AICO 2010 annual report

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2010 annual report

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AICO 2010 annual report

  1. 1. Annual Report 2 0 0 9 ANNUAL REPORT
  2. 2. Our Vision: To be a dominant agro-industrial business in our chosen markets. Our Values: We believe in honesty and integrity - trust is the foundation of our business. We believe in innovation, teamwork and mutual respect - together we achieve exceptional results. We are passionate about delivering world class quality pr oducts and services - it is the cor nerstone of our success. We cherish our role as creators and custodians of wealth - it is our legacy for present and future generations. Our Mission: To be the leading pr oducers, processors and marketers of agr o-industrial commodities and brands of world-class quality in the markets we serve. We are dedicated to achieving superior returns for our stakeholders and to pursuing gr owth opportunities by optimising our competencies and leveraging on our r esource base. We foster innovation and all round excellence in everything we do.
  3. 3. Contents N OTICE TO SHAREHOLDERS 2 PROXY FORM/CHANGE OF ADDRESS 3 GROUP PROFILE 6 CORPORATE INFORMATION 7 BOARD OF DIRECTORS 8 GROUP COMPANIES’ BOARD COMPOSITION 10 BOARD COMMITTEES AND GROUP MANAGEMENT 11 CORPORATE GOVERNANCE STATEMENT 13 CHAIRMAN’S STATEMENT 16 DIRECTORS’ RESPONSIBILITY STATEMENT 19 GROUP CHIEF EXECUTIVE’S REPORT 20 DIRECTORS’ REPORT 24 INDEPENDENT AUDITOR’S REPORT 26 STATEMENTS OF FINANCIAL POSITION 28 INCOME STATEMENTS 29 STATEMENTS OF COMPREHENSIVE INCOME 30 STATEMENTS OF CASH FLOW 31 STATEMENTS OF CHANGES IN EQUITY 32 GROUP SEGMENT REPORTS 34 ACCOUNTING POLICIES 37 NOTES TO THE FINANCIAL STATEMENTS 45 SHAREHOLDERS ANALYSIS 67 SHAREHOLDERS’ CALENDAR 67 CORPORATE DIRECTORY 69 Annual Report 2010 1
  4. 4. Notice to Shareholders Notice is hereby given that the Second Annual General b) That, accordingly, the issued shar e capital of Meeting of the members of AICO Africa Limited will the Company of 531,065,109 or dinary shares be held at The Cotton Pavilion, Harar e Exhibition be re-denominated to US$5 310 651 consisting Centre, Zimbabwe on Wednesday, 4 August 2010 at of 531,065,109 ordinary shares of US$0.01 each. 15:00 hours for the following business: c) That the Directors be authorised to transfer from ORDINARY BUSINESS the capital reserves of the Company, an amount sufficient to fund the aforesaid re-denomination 1. FINANCIAL STATEMENTS of the Company's shar e capital and to do all To receive and adopt the financial statements for such things and execute all such documents the year ended 31 March 2010 together with the as may be necessary to give effect to the above. reports of the Directors and the Auditors thereon. d) That the Memorandum and Articles of 2. ELECTION OF DIRECTORS Association of the Company be amended such In terms of Article 32.1 of the Company's Articles that any and all reference to 'nominal value' of of Association, Messrs B. L. Nkomo and L.F Preston . shares shall mean and read 'US$0.01' per share. retire by rotation. Mr P Devenish who was appointed . during the year will step down. Both r etiring 6. ANY OTHER BUSINESS Directors, and the new Director, being eligible, offer To transact such other business as may be themselves for re-election. transacted at an Annual General Meeting. 3. DIRECTORS' REMUNERATION NOTE: A member entitled to attend and vote at To approve the fees paid to the Dir ectors for the the meeting may appoint any person or persons year ended 31 March 2010. to attend and speak in his stead. A proxy need not be a member of the company . Proxies must be 4. AUDITORS lodged with the Secretary at least 48 hours before To approve the remuneration of the Auditors and the time of holding the meeting. to consider the re-appointment of KPMG as auditors for the ensuing year. BY ORDER OF THE BOARD SPECIAL BUSINESS 5. RE-DENOMINATION OF SHARE CAPITAL P. MANAMIKE To Resolve: GROUP COMPANY SECRETARY a) That the authorised share capital of the Company 13 July 2010 denominated in Zimbabwe dollars consisting of one billion five hundred million (1 500 000 000) REGISTERED OFFICE ordinary shar es of ZW$1 each be r e- denominated to one billion five hundred million 1st FLOOR SAZ BUILDING (1 500 000 000) or dinary shares of US$0.01 NORTHEND CLOSE,NORTHRIDGE PARK each. BORROWDALE, HARARE 2 AICO Africa Limited
  5. 5. 2nd Annual General Meeting 2nd Annual General Meeting Proxy Form Change of Address Notice I/We of NAME: (In full block letters) being the registered holder/holders of shares in AICO Africa Limited hereby appoint NEW ADDRESS: Of or failing him, the Chairman of the meeting, as my/our proxy to vote on my/our behalf at the second annual general meeting of the Company to be held on Wednesday 4 August 2010 at 15:00 hours and at any adjournment thereof. OLD ADDRESS: Signed this day of 2010 Signature of shareholder NOTE A member entitled to attend and vote at the meeting may appoint any person or persons to speak in his stead. A pr oxy need not be a member of the Company. Proxies must be lodged with the Secretary at least forty-eight hours befor e the meeting. Annual Report 2010 Annual Report 2010
  6. 6. Stamp Stamp Transfer Secretaries Transfer Secretaries AICO AFRICA Limited AICO AFRICA Limited First Transfer Secretaries (Private) Limited First Transfer Secretaries (Private) Limited P O Box 11 P O Box 11 Harare Harare Zimbabwe Zimbabwe Annual Report 2010 Annual Report 2010
  7. 7. Each problem has hidden in it an opportunity so powerful that it literally dwarfs the problem. The greatest success stories were created by people who recognised a problem and turned it into an opportunity. Joseph Sugarman
  8. 8. Group Profile PREAMBLE AICO holds a 51.21% contr olling stake in Seed Co AICO Africa Limited (AICO) is a diversified agr o- Limited (Seed Co). Seed Co develops and markets industrial conglomerate. hybrid maize and other broad acre crop seeds. Seed Co, in turn, holds a 100% interest in a cotton planting It was incorporated in Zimbabwe on 23 July 2008 seed pr oduction house, Quton Seed Company and subsequently reverse listed on the Zimbabwe (Private) Limited. These two seed houses make up Stock Exchange on 1 September 2008, in place of the Group’s seed operations. The Cotton Company of Zimbabwe Limited (Cottco) t h ro u g h a G r o u p r e s t r u c t u r i n g e x e r c i s e . AICO has a 75% controlling stake in a local spinning mill, Scottco (Private) Limited (Scottco), which INVESTMENTS produces yar n mainly for the export market. This AICO wholly owns Cottco, which, with nine ginneries constitutes the spinning operations of the Gr oup. across Zimbabwe, constitutes the Cotton operations of the Group. Cottco is the single lar gest ginner of AICO also has a 49% stake in Olivine Holdings (Private) cotton in Souther n Africa, and is involved in every Limited (Olivine), a major player in the local fast moving facet of cotton production and sales. This includes consumer goods (FMCG) market. Its key pr oducts the pr ovision of agr onomic advisory services, include edible oils and fats, canned vegetables, soaps, production and merchandising of planting seed, supply cotton and soya meal. In addition, AICO has a 100% of chemicals and fertiliser, ginning, warehousing as interest in a fr ozen foods outfit, Exhort Enterprises well as marketing of lint and cotton seed in global (Private) Limited (Exhort). T ogether, these two and local markets. investments constitute the Group’s FMCG operations. GROUP STRUCTURE Incorporating 75% 100% 100% 51.21% 100% 49% 100% Cottco Zambrano Investments International (Private) Limited Limited PRINCIPAL ACTIVITIES COMPANY PRINCIPAL ACTIVITIES PRODUCTS MARKETS Ginning of seed cotton and selling of lint and by products Lint, ginned seed, delinted seed and linters. Africa, Asia and Europe Cottco of the ginning process. Seed Co Development, production and selling of broad acre crop Maize, soya beans, wheat, cotton, Africa seeds. sorghum and a variety of other crop seeds. Scottco Selling of yarn and woven products. Cotton yarn and grey cloth. Africa and Europe Manufacturing of edible oils and fats, jams and marmalades, Cooking oil, margarine, candles, baked Africa Olivine soaps, candles as well as canned fruits and vegetables. beans, bath soaps, canned foods etc. Exhort Processing of frozen vegetables. Frozen carrots, beans, peas, cauliflower, Africa sweet corn, broccoli etc. Zambrano Investment vehicle for inflation hedged assets. Quoted shares and investment property. Zimbabwe 6 AICO Africa Limited
  9. 9. Corporate Information Registered Office Company Secretary 1st Floor SAZ Building Northend Close Northridge Park Box BW 537 Borrowdale P. Manamike HARARE ZIMBABWE Tel: 263-4-852795 Fax: 263-4-850705 Email: info@aicoafrica.com Auditors Transfer Secretaries KPMG Chartered Accountants (Zimbabwe) First Transfer Secretaries Mutual Gardens 4th Floor, Goldbridge 100 The Chase (West) Eastgate Emerald Hill HARARE HARARE ZIMBABWE ZIMBABWE Main Bankers African Banking Corporation CBZ Bank Limited 1 Endeavor Crescent 60 Kwame Nkrumah Avenue Mount Pleasant Business Park HARARE HARARE ZIMBABWE ZIMBABWE Standard Chartered Bank Zimbabwe African Export and Import Bank Africa Unity Square World Trade Center Building Sam Nujoma Street 1191 Comiche El Nil HARARE CAIRO ZIMBABWE EGYPT Standard Chartered Bank 22 Billiter Street LONDON UNITED KINGDOM Lawyers Gill Godlonton & Gerrans Kantor & Immerman Legal Practitioners 19 Selous Avenue Beverly Court HARARE 100 Nelson Mandela Avenue ZIMBABWE HARARE ZIMBABWE Annual Report 2010 7
  10. 10. Board of Directors Patison Sithole Bekithemba Nkomo (Non-Executive Chairman) (Non-Executive Director) Patison was appointed Bekithemba was appointed Chairman of the AICO to the AICO Boar d on 15 Board on 15 August 2008. August 2008. Prior to that, Until his appointment to this he had been on the Cottco position, he had served as Board since 1 December the Chairman of the Cottco 2002. He is a pr ominent Board since 22 February businessman and Managing 2006. A former pr esident of Director of Lloyd Corporate the Confederation of Zimbabwe Industries, Patison Capital (Private) Limited. Bekithemba sits on the has vast experience in business, and is the Gr oup boards of CABS and African Sun Limited and is also Chief Executive of Starafrica Corporation Limited and a dir ector of Gaskets and Cuttings Inter national Chairman of Red Star Holdings Limited, both of which (Private) Limited, Willsgr ove Ware Pottery (Private) are listed on the Zimbabwe Stock Exchange. He also Limited and Rubber Products Manufacturers (Private) sits on the boards of ABC Zimbabwe Limited, Sugar Limited. He holds a Bachelor of T echnology in Industries (Pr oprietary) Limited in Botswana and Accounting degree from the University of Zimbabwe Consolidated Sugar Industries (Proprietary) Limited and is a certified Business Excellence Assessor with in Namibia. Patison was voted Zimbabwe Institute of The South African Excellence Foundation. Management Manager of the year in 2004. He holds a Bachelor of Accountancy (Honours) degr ee from Catherine Chitiyo the University of Zimbabwe, a Masters in Business (Non-Executive Director) Leadership from University of South Africa, and is a Catherine was appointed to Chartered Accountant. the Boar d on 15 August 2008, and is a partner with Atherstone & Cook Patrick Devenish (Incorporating Wickwar & (Group Chief Executive) Chitiyo) Legal Practitioners. Patrick was appointed to Prior to this appointment, the position of Group Chief she was a Cottco Boar d Executive for AICO Africa member since 1 December 2002. She holds a Bachelor Limited with ef fect from 1 of Laws (Honours) degr ee fr om the University of January 2010. Pat is the Zimbabwe and several years of commer cial law former Gr oup Chief experience. Catherine also sits on various company Executive of Seed Co boards. Limited, a subsidiary of AICO Africa Limited. He brings with him a wealth of experience in management, strategy and business development and is well positioned to lead the Group into the future. He is a holder of an Executive Masters in Business Administration from the University of Cape Town. 8 AICO Africa Limited
  11. 11. Board of Directors (continued) Albert Nhau Pious Manamike (Non-Executive Director) (Company Secretary) Albert was appointed to the Pious was appointed the Board on 15 August 2008. Group Company Secretary Prior to this appointment, on 15 August 2008. He Albert was a Cottco Board joined the Group in August member since June 2007. 2005 after holding various He has vast experience in positions in finance and business and is the Group administration for 15 years. Chief Executive of Mike Appel He holds a Bachelor of Organisation (Private) Limited. He sits on the boards Accountancy (Honours) degree from the University of Nestle Zimbabwe (Private) Limited, Riozim (Private) of Zimbabwe, a Masters in Business Administration Limited and is the Chairman of National Social Security degree fr om Midlands State University and is a Authority (NSSA) and Beta Holdings (Private) Limited. Chartered Secretary. Bernard Mudzimuirema Lawrence F. Preston (Group Finance Director) (Non-Executive Director) Bernard was appointed to Lawrence has been the post of Group Finance involved in cotton Director on 15 August 2008. merchandising for mor e Prior to this he was the than 56 years and is Finance Director for Cottco currently the pr esident of since 1 September 2005. Lawrence Pr eston He is a fellow of the Associates, a commodity C h a r t e re d I n s t i t u t e o f brokerage and advisory Management Accountants and holds a Masters in group. Lawrence has considerable experience in Business Administration fr om Nottingham T rent international trading having served as pr esident of University, United Kingdom. Prior to his appointment, the Liverpool Cotton Association in 1976 and the he exercised his skills in finance, business and strategy American Cotton Shippers Association in 1991/2. He development as a Consultant. Ber nard is a former also served as Chairman of the Committee for Finance Dir ector of Zimboar d Pr oducts (Private) Inter national Cooperation between Cotton Limited and has worked for several blue chip Associations (C.I.C.C.A) from 1978 to 1980. He was companies and groups of companies in Zimbabwe, appointed to the Board on 15 August 2008. Prior to including Car naudmetalbox, Unilever (then Lever this appointment he was a Cottco Boar d member Brothers), Innscor Africa Limited and PG Industries since October 2000. Zimbabwe Limited. Bernard also sits on the boards of Seed Co Limited, Seed Co Zambia Inter national (Private) Limited, Olivine Industries (Private) Limited as well as Scottco (Private) Limited and Exhort Enterprises (Private) Limited. Annual Report 2010 9
  12. 12. Group Companies’ Board Composition SUBSIDIARIES JOINT OPERATIONS The Cotton Company of Zimbabwe Limited Olivine Holdings (Private) Limited P Sithole - Chairman M Ndudzo - Chairman D Machingaidze - Managing Director P Devenish - Deputy Chairman J Chindanya J Mushangari - Managing Director C Chitiyo (Ms) C Chitiyo (Ms) P Devenish O Dangwa (Mrs) B Mudzimuirema B Nkomo M Dzinoreva A Nhau S Mavende W Ntini S Mazhandu L Preston B Mudzimuirema T Wicks E Mugamu A Nhau Scottco (Private) Limited P Devenish - Chairman A Kamali - Managing Director S Bobat B Mudzimuirema V Patel Seed Co Limited F Rwodzi - Chairman M Nzwere - Group Chief Executive P Devenish DE Long J Matorofa B Mudzimuirema JP Rooney C Utete (Dr) Exhort Enterprises (Private) Limited P Devenish - Chairman S Manyonda (Mrs) - Managing Director B Mudzimuirema Zambrano Investments (Private) Limited P Devenish - Chairman B Mudzimuirema T Wicks 10 AICO Africa Limited
  13. 13. Board Committees and Group Management BOARD COMMITTEES GROUP MANAGEMENT Audit Committee AICO Africa Limited B Nkomo - Chairman P Devenish - Group Chief Executive C Chitiyo (Ms) B Mudzimuirema - Group Finance Director B Mudzimuirema P Manamike - Group Company Secretary A Nhau A Nyakonda - Group Audit Manager Remuneration Committee The Cotton Company of Zimbabwe Limited P Sithole - Chairman D Machingaidze - Managing Director P Devenish W Ntini - Finance Director B Nkomo J Chindanya - Director, Crop Procurement and Inputs T Wicks - Director, Ginning and Marketing Investment Committee B Nkomo - Chairman Seed Co Group C Chitiyo (Ms) M Nzwere - Group Chief Executive P Devenish J Matorofa - Group Finance Director B Mudzimuirema D Zaranyika - Managing Director, Seed Co Zimbabwe A Nhau D Clements - Managing Director, Seed Co Zambia R Jarvis - Managing Director, Quton Seed Company Exhort Enterprises (Private) Limited S Manyonda - Managing Director Scottco (Private) Limited A Kamali - Managing Director Olivine Holdings (Private) Limited J Mushangari - Managing Director S Mavende - Finance Director V Nkomo - Human Resources Director S Madondo - Supply Chain Director F Mtangadura - Marketing and Sales Director Annual Report 2010 11
  14. 14. Always bear in mind that your own resolution to succeed is more important than any other. Abraham Lincoln
  15. 15. Corporate Governance Statement The Gr oup is committed to the principles of To ensur e unity of objectives and pr oper co- ethics, transpar ency, r esponsibility, integrity, ordination, the Company elects management accountability and good governane in its dealings representatives to sit on the various boar ds. with stakeholders. Each board is r esponsible for maintaining the direction and contr ol of its company thr ough: The primary objective of corporate governance systems is to ensure that Directors, Executives • Setting and playing a pr ominent role in and Management carry out their responsibilities strategy development as well as determining effectively and efficiently. The Group's structures the strategic direction of the company and/or are, ther efore, continuously r eviewed and the Group; updated to ensure compliance with applicable • Determining performance targets and the laws and generally accepted corporate remuneration of Executive Management; governance practices. • Monitoring management performance against set targets; FINANCIAL STATEMENTS • Liaising with inter nal and exter nal auditors The Directors recognise that they are responsible on the financial and business affairs of the for the preparation and integrity of the financial company; statements and related information contained in • Reviewing, deciding and acting on material the annual report in a manner that fairly presents business transactions and/or matters; and the state of affairs and the results of the Group's • Promoting ethical conduct in business operations. affairs of the Group. The annual financial statements have been The composition of each board ensures a well- independently examined by the Company's balanced team with a br oad range of business external auditors. Their r eport is presented on and industry expertise. pages 26 and 27. The Board of AICO Africa Limited comprises five INTERNAL CONTROL non-executive Dir ectors and two executive The Gr oup has developed and continues to Directors. The Chairman of the Board is a non- maintain systems of inter nal contr ol. These executive Director. All Directors have access to controls are designed to provide reasonable, but outside professional advice through the Company not absolute, assurance as to the r eliability of Secretary who is r esponsible to the Boar d for the financial statements and to safeguard, verify ensuring that correct procedures are followed. and maintain accountability of assets and to prevent and detect misstatement and loss. The The Group Chief Executive is responsible for the Group has adopted a risk based audit approach day-to-day management of the Group. There is and the inter nal auditors have been tasked to clear separation of r esponsibility between the ensure compliance with policies, pr ocedures, Board and Management. internal controls and systems through continuous programmes that are designed to cover all risks ATTENDANCE OF BOARD MEETINGS and pr ovide r egular feedback to Executive The Board met five times during the year under Management and the Audit Committee. The review. The number of Directors' meetings and internal audit function has free and unrestricted the number attended by each Dir ector during access to the Audit Committee. the period are: BOARD OF DIRECTORS All companies in the Gr oup have unitary board structures. The boards meet regularly, retaining full and ef fective contr ol over the r espective companies and monitor the performance of executive management. Annual Report 2010 13
  16. 16. Corporate Governance Statement (continued) • Reviewing business risks and the adequacy B oard Meetings of the company's risk management systems Held Attended and processes. C Chitiyo 5 5 Both the internal audit function and the external P Devenish** 2 2 auditors have unrestricted access to the Audit H Mapara* 2 2 Committee and all of their significant findings B Mudzimuirema 5 5 a re b r o u g h t t o t h e a t t e n t i o n o f t h e A u d i t A Nhau 5 3 Committee and the Board. BL Nkomo 5 5 LF Preston 5 2 The Audit Committee meets at least once every quarter. P Sithole 5 5 * Resigned during the year ** Appointed during the year The Committee met four times during the year. Members' attendance of these meetings is shown below: Board meetings ar e held at least once every quarter. A udit Committee Meetings Held Attended BOARD COMMITTEES The Board has established committees to assist C Chitiyo 4 4 in discharging its duties as follows: B Mudzimuirema 4 4 BL Nkomo 4 3 • Audit Committee; A Nhau 4 4 • Executive Committee; • Remuneration Committee; and • Investment Committee. Remuneration Committee The Remuneration Committee consists of two Audit Committee non-executive Directors, as well as the Gr oup The Audit Committee, which includes one Chief Executive, and is chair ed by a non- executive Dir ector, consists of thr ee non- executive Director. executive Directors and is chaired by one of the non-executive Directors. The Audit Committee The committee's task is to r eview, assess and is responsible for: make recommendations to the main Boar d on the following matters: • Internal and exter nal audit policy; • Reviewing the performance of external • The Group's remuneration policies in general; auditors; • Remuneration packages for top management, • Reviewing the scope, adequacy and especially executive Directors; effectiveness of the inter nal audit function; • Incentive schemes including share incentive • Reviewing and acting on matters relating to plans; financial and internal control, fraud, regulatory • Measurement criteria for the performance of compliance, accounting policies, financial executive Directors; reporting and disclosure; • Reviewing financial statements prior to The Remuneration Committee met twice during publication and adoption by the Boar d of the year. Members' attendance of these meetings Directors; is shown below: • Reviewing material financial transactions and projects prior to adoption by the Board of Directors; and 14 AICO Africa Limited
  17. 17. Corporate Governance Statement (continued) Executive Committee R emuneration The Executive Committee consists of two Committee Meetings executive Dir ectors and selected senior Held Attended executives. P Devenish** 1 1 The committee's functions are to: H Mapara* 1 1 BL Nkomo 2 2 • Assist the Gr oup Chief Executive Of ficer in P Sithole 2 2 managing the Group; * Resigned during the year • Provide a working link between the Boar d ** Appointed during the year and senior management; • Ensure that strategic decisions are effectively implemented; and The Remuneration Committee meets at least • Ensure that management and operations twice every year. performance are adequately and regularly monitored in between Boar d meetings. Investment Committee The committee consists of three non-executive The committee meets at least once each month. Directors and two executive Dir ectors. SHARE DEALINGS BY DIRECTORS, The committee is responsible for: MANAGEMENT AND STAFF The Group's policy concer ning dealings in the • Providing advice to the Board in establishing shares of AICO Africa Limited and its listed policies r elated to investments and subsidiaries, by Dir ectors, Management, Staf f re c o m m e n d i n g t h e s e t o t h e B o a r d f o r and their immediate families, stipulates the approval; periods when they can or cannot deal in its • Reviewing, approving and recommending to shares. the Boar d investment transactions that management may consider within the DIRECTORS' INTERESTS investment guidelines; The Directors of the Company ar e required to • Monitoring the management of investment disclose, in writing, any material interest in any funds; significant contract with the Company that may • Evaluating investment performance, taking result in a conflict or potential conflict of interest. into account investment policies, guidelines No such conflicts were reported during the year. and risk levels; • Monitoring, as r equired, staff's compliance EMPLOYEE RELATIONS with guidelines and pr ocesses of the The Gr oup has formally constituted works investment policy; and councils in each operating company. These deal • R e v i e w i n g a n n u a l l y t h e c o n t i n u e d with issues that af fect the employees dir ectly appropriateness of the investment policy and and provide platforms for: recommending to the Boar d any pr oposed modifications. • Productivity improvements; • Information sharing and dissemination; The Investment Committee did not meet during • Enhancing good employer/employee relations; the year and meets, largely, on an ad hoc basis. • Consultation and dispute/conflict resolution; and • Collective bargaining. Annual Report 2010 15
  18. 18. Chairman’s Statement I am pleased to present my report consumer demand. Global for the year ended 31 March 2010. commodity prices which fell in 2008 have recovered and should O P E R AT I N G E N V I R O N M E N T propel improvements in r evenue and aggr egate ear nings going The year under r eview was both forward. exciting and challenging. GROUP FINANCIAL First, we saw the liberalisation of PERFORMANCE the economy and the introduction of the multi-currency regime. With Aggregate sales volumes grew by this, we saw an end to 37% over prior year, driven in the Patison Sithole hyperinflation which had so main by volume gr owth in the ravaged this economy for the past FMCG and Cotton business. few years. Inflation r eceded for most of the year while supply and G ro u p t u r n o v e r o f U S $ 1 6 2 . 9 availability of basic commodities million is 35% higher than last improved significantly . year due to tur nover gr owth in Inflation receded Nevertheless, costs of running Seed Co Limited arising mainly businesses r ose in r eal terms from improvements in Zimbabwe for most of the resulting in local businesses, particularly the manufacturing maize seed prices and volumes. Despite strong performance from year while supply sector, being put under sever e strain. the Seed Strategic Business Unit (SBU), Group operating pr ofit of and availability of Second, we experienced US$12.8 million (last year: US$26.9 million) was negated by unprecedented liquidity the operating losses in the Cotton, basic commodities constraints acr oss the entir e FMCG and Spinning businesses. economy. Funds were scarce and, As a result, Group profit after tax improved when available, facility tenur es fell by 84% to US$2.4 million. were short causing challenges to Earnings attributable to significantly. the smooth flow of operations. shareholders declined by US$12.0 Consequently, the cost of money million fr om US$7.8 million last was expensive with interest rates year, to a loss of US$4.3 million. migrating fr om about 13% per annum in Mar ch/April 2009 to Discontinued operations between 20% and 25% per annum contributed US$1.5 million to in March 2010. This, together with revenue and recorded combined increased operating costs (in real losses after tax of US$2.1 million. terms) and competition fr om Otherwise, pr ofit after tax fr om imported pr oducts, caused continuing operations amounted viability challenges for local to US$4.5 million (last year: businesses. US$15.3 million). Despite notable improvements in Capital expenditure amounted to capacity utilisation, power outages US$6.1 million. Net cash flow remained a major bottleneck to generated fr om operations was recovery of business and US$8.4 million. production levels. On the other hand, disposable incomes remained low and af fected 16 AICO Africa Limited
  19. 19. Chairman’s Statement (continued) OPERATIONS REVIEW The company invested US$11 to pr oduce some of the key million in crop inputs last year varieties required by the market. Cotton and we expect this to result in Maize seed volumes grew 70% The national cotton crop fell to much higher intake in the on the back of firm demand in 211,000 tonnes fr om 230,000 forthcoming buying season. all markets. Revenue grew 43% tonnes last year. Consequently, to reach US$77.0 million. Costs Cotto's intake volumes fell to World lint prices have recovered rose in real terms in Zimbabwe 9 8,000 tonnes fr om 122,000 and are now quoted at above due to “dollarisation”' while tonnes last year. Sales volumes 80US cents per pound. This, regional overhead costs went were 67% higher than prior year together with anticipated up on the back of initiatives to due to higher carryover stocks. increases in cr op intake and increase maize seed However, r evenue of US$78 sales volumes, should see a production. Consequently, profit million was 3% lower than prior significant impr ovement in before tax of US$17.9 million year due to lower commodity profits in the new financial year. rose by 7% over prior year . prices obtained during the year under review. Seed Future performance will be Performance was more exciting propelled by the tr ebling of Seed cotton buying price in the Seed business str eam, production in Zimbabwe and by averaged US$330 per tonne with all SBU's reporting profits harnessing the gr owth of the leading to cost overruns of and positive cash balances. East African business units. US$17 million r elative to World lint prices have budget. This, together with low FMCG sales prices and other cost recovered and are now quoted Despite the many challenges overruns, resulted in a reduction at above 80US cents per facing this business, it remains in margins and subsequently a pound. This, together with one of the mor e exciting loss befor e tax of US$10.4 anticipated increases in crop opportunities within the Group. million. Inter est costs of intake and sales volumes, Nevertheless, volume and sales US$9 .7 million ar e extr emely should see a significant performance were hampered by high and will be addr essed low demand due to low improvement in profits in the going forward. disposable incomes and, in new financial year some instances, the narr ow Efforts ar e underway to Government and NGO inputs product range occasioned by restructure this business and support programmes in Malawi, funding constraints. its cost base. A voluntary Zambia, T anzania and retrenchment package has been Zimbabwe meant that all maize Notwithstanding power and approved and concluded. seed available had a r eady working capital constraints, Regulatory framework in the market. In fact, low production sales volumes gr ew by 86% form of Statutory Instrument in the pr evious season relative to prior year. Volumes 142 of 2009 (SI142) was occasioned by dry conditions sold amounted to 17,305 promulgated in August 2009 . coupled with low carryover tonnes (last year: 9,300 tonnes). SI142 will gover n the or derly stocks meant that demand The product range herein enjoys production and marketing of outstripped supply. Efforts are good brand equity and cotton in the country . W e, being intensified to incr ease preference and has held its own therefore, expect a significant production and addr ess this against imported pr oducts - reduction in side marketing and shortfall. In Zimbabwe, albeit at lower mar gins. concomitant increases in crop production will incr ease support, cr op pr oduction threefold, T anzania will Revenue r ose by 464% to volumes and intake. We project commence local seed US$14.9 million. Revenue the company's market shar e production, Malawi will enhance increased significantly as a under these cir cumstances to resources and seed production result of the r emoval of price be above 51%. capacity, while the new farm controls and growth in volumes. acquired in Zambia will be used Lower mar gins and high Annual Report 2010 17
  20. 20. Chairman’s Statement (continued) operating costs r esulted in a Exhort Enterprises (Private) PROSPECTS loss befor e tax of US$3.6 Limited Prospects for the Gr oup ar e million. The Group's frozen vegetables good. Pr ojected r ecovery in operation has continued to intake and sales volumes in Rationalisation of costs and the perform unsatisfactorily . In Seed Co Zimbabwe and the product range are ongoing with particular it continues to face Cotton business as well as a view to enhancing both sales challenges relating to on-farm i m p ro v e m e n t i n u n d e r l y i n g volume performance and overall quality of contracted pr oduce commodity prices will result in earnings. together with very low yields a significant impr ovement in thereon. In addition, it is the earnings. The FMCG business Subject to availability of Board's view that this operation will gr ow substantially on the working capital and attendant has now become sub-scale back of higher ef ficiencies improvements in efficiency and relative to the Gr oup's other arising from improving capacity capacity utilisation, we expect operations and no longer fits utilisation. production and sales volumes, the Gr oup's strategy going p ro f i t a b i l i t y a n d forward. Consequently , the Appropriate funding of key competitiveness to impr ove. Board has decided to wind Group operations and down and dispose of this rationalisation of the Gr oup Spinning operation. balance sheet will, however, be Yarn prices, despite r ecovery critical for overall futur e of lint prices, remained low for Salamax Trading (Proprietary) performance. most of the year . Resistance Limited to price incr eases in South In 2008, the Group established DIRECTORATE Africa af fected r evenue. As a a buying office in South Africa, M r. P a t r i c k D e v e n i s h w a s result, operating mar gins fell appointed Gr oup Chief substantially. This has, however, Prospects for the Group are Executive for AICO Africa now been corrected. good. Projected recovery in Limited with ef fect fr om 1 intake and sales volumes in January 2010 and joined the The supply of raw materials was Seed Co Zimbabwe and the Board on the same date. He erratic due to liquidity Cotton business as well as replaced Mr . Happymor e constraints. Consequently , improvement in underlying Mapara who left the Gr oup in production levels were 55% of commodity prices will result November 2009 to pursue capacity resulting in substantial private interests. in a significant improvement cost under recoveries. in earnings. ACKNOWLEDGEMENTS However, yar n volumes wer e under the name Salamax I wish to extend my sincer e 9 % higher than prior year . Trading (Pr oprietary) Limited. gratitude and appreciation and Turnover of US$5.9 million is Given the change in that of the Boar d to 20% higher than last year. The c i rc u m s t a n c e s , p a r t i c u l a r l y Management and Staff across loss after tax amounted to "dollarisation" of the economy the Gr oup for the dedication US$1.7 million. and subsequent improvements and commitment. I also want to in availability of goods and extend my gratitude to my Yarn prices are now recovering services at competitive costs, colleagues on the Boar d for and this, coupled with attendant it is the Board's view that this their invaluable contribution. improvements in working vehicle is no longer necessary. capital, will see ear nings Accordingly, the Boar d has improve in the new financial decided that this operation be year. closed down. DISCONTINUED OPERATIONS DIVIDEND P. Sithole D u r i n g t h e y e a r, t h e G r o u p Due to the pr evailing liquidity CHAIRMAN Board decided to close down challenges, the Directors have two of its smaller operations. not declar ed a dividend. 23 June 2010 18 AICO Africa Limited
  21. 21. Directors’ Responsibilty Statement ACCOUNTING RECORDS AND FINANCIAL GOING CONCERN STATEMENTS After r eviewing the Gr oup’s budgets and r elated The Directors are responsible for the maintenance of financial projections, the Directors have no reason, adequate accounting r ecords as well as the in all material respects, to believe that the Group will preparation and integrity of the financial statements not continue to operate in the for eseeable future. and related information contained in the annual report Accordingly, these financial statements have been in a manner that fairly pr esents the state of af fairs prepared on a going concern basis. and the r esults of the Gr oup’s operations. ACCOUNTING POLICIES EXTERNAL AUDITORS’ ROLE In preparing the Group financial statements set out The external auditors are responsible for carrying out on pages 28 to 66 appr opriate accounting policies an independent examination of the financial statements have been applied, as have the relevant International in accordance with International Standards on Auditing Financial Reporting Standar ds, unless otherwise and reporting their findings thereon. stated, and ar e supported, wher e necessary, by reasonable and prudent judgement and estimates. SYSTEMS OF INTERNAL CONTROL The Directors are also responsible for the Gr oup’s APPROVAL OF FINANCIAL STATEMENTS systems of inter nal financial contr ol. These ar e The financial statements for the year ended 31 March designed to provide reasonable, but not absolute, 2010 have been approved by the Board of Directors assurance as to the r eliability of the financial and are signed on its behalf by: statements and to safeguar d, verify and maintain accountability of assets and to pr event and detect misstatement and loss. Nothing has come to the attention of the Directors to indicate that any material P. Sithole P. Devenish breakdown in the functioning of these contr ols, CHAIRMAN GROUP CHIEF EXECUTIVE procedures and systems has occurr ed during the year under review. 23 June 2010 Annual Report 2010 19
  22. 22. Group Chief Executive’s Report OVERVIEW for further growth. Cottco had a very The year ended 31st Mar ch 2010 difficult year primarily due to side was a dif ficult year for AICO. The marketing of seed cotton by growers introduction of the multi-curr ency who had been funded by us. Olivine system in February 2009 saw a registered meaningful gr owth but significant incr ease in r eal costs volumes are still significantly below which, apart from a small downward levels that will fully absorb overheads trend at midyear, has continued until and produce profits. now. Inflation in US dollars, which is ahead of the r est of the world, is GROUP STRUCTURE making Zimbabwe uncompetitive on Structure of the Gr oup r emains the world stage. On the bright side unchanged, smaller subsidiaries are dollarisation has created enormous being closed or sold off so as to leave Patrick Devenish opportunity for Zimbabwe to regain the Group with three large businesses its rightful place as the agricultural, that fit well together. business and intellectual hub of the region. The r emoval of exchange A large part of the pr evious Chief controls and, theoretically, the free Executive's time last year was spent flow of money has given industry the in finalising the AICO structure; this The removal of opportunity to r ecapitalise and included the r ecruitment of a exchange controls embrace new technology. The quality substantive Managing Dir ector for of Zimbabwean managers and Cottco. It is pleasing to r eport that and, theoretically, businessmen means that we ar e the Gr oup is now fully and the free flow of better qualified than our peers in the competently staf fed at SBU money has given region to take advantage of the new leadership level. African realities. Our neighbours in industry the Zambia and Malawi have, as a result The AICO management team of the opportunity to of well directed input programmes Chief Executive, Gr oup Finance and the use of improved seed, largely Director, Gr oup Inter nal Audit recapitalise and supplied by Seed Co, been able to Manager and Company Secr etary embrace new produce significant surpluses of grain. has now relocated to offices away technology. Sadly, they do not own sophisticated from Cottco.This gives independence grain storage facilities such as those to Cottco management and allows of our own Grain Marketing Boar d the AICO team to focus on Gr oup and may have problems in storing it. level activities. Structural issues in the financial OPERATIONS REVIEW sector in Zimbabwe have restricted the flow of capital and borr owings Cottco that started of f at a tough but This business had a very tough year manageable 13%, moved up to 25% in 2009/10. Statutory instrument 142 and beyond in the period under (SI142) was still in the pr ocess of review. This had a dampening effect being drafted and taken through the on our companies, particularly legislature for most of last year. This Olivine, which was carrying a fairly meant that ginners and traders who large debtors book as a result of the had not funded the growing of cotton liquidity problem. were allowed to buy seed cotton. As a result, these or ganisations were Of the three key business units, Seed able to offer a price higher than the Co had a good year and is poised serious players. This was obviously 20 AICO Africa Limited
  23. 23. Group Chief Executive’s Report (continued) an unsustainable practice and now CORPORATE SOCIAL and other commercial experience that SI142 has been implemented, RESPONSIBILITY is invaluable. only players who have funded the A wide range of programmes have production of Seed Cotton are able been undertaken over the year . SAFETY, HEALTH AND to buy and we expect Cottco to These ar e primarily focused on ENVIRONMENT benefit substantially. As a result of helping the young, the disabled The company has a clearly defined the side marketing , Cottco's intake and the aged. The Cottco schools HIV/AIDS policy and this is helping dropped significantly . This, rugby festival is the highlight of the to r educe the incidence of combined with incr eased schools rugby calendar and this HIV/AIDS related illness across the overheads and high inter est event is gaining inter national Group. Anti-retroviral drugs (ARV's) charges, r esulted in a US$10 recognition and is thought to be are pr ovided by the company . million loss for the company . the largest event of its kind in the world. There were very few work related Seed Co accidents in the year. Seed Co had a solid year; profits The Group has before tax wer e ahead of F2009 ambitious plans for OUTLOOK AND STRATEGY but were slightly lower after tax as Looking ahead, ther e is good a result of the Zimbabwe dollar growth and it is reason to be optimistic about the effect on last year's income future of the Group. Cottco has a statement. Volumes increased from expected that the large crop of seed cotton in the 45,140 tonnes to 47,900 tonnes people who do this ground and intake is pr oceeding and this was in spite of a reduction in an or derly fashion albeit with in sales of both winter cereal and work will come from some challenges to SI142 fr om soya bean seed. Resear ch within the Group. unregistered players in the industry. activities continue to be the The company is confident of cornerstone of Group activities and PEOPLE support from Government in this a new research farm was acquired AICO continues to work towar ds regard. World demand for cotton just outside Lusaka. New factories being a people driven and focused lint is curr ently strong and ther e for both the Zambian and Malawian organisation. In this regard training are plans, both at Cottco and business units will be built in the and development is a key area of industry level, to increase plantings new year. Growth will come from focus. The Gr oup has ambitious in the summer. It is interesting to ramping up the level of activity in plans for growth and it is expected note that Zimbabwe is the only East Africa as well as incr easing that the people who do this work country in Africa to have expanded business in existing markets. will come from within the Group. the crop in the last year. Several pr omotions have taken Olivine place r ecently and a lar ge Olivine, as previously mentioned Volumes grew by 87% over last percentage of these have been is slowly growing its output. It is year but are still significantly below internal. hoped that we will reach maximum capacity. Working capital shortages capacity utilisation within the next were possibly the biggest single At top management level, David two years. Ther e is tr emendous impediment to rebuilding capacity. Machingaidze comes in as scope for this business and its Other issues are local inflation, high Managing Director of Cottco. He products in Zimbabwe and the cost of labour versus r egional brings experience from the retail region. Current activity is focused competitors, imported pr oducts and tobacco business. Mor gan on identifying appr opriate and aged and technologically Nzwere took over from me at Seed technology and ensuring that outdated plant and equipment. Co and has a wealth of experience existing plant and equipment is Olivine products and brands ar e both at Seed Co and r egional fully maintained. still prized by consumers and, as business levels. Jonas Mushangari capacity is rebuilt, there will be a has been at Olivine for nearly two Seed Co has built a strong platform ready market. years now and his experience as for growth over the past few years an engineer at Olivine in the past and this is expected to continue Annual Report 2010 21
  24. 24. Group Chief Executive’s Report (continued) into the futur e. V olumes ar e I would like to r ecord my growing fast and the company is appreciation to all members of staff consolidating its position in existing across the Gr oup for their markets and engaging in planned invaluable work; we usually work expansion in new and less harder when businesses are having developed markets. Resear ch hard times than when they ar e activities continue to expand and doing well! we have been successful in recruiting some of the brightest talent in the r egion to drive this. APPRECIATION AICO has a str ong and diverse group of Directors both at Group P. Devenish and business unit level. The Group Chief Executive contribution made by these people is much appreciated and their level 23 June 2010 of commitment and expertise are amongst the very best in the market. 22 AICO Africa Limited
  25. 25. An empowered organisation is one in which individuals have the knowledge, skill, desire, and opportunity to personally succeed in a way that leads to collective organisational success. Stephen R. Covey
  26. 26. Directors’ Report The Directors have pleasure in presenting their report Following the introduction of the multi-currency regime together with the audited financial statements for the in February 2009, the Register of Companies requires year ended 31 March 2010. that all shar e capital, authorised and issued, be redenominated into United States dollars. Accordingly, PRINCIPAL ACTIVITIES the Dir ectors will, at the next AGM, pr opose the AICO Africa Limited (AICO) is a diversified agr o- redenomination of the Company's authorised share industrial conglomerate with interests in cotton ginning capital into 1,500,000,000 or dinary shares with a and marketing, spinning, fast moving consumer goods nominal value of US$0.01 per shar e, together with and production and marketing of planting seed. The the redenomination of the issued shar e capital into Company was incorporated in July 2008 and was 531,065,109 ordinary shares with a nominal value of subsequently reverse listed on the Zimbabwe Stock US$0.01 per share. Exchange on 1 September 2008 in place of The Cotton Company of Zimbabwe Limited and thus RESERVES emerged as the new investment holding entity for the The movements in the reserves of the Group are as Group. shown in the statement of changes in equity . DIRECTORS' RESPONSIBILITY ST ATEMENT DIRECTORS' SHAREHOLDING While the audit opinion is modified in r espect of The details of Directors' shareholding are shown in comparative information on account of the unique the shareholder analysis report accompanying the circumstances that prevailed in Zimbabwe in the prior financial statements. year, the Directors believe that the financial information that has been presented fairly reflects the underlying IMPAIRMENT performance of the Group and its entities for the years The income statement includes impairment losses of then ended and its financial position as of those dates. US$0.8 million for the Group, US$0.2 million of which was in the Cotton business, US$0.4 million in the SHARE CAPITAL Spinning business and US$0.2 million was in the The authorised shar e capital of the Company is FMCG business. Impairment losses were in respect 1,500,000,000 ordinary shares, of which 531,065,109 of trade receivables, other financial assets as well as are issued and fully paid. property, plant and equipment. At the time the shares were issued, the nominal value OPERATING RESULTS per share was 1 Zimbabwe dollar. Between the date The results for the year fr om continuing operations of issue and 31 Mar ch 2009, the Zimbabwe dollar are summarised below and are set out in more detail was debased by r emoving twenty-two zer os. The in the accompanying financial statements. nominal value of these shares in Zimbabwe dollars is Commentary on these results is also provided in the now virtually zero. The nominal value of the issued Chairman's and Gr oup Chief Executive's r eports. share capital at 31 March 2010, when converted to US dollars, amounts to US$61. 31 March 2010 Issued share capital as at 1 April 2010 530,512,042 Share options exercised 553,067 Issued share capital as at 31 March 2010 531,065,109 24 AICO Africa Limited
  27. 27. Directors’ Report (continued) 31 March 2010 DIVIDENDS US$'000 Due to concurrent operating challenges and attendant Group liquidity constraints, the Directors are of the opinion Profit before taxation 4,875 that it is not appropriate to declare a dividend for the Income tax expense (339) year ended 31 March 2010. No interim dividend was Profit after tax - continuing declared during the year. operations 4,536 Loss after tax from discontinued DIRECTORS operations (2,139) In terms of Article 32.1 of the Company's Articles of Profit for the year 2,397 Association, Messrs B. L. Nkomo and L.F. Preston retire by rotation. Mr P. Devenish who was appointed during the year will step down. Both retiring Directors, Attributable to: and the new Director being eligible offer themselves Equity holders of the parent (4,270) for re-election. Minority interest 6,667 2,397 AUDITORS Members will be asked to approve the remuneration Retained earnings 29,919 of the auditors for the year ended 31 March 2010 and to consider the reappointment of KPMG as auditors Equity attributable to equity to the Company for the ensuing year. holders of the parent 82,455 Non-controlling interest 32,117 For and on behalf of the Board Total equity 114,572 P. Manamike CAPITAL EXPENDITURE COMPANY SECRETARY Capital expenditure for the year ended 31 March 2010 amounted to US$6.1 million and capital expenditure 23 June 2010 for the following year is budgeted at US$10.5 million. Annual Report 2010 25
  28. 28. Independent Auditor’s Report KPMG Telephone +263 (4) 303700 Mutual Gardens +263 (4) 302600 100 The Chase (West), Emerald Hill Fax +263 (4) 303699 P O Box 6, Harare Zimbabwe To the Members of AICO Africa Limited Report on the financial statements We have audited the accompanying financial statements of AICO Africa Limited (the Company) and its subsidiaries (the Group) as set out on pages 28 to 66, which comprise the statements of financial position at 31 March 2010, the income statements, statements of comprehensive income, changes in equity and 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 notes. Directors' responsibility for the financial statements The Directors are responsible for the pr eparation and fair pr esentation of these financial statements in accordance with Inter national Financial Reporting Standar ds (IFRS's) and in the manner r equired by the Companies Act (Chapter 24:03) of Zimbabwe and the r elevant statutory instruments. This r esponsibility includes: designing, implementing and maintaining inter nal control relevant to the pr eparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statement s, whether due to fraud or err or. In making those risk assessments, the auditor considers inter nal control relevant to the entity's pr eparation and fair presentation of the financial statements in or der to design audit pr ocedures that ar e 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 appr opriateness of accounting policies used and the r easonableness 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 qualified audit opinion. KPMG, a Zimbabwean partnership and a member firm of the KPMG network of independent member firms af filiated with KPMG international, a Swiss co-operative. 26 AICO Africa Limited
  29. 29. Independent Auditor’s Report (continued) Basis for qualified opinion The Directors have not presented comparative information r elating to cash flows as they believe that the information will be misleading for reasons stated in notes 29 to 31. Consequently, the Company and Group have not complied with Inter national Accounting Standard (IAS) 1 (Presentation of Financial Statements). An adverse audit opinion was issued on the financial performance and cash flows relating to the prior year due to non-compliance with IAS 29 (Financial Reporting in Hyperinflationary Economies) and IAS 21 (The Effects of Changes in Foreign Exchange Rates) for the reasons stated in notes 29 to 31. Qualified opinion In our opinion, except for the effects of the matters described in the Basis for qualified opinion paragraph, the financial statements give a true and fair view of the financ ial position of the Company and Group at 31 March 2010, and the Company and Group’s financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards. Report on other legal and regulatory requirements In our opinion, the financial statements have, in all material respects, been properly prepared in compliance with the disclosure requirements of the Companies Act (Chapter 24:03) of Zimbabwe and Statutory Instruments (SI 33/99 and SI 62/96), except for the presentation of the comparative information relating to the Company and Group’s financial performance. Emphasis of matter Without further qualifying our opinion, we draw attention to note 15 to the financial statements which describes that no provision has been made on a trade account receivable with a carrying amount of US$3 376 004 for reasons stated in that paragraph. KPMG Chartered Accountants (Zimbabwe) Harare 23 June 2010 Annual Report 2010 27
  30. 30. Statements of Financial Position As at 31 March 2010 GROUP COMPANY 31 March 31 March 31 March 31 March 2010 2009 2010 2009 Notes US$'000 US$'000 US$'000 US$'000 Non-current assets Property, plant and equipment 6 116,800 132,770 222 - Investment property 7 684 1,141 - - Investments held in subsidiaries 8 - - 120,074 113,537 Investment held in joint venture 9 - - 6,825 6,825 Investment held in associate 10 65 65 - - Total non-current assets 117,549 133,976 127,121 120,362 Current assets Biological assets 12 588 777 - - Inventories 13 37,369 29,624 - - Inputs scheme receivables 14 9,717 5,206 - - Prepayments for current assets 12,004 6,205 10 - Trade and other receivables 15 29,885 30,788 64 - Other financial assets 16 2,131 583 - - Assets classified as held for sale 27 3,277 51 - - Bank and cash balances 17 12,161 5,700 39 - Balances owed by Group companies 18 - - 5,803 5,678 Total current assets 107,132 78,934 5,916 5,678 Total assets 224,681 212,910 133,037 126,040 EQUITY AND LIABILITIES Capital and reserves Share capital 19 - - - - Capital reserves 52,536 52,143 118,145 111,946 Retained earnings 29,919 33,512 (1,419) (1,175) Equity attributable to equity holders of the parent 82,455 85,655 116,726 110,771 Non-controlling interest 32,117 29,621 - - Total equity 114,572 115,276 116,726 110,771 Non-current liabilities Borrowings 20 10 189 - - Deferred tax liabilities 11 25,974 39,589 250 - Finance lease liabilities - third party 28 258 - - - Total non-current liabilities 26,242 39,778 250 - Current liabilities Borrowings 20 48,528 35,020 - - Trade and other payables 21 20,626 15,646 40 - Finance lease liabilities 28 518 - - - Taxation 4,581 1,724 10 - Bank overdrafts 17 8,767 5,466 - - Liabilities classified as held for sale 27 847 - - - Balances owed to Group companies 18 - - 16,011 15,269 Total current liabilities 83,867 57,856 16,061 15,269 Total equity and liabilities 224,681 212,910 133,037 126,040 P. SITHOLE - CHAIRMAN P. DEVENISH - GROUP CHIEF EXECUTIVE 23 June 2010 23 June 2010 28 AICO Africa Limited
  31. 31. Income Statements For the Year Ended 31 March 2010 GROUP COMPANY 31 March 31 March 31 March 31 March 2010 2009 2010 2009 Notes US$'000 US$'000 US$'000 US$'000 Continuing operations Revenue 162,879 120,677 - - Cost of sales (109,352) (51,600) - - Gross profit 53,527 69,077 - - Other operating income 4,215 6,448 5 - Operating expenses (44,959) (48,639) (601) (441) Administration expenses (22,856) (26,285) (457) (441) Distribution and selling expenses (12,990) (9,296) - - Other operating expenses (9,113) (13,058) (144) - Profit/(loss) from operations 1 12,783 26,886 (596) (441) Investment income 2 519 275 - - Other gains/(losses) 3 2,413 (1,350) - - Interest expense (10,840) (8,966) - (734) Profit/(loss) before taxation 4,875 16,845 (596) (1,175) Taxation for the year 4 (339) (1,519) 77 - Profit/(loss) after tax from continuing operations 4,536 15,326 (519) (1,175) Discontinued operations Loss after tax from discontinued operations 27 (2,139) - - - Profit/(loss) for the year 2,397 15,326 (519) (1,175) Attributable to: Equity holders of the parent (4,270) 7,774 (519) (1,175) Non-controlling interest 6,667 7,552 - - 2,397 15,326 (519) (1,175) Basic (loss)/earnings per share (US cents) 5 (0.80) 1.47 (0.10) (0.22) Diluted (loss)/earnings per share (US cents) 5 (0.78) 1.42 (0.09) (0.21) Annual Report 2010 29
  32. 32. Statements of Comprehensive Income For the Year Ended 31 March 2010 GROUP COMPANY 31 March 31 March 31 March 31 March 2010 2009 2010 2009 US$'000 US$'000 US$'000 US$'000 Profit/(loss) for the year 2,397 15,326 (519) (1,175) Other comprehensive income Foreign currency translation differences from foreign operations 1,026 (4,914) - - Exchange differences arising from change in functional currency - (32,936) - (1,881) Revaluation of property, plant and equipment (141) 8,702 - - Impairment charge against revaluation reserve (12,130) - - - Gains/(losses) on available for sale investments - - 6,538 (83,703) Income tax on other comprehensive income 7,894 (1,847) (327) - Other comprehensive (loss)/income for the year (3,351) (30,995) 6,211 (85,584) Total comprehensive (loss)/income for the year (954) (15,669) 5,692 (86,759) Total comprehesive (loss)/income attributable to: Equity holders of the parent (4,102) (27,705) 5,692 (86,759) Non-controlling interest 3,148 12,036 - - (954) (15,669) 5,692 (86,759) 30 AICO Africa Limited
  33. 33. Statements of Cash Flow For the Year Ended 31 March 2010 GROUP COMPANY 31 March 31 March 31 March 31 March 2010 2009 2010 2009 Notes US$'000 US$'000 US$'000 US$'000 Cash flows from operating activities Operating cash flows before reinvesting in working capital 25 18,154 - (449) - Increase in working capital 26 3,094 - 681 - Interest paid (10,840) - - - Net taxation paid (2,022) - - - Net cash generated from operations 8,386 - 232 - Cash flows from investing activities Proceeds from disposal of property, plant and equipment 251 - - - Acquisition of property, plant and equipment (6,080) - (225) - Acquisition of other investments (42) - - - Net cash out flow from investing activities (5,871) - (225) - Cash flows from financing activities Proceeds from issue of option shares 32 - 32 - Net third party borrowings paid (179) - - - Increase in finance lease liabilities 776 - - - Dividends paid (289) - - - Net cash in flow from financing activities 340 - 32 - Net increase in cash and cash equivalents 2,855 - 39 - Cash and cash equivalents Balance at the beginning of the year 234 - - - Effect of exchange rate fluctuations on cash held 305 - - - Cash and cash equivalents at the end of the year 17 3,394 - 39 - Annual Report 2010 31
  34. 34. Statement of Changes in Equity - GROUP For the Year Ended 31 March 2010 TTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT MINORITY A Total Share Capital Retained Total INTEREST equity capital reserves earnings Group US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 Balances as at 31 March 2008 - 83,642 25,738 109,380 17,486 126,866 Changes in equity for 2009 Share based payment transactions - 3,980 - 3,980 99 4,079 Total comprehensive income for the year (net of tax) - (35,479) 7,774 (27,705) 12,036 (15,669) Balances as at 31 March 2009 - 52,143 33,512 85,655 29,621 115,276 Changes in equity for 2010 Share based payment transactions - (11) 476 465 74 539 Reversal of minority share of reserves - 236 201 437 (437) - Dividends paid - - - - (289) (289) Total comprehensive income for the year (net of tax) - 168 (4,270) (4,102) 3,148 (954) Balances as at 31 March 2010 - 52,536 29,919 82,455 32,117 114,572 32 AICO Africa Limited
  35. 35. Statement of Changes in Equity - COMPANY For the Year Ended 31 March 2010 Share Capital Retained Total Company capital reserves earnings equity US$'000 US$'000 US$'000 US$'000 Balances as at 31 March 2008 - - - - Changes in equity for 2009 Issue of shares on restructuring - 193,651 - 193,651 Share based payment transactions - 3,879 - 3,879 Total comprehensive income for the year (net of tax) - (85,584) (1,175) (86,759) Balances as at 31 March 2009 - 111,946 (1,175) 110,771 Changes in equity for 2010 Share based payment transactions - (12) 275 263 Total comprehensive income for the year (net of tax) - 6,211 (519) 5,692 Balances as at 31 March 2010 - 118,145 (1,419) 116,726 Annual Report 2010 33

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