Content

Scope of this Report Overview

We are pleased to present the annual report for Dairibord Corporate Profile 3 Holdings Limited, a company listed on Zimbabwe Stock Vision, Mission & Values 4 Exchange (ZSE) which include Dairibord Zimbabwe (Private) Group Structure 5 Limited, Martindale (Trading Private) Limited t/a Lyons, Dairibord Malawi Limited, Kutal Investments (Private) Limited and NFB Group Brands & Markets 6 Logistics (Private) Limited for the year ended 31 December Our Business Model 7 2015. Group Financial Highlights 10

This report is targeted at a broad range of our stakeholders with the aim of presenting a balanced review of material issues Governance, Ethics & Engagements from our operations. The report includes our operations in Zimbabwe and Malawi. Chairman’s Statement 11 Group Chief Executive’s Review of Operations 14 This report is prepared using Global Reporting Initiatives (GRI Corporate Governance & Ethics 19 – G4 Core) Guidelines in measuring our progress towards sustainability. This report is our fourth sustainability report. The Daribord Holding Limited Management 21 previous report was prepared meeting GRI G3.1. Application Sustainability Strategy & Governance 23 Level-C reporting requirements. Risk Management. 25 Our sustainability reporting is integrated with our financial Material Issues and Report Boundary 27 reports. Our financial statements are audited by Ernst & Young Stakeholder Engagement 28 Chartered Accountants (Zimbabwe). An independent auditors’ report on the financial statements contained in this report appears on page 39 of this Annual Report. Performance Sustainability Performance 30 Forward looking Statements Certain statements in this report constitute ‘forward looking Statement of Directors’ Responsibility 37 statements’. Such statements involve known and unknown Report of Directors 38 risks, uncertainties and other factors that may cause the actual results, performances, objectives or achievements of Independent Auditors’ Report 39 Dairibord Holdings to be materially different from future results, Annual Financial Statements 40 performance, objectives or achievements expressed or implied in forward looking statements. Annexure The performance of Dairibord Holdings is subject to effects Glossary of Terms 80 of changes in the operating environment and other factors. Dairibord Holdings undertake no obligation to update publicly GRI Content Index 81 or to release any revision of these forward looking statements to Shareholder Analysis 82 reflect the events or circumstances after the date of publication Notice to Shareholders 83 of these pages or to reflect the occurrence of unanticipated events. Shareholders’ Calendar 84

We would welcome your feedback on our reporting and any Form of Proxy suggestions you have in terms of what you would like to see incorporated in our report for 2016. To do so, please email: Loose [email protected] Corporate Information 87

Chairman Chief Executive Officer Dairibord Holdings Limited 2015 Annual Report

Corporate Profile OVERVIEW

Dairibord Holdings Limited is a manufacturer and marketer of (yoghurt, ice creams, condiments and spreads) and beverages quality milk, foods and beverages. The company is listed on (cordials, ready-to-drink dairy and non-dairy, tea and mineral the Zimbabwe Stock Exchange. Dairibord Holdings Limited water) which are marketed in both the domestic and export has 100% ownership in Martindale Trading (Private) Limited t/a markets. Lyons, Lavenson Investments (Private) Limited, NFB Logistics (Private) Limited, Kutal Investments (Private) Limited and 68.4% Dairibord Holdings Limited is one of the largest manufacturing shareholding in Dairibord Malawi Limited. Kutal Investments and marketing companies in Zimbabwe with over 45 brands. is a property holding company which leases its properties to The Group has factories in Harare, Chitungwiza, and Chipinge. GOVERNANCE, ETHICS & ENGAGEMENTS Group companies. Lavenson Investments (Private) Limited has The operations in Malawi are located in Blantyre. a 100% ownership in Dairibord Zimbabwe (Private) Limited.

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

3 Dairibord Holdings Limited 2015 Annual Report

Vision, Mission and Values

VISION To be the leading foods and beverages company in Africa, commanding a position of sustainable market leadership driven by strong brands and superior human capital.

MISSION To provide our customers with the best quality foods and beverages for the sustenance of good health

VALUES Innovation: We are committed to innovation and addressing changing customers’ needs and we will continuously develop our processes to produce a wide variety of quality new products and services.

Commitment: Customer satisfaction is the yardstick against which our company’s performance in all spheres will be measured. Exceeding our customer needs and expectations will be a commitment shared by every person in the company.

Professionalism: We will recruit and develop a well trained work force in which job competence, performance and succession stability are the primary objectives.

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

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

Accountability: We take responsibility for our own actions.

Sensitivity: We will provide a safe and positive working environment for our employees. Openness, two way communication, personal development, trust and recognition of achievement will be fostered to achieve our mission. Our goal is to be responsible and accountable to our shareholders through value creation in which sustainable profitability is a key requisite. We have developed and maintained a well-documented management system supported by an internationally recognized up-to-date enterprise wide management system.

Fairness: We will be fair in all our dealings

Zero Tolerance to Corruption: Our strategies and operations are anchored on principles of sound corporate governance. We shall not tolerate any form of corrupt dealings with our stakeholders. We will embrace ethical relationships with suppliers, employees, government, customers, consumers and regulatory authorities. To this end, the Group operates a zero tolerance to corruption policy.

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

4 Dairibord Holdings Limited 2015 Annual Report

Group Structure OVERVIEW

Dairibord Holdings Limited GOVERNANCE, ETHICS & ENGAGEMENTS

Martindale Lavenson Dairibord NFB Logistics Kutal Trading Investments Malawi (Private) Investments (Private) (Private) Limited Limited (Private) Limited Limited Limited 100% 100% 68.4% 100% 100%

Dairibord Repsol Lyons Africa Lyons Abrupt Westside Zimbabwe Estates (Private) Zimbabwe Enterprises Foods (Private) (Private) Limited (Private) (Private) (Private) Limited Limited Limited Limited Limited PERFORMANCE

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

Soilmark Rosenwald Goldblum Slimline Chatmoss Qualinex Farming Estates Investments Investments Enterprises (Private) (Private) (Private) (Private) (Private) (Private) Limited Limited Limited Limited Limited Limited

100% 100% 100% 100% 100% 100% ANNEXURE

5 Dairibord Holdings Limited 2015 Annual Report

Group Brands & Markets

Dairibord Holdings Limited is one of the largest manufacturing and marketing companies in Zimbabwe with over 45 active product brands. The Group has factories in Harare, Chitungwiza, and Chipinge. The operations in Malawi are located in Blantyre.

The table below summarises Dairibord Holdings Brands.

Product Category Product Type Brands

Dairibord Zimbabwe (Private) Limited Lyons Dairibord Malawi Limited Liquid Milks Long Shelf Life Dairibord Steri Milk Dairibord Ching’ombe Dairibord Chimombe

Cultured Dairibord Lacto Dairibord Chambiko

Short Shelf Life Dairibord Fresh Milk Cream Dairibord Fresh Cream Foods Yoghurts Dairibord Yummy Dairibord Yoghurt Dairibord Froot Scoop Dairibord Yogie Yuphoria

Ice cream Sticks Nutty Squirrel Lyons Maid Dairibord Ice Lollies Skippy Choc Sundae Cups Bigga Bear Super Split Plus 20 Monsta Mouse Green Giant Mello Ice

Ice cream Cones Divine Napoli

Bulk Ice Creams Dairibord Real dairy Lyons Maid Dairibord Bulk Ice Creams Dairibord Novelty

Cheese Gouda and Cheddar

Sauces & Rabroy Tomato Condiments Sauce Rabroy Salad Cream Rabroy Mayonnaise Magic Whip Lyons Peanut Butter

Beverages Ready To Drink Nutriplus Cascade Family Choice Juices Fun ‘n Fresh Juice Up Natural Joy Pfuko/Udiwo

Crushes & Cordials Quench Family Choice Xtra value Bottled Water Dairibord Aqualite Dairibord Aquamadzi

Tea Quick Brew Tea Quick Brew Rooibos

Lyons Drinking Drinking Chocolate Chocolate

Logistics Refrigerated Insulated Tankers Flat Deck Passenger

6 Dairibord Holdings Limited 2015 Annual Report

Our Business Model

The Group’s principal business is the manufacturing and distribution of foods and beverages. In line with our mission, the portfolio is focused on providing customers and consumers with quality foods and beverages for the sustenance of good health.

Our Stakeholders The Group is committed to open and honest interaction with all its stakeholders. The Group believes in inclusivity and responsive- ness through ongoing stakeholder engagement. OVERVIEW

Our stakeholder portfolio and their key interests

Stakeholders Issues of interest

Our Customers and consumers § Customer service § Product quality § Prices § Payment terms GOVERNANCE, ETHICS & ENGAGEMENTS Investors § Value creation § Profitability § Sustainability

Suppliers § Prices of materials and other inputs § Quality and consistence of supply § Payment terms

Government and Regulators § Import permits for raw materials and heifers § Compliance with tax, safety, health , municipal and environmental regulations § Local industry support § Employment creation Communities § Corporate social responsibility § Clean Environment

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

7 Dairibord Holdings Limited 2015 Annual Report

Our Business Model (continued)

OUR STRATEGY AT A GLANCE

Focus • Focused on quality foods and beverages

Core competences Strategic priorities • A portfolio focused on • Milk supply development promoting and sustaining • building superior brands good health and human capital • Competitive brands • cost reduction and • diversified distribution alignment channels • Investment in superior • Nationwide distribution technology network

Opportunities • Milk demand exceeding supply • Consumers increasing nutrition literacy • Regional markets fuelled by economic growth • Business realignment for efficiencies and effectivenes

8 Dairibord Holdings Limited 2015 Annual Report

Our Business Model (continued)

OUR VALUE CHAIN

Stage of the value chain Comments

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

Materials [Skimmed Milk Powder, Full Cream Milk Powder, Sugar, Orange Juices and Fruit Sets, HDPE, PET] Due to depressed industrial activity in Zimbabwe and Malawi, most raw materials are sourced globally exposing the business to global commodity price volatilities. Major imports are milk powders, sugar, HDPE and Fruit sets. GOVERNANCE, ETHICS & ENGAGEMENTS

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

Labour [contract and permanent] Labour is partly contracted and partly permanent. Unionized employees bargain for wage in- creases annually and these negotiations are not based on productivity but much driven by the market determined poverty datum line.

Processes The Group undertakes value addition by converting the inputs into value added products. The Group operates 5 factories [4 in Zimbabwe and 1 in Malawi]. The logistics business provides transport services to both Group companies and third party customers. PERFORMANCE Outputs and distribution Product portfolio channels The Group’s outputs are divided into the following portfolio; i. Liquid Milks ii. Foods iii. Beverages iv. Logistics

Distribution Channels ŸŸ Retail: This channel is composed of large retail outlets and wholesalers. ŸŸ Vending: This is a cash channel with independent vendors buying stocks for resale on a daily basis. The Group’s fast moving lines are sold through this channel mainly Yoghurt, Cascade, Fun’n Fresh, Nutriplus and Ice creams. ŸŸ

Franchises: Most franchises operate from the Group’s premises formerly operated as ANNEXURE distribution depots. ŸŸ Sales shops: These enable the Group to sell as close to the market as possible. The Group has sales shops at factories, in cities and major towns. ŸŸ Hospitality and institutions: The channel focuses on hotels, schools and similar institutions ŸŸ Exports: trade is done mainly with customers in Zambia, Mozambique and Botswana.

9 Dairibord Holdings Limited 2015 Annual Report

Group Financial Highlights

2015 2014 Increase/(Decrease) US$ US$

Revenue 103,441,209 99,015,525 4% Operating profit 3,970,058 1,356,521 193% Profit for the year 2,301,673 604,096 281% Net cashflows generated from operating activities 6,029,762 4,365,900 38% Net assets 48,102,112 46,084,681 4%

Share information No. No. Number of ordinary shares in issue at the end of period 358,000,858 358,000,858 Weighted average number of shares 358,000,858 358,000,858

Share performance Earnings per share US cents US cents -Basic 0.65 0.20 226% -Diluted 0.65 0.20 226%

Closing market price (US cents) 6.90 8.00 (23%) Net asset value per share (US cents) 13.37 12.77 5%

US$ US$ Market capitalisation 24,702,059 28,640,069 (14%)

10 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 11 exchange rate of MK673: USD1, compared to MK490: USD1 at exchange rate of MK673: USD1, compared the beginning of the year. cost of utilities, mainly water and Erratic supply and increasing on operating costs. also impacted negatively electricity, GROUP PERFORMANCE Milk supply a litres, 26.509 million was the year for intake raw milk Group to was due The decline year. the previous 2% from of decrease Malawi. In Zimbabwe, the a 24% fall in milk intake for Dairibord in raw milk intake. This was in line 3% growth recorded Group in national milk production. with the growth Revenue grew by 4%, to $103.441 million. The mismatch to $103.441 million. The mismatch by 4%, Revenue grew was due to and volume performance growth between revenue mix, and a change in product a combination of factors, namely, selling prices declined in consumer prices. Average reduction year. $1.39, in the previous 12%, to $1.22 from Investments in capacity and marketing support had a positive impact on overall top-line performance. The cost of producing raw milk in Zimbabwe remains raw milk in Zimbabwe remains The cost of producing economies. to regional uncompetitive compared and Revenue Performance Volume to 83.893 19% over the prior year, Sales volumes increased driven by the beverages portfolio, up 45% largely million litres, the major volume on 2014. Pfuko, Cascade and Aqualite were by 1%, while Foods declined 4%. The drivers. Liquid milks grew to luxury products change in consumer spending patterns, from which Foods of performance the impacted negatively basics, yoghurts and condiments. comprise mainly of ice creams, “Pfuko, Cascade and Aqualite and Aqualite Cascade “Pfuko, volume drivers.” the major were Dr. L.L. Tsumba Dr. Chairman Chairman’s Statement 2015 Statement Chairman’s in both food and non-food inflation. The high rate of inflation had inflation of rate high The inflation. non-food and food both in Exchange power. a negative impact on consumer purchasing in an end of year rate deteriorated during the period, and resulted Malawi The operating environment in Malawi remained difficult due to floods, a weak domestic economy and foreign currency on year inflation was 25% driven by increases shortages. Year of supply. of supply. environment. This culminated in higher operating costs, as costs, as This culminated in higher operating environment. expensive alternative to even more sources companies resorted Year on Year inflation remained negative, having opened the year the opened having negative, remained inflation Year on Year at –0.8%, and closing at -2.47%; with food and non-alcoholic water and cuts power Increased -3.71%. at inflation beverages rationing also contributed to the deterioration in the operating imported products and weaker regional currencies, against the against currencies, regional weaker and products imported in consumer prices. culminated in further reduction US Dollar, According to the Confederation of Zimbabwe Industries (CZI), According capacity utilisation contracted manufacturing sector survey report, from 36.5% in 2014, to 34.3% in 2015. Pricing pressure from in Sub-Saharan Africa of 3.8%. The economy was negatively negatively was economy The 3.8%. of Africa Sub-Saharan in job cuts, low impacted by unfavourable weather conditions, commodity prices.consumer disposable incomes and softening Key sectors of the economy were weak during the year, weak during the year, Key sectors of the economy were to growth 1.5%, compared of only GDP growth in culminating OPERATING ENVIRONMENT OPERATING Zimbabwe It is my pleasure to report improved results for the year year the for results improved report to my pleasure is It ended 31 2015. December, The results reflect the impact of initiatives and cost reduction enhancement measures revenue of the year. implemented by the company at the beginning INTRODUCTION 2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Chairman’s Statement 2015 (Continued)

Profitability OUTLOOK While volume and revenue grew by 19%, and 4% respectively, The macro economic situation is not expected to improve in total operating costs increased by a mere 1.7% as the group 2016 largely owing to the El Nino induced drought. The cost benefited from the cost reduction and business re-alignment of maize and stock feeds is expected to increase. This will put initiatives put in place earlier in the year. Consequently, operating unwelcome pressure on margins. profit for the period improved to $3.970 million, from $1.357 million in 2014. The operating profit margin for the period was In the medium to long term, Government efforts to re-engage 4% up from 1% in 2014. International Financial Institutions are expected to have a positive impact on major sectors of the economy, including finance, Key cost containment initiatives implemented include the agriculture, mining and manufacturing. rationalisation of the Gweru factory, manpower reduction and cost effective procurement of key materials and services. These The main focus for 2016 will be to defend volumes whilst pursuing initiatives will continue to have a positive impact on profitability opportunities to optimise the Group’s cost base. The Group going forward. is undertaking a restructuring exercise. One of the objectives is to streamline the business by grouping together all related DAIRIBORD MALAWI operations. The measures implemented to turn around Dairibord Malawi are also beginning to bear fruit. The company recorded an operating The new structure will consolidate the three operating companies loss of $11 197, down from an operating loss of $383 036 in 2014. in Zimbabwe; (Dairibord Zimbabwe (Private) Limited, Martindale The board continues to review its position on the investment, Trading (Private) Limited T/A Lyons, and NFB Logistics (Private) taking into account the performance of the business as well as Limited), into one operating entity. The new structure will allow trends in the macro-economic environment. the Group to re-model the business and reduce duplication of roles and activities along the value chain. CASH FLOWS Cash generated from operations increased from $4.366 million DIVIDEND in 2014 to $6.030 million during the year under review. The As the Group is set to invest in critical performance improvement improvement was on account of improved business profitability. projects in 2016, the Board has resolved not to declare a dividend However, increased working capital requirements, to support for the year ended 31 December 2015. growing sales volumes and new product lines, had a negative impact on cash-flows. The cash generated from operations was DIRECTORATE used to fund capital expenditure of $4.833 million, and to repay I advise that Mr Herbert Makuwa who was appointed director of $1.274 million of borrowings. Borrowings thus fell by 12%, to the company on 1 March 2006 will be retiring at the next AGM $9.749 million. and is not seeking re-election. Mr Makuwa was a member of the Finance and Audit Committee. On behalf of the board, I take this SUSTAINABILITY REPORTING opportunity to thank Herbert for his invaluable contribution to the The Group remains committed to conducting its business in a company over the years and wish him the very best in the future. sustainable way. Since 2012, the Group has been reporting on sustainability under the G3 guidelines of the Global Reporting APPRECIATION Initiative (GRI). To improve the quality of the report, the company I take this opportunity to express my appreciation to our various has embarked on a journey to upgrade its reporting to meet the stakeholders, employees, management and my fellow board G4 guidelines. This Annual Report has been prepared in line with members for their efforts in turning around the performance of the G4 reporting framework. the business.

The Group has received accolades in recognition for its initiative to provide stakeholders with more information through its sustainability reports. For the second year running, Dairibord Holdings Limited received awards for the Best Stakeholder DR. L. L. Tsumba Practices and Sustainability Reporting award, and came second Chairman in the Best Governed Company Category at the 2015 Institute of 10 March 2016 Chartered Secretaries and Administrators in Zimbabwe Corporate Governance Awards Forum.

12

Dairibord Holdings Limited 2015 Annual Report

Group Chief Executive’s Review of Operations

“Going forward, the Group will continue to focus on reshaping the business model to reduce costs and improve efficiencies.”

Anthony Mandiwanza Group Chief Executive

OVERVIEW This trend had a negative impact on liquidity in the local Business realignment to address emerging consumer needs economy through reduced mining receipts from exports. As and initiatives to reduce operating costs remained the key focus a result, exports declined from $3.558 billion in prior year to areas for the Group during the period under review. Despite $2.910 billion in 2015 culminating in a trade deficit of $2.839 the challenging operating environment, the Group recorded billion. significant progress in building a sustainable business model. • The decline in crude oil prices had a positive impact on cost Key performance highlights are: of fuel as well as oil related products like plastic packaging • 193% improvement in operating profit over prior year. • The strength of the US dollar vesus regional currencies made • New products contribution increasing to 12% of total revenue. imports cheaper particularly those from South Africa into • Gweru factory rationalisation following soon after the Zimbabwe. commissioning of the Chipinge Steri Milk plant. The Group • The El-Nino induced drought impacted on prices and ended the year with four (4) factories in Zimbabwe from a availability of agricultural commodities as well as utilities total of five (5) in the previous year. mainly water and electricity. • Continuous head count reduction to realign with reduced number of factories. At the end of the year, the Group had a ZIMBABWE staff complement of 1451 employees from 1 478 the previous The government has made good progress re-engaging the year. International Financial Institutions which are critical stakeholders • Recapitalisation to support new products, line extensions and in the government’s strategy to raise funding for national projects. increasing capacity for constrained lines. Capital expenditure Furthermore, mega deals with the Chinese, Germans and other of $4.622 million was deployed mainly towards the Steri Milk international investors reflect a significant medium to long term plant, Pfuko-Udiwo expansion and distribution facilities. potential in the economy. Despite these deals, the economy • Milk supply intervention through heifer procurement beginning remained depressed in the short term. to bear fruit. Contribution to DZPL raw milk intake was at 8% in 2015. Year on year inflation was negative at -2.47% as at 31 December 2015 vs. -0.8% for 2014. The deflation is attributed to reduced OPERATING ENVIRONMENT disposable incomes induced by company closures, lay-offs, increased competition and cheaper imports from the region. The OVERVIEW weakening of the ZAR worsened the competitiveness position of The developments in the macro-economic environment had local manufacturers. The ZAR closed the year at USD1:ZAR15.2 a direct impact on company level performance. Overally, the from USD1:ZAR11.6 at the beginning of the year. operating environment further deteriorated in 2015. Major global developments were as follows: Power cuts and water supply challenges were exacerbated by • The slow down in the Chinese economy resulting in a the drought situation with negative impact on cost of utilities as significant reduction in commodity prices mainly metals. businesses resort to alternative sources.

14 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE

15 579 S E G 30, A R E V E B - 286 45% 44, ) s e tr i 000 L (

928 lio 11, o 2014 tf OOD r F - o p 485 % 2015 y 4 11, b

d l o s

s me u l 905 K o V 27, MIL UID IQ % L 122 - 1 28, 3%, selling and distribution costs declined 9% and administration costs remained flat. Going forward, the Group will continue to and costs reduce to model business the reshaping on focus improve efficiencies. Specific initiatives will include ongoing Declining consumer disposable incomes and increased and increased Declining consumer disposable incomes now are which Foods on impact negative had a competition yoghurts creams, ice were lines affected Most luxuries. as viewed Rabroy in recorded however was Growth cream. salad and Sauce. Tomato Beverages The Beverages portfolio benefited from thefull year impact of Pfuko-Udiwo Maheu. The traditional beverage, launched mid- has since won a leading position in the market. Investments2014, capacity, improved will be made to support the brand through new flavors and marketing support.Other key volume drivers benefited brand Cascade The water. Aqualite and Cascade were quality product consistent market support and improved from capacity benefited Aqualite volumes. while increased PROFITABILITY operating costs was maintained throughout The focus on reducing efficiencies costs, materials at targeted initiatives Various year. the profitability in improvement in resulted costs overhead other and the market. from realised against a 12% decline in price per litre in million $1.357 from improved profit operating Consequently, 2014 to $3.970 million in 2015. by Whilst sales volumes went up 19%, cost of sales increased Liquid Milks supply by impacted negatively was Milks Liquid for Growth of the Chipinge Steri plant.disruptions during the commissioning and in Chimombe the impact was mitigated by growth However, consistency supply extensions, line from benefited which Lacto presents still category The support. marketing in investment and significant volume growth potential given the supply demand therefore will The Group obtaining in the country. gap currently increase to plant filling and processing carton a in investing be demand. supply which has not been able to meet Foods

s c

ti s i g o ION 123 CS , - L I 1 T T S E U I 1% 31% 31% 37% s U G 2014 B e I N LO rag E R 728 e V 35% v T e E N R - B

O L C A d o T o O IO 656 ES - F T L G

A 30, O O k l 1% T F 37% 27% 35% 2015 Mi T EVER d 913 i 4 B R u 1 27% q i 0 38, O 2 - L P - Revenue ($000) 5 1 ce 0 2 n

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I o e f v S T OOD r e E F U e % 835 43% 17% 40% - B 9 P M 2014 B

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T K 802 O Group Chief Executive’s Review of Operations (continued) of Operations Review Chief Executive’s Group L k O l I I 36, T M

Mi d i ID O 52% 14% 34% u 2015 U FOL T q i 964 T LIQ - L % R 35, 2 O P PORTFOLIO REVIEW PORTFOLIO between 2015 The graphs below show the performance trend and 2014 by portfolio. per litre were 3%, 5% and 12% below prior year respectively. and 12% below prior year respectively. 3%, 5% were per litre Change in product mix and price adjustments to improve brand mix and price adjustments to improve Change in product by decreased which litre per price impacted competitiveness and Beverages prices 12%. By portfolio, Liquid Milks, Foods as shown below: Milks and a decline of 4% for Foods. mix in product in a change in beverages resulted The growth Revenue and volumes sold Revenue and volumes million of 19% to 83.892 a volume growth recorded The Group million. The by 4% to $103.441 increased while revenue litres to the growth. Beverages portfolio had the highest contribution was 45% for Beverages, 1% for Liquid In volume terms, growth PERFORMANCE OVERVIEW foreign currency inflows. currency foreign No improvement was recorded in the macroeconomic the macroeconomic in was recorded No improvement dependent and donor The country remains environment. reengagement efforts are taking longer torealise meaningful MALAWI MALAWI 2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Group Chief Executive’s Review of Operations (continued) negotiations with suppliers of materials and services for price adjustments, input substitutions without compromising product A total of 330 heifers were procured by DZPL under the Heifer quality and distribution efficiencies. Procurement Programme bringing the cumulative total heifers procured to 760. These cows are now contributing 8% of total INVESTMENTS raw milk intake. A cautious approach on Heifer Procurement will The following investments were made in line with the Group’s be taken in 2016 in light of the prevailing El Nino induced drought. recapitalization and expansion program: In Malawi, depressed demand for milk products and floods led • The Chipinge Steri Plant commissioned in June 2015. The to a 24% decline in milk intake. Going forward, milk intake is investment enabled the Group to rationalize production expected to improve in line with initiatives to increase sales of operations at Gweru effectively reducing the number of the related products. factories. The investment will also reduce operating costs including maintenance costs, product losses, labour and HUMAN CAPITAL utilities. Human resources interventions have been modeled to facilitate • Pfuko- Udiwo expansion at the Chitungwiza Factory. The productivity, capacity building and creating an environment investment was made to unlock capacity which was already conducive for innovation. constrained. • Distribution capacity in the form of vehicles and market support For the period under review, there were cordial employee relations facilities. This investment was largely aimed at supporting when the country’s industrial relations climate was turbulent growing volumes and improve product presentation in the and unpredictable. Through various internal industrial relations market. and governance structures, staff contributed to strategic cost A total of $4.622 million was spent on these investments. management initiatives that included mutually agreed wage freezes and managerial salary cuts. CASH GENERATION Cash generated from operations improved by 38% to $6.030 The Group realizes the criticality of human capital in the attainment million. Receipts from the disposal of properties and ME of its strategic goals. As such, training and development programs Charhons were $1.244 million. will continue focusing on leadership and technical skills as well as health and safety at the work place. Cash generation was impacted by increased working capital requirements. Customers are taking longer to pay while foreign BRAND BUILDING suppliers demand significant pre-payments before delivery. The Group’s brands continue to occupy leading positions in During the year, inventories increased by 19% driven mainly various categories. During the year, selected brands won the by forward procurement of milk powders and finished goods to following accolades: support increased volumes. Trade receivables went up 22% due • Cascade- 2nd Runner Up in the FMCG Non – Alcoholic to increased credit sales and delays in payments by customers. Beverages Category under the Superbrands Awards for 2015 Going forward, the Group will focus on increasing sales through • Chimombe- 2nd position in the FMCG Dairy Products cash channels and aggressive collection of trade receivables to Category improve the working capital position. • Steri Milk- 1st runner up in the FMCG Dairy Products Category • Pfuko-Udiwo Maheu- 1st position in the Megafest Awards MILK SUPPLY To further strengthen our brands, the following initiatives are Milk Intake Performance (000 Litres) being undertaken:

57,500 55,500 • Continuous research into the emerging consumer needs for Group products • Improving processes and product architecture to ensure 26,509 26,922 22,889 22,134 that the product offering meets and exceeds consumer

3,619 4,788 expectations NATIONAL GROUP ZIMBABWE MALAWI • Widening product offering through new SKUs, flavors and 2015 2014 new products • Investing in capacity along the entire value chain to Milk intake for Zimbabwe operations grew by 3% vs. a consistently meet demand national growth of 4%. DZPL milk intake was 40% of raw milk produced nationally. STRATEGIC BUSINESS UNIT (SBU) PERFORMANCE

16 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 17 Optimization of product availability in the market through Focus on cost reduction along the entire value chain from Investment in processing and filling equipment to support the support to equipment filling and processing in Investment Product Product reformulations to reduce costs of inputs whilst to the market quality and maintaining product up to distribution operations materials procurement existing cartonised Chimombe. The brand has been already existing cartonised Chimombe. The brand has been already unable accepted in the market and the business is currently to meet demand. Upscaling capacity for Maheu to meet increasing demand of new flavors and allow for the introduction pocket consumer’s routes our strengthening and support trade in investment Line extensions and new flavors to increase share of the

The Group is undertaking a corporate restructuring of its of its restructuring is undertaking a corporate The Group January 1 from effect taking structure new the with subsidiaries business is meant to streamline 2016. The restructuring operations, in order to reduce costs, increase efficiencies and structure. simplify the Group all operations in Zimbabwe in having will result The restructuring Zimbabwe (Private) Dairibord subsidiary, under one distinct Martindale for undertakings business entire The (DZPL). Limited (Private) Logistics NFB and Lyons) (t/a Limited, (Private) Trading will Malawi in operation The DZPL. to transferred be will Limited subsidiaries owning The property standalone legal entity. a remain Limited. Holdings Dairibord by controlled and held directly be will This exercise will enable the business to optimize benefits of on its overhead cost structure. and improve synergies OUTLOOK • • • sufficient are place in strategies the that confident is Management lack of capacity to improve wages by the largest employers, employers, wages by the largest lack of capacity to improve namely Government and local authorities. In addition, the to lead to an is expected El Nino induced drought prevailing in cost of the staple food maize meal and stock feeds increase of agricultural produce as the nation becomes a net importer the African boarders. outside from intensify from to In the market place competition is expected deflationary other with Coupled entrants. new and existing both to decline further expected consumer prices are pressures, margins. performance and profit impacting on revenue The Group is however geared to respond effectively to these are: challenges. Key business drivers going forward • • • The macro economic situation is not expected to improve in the economic situation is not expected to improve The macro low especially given Disposable incomes will remain coming year. • GROUP RESTRUCTURING

E ENU 5% 5% V 33% 61% 33% 61% 2014 E 1% R L A B T F N O T

L M O D T s n ON yo I L T L U P Z B D ONTRI 4% C 4%

31% 64% 31% 64% 2015 U 1% B S Group Chief Executive’s Review of Operations (continued) of Operations Review Chief Executive’s Group contribution to earnings is anticipated in 2016. Exports will earnings will to Exports 2016. contribution in anticipated is to support raw material currency continue to generate foreign lines. critical product for procurement This was due to a reduction in operating costs and improvement in operating costs and improvement This was due to a reduction in efficiencies. The strategy company’s has been realignedto Positive profitability. improve and volumes sales in growth ensure The business was turned in 2015 with achieving a break- around an operating loss of $383,036 in 2014. even performance from Dairibord Malawi Limited Dairibord augmentation of capacity through broking. Third party turnover, party turnover, Third broking. augmentation of capacity through to the previous at $0.652 million, was a 36% decline compared This was as a total revenue. contributing 7% to the unit’s year, party customers to Group third of moving capacity from result volumes. business to cater for increased NFB Logistics prior 11% above million, $8.797 was business for the Turnover andvolumes group in increase an by driven was growth The year. such as introducing more flavor variants for drive brands and market share. market support to defend and grow aggressive from price adjustments and improved product availability. Going availability. product improved and adjustments price from initiatives growth revenue on focus will business the forward, Rabroy Tomato Sauce brands which recorded volume growth of volume growth which recorded Sauce brands Tomato Rabroy The Cascade brand was supported 11% and 12% respectively. and SKUs larger variants, flavor increased of combination a by Sauce benefited investments in trade support. Tomato Rabroy Lyons Lyons by improved volumes sales while year prior on flat was Turnover in volumes is attributed to the Cascade and 10%. The growth in order to further increase market share and increase sales sales and increase market share to further increase in order volumes. volume growth were Pfuko-Udiwo Maheu, Aqualite, Chimombe Pfuko-Udiwo Maheu, Aqualite, were volume growth a leading position inand Lacto. The brands continue to maintain will be maintainedthe market and investments in brand building however grew at a faster rate of 32% mainly driven by Beverages by driven mainly 32% of rate a faster at grew however by 91% and 7% respectively. and Liquid Milks which increased to contributors Significant year. previous on flat remained Foods Dairibord Zimbabwe (Private) Limited (DZPL) Dairibord Volumes for the year was 13% higher than 2014. Turnover The gragh below shows contribution to total revenue by SBU. to total revenue below shows contribution The gragh

2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Group Chief Executive’s Review of Operations (continued) to identify, prepare and respond to the risks and opportunities that emerge from the trends in the environment.

Anthony S Mandiwanza Group Chief Executive

10 March 2016

A total of 330 heifers were procured by DZPL under the Heifer Procurement Programme.

18 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 19 closed period as defined by the Zimbabwe Stock Exchange (ZSE) Exchange Stock Zimbabwe the by defined as period closed and Expertise Structure Board non-executive directors comprises of seven board The present (70%) (Including the chairman) and three executive directors executive directors chairman) and three (70%) (Including the board The board. chairs the director executive A non (30%). various possess board the of Members quarterly. least at meets expertise that include business, finance,manufacturing and management. human resources Non-Executive Directors of Appointment and Retirement of non- of Association, a third Articles In terms of the company’s executive directors retire from office by rotation at the annual eligible for re-election. general meeting and are Advice Professional is a that there agrees the board policy that provided It is Board justifiable case directors shall be entitled to seek independent expense in the furtherance advice at company’s professional of their duties. Corporate GovernanceCorporate Ethics & 2015 Annual Report 2015 Limited Holdings Dairibord Directors and all group employees are not permitted to deal not permitted to deal are employees all group and Directors the during company the of shares the in indirectly or directly Share Dealings Share any dealings to declare required and Management are Directors any to declare required They are of the company. in the shares that may materially affect the company. other interests rights system. meetings, press announcements of performance (Interim and announcements of performance (Interim and meetings, press year end), company website, formal meetings with shareholders voting and use of shareholders and investors, presentations The Company provides platforms for shareholders to communicate platforms for shareholders The Company provides Some of the platforms include annual general with the Board. Communication with Shareholders certified suppliers and service providers. Where there are our business practices, due attention complaints arising from that issues ensure hopes to Group is placed. Under this policy, Nations United the by outlined as Business in Rights Human of in supply chain screening. also considered are company may involve experts, external auditors and the police. and responsible The company adopted a policy of sustainable and with credible when assessing and dealing procurement The company adopted a Zero Tolerance Approach to corruption Approach Tolerance The company adopted a Zero All cases involvingin all business dealings with all stakeholders. on the case, the investigated. Depending carefully corruption are Business Ethics Development (OECD 1999) Principles of Corporate Governance,Development (OECD 1999) Principles of and Principles of Corporate Governance in the Commonwealth of the review is a broad (CACG Guidelines 1999). The following and practices. structure present by continuously benchmarking with internationalby continuously benchmarking with practices Governance Corporate on Report III King The in contained and for Economic Cooperation for South Africa, Organisation practices by adopting the National Code of Corporate Governancepractices by adopting the National Code of the year 2015. The group in Zimbabwe (ZIMCODE) launched during corporate governancewill continue to observe best practices in to all stakeholders. will endeavor to align existing corporate governanceThe Group affirms its commitment to ensure the Group acts in a responsible a in acts Group the ensure to commitment its affirms and environmental an economic, manner from and transparent benefits and value sustainable creating while perspective social shareholders on their stewardship. To that end it has established established has it end that To stewardship. their on shareholders govern to the of conduct the procedures and policies appropriate The Board and deliberations of the board. business company’s The Board of Directors is responsible for the direction and control control and direction the for responsible is Directors of Board The leadership to aims, providing setting its strategic of the Group, to reporting and management supervising effect, into them put Governance Approach and Management Dairibord Holdings Limited 2015 Annual Report

Corporate Governance & Ethics

BOARD Sub-Committees: Committee Members Main Function Finance & Audit Mr. David Hasluck (Chairman) The Committee monitors the company’s overall control procedures, risk management, and financial reporting. It Mrs. Rachael Pfungwa Kupara provides direct oversight and liaison on behalf of the Board with both internal and external auditors. The Committee reviews all Mr. Josphat Sachikonye significant Group risks, as well as risk mitigation initiatives and their effectiveness on a quarterly basis. Mr. Herbert Makuwa

Mr. Nobert Chiromo

Remuneration Dr. Leonard L. Tsumba (Chairman) This committee is responsible for reviewing the company’s remuneration policies and approving remuneration packages for Mr. David Hasluck senior executives

Mr. Anthony Mandiwanza Nominations Dr. Leonard L. Tsumba This committee searches and receives nominations, carries out background and reference checks and makes recommendations Mrs. Sibusisiwe Chindove on candidates for board membership. It reviews the adequacy of the expertise, relevance and independence of the board. The Mr. Cleton Mahembe Committee also co-ordinates the evaluation of the performance of the board. Mr Antony S Mandiwanza

ATTENDANCE TO MEETINGS DURING 2015 Year of appointment Committees

Main Board Finance & Audit Nominations Remunerations

Attended Attended Attended Attended

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

Mrs S Chindove 2008 2/4 1/1

Mr N. Chiromo 2015 2/2

Mr D Hasluck 2015 3/4 3/4

Mrs R P Kupara 2015 4/4 1/3

Mr T Mabika 1997 4/4

Mr C Mahembe 1997 4/4 1/1

Mr H Makuwa 2006 3/4 4/4

Mr A S Mandiwanza 1997 4/4 1/1

Mr F Mungoni* 2010 2/2 2/2

Ms M Ndoro 2009 4/4

Mr J Sachikonye 2009 4/4 2/3 1/1

*Mr F Mungoni retired at the AGM held on 28 May 2015 and did not seek re-election.

20 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 21 Group Chief Executive Group Manager Information Systems Group Chief Internal Auditor Group and Development Manager Research Group Manager Human Resources Group Executive (Acting) Procurement Group Chief Engineer Group Director and Administration Human Resources Group Manager Corporate Communications Group Finance Manager Group Director Finance Group Analyst Business Group Strategy Executive Director Director Managing Executive Production Financial Controller Manager Manager Human Resources Unit General Manager – Milk Supply Development Engineering Sales and Marketing Executive Controller Managing Director Operations Manager Technical Financial and Logistics Manager Transport Sales and Marketing Executive Director Controller Managing Financial Manager Production Sales and Marketing Executive Quality Assurance Manager Manager Human Resources Director Controller Managing Financial Sales and Marketing Manager ------Dairibord Holdings Limited Management Limited Holdings Dairibord 2015 Annual Report 2015 Limited Holdings Dairibord - Napata Zimbabwe (Private) Limited Dairibord Tatenda Anna Dhlamini Bernard Chakeredza Charity Magwenzi Daphne Bope Daniel Mhlanga Gabriel Matanga Gilbert Takabarasha Imelda Shoko Kudakwashe Bhaera Ndoro Mercy Obey Machechesa Thompson Mabika OPERATIONS - Themba Mutsvairo Maurice Karimupfumbi Baro Tinashe Kandare Stanley Mandizha Mpembe Eunice Ganyawu - NFB Logistics (Private) Limited Kiropasi Chokoza Lovemore Leo Gandiya Peter - Mashayahanya George - Kasenya Terence Mutaviri Nzuma (Private) Limited t/a Lyons Martindale Trading Tracey Godfrey Karman Machame - Gilbert Mushunje - Jacob Maneswa Mudzi Trymore Marimo Chiwota Malawi Limited Dairibord Theodora Pedzisai Munaka Shadreck CORPORATE MANAGEMENT CORPORATE Anthony S. Mandiwanza Dairibord Steri Milk Refurbished Plant Commissioning

Commissioning in pictures

The towering Chipinge Dairibord Steri Milk Plant. Sandra Dodo and Tatenda Napata of DZPL reveal Guest of Honour, Honourable M. Chimene the rebranded Dairibord Steri Milk. Minister of State for Provincial Affairs, Manicaland Commissioning the refurbished Dairibord Steri Milk Plant in Chipinge.

Mr. A. Mandiwanza, Dr L.L. Tsumba and Honourable M. Chimene handing over a donation of football Mr A. Mandiwanza (left) and Group Chief Engineer G. Matanga and netball kits to the headmaster of Matione Primary School in Gaza, Chipinge, Mr Bepete. (in blue cap) touring the factory with Honourable M. Chimene and other guests.

Mr Misheck Nyamupingidza (second black General Manager of the then DMB), Honourable Mandy Chimene, Mr Anthony Mandiwanza (Dairibord Holdings, Group Chief Executive), Mr Kumbirayi Katsande (first black General Manager of the then DMB) and Mr Lance Jena ( Former Executive Director - Marketing Services and Exports) OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 23 Credit facilities Credit depots dairibord at some for Premises Marketing support Advisory support on how to manage their businesses Franchises or distributors • • • • Provision of uniforms and equipment Provision selling to and from Transportation points facilities to enable them to buy Credit and pay after sales Vendors • • • - Sustainability Strategy & Governance & Strategy Sustainability Guaranteed market for milk produced Extension services development, facilities for herd Credit stock feeds, equipment and other farm requirements Lobbying to government for favour able policies • • • • Farmers The diagram below shows the linkages between the business and the bottom of the pyramid stakeholders: The diagram below shows the linkages The impact of the business as a commercial enterprise on the low to middle income sections of society is reflected in the business the in reflected is society of sections income middle to low the on enterprise commercial a as business the of impact The operations. and downstream model which engages them in both upstream Inclusive Business Inclusive business is the profitable integration of the less privilegedand small & micro enterprises in the core value chain of larger consumers, retailers, distributors, suppliers, as involved be can (BoP) Pyramid the of Base the at enterprises and People companies. & innovators and as additional employees. entrepreneurs Stakeholder Engagement The stakeholder Group’s engagement strategy is part of our overall corporate affairs strategy and risk management. Keysuppliers, customers and communities, government,employees, investors, include who stakeholders our toregulators, are operations our purpose of capturing material concerns values these stakeholders. As such, stakeholder engagement for the from others. The group is an integral success of the organization with the long term our businesses approach our stakeholders which can help us balance part of our strategy. Governance level sustainability teams. At company company for coordinating level responsible at group Team has a Sustainability The Group issues pertaining to environmental evaluating and managing material assist management in identifying, Teams level, Sustainability and the Group to Management and evaluate data collected for reporting and opportunities. The teams monitor and social impacts of Directors. Management and the Board to Senior Group which reports Sustainability Team Management Approach Management and competitiveness to the long term success manner is key friendly socially and environmental that operating in a believes The Group operations. our from arising impacts sustainability and address manage to in systems investing business is The the business. of as a tool for measuring Sustainability Reporting Guidelines the Global Reporting Initiatives (GRI) adopted As such, the group sustainable business initiatives and practices. performance in our 2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Integrated Capital Management The Group’s strategy recognizes the various forms of capitals, both financial and non-financial, as strategic input into the Group Business model for achieving short to long term business success. The Group’s strategy is to consider and manage all identified capitals of the business in an integrated approach. The Group identified the following outlined capitals as integral to the business:

Financial capital: Human capital: Social capital: Natural capital: Intellectual capital:

• These are the • This refers to the • This is the advantage • This refers to the • This refers to the financial resources employees as well we enjoy from natural environment knowledge our that are used to as the processes relationships with from which inputs employees possess fund our business used to engage and key stakeholders are produced and as well as the activities and support develop them. Critical including outputs and waste intellectual capital our strategy. This components are the government, disposed. As a that enables the includes the equity skills, capabilities, customers, manufacturing entity, business to remain from shareholders, knowledge and employees, suppliers we are committed ahead of competition loans from financial experience relevant and financial to preserving this and influence trends institutions and trade to the advancement institutions. natural capital as in our chosen partners. of the strategy of the well as working to domains. Group. optimize benefits e.g. through solar energy.

24 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 25 Proactive participation in wage negotiation wage in participation Proactive tension to minimize climate relations industrial cordial Promoting with engagement Frequent done regularly health checks Tax developments. related and other laws tax authorities on Annual certification for compliance is sought from the National from the compliance is sought for Annual certification Board. Empowerment Economic and Indigenization Operating standards are maintained above minimum above maintained are standards Operating requirements. Social Security National like regulators with Certification of and Ministry Agency, Management Environmental Authority, operations. commencing before sought are Agriculture certified procedures ISO 9000: Quality Assurance done certification Systems Management Safety ISO 22001: Food Lyons. out to and DML and being rolled DZPL for Health and Environmental ISO 14001: Safety, Pursuing certification Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Mitigants Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Risk Management Risk Excessive wage demands by labor unions demands by wage Excessive levels wage in unsustainable resulting laws with tax Non-compliance Specific exposures Specific Non-compliance with indigenization and with indigenization Non-compliance laws empowerment Product and workplace safety below below safety and workplace Product standard Legal/Regulatory Risk category Socio-political Main risks affecting the Group and mitigating measures Main risks affecting the Group To ensure the efficient monitoring and assessment of risk management systems, the Group Chief Internal Auditor is responsible for responsible is Internal Auditor Chief Group the systems, management risk of assessment and monitoring efficient the ensure To evaluating the adequacy and operational effectiveness of the The procedures. Group Chief Internal Auditorreports tothe Finance and Audit Committee. Operational Structure risk management procedures the Group’s for designing, implementing and monitoring Management is accountable to the Board of responsibility. for managing risk in their areas and every manager is responsible Group Risk Management Framework Group the risk management function has delegated The Board the Group. risk governance for across is terminally responsible The Board up of Non-Executive Finance and Audit Committee is made Committee. The composition of the Finance and Audit to the Group Committee Audit and Finance of the The mandate of Directors. Board main to the sub-committee is accountable The only. Directors to any risks for and respond prepare predict, systems to identify measure, has adequate that the Group risk is to ensure regarding may face. that the organization Risk Management Philosophy Risk Management is the Group of risk across The management opportunity. separable from activities and is not in the Group’s Risk is embedded in terms the major uncertainties are operations. The risks in this report but rather an integral part of our not a standalone activity and develop to identify and the operating environment continues to monitor the business The board of likelihood and impact. risks. emerging strategies to mitigate 2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Risk Management (Continued)

Risk category Specific exposures Mitigants Economic risk Declining consumer disposable incomes ŸŸ Innovation to reduce costs and pass on savings to customers through lower prices ŸŸ Value offerings in the form of pack sizes and flavors Increased competition from cheaper ŸŸ Price adjustments to retain competitiveness imports ŸŸ Investments in brand building to enable our brands to have a stronger value proposition ŸŸ Cost containment measures to recover profit margins lost through price adjustments Decline in competitiveness due to the ŸŸ Investing in new technology to improve on efficiencies opening up of the Global economy and the ŸŸ Investing in research and development to keep pace with the attractiveness of the US dollar market Deterioration of the operating environment ŸŸ Focusing on exports to preserve the value of the subsidiary in in Malawi threatening viability Malawi ŸŸ Adjusting business model to match consumer trends in the local market Business risk Failure of the business model to create Remodeling Group structure through: superior and sustainable performance ŸŸ Consolidation of operating subsidiaries to eliminate duplication of roles and reduce costs ŸŸ Adjusting product offering in line with market trends

Work stoppages/operational failure due to ŸŸ Holding safety stocks for all critical materials materials non-availability, power outages ŸŸ Developed more suppliers for critical materials to avoid and other unforeseen eventualities concentration risk. ŸŸ Signed supply contracts with most dairy farmers ŸŸ The Group has invested in standby generators and boreholes to ensure consistent supply of utilities

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

Talent risk Loss of skilled employees ŸŸ Rewarding top performers to improve retention ŸŸ Training and development to ensure adequate skill pool Inadequate succession planning exposing ŸŸ 100% cover for all critical positions the future of the business ŸŸ Several management development programs are underway viz. MBAs, Graduate Trainees and Food and Dairy Technology training Commodity price risks Negative impact on profit margins ŸŸ The procurement function undertakes global procurement of materials taking advantage of lower prices during down turns in global markets. ŸŸ Supply contracts are constantly negotiated to find better terms in light of developments in the market Investor sentiment Negative investor sentiment on the com- ŸŸ The Group actively participates in investor roadshows held by risk pany leading to share price decline on the different securities traders to clarify on the prospects of the Zimbabwe Stock Exchange. company ŸŸ One on one meetings are also held with interested investors or analysts at any time during the year ŸŸ Analysts’ presentations are held every year accompanying the publication of full year financial results. Financial Risk Financial risk is comprehensively dealt with in the notes to the financial statements on page 76 to 77

26 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 27 The Group engages all Heads of Business Units and Sustainability Teams Leaders; Teams of Business Units and Sustainability engages all Heads The Group Risk management Workshops, is conducted through of prioritisation The process meetings and Stakeholder Engagement Senior Sustainability Team, by Group Review of material issues is conducted approval Management and Risk Management for Material Issues and Reporting Boundary and Reporting Issues Material APPROVAL IDENTIFICATION PRIORITISATION Report Boundary Reporting boundary for the Group is defined by where material impacts are identified within theGroup’s operations. The occurring. Group they are our stakeholders and where and social issues deemed to be of high impact to the Group, assess environmental This report level following an evaluation process. at Group approved content and performance indicators are Boundary of the report our operations in both Zimbabwe Malawi. covers sustainability performance from The Group’s approach to identifying material aspects for disclosure is influenced by the stakeholder engagement process and internal and process Process Materiality engagement stakeholder the by influenced is disclosure for aspects material identifying to approach Group’s The in identifying sustainability aspects the sustainable business philosophy and resources its collective applies evaluation. The Group in environment operating business the account into takes process This stakeholders. and Group the both to impact high deemed Zimbabwe and Malawi. Key performance indicators are identified through anassessment of our business inrelation is broadly by the Group to materiality to social aspects. The approach and concerns stakeholders on economic, environmental of our material and basis for reporting. in our approaches consistence to ensure Sustainability Reporting Guidelines guided by the GRI’s 2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Stakeholder Engagement

The Group’s relations with stakeholders is an integral form of capital for the successful implementation of our business strategies. Therefore, the group proactively engage stakeholders with the spirit of inclusivity and responsiveness. The Group engage stake- holders frequently to identify material issues and areas of concern that impacts our stakeholders and the business. Our stakeholder engagement is decentralized to business units to ensure speedy response to material issues. At Group Level, engagement is fo- cused on key stakeholders with material impacts on policies and business operating environment and the different capitals. Stake- holder engagement reports are managed through a consolidated process at Group Level. During the year, the Group identified and responded to issues concerning our stakeholders and the business. The table below shows a summary of key engagements held during the year:

Stakeholder Method of Material Issues Result/Action taken Engagement Discussed Customers and ŸŸ Customer ŸŸ Product ŸŸ Due to increasing competition, pricing and product consumers satisfaction quality quality have become increasingly important in the surveys ŸŸ pricing customer’s mind. ŸŸ Business review ŸŸ The Group continuously review pricing to align with meetings market taking into account the quality premium in our ŸŸ Social media brands. platforms Government ŸŸ Representations Creation of a ŸŸ Government implementing various measures to enable and regulatory (letters) level playing field local companies to produce competitively Authorities ŸŸ Formal meetings between imports ŸŸ Import quotas and duties on finished goods in place to ŸŸ Policy briefings and exports nurture local industry ŸŸ Compliance ŸŸ Continuous government engagement to reinforce and inspections improve on ease of doing business

Regulatory ŸŸ Compliance with regulations compliance Effluent treatment ŸŸ Effluent treatment plant construction in progress. and refuse Cost incurred at end of 2015 was $130,000 and disposal commissioning will be done in the first half of 2016.

Water outages ŸŸ Water supply from City council impacted by both equipment quality and water levels at major sources. ŸŸ Boreholes have been drilled at all strategic locations to ensure consistent supply of water ŸŸ Health and ŸŸ The Group is embarking on preparations for SHE safety certification. The construction of effluent treatment plants ŸŸ Factory will enable compliance with the requirements for SHE license certification. renewals ŸŸ Routine maintenance is done to ensure that all plant and equipment at least complies with minimum health, safety and environmental requirements. Suppliers ŸŸ Formal meetings Raw milk supply ŸŸ Heifer procurement scheme ongoing ŸŸ Supplier briefings initiatives and ŸŸ Partnered a local financial institution to fund bankable ŸŸ Workshops pricing dairy projects going forward. Looking for more institutions with appropriate funding models to increase the pool of funds ŸŸ Farmers agreed to a price review to align with reduced milk powder prices globally. The move will be compensated by a corresponding reduction in stockfeed prices by feed manufacturers.

Prices, quality ŸŸ Price adjustments have been secured from most and supply suppliers in line with the general deflation in the economy consistence for and weakening of major trading currencies. key inputs ŸŸ Power cuts increasing due to low dam levels at Kariba impacting power generation.

28 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 29 The Group’s policy is to pay above the negotiated wages policy is to The Group’s of the business. in line with the performance The during the year. retrenched 13 employees were has not contested and the Group were retrenchments with best practice paid benefits in line The Company’s turnaround strategies are continuously strategies are turnaround The Company’s investor community communicated to the meetings during the team holds The investor relations of the developments in the year to apprise investors market and in the company The Group’s focus is to finance operations through low focus is to finance operations through The Group’s cost diversified funding. Ÿ Ÿ Ÿ Ÿ Ÿ Result/Action taken Result/Action Ÿ Ÿ Ÿ Ÿ Ÿ Conditions of service Retrenchments Material Issues Material Issues Discussed prospects Growth creation Value Business risk Funding requirements and interest Tenure rates Stakeholder Engagement (Continued) Engagement Stakeholder Roadshows council Works meetings Method of Method of Engagement AGMs, Briefings Formal meetings Employees Stakeholder Investors and Analysts Financial Institutions 2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Sustainability Performance

ENVIRONMENTAL PERFORMANCE

Management Approach The business impact of change in climate and the natural environment in general is becoming more pronounced in the twenty first century. The El-Nino induced drought for the 2015/2016 agriculture season has impacted the entire SADC region’s agricultural output posing challenges from the supply side of agriculture commodities as well as the demand by the rural population which forms the majority of the Sub-Saharan Africa customer base. The business is therefore proactively investing in programs to reduce impact of its operations on the environment including ground, air and water. In addition to the programs, the business continues to monitor the risks and opportunities that emanate from the trends in climate and the other environmental factors.

Environmental Management Priorities • To perform above the minimum standards set by regulators. • Partnering other players to recycle plastic packaging materials and used oils. • Pursuing active and passive initiatives to reduce the carbon footprint. • Optimal utilization of water recognizing the fact that water is increasingly becoming a scarce resource. • Managing waste disposal – liquid, solid and gas – in a manner that preserves flora and fauna. • Proactively consider the National Climate Change Response Strategy launched by Government of Zimbabwe.

Performance The table below shows the quantities of key materials consumed by the Group during the year under review:

Materials Materials Used Units 2015 2014 PET Tons 588 454 HDPE Tons 2,251 1,546 Oils and Grease Tons 11 8 Plastic wrappers Tons 459 486 Detergents Tons 222 327 Paper packaging Tons 502 942 Polypropylene Tons 439 386

HDPE consumption increased by 45% due to significant growth in the production of Pfuko-Udiwo Maheu and Cascade. Increased fleet size to support the increased volume resulted in increased oil consumption. The closure of production operations at the Gweru factory after the commissioning of the Chipinge factory led to reduced detergents used for cleaning the production equipment and factories.

Recycling Initiatives The Group continues to sell used oils to dealers approved by the Environmental Management Agency (EMA). Recycling also include HDPE materials mainly used in the production of bottles for Steri Milk. The decline in HDPE recycling is attributable to improved production efficiencies achieved after the commissioning of a new Steri plant in Chipinge. The table below summarizes the performance in this regard.

Materials Recycled Unit 2015 2014 HDPE % 1 4 Used oil % 26 26

PETRECOZIM The Group remained a member of the PET recycling company (PETRECOZIM) run by bottlers and other related operators in Zimbabwe. Performance during the year was as follows:

30 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 31 6 166 2014 2014 2014 5,514 1,538 16,896 114,881 257,209 8 199 2015 2015 2015 6,035 2,284 17,976 382,002 181,315 Unit Unit Unit Tons Tons MWh ‘000’ Litres ‘000’ Litres Cubic Litres Cubic Litres Sustainability Performance (continued) Performance Sustainability Increased power cuts induced by low output from the national utilities both in Malawi and Zimbabwe. Electricity prices per the national power cuts induced by low output from Increased KWH also increased. fuels mainly diesel and an opportunity for price adjustments for all crude oil related Global oil prices declined presenting petrol. 590t of PET waste was collected from the environment, a recovery rate of 5%. a recovery the environment, from waste was collected 590t of PET was sold to China. into 505t which was processed The waste rate of 13%. a recovery the environment, to be collected from 1916t of PET waste material. sold as recycled output to be 1710t processed Electricity Diesel Municipal Source Energy Type Energy Energy Type Energy Heating (Coal) Gases Petrol Borehole Energy Consumption – Within the Organisation Energy • • The table below year. than the previous sales volumes, coal, diesel and electricity consumption was greater Due to increased during the year: for the Group consumption by source shows the energy ENERGY both in terms of these sources coal and gases. The performance petrol, diesel, electricity, are of energy major sources The Group’s during the year are: the business. Key developments of availability and cost had an impact on • • as follows: for 2016 are Projections • • collections to other cities. contributors and expand waste recruit more efforts to The company will continue Energy Consumption – Outside the Organisation Energy Use of municipal water increased by 233% during the year due to reduction in the use of borehole which decreased by 30%. Overall which decreased in the use of borehole by 233% during the year due to reduction Use of municipal water increased water usage went up in line with volume growth. WATER impact significant patternhas weather El-Nino prevailing the However, process. production our of component key a remains Water water supplies for adequate unable to provide currently The Local Authorities in Malawi and Zimbabwe are on water sources. will continue to manage soon. The Group not expected to be resolved factory operations. The existing water supply challenges are for the year under review: of water available. The table below shows water consumption by primary source all sources 2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Sustainability Performance (continued)

EMMISSIONS, EFFLUENTS, AND WASTE

Effluent Discharge Due to the nature of our products, the effluent from the Group’s operations contains milk and milk products, Lye and Acid ions which threaten the survival of plants and animals in rivers and dams if discharge is not treated. The Group is in the process of constructing an effluent treatment plant at the DZPL Harare factory to treat the effluent before discharge into the municipal sewer. As at 31 December 2015, costs incurred were at $130,000 against a plan of $285,000. The project is at an advanced stage and completion is expected in the first half of 2016.

SHE Certification at DZPL and NFB Logistics DZPL and NFB are still waiting for the completion of the effluent treatment plant before proceeding with seeking SHE certification.

Human Capital Maintenance

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

Human Capital Management Priorities The Group’s human capital strategy focuses on the following priorities: Health and safety. Training and development. Linking remuneration to productivity. Respect and fair treatment of all employees. Equal opportunity for marginalized groups including gender equality.

Performance

Employee Engagement and Turnover

Total Employees at Year End Employee Category Unit 2015 2014 Permanent Count 813 865

Contract Count 638 613

Total 1,451 1,478

On the 17th of July 2015, the Supreme Court of the Republic of Zimbabwe made a ruling on the validity of the three months’ notice which culminated in industry wide layoffs across many companies. The Group considered the impact of the layoffs on human capital and a decision was made not to undertake any retrenchments in line with this ruling. In view of depressed economic environment and production, the Group realigned staff to production by reducing head count by 27 employees which included retrenchments of 13 permanent staff.

32 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 33 - - 90 18 15 11 18 44 2014 175 2014 2014 1,303 1,478 1 1 19 131 10 17 10 37 2015 195 2015 2015 1,256 1,451 Unit Days Count Count Unit Unit Count Count Count Count Count Incidence Sustainability Performance (continued) Performance Sustainability Provision of health and safety training to achieve zero harm at the work place harm at the of health and safety training to achieve zero Provision safety occupational that improve of factory designs to implement measures Regular review Factory clinics at operating factories Medical aid support for all employees for HIV and AIDS programs Running awareness Female Apprentice Male Graduate Trainees Students on Attachment Total Total Indicators Safety representative training (Frequency) Safety representative Category Hazards for which internal STOP Notes issued Hazards Employee Gender Category Employee Gender Number of lost time injuries number of injuries Total • • • • Related Accidents/Injuries Work to work place health and safety is shown below: with respect The performance of the Group Apprentices, Graduate trainees and Students on attachment Apprentices, providing human capital contribution through invests in future continues to enhance the skills pool while the group The group a summary totals at the end graduates and students. The table below provides training and practical experience for apprentices, of the year: Health & Safety its continues to improve customers and other stakeholders. As such, the Group Health and safety is a priority for our employees, the following: it conducts its business through ever and where premises health and safety performance within its • Employees Gender Distribution Employees levels by 2015. The table below shows manning 175 to 194 at the end of from of female employees increased number Total gender: 2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Sustainability Performance (continued)

Number of lost days Count 269 237 Health & Safety Training and Awareness Programmes Programme Unit 2015 2014 Wellness Programme Employees 12 14 Anti-Retroviral therapy Employees 7 10 Medical aid Employees 612 675 Peer educators Count 20 30 HIV/AIDS awareness campaigns Activities 7 11 Clinics Counts 1 1 First Aid workers Count 50 30

PRODUCTS RESPONSIBILITY The Group remains focused on delivering heathy and safe products to all customers. As such, the main priorities for product responsibility are: • Quality of raw materials tested before they are utilized in the production processes. • Supplier evaluation and engagement to ensure their systems produce consistent quality products that meet food safety requirements. • Process certification to ensure that the Group’s operations have the necessary standards and procedures to produce quality products. • A robust customer complaints handling procedure.

The following systems and certifications are in place to ensure the manufacture and distribution of quality products: • ISO certification. DZPL and DML are certified under ISO 22000:2005 Food Safety Management Systems. Lyons is ISO 9001:2000 certified and work is in progress to get ISO 2000:2005 certification in 2016. • Ministry of Health and SAZ certification of all products. • Collaborating with other industry players and regulatory agencies in clean up and awareness campaigns and environmental

34 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 35 2014 Amount ($) 12,000 2015 Amount ($) 25,000 For the third year running, the Group sponsored sponsored Group year running, the For the third fund (CAST) Survivors Trust the Cancer Awareness the dinner raised from Proceeds raising dinner. chemotherapy and meals towards channeled were rural areas. for the less privileged patients from Television sets five(5) Chipinge Hospital received Holdings for the patients wards Dairibord from (SODA) in The Society of the Destitute and Aged orphanage and Rekai Tangwena Highfield, Harare every products nutritious Group in Nyanga receive month. Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Key Activities and Beneficiaries Sustainability Performance (continued) Performance Sustainability Dairibord Holdings Limited presented five(5) television sets to Chipinge Hospital for the patients wards expos. Health and social welfare Community Priority Areas Community Priority COMMUNITY INVESTMENT during the year: undertaken key community investment programs The table below summarizes 2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Community Priority Areas Key Activities and Beneficiaries 2015 2014 Amount ($) Amount ($)

Sports ŸŸ The annual Dairibord Schools Rugby Festival 184,920 180,420 sponsorship contract runs from 2014 -2018 and events are hosted at Prince Edward School in Harare.

ŸŸ Matione Primary School in Chipinge, Emmanuel and Mazarura High schools in Nyanga received a donation of Football and Netball kits. Education ŸŸ Donation of $5,000.00 worth of tools for the 31,500 26,653 agriculture, woodwork and building subjects at Ordinary Level for Mazarura High School.

ŸŸ Co-sponsorship of the 2015 Boost Fellowship/ Enactus Zimbabwe National Competition where various university teams in the country present their outreach programmes. The winning team then competes at international level.

ŸŸ A total of 17 students benefited from the Dairibord Holdings Education Trust Fund. Nine (9) students were at university level and eight (8) were in secondary school.

Total Community 241,420 219,073 Investments

ECONOMIC

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

36 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 37 Statement of Directors’ Responsibility of Directors’ Statement 2015 Annual Report 2015 Limited Holdings Dairibord Group Chief Executive A. S. Mandiwanza Chief Dr L.L.Tsumba Group Chairman 2016 10 March The financial statements for the year ended 31 December 2015 have been approved by the Board of Directors and are signed on its on signed are and Directors of Board the by approved been have 2015 December 31 ended year the for statements financial The Mandiwanza. Chief Executive Mr A.S. and by the Group Dr L.L. Tsumba behalf by the Chairman of the Board, on a going concern basis is appropriate. The Directors The have Directors satisfied themselves that the is Group in a sound financial position,and has to resources adequate continue in statements, financial these of preparation the that believe Directors your Accordingly, future. foreseeable the for existence operational The Directors recognize and acknowledge their responsibility for the Group’s systems of internal control. These systems are adequate These systems are systems of internal control. for the Group’s and acknowledge their responsibility recognize The Directors for the preparation necessary and that accurate records, safeguarded are of the Group assurance that the assets reasonable to provide maintained. of the financial statements, are been made. International Financial Reporting Standards have also been followed where applicable with suitable accounting policies applicable with suitable accounting been followed where have also been made. International Financial Reporting Standards having been consistently applied. The Directors consider that in the preparation of these financial statements, reasonable and prudent judgments and estimates have estimates and judgments prudent and reasonable statements, financial these of preparation the in that consider Directors The The Directors are responsible for maintaining records, which disclose with reasonable accuracy the financial position of the company the of position financial the accuracy reasonable with disclose which records, maintaining for responsible are Directors The (Chapter Act Companies the with comply statements financial consolidated the that ensure to them enable which and Group, the and fraud and other and detecting and for preventing the assets of the Group safeguarding for also responsible are 24:03). The Directors irregularities. The Directors are required by the Companies Act (Chapter 24:03) to prepare financial statements for each financial year giving a true giving year financial each for statements financial prepare to 24:03) (Chapter Act Companies the by required are Directors The cash and profit the as well as period financial the of end the at as Group the and company the of affairs of state the of view fair and period. flows for the same Dairibord Holdings Limited 2015 Annual Report

Report of the Directors The Directors have pleasure in submitting their twenty first annual report, together with audited financial statements of the Group for the year ended 31 December 2015.

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

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

Distributable reserves at the beginning of the year 20 711 889 Profit for the period 2 333 476 Transfer from capital reserves on sale of properties 119 210 Distributable reserves at the end of the year 23 164 575

Movements in other reserves are shown in the Statement of Changes in Equity and in the notes to the financial statements.

INVESTMENTS During the year, the Company received $121 807 from Cairns Holdings Limited in part settlement of the sale of the shareholding in Charhons (Private) Limited done in 2012. The receivable was impaired in 2012 when the company was placed under Judicial Management except for a balance of $47 909, resulting in a profit of $73 898. The balance due from Cairns now at $734 248, accrues interest at 5% per annum and will be paid over the next five years. Income will be recognized on receipt.

PROPERTY PLANT AND EQUIPMENT Expenditure on property, plant and equipment during the period was US$4.622 million. Expenditure for the year January to December 2016 is planned at US$11 million. This expenditure is to be financed from borrowings and from the Group’s own resources.

GROUP RESTRUCTURING The Group is undertaking a restructuring exercise with one of the objectives being to streamline the business by grouping together all related operations. The new structure will consolidate the three operating companies in Zimbabwe (Dairibord Zimbabwe (Private) Limited, Lyons and NFB) into one operating entity. The new structure will allow the Group to re-model the business and reduce duplication of roles and activities along the value chain.

DIVIDEND The Board considered the Group’s capital projects for the coming year and the resultant working capital requirements and resolved not to declare a dividend for the year ended 31 December 2015.

DIRECTORS In accordance with article 100 of the company’s Articles of Association, Mr J Sachikonye retires by rotation and being eligible, offers himself for re-election.

Mr. H. Makuwa who has served the company as non-executive director since March 2006 is also retiring in accordance with article 100 of the Company’s Articles of Association and is not seeking re-election. Mr Makuwa was a member of the Finance and Audit Committee.

AUDITORS Members will be asked to approve the remuneration of the auditors, Ernst & Young Chartered Accountants (Zimbabwe) of $152 250, for the year ended 31 December 2015 and their re-appointment as Auditors to the company for the ensuing year.

M. Ndoro Company Secretary 10 March 2016

38 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DAIRIBORD HOLDINGS LIMITED

Report on the financial statements We have audited the accompanying consolidated and company financial statements of Dairibord Holdings Limited as set out on pages 40 to 79, which comprise the statements of financial position at 31 December 2015, the statements of comprehensive income, the statements of changes in equity and the statements of cash flows for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information.

Directors’ responsibility for the financial statements The Company’s directors are responsible for the preparation and fair presentation of these consolidated and company financial statements in accordance with International Financial Reporting Standards (IFRS) and in the manner required by the Companies Act (Chapter 24:03) and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

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

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

Opinion In our opinion, the consolidated and company financial statements present fairly, in all material respects, the consolidated and company financial position of Dairibord Holdings Limited as at 31 December 2015, and its consolidated and company financial performance and consolidated and company cash flows for the year then ended.

Report on other legal and regulatory requirements In our opinion the consolidated and company financial statements have been properly prepared in compliance with the disclosure requirements of the Companies Act (Chapter 24:03)

Ernst & Young Chartered Accountants (Zimbabwe) Registered Public Auditors Harare 15 March 2016 Dairibord Holdings Limited 2015 Annual Report

Statements of comprehensive income for the year ended 31 December 2015 GROUP COMPANY 2015 2014 2015 2014 Notes US$ US$ US$ US$

Revenue 103,441,209 99,015,525 1,961,289 2,498,469

Cost of sales (78,727,306) (76,595,970) - -

Gross profit 24,713,903 22,419,555 1,961,289 2,498,469

Other operating income 3 238,907 364,398 1,175,558 1,231,930 Selling and distribution expenses (9,921,234) (10,863,429) - - Administration expenses (10,854,985) (10,329,543) (3,356,540) (3,368,165) Other operating expenses 4 (206,533) (234,460) (700,000) -

Operating profit/(loss) 5 3,970,058 1,356,521 (919,693) 362,234

Finance costs 6 (1,085,599) (792,305) (1,089,830) (794,510)

Finance income 7 127,131 209,592 1,071,854 775,173

Profit /(loss) before taxation 3,011,590 773,808 (937,669) 342,897

Income tax (expense)/credit 8 (709,917) (169,712) 67,986 (45,367)

Profit/(loss) for the year 2,301,673 604,096 (869,683) 297,530

Other comprehensive income:

Other comprehensive income to be reclassified to profit or loss in subsequent periods Exchange differences on translating foreign operations (284,242) (85,019) - -

Other comprehensive income for the year, net of tax (284,242) (85,019) - -

Total comprehensive income/(loss) for the year 2,017,431 519,077 (869,683) 297,530

Profit /(loss) attributable to:

Equity holders of the parent 2,333,476 730,456 (869,683) 297,530 Non-controlling interests (31,803) (126,360) - -

2,301,673 604,096 (869,683) 297,530 Total comprehensive income /(loss) attributable to:

Equity holders of the parent 2,139,054 672,303 (869,683) 297,530 Non-controlling interests (121,623) (153,226) - - 2,017,431 519,077 (869,683) 297,530

Earnings per share (cents)

Basic earnings for the year attributable to ordinary equity holders of the parent 0.65 0.20 Diluted earnings for the year attributable to ordinary equity holders of the parent 0.65 0.20

40 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE ------41 US$ 2014 77,473 85,649 11,996 36,637 35,800 34,303 48,238 401,905 339,794 272,043 706,277 428,918 6,887,969 1,251,464 3,935,762 5,575,653 5,575,653 1,379,664 6,420,860 6,455,163 4,384,132 5,567,565 17,698,183 25,151,179 30,726,832 17,016,597 18,704,104 18,704,104 12,022,728 30,726,832

COMPANY COMPANY ------US$ 2015 31,436 62,145 76,632 38,171 58,672 35,800 201,051 138,578 800,949 (597,640) 8,122,352 1,856,019 5,223,914 5,158,090 7,238,921 7,238,921 1,379,664 4,498,168 4,498,168 4,515,525 16,998,183 25,568,232 32,807,153 17,016,597 17,834,421 17,834,421 10,474,564 14,972,732 32,807,153 A. MANDIWANZA A. MANDIWANZA Chief Executive Group ------35,800 688,262 869,298 102,720 919,551 460,874 375,253 1,467,501 1,349,774 4,565,037 1,414,341 1,379,664 6,511,313 3,194,811 9,706,124 42,326,441 45,351,502 15,147,057 11,613,141 29,524,313 30,443,864 75,795,366 23,121,201 20,711,889 45,709,428 46,084,681 20,004,561 29,710,685 75,795,366 15,336,804 GROUP

- - - - - US$ US$ 2014 2015 31,436 35,800 658,011 220,904 421,884 637,349 169,869 827,915 355,659 253,630 1,467,501 5,187,620 2,809,915 1,379,664 4,561,863 3,394,442 7,956,305 44,504,796 41,705,060 18,096,735 11,823,454 33,367,453 34,195,368 78,700,164 22,912,784 23,164,575 47,848,482 48,102,112 22,641,747 30,598,052 78,700,164 17,284,258

11 10 12 13 14 15 24 16 18 14 19 20 24 25 17.1 22.2 21.1 21.2 22.1 17.2

Notes as at 31 December 2015 as at 31 Statements of financial position financial of Statements

Investment property Assets assets Non-current plant and equipment Property, Intangible assets Investment in subsidiaries Long-term loans receivable expenditure Prepayments-capital assets financial Other non-current tax asset Deffered assets Current Inventories companies Amounts owed by group Prepayments and other receivables Trade Short-term loans receivable Equity attributable to owners of the parent - bearing borrowings Interest Income tax payable Cash and cash equivalents Assets classified as held for sale assets Total Equity and liabilities Equity capital Share premium Share Non - distributable reserves Reserves of assets classified as held for sale Retained earnings / (Accumulated losses) interests Non - controlling equity Total liabilities Non-current - bearing borrowings Interest tax liability Deferred liabilities Current and other payables Trade companies Amounts owed to group liabilities Total equity and liabilities Total DR L. L .TSUMBA Chairman 2016 10 March 2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Statements of cash flows for the year ended 31 December 2015 GROUP COMPANY 2015 2014 2015 2014 Notes US$ US$ US$ US$

Operating activities

Profit/(loss) before tax 3,011,590 773,808 (937,669) 342,897 Adjusted for: Depreciation of property, plant and equipment 10 4,609,952 3,914,217 207,878 205,673 De-recognition/ impairment of property, plant and equipment 10 - 207,735 - - Amortisation of intangible assets 12 91,356 91,357 - - Impairment of subsidiary - - 700,000 - Profit on disposal of property, plant and equipment and assets held for sale (74,026) (144,559) (1,660) (12,867) Finance income (127,131) (209,592) (1,071,854) (775,173) Inventory written off 16 773,840 824,805 - - Allowances for credit losses 18 153,912 187,256 - - Unrealised exchange loss - 6,038 - - Finance costs 1,085,599 792,305 1,089,830 794,510 Profit realised on recovery of amount on disposal of associate (73,898) - (73,898) - Working capital adjustments : Increase in inventories (3,885,802) (2,438,307) - - (Increase)/decrease in trade and other receivables and prepayments (446,869) (2,064,375) 260,490 (89,468) Increase in amounts owed by group companies - - (3,127,090) (4,024,122) Increase /(decrease) in amounts owed to group companies - - 4,038,699 (560,506) Increase in trade and other payables 2,226,707 3,584,795 94,672 70,103

7,345,230 5,525,483 1,179,398 (4,048,953) Interest paid (1,085,599) (792,305) (1,089,830) (794,510) Income tax paid (229,869) (367,278) (45,990) (165,796)

Net cashflows generated from /(used in) operating activities 6,029,762 4,365,900 43,578 (5,009,259)

Investing activities Purchase of plant and equipment 10 (4,621,930) (9,885,174) (9,563) (65,416) Purchase of intangible assets 12 (61,105) (77,473) (61,105) (77,473) Proceeds from sale of property, plant and equipment 346,280 142,321 4,200 14,667 Proceeds from sale of assets classified as held for sale 898,000 173,069 - - Amount recovered on sale of investment in associate 3 121,807 - 121,807 - Increase in long term prepayments (210,904) - - - Dividends received - - - 311,000 Finance income 127,131 209,592 1,071,854 775,173

Net cashflows (used in)/ generated from investing activities (3,400,721) (9,437,665) 1,127,193 957,951

Financing activities Proceeds from borrowings 4,403,397 9,437,114 4,382,516 9,351,804 Repayment of borrowings (5,677,585) (5,428,214) (5,531,252) (5,328,035)

Net cashflows from financing activities (1,274,188) 4,008,900 (1,148,736) 4,023,769

Net increase /(decrease) in cash and cash equivalents 1,354,853 (1,062,865) 22,035 (27,539) Net foreign exchange difference 40,721 21,574 - - Cash and cash equivalents at beginning of the period 1,414,341 2,455,632 36,637 64,176

Cash and cash equivalents at the end of the period 19 2,809,915 1,414,341 58,672 36,637

42 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE

------43 US$ Total equity (85,019) 519,077 604,096 (284,242) 2,301,673 2,017,431 46,084,681 45,565,604 48,102,112

- US$ Non - (31,803) (89,820) (26,866) interests 375,253 528,479 253,630 (126,360) (153,226) (121,623) controlling

------US$ US$ Total Total Total 297,530 297,530 (58,153) 672,303 730,456 (869,683) (869,683) (194,422) 2,333,476 2,139,054 18,406,574 18,704,104 17,834,421 45,709,428 45,037,125 47,848,482

- - -

- - US$ 730,456 334,948 119,210 730,456 earnings Retained losses) 2,333,476 2,333,476 272,043 297,530 297,530 (25,487) 20,711,889 19,646,485 23,164,575 (869,683) (597,640) (869,683) earnings/ Retained

------US$ US$ (Accumulated

------460,874 304,548 491,274 355,659 (334,948) (105,215) Non US$ Reserves of reserves reserves as held for sale assets classified assets

17,016,597 17,016,597 17,016,597 - - - distributable US$ 21.3)

Non ------reserves (58,153) (13,995) (58,153) (194,422) (304,548) (194,422) (Note Share Share 23,121,201 23,483,902 22,912,784 distributable

Premium Premium - 1,379,664 1,379,664 1,379,664 ------Share Share

------Premium 1,379,664 1,379,664 1,379,664 US$ US$ Share Share

holders of the parent Attributable to equity

35,800 35,800 35,800 - Capital ------US$ US$ Share Share Capital 35,800 35,800 35,800 for the year ended 31 December 2015 ended 31 for the year Statements of Changes in Equity Changes of Statements As at 31 December 2014 for the period Profit/(loss) income Other comprehensive

to held for sale reserve Transfer income comprehensive Total earnings on to retained Transfer sale of assets As at 1 January 2014 /(loss)for the period Profit income Other comprehensive income comprehensive Total earnings on to retained Transfer sale of assets As at 31 December 2015

2015 Annual Report 2015 Limited Holdings Dairibord As at 1 January 2014 for the period Profit income Other comprehensive income comprehensive Total As at 31 December 2014 Loss for the period As at 31 December 2015 income Other comprehensive income comprehensive Total COMPANY GROUP Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements

1. Corporate information The consolidated financial statements of Dairibord Holdings Limited and its subsidiaries (collectively, the Group) for the year ended 31 December 2015 were authorised for issue on 10 March 2016 in accordance with a resolution of the directors. Dairibord Holdings Limited is a company incorporated and domiciled in Zimbabwe whose shares are publicly traded through the Zimbabwe Stock Exchange. The registered office is located at ZB Life Towers, 9th Floor, 77 Jason Moyo Avenue in Harare. The Group’s principal activities are the manufacturing, processing, marketing and distribution of milk products, foods and beverages.

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

Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS).

2.2 Basis of consolidation The consolidated financial statements comprise the financial statements of Dairibord Holdings Limited and its subsidiaries as at 31 December 2015. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: • Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee) • Exposure, or rights, to variable returns from its involvement with the investee, and • The ability to use its power over the investee to affect its returns

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

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

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

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it: • Derecognises the assets (including goodwill) and liabilities of the subsidiary. • Derecognises the carrying amount of any non – controlling interest. • Derecognises the cumulative translation differences, recorded in equity • Recognises the fair value of the consideration received • Recognises the fair value of any investment retained • Recognises any surplus or deficit in profit or loss. • Reclassifies the parent’s share of components previously recognized in other comprehensive income to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities.

44 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 45 The accounting policies adopted are consistent with those of the previous financial Amendments year. and improvements to Changes in accounting policies and disclosures in accounting policies Changes Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher its recoverable Impairment exists when the carrying value of an asset or cash generating unit exceeds Such estimates and assumptions are based on historical experience and various other factors that are believed to be reasonable reasonable be to believed are that factors other various and experience historical on based are assumptions and estimates Such Business combinations and goodwill in the interest at acquisition date fair value and the amount of any non-controlling measured of the consideration transferred, Refer note 10 and note 11 for the carrying amounts of non-financial assets. of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available on based is calculation disposal of costs less value fair The use. in value its and disposal of costs less fair value its of length, for similar assets or observable market prices less incremental binding sales transactions, conducted at arm’s data from use, impairment is calculated based on value through to be recovered going assets are of the asset. Where costs for disposing in use which is the discounted value of the expected cash flows over a period of time. iii) Impairment of non-financial assets was determined in 2012, using the assumptions and estimates disclosed under note 10, before the property was transferred transferred was property the before 10, note under disclosed estimates and assumptions the using 2012, in determined was plant and equipment. The carrying amount at of year the end to investment was property not materially different property, from the fair value and no fair value adjustment was recorded. valued by reference to market-based evidence, using comparable prices adjusted for specific market factors such as nature, Refer note 10 for the carrying amount of land and buildings and estimates and assumptions location and condition of the property. investment property the of value fair the assessment for value fair a performed Management values. fair the determine to used in other comprehensive income for land and buildings and profit or loss for investment property. The Group engaged independent engaged Group The property. investment for loss or profit and buildings and land for income comprehensive other in 2012. Land and buildings were land and buildings as at 31 December of freehold valuation specialists to determine fair value ii. Revaluation of land and buildings and investment property ii. Revaluation of land and buildings and experience, technology changes and the local operating environment. Residual values were reassessed during the year and and year the during reassessed were values Residual environment. operating local the and changes technology experience, Note and equipment and plant property, of lives useful the for (i) 2.5 Note Refer year. last determined those with line in still were plant and equipment balances. 10 for the carrying amount of property, Estimates and assumptions date, that have a at the reporting of estimation uncertainty and other key sources The key assumptions concerning the future significant risk ofcausing a material adjustment to the carrying amounts of assets and liabilities within the next financial year financial consolidated the when available parameters on estimates and assumptions its based Group The below: described are may change due developments, however, the future and assumptions about Existing circumstances prepared. statements were to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur. equipment plant and values of property, i. Useful lives and residual past consideration into taking year equipment each and plant property, of values residual and lives useful assesses Group The in the circumstances and constitute management’s best judgement at the date of the financial statements. best judgement and constitute management’s in the circumstances about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of adjustment to the carrying amount a material that require in outcomes and estimates could result about these assumptions periods. in future assets or liabilities affected that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities. Uncertainty liabilities. contingent of disclosure the and liabilities, and assets expenses, revenues, of amounts reported the affect that existing standards that became effective for the Group as from 1 January 2015 did not have a material impact on the Group. a material impact on the Group. 1 January 2015 did not have as from effective for the Group that became existing standards The Group measures freehold land and buildings and investment property at fair value with changes in fair value being recognised at fair value with changes in fair value being recognised land and buildings and investment property freehold measures The Group The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions and estimates judgements, make to management requires statements financial consolidated the of preparation The Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate the aggregate as is measured acquisition The cost of an method. acquisition for using the accounted are Business combinations Financial Statements (Continued) Statements to the Financial Notes 2015 Annual Report 2015 Limited Holdings Dairibord

2.3 a) 2.5 Summary of significant accounting policies

2.4 Significant accounting judgements, estimates and assumptions judgements, estimates and 2.4 Significant accounting Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements (Continued)

2.5 Summary of significant accounting policies (Continued) a) Business combinations and goodwill (Continued) acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses.

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

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

Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

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

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash generating unit retained. b) Foreign currency translation The consolidated financial statements are presented in United States Dollars, which is also the parent company’s functional currency. Each entity in the Group determines its own functional currency and items included in the consolidated financial statements of each entity are measured using that functional currency.

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

All differences arising on settlement or translation of monetary items are taken to profit or loss with the exception of monetary items that are designated as part of the hedge of the Group’s net investment in a foreign operation. These are recognised in other comprehensive income until the disposal of the net investment, at which time, the cumulative amount is reclassified to profit or loss. Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in other comprehensive income or profit or loss are also recognised

46 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 47 Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be received from from received at the amount expected to be measured and prior periods are income tax assets and liabilities for the current Current comprehensive income and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect with returns tax the in taken positions evaluates periodically Management loss. or profit in not and income comprehensive or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively substantively or enacted are that those are amount the compute to used laws tax and rates tax The authorities. tax the to paid or and generates taxable income. operates the Group date in the countries where enacted at the reporting Taxes income tax Current approve the dividend. approve Dividend income is the rate that exactly discounts the estimated future cash payments through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset Interest or income liability. is included in income. finance income in the statement of comprehensive control over the goods sold; over control reliably; can be measured iii. the amount of revenue to the entity; and that the economic benefits associated with the transaction will flow it is probable iv. reliably. of the transaction can be measured in respect or to be incurred the costs incurred v. income Interest in other comprehensive income or profit or loss, respectively). or loss, or profit income in other comprehensive companies Group States Dollars at the rate of exchange translated into United operations are of foreign assets and liabilities On consolidation the at the exchange rates prevailing translated at income are statements of comprehensive date and their at the reporting prevailing income and recognised in other comprehensive translation are arising from date of the transactions. The exchange differences then non-wholly-owned subsidiary, if the operation is a However, equity. in reserve translation currency in the foreign presented interests. is allocated to the non-controlling difference of the translation share proportionate the relevant operation foreign to that particular income relating operation, the component of other comprehensive On disposal of a foreign on disposal. or loss as part of the gain or loss to profit is reclassified Revenue and other income recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to theGroup and the revenue can discounts, excluding receivable, or received consideration the of value fair the at measured is Revenue measured. reliably be and rebates, value added tax. The assesses Group its arrangements revenue against specific criteria in to order determine if it arrangements since it in all of its revenue has concluded that it is acting as a principal is acting as principal or agent. The Group risks. The has pricing latitude and is also exposed to inventory and credit arrangements the revenue in all is the primary obligor recognised: revenue is criteria described below must also be met before recognition specific Sale of goods following conditions have been satisfied: when all the the sale of goods is recognised Revenue from i. the entity has transferred to the buyer the significant risks andrewards of ownership of the goods, usually on delivery of the goods; Revenue is recognised when the Group’s right to receive payment is established, which is generally when the shareholders payment is established, which is generally when the shareholders right to receive when the Group’s Revenue is recognised Current income tax relating to items recognised directly in equity or other comprehensive income is recognised in equity or other income is recognised in equity or other comprehensive directly to items recognised income tax relating Current ii. the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR), which (EIR), rate interest effective the using recorded is income interest cost, amortised at measured instruments financial all For Foreign currency translation (Continued) translation currency Foreign Financial Statements (Continued) Statements to the Financial Notes

d)

c) 2015 Annual Report 2015 Limited Holdings Dairibord 2.5 Summary of significant accounting policies (Continued) accounting policies of significant 2.5 Summary b) Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements (Continued)

2.5 Summary of significant accounting policies (Continued) d) Taxes (Continued) to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences, except: - Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither the accounting profit nor taxable profit or loss, and

- In respect of taxable temporary differences associated with investments in subsidiaries and associates, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except: - Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

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

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss in correlation to the underlying transaction either in other comprehensive income or directly in equity.

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

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, would be recognised subsequently if new information about facts and circumstances changed. The adjustment would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it occurred during the measurement period or recognised in profit or loss if it is incurred after the measurement period.

Value added tax Revenues, expenses and assets are recognised net of the amount of value added tax except: - Where the value added tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case the value added tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable - Receivables and payables that are stated with the amount of value added tax included. The net amount of Value Added Tax recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

48 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 49 Retirement benefits are provided for Group employees through independently administered defined contribution funds, including funds, contribution defined administered independently through employees Group for provided are benefits Retirement Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, and loans or loss, profit through value fair at assets financial as classified are 39 IAS of scope the within assets Financial Pensions and other post-employment benefits and termination benefits post-employment benefits and termination Pensions and other post-employment benefits Pensions and other The Group’s financial assets include cash and short term deposits, trade and other receivables and loans and receivables. and loans and receivables and short term deposits, trade and other financial assets include cash The Group’s financial assets at initial recognition. All financial assets are recognised initially at fair value plus, in the case of investments not at not investments of case the in plus, value fair at initially recognised are assets financial All recognition. initial at assets financial delivery require that assets financial of sales or Purchases costs. transaction attributable directly loss, and profit through value fair on recognised way trades) are or convention in the market place (regular of assets within a time frame established by regulation or sell the asset. commits to purchase the trade dates i.e. the date that the Group held-to-maturity investments, financialavailable-for-sale assets, as appropriate. The Group determines the classification of its to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately ultimately will that instruments equity of number the of estimate best Group’s the and expired has period vesting the which to recognised expense cumulative in movements the represents period a for loss or profit in recognised credit or charge The vest. as at the beginning and end of that period. that do not ultimately vest. for awards No expense is recognised The dilutive effect of outstanding options isreflected as additional share dilution in the computation of the earnings per share (Note 9). Financial assets Initial recognition calculate the present value shall be determined by reference to market yields on high quality corporate bonds at the end of the to market yields on high quality corporate bonds at the end of the by reference value shall be determined the present calculate period. reporting payment Share-based payment transactions, in the form of share-based remuneration receive of the Group Employees (including senior executives) instruments (‘equity-settled transactions’). services as consideration for equity employees render whereby Equity-settled transactions the date on which they are to the fair value at by reference with employees is measured The cost of equity – settled transactions together with The cost of equity – settled transactions is recognised an externalgranted. The fair value is determined by valuer. a corresponding increase over in the equity, period in which the performance and/or service conditions are fulfilled, ending on ( ‘ the vesting date’). employees become fully entitled to the award the date on which the relevant than 12 months after the reporting period, the present value of the benefits shall be determined. The discount rate used to liability and an expense at the earlier of when the offer of termination cannot be withdrawn or when the related restructuring costs restructuring related the when or withdrawn be cannot termination of offer the when of earlier the at expense an and liability Contingent Liabilities and Contingent Assets. under IAS 37 Provisions, recognised are more due are benefits termination Where contract. termination the of terms the to according measured are benefits Termination Social Security Authority Scheme and National Social Security Fund is determined by the systematic recognition of legislated recognition Fund is determined by the systematic Scheme and National Social Security Social Security Authority contributions. benefits Termination of result a as employment employee’s an of termination the for exchange in provided benefits employee are benefits Termination decision employee’s an or date retirement normal the before employment employee’s an terminate to decision entity’s an either to accept an offer of benefits in exchange for the termination of employment. TheGroup recognises termination benefits as a the National Social Security Authority Scheme in Zimbabwe and National Social Security Fund in Malawi. Contributions to the and National Social Security Fund in Security Authority Scheme in Zimbabwe the National Social National to the applicable benefits retirement of cost The due. fall they as loss or profit in recognised are fund contribution defined The cumulative expense recognised for equity – settled transactions at each reporting date until the vesting date reflects the extent the reflects date vesting the until date reporting each at transactions settled – equity for recognised expense cumulative The Financial Statements (Continued) Statements to the Financial Notes

e)

g) f)

2015 Annual Report 2015 Limited Holdings Dairibord 2.5 Summary of significant accounting policies (Continued) accounting policies of significant 2.5 Summary Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements (Continued)

2.5 Summary of significant accounting policies (Continued) g) Financial assets (Continued) Subsequent measurement The subsequent measurement of financial assets depends on their classification as follows:

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

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

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

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

Financial assets carried at amortised cost For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognised are not included in a collective assessment of impairment.

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

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

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

50 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 51 Financial assets (Continued) Financial • The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash received the pay to obligation an assumed has or asset the from flows cash receive to rights its transferred has Group The • Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original at the lower of the original is measured asset form of a guarantee over the transferred Continuing involvement that takes the Derecognition of financial assets of financial Derecognition A financial asset where applicable (or, a part of a financialasset or part of groupa of similar financial assets) derecognised is when: asset have expired. the from cash flows • The rights to receive Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position financial of statement consolidated the in reported amount net the and offset are liabilities financial and assets Financial if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a on settle to intention an is there and amounts recognised the offset to right legal enforceable currently a is there if, only and if, the assets and settle the liabilities simultaneously. net basis, or to realise financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are liability existing an of terms the or terms, different substantially on lender same the from another by replaced is liability financial recognition the and liability original the of a derecognition as treated is modification or exchange an such modified, substantially or loss. recognised in profit respective carrying amounts is in the and the difference of a new liability, Offsetting of financial instruments method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the effective Amortised cost is calculated by taking into account any discount or premium rate method (EIR) amortisation process. interest an integral part of the EIR. on acquisition and fees or costs that are income of comprehensive The EIR amortisation is included in finance costs in the statement and other payables Trade rate method. at amortised cost using the effective interest subsequently measured and other payables are Trade of financial liabilities Derecognition existing an When expires. or cancelled or discharged is liability the under obligation the when derecognised is liability financial A liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs. attributable transaction plus directly of loans and borrowings, value and in the case at fair initially recognised are liabilities and loans and borrowings. financial liabilities include trade and other payables The Group’s Subsequent measurement as follows: of financial liabilities depends on their classification The measurement bearing borrowings Interest borrowings, borrowings, as appropriate. The Group determines the classification of its financial liabilities at initial recognition. All financial Financial liabilities and measurement Initial recognition profit or loss or loans and Financial liabilities classified within asthe financialscope liabilitiesof atIAS fair39 value are through carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay. could be required amount of consideration that the Group carrying amount of the asset and the maximum the asset is recognised to the extent of the Group’s continuing involvement in the asset. continuing to the extent of the Group’s the asset is recognised measured liability are asset and the associated The transferred an associated liability. also recognises In that case, the Group retained. has the rights and obligations that the Group on a basis that reflects and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of the asset, control of the asset nor transferred of the risks and rewards substantially all nor retained and has neither transferred flows in full without material delay party to under arrangement; a a and third ‘pass either has through’ (a) transferred the Group substantially all the risks retained nor has neither transferred of the asset, or (b) the Group risks and rewards substantially all the asset. of the control of the asset, but has transferred and rewards arrangement, pass-through a into entered has or asset an from flows cash receive to rights its transferred has Group the When After initial recognition, interest bearing borrowings are subsequently measured at amortised cost using the effective interest rate interest effective the using cost amortised at measured subsequently are borrowings bearing interest recognition, initial After Financial Statements (Continued) Statements to the Financial Notes 2.5 Summary of significant accounting policies (Continued) accounting policies of significant 2.5 Summary g) 2015 Annual Report 2015 Limited Holdings Dairibord

h)

Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements (Continued)

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

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

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

The Group’s policy is to depreciate property, plant and equipment evenly over the expected life of each asset, with the exception that no depreciation is charged on land and assets under construction and not yet in use. The expected useful lives of the property, plant and equipment are as follows: Freehold land and buildings 40 years Plant and equipment 3 -10 years Furniture and fittings 2 – 10 years Motor vehicles - Light 5 years - Heavy vehicles and trailers 8 years

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

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

The assets’ residual values, useful lives and depreciation methods are reviewed and adjusted if appropriate, at each financial year end. Adjustments are made prospectively as a change in accounting estimate. j) Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the recoverable amount of the asset. An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s (CGU) fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets.

Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present values using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated, by valuation multiples, quoted public share prices for publicly traded entities or other available fair value indicators.

52 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 53 Impairment of non-financial assets (Continued) of non-financial Impairment separately for prepared calculations, which are forecast calculation on detailed budgets and bases its impairment The Group calculations allocated. These budgets and forecast assets are generating units, to which the individual cash each of the Group’s generally cover a period of five years. For longer periods a long term growth rate is calculated and applied to projected future fifth year. cash flows after the Group as a lessee Group or loss on a straight line basis over the lease term. as an operating expense in profit recognised Operating lease payments are as a lessor Group Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as added to the carrying amount and arranging an operating lease are in negotiating costs incurred direct operating leases. Initial as recognised are income. Contingent rents over the lease term on the same basis as rental of the leased asset and recognised earned. in the period in which they are revenue date. The arrangement is assessed for whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or asset specific a of use the on dependent is arrangement the of fulfilment whether for assessed is arrangement The date. or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement. the fair values of investment properties are included in profit or loss in the period in which they arise, including the corresponding corresponding the including arise, they which in period the in loss or profit in included are properties investment of values fair the tax effect. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer Committee. Standards by the International Valuation applying a valuation model recommended permanently withdrawn from either when they have been disposed of or when they are derecognised are Investment properties the and proceeds disposal net the between difference The disposal. their from expected is benefit economic future no and use or loss in the period of de-recognition. in profit carrying amount of the asset is recognised investment property in use. For a transfer from is a change only when there investment property made to (or from) are Transfers subsequent accounting is the fair value at the date of change in use. If owner the deemed cost for property, to owner-occupied with the policy stated in accordance accounts for such property the Group becomes an investment property, occupied property date of change in use. plant and equipment up to the under property, Leases of the arrangement at inception of whether an arrangement is, or contains, a lease is based on the substance The determination recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the exists, the Group If such indication exist or may have decreased. may no longer losses impairment recognised has been only if there is reversed impairment loss recognised amount. A previously recoverable or cash generating unit’s asset’s the last impairment loss was recognised. amount since recoverable the asset’s a change in the assumptions used to determine amount, nor exceed the carrying is limited so that the carrying amount of the asset does not exceed its recoverable The reversal for the asset in prior been recognised had no impairment loss net of depreciation, amount that would have been determined, years. treated is reversal the case which in amount, revalued a at carried is asset the unless loss or profit in recognised is reversal Such increase. as a revaluation Investment properties investment initially at cost, including transaction costs. Subsequent to initial recognition, measured are Investment properties in changes from arising losses or Gains date. reporting the at conditions market reflects which value fair at stated are properties categories consistent with the functions of the impaired assets, except for a property previously revalued where the revaluation the revaluation where revalued previously for a property assets, except with the functions of the impaired categories consistent up income, in other comprehensive is also recognised income. In this case, the impairment comprehensive was taken to other revaluation. previous to the amount of any Impairment losses of continuing operations, including impairment on inventories, are recognised in profit or loss in those expense those in loss or profit in recognised are inventories, on impairment including operations, continuing of losses Impairment For assets excluding goodwill, an assessment is made at each reporting date, as to whether there is any indication that previously is any indication that previously there date, as to whether is made at each reporting For assets excluding goodwill, an assessment Financial Statements (Continued) Statements to the Financial Notes

(Continued) (Continued) accounting policies of significant 2.5 Summary j)

l) k) 2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements (Continued)

2.5 Summary of significant accounting policies (Continued) m) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. n) Inventories Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and conditions are accounted for as follows: • Materials and consumables are valued at the purchase cost on a weighted average basis. • Finished goods and work in progress are valued at the direct materials costs, labour and an appropriate portion of manufacturing overheads based on normal operating capacity, but excluding borrowings costs.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. o) Cash and cash equivalents Cash and cash equivalents in the statement of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three months or less. p) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

The expense relating to any provision is presented in profit or loss net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. q) Non-current assets held for sale and discontinued operations Non-current assets and disposal groups classified as held for sale are measured at lower of their carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

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

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

54 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 55 that the asset will be available for use or sale that the asset will be available for use or In the principal market for the asset or liability, or In the principal market for the asset or liability, liability market for the asset or In the absence of a principal market, in the most advantageous The technical feasibility of completing the intangible asset so The technical feasibility of completing the Its intention to complete and its ability to use or sell the asset Its intention to complete and its ability economic benefits How the asset will generate future to complete the asset The availability of resources during development the expenditure reliably The ability to measure • • • • • • • 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 market between transaction orderly an in liability a transfer to paid or asset an sell to received be would that price the is value Fair Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated as an asset, the asset is carried at cost less any accumulated of the development expenditure Following initial recognition A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits benefits economic generate to ability participant’s market a account into takes asset non-financial a of measurement value fair A The The Group uses valuation techniques that are appropriate in the circumstances and for which sufficientdata is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. fair value, maximising the use of relevant measure All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest by using the asset in its highest and best use or by selling it to another market and best use. The principal or the most advantageous market must be accessible to by the Group. Group. The principal or the most advantageous market must be accessible to by the using the assumptions that market participants would use when pricing the The fair value of an asset or a liability is measured assuming that market participants act in their economic best interest. asset or liability, participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the is based on the presumption date. The fair value measurement participants at the measurement asset or transfer the liability takes place either: Fair value measurement reporting date. at fair value at non-financial assets such as land and buildings and investment property, measures The Group amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the assetthe and complete is development when begins asset the of Amortisation losses. impairment accumulated and amortisation is available for use. It is amortised over the period of expected benefit.future Amortisation inrecorded is cost of sales. During tested for impairment annually. the period of development, the asset is Research and development costs Research intangible an as recognised are project individual an on expenditures Development incurred. as expensed are costs Research can demonstrate: asset when the Group proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised. or loss in profit recognised and the carrying amount of the asset and are proceeds Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the at or individually either annually, impairment for tested are but amortised, not are lives useful indefinite with assets Intangible continues life indefinite the whether determine to annually reviewed is life indefinite of assessment The level. unit generating cash prospective basis. indefinite to finite is made on a useful life from to be supportable. If not, the change in in the expense category that is consistent with the function of the intangible assets. intangible of the that is consistent with the function in the expense category The amortisation period and the amortisation method for an intangible asset with a finitereviewed useful at life least are at the economic or the expected pattern Changes in the expected useful lives period. of future of consumption end of each reporting treated are and appropriate, as method, or period amortisation the changing by for accounted is asset the in embodied benefits loss or profit in recognised is lives finite with assets intangible on expense amortisation The estimates. accounting in changes as the Group intangible assets consist of assets assessed as finite and are amortised over a period of 10 years. amortised are consist of assets assessed as finite and intangible assets the Group their useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. Currently Currently impaired. that the intangible asset may be is an indication for impairment whenever there their useful life and assessed The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortised over amortised are lives finite with assets Intangible indefinite. or finite either as assessed are assets intangible of lives useful The Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal Intangible assets (Continued) Intangible Financial Statements (Continued) Statements to the Financial Notes

s)

2015 Annual Report 2015 Limited Holdings Dairibord (Continued) (Continued) accounting policies of significant 2.5 Summary r) Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements (Continued)

2.5 Summary of significant accounting policies (Continued) s) Fair value measurement (Continued) value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: • Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities. • Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable • Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. t) Current versus non-current classification The Group presents assets and liabilities in statement of financial position based on current/non-current classification. An asset is classified as current when it is: • Expected to be realised or intended to be sold or consumed in normal operating cycle • Held primarily for the purpose of trading • Expected to be realised within twelve months after the reporting period, or • Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.

A liability is current when: • It is expected to be settled in normal operating cycle • It is held primarily for the purpose of trading • It is due to be settled within twelve months after the reporting period, or • There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period

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

2.6 Standards and amendments issued but not yet effective The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s financial statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.

IFRS 9 Financial Instruments In July 2014, the IASB issued the final version of IFRS 9Financial Instruments that replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. IFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions.

The Group plans to adopt the new standard on the required effective date. During 2015, the Group has performed a high-level impact assessment of all three aspects of IFRS 9. This preliminary assessment is based on currently available information and may be subject to changes arising from further detailed analyses or additional reasonable and supportable information being made available to the Group in the future. Overall, the Group expects no significant impact on its statement of financial position and equity except for the effect of applying the impairment requirements of IFRS 9. The Group expects a higher loss allowance resulting in a negative impact on equity and will perform a detailed assessment in the future to determine the extent.

(a) Classification and measurement The Group does not expect a significant impact on its balance sheet or equity on applying the classification and measurement

56 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 57 The amendments to IFRS 11 require that a joint operator accounting for the acquisition of an interest in a joint operation, in which that a joint operator accounting for the acquisition of an interest The amendments to IFRS 11 require Loans as well as trade receivables are held to collect contractual cash flows and are expected to give rise to cash flows representing representing flows cash to rise give to expected are and flows cash contractual collect to held are receivables trade as well as Loans interests interests in the same joint operation and are prospectively effective for annual periods beginning on or after 1 January 2016, the activity of the joint operation constitutes a business, must apply the relevant IFRS 3 principles for business combinations IFRS 3 principles for business combinations the activity of the joint operation constitutes a business, must apply the relevant the acquisition on in a joint operation is not remeasured held interest accounting. The amendments also clarify that a previously added been has exclusion scope a addition, In retained. is control joint while operation joint same the in interest additional an of are entity, including the reporting joint control, to IFRS 11 to specify that the amendments do not apply when the parties sharing party. of the same ultimate controlling under common control after 1 January 2018. Early adoption is permitted. The Group is still assessing the impact of the standard on its contracts with is still assessing the impact of the standard after 1 January 2018. Early adoption is permitted. The Group customers. Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests total revenue; information about performance obligations; changes in contract asset and liability account balances between between balances account liability and asset contract in changes obligations; performance about information revenue; total periods and key judgments and estimates. regardless of the type of revenue transaction or the industry. The standard’s requirements will also apply to the recognition and will also apply to the recognition requirements The standard’s transaction or the industry. type of revenue of the regardless activities ordinary entity’s the of output an not are that assets non-financial some of sale the on losses and gains of measurement of including disaggregation will be required, or intangibles). Extensive disclosures plant and equipment (e.g., sales of property, IFRS 15 Revenue from Contracts with Customers IFRS 15 Revenue from IFRS 15 was issued in May 2014 and establishes a five-step model to account forrevenue arising from contracts customers. Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in to a customer. exchange for transferring goods or services under existing IFRS. requirements recognition revenue will supersede all current standard The new revenue its existing accounting policies for regulatory deferral account balances upon its first-time adoption of IFRS. Entities that adopt that Entities IFRS. of adoption first-time its upon balances account deferral regulatory for policies accounting existing its present and position financial of statement the on items line separate as accounts deferral regulatory the present must 14 IFRS movements in these account balances as separate line items in the statement of orprofit loss and OCI.requires The standard disclosure of the nature of, and risks associated with, the rate-regulation entity’s and the effects existing of an that is Group rate-regulation on the Since its 2016. 1 January after or on beginning periods annual for effective is 14 IFRS statements. financial would not apply. this standard IFRS preparer, before concluding whether all those instruments meet the criteria for amortised cost measurement under IFRS 9. cost measurement for amortised those instruments meet the criteria concluding whether all before Impairment on a either securities, loans and trade receivables, losses on all of its debt expected credit to record the Group IFRS 9 requires trade all on losses expected lifetime record and approach simplified the apply to expects Group The basis. lifetime or 12-month all detailed analysis which considers to perform a more need will but it expects an impact on its equity, The Group receivables. elements to determine the extent of the impact. and supportable information, including forward-looking reasonable IFRS 14 Regulatory Deferral Accounts solely payments of principal and interest. Thus, the Group expects that these will continue to be measured at amortised cost at amortised cost will continue to be measured expects that these Thus, the Group principal and interest. solely payments of under IFRS 9. the However, Group will analyse the contractual cash flow characteristics of those instruments in more detail requirements of IFRS 9. requirements The amendments apply to both the acquisition of the initial interest in a joint operation and the acquisition of any additional additional of any joint operation and the acquisition in a initial interest of the to both the acquisition apply The amendments IFRS 14 is an optional standard that allows an entity, whose activities are subject to rate-regulation, to continue applying most of of most applying continue to rate-regulation, to subject are activities whose entity, an allows that standard optional an is 14 IFRS Either a full retrospective application or a modifiedretrospective application isrequired for annual periods beginning on or IFRS 15 establishes a five-step model that will apply to revenue earned from a contract with a customer (with limited exceptions), limited (with customer a with contract a from earned revenue to apply will that model five-step a establishes 15 IFRS (Continued) Instruments IFRS 9 Financial Financial Statements (Continued) Statements to the Financial Notes

(b) 2015 Annual Report 2015 Limited Holdings Dairibord (Continued) (Continued) but not yet effective amendments issued and 2.6 Standards Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements (Continued)

2.6 Standards and amendments issued but not yet effective (Continued) Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests (Continued) with early adoption permitted. These amendments are not expected to have any impact on the Group.

Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation The amendments clarify the principle in IAS 16 and IAS 38 that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortise intangible assets. The amendments are effective prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group given that the Group has not used a revenue-based method to depreciate its non-current assets.

Amendments to IAS 27: Equity Method in Separate Financial Statements The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. Entities already applying IFRS and electing to change to the equity method in its separate financial statements will have to apply that change etrospectively.r

For first-time adopters of IFRS electing to use the equity method in its separate financial statements, they will be required to apply this method from the date of transition to IFRS. The amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments will not have any impact on the Group’s consolidated financial statements. Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants The amendments change the accounting requirements for biological assets that meet the definition of bearer plants. Under the amendments, biological assets that meet the definition of bearer plants will no longer be within the scope of IAS 41. Instead, IAS 16 will apply. After initial recognition, bearer plants will be measured under IAS 16 at accumulated cost (before maturity) and using either the cost model or revaluation model (after maturity). The amendments also require that produce that grows on bearer plants will remain in the scope of IAS 41 measured at fair value less costs to sell. For government grants related to bearer plants, IAS 20 Accounting for Government Grants and Disclosure of Government Assistance will apply. The amendments are retrospectively effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group as the Group does not have any bearer plants.

Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture The amendments address the conflict between IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary that is sold or contributed to an associate or joint venture. The amendments clarify that the gain or loss resulting from the sale or contribution of assets that constitute a business, as defined in IFRS 3, between an investor and its associate or joint venture, is recognised in full. Any gain or loss resulting from the sale or contribution of assets that do not constitute a business, however, is recognised only to the extent of unrelated investors’ interests in the associate or joint venture. These amendments must be applied prospectively and are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact on the Group.

Amendments to IAS 1 Disclosure Initiative The amendments to IAS 1 Presentation of Financial Statements clarify, rather than significantly change, existing IAS 1 requirements. The amendments clarify: • The materiality requirements in IAS 1 • That specific line items in the statement(s) of profit or loss and OCI and the statement of financial position may be disaggregated • That entities have flexibility as to the order in which they present the notes to financial statements • That the share of OCI of associates and joint ventures accounted for using the equity method must be presented in aggregate as a single line item, and classified between those items that will or will not be subsequently reclassified to profit or loss

Furthermore, the amendments clarify the requirements that apply when additional subtotals are presented in the statement of financial position and the statement(s) of profit or loss and OCI. These amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact on the Group.

58 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 59 s. (ii) Applicability of the amendments to IFRS 7 to condensed interim financial statements The amendments address issues that have arisen in applying the investment entities exception under IFRS 10. The amendments to entities exception under IFRS 10. The that have arisen in applying the investment issues The amendments address Investment Entities: Applying the Consolidation Exception 10, IFRS 12 and IAS 28 Investment Entities: Amendments to IFRS The amendment clarifies that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality the obligation is located. When there obligation is denominated, rather than the country where government bond rates must be used. This amendment must be applied prospectively. corporate bonds in that currency, unless such disclosures provide a significant update to the information reported in the most recent annual report. This amendment This report. annual recent most the in reported information the to update significant a provide disclosures such unless must be applied retrospectively. IAS 19 Employee Benefits entity must assess the nature of the fee and the arrangement against the guidance for continuing involvement in IFRS 7 in order of the fee and the arrangement against the guidance for continuing involvement in IFRS 7 in order entity must assess the nature involvement The assessment of which servicing contracts constitute continuing required. are to assess whether the disclosures for any period beginning before would not need to be provided disclosures the required However, must be done retrospectively. the annual period in which the entity first applies the amendment IFRS 7 Financial Instruments: Disclosures (i) Servicing contracts changing from one of these disposal methods to the other would not be considered a new plan of disposal, rather it is a continuation of these disposal methods to the other would not be considered one changing from in IFRS 5. This amendment must of the application of the requirements no interruption is, therefore, plan. There of the original be applied prospectively. Annual Improvements 2012-2014 Cycle Annual Improvements on or after 1 January 2016. They include: effective for annual periods beginning are These improvements Assets Held for Sale and Discontinued Operations IFRS 5 Non-current that clarifies amendment The owners. to distribution or sale through either of disposed generally are groups) disposal (or Assets standard. of the standard. the use of the identified asset, which could be a physically distinct portion of an asset. the use of the identified asset, which could liabilities for most leases on their balance sheets. Under the new standard, a lease is a contract or part of a contract that conveys a lease is a contract sheets. Under the new standard, liabilities for most leases on their balance be a lease, a contract must convey the right to control in exchange for consideration. To the right to use an asset for a period of time Furthermore, the amendments to IFRS 10 clarify that only a subsidiary of an investment entity that is not an investment entity itself of an investment entity that is not an investment to IFRS 10 clarify that only a subsidiary the amendments Furthermore, measured entity are All other subsidiaries of an investment to the investment entity is consolidated. support services and that provides measurement value fair the retain to method, equity the applying when investor, the allow 28 IAS to amendments The value. fair at in subsidiaries. to its interests entity associate or joint venture applied by the investment with 2016, January 1 after or on beginning periods annual for effective are and retrospectively applied be must amendments These Group. not expected to have any impact on the are early adoption permitted. These amendments IFRS 16 - Leases IFRS 10 clarify that the exemption from presenting consolidated financial statements applies to a parent entity that is a subsidiary consolidated financial statements applies to a parent presenting IFRS 10 clarify that the exemption from of its subsidiaries at fair value. all when the investment entity measures of an investment entity, The standard will be effective for annual periods beginning on or after 1 January 2019.The Group is still assessing the impact The amendment clarifies that the offsetting disclosure requirements do not apply to condensed interim financial statements, The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. An asset. financial a in involvement continuing constitute can fee a includes that contract servicing a that clarifies amendment The The International Accounting Standards board (IASB) issued IFRS 16 in January 2016 which requires lessees to recognize assets and lessees to recognize in January 2016 which requires (IASB) issued IFRS 16 The International board Accounting Standards Financial Statements (Continued) Statements to the Financial Notes (Continued) (Continued) but not yet effective amendments issued and 2.6 Standards 2015 Annual Report 2015 Limited Holdings Dairibord

Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements (Continued)

2.6 Standards and amendments issued but not yet effective (Continued) (b) Impairment (Continued) IAS 34 Interim Financial Reporting The amendment clarifies that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the interim financial report (e.g., in the management commentary or risk report). The other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time. This amendment must be applied retrospectively.

These amendments are not expected to have any impact on the Group.

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

USD 1: Statement of Statement of financial position comprehensive income

Malawi Kwacha 672.65 517.46 South African Rand 15.25 12.60 EURO 0.89 0.90

60 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE

------61 2014 US$ 5,100 8,785 7.17% 0.00% 1.25% 0.00% 0.19% 0.06% 12,867 88,460 48,219 24,796 39,000 71,617 45,367 (6.17%) 25.75% 13.23% (32,748) 119,063 775,173 900,000 200,000 205,673 794,510 (15.02%) 1,231,930 1,958,712 2,039,114

Company ------US$ 2015 1,660 6,000 8,585 0.00% 0.00% 1.38% 5.49% 0.12% 7.25% (8,247) 73,898 73,298 18,228 45,000 (1.06%) (3.73%) (1.48%) 25.75% (83,967) 100,990 900,000 200,000 207,878 700,000 700,000 (67,986) (19.22%) 1,175,558 1,992,400 1,071,854 2,074,283 1,089,830

------US$ 2014 3.18% 1.32% 2.47% 46,450 26,725 24,796 65,709 91,357 (0.23%) (7.78%) (2.74%) (0.04%) 25.75% 21.93% 173,429 364,398 185,679 144,519 207,735 191,585 350,100 209,592 792,305 234,460 197,385 199,042 169,712 (106,472) 3,914,217 16,659,421 17,208,563 Group

------US$ 2015 0.33% 1.20% (2,836) 73,898 60,758 30,225 20,969 74,026 91,356 72,029 (0.05%) (3.26%) (0.43%) (1.03%) 25.75% 23.57% 462,747 709,917 238,907 134,504 210,386 329,646 127,131 229,037 206,533 181,753 199,098 4,609,952 1,085,599 15,918,997 15,390,253 income tax: Current Bad debts recovered * Bad debts recovered on disposal of scrap Profit Sundry income Private in Charhons Cairns of the shareholding Holdings Limited (Cairns) $121 807 from for purchase the company received *During the year, in 2012 when Cairns Cairns was placed been impaired , except for an amount of $47 909, had from Limited done in 2012.The receivable realised. of $73 898 was a profit under judicial management and therefore Other operating expenses translation currency Exchange loss on foreign off of plant components Write costs Retrenchment emoluments for services as directors Directors Employee benefits expense -Salaries and wages -Pension costs Finance income on loans and investments received Interest income tax charge - Current - Prior year (over)/ under provision Capital gains tax tax Deferred credit) tax charge/( -Deferred Other operating income Royalties Dividends received & assets classified plant and equipment on disposal of property, Profit as held for sale Amortisation of intangible assets under provision Prior year income tax charge on passenger motor vehicle excess cost ineligible Depreciation for tax allowances Impairment - Inventory - investment in subsidiary the following: /(loss) is stated after charging Operating profit Audit fees and equipment plant of property, Depreciation -National Social Security Authority Finance costs on borrowings Interest -Prior year under provision rate reconciliation Tax rate Standard Effect of higher tax rate in Malawi on assessed loss Disallowed expenses 1.06% at lower rate tax charged deferred Properties taxed at a lower rate on disposal of shares Profit Non-taxable dividends Impairment loss on subsidiary Other non-taxable /non-deductible items Effective tax rate Financial Statements (Continued) Statements to the Financial Notes 2015 Annual Report 2015 Limited Holdings Dairibord 8 Taxation 4 7

3 5 6 Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements (Continued)

9 Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

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

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

Group 2015 2014 US$ US$

Net profit attributable to ordinary equity holders of the parent for basic earnings 2,333,476 730,456

2015 2014 No. No.

Weighted average number of ordinary shares for basic earnings per share 358,000,858 358,000,858

Effect of dilution: Share options* - -

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

* The outstanding share options have no dilutive effect because the market price is currently lower than the exercise price

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

62 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE ------63 US$ 2014 Total 9,563 9,961 (1,800) 15,700 65,416 65,416 (12,500) (17,500) 201,051 401,905 543,962 401,905 (790,126) (600,153) (205,673) (207,878) (600,153) (205,673) (790,126) (988,043) 1,192,031 1,189,094 1,144,115 1,144,115 1,192,031 - - - -

------US$ US$ 9,961 2015 Motor 15,700 60,000 9,563 784,235 771,735 (12,500) (17,500) vehicles 741,735 134,232 287,819 (2,539) (496,416) (401,810) (110,306) (151,048) (637,503) 401,905 201,051 (790,126) (207,878) (988,043) 1,192,031 1,189,094 ------

and US$ 9,563 5,416 66,819 Fittings 407,796 417,359 (95,367) (56,830) 402,380 114,086 Furniture (293,710) (198,343) (350,540)

US$ Total US$ 5,720 2014 62,810 76,138 80,705 215,188 176,315 181,862 309,505 (252,022) (198,998) (759,971) (246,462) (613,364) (384,050) (693,914) 4,621,930 9,885,174 (478,726) (607,644) (175,884) (207,735) 56,575,074 59,991,573 (1,530,311) (3,914,217) (4,609,952) 50,163,561 41,705,060 42,326,441 9,885,174 (14,248,633) (10,870,587) (18,286,513) (3,914,217) (1,467,501) 39,292,974 50,163,561 42,326,441 56,575,074 (10,870,587) (14,248,633) -

------US$ 2015 Motor 35,134 38,929 (30,985) (25,153) vehicles 336,049 100,925 649,966 156,768 (197,173) (756,616) (145,163) (711,891) (64,600) 6,801,851 6,915,574 6,328,033 3,610,638 4,013,109 (118,293) (450,466) (2,788,742) (2,168,185) (3,304,936) 4,621,930 42,326,441 (4,609,952) 56,575,074 41,705,060 59,991,573 ------(14,248,633) (18,286,513)

and US$ US$ 7,649 52,017 22,422 92,495 11,075 20,276 Fittings 998,055 (25,883) (10,471) (22,473) 214,119 280,053 920,384 Furniture (718,002) (549,967) (179,986) (123,419) (810,070) 1,024,189 ------

COMPANY GROUP Capital work in 722,248 722,248 progress 2,809,213 2,809,213 2,809,213 (2,086,965) -

- - -

US$ US$ 1,554 (6,218) 73,381 49,255 80,705 (84,053) 176,315 235,226 (198,998) (138,810) (440,834) (384,050) Plant and 6,320,829 6,275,567 equipment 30,930,334 36,605,113 (8,127,034) (2,879,572) (3,677,043) 22,537,900 20,222,679 25,261,680 (10,707,655) (14,067,213)

- - - - -

US$ 5,720 2,220 62,810 18,460 57,933 12,465 15,074 (34,234) (89,876) (43,071) (25,401) (98,043) (97,599) land and Freehold buildings (268,101) (613,364) (442,225) (104,294)

15,035,621 14,724,449 (1,530,311) 14,620,155 15,001,387 17,653,464

Additions Exchange adjustments At 31 December 2014 to assets Transfer sale for held as classified Disposals Exchange adjustments At 31 December 2015 Accumulated depreciation and impairment Accumulated depreciation At 1 January 2014 Transfer to investment Transfer property of De-recognition assets (Note 10.4) to assets Transfer sale for held as classified charge Depreciation for the year of De-recognition assets (Note 10.4) to investment Transfer (Note 11) property Disposals Assets held for sale Exchange adjustments At 31 December 2014 Depreciation charge Depreciation for the year Net book value At 31 December 2015 At 31 December 2014 Cost or valuation At 1 January 2014 Additions Disposals to held for sale Transfer Disposals Exchange adjustments At 31 December 2015 Property, plant and equipment plant and Property, Cost Cost Net carrying amount at 1 January and impairment Accumulated depreciation Movement for the year: Additions Net carrying amount of disposals for the year charge Depreciation De-recognition to assets held for sale (note 20) Transfer to investment property Transfer Net exchange adjustment Net carrying amount at 31 December and impairment Accumulated depreciation Financial Statements (Continued) Statements to the Financial Notes

10

10.1 Reconciliation of opening and closing carrying amounts

2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements (Continued)

10.2 Property revaluation

The valuation of property was performed in line with market values on 31 December 2012.

If land and buildings were measured using cost model, the carrying amount would be $8,633,610 (2014 : $8,854,985)

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

Fair value of the properties was determined by using market comparable method. This means that valuations performed by the valuer are based on active market prices, significantly adjusted for difference in the nature, location or condition of the specific property. As at date of revaluation 31 December 2012, the properties’ fair values were based on valuations performed by CB Richard Ellis,an accredited independent valuer. Significant unobservable data Price per square metre US$400-US$1,250 (2014:US$400-US$1 250)

Significant increases (decreases) in estimated price per square metre in isolation would result in a significantly higher/(lower) fair value.

Refer Note 30 for fair value hierachy and Note 21.3 for the movement in the revaluation reserve.

10.3 Property secured against borrowings

Property with a carrying amount of $14,185,342 (2014: $14,474,839) is encumbered against interest bearing borrowings (Note 22).

10.4 Assets written off

During the prior year, some specific plant and machinery parts which had become obsolete in the production process were replaced in line with technology changes. The replaced parts with a carrying amount of $207 735 were de-recognised.

10.5 Capitalised borrowings costs

Borrowings costs of $123 000 (2014:$559 628 were capitalised during the year on the qualifying expenditure of $2.8 million. The interest capitalised was computed using the specific interest rate on the borrowings .

GROUP COMPANY 2015 2014 2015 2014 US$ US$ US$ US$

11 Investment property

Balance at 1 January 1,467,501 - - - Transfer from property, plant and equipment - 1,467,501 - - Cost (Note 10) - 1,530,311 - - Accumulated depreciation (Note 10) - (62,810) - - Fair value adjustment Balance at 31 December 2015 1,467,501 1,467,501 - -

The Group’s investment property comprises of 11 commercial properties located across the country.

The properties were revalued in December 2012 as part of land and buildings. Refer to Note 10 for the valuation technique and key unobervable inputs used to value the property Management performed a fair value assessment at 31 December 2015 and the movement in fair value was not material.

Revenue and expenses relating to investment property

GROUP COMPANY 2015 2014 2015 2014 US$ US$ US$ US$

Rental income from leasing 75,803 97,635 - - Operating costs (20,870) (30,564) - - Net income 54,933 67,071 - -

12 Intangible assets

Cost At 1 January 1,003,211 925,738 77,473 - Additions 61,105 77,473 61,105 77,473

At 31 December 1,064,316 1,003,211 138,578 77,473

Amortisation At 1 January (314,949) (223,592) - - Charge for the year (91,356) (91,357) - - At 31 December (406,305) (314,949) - -

Net book value 658,011 688,262 138,578 77,473

64 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE

------1 65 US$ US$ 2014 2 014 77,473 77,473 77,473 259,897 6 887 969 6,259,870 1,207,807 9,153,012 1,077,493 8,467,968 1,071,314 9,799,179 1,024,552 2,911,210 3,935,762 (2,911,210) 17,698,183

- - - 1 COMPANY COMPANY US$ 2015 2 015 77,473 61,105 77,473 507,215 620,230 138,578 138,578 507,807 8 122 352 11,856,266 11,856,266 1,490,000 3,733,914 5,223,914 6,259,870 9,153,012 1,077,493 10,728,821 (3,733,914) 16,998,183

------US$ US$ US$ 2014 2 014 77,473 (91,357) 925,738 702,146 688,262 (223,592) (314,949) 1,003,211

GROUP GROUP ------US$ US$ 2015 2 015 61,105 (91,356) 688,262 658,011 (406,305) (314,949) 1,003,211 1,064,316

Reconciliation of opening and closing carrying amounts Reconciliation of opening Intangible assets (Continued) Intangible (Private) Limited Martindale Trading Net carrying amount at 1 January Net carrying amount at Cost Accumulated amortisation Movement for the year: Additions Amortisation Net carrying amount at 31 December Cost Accumulated amortisation The intangible assets consist of computer software. which was not yet complete sofware of a business intelligence to the purchase company relates The additions to intangible assets under the in the year. charge was no ammortisation as at 31 December and hence there Investments in subsidiaries Lavenson Investments (Private) Limited (Private) Limited Martindale Trading Malawi Limited Dairibord Kutal Investments (Private) Limited NFB Logistics (Private) Limited impairment as the subsidairy continues to post Malawi Limited (DML) was assesed for At 31 December 2015, the investment in Dairibord by $700 000 in the separate financial statements. impaired of this analysis, the investment was losses. As a result The fair value less costs of disposal estimated using the net asset value per share. amount of $ 507 807 was based on The recoverable company has a 68.4% interest in the subsidiary translating to 684 shares. The recoverable measurement. amount will be classified as a level 3 fair value Loans receivable Long-term loans receivable Zimbabwe (Private) Limited Dairibord NFB Logistics (Private) Limited Less : Amounts falling due within one year Zimbabwe (Private) Limited Dairibord Add : Amounts falling due within one year of long term loans receivable and 11% per annum and are issued to subsidiaries at an all-in cost of between 9.6% to loans that were relate The long term loans receivable banks for onlending to subsidiaries. by 2019. The holding company raises loans from repayable Financial Statements (Continued) Statements to the Financial Notes

12

13 14 14.1 14.2 Short-term loans receivable

2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements (Continued)

Short term loans receivable were issued at an all-in cost of 11% per annum for a tenor of between 30 days and 180 days.

GROUP COMPANY 2015 2014 2015 2014 US$ US$ US$ US$

15 Other non-current financial assets

Loans receivable 421,884 869,298 76,632 85,649

The loans receivable represent the non-current portion of loans which were issued to staff under a motor vehicle loan scheme and loans to farmers under a heifer funding programme. The loans to famers were taken over by a bank during the year. The motor vehicle loans are repayable over 5 years from date of issue at an interest rate of 9.5% per annum whilst the loans to farmers are repayable over 2.5 years at an interest rate of 15%. The short term portion of these loans is included in other receivables.

16 Inventories

Packaging and raw materials (at cost) 12,269,199 10,740,497 - - Spares and general consumables (at cost) 3,024,708 2,704,557 - - Finished goods (at lower of cost and net realisable value) 2,802,828 1,702,003 - - Total inventories at the lower of cost and net realisable value 18,096,735 15,147,057 - -

The amount of inventories recognised as an expense for the period was $ 57 517 088 (2014 :$55 320 994 ).

During 2015, stock losses amounting to US$ 773 840 (2014 : US$824 805) was recognised as an expense in cost of sales.

17 Group companies

The following balances arise from normal trading activities:

17.1 Amounts owed by group companies

NFB logistics (Private) Limited - - 857,977 624,482 Martindale Trading (Private) Limited - - - 288,810 Chatmoss Enterprises (Private) Limited - - - 52,905 Slimline Investments (Private) Limited - - - 73,655 Qualinex Investments (Private) Limited - - - 33,118 Dairibord Malawi Limited - - 150,534 100,534 Dairibord Zimbabwe (Private) Limited - - 847,508 77,960 - - 1,856,019 1,251,464

17.2 Amounts owed to group companies

Goldblum Investments (Private) Limited - - 2,370,224 428,918 Martindale Trading (Private) Limited - - 120,175 - Chatmoss Enterprises (Private) Limited - - 978,619 - Qualinex Properties (Private) Limited - - 324,027 - Slimline Investments (Private) Limited - - 722,480 - - - 4,515,525 428,918

All group transactions are conducted on an arm’s length basis and are interest free, with no fixed repayment terms.

66 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE

------67 US$ US$ US$ US$ 2014 2014 36,637 339,794 339,794 794,464 919,551 919,551 980,208 607,644 919,551 60 +days (668,301) 1,289,026 Group

- - - - - COMPANY US$ US$ US$ 2015 2015 but not 38,171 38,171 58,672 827,915 118,293 709,622 827,915 919,551 118,293 impaired Past due (209,929) 1,108,640 1,466,689 30-60 days

US$ past US$ 2014 (1,993) Neither due nor

842,007 187,256 664,561 - impaired (362,709) 8,242,338 3,370,803 7,633,834 5,981,185 1,414,341 11,613,141 GROUP

- US$ US$ Total Total 2015 532,549 664,561 153,912

(285,924) 2,809,915 1,791,954 8,242,338 11,823,454 10,031,500 10,031,500

The following is a movement in the impairment of The following is a movement e as follows:

for. provided of $532 549 (2014 : $664 561) were receivables As at 31 December 2015, balance: receivables Opening balance period. within the credit is charged terms and no interest day credit on 30 is generally offered credit Trade and other receivables Trade receivables Trade Other receivables for the year Charge At 31 December 2015 At 31 December 2014 that quality of trade receivables credit manages and measures how the Group to understand risk of trade receivables See note 31.1 on credit neither past due nor impaired. are Cash and cash equivalents Cash at banks and on hand Assets classifed as held for sale

Assets classified as held for sale residential to sell some resolution classified as held for sale following a Board were properties On 31 December 2013, certain residential is confident the worth $878 230 have been sold to date and management Properties and invest the cash in plant and machinery. properties classified as held for sale as at 31 December 2015. remained year and hence will be sold in the current properties remaining Bad debts written off Reversal for the year At 31 December follows : was as The ageing analysis of trade receivables for sale following a management decision that they classified as held At 31 December 2015, certain pieces of plant and machinery were should be sold. The major classes of assets classified as held for sale as at 31 December 2015 ar Plant and machinery Reconciliation of assets held for sale Disposals Closing balance associated with the assets held for sale. no liabilities directly were There Freehold land and buildings Freehold Opening balance plant and equipment (Note 10.1) property, from Transfer

Financial Statements (Continued) Statements to the Financial Notes

18 19 20

2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements (Continued)

Group and Company 2015 2014 No. No.

21 Issued capital and reserves

21.1 Share capital

Authorised shares Ordinary shares of US$0.0001 each 425,000,000 425,000,000

No. US$ Ordinary shares issued and fully paid At 31 December 2014 358,000,858 35,800

At 31 December 2015 358,000,858 35,800

Subject to the limitations imposed by the Companies Act (Chapter 24:03) in terms of a resolution passed by the company in general meeting, the unissued shares have been placed at the disposal of the directors.

Share option Scheme

The directors are empowered to grant share options to certain employees of the company.The options granted are exercisable within 6 years from date of grant and they all vested in 2011.

Movements in the year No. No.

Opening balance 465,286 465,286 Exercised during the year - -

Exercisable at 31 December 465,286 465,286

The share options were granted in 2010 and the following are the key aspects of the share option scheme:

-The exercise price of the option (US$) 0.085 -The market price of the option (US$) as at 31 December 2015 0.070 -The remaining contractual life (years) 1

Group and Company 2015 2014 US$ US$ 21.2 Share premium

At 31 December 1,379,664 1,379,664

68 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE

- - - 69 US$ Total Total (58,153) (58,153) (13,995) reserves reserves (304,548) (194,422) (194,422) 23,483,902 23,121,201 22,912,784

------US$ Other capital 117,784 117,784 117,784 reserves

------US$ Asset reserve (13,995) to employees, including key (304,548) 8,835,080 8,530,532 8,516,537 revaluation

------US$ reserve conversion 18,641,370 18,641,370 18,641,370 - - - - US$ details of these plans. reserve Foreign Foreign (58,153) (58,153) currency currency (194,422) (194,422) translation (4,127,129) (4,185,282) (4,379,704) to equity holders of the parent Attributable

------US$ Share 16,797 16,797 16,797 Option reserve

Non-distributable reserves reserves Non-distributable Group Balance at 1 January 2014 Balance at 1 January income Other comprehensive Gross Income tax effect to held for sale reserve Transfer Balance at 31 December 2014 income Other comprehensive Gross Income tax effect earnings on disposal of asset to retained Transfer Balance at 31 December 2015 and purpose of reserves Nature translation reserve currency Foreign the translation of the financial statements of the arising from exchange differences is used to record translation reserve currency The foreign subsidiary. foreign conversion reserve currency Foreign the Zimbabwe dollar to the United States from of change in functional currency as a result arose conversion reserve currency The foreign as at the change over period and has been designated as non - distributable reserve. equity in existence the residual represents dollar.It reserve Asset revaluation extent that such to the in the fair value of land and buildings and decreases increases is used to record reserve The asset revaluation equity. in recognised on the same asset previously to an increase relate decreases Other capital reserves Malawi Limited. in Dairibord made on the acquisition of additional interest to the profit This relates option reserve Share payments provided the value of equity-settled share-based is used to recognise option reserve The share Refer to Note 21.1 for further management personnel, as part of their remuneration. Reserves of assets held for sale surplus on assets classified as held for sale. to the revaluation relates The reserve Financial Statements (Continued) Statements to the Financial Notes 2015 Annual Report 2015 Limited Holdings Dairibord 21.3

Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements (Continued)

Borrowing cost % GROUP COMPANY United States Malawi 2015 2014 2015 2014 dollar Kwacha Maturity US$ US$ US$ US$

22 Interest bearing borrowings

22.1 Long term borrowings a) Bank loan Malawi 37.5% Aug 2016 93,225 271,358 - b) PTA Bank-2011 Loan 11% Dec 2016 992,606 1,999,297 992,606 1,999,297 c) PTA Bank-2014 Loan 10.6% May 2019 4,756,086 5,012,672 4,756,086 5,012,672 d) Secured loan 10.6% Dec 2016 568,566 941,023 568,566 941,023 e) Bank loan Zimbabwe-secured 10% May 2016-Dec 2018 1,814,000 1,852,000 1,814,000 1,852,000

8,224,483 10,076,350 8,131,258 9,804,992 Less : Amounts falling due within one year (3,662,620) (3,565,037) (3,633,090) (3,384,132) 4,561,863 6,511,313 4,498,168 6,420,860

22.2 Short term borrowings f) Bank loan Zimbabwe - secured 10% Jan 2016 500,000 - 500,000 - g) Bank loan Zimbabwe - unsecured 11% Sep 2016 1,025,000 1,000,000 1,025,000 1,000,000 1,525,000 1,000,000 1,525,000 1,000,000 Add : Portion of long term loans falling due within one year 3,662,620 3,565,037 3,633,090 3,384,132 5,187,620 4,565,037 5,158,090 4,384,132

Total interest bearing borrowings 9,749,483 11,076,350 9,656,258 10,804,992 a) 37.5% secured loan This is made up of two loans totalling MK 140,532,913 (US$ 330,941) which were used in financing the acquisition of plant and equipment. The loans are repayable by 30 August 2016 in monthly instalments of MK 2,988,018 (US$6,567 ). The loan is secured over assets purchased. b) 11% PTA Secured-loan This loan was utilised to purchase plant and equipment.The total loan facity amounts to $4,023,000 and is secured by immovable property of Kutal Investment (Private) Limited with a book value of $ 5,984,633 and assets purchased. c) 10.6% PTA Secured loan The loan financed capital projects. This loan , together with the old loan above ,is secured over immovable property worth US$9 million and the assets funded. The total facility available is $6 million. d) Secured loan This loan was used to fund part of the capital projects at Dairibord Zimbabwe (Private) Limited. The loan repayment is over 2.5 years and started in November 2014. e) Bank Loan Zimbabwe This loan was used to acquire plant and equipment at Dairibord Zimbabwe (Private) Limited. Part of the loan , $784 000 is due by 10 May 2016 with the balance due by 10 December 2018. It is secured over property with a book value of $4,499,490. f) Bank Loan Zimbabwe This was made up of various short term loans secured by immovable property of Kutal Investment (Private) Limited as indicated in note (e) above. The current facility amounts to $500 000 and expires on 8 May 2016 and is subject to renewal. g) Bank Loan Zimbabwe-unsecured This is a working capital loan. The facility expires on 30 September 2016 and is subject to renewal.

70 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE

------71 US$ 2014 61,829 34,303 34,303 67,051 34,303 e (27,526) (32,748) 706,277 706,277

------COMPANY US$ 2015 80,611 31,436 34,303 (53,369) (58,678) (65,739) 800,949 800,949 (31,436) (31,436)

- - - US$ 2014 (27,080) (32,599) 578,173 157,278 247,803 (173,710) (106,472) 3,990,900 3,194,811 3,194,811 3,333,882 2,931,660 3,194,811 (1,578,553) 15,336,804 12,405,144 GROUP

US$ 2015 31,436 513,380 133,755 (18,860) (60,842) 158,730 229,037 (297,769) (103,011) (164,257) 3,194,811 3,363,006 4,366,045 3,363,006 3,394,442 2,968,197 14,316,061 (1,225,007) 17,284,258

Banking facilities 000). The facilities expir amounted to $15 182 000 (2014 : $16 500 , the banking facilities in place in Zimbabwe At 31 December 2015 and 10 May 2019. between 10 May 2016 August 2016. by 530,612). The facilities expire facilities amounted to MK 260,000,000 (US$ In Malawi the banking powers Borrowings The directors may borrow any sum of money not exceeding the aggregate of twice the issued and paid up share capital of the company and capital of the issued and paid up share of twice of money not exceeding the aggregate any sum may borrow The directors account. premium and share accounts of all the reserve standing to the credit of the amounts the aggregate Terms and conditions of trade and other payables: Terms on 14 - 30 day terms. bearing and are non - interest and other payables are Trade Deferred taxation Deferred to the following: tax relates Deferred for sale classified as held and property , investment property Property Plant and equipment Intangible assets Inventory Accounts receivable loss on exchange Unrealised Unutilised tax loss Prepayments Provisions Net liability/(asset) financial position: Disclosed as follows on the statement of Asset Liability tax Reconciliation of deferred Opening balance as of 1 January or loss in profit recognised expense/(credit) Tax Other payables Effect of exchange rate change Closing balance as at 31 December available for offset against future of US$5 779 026 (2014:US$6,027,066) that are in two subsidiaries has tax losses which arose The Group recognised for the whole amount of the tax losses. tax asset has been Deferred taxable profits. and other payables Trade payables Trade Financial Statements (Continued) Statements to the Financial Notes

23

24 25 2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements (Continued)

GROUP 2015 2014 US$ US$ 26 Commitments and contigencies

Capital commitments : Authorised and contracted for 5,762,728 1,528,753 Authorised and not contracted for 5,356,438 8,967,526 11,119,166 10,496,279

The Group’s capital expenditure will be financed from the Group’s own resources and borrowings.

Litigation The Group is a respondent in various employee claims for unfair dismissal and vendor litigations.

On the basis of legal advice the claims are not valid and there will be no outflow of resources.

Operating lease commitments - Group as lessee The Group entered into a commercial lease on a commercial building.The lease is for a one year period with a renewal option included in the contract. There are no restrictions placed upon the Group in entering into the lease.

Future minimum rentals receivable under the operating leases as at 31 December are as follows :

Within one year 156,330 160,000

Operating lease commitments -Group as Lessor The Group entered into commercial leases with tenants on commercial buildings.The leases are for a one year period with a renewal option included in the contract. There are no restrictions placed upon the Group in entering into the lease.

Future minimum rentals payable under the operating leases as at 31 December are as follows :

Within one year 100,000 152,000

27 Related party disclosures

27.1 The consolidated financial statements include the financial statements of Dairibord Holdings Limited and the subsidiaries listed in the following table:

% equity Interest Country of Name Incorporation 2015 2014

Dairibord Malawi Limited Malawi 68.4 68.4 Martindale Trading (Private) Limited Zimbabwe 100 100 Lavenson Investments ( Private ) Limited Zimbabwe 100 100 NFB Logistics ( Private ) Limited Zimbabwe 100 100 Kutal Investments ( Private ) Limited Zimbabwe 100 100

27.2 Company US$ US$

Management fees received from subsidiaries 1,961,289 2,498,469 Royalties received from subsidiaries 900,000 900,000

Loans issued to subsidiaries 8,800,306 9,545,717 Loans repaid by subsidiaries 6,276,006 3,933,717

Interest income on loans to subsidiaries 1,058,062 755,862

Refer Note 14 and 17 for loans receivable from subsidiaries and related party balances respectively.

72 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 73 US$ 2014 8,785 93,009 27,683 71,617 80,402 235,473 108,776 199,042 350,100 549,142 3,294,752 3,387,761 1,561,193 1,588,876 GROUP US$ 2015 8,585 68,748 88,491 28,992 73,298 81,883 199,098 258,635 329,646 528,744 3,178,304 3,266,795 1,517,722 1,546,714

Company rate of 9.5% , and on the same terms as to all issued at an interest The motor vehicle loans were detail. other employees. Refer Note 15 for more option scheme Share issued to key which were excercisable options currently 465 286 outstanding share are There during the year no excercises were management personnel in 2010. There plans Pension and retirement Defined contribution funds of defined contributions funds. eligible to be members are All employees of the Group National Social Security Authority Scheme Social Security Authority Act (1989). Contributions This is a scheme estabilished under the National pensionable salary of $700. This scheme is a defined per employee is 3.5% per month up to a maximum perspective. the Group’s contribution scheme from to the income statement during the year Pension costs charged Group Zimbabwe National Social Security Authority Scheme - Defined contribution funds Company National Social Security Authority Scheme - Zimbabwe Key management personnel transactions Key management personnel Short term employee benefits Pension contributions compensation paid Total Company Short term employee benefits Pension contributions compensation paid Total Motor vehicle loan balances Group Defined contribution funds Financial Statements (Continued) Statements to the Financial Notes

28 28.1 28.2 28.3 27.3 Compensation Group 2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements (Continued)

29 Material partly-owned subsidiary

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

Name Country of incorporation 2015 2014 and operation Daribord Malawi Limited Malawi 31.6% 31.6%

US$ US$ 2015 2014

Accumulated balances of material non-controlling interest: 253,630 375,253

Loss allocated to non-controlling interest (31,803) (126,360)

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

Dairibord Malawi Limited summarised statement of profit or loss for 2015 2015 2014 US$ US$

Revenue 4,210,573 4,980,585 Cost of sales (2,920,669) (3,779,227) Administrative expenses (1,301,101) (1,584,394) Finance costs (131,987) (157,946) Loss before tax (143,184) (540,982) Income tax credit 42,543 141,109

Loss for the year (100,641) (399,873)

Total comprehensive income (100,641) (399,873)

Attributable to non-controlling interests (31,803) (126,360)

Dairibord Malawi Limited summarised statement of financial position as at 31 December 2015

2015 2014 US$ US$

Inventories, receivables and cash and bank balances (current) 629,294 865,735 Property, plant and equipment and other non-current financial assets (non-current) 1,231,343 1,809,011 Trade and other payables (current) (844,144) (991,864) Interest-bearing loans and borrowings (current) (29,532) (180,905) Interest-bearing loans and borrowings and deferred tax liabilities (non-current) (184,337) (314,469)

Total equity 802,624 1,187,508 Attributable to equity holders of parent 548,995 812,255 Non-controlling interest 253,629 375,253

Summarised cash flow information for the year ending 31 December 2015

Operating 246,059 241,929 Investing 3,906 (310,017) Financing (257,440) (14,869) Net decrease in cash and cash equivalents (7,475) (82,957)

74 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE

75 US$ US$ Level 3 3 Level Level 3 (Level 3) (Level 3) 1,467,501 1,467,501 Significant Significant 14,620,155 15,001,387

unobservable inputs unobservable inputs

- - - -

US$ US$ Level 2 Level 2 Significant Significant observable observable inputs (Level 2)

inputs (Level 2) Fair value measurement using using Fair value measurement Fair value measurement using Fair value measurement

- - - - US$ US$

Level 1 Level 1 in active in active Quoted prices Quoted prices markets (Level 1) markets (Level 1)

US$ US$ Total Total Total Total 1,467,501 1,467,501 14,620,155 15,001,387

for assets: hierarchy fair value measurement Quantitative disclosures As at 31 December 2015 at fair value Assets measured measurement Fair value The following table provides the fair value measurement hierachy of the Group’s assets. Group’s hierachy of the the fair value measurement The following table provides Revalued land and buildings (Note 10) (Note 10) Revalued property Investment property (Note 11) Investment property 2. have been no transfers between Level 1 and Level There As at 31 December 2014 (Note 11) Investment property 2. have been no transfers between Level 1 and Level There Assets measured at fair value Assets measured Financial Statements (Continued) Statements to the Financial Notes

Group 30

2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements (Continued)

31 Financial Risk Management objectives and policies

The Group’s principal financial liabilities comprise trade payables and interest-bearing borrowings. The main purpose of these financial instruments is to raise finance for the Groups’s operations. The Group has various financial assets such as trade receivables and cash which arise directly from its operations.

The main risk arising from the Group’s financial instruments are interest rate risk, liquidity risk, foreign currency risk and credit risk. These risks are managed as follows :

31.1 Credit risk

Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily for trade receivables and loan notes) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Trade receivables Customer credit risk is managed by each business unit subject to the Group’s establised policy , procedures and control relating to customer credit risk management. Credit limits are established for all customers based on internal rating criteria. Credit quality of the customer is assessed through extensive credit verification procedures and individual credit limits are defined in accordance with this assessment. Customers with outstanding balances are regularly monitored.

The requirement for impairment is analysed at each reporting date on an individual basis for all customers. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of financial asset disclosed in note 18. The Group evaluates the concentration of credit risk as low since the balances are widely spread.

Cash balances The Group only deposits cash with financial institutions with high credit ratings. The maximum exposure to risk is equal to the carrying amount of cash and bank balances as disclosed in note 19.

31.2 Liquidity risk

The Group consistently monitors its risk to a shortage of funds.This requires that the Group considers the maturity of both its financial investments and financial assets e.g accounts receivables, other financial assets and projected cash flows from operations.The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and debentures.

The table below summaries the maturity profile of the Group and Company’s financial liabilities as at 31 December 2015 based on contractual undiscounted payments :

GROUP

Year ended 31 December 2015

On 0 to 3 3 to 12 1 to 5 + 5 Total demand months months years years Liabilities US$ US$ US$ US$ US$ US$

Interest bearing borrowings - 1,926,765 3,875,696 5,192,657 - 10,995,118 Trade and other payables - 17,284,257 - - - 17,284,257 - 19,211,022 3,875,696 5,192,657 - 28,279,375

Year ended 31 December 2014

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

COMPANY Year ended 31 December 2015

Liabilities Interest bearing borrowings - 1,897,233 3,812,003 5,192,657 - 10,901,893 Trade and other payables - 800,949 - - - 800,949 Amounts owed to Group companies - 4,515,526 - - - 4,515,526 - 7,213,708 3,812,003 5,192,657 - 16,218,368

Year ended 31 December 2014 Liabilities Interest bearing borrowings - 1,270,027 3,926,844 7,176,528 - 12,373,399 Trade and other payables - 706,277 - - - 706,277 Amounts owed to Group companies - 428,918 - - - 428,918 - 2,405,222 3,926,844 7,176,528 - 13,508,594

76 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE

77

US $ 35.2% (1,414,341) 15,336,804 24,998,813 46,084,681 71,083,494 11,076,350

2015 2014 US $ 6,088 Effect 33.5% 73,754 30,311 48,124 (55,698) (13,255) (58,513) on profit on profit (131,029) 9,749,483 before tax before before tax before (2,809,915) 17,284,258 24,223,826 48,102,112 72,325,938

rates -10% +10% -10% Effect +10%

Change in rates -10% +10% -10% +10% Change in

2015

2014 2014 2015 Foreign currency risk currency Foreign Foreign currency risk is the risk that the fair value or future cash operating activities flows of primarily to the Group’s exchange rates relates in foreign to the risk of changes a exposure financialexchange rates. The Group’s instrument will fluctuate because of changes foreign in (when revenues or expenses are denominated in a exposure differentto exchange currency),rate andfluctuations by either groupsthe pre-paying for purchases or net investmentretaining stock liability has been secured. until the foreignin subsidiaries currency to settle therelated . The Group limits rate , and Rand exchange possible change in the Euro the sensitivity to a reasonable The following table demonstrates Because of the investment in Malawi , the Group’s statement of financial position can be affected siginificantly by movements in the Malawi statement of Because of the investment in Malawi , the Group’s Kwacha. States Dollar on the reasonable change in the Malawi Kwacha to United tax to a before the effect on profit The following table represents consolidation of Malawi operations: Interest rate risk Interest rate risk Interest is the risk that the fair value cash or flowsfuture of a financial instrument will fluctuate because of changes in market interest exposure rates. to The the Group’s risk of changes in market interest rates relates primarily long to term the obligations Group’s with floating rates. interest to is policy Group’s The borrowings. and loans rate variable and fixed of portfolio balanced a having by risk rate interest its manages Group The The only variable keep most at of fixed its rates with ratesborrowings forre-negotiate an of term interest option interests; loans to every year. rise a 100%, least at by rises LIBOR the if loss and profit on impact only will which but rate, LIBOR months 3 to linked one is loan rate interest rate sensitivity has not not been calculated. which is unlikely and hence interest Capital management to support that the company maintains a healthy capital ratio in order to ensure capital management is The primary objective of the company’s value. the business and maximize shareholder maintain or adjust the To and makes adjustments to it in light of changes in the economic enviroment. manages its capital structure The group No changes or issue new shares. capital to shareholders, return may adjust the dividend payment to shareholders, the Group capital structure during the year ended 31 December 2015. made to the objectives , policies or processes were policy is to keep the net debt. The Group’s monitors capital using a gearing ratio , which is net debt divided by total capital plus The Group trade and other payables, bearing loans and borrowings, includes within net debt, interest gearing ratio up to a maximum of 50%. The Group less cash and cash equivalents, excluding discontinued operations. and other payables (Note 25) Trade Less cash and short-term deposits (Note 19) Net Debt Equity Capital and debt Gearing ratio Interest bearing borrowings (Note 22) bearing borrowings Interest Financial Statements (Continued) Statements to the Financial Notes 2015 Annual Report 2015 Limited Holdings Dairibord 31.3

31.4 31.5

Dairibord Holdings Limited 2015 Annual Report

Notes to the Financial Statements (Continued)

32 Segment Information

32.1 For management purposes , the Group is currently primarily organised into business units based on business activity.The Group has four operating segments as follows :

Manufacturing - manufactures foods and beverages Logistics - logistical services and distribution of goods Properties - leasing of properties Corporate - resource allocation

Three business units- 2 in Zimbabwe and the Malawi operation-have been agregated into the manufacturing segment.The following factors have been considered in arriving at the decision:

(a) the business units have similar product categories divided into milks, beverages and foods . These product lines have almost similar margins. (b) they have same customers; and (c ) the 2 entities in Zimbabwe use same distribution to the market and in some cases share the same selling points in some areas.

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

Adjustments and Year ended 31 December 2015 Manufacturing Logistics Properties Corporate eliminations Group US$ US$ US$ US$ US$ US$

Revenue External customers 102,713,056 652,350 75,803 - - 103,441,209 Inter-segment 7,199,471 8,144,644 664,151 - (16,008,266) -

Total revenue 109,912,527 8,796,994 739,954 - (16,008,266) 103,441,209

Results Depreciation, ammortisation and impairment 3,907,116 512,485 73,831 207,876 - 4,701,308 Operating profit/(loss) 2,962,457 887,812 539,481 (919,693) 500,000 3,970,057 Segment assets 60,250,701 7,035,325 21,300,942 32,775,718 (42,662,522) 78,700,164 Segment liabilities 37,404,490 3,547,045 357,589 14,941,296 (25,652,368) 30,598,052 Capital expenditure 4,430,091 182,277 - 70,668 - 4,683,036

Adjustments and Year ended 31 December 2014 Manufacturing Logistics Properties Corporate eliminations Group US$ US$ US$ US$ US$ US$

Revenue External customers 97,893,279 1,024,611 97,635 - - 99,015,525 Inter-segment 5,032,010 6,934,229 627,821 - (12,594,060) -

Total revenue 102,925,289 7,958,840 725,456 - (12,594,060) 99,015,525

Results Depreciation 3,176,965 456,271 75,309 205,672 - 3,914,217 Operating (loss)/profit (342,643) 756,928 792,336 362,243 (212,343) 1,356,521 Segment assets 54,866,576 5,879,432 21,061,287 30,726,832 (36,738,761) 75,795,366 Segment liabilities 33,258,157 2,816,080 642,315 12,022,727 (19,028,594) 29,710,685 Capital expenditure 9,631,248 334,500 22,711 142,889 (168,701) 9,962,647

The adjustments and eliliminations columns relate to inter-segments transactions and balances which are eliminated on consolidation.

32.2 Geographic Information

Revenue from external customers Group 2015 2014 US$ US$

Zimbabwe 99,721,998 94,034,940 Malawi 3,719,211 4,980,585

103,441,209 99,015,525

The revenue information above is based on the location of the operations

Non-current assets Zimbabwe 42,599,229 43,542,493 Malawi 1,231,343 1,809,011 43,830,572 45,351,504

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

78 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 79

Martindale Trading (Private) Limited and NFB Martindale Logistics Trading now are operating divisions of Zimbabwe Dairibord (Private) Limited (DZPL). DZPL Holdings Limited. by Dairibord itself is now owned directly Holdings Limited owned by Dairibord now directly Slimline, Chatmoss and Qualinex-are holding companies-Goldblum, The property Estates (Private) Repsol Estates (Private) Limited, Rosenwald Soilmark Farming (Private) Limited, In addition, and will be de-registered. Limited, Repsol Estates, Abrupt Enterprises (Private) (Private) Foods Limited, Limited Westside and will also de-registered. be Lavenson Investments Private Limited, Kutal Investments (Private) Limited and Martindale Trading Private Limited will no longer hold assets assets hold longer no will Limited Private Trading Martindale and Limited (Private) Investments Kutal Limited, Private Investments Lavenson Effective 1 January 2016, the Boardresolved torestructure the Group and streamline the business by to achieve operational efficiencies • • • grouping together all related operations and businesses. The Group structure has therefore changed from the one on page 5 of this report. The of this report. the one on page 5 changed from has therefore structure and businesses. The Group operations together all related grouping below: is summarised structure new group Events after the reporting date the reporting Events after Financial Statements (Continued) Statements to the Financial Notes

33 2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Glossary of Terms

DML - DAIRIBORD MALAWI LIMITED

DZL - DAIRIBORD ZIMBABWE LIMITED

DZPL - DAIRIBORD ZIMBABWE (PRIVATE) LIMITED

HDPE - HIGH DENSITY POLYETHYLENE

GDP - GROSS DOMESTIC PRODUCT

IFRS - INTERNATIONAL FINANCIAL REPORTING STANDARDS

ISO - INTERNATIONAL STANDARDS ORGANISATION

MBA - MASTERS OF BUSINESS ADMINISTRATION

NSSA - NATIONAL SOCIAL SECURITY AUTHORITY

PET - POLYETHYLENE TERAPHTHALATE

PBT MARGIN - PROFIT BEFORE TAX MARGIN

SADC - SOUTHERN AFRICA DEVELOPMENT COMMUNITY

SAZ - STANDARDS ASSOCIATION OF ZIMBABWE

SBU - STRATEGIC BUSINESS UNIT

SKU - STOCK KEEPING UNIT

ZSE - ZIMBABWE STOCK EXCHANGE

ZIMRA - ZIMBABWE REVENUE AUTHORITY

80 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 81 Not Assured Not Assured External Assurance Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured Not Assured 5 3 9 11 72 27 27 72 27 27 27 N/A N/A 5-10 31-33 16-17 25-26 28-29 28-29 44, 82 Scope Scope;5 23.29-29 Page No. Scope,34 Back Cover Front Cover Front STAKEHOLDER ENGAGEMENT STAKEHOLDER IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES IDENTIFIED MATERIAL G4.1 G4-3 G4-4 G4-5 G4-6 G4-7 G4-8 G4-9 G4-10 G4-11 G4-12 G4-17 G4-13 G4-14 G4-15 G4-16 G4-18 G4-19 G4-20 G4-21 G4-22 G4-23 G4-24 G4-25 G4-26 G4-27 GRI Content Index GRI Content ORGANISATIONAL PROFILE ORGANISATIONAL GRI Indicator STRATEGY AND ANALYSIS STRATEGY 2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

GRI Content Index

REPORT PROFILE G4-28 Scope Not Assured G4-29 Scope Not Assured G4-30 Scope Not Assured G4-31 Scope Not Assured G4-32 This Page Not Assured G4-33 20-21 Not Assured GOVERNANCE G4-34 20 Not Assured ETHICS AND INTEGRITY G4-56 18 Not Assured SPECIFIC STANDARD DISCLOSURES

Material Aspects: DMA and Indicators

Page (s) Omission External Assurance ECONOMIC

Economic Performance G4-EC1 Direct economic value generated and distributed (see Finan- 35-36; n/a Assured cial Statements) 38;40-79 G4-EC3 Coverage of the Organisation’s defined contribution plan N/A n/a Not Assured G4-EC4 Significant financial assistance received from government. 36 n/a Not Assured ENVIRONMENTAL Materials G4-EN1 Material used by weight or volume 30 n/a Not Assured G4-EN2 Percentage materials used that are recycles materials 30 n/a Not Assured Energy G4-EN3 Energy consumption – Inside the organisation 31 n/a Not Assured G4-EN4 Energy Consumption – Outside the organisation 31 n/a Not Assured Water G4-EN8 Total water withdrawn by source 31 n/a Not Assured Emissions, Effluents, and Waste G4-EN23 Effluent and waste discharge 32 n/a Not Assured SOCIAL PERFORMANCE INDICATORS Employment G4-LA1 Employment 31-33 n/a Not Assured G4-LA6 Occupational incidences 33 n/a Not Assured G4-LA8 Health and safety training and awareness 31 n/a Not Assured

82 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 83 % 7.0% 4.9% 2.9% 2.9% 2.8% 1.8% 1.6% 1.30% 1.07% 0.23% 0.36% 0.50% 0.77% 1.49% 4.53% 1.92% 2.79% 3.78% 1.60% 4.27% 0.01% 0.35% 0.02% 0.23% 31.7% 13.1% 12.4% 18.8% 51.90% 13.75% 23.15% 85.97% 100.0% 100.00% 100.00% - - - 100 266 Shares Shares 35,377 70,262 Issued 822,337 138,575 839,548 2,637,879 3,837,729 1,893,832 1,775,830 2,747,027 9,491,528 5,335,725 6,880,422 3,167,513 5,739,057 6,368,443 4,636,693 1,292,518 5,738,212 1,270,805 13,548,132 15,293,141 46,902,421 44,542,780 25,238,557 17,667,266 10,513,330 10,282,425 10,000,000 49,222,294 82,879,204 16,206,173 10,000,000 67,364,218 307,760,515 113,382,361 358,000,858 185,809,772 358,000,858 358,000,858

% 0.59% 5.84% 0.27% 2.02% 0.75% 1.86% 3.11% 1.30% 1.33% 0.82% 0.02% 0.76% 0.46% 0.37% 0.04% 0.66% 0.27% 0.04% 2.22% 90.88% 86.42% 100.00% 100.00%

73 75 46 1 43 21 2 37 2 33 15 114 42 105 26 15 125 329 175 5,120 5 634 5 634 4 869 Number of Shareholders Shareholders

above 5 000

10 000 50 000 25 000 100 000 200 000 500 000 1 000 000

Limited 31 December 2015 31 December Analysis Shareholders 2015 Annual Report 2015 Limited Holdings Dairibord Dr L. L. Tsumba Shareholding Directors' Trade Classification Trade Investment and Trust

Local companies S. Chindove Size of Shareholding 1 Insurance Companies T. Mabika T. 5 001 Nominees Local C. Mahembe 10 001 H. Makuwa Pension Funds 25 001 A. S. Mandiwanza Local individual residents 50 001 J. H. K. Sachikonye 100 001 trust Employee share 200 001 M. R. Ndoro New non - residents D. Hasluck 500 001 Nominees foreign R. P. Kupara R. P. 1 000 001 Fund managers

Banks Other

Shareholders Ten Top Stanbic Nominees (Pvt) Ltd. Old Mutual Life Assurance Company Zimbabwe Limited Old Mutual Life Assurance Company Zimbabwe Serrapin Investments (Pvt) Ltd SCB Nominees 033663900002 Mining Industry Pension Fund Scrimpton Investments (Pvt) Ltd National Social Security Authority Trust DZL Holdings Employee Share Old Mutual Zimbabwe Limited Lalibela Other

Dairibord Holdings Limited 2015 Annual Report

Notice to Shareholders

Notice is hereby given that the twenty-first Annual General Meeting of members of Dairibord Holdings Limited will be held in the Mirabelle Room, Meikles Hotel, on Wednesday 18 May 2016 at 11:30 am.

Ordinary Business 1. To receive and adopt the Financial Statements for the year ended 31 December 2015, together with reports of the Directors and Auditors thereon.

2. To elect Directors of the Company In accordance with article 100 of the company’s Articles of Association, Mr J. Sachikonye retires by rotation and being eligible, offers himself for re-election.

Mr Hebert Makuwa who has served the company as non-executive director since 1 March 2006 is also retiring in accordance with article 100 of the company’s articles of association and is not seeking re-election

In accordance with article 107 of the Company’s Articles of Association, Mr. Cron Von Siedel who was appointed director of the company with effect from 10 March 2016 retires, and being eligible offers himself for election.

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

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

Special Business

5. As an ordinary resolution: Share Buy Back. “That the company as duly authorised by Article 6 of its Articles of Association and section 79 of the Companies Act (Chapter 24:03), may undertake the purchase of its ordinary shares in such manner or on such terms as the directors may from time to time determine, provided that the re-purchases are not made at a price greater than 5% above the weighted average of the market value for the securities for the five (5) business days immediately preceding the date of the re-purchase and also provided that the maximum number of shares authorised to be acquired shall not exceed 10% of the company’s issued ordinary share capital.”

That this authority shall expire at the next Annual General Meeting (AGM), and shall not extend beyond 15 months from the date of this resolution.

After considering the effect of the maximum re-purchase of the shares, the directors are confident that a) The company will be able to pay its debts for a period of twelve months after the date of the notice of the AGM. b) The assets of the company will be in excess of its liabilities c) The share capital and reserves of the company are adequate for a period of twelve months after the date of the notice of the AGM. d) The company will have adequate working capital for a period of twelve months after the date of the notice of the AGM.

Notes

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

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

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

By order of the board M. Ndoro Company Secretary 10 March 2016

84 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 85 Corporate Information Corporate Sustainability Reporting Advisors Advisors Reporting Sustainability (Insaf) Africa of Sustainability Institute Crescent 52 Northampton Eastlea Harare Zimbabwe Corpserve (Private) Limited (Private) Corpserve ZB Centre 4th Floor, Nkrumah Avenue and Kwame Street Cnr 1st Harare Zimbabwe Transfer Secretaries Transfer Principal Bankers Limited Bank of Zimbabwe Chartered Standard Limited Bank of Zimbabwe Barclays Auditors (Zimbabwe) Accountants Chartered & Young Ernst City Angwa Nkrumah Ave Way/Kwame Julius Nyerere 62 or 702 Box P.O Harare Mercy R Ndoro Mercy [email protected] E-mail: Company Secretary Company Postal Address Postal Zimbabwe 587, Harare, P O Box 263 4 790801-7, +263 4 731071-8 Numbers: Telephone Number: +263 4 795220 Fax ZB Life Towers ZB Life 9th Floor Avenue 77 Jason Moyo Harare Registered Office Registered Dairibord Holdings Limited Dairibord No. 2168/94 Registration Company www.dairibord.com 2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Notes

86 OVERVIEW GOVERNANCE, ETHICS & ENGAGEMENTS PERFORMANCE ANNEXURE 87 Notes 2015 Annual Report 2015 Limited Holdings Dairibord Dairibord Holdings Limited 2015 Annual Report

Notes

88