensation do not automatically fail SPPI.

The amendment applies to annual periods beginning on or after 1 January 2019, with earlier application permitted. There are

specific transition provisions depending on when the amendments are first applied, relative to the initial application of IFRS 9.

The directors of the Company do not anticipate that the application of the amendments in the future will have an impact on

the Group’s consolidated financial statements.

Amendments to IAS 28 - Long term Interests in Associates and Joint Ventures The amendment clarifies that IFRS 9, including its impairment requirements, applies to long term interests. Furthermore, in

applying IFRS 9 to long term interests, an entity does not take into account adjustments to their carrying amount required by

IAS 28 (i.e., adjustments to the carrying amount of long term interests arising from the allocation of losses of the investee or

assessment of impairment in accordance with IAS 28).

The amendments apply retrospectively to annual reporting periods beginning on or after 1 January 2019. Earlier application is

permitted. Specific transition provisions apply depending on whether the first time application of the amendments coincides

with that of IFRS 9.



Annual Improvements to IFRS Standards 2015–2017 Cycle Amendments to IFRS 3 Business Combinations, IFRS 11 Joint Arrangements, IAS 12 Income Taxes and IAS 23 Borrowing Costs .

The Annual Improvements include amendments to four Standards.

IAS 12 - Income Taxes The amendments clarify that an entity should recognise the income tax consequences of dividends in profit or loss, other

comprehensive income or equity according to where the entity originally recognised the transactions that generated the

distributable profits. This is the case irrespective of whether different tax rates apply to distributed and undistributed profits.

IAS 23 - Borrowing Costs The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use

or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalisation rate on

general borrowings.


ACCOUNTING POLICIES




Annual Improvements to IFRS Standards 2015–2017 Cycle Amendments to IFRS 3 Business Combinations, IFRS 11 Joint Arrangements, IAS 12 Income Taxes and IAS 23 Borrowing Costs (continued)

IFRS 3 - Business Combinations The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, the entity applies

the requirements for a business combination achieved in stages, including re-measuring its previously held interest (PHI) in the

joint operation at fair value. The PHI to be re-measured includes any unrecognised assets, liabilities and goodwill relating to the

joint operation.

IFRS 11 - Joint Arrangements The amendments to IFRS 11 clarify that when a party that participates in, but does not have joint control of, a joint operation

that is a business obtains joint control of such a joint operation, the entity does not re-measure its PHI in the joint operation.

All the amendments are effective for annual periods beginning on or after 1 January 2019 and generally require prospective

application. Earlier application is permitted.



Amendments to IAS 19 - Employee Benefits Plan Amendment, Curtailment or Settlement The amendments clarify that the past service cost (or of the gain or loss on settlement) is calculated by measuring the defined

benefit liability (asset) using updated assumptions and comparing benefits offered and plan assets before and after the plan

amendment (or curtailment or settlement) but ignoring the effect of the asset ceiling (that may arise when the defined benefit

plan is in a surplus position). IAS 19 is now clear that the change in the effect of the asset ceiling that may result from the plan

amendment (or curtailment or settlement) is determined in a second step and is recognised in the normal manner in other

comprehensive income.

The paragraphs that relate to measuring the current service cost and the net interest on the net defined benefit liability (asset)

have also been amended. An entity will now be required to use the updated assumptions from this re-measurement to

determine current service cost and net interest for the remainder of the reporting period after the change to the plan. In the

case of the net interest, the amendments make it clear that for the period post plan amendment, the net interest is calculated

by multiplying the net defined benefit liability (asset) as re-measured under IAS 19.99 with the discount rate used in the

re-measurement (also taking into account the effect of contributions and benefit payments on the net defined benefit liability

(asset).

The amendments are applied prospectively. They apply only to plan amendments, curtailments or settlements that occur on or

after the beginning of the annual period in which the amendments to IAS 19 are first applied. The amendments to IAS 19 must

be applied to annual periods beginning on or after 1 January 2019, but they can be applied earlier if an entity elects to do so.




ACCOUNTING POLICIES




IFRS 10 Consolidated Financial Statements and IAS 28 (amendments) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

IFRS 10 and IAS 28 - Amendments: Amends IFRS10 Consolidated Financial Statements and IAS28 Investments in Associates and Joint Ventures (2011) to clarify the

treatment of the sale or contribution of assets from an investor to its associate or joint venture, as follows:

• Require full recognition in the investor’s financial statements of gains and losses arising on the sale or contribution of assets

that constitute a business (as defined in IFRS3 Business Combinations)

• Require the partial recognition of gains and losses where the assets do not constitute a business, i.e. a gain or loss is

recognised only to the extent of the unrelated investors’ interests in that associate or joint venture.

• These requirements apply regardless of the legal form of the transaction, e.g. whether the sale or contribution of assets

occurs by an investor transferring shares in a subsidiary that holds the assets (resulting in loss of control of the subsidiary),

or by the direct sale of the assets themselves.

• The effective date of the amendments has yet to be set by the IASB; however, earlier application of the amendments is

permitted.

• The directors of the Company anticipate that the application of these amendments may have an impact on the

Group’s consolidated financial statements in future periods should such transactions arise.

IFRIC 23 - Uncertainty over Income Tax Treatments IFRIC 23 sets out how to determine the accounting tax position when there is uncertainty over income tax treatments.

The Interpretation requires an entity to:

• determine whether uncertain tax positions are assessed separately or as a group; and

• assess whether it is probable that a tax authority will accept an uncertain tax treatment used, or proposed to be used, by an

entity in its income tax filings:

• If yes, the entity should determine its accounting tax position consistently with the tax treatment used or planned to be

used in its income tax filings.

• If no, the entity should reflect the effect of uncertainty in determining its accounting tax position.

The Interpretation is effective for annual periods beginning on or after 1 January 2019. Entities can apply the Interpretation with

either full retrospective application or modified retrospective application without restatement of comparatives retrospectively

or prospectively.

The Directors of the Group and Company do not anticipate that the application of the amendments in the future will have an

impact on the Group and Company financial statements.


ACCOUNTING POLICIES


3. Summary of significant accounting policies

3.1 Basis of preparation

The financial statements have been prepared on the historical cost basis except for certain properties and financial instruments

that are measured at revalued amounts or fair values, as explained in the accounting policies below. Where necessary, prior year

figures have been reclassified to improve comparability of the information and to ensure relevance to the understanding of the

current year’s financial results.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

market participants at the measurement date, regardless of whether that price is directly observable or estimated using another

valuation technique. In estimating the fair value of an asset or a liability, the Group and Company takes into account the

characteristics of the asset or liability if market participants would take those characteristics into account when pricing the

asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements

is determined on such a basis, except for share- based payment transactions that are within the scope of IFRS 2, leasing

transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not fair

value, such as net realisable value in IAS 2 or value in use in IAS 36.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to

which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement

in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access

at the measurement date.

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability,

either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

The financial statements are presented in United States Dollars ($), the functional currency of the Group and the country and

are rounded off to the nearest dollar.

The consolidated financial statements have been prepared on the historical cost basis except for certain properties that are

measured at re-valued amounts or fair values at the end of each reporting period, as explained in the accounting policies

below:

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

3.2 Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries. Control is

achieved when the Company:

• has power over the investee;

• is exposed, or has rights, to variable returns from its involvement with the investee and

• has the ability to use its power to affect its returns.

The Company reassess whether or not it controls an investee if facts and circumstances indicate that there are changes to one

or more of the three elements of control listed above.

When the Company has less than a majority of voting rights of an investee, it has power over the investee when the voting


ACCOUNTING POLICIES


3. Summary of significant accounting policies (continued)3.2 Basis of consolidation (continued)

rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company

considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are

sufficient to give it power including:

• the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

• potential voting rights held by the Company, other vote holders or other parties;

• rights arising from other contractual arrangements; and

• any additional facts and circumstances that indicate that the Company has, or does not have the current ability

to direct the relevant activities at the time that the decisions need to be made, including voting patterns at previous

shareholders’ meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company

loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are

included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains

control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributable to the owners of the Company and to the

non- controlling interests even if this results in the non-controlling interests having a deficient balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line

with the Group’s accounting policies.

All intergroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the

Group are eliminated in full on consideration.

3.2.1 Changes in the Group’s ownership interest in existing subsidiaries

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the

subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interest and the non-

controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. 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.

When the Group loses control of a subsidiary, the gain or loss is recognised in profit or loss and is calculated as the difference

between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the

previous carrying amount of the assets (including goodwill), less liabilities of the subsidiary and any non-controlling interests.

All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the

Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to

another category of equity as specified /permitted by applicable IFRS Standards). The fair value of any investment retained in the

former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting

under IFRS 9 Financial Instruments when applicable, or the cost on initial recognition of an investment in an associate or a joint

venture.


ACCOUNTING POLICIES


3. Summary of significant accounting policies (continued)

3.3 Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration transferred in a

business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets

transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued

by the Group, in exchange for the control of the acquiree. Acquisition related costs are generally recognised in profit or loss as

incurred.

At acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at the fair value except that: -

• deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and

measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;

• liabilities or equity instruments related to the replacement by the Group of an acquirer’s share- based payments awards are

measured in accordance with IFRS 2 Share- based Payment; and

• 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 are measured in accordance with that Standard.

3.4 Interests in joint operations

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets,

and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an

arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing

control.

When a group entity undertakes its activities under joint operations, the Group as a joint operator recognises in relation to its

interest in a joint operation:

• its assets, including its share of any assets held jointly;

• its liabilities, including its share of any liabilities incurred jointly;

• its revenue from the sale of its share of the output arising from the joint operation;

• its share of the revenue from the sale of the output by the joint operation; and

• its expenses, including its share of any expenses incurred jointly.

The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance

with the IFRSs applicable to the particular assets, liabilities, revenues and expenses.

When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a sale or contribution

of assets), the Group is considered to be conducting the transaction with the other parties to the joint operation, and gains

and losses resulting from the transactions are recognised in the Group’s consolidated financial statements only to the extent of

other parties’ interests in the joint operation.

When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a purchase of assets),

the Group does not recognise its share of the gains and losses until it resells those assets to a third party.


ACCOUNTING POLICIES



3.5 Revenue recognition

In the current year, the Group and Company has adopted IFRS 15 Revenue from Contracts with Customers (as amended in April

2018) which is effective for an annual period that begins on or after I January 2018.

Revenue comprises the fair value of the consideration received or receivable for goods and services offered by the Group and

Company during the course of the year. Revenue is recognised as per IFRS 15 five-step model as follows:

• Identify the contract with the customer.

• Identify the performance obligations in the contract.

• Determine the transaction price.

• Allocate the transaction price to the performance obligations in the contracts.

• Recognise revenue when (or as) the entity satisfies a performance obligation.

The Group and Company recognise revenue when it satisfies a performance obligation as per IFRS 15 above i.e.

• Both parties, the customer and the Group and Company commit to the contract by signing an agreement, which specifies

terms such as product quantity and specification, unit price, payment terms, form of payment, expected delivery date, any

after sales service to be offered to the customer.

• The contract can be in the form of a quotation accompanied by the terms and conditions, which both parties sign.

• The Group and Company only recognise revenue after satisfying the contract performance obligation.

Apart from providing more extensive disclosures for the Group and Company revenue transactions, application of IFRS 15 has

not had a significant impact on the Group and Company’s financial statements.

3.5.1 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 Group and Company and the amount of income can be

measured reliably). Interest income from financial assets is recognised when it is probable that the economic benefits will flow

to the Group and Company and the amount of income can be measured reliably. Interest revenue is accrued on a time basis,

by reference to the principal outstanding and at the effective interest rate that exactly discounts estimated future cash receipts

through the expected life of the financial asset to that asset’s net carrying amount.

3.5.2 Rental income

Rental income from investment properties is recognised on a straight-line basis over the term of the relevant lease.

Property, plant and equipment are tangible assets that the Group and Company holds for its own use or for rental to others and

which the Group and Company expects to use for more than one period. The consumption of property, plant and equipment

is reflected through a depreciation charge designed to reduce the asset to its residual value over its useful life.

3.6.1 Measurement

Property, plant and equipment are shown at cost less the related depreciation. It is the policy of the Group and Company

to revalue its freehold land and buildings frequently enough to ensure that the fair value of a revalued asset does not differ

materially from its carrying amount. Any revaluation increase arising is recognised in other comprehensive income, except to

the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the

increase is credited to profit or loss to the extent of the decrease previously expensed. A decrease in the carrying amount arising

on revaluation is recognised in profit or loss to the extent that it exceeds the balance, if any, held in the revaluation reserve of

that asset.


ACCOUNTING POLICIES



3.6.2 Subsequent costs

Subsequent costs are included in an asset’s carrying value only when it is probable that future economic benefits associated

with the item will flow to the Group and Company and the cost of the item can be measured reliably.

3.6.3 Components

The amount initially recognised in respect of an item of property, plant and equipment is allocated to its significant components

and where they have different useful lives, are recorded and depreciated separately. The remainder of the cost, being the parts

of the item that are individually not significant or have similar useful lives, are compiled together and depreciated as one

component.

3.6.4 Depreciation

Depreciation is recognised so as to write off the cost or valuation of assets (other than freehold land and properties under

construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual

values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate

accounted for on a prospective basis.

The following average useful lives are used in the calculation of depreciation:

Land is not depreciated

Buildings 40 years on a straight – line basis

Plant and equipment 8 years on a straight – line basis

Motor vehicles 5 years on a straight – line basis

Other Assets 3-10 years on a straight – line basis

3.6.5 Useful lives and residual values

The property, plant and equipment’s residual values and useful lives are reviewed, and adjusted if appropriate, at each financial

year-end. The estimated useful life is based on expected usage of the asset and expected physical wear and tear, which depends

on operational factors such as number of shifts for which the asset is to be used and the repair and maintenance program and

technological obsolescence arising from changes and residual value.

3.7 Impairment of assets

At each statement of financial position date, the Group and Company assesses whether there is any indication that an asset

may be impaired. If any such indication exists, the asset is tested for impairment by estimating the recoverable amount of the

related asset. Irrespective of whether there is any indication of impairment, an intangible asset with an indefinite useful life,

intangible assets not yet available for use and goodwill acquired in a business combination, are tested for impairment on an

annual basis.

When performing impairment tests, the recoverable amount is determined for the individual asset for which an objective

indication of impairment exists. If the asset does not generate cash flows from continuing use that are largely independent from

other assets or group of assets, the recoverable amount is determined for the cash generating unit (CGU) to which the asset

belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. 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 for which the estimates of future cash flows have not been adjusted.


ACCOUNTING POLICIES



3.8 Taxation and deferred taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

3.8.1 Current taxation

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement

of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further

excludes items that are never taxable or deductible. The liability for current tax is calculated using rates that have been enacted

by the statement of financial position date.

3.8.2 Deferred taxation

Deferred tax is recognised on temporary differences between the carrying amount 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 statement

of financial position 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 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 interest in joint ventures, except where the Groupand 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.

The carrying amount of deferred tax assets is reviewed at each statement of financial position 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 rates that are expected to apply in the period in which the liability

is settled or the assets realised based on tax rates (and tax laws) that have been enacted or substantively enacted by the

statement of financial position date. The measurement of deferred tax liabilities and assets reflects the tax consequences that

would follow from the manner in which the Group and Company expects, at the reporting date, to recover or settle the carrying

amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off

current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and

the Group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items that are

recognised outside profit or loss (whether in other comprehensive income or directly in equity), in which case the tax is also

recognised outside profit or loss, or where they arise from the initial accounting for a business combination. In the case of a

business combination, the tax effect is taken into account in the accounting for the business combination.


ACCOUNTING POLICIES



3.8 Taxation and deferred taxation (continued)

3.8.3 Value added tax

Revenues, expenses and assets are recognised net of the amount of value added tax except where the goods supplied are

exempted or zero-rated. The net amount of VAT recoverable from or payable to the taxation authority is included as part of

receivables or payables in the statement of financial position.

3.9. Advance payments received

Advance payments received are assessed on initial recognition to determine whether it is probable that they will be repaid in

cash or another financial asset. If it is probable that the advance payments will be repaid with goods or services, the liability is

carried at historic cost.

3.10. Inventories

Inventories comprise raw materials, work in progress, finished goods and manufactured components. They are valued at the

lower of cost or net realisable value. Net realizable value is the estimated selling price in the ordinary course of business, less

estimated costs of completion and the estimated costs necessary to make the sale.

3.11 Foreign currency translation

The individual financial statements of each Group entity are presented in the currency of the primary economic environment

in which the entity operates (its functional currency). For the purpose of the Company and consolidated financial statements,

the results and financial position of Group and Company are expressed in United States Dollars, which was deemed to be at

par with the RTGS dollar, bond notes and other currencies as per Statutory Instrument 33 of 2019. In preparing the financial

statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies)

are recorded at the rates of exchange prevailing at the dates of the transactions. At each statement of financial position date,

monetary items denominated in foreign currencies are retranslated at the rates prevailing at the statement of financial position

date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing

at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in foreign

currency are not retranslated. Exchange differences are recognised in profit or loss in the period in which they arise except for:

• those which are included in the cost of those assets where they are regarded as an adjustment to interest costs on foreign

currency borrowings;

• exchange differences on transactions entered into in order to hedge certain foreign currency risks, and

• exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither

planned nor likely to occur, which form part of the net investment in a foreign operation, and which are recognised in the

foreign currency translation reserve and recognised in profit or loss on disposal of the net investment.

For the purpose of presenting Company and consolidated financial statements, the assets and liabilities of the Group and

Company are expressed in United States dollars using exchange rates 1:1 for the US dollar to other currencies at the statement

of financial position date. Income and expense items are translated at the average exchange rates for the period, unless

exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are

used.

Exchange differences arising, if any, are classified as equity and transferred to the Group and Company’s foreign currency

translation reserve. Such exchange differences are recognised in profit or loss in the period in which the foreign operation is

disposed of. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and 8

liabilities of the foreign operation and translated at the closing rate.


ACCOUNTING POLICIES



3.11 Foreign currency translation (continued)

On the disposal of a foreign operation (i.e. disposal of a Group and Company’s entire interest in a foreign operation, or a disposal

involving loss of control over a subsidiary that includes a foreign operation, a disposal involving loss of joint control over a jointly

controlled entity that includes a foreign operation), all of the exchange differences accumulated in equity in respect of that

operation attributable to the owners of the Group and Company are reclassified to profit or loss.

In addition, in relation to a partial disposal of a subsidiary that does not result in the Group and Company losing control over

the subsidiary, the proportionate share of accumulated exchange differences is re-attributed to non-controlling interest and

are not recognised in profit or loss. For all partial disposals i.e. partial disposal of associates or jointly controlled entities that do

not result in the Group and Company losing significant influence or joint control, the proportionate share of the accumulated

exchange differences is reclassified to profit or loss.

Goodwill and fair value adjustments on identifiable assets and liabilities acquired arising on the acquisition of a foreign operation

are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each

reporting period. Exchange differences arising are recognised in equity.

The Directors of the Group and Company anticipate that the application of the amendments in the future will have a material

impact on the Group and Company’s consolidated financial statements. Sensitivities on exchange rate fluctuations are disclosed

under note 26.

3.12 Financial instruments

3.12.1 Financial assets

Financial assets and liabilities are recognised in the Group and Company’s statement of financial position when and only when

the Group and Company becomes a party to the contractual provisions of the particular instrument.

All financial assets and liabilities are measured at fair value on the date of initial recognition. Transaction costs that are directly

attributable to the acquisition of financial assets are expensed in profit or loss for financial assets initially classified at fair value

through profit or loss. For financial assets not classified at fair value through profit or loss, transaction costs are added to or

deducted from the fair value at initial recognition. The Group and Company derecognises a financial asset when and only when:

• The contractual rights to the cash flows arising from the financial assets have expired or been forfeited by the Group and

Company;

or

• It transfers the financial asset including substantially all the risks and rewards of ownership of the asset; or

• It transfers the financial asset, neither retaining nor transferring substantially all the risks and rewards of ownership of the

asset, but no longer retains control of the asset.

Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL),

‘Fair value through other comprehensive income’ FVOCI, ‘amortised cost’ and ‘loans and receivables’. The classification depends

on the nature and purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases

or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases

or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the

marketplace.

All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on

the classification of the financial assets.


ACCOUNTING POLICIES



3.12 Financial instruments (continued)

3.12.1 Financial assets (continued)

Amortised cost and Effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest

income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts

(including all fees and 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 debt instrument, or, where appropriate, a shorter period, to the net

carrying amount on initial recognition.

The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the

principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that

initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the

amortised cost of a financial asset before adjusting for any loss allowance.

Effective interest method

Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.

Financial assets at FVTPL

Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL. A

financial asset is classified as held for trading if:

It has been acquired principally for the purpose of selling it in the near term; or

On initial recognition it is part of a portfolio of identified financial instruments that the Group and Company manages together

and has a recent actual pattern of short-term profit-taking; or

It is a derivative that is not designated and effective as a hedging instrument.

A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:

Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

The financial asset forms part of a Group of financial assets or financial liabilities or both, which is managed and its performance

is evaluated on a fair value basis, in accordance with the Group and Company’s documented risk management or investment

strategy, and information about the Group is provided internally on that basis; or

It forms part of a contract containing one or more embedded derivatives, and IFRS 9 Financial Instruments:

Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value losses recognised in

profit or loss to the extent they are not part of a designated hedging relationship.


ACCOUNTING POLICIES





Foreign exchange gains and losses

The carrying amount of financial assets that are denominated in a foreign currency is determined in that foreign currency and

translated at the spot rate at the end of each reporting period. Specifically:

• for financial assets measured at amortised cost that are not part of a designated hedging relationship, exchange

differences are recognised in profit or loss.

• for debt instruments measured at fair value through. other comprehensive income (FVTOCI) that are not part of a

designated hedging relationship, exchange differences on the amortised cost of debt instrument are recognised in profit or

loss. Other exchange differences are recognised in other comprehensive income in the investments revaluation reserve.

• for financial assets measured at FVTPL that are not part of a designated hedging relationship, exchange differences are

recognised in profit or loss and

• for equity instruments measured at FVTOCI, exchange differences are recognised in other comprehensive income in the

investments revaluation reserve.

See hedging accounting policy regarding the recognition of exchange differences where the foreign currency risk component

of financial asset is designated as a hedging instrument for a hedge of foreign currency risk.

Impairment of financial assets

The Group and Company recognises a loss allowance for expected credit losses (ECL) on trade receivables and contract assets,

the amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition

of the respective financial instruments.

The expected credit losses on these financial assets are estimated using a provision matrix based on the Group and Company’s

historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an

assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of

money where appropriate. For the purpose of impairment assessment for these financial assets, the loss allowance is measured

at an amount equal to 12-month ECL. As for the loans to related and other parties, as disclosed in note 21, lifetime ECL has

been provided for them upon initial application of IFRS 9 until these financial assets are derecognised as it was determined

on initial application of IFRS 9 that it would require undue cost and effort to determine whether their credit risk has increased

significantly since initial recognition to the date of initial application of IFRS 9.

There has been no change in the estimation techniques or significant assumptions made during the current reporting period

in assessing the loss allowance for these financial assets.

Note 2.1: (Impact on initial application of IFRS 9: Provision approach) details the gross carrying amount, loss allowance as well

as the measurement basis of expected credit losses for each of these financial assets by credit risk rating grades.

Significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Group and

Company compares the risk of a default occurring on the financial instrument at the reporting date with the risk of a default

occurring on the financial instrument at the date of initial recognition. In making this assessment the Group and Company

considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and

forward looking information that is available without undue cost or effort.


ACCOUNTING POLICIES




3.12.1 Financial assets (continued) Significant increase in credit risk (continued) In particular, the following information is considered when assessing whether credit risk has increased significantly since initial

recognition.

• An actual or expected significant deterioration in the financial instrument’s external or internal credit rating;

• Significant deterioration in external market indications of credit risk for a particular financial instrument;

• Existing or forecast changes in business, financial or economic conditions that are expected to cause a significant

decrease in the debtor’s ability to meet its obligations;

• An actual or expected significant deterioration in the operating results of the debtor;

• Significant increases in credit risk on other financial instruments of the same debtor;

• An actual or expected significant adverse change in the regulatory, economic or technological environments of the

debtors that results in a significant decrease in the debtor’s ability to meets it obligations.

Irrespective of the above, the Group and Company presumes that the credit risk on a financial asset has increased significantly

since initial recognition when the contractual payments are more than 60 days past due unless the Group and Company has

reasonable and supportable information that demonstrates otherwise.

Despite the foregoing, the Group and Company assumes that the credit risk on financial instrument has not increased

significantly since initial recognition if the financial instrument is considered to have low credit risk at the reporting date.

A financial asset is determined to have low credit risk if:

(1) The financial instrument has a low risk of default.

(2) The debtor has a strong capacity to meet its contractual cash flow obligations in the near future, and

(3) Adverse changes in economic and business conditions in the longer term may, but will not necessarily reduce the

debtor’s ability to fulfil its contractual cash flow obligations.

(4) When the financial asset has external low credit rating in accordance with the globally understood definition or if the

asset has an internal rate of ‘perfoming’.

Definition of default

The Group and Company considers the following as constituting an event of default for internal credit risk management

purposes as historical experience indicates that financial assets that meet either of the following criteria are generally not

recoverable:

• When there is a breach of financial covenants by the debtor; or

• Information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its

creditors, including Group and Company, in full (without taking into account any collateral held by the Group and Company)

Irrespective of the above analysis, the Group and Company considers that default has occurred when a financial asset is

more than 90 days past due unless the Group and Company has reasonable and supportable information to demonstrate

otherwise.


ACCOUNTING POLICIES





Credit-impaired financial assets

A financial asset is credit impaired when one or more events that have a detrimental impact on the estimated future cash flow

of that financial asset have occurred. Evidence that a financial asset is credit–impaired includes observable data about the

following events:

(a) Significant financial difficulty of the debtor;

(b) A default of contract such as a default or past due event;

(c) it is becoming probable that the debtor will enter into bankruptcy or other financial re-organisation; or

(d) the disappearance of an active market for that financial asset because of financial difficulties.

Write–off policy

The Group and Company writes off a financial asset when there is information indicating that the debtor is in severe financial

difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered

into some bankruptcy proceedings, or when the amounts are over two years past due, whichever occurs first. Financial assets

written off may still be subject to enforcement activities under the Group and Company’s credit control procedures, taking into

account legal advice where appropriate. Any bad debts recovered are recognised in profit or loss.

Measurement and recognition of expected credit losses

The Group and Company has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the

previous reporting period, but determines at the current reporting date that the conditions for lifetime ECL are no longer met,

the Group and Company measures the loss allowance at an amount equal to 12 –month ECL at the current reporting date.

The Group and Company recognises an impairment gains or loss in profit or loss for all financial instruments with a corresponding

adjustment to their carrying amount through a loss allowance.

De-recognition of financial assets

The Group and Company derecognises a financial asset only when the contractual rights to the cash flows from the asset

expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another

entity. If the Group and Company neither transfers nor retains substantially all the risks and rewards of ownership and continues

to control the transferred asset, the Group and Company recognises its retained interest in the asset and an associated liability

for amounts it may have to pay. If the Group and company retains substantially all the risks and rewards of ownership of a

transferred financial asset, the Group and company continues to recognise the financial asset and also recognises a collateralised

borrowing for the proceeds received.

On de-recognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the

consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive

income and accumulated in equity is recognised in profit or loss.

On de-recognition of a financial asset other than in its entirety (e.g. when the Group and Company retains an option to

repurchase part of a transferred asset), the Group and company allocates the previous carrying amount of the financial asset

between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of

the relative fair values of those parts on the date of the transfer. The difference between the carrying amount allocated to the

part that is no longer recognised, the sum of the consideration received for the part no longer recognised and any cumulative

gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss.


ACCOUNTING POLICIES





De-recognition of financial assets (continued)

A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that

continues to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.

Classification as debt or equity

Debt and equity instruments issued by a Group entity are classified either as financial liabilities or as equity in accordance with

the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

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 Group and Company are recognised at the proceeds received, net of direct issue costs.

Repurchase of the Group and Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss

is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group and company’s own equity instruments.

Compound instruments

The component parts of compound instruments (convertible notes) issued by the Group and Company are classified separately

as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a

financial liability and an equity instrument. Conversion option that will be settled by the exchange of a fixed amount of cash or

another financial asset for a fixed number of the Group and Company’s own equity instruments is an equity instrument.

At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar

non-convertible instruments. This amount is recorded as a liability on an amortised cost basis using the effective interest

method until extinguished upon conversion or at the instrument’s maturity date.

The conversion option classified as equity is determined by deducting the amount of the liability component from the fair

value of the compound instrument as a whole. This is recognised and included in equity, net of income tax effects, and is not

subsequently re-measured. In addition, the conversion option classified as equity will remain in equity until the conversion

option is exercised, in which case, the balance recognised in equity will be transferred to share premium. When the conversion

option remains unexercised at the maturity date of the convertible note, the balance recognised in equity will be transferred to

retained profits. No gain or loss is recognised in profit or loss upon conversion or expiration of the conversion option.

Transaction costs that relate to the issue of the convertible notes are allocated to the liability and equity components in

proportion to the allocation of the gross proceeds.

Transaction costs relating to the equity component are recognised directly in equity. Transaction costs relating to the liability

component are included in the carrying amount of the liability component and are amortised over the lives of the convertible

notes using the effective interest method.


ACCOUNTING POLICIES




3.12.2 Financial liabilities and equity instruments

Financial liabilities

Financial liabilities are classified as either financial liabilities ‘at FVTPL’ or ‘other financial liabilities’. Financial liabilities are classified

as at FVTPL when the financial liability is either held for trading or it is designated as at FVTPL. A financial liability is classified as

held for trading if:

• it has been acquired principally for the purpose of repurchasing it in the near term; or

• on initial recognition it is part of a portfolio of identified financial instruments that the Group and Company manages

together and has a recent actual pattern of short-term profit-taking; or

• a derivative is not designated and effective as a hedging instrument.

A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:

• Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise

arise; or

• The financial liability forms part of a Group and Company of financial assets or financial liabilities or both, which is managed

and its performance is evaluated on a fair value basis, in accordance with the Group and Company’s documented risk

management or investment strategy, and information about the Group and Company is provided internally on that basis; or

• It forms part of a contract containing one or more embedded derivatives, and IFRS 9 Financial Instruments: Recognition

and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.

Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or

loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the

‘other gains and losses’ line item in profit or loss.

Other financial liabilities

Other financial liabilities (including borrowings and trade and other payables) are subsequently measured at amortised cost

using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest

expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments

(including all fees and 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 liability, or (where appropriate) a shorter period, to the net

carrying amount on initial recognition.


ACCOUNTING POLICIES




3.12.2 Financial liabilities and equity instruments (continued)

Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a

loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.

Financial guarantee contracts issued by the Group and Company are initially measured at their fair values and, if not designated

as at FVTPL, are subsequently measured at the higher of:

• the amount of the obligation under the contract, as determined in accordance with IAS 37 Provisions, Contingent Liabilities

and Contingent Assets; and

• the amount initially recognised less, where appropriate, cumulative amortisation recognised in accordance with the

revenue recognition policies.

De-recognition of financial liabilities

The Group and Company derecognises financial liabilities when, and only when, the Group and Company’s obligations are

discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and

the consideration paid and payable is recognised in profit or loss.

3.13 Leasing

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.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.

3.14 Share based payments

Senior executives of the Group and Company receive remuneration in the form of share-based payments, whereby they receive

equity instruments as consideration for rendering services. The cost of equity settled transactions with employees is measured

by reference to the fair value at the date on which they are granted. In valuing equity settled transactions, no account is taken of

any performance conditions, other than linked to the price of the shares of the Group and Company. The cost of equity settled

transactions is recognised, together with corresponding increase in equity, over the period in which the performance and/or

service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘the

vesting date’).

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per

share.

Details regarding the determination of the fair value of equity settled share based transactions are set out in note 8.

The fair value determined at the grant date of the equity settled share based payments is expensed on a straight line basis

over the vesting period, based on the Group and Company’s estimate of equity instruments that will eventually vest, with

a corresponding increase in equity. At the end of each reporting period, the Group and Company revises its estimate of the

number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit

or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity-settled

employee benefits reserve.


ACCOUNTING POLICIES



3.15 Investment properties

Investment property is property held to earn rentals and/or for capital appreciation rather than for use in the production

or supply of goods or services, for administrative purposes, or sale in the ordinary course of business. This classification is

performed on a property-by-property basis. Initially, investment property is measured at its cost, including transaction costs.

Subsequent to initial measurement, investment property is measured at fair value. Gains or losses arising from changes in the

fair value of investment property are included in profit or loss for the period in which they arise.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use

and no future economic benefits are expected from the disposal. Any gain or loss arising on de-recognition of the property

(calculated as the difference between the net disposal proceeds and the carrying amount of the assets) is included in profit or

loss in the period in which the property is derecognised.

3.16 Capitalisation of borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that

necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets,

until such time as the assets are substantially ready for their intended use or sale. 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. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

3.17 Provisions and contingencies

3.17.1 Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is

probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the

obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at

the statement of financial position date, taking into account the risks and uncertainties surrounding the obligation. Where a

provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value

of those cash flows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the

receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable

can be measured reliably.


ACCOUNTING POLICIES



3.17 Provisions and contingencies (continued)

3.17.2 Contingent liabilities A contingent liability is a possible obligation that arises from past events and existence will be confirmed only by the occurrence

or non-occurrence of one or more uncertain events not wholly within the control of the Group and Company, or a present

obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying

economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured with sufficient

reliability. If the likelihood of an outflow of resources is remote, the possible obligation is neither a provision nor a contingent

liability and no disclosure is made.

3.17.3 Contingent assets

A contingent asset is a possible asset that arises from past events and existence will be confirmed only by the occurrence of one

or more uncertain future events not wholly within the control of the Group and Company. In the ordinary course of business,

the Group and Company may pursue a claim against a subcontractor or client. Such contingent assets are only recognised in

the financial statements where the realisation of income is virtually certain. If the flow of economic benefits is only probable,

the contingent asset is disclosed as a claim in favour of the Group but not recognised on the statement of financial position.

3.18 Employee benefits

3.18.1 Defined contribution plans The Group and Company operates pension schemes in terms of the Pension and Provident Funds Act and current contributions

to defined contribution schemes are charged against income as incurred. The Group and company also participates in the

National Social Security Authority scheme. Under defined contribution plans the Group and Company’s legal or constructive

obligation is limited to the amount that it agrees to contribute to the fund. Consequently, the actuarial risk that benefits will be

less than expected and the investment risk that assets invested will be insufficient to meet expected benefits is borne by the

employee.

3.18.2 Short term employee benefits Wages, salaries, paid annual leave; bonuses and non-monetary benefits are recognised as employee benefit expenses and

accrued when the associated services are rendered by the employees of the Group and Company.

3.18.3 Termination benefits Termination benefits are payable when employment is terminated by the Group and company before retirement date or

whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group and Company recognises

termination benefits when it is demonstrably committed to either: terminating the employment of current employees

according to a detailed formal plan without the possibility of withdrawal; or providing termination benefits as a result of an

offer made to encourage voluntary redundancy.

Benefits falling due more than 12 months after the statement of financial position date are discounted to present value.

3.18.4 Retirement benefit costs Payments to defined contribution retirement benefit plans are recognise as an expense when employees have rendered service

entitling them to the contributions.

3.19 Related parties Related parties are considered to be related if one party has the ability to control or jointly control the other party or exercise

significant influence over the other party in making financial and operating decisions. Key management personnel are also

regarded as related parties. Key management personnel are those persons having authority and responsibility for planning,


ACCOUNTING POLICIES



3.19 Related parties (continued) directing and controlling the activities of the Group and Company, directly or indirectly, including all executive and non-

executive directors.

Related party transactions are those where a transfer of resources or obligations between related parties occur, regardless of

whether or not a price is charged.

3.20 Critical judgement and significant estimates In preparing the financial statements, Directors are required to make estimates and assumptions that affect the amounts

presented in the financial statements and related disclosures. Use of available information and the application of judgement

is inherent in the formation of estimates. Actual results in the future could differ from these estimates, which may be material

to the financial statements. In the course of preparing the financial statements, Directors made the decision to assume the

rate of US$ as 1:1 to the RTGS dollars electronic balances and bond notes to value assets and liabilities at reporting date as per

Statutory Instrument 33 of 2019.

Below are judgements that involve estimation that have also been made in the process of applying the Group and Company ‘s

accounting policies:

Provision for doubtful debts

In arriving at expected credit losses from trade receivable, the Group and Company considers historical information, economic

conditions, including the performance of the customer’ business and estimates about the future. Using this information, Group

and Company reviews the credit policy, which helps to determine at what stage to provide for expected loss. These estimates

may not reflect the true position of what may happen in future.

Impairment testing

The Group and Company assesses its property, vehicles and equipment for impairment at each reporting date. Impairment

testing is an area involving management judgement, requiring assessment as to whether the carrying amount of assets can be

supported by the net present value of future cash flows derived from such assets using cash flow projections, which have been

discounted at an appropriate rate.

Determining residual values and useful lives

The Group and Company is required to assess the remaining useful lives of it property and equipment on an annual basis. This

affects the amount of depreciation that is recognisable in the financial statements. The Group and its Company have assessed

residual values at nil for equipment as it intends to use the assets until the end of their economic useful lives.

Taxation provisions

The Group and Company’s curent tax provision of $284,040 relates to management’s assessment of the amount of tax payable

on open tax positions where the liabilities remain to be agreed with Zimbabwe Revenue Authority (ZIMRA). There is a possibility

that, on conclusion of open tax matters at a future date, the final outcome may differ.

Valuation of share options;

Many assumptions are made when valuing share options, i.e. the risk free rate to use and the number of equity instruments

expected to vest.

The announcement of Statutory Instrument (SI) 33 of 2019

The SI 33 of 2019, which deemed all assets and liabilities to be valued at par with the US$ and RTGS Dollar has introduced

uncertainties into the future which may have a significant risk of resulting in material adjustments to the carrying amounts of

assets and liabilities within the next financial year. Refer to note 1.3: Determination of functional currency.


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS


4 Property, plant and equipment

Group

Freehold Capital Furniture & Land & Work Lease hold Plant & Motor Office

Buildings in Progress Improvements Equipment Vehicles Equipment TOTAL Cost /Valuation $ $ $ $ $ $ $ Balance at 31 December 2016 1,405,208 - - 7,267,593 461,779 245,105 9,379,685 Additions - - 98,710 22,841 145,803 104,118 371,472

Disposals - - - - (84,722) (11,002) (95,724)

Balance at 31 December 2017 1,405,208 - 98,710 7,290,434 522,860 338,221 9,655,433 Additions - 4,729,751 - 433,449 264,760 63,251 5,491,211

Revaluation 340,833 - - - - 340,833

Disposals - - - (541,583) - (67,158) (608,741)

Balance at 31 December 2018 1,746,041 4,729,751 98,710 7,182,300 787,620 334,314 14,878,736

Accumulated Depreciation

Balance at 31 December 2016 (41,167) - - (3,968,909) (283,885) (162,224) (4,456,185) Depreciation for the year (26,000) - - (804,562) (46,148) (35,958) (912,668)

Disposals - - - - 70,016 8,564 78,580

Balance at 31 December 2017 (67,167) - - (4,773,471) (260,017) (189,618) (5,290,273) Depreciation for the year (22,500) - (9,085) (624,265) (82,493) (56,750) (795,093)

Disposals - - - 510,055 - 59,314 569,369

Balance at 31 December 2018 89,667) - (9,085) (4,887,681) (342,510) (187,054) (5,515,997)

Carrying Amount

Balance at 31 December 2017 1,338,041 - 98,710 2,516,963 262,843 148,603 4,365,160 Balance at 31 December 2018 1,656,374 4,729,751 89,625 2,294,619 445,110 147,260 9,362,739


NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS (continued)


4. Property, plant and equipment (continued)

Company Furniture &

Lease hold Capital Work in Plant & Motor Office Improvements Progress Equipment Vehicles Equipment TOTAL

Cost /Valuation $ $ $ $ $ $

Balance at 31 December 2016 - - 7,267,593 461,779 245,105 7,974,477Additions 98,710 - 22,841 145,803 104,118 371,442

Disposals - - - (84,722) (11,002) (95,724)

Balance at 31 December 2017 98,710 - 7,290,434 522,860 338,221 8,250,225Additions - 4,729,751 433,449 264,760 63,251 5,491,211

Disposals - - (541,583) - (67,158) (608,741)

Balance at 31 December 2018 98,710 4,729,751 7,182,300 787,620 334,314 13,132,695

Accumulated Depreciation Balance at 31 December 2016 - - (3,968,909) (283,885) (162,224) (4,415,018)Depreciation for the year - - (804,562) (46,148) (35,958) (886,668)

Disposals - - - 70,016 8,564 78,580

Balance at 31 December 2017 - - (4,773,471) (260,017) (189,618) (5,223,106)Depreciation for the year (9,085) - (624,265) (82,493) (56,750) (772,593)

Disposals - - 510,055 - 59,314 569,369

Balance at 31 December 2018 (9,085) - (4,887,681) (342,510 ) (187,054) (5,426,330) Carrying AmountBalance at 31 December 2017 98,710 - 2,516,963 262,843 148,603 3,027,119Balance at 31 December 2018 89,625 4,729,751 2,294,619 445,110 147,260 7,706,365




4 Property, plant and equipment (continued)

4.1 Encumbrances on property, plant and equipment

Freehold land and buildings with a carrying amount of $1.2 million have been pledged to secure borrowings of the Group and

Company. This was done by way of a Deed of Hypothecation over The Remaining Extent of Lot 5 Block Y Ardbennie Township

of Ardbennie. Refer to note 9. The Group and Company’s property, plant and equipment are insured at full replacement cost.

4.2 Revaluation

The Directors engaged an independent valuer, Intergrated Properties (Private) Limited to do the valuation of the property and

the Directors are of the view that the property market has not fundamentally changed and, therefore, the valuation carried out

on 4 October 2018 still reflects the fair value of the land and buildings.

5 Investment in subsidiary Company

31 December 31 December 2018 2017 $ $ At fair value Balance at beginning of the year 1,123,289 1,123,289 Disposal from Promouldings (Private) Limited (426,375) - Investment in Promouldings 696,914 1,123,289 Investment in Dudway Investments (Private) Limited 426,375 - Balance at end of year 1,123,289 1,123,289

The investment is in the property owning Companies, Promouldings (Private) Limited and Dudway Investments (Private)

Limited, which are 100 % owned by Proplastics Limited. The Directors are of the view that this valuation reflects the fair value of

the Investment in subsidiaries.

During the year part of the investment in Promouldings (Private) Limited was transferred to Dudway Investments (Private)

Limited under a scheme of reconstruction.

The Group and Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs

used in making the measurements.

• Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.

• Level 2: Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

This category includes instruments valued using quoted market prices in active markets for similar instruments; quoted prices

for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all

significant inputs are directly or indirectly observable from market data.




5. Investment in subsidiary (continued)

• Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the

valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on

instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where

significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

The value produced by a model or other valuation technique may be adjusted to allow for a number of factors as appropriate,

because valuation techniques cannot appropriately reflect all factors market participants take into account when entering

into a transaction. Directors believe that these valuation adjustments are necessary and appropriate to fairly state financial

instruments carried at fair value on the statement of financial position.

The following table presents assets and liabilities recognised at fair value in the statement of financial position of the Group:

There were no transfers between level 1 and level 2 during the current year.

2018

Level 1

$

Level 2

$

Level 3

$

Total carrying amount

$

Freehold land & buildings - $ $ 1,230,000 - 1,230,000

6. Inventories Group Company 31 December 31 December 31 December 31 December 2018 2017 2018 2017 $ $ $ $ Raw materials 2,809,095 1,137,656 2,809,095 1,137,656

Work in progress 711,316 667,974 711,316 667,974

Finished goods 2,756,444 1,399,776 2,756,444 1,399,776

Spares and consumables 680,715 667,391 680,715 667,391

Provision for slow moving inventories (114,059) (148,396) (114,059) (148,396)

Total inventories 6,843,511 3,724,401 6,843,511 3,724,401

The cost of inventories written off as an

expense was $126,557 (2017- $193,623).

7. Trade and other receivables

Trade receivables 1,171,953 1,305,190 1,171,953 1,305,190

Prepayments 1,162,985 290,177 1,162,985 290,177

Deposits and other receivables 1,586,660 368,661 1,591,660 368,661

Tax asset 477 - - -

3,922,075 1,964,028 3,926,598 1,964,028 Less: Allowances for doubtful receivables (137,648) (188,525) (137,648) (188,525)

Trade and other receivables 3,784,427 1,775,503 3,788,950 1,775,503

During the year $200,449 was written off

as bad debts (2017-$5,933).




7. Trade and other receivables (continued)

The average credit period on sales of goods is 60 days. No interest is charged on outstanding trade receivables. The Group and

Company always measures the loss allowance for trade receivables at an amount equal to lifetime ECL. The expected credit

losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and

an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtors, general economic

conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction

of conditions at the reporting date. The Group and Company has recognised a loss allowance of 50% against all receivables over

90 days past due because historical experience has indicated that about 50% of these receivables are generally not recoverable.

There has been no change in the estimation techniques or significant assumptions made during the current reporting period.

The Group and company writes off a trade receivable when there is information indicating that the debtor is in severe financial

difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered

into bankruptcy proceedings, or when the trade receivables are over two years past due, whichever occurs earlier. None of

the trade receivables that have been written off is subject to enforcement activities. The following table details the risk profile

of trade receivables based on the Group and Company’s provision matrix. As the Group and Company’s historical credit loss

experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance

based on past due status is not further distinguished between the Group and Company’s different customer bases.

Trade receivables-days past due

31 December 2018 Not past due 1-30 days PAST DUE

31-60 days past due

61-90 days

past due

91> Total

$ $ $ $ $ $

Expected credit loss rate(A) 0.5324% 1.0002% 2.0008% 10.0009% 49.9998% 14.5792%

Estimated total gross carrying amount at default (B) 568,559 61,986 18,443 34,857 260,293 944,138

Lifetime expected credit loss (ECL) AXB 3,027 620 369 3,486 130,146 137,648




7. Trade and other receivables (continued)

Group Company 31 December 31 December 31 December 31 December 2018 2017 2018 2017 Days Days Days Days Debtor days 17 39 17 39

Movement in the allowance for doubtful debts

31 December 31 December 31 December 31 December 2018 2017 2018 2017 $ $ $ $ Balance at the beginning of the year 188,525 93,198 188,525 93,198

Net movement in provision for the year 149,572 101,260 149,572 101,260

Bad debts written off (200,449) (5,933) (200,449) (5,933)

Balance at the end of the year 137,648 188,525 137,648 188,525

Book debtors are encumbered as shown in note 9.

In determining recoverability of trade receivables, the Group and Company consider any changes in the credit quality of

trade receivables from the date credit was initially granted up to the reporting date. The concentration risk is limited due

to the customer base being large and unrelated.

Five of Group and Company’s trade receivables constitute 64% of the total receivable balance, with Masimba Holdings,

a related party, owing 10%. (Ninety-One thousand three hundred and sixty-seven United States Dollars - $91,367

(2017-$ 161,189) of the total balance.

The entire Group and Company`s impaired trade receivable balances are older than 180 days.

Ageing of impaired trade receivables

Group Company 31 December 31 December 31 December 31 December 2018 2017 2018 2017 $ $ $ $ 180+ days 137,648 188,525 137,648 188,525




8. Share capital and reserves Group Company 31 December 31 December 31 December 31 December 2018 2017 2018 2017

$ $ $ $ Authorised and issued share capital

Authorised

875,000,000 ordinary shares of $0.0001 each 87,500 87,500 87,500 87,500

Issued

246,493,024 ordinary shares of $0.0001 each 24,649 24,499 24,649 24,499

Of the total shares in issue, some 7,476 shares are held in treasury.

Unissued share capital

This is the share capital which Directors may allot, grant options over or deal with at their discretion (in terms of the articles of

Association) subject to the limitations of the Companies Act (Chapter 24:03) and the Zimbabwe Stock Exchange without further

restrictions.

Unissued share capital 62,851 63,001 62,851 63,001

Shares under options

The Directors are empowered to grant share options to senior executives of the Group and Company up to a maximum of

20,000,000 share options. The options are granted for a period of 5 years at a price determined by the middle market price

ruling on the Zimbabwe Stock Exchange on the dealing date immediately preceding the day on which the options are granted.

Details of share options outstanding as at 31 December 2018 were as follows:

Group Company 31 December 31 December 31 December 31 December 2018 2017 2018 2017

shares shares shares shares

Balance at the beginning of year 6,000,000 6,000,000 6,000,000 6,000,000

Granted during the year 3,400,000 - 3,400,000 -

Forfeited during the year - - - -

Exercised during the year (1,500,000) - (1,500,000) -

Balance at end of year 7,900,000 6,000,000 7,900,0000 6,000,000




8. Share capital and reserves (continued)

Proplastics Directors carried out a valuation as at 31 December 2018. The estimated fair values of options granted were

determined using Black Scholes model in accordance with IFRS 2 with the following inputs and assumptions:


$ $ $ $ Grant date share price ($) 0.1205 0.023 0.1205 0.023

Exercise price ($) 0.1205 0.023 0.1205 0.023

Expected volatility 497% 25.30% 497% 25.30%

Dividend yield 1.03% 7.14% 1.03% 7.14%

Risk-free interest rate 7% 6% 7% 6%

Valuation Inputs

Exercise price

The scheme rules state that the price for the shares comprised in an option shall be the middle market price ruling on the

Zimbabwe Stock Exchange on the dealing day immediately preceding the day on which the options are granted.

Expected Volatility

Expected volatility is a measure of the amount by which the price is expected to fluctuate during a period, for example between

grant date and the exercise date. Volatility was calculated as the standard deviation of lognormal daily returns for the period

starting 10 October 2018 to 04 March 2019.

Expected dividends

When estimating the fair value of options, the projected valuation of shares is reduced by the present value of dividends

expected to be paid during the vesting period. This is because the payment of dividends reduces the value of the Company.

Risk free rate of return

A risk free rate of return is the interest rate an investor would expect to earn on an investment with no risk, which is usually taken

to be a government issued security. It is the interest rate earned on a riskless security over a specified time horizon. The risk free

rate was based on long-term bonds being issued in the market.

All options expire, if not exercised, 5 years after the date of grant.




9. Borrowings


$ $ $ $ Long term loan 848,818 - 848,818 -

Short term loan 422,273 374,667 422,273 374,667

Total borrowings 1,271,091 374,667 1,271,091 374,667

The loan is secured by Notorial General Covering Bond (NGCB) over movable assets including cession of book debts and First

Ranking Deed of Hypothecation over immovable assets. It is payable over 3 years at an effective interest rate of 8.5% per annum.

10. Deferred tax

Group Company 31 December 31 December 31 December 31 December 2018 2017 2018 2017 $ $ $ $ Balance at beginning of the year 576,357 559,615 329,506 308,710 Impact of IFRS 9 5,926 - 5,926 -

Charge to income statement 233,233 16,742 153,221 20,796

Balance at end of year 815,516 576,357 488,653 329,506

Comprising of: Accelerated wear and tear 921,411 660,190 593,724 412,515

Unrealised exchange gains (22,030) (10,263) (22,030) (10,263)

Prepayments 8,021 11,424 8,021 11,424

Revenue received in advance 202,799 128,020 202,799 128,020

Provision for bad debts (41,370) (48,545) (41,370) (48,545)

Provision for obsolete stock (29,370) (38,212) (29,370) (38,212)

Other provisions (235,797) (126,257) (234,973) (125,433)

815,516 576,357 488,653 329,506

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply. Critical judgements and estimates

are made when determining deferred tax. (Refer to note 3.20).




11. Trade and other payables


$ $ $ $ Trade payables 2,970,934 1,124,732 2,970,934 1,124,732

Accruals and other payables 2,710,254 1,639,466 2,828,082 1,723,948

Total trade and other payables 5,681,188 2,764,198 5,799,016 2,848,680

The average credit period on purchases of goods and services from suppliers is 29 days. No interest is charged on trade payables.

The Group and Company has financial risk management policies in place to ensure that all payables are paid within pre-agreed

credit terms.

12. Revenue

Market Segment Group Company 31 December 31 December 31 December 31 December 2018 2017 2018 2017

$ $ $ $ Civils 9,741,018 6,634,895 9,741,018 6,634,895

Merchants 7,044,459 4,620,892 7,044,459 4,620,892

Irrigation 4,815,997 3,883,569 4,815,997 3,883,569

Mining 876,181 370,681 876,181 370,681

Local authorities 1,135,235 319,170 1,135,235 319,170

Borehole drillers 479,099 274,728 479,099 274,728

Total 24,091,989 16,103,935 24,091,989 16,103,935

12. 1 Other income/(expenses) Group Company 31 December 31 December 31 December 31 December 2018 2017 2018 2017

$ $ $ $ Exchange loss (85,553) (68,528) (85,553) (68,528)

Deilly write off - (15,553) - (15,553)

Container deposit write off - (1,365) - (1,365)

Insurance claim 3,760 2,160 3,760 2,160

(Loss)/profit on disposal of property,

plant and equipment (5,596) 6,169 (5,595) 6,169

Unknown deposits 301 - 301 -

Zimdef/NSSA refunds 18,274 4,949 18,274 4,949

Cost recoveries 13,364 - 13,364 -

Export incentive 29,282 18,349 29,282 18,349

Interest on staff loans 15,011 1,225 15,011 1,225

Handling charges 2,752 1,143 2,752 1,143

Scrap sales 20,772 6,105 20,771 6,105

Total other income 12,367 (45,346) 12,367 (45,346)




13. Administrative expenses Group Company 31 December 31 December 31 December 31 December 2018 2017 2018 2017

$ $ $ $ Audit fees 56,000 46,200 56,000 46,200

Bad debt expense - 6,078 - 6,078

Increase in allowance for credit losses 149,572 101,260 149,572 101,260

Bank charges 94,554 71,616 94,483 71,616

2%(IMT) Government Tax 102,637 - 102,637 -

Communication 28,837 29,468 28,837 29,468

Computer printing and stationery expenses 43,103 25,590 43,103 25,590

Consultancy /technical fees 3,163 7,545 3,163 7,545

Donations 10,435 7,339 10,435 7,339

Depreciation 167,674 105,930 145,174 79,930

Directors Fees 88,375 81,250 88,375 81,250

Internal audit - 33,425 - 33,425

Legal and professional fees 49,926 2,956 49,926 2,956

Insurance 41,694 19,734 39,934 17,534

Licenses and levies 27,791 15,607 27,410 15,607

Repairs and maintenance 35,929 12,895 35,929 12,895

Security expenses 41,156 33,516 41,156 33,516

Share based payments 18,674 6,704 18,674 6,704

Other 316,903 207,744 315,903 229,563

Staff 2,121,641 1,464,680 2,121,641 1,464,680

3,398,064 2,279,537 3,372,352 2,273,156




14. Profit before taxation

Profit before taxation has been arrived at after taking into account the following items, which have not been disclosed

separately:


$ $ $ $ Depreciation 795,093 912,668 772,593 886,668

Pension 198,106 150,374 198,106 150,374

Compensation to directors

and key management 635,575 551,650 635,575 551,650

Share option expenses 18,674 6,704 18,674 6,704

Loss/(profit) on disposal of property ,

plant and equipment 5,596 (6,169) 5,595 (6,169)

15. Income tax expense

Current income tax 1,091,448 599,477 1,079,214 587,411

Deferred tax movement 145,468 16,742 153,221 20,796

Tax per income statement 1,236,916 616,219 1,232,435 608,207

Reconciliation of current income taxation

Profit before tax 4,834,792 1,974,667 4,810,472 1,956,035

Tax at standard rate 1,244,959 508,477 1,238,697 503,679

Effects of expenses not deductible for tax (153,511) 91,000 (159,483) 83,732

Effects of other permanent differences 145,468 16,742 153,221 20,796

Effective income tax expense 1,236,916 616,219 1,232.435 608,207

Effective tax rate 25.6% 31.2% 25.6% 31.1%




16. Earnings per share

Basic earnings per share

The calculation is based on the profit attributable to ordinary shareholders and the number of shares in issue at the end of the

period, which participated in the profit of the Company.

Diluted earnings basis

The calculation is based on the profit attributable to ordinary shareholders and the number of shares in issue after adjusting to

assume conversion of share Options not yet exercised.

The calculation of basic and diluted earnings per share attributable to ordinary shareholders of the Company is based on the

following data:


$ $ $ $ Earnings

Earnings attributable to the equity

holders of the Company ($) 3,528,785 1,358,448 3,596,711 1,347,828

Number of shares

Weighted average number of shares

in issue used in the determination of:

Basic earnings per share 246,493,024 244,993,024 246,493,024 244,993,024

Diluted earnings per share 254,393,024 250,993,024 254,393,024 250,993,024

Earnings per share (US cents):

Basic 1.42 0.55 1.45 0.55

Diluted 1.38 0.54 1.41 0.54




17.

Pension funds

The Group and Company operations and all permanent employees contribute to the funds below:

17.1 Masimba Holdings Limited Pension Fund

All entity employees are members of this fund administered by Old Mutual. The Fund is a defined contribution scheme.

All members joining the fund automatically participate on the defined contribution pension benefit basis.

As at 31 December 2018, there were 109 members on the scheme.

17.2 National Social Security Authority (NSSA)

The entity and its employees contribute to the National Social Security Authority. This is a social security scheme promulgated

under the National Social Security Act 1989. The Group and Company’s obligations under the scheme are limited to specific

contributions legislated from time to time.

Pension costs recognised as an expense for the period.

Group Company December 31 December 31 December 31 December 2018 2017 2018 2017

$ $ $ $

Masimba Holdings Pension Fund 163,855 119,213 163,855 119,213

National Social Security Authority 34,251 31,161 34,251 31,161

198,106 150,374 198,106 150,374




18. Capital commitments

Capital Expenditure for the period to 31 December 2018 amounted to $5,917,586. The budgeted capital expenditure for the

period to 31 December 2019 is $3,301,330. The expenditure is to be financed from internal resources and existing facilities.

Construction of the new Factory is nearing completion, and the estimated cost of constructing the factory is four million

United States Dollars ($4,000,000). The new factory is owned by Dudway Investments (Private) Limited, a Company which is

100% owned by Proplastics Limited. Installation of equipment, the new extruder and mixing plant will commence in April 2019.

Migration of the plant to the new factory is scheduled to commence on 10 June 2019 in a phased approach, which will be

spread over two months. The installation of the automated material handling system will be running over the same period. The

new factory will be ready for commissioning in the third quarter of 2019.

19. Directors’ interests

The Directors directly/indirectly hold the following number of shares in the Group:


Shares Shares Shares Shares

G.Sebborn - - - -

S.Roberts - - - -

H.Mashanyare - - - -

K.Chigiya 7,266,667 - 7,266,667 -

P.Changunda 3,783,333 - 3,783,333 -

P.Zhanda 23,829,479 - 23,829,479 -

M.McCulloch 53,327,963 102,713,272 53,327,963 102,713,272

Total 88,207, 442 102,713,272 88,207, 442 102,713,272

20. Borrowing powers

Authority is granted in the Articles of Association for directors to borrow a sum not exceeding 300% of the ordinary shareholders’

funds without the prior sanction of an ordinary resolution of the Group.




21. Related party disclosures

Balances and transactions between entities within the Group have been eliminated on consolidation and are not disclosed in

this note.

The Company had significant transactions with Masimba Holdings Limited, a significant shareholder in Proplastics Limited. In

addition, the major shareholders in Proplastics Limited are also major shareholders in Masimba Holdings. All transactions with

Masimba Holdings are at arm’s length. Below are the sales made to and balances owing (to)/from Masimba Holdings as at 31

December 2018:

Sales to related parties Group Company 31 December 31 December 31 December 31 December 2018 2017 2018 2017

$ $ $ $ Sales to Masimba Holdings 499,976 468,331 499,976 468,331

Balances owing (to) from related parties

Group Company 31 December 31 December 31 December 31 December

2018 2017 2018 2017 $ $ $ $

Balance owing from Masimba Holdings 38,481 161,189 38,481 161,189

Balance owing to Masimba Holdings - (36,126) - (36,126)

Balance owing to

Promouldings (Private) Limited - - (121,027) (87,681)

Balance owing from Dudway

Investments (Private) Limited - - 5,000 -




21. Related party disclosures (continued) The remuneration of directors and other members of key management during the period were as follows:


$ $ $ $ Short term benefits 635,575 551,650 635,575 551,650

Terminal benefits 68,400 56,742 68,400 56,742

For services rendered as directors 88,375 81,250 88,375 81,250

For managerial services 547,200 470,400 547,200 470,400

The Remuneration Committee having regard to the performance of individuals and market trends determines the remuneration

of Directors and key executives.


$ $ $ $ Short -term 144,831 22,416 144,831 22,416 Long term 520,101 44,831 520,101 44,831 Total 664,932 67,247 664,932 67,247

Terms and Conditions: The loan amount limit ranges between 6-30 months’ salary and is subject to cash flow availability and

Remuneration Committee approval. The annual interest rate is 6% per annum. The repayment period is 6 months to 5 years.




21. Related party disclosures (continued) Loans and advances to Directors (continued)

The Directors have concluded that it would require undue cost and effort to determine the credit risk of each loan on their

respective dates of initial recognition. These loans are also assessed to have credit risk other than low. Accordingly, the Group

and Company recognises lifetime ECL for these loans until they are derecognised.

22. Financial instruments

(a) Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of

measurement and the basis on which income and expenses are recognised, in respect of each class of financial assets, financial

liability and equity instruments are disclosed per note 3.


$ $ $ $ Financial Assets

Cash and cash equivalents 1,173,304 4,396,251 1,168,375 4,396,251

Trade and other receivables 3,784,427 1,775,503 3,765,935 1,775,503

Financial Liabilities

Borrowings and payables 6,952,279 3,138,865 7,070,107 3,223,347

(b) Cash and cash equivalents

Included in cash and cash equivalents are balances with banks. These balances are used for transacting on a daily basis.

On 1 October 2018, banks were instructed by the Reserve Bank of Zimbabwe (RBZ) to separate RTGS foreign currency accounts

(FCA), (for local electronic money transfers) and Nostro FCA accounts (for actual foreign currency deposits or export proceeds).

The acute shortage of foreign currency in cash and in local banks’ foreign Nostro accounts led to the use of unofficial exchange

rates in the market. Subsequent to this change, on 20 February 2019, a further RBZ monetary policy statement introduced the

RTGS dollar as a currency and the platform to exchange with other currencies.

Cash and cash equivalents include US dollar and bond notes. Bond notes are a debt instrument which has been disclosed

under cash and cash equivalents since it meets the definition of cash and cash equivalents and is implied to be pegged at 1:1

with the $. Included in the cash and cash equivalents is US$ 45,403.

(c) Fair value of financial instruments

The fair value of financial assets and financial liabilities approximate the carrying values in the statement of financial position as

at 31 December 2017.




23. Financial risk management

The Group and Company financial liabilities comprise bank loans and trade and other payables. The main purpose of these

financial instruments is to raise finance for the Group and Company’s operations. The Group and Company has various financial

assets such as trade receivables, cash and short-term deposits, which arise directly from its operations. The Group and Company

does not use derivative financial instruments in its management of foreign currency risk. Derivative financial instruments are

not held or issued for trading purposes.

The main risks arising from Group and Company’s financial instruments are cash flow risk, foreign currency risk, interest rate

risk, credit risk and liquidity risks. Senior executives of the Group and Company meet on a regular basis to review and agree on

policies to manage each of these risks. Treasury management strategies together with currency and interest rate exposures are

re-evaluated against revised economic forecasts. Compliance with the Group and Company policies and exposure limits are

reviewed at Audit and Risk Committee meetings.

23.1 Foreign exchange risk management

The Group and Company undertakes certain transactions denominated in RTGS electronic transfers, bond notes, US dollar and

other currencies hence exposure to exchange rate fluctuations arises.

The Group and Company’s net foreign asset /liability exposure as at reporting date, is summarised as:

Abbreviation of currencies

ZAR - South African rand

$ - United States dollar

EUR- European currency

PULA- Botswana Pula

Refer to the sensitivity analysis shown under note 26: Events after reporting period.

Group

Payables

Currency Foreign

Balance

outstanding

2018

US$

equivalent

Foreign

balance

outstanding

2016

US$

equivalent

ZAR

EUR

PULA

(13,479,608)

(9,824)

(594,686)

(1,026,627)

(11,986)

(65,494)

(11,173,916)

(11,531)

-

(875,013)

(9,375)

-

Total (1,104,107) (884,388)

Company

Payables ZAR

EUR

PULA

(13,479,608)

(9,824)

(594,686)

(1,026,627)

(11,986)

(65,494)

(11,173,916)

(11,531)

-

(875,013)

(9,375)

-

Total (1,104,107) (884,388)




23. Financial risk management (continued)

23.2 Interest risk

The Group and Company’s treasury policy limits exposure to interest rate fluctuations by adopting a non-speculative approach

to managing interest rate risk and only deals in approved financial instruments. Implementation of treasury policy ensures

limited exposure to funding instruments while investment instruments are those, which provide risk free returns at variable

interest rates and mature within one year.

23.3 Credit risk

Financial assets, which potentially subject the Group and Company to concentration of credit risk consists principally of cash,

short - term deposits and trade receivables. The Group and Company’s surplus cash equivalents and short-term deposits are

placed with high quality creditworthy financial institutions. The trade receivables are presented net of the allowance for credit

losses and comprise a large, widespread customer base and the Group and Company monitors the performance and financial

condition of its customers so that the exposure to bad debts is not significant.

23.4 Liquidity risk

The Group and Company monitors its risk of shortage of funds using a liquidity-planning tool. The Group and Company

considers the maturity of both its financial investments and financial assets (e.g. receivables) and projected cash flows from

operations. The Group and Company’s main objective is to maintain short-term bank loans at a manageable level.

The liquidity risk on foreign creditors and lenders has increased due to delay of foreign payments. Refer to note 21 for additional

disclosures under cash and cash equivalents.

Liquidity and interest rate tables

The following tables detail the Group and Company’s remaining contractual maturity for its financial liabilities with agreed

repayment periods and fixed interest rate. There are no financial liabilities with floating rates. The tables have been drawn up

based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and Company can

be required to pay. The tables include both interest and principal cash flows. All interest rate cash flows are fixed in nature. The

contractual maturity is based on the earliest date on which the Group and Company may be required to pay.

31 December 2018 Weighted average effective

interest rate

0-2months

$

2-12 months

$

12-36 months

$

Total

$

Fixed interest rate instruments


8.5

-

49,937

851,038

573,573

1,992,051

726,128

127,845

1,379,6382,970,934

Total - 900,975 2,565,624 883,973 4,350,572

31 December 2017

Fixed interest rate instruments


6.5

-

86,941

449,001

299,895

675,731

-

-

386,8361,124,732

Total - 535,942 975,626 - 1,511,568




23. Financial risk management (continued)

23.4 Liquidity risk (continued)

Liquidity and interest rate tables (continued)

The Group and Company has access to financing facilities of which $400,000 were unused at the end of the reporting period.

The Group and Company expect to meet its obligations from operating cash flows. Included in trade and other payables were

foreign obligations amounting to $1,012,759, (2017 - $851,679).

The Group and Company have capacity to generate revenue in both foreign currency and RTGS balances which will enable

it to liquidate its foreign obligations while also accessing foreign currency on the interbank market to liquidate its foreign

obligations.

The Directors do not consider that the carrying amounts of financial assets and financial liabilities in the financial statements

approximate the fair value for the reason that Statutory Instrument 33 of 2019 deemed all assets denominated in us dollar and

other currencies to be valued at 1:1 with the RTGS dollar and bond notes.

23.5 Capital risk management

The Group and Company manages its capital structure to ensure that it will be able to continue as a going concern, while

maximising the return to stakeholders through the optimisation of debt and equity.

The capital structure of the Group and Company consists of debt, which includes borrowings disclosed in Note 9, interest

bearing borrowings and equity attributable to equity holders, comprising issued share capital, reserves and retained earnings.

The Group’s Audit and Risk Committee reviews the capital structure on a quarterly basis. As a part of this review, the committee

considers the cost of capital and the risks associated with each class of capital. Based on the recommendations of the committee,

the Group and Company will balance its overall structure through payments of dividends, new share issues and share buy backs

as well as the issue of new debt or the redemption of existing debt.




24. Critical accounting estimates and judgements

The Group and Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by

definition, seldom equal the related actual results.

24.1 Revenue recognition

The Group and Company uses certain assumptions and key factors in the management of and reporting for its revenue.

Management is satisfied that at period end, the Group and Company had satisfied all performance obligations with all

customers and that recognition of revenue is appropriate.

Other estimates made:

The Group and Company also makes estimates for:

• The calculation of the provision for credit losses. In determining trade recoverability of trade receivables, the Group

considers any changes in the credit quality of the trade receivable from the date credit was initially granted up to the

reporting date. The Group and Company therefore recognises an allowance for credit losses against receivables on a case-

by-case basis. Refer to note 7: Trade and other receivables.

• Deferred taxation. Refer to note 3.82.

• The determination of useful lives and residual values of items of property, plant and equipment. (Refer to property, plant

and equipment accounting policy).

The determination of the fair value of share options and the risk free rate for valuation of share options. (Refer to note 8).

Included in provisions (note 11) is a liability for long service awards, which are awarded to employees on reaching certain

employment period milestones. The amount recognised is the present value of future cash flows adjusted for life expectancy,

salary levels and probability of early terminations. Management uses market and non- market related information to come up

with these estimates.

25. Going concern

The Directors have assessed the ability of the Group and Company to continue operating as a going concern and believe that

the preparation of these financial statements on a going concern basis is still appropriate. However, the Directors believe that

under the current economic environment a continuous assessment of the ability of the Group and Company to continue to

operate as a going concern will need to be performed to determine the continued appropriateness of the going concern

assumption that has been applied in the preparation of these financial statements.

26. Events after the reporting period

The key events below took place after the reporting period and will have a significant impact on the Financial Statements of the

Group and Company.

Monetary Policy Statement of 20 February 2019; The recently announced monetary policy statement of 20 February ushered in new trading Parameters, which include a new

currency, the “RTGS dollar”, as the reporting currency.

Exchange Control Directive RU 28 of 2019 issued on 22 February 2019; This instrument introduced an interbank market to freely trade the RTGS Dollar and other currencies on a willing buyer, willing

seller basis.




26. Events after the reporting period (continued)

Statutory Instrument 33 of 2019 issued on 22 February 2019;

This instrument deemed all assets and liabilities that were valued in US dollar immediately before 22 February to be valued in

RTGS dollars at a rate of 1:1 for accounting and other purposes.

The subsequent recognition of the RTGS dollar as a currency and its devaluation against the US dollar on 20 February implies

that the amounts presented in the Financial Statements may, therefore, not reflect the opening balances in RTGS dollars for

future accounting periods. The Financial Statements have been prepared on the basis that the RTGS currency was at par with

the US dollar as at 31 December 2018 in line with the Statutory Instrument 33 of 2019 issued on 22 February 2019 but contrary

to the requirements of International Financial Reporting Standards (IFRS), which requires consideration of substance over legal

form.

The Board has assessed the impact of the Group and Company’s inability to comply with the requirements of IAS 21: The Effects

of Changes in Foreign Exchange Rates, and concluded that this will have a significant impact on the Group and Company’s

Financial Statements.

Below is the sensitivity analysis of the monetary assets, non-monetary assets and liabilities as at 31 December 2018:

Group

ElementMonetary Assets and

Liabilities

Non - Monetary Assets and Liabilities

Total US Dollar

Total RTGS Dollar

Total RTGS Dollar

Total RTGS Dollar

Nostro FCA RTGS Dollar

US Dollar

RTGSDollar @1:1 @1:2.5 @1:3 @1:4

Property and

equipment - - - 9,362,739 9,362,739 9,362,739 9,362,739 9,362,739

Cash and

cash

equivalents

45,403 1,127,901 - - 1,173,304 1,241,408 1,264,109 1,309,512

Trade

receivables 1,298,001 2,486,426 - - 3,784,427 5,731,428 6,380,429 7,678,430

Inventory - 6,843,511 - - 6,843,511 6,843,511 6,843,511 6,843,511

Total Assets 1,343,404 10,457,838 - 9,362,739 21,163,981 23,179,086 23,850,788 25,194,192

Share-holders’

Equity - 4,347,894 - 8,513,921 13,078,844 13,404,387 13,512,901 13,729,930

Deferred tax

liabilities - - -

848,818 848,818 848,818 848,818 848,818

Borrowings - 1,271,091 - - 1,271,091 1,271,091 1,271,091 1,271,091

Trade and

other

payables 1,126,375 4,838,853 - - 5,965,228 7,654,790 8,217,978 9,344,353

Total equity and liabilities 1,126,375 10,457,838 - 9,362,739 21,163,981 23,179,086 23,850,788 25,194,192


Company

ElementMonetary Assets and

Liabilities

Non - Monetary Assets and Liabilities

Total US Dollar

Total RTGS Dollar

Total RTGS Dollar

Total RTGS Dollar

Nostro FCA RTGS Dollar

US Dollar

RTGSDollar @1:1 @1:2.5 @1:3 @1:4

Property and

equipment - - - 8,829,654 8,829,654 8,829,654 8,829,654 8,829,654

Cash and cash

equivalents 45,403 1,122,972 - - 1,168,375 1,236,480 1,259,181 1,304,584

Trade

receivables 1,298,001 2,490,949 - - 3,788,950 5,735,952 6,384,952 7,682,953

Inventory - 6,843,511 - - 6,843,511 6,843,511 6,843,511 6,843,511

Total Assets 1,343,404 10,457,432 - 8,829,654 20,630,490 22,645,597 23,317,298 24,660,702

Share-holders’

Equity - 4,229,660 - 8,341,001 12,787,690 13,113,234 13,221,748 13,438,777

Deferred tax

liabilities - - -

488,653 488,653 488,653 488,653 488,653

Borrowings - 1,271,091 - - 1,271,091 1,271,091 1,271,091 1,271,091

Trade and

other

payables 1,126,375 4,956,681 - - 6,083,056 7,772,619 8,335,806 9,462,181

Total equity and liabilities 1,126,375 10,457,432 - 8,829,654 20,630,490 22,645,597 23,317,298 24,660,702



26. Events after the reporting period (continued)

Statutory Instrument 33 of 2019 issued on 22 February 2019; (continued)

Key assumptions made • After floating the RTGS at 1:2.5 on 20 February 2019, the rate will initially go up, as there is no foreign currency in the market.

• Forces of supply and demand will force the rate to reach equilibrium and we expect the rate to stabilise between 1:3 and 1:4.

The Group and Company remains solvent and sufficiently funded at the various exchange rate sensitivities.

The above figures do not necessarily reflect opening balances in RTGS dollars for the 2019 financial statements.

27. Dividend declaration

On 20 March 2019, the Proplastics Limited Board declared a final dividend of RTGS 0.56 cents per share with a scrip option for

the year ended 31 December 2018 payable in respect of all ordinary shares of the Company.

28. Approval of financial statements

The financial statements were approved by the Board of Directors and authorised for issue on 10 April 2019.


SHAREHOLDERS’ ANALYSIS

Consolidated top 20 as at 31 December 2018

Rank Account Name Shares % of Total

1 Zumbani Capital (Pvt)Ltd, 53,327,963 21.63

2 Old Mutual Life Ass Co Zim Ltd 45,772,051 18.57

3 Stanbic Nominees 25,078,960 10.17

4 Amalgamated African Ventures 23,829,479 9.67

5 Giona Capital (Pvt) Ltd 15,554,830 6.31

6 Masimba Holdings Limited, 14,147,353 5.74

7 Scb Nominees 10,265,075 4.16

8 Old Mutual Zimbabwe Limited 9,734,883 3.95

9 Stanbic Nominees Nr 7,967,806 3.23

10 Bulkwood Investments 7,266,667 2.95

11 Streamcoast Investments P/L 3,783,333 1.53

12 Turner , Roy 2,756,599 1.12

13 National Social Security Authority (W.C.I.F) 2,540,728 1.03

14 National Foods Pension Fund 1,368,740 0.56

15 Catering Industry Pension Fund 1,198,058 0.49

16 Lobb, Marcus Richard 1,177,650 0.48

17 Zesa Staff Pension Fund 1,069,241 0.43

18 Guramatunhu Family Trust 961,027 0.39

19 Fbc Holdings Pf 664,606 0.27

20 Hit Pension Fund 610,965 0.25

Total 229,076,014 92.93

Other Shareholders 17,417,010 7.07

Total Shares 246,493,024 100.00

Number of Shareholders 879


SHAREHOLDERS’ ANALYSIS (continued)

Company Statistics as at 31 December 2018

Country Holders % of Holders Shares % of Shares

Australia 5 0.57 15,148 0.01

Botswana 1 0.11 500 0.00

Canada 2 0.23 5,772 0.00

Ireland 3 0.34 2,328 0.00

Kenya 1 0.11 11,003 0.00

Malawi 1 0.11 5,774 2.01

Mauritius 1 0.11 1,099 0.00

New Zealand 1 5.17 8,660 0.00

South Africa 45 5.12 337,631 0.14

Sweden 1 0.11 10,000 0.00

Turkey 1 0.11 540,921 0.22

United Arab Emirates 1 0.34 18,338 0.01

United Kingdom 10 1.14 270,308 0.11

United States 3 0.34 7,910,859 3.21

Warrant Not Presentable 210 23.89 1,263,199 0.51

Zimbabwe 593 67.46 236,091,484 95.78

Total 879 100.00 246,493,024 100.00

Industry Holders % of Holders Shares % of Shares

Companies 108 12.29 122,704,509 49.78

Employee 4 0.46 2,841 0.00

Estate Late 10 1.14 61,541 0.02

Fund Managers 2 0.23 447,569 0.18

Insurance Companies 13 1.48 58,185,257 23.61

Investment Trusts And Property 13 1.48 792,221 0.32

Local Resident 522 59.39 9,606,381 3.90

Nominees Local 35 3.98 11,577,078 4.70

Non Residents 3 0.34 7,905,683 3.21

Non Resident Individual 97 11.04 1,312,086 0.53

Pension Fund 72 8.19 33,897,858 13.75

Total 879 100.00 246,493,024 100.00

Range Holders % of Holders Shares % of Shares

0 - 500 136 15.47 28,007 0.01

501 - 1,000 108 12.29 75,410 0.03

1,001 - 5,000 281 31.97 744,191 0.30

5,001 - 10,000 112 12.74 813,187 0.33

10,001 - 50,000 116 13.20 2,406,373 0.98

50,001 - 100,000 29 3.30 2,065,414 0.84

100,001+ 97 11.04 240,360,442 97.51

Total 879 100.00 246,493,024 100.00


NOTICE TO SHAREHOLDERS

Notice is hereby given that the Fourth Annual General Meeting of the Members of Proplastics Limited will be held at Palm Court,

Meikles Hotel, Corner 3rd Street & J. Moyo Avenue, Harare on Tuesday, 25 June 2019 at 10.00 hours.

ORDINARY BUSINESS

1. Approval of Financial Statements and Reports To receive, consider and adopt the financial statements for the year ended 31 December 2018, together with the reports of the

Directors and Auditors thereon.

2. Dividend To declare an interim dividend of US0.25 cents and a final dividend of RTGS 0.56 cents per ordinary share in the capital of the

Company.

3. Directors’ Fees To approve the fees of the Directors for the year ended 31 December 2018.

4. Election of Directors 4.1 To re-elect retiring Directors Mr. Paschal Changunda and Mrs. Sandra Roberts who retire by rotation and being eligible,

offer themselves for re-election.

4.2 To approve the appointment of Mr. Malcolm McCulloch (Alt. Mark Di Nicola) with effect from 01June 2018 and who in terms of

the Articles of Association of the Company is required to retire from the Board at the Company’s Annual General Meeting and

being eligible, offers himself for re-election.

5. Auditors5.1 To approve the remuneration of the Auditors for the previous year.

5.2 To approve re-appointment of Deloitte & Touche Chartered Accountants Zimbabwe as Auditors for the current year.

Note: In terms of the Companies Act (Chapter 24:03) a member entitled to attend and vote at a meeting is entitled to appoint a proxy to attend and vote on a poll and speak in his stead. A proxy need not be a member of the Company. Proxy forms must be lodged with the secretary not less than forty-eight (48) hours before the time of holding the meeting.

By Order of the Board

P. ChangundaCompany Secretary30 May 2019


PROXY FORM

PROPLASTICS LIMITED

For the Fourth Annual General Meeting of the Members of Proplastics Limited to be held at Palm Court, Meikles Hotel, Corner 3rd Street & J. Moyo Avenue, Harare on Tuesday, 25 June 2019 at 10.00 hours

I/We ……………………………………………………………………………………………………………………………………… (Name in block letters)

Of …………………………………………………………………………………………………………………………………………

Being the holder of ………………………………………………………………………………shares in the Company hereby appoint:

1 …………………………………………………… of ………………………………………… or failing him/her

2 …………………………………………………….. of ………………………………………... or failing him/her

3 the Chairman of the AGM.

As my/our proxy to act for me/us at the AGM for the purpose of considering and, if deemed fit, passing, with or without modification, the resolutions to be proposed thereat, and at each adjournment thereof, and to vote for and/or against the resolutions and/or abstain from voting in respect of the shares in the issued share capital of the Company registered in my/our name (see note 2) in accordance with the following instructions:

Resolution For Against Abstain

1. Ordinary Resolution number 1

Adoption of the 2018 Annual Financial Statements

and Directors’ and External Auditors’ reports


Approval of dividend


Approval of Directors’ remuneration


4.1 To re-elect Sandra Roberts as a Director of the Company.

4.2 To re-elect Paschal Changunda as a Director of the Company.

4.3 To re-elect Malcolm McCulloch (Alt. Mark Di Nicola) as

a Director of the Company


5.1 Approval of Audit fees

5.2 Appointment of External Auditors

Every person present and entitled to vote at the AGM shall, on a show of hands, have one vote only, but in the event of a poll, every

share shall have one vote.

Signed at ____________________________________________ on ________________________ 2019

Signature (s) ________________________________________________________________________

Assisted by me ______________________________________________________________________

Full name (s) of signatory/ries if signing in a representative capacity (see note 2). (PLEASE USE BLOCK LETTERS)


PROXY FORM

INSTRUCTIONS FOR SIGNING AND LODGING THIS FORM OF PROXY

1. A Shareholder may insert the name of a proxy or the names of two alternative proxies of the Shareholder’s choice in the space

provided, with or without deleting “the Chairman of the AGM”, but any such deletion must be initialed by the Shareholder. The

person whose name appears first on the form of proxy will, unless his/her name has been deleted, be entitled to act as proxy to

the exclusion of those whose names follow.

2. A Shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by

that shareholder in the appropriate space/s provided as well as by means of a cross whether the Shareholder wishes to vote,

for, against or abstain from the resolutions. Failure to comply with the above will be deemed to authorize the proxy to vote

or abstain from voting at the AGM as he/she deems fit in respect of the entire Shareholder’s votes exercisable thereat. A

Shareholder or his/her proxy is not obliged to use all the votes exercisable by the Shareholder or by his/her proxy, or cast them

in the same way.

3. A deletion of any printed matter and the completion of any blank spaces need not be signed or initialed. Any alteration or

correction must be initialed by the signatory/ries.

4. The Chairman shall be entitled to decline to accept the authority of a person signing the proxy form:

i. Under a power of attorney

ii. On behalf of a company

Unless that person’s power if attorney or authority is deposited at the offices of the Company’s transfer secretaries, or the

registered office of the Company, not less that forty-eight (48) hours before the meeting.

5. If two or more proxies attend the meeting then that person attending the meeting whose name appears first on the proxy form

and whose name is not deleted, shall be regarded as the validly appointed proxy.

6. When there are joint holders of shares, any one holder may sign the form of proxy. In the case if joint holders, the senior who

tenders a vote will be accepted to the exclusion of other joint holders. Seniority will be determined by the order in which

names stand in the register of members.

7. The completion and lodging of this form of proxy will not preclude the member who grants this proxy form from attending the

AGM and speaking and voting in person thereat to the exclusion of any proxy appointed in terms thereof should such member

wish to do so.

8. In order to be effective, completed proxy forms must reach the Company’s transfer secretaries or the registered office of the

Company not less than 48 hours before the time appointed for the holding of the AGM.

9. Please ensure that name(s) of the member(s) on the form of proxy and the voting form are exactly the same as those on the

share register.

Office of the Transfer Secretaries Registered office of the Company

First Transfer Secretaries (Private) Limited 5 Spurn Road

1 Armagh Road Eastlea Ardbennie

Harare Harare

Zimbabwe Zimbabwe

Contact us:

Head O�ce: 5 Spurn Road, Ardbennie, P.O. Box CY 1199, Causeway, Harare, Zimbabwe

Tel: +263 (242) 621 651-5, 661 341-3 | Fax: +263 (242) 660 545

Harare Show Grounds: Stand No. 14, 1st Avenue, ZAS | Tel: +263 (0) 864 421 9155, +263 (0) 778 415 338.

Bulawayo branch: Millitary Rd (o� Khami), P.O. Box RY 115, Raylton, Bulawayo

Tel: +263 (292) 68396, 62059 | Fax: +263 (292) 76130

Email: [email protected] | Website: www.proplastics.co.zw

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