2011ANNUAL REPORT
Our Vision:To be a dominant agr o-industrial business in ourchosen markets.Our Values:We believe in honesty and integrity•...
Contents    N    	 OTICE TO SHAREHOLDERS	                    2	    PROXY FORM AND CHANGE OF ADDRESS NOTICE	    3	    GROUP...
Notice to Shareholders                                                                                                    ...
3rd Annual General Meeting                                                                               Change of Address...
Stamp           Transfer Secretaries          AICO AFRICA LimitedFirst Transfer Secretaries (Private) Limited             ...
AICO Africa Limited 2011
Group Profile                                                                                                             ...
Corporate InformationRegistered Office	                                Company Secretary1st Floor SAZ BuildingNorthend Clo...
Board of Directors                                                                                         AICO Africa Lim...
Board of DirectorsBernard was appointed to the post of Group Finance Director on 15 August 2008. Prior tothis he was the F...
Group Companies’ Board Composition                                                                                        ...
Board Committees and Group ManagementBoard Committees                Group ManagementAudit Committee                 AICO ...
Corporate Governance Statement                                                                                            ...
Corporate Governance Statement (continued)Both the internal Audit function and the external Auditors have                 ...
Chairman’s Statement                                                                                                  AICO...
Chairman’s Statement (continued)                                   OUTLOOK                                      Mr Patison...
Directors’ Responsibilty Statement                                                                                        ...
Group Chief Executive’s Report                                                                                            ...
Group Chief Executive’s Report (continued)                                  delinted seed to the T anzanian cotton        ...
Independent Auditor’s Report Group Chief Executive’s Report (continued)                                                   ...
Directors’ Report                                                                                                         ...
Directors’ Report (continued)DIVIDENDSDue to the pr evailing liquidity challenges and concurr ent fundingrequirements in t...
Independent Auditor’s Report                                                                                              ...
STATEMENTS OF FINANCIAL POSITIONAs at 31 March 2011			   			                                                              ...
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
AICO Africa Limited 2011 annual report
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AICO Africa Limited 2011 annual report for the year ended 31 March 2011

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AICO Africa Limited 2011 annual report

  1. 1. 2011ANNUAL REPORT
  2. 2. Our Vision:To be a dominant agr o-industrial business in ourchosen markets.Our Values:We believe in honesty and integrity• trust is the foundation of our business. We believe in innovation, teamwork and mutual r espect• together we achieve exceptional results. We are passionate about delivering world class quality products and services• it is the cornerstone 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, pr ocessors andmarketers of agro-industrial commodities and brandsof world-class quality in the markets we serve. Weare dedicated to achieving superior returns for ourstakeholders and to pursuing growth opportunitiesby optimising our competencies and leveraging onour resource base. We foster innovation and all roundexcellence in everything we do.
  3. 3. Contents N OTICE TO SHAREHOLDERS 2 PROXY FORM AND CHANGE OF ADDRESS NOTICE 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 12 CHAIRMAN’S STATEMENT 14 DIRECTORS’ RESPONSIBILITY STATEMENT 16 GROUP CHIEF EXECUTIVE’S REPORT 18 DIRECTORS’ REPORT 22 INDEPENDENT AUDITOR’S REPORT 24 STATEMENTS OF FINANCIAL POSITION 26 INCOME STATEMENTS 27 STATEMENTS OF COMPREHENSIVE INCOME 28 GROUP STATEMENTS OF CHANGES IN EQUITY 29 COMPANY STATEMENTS OF CHANGES IN EQUITY 30 STATEMENTS OF CASH FLOWS 31 GROUP PRIMARY SEGMENT REPORTS 32 GROUP SECONDARY SEGMENT REPORTS 33 ACCOUNTING POLICIES 34 NOTES TO THE FINANCIAL STATEMENTS 42 SHAREHOLDER ANALYSIS 61 SHAREHOLDERS’ CALENDAR 61 CORPORATE DIRECTORY 65 AICO Africa Limited 2011
  4. 4. Notice to Shareholders AICO Africa Limited 2011Notice is hereby given that the 3rd Annual General Meeting of the basis of maintaining the alignment of employee and shareholdermembers of AICO Africa Limited will be he ld at The Cotton objectives. Rules and conditions of the proposed AICO SharePavilion, Harare Exhibition Centre, Zimbabwe on Wednesday, 31 Scheme are the same as those originally appr oved for theAugust 2011 at 1500 hours for the following business: 2003 Option Scheme, except that the vesting of shar es has been adjusted to ensur e that 70% of options granted underORDINARY BUSINESS this scheme vest in years four and five r elative to 20% in the 2003 Option Scheme, thus ensuring staf f are rewarded for1. FINANCIAL STATEMENTS loyalty as well as long term performance. To receive and adopt the financial statements for the year ended 31 March 2011 together with the reports of the Directors Accordingly, shareholders are being asked to consider and if and the auditors thereon. deemed fit to approve with or without amendments the following resolutions:2. ELECTION OF DIRECTORS In terms of Article 32.1 of the Companys Articles of Association, 5.1. That the “2011 AICO Africa Limited Share Option Scheme” be Ms CC Chitiyo and Messrs CB Mudzimuir ema and AF Nhau and is hereby approved; and retire by rotation. Messrs I Chagonda, JP Rooney and F Rwodzi who were appointed during the year will also step down. All 5.2. That 53 100 000 ordinary shares being 10% of AICOs issued retiring Directors, and the new Dir ectors being eligible, of fer share capital, be allocated and set aside for issue to qualifying themselves for re-election. staff on terms and conditions as the Dir ectors may deem fit. 3. DIRECTORS REMUNERATION NOTE: A member entitled to attend and vote at the meeting To approve the fees paid to the Directors for the the year ended may appoint any person or persons to attend and speak in 31 March 2011. his stead. A pr oxy need not be a member of the company . Proxies must be lodged with the Secr etary at least 48 hours4. AUDITORS before the time of holding the meeting. To approve the remuneration of the auditors and to consider the re-appointment of KPMG as auditors for the ensuing year. BY ORDER OF THE BOARD SPECIAL BUSINESS5. The current Share Option Scheme was set up and appr oved by shareholders in 2003 as the “2003 Cotton Company of Zimbabwe Limited Shar e Option Scheme (the 2003 Option P MANAMIKE Scheme)”. Upon restructuring, the Group and the simultaneous COMPANY SECRETARY reverse listing of AICO Africa Limited (AICO), AICO inherited and continued with the 2003 Option Scheme without any 8 August 2011 additional shares being allocated to the 2003 Option Scheme as appr oved by the shar eholders in August 2008. REGISTERED OFFICE 1st FLOOR SAZ BUILDING The shares that were set aside in 2003 for this scheme have NORTHEND CLOSE now been exhausted and the Directors wish to have set aside NORTHRIDGE PARK more shares in respect of a new AICO Africa Limited Shar e BORROWDALE Option Scheme to be known as the “2011 AICO Africa HARARE Limited Share Option Scheme (AICO Shar e Scheme)” as a2
  5. 5. 3rd Annual General Meeting Change of Address Notice NAME: (In full block letters) NEW ADDRESS: OLD ADDRESS: 3rd Annual General Meeting Proxy FormI/We ofbeing the registered holder/holders ofshares in AICO Africa Limited hereby appointOfor failing him, the Chairman of the meeting, as my/our proxy to vote on my/our behalf at the second annual generalmeeting of the Company to be held on Wednesday 31 August 2011 at 15:00 hours and at any adjournment thereof.Signed this day of 2011Signature of shareholderNOTE:A member entitled to attend and vote at the meeting may appoint any person or persons to speak in his stead.A proxy need not be a member of the Company. Proxies must be lodged with the Secretary at least forty-eighthours before the meeting.
  6. 6. Stamp Transfer Secretaries AICO AFRICA LimitedFirst Transfer Secretaries (Private) Limited P O Box 11 Harare Zimbabwe Stamp Transfer Secretaries AICO AFRICA LimitedFirst Transfer Secretaries (Private) Limited P O Box 11 Harare Zimbabwe
  7. 7. AICO Africa Limited 2011
  8. 8. Group Profile AICO Africa Limited 2011PREAMBLE AICO holds a 50.50% contr olling stake in Seed Co Limited (Seed o-industrial conglomerate.AICO Africa Limited (AICO) is a diversified agr Co). Seed Co develops and markets hybrid maize and other br oad acre crop seeds. Seed Co in turn, holds a 100% interest in a cottonIt was incorporated in Zimbabwe on 23 July 2008 and subsequently planting seed pr oduction house, Quton Seed Company (Private)reverse listed on the Zimbabwe Stock Exchange on 1 September Limited. These two seed houses make up the Group’s seed operations.2008, in place of The Cotton Company of Zimbabwe Limited (Cottco)through a Group restructuring exercise. AICO has a 75% contr olling stake in a local spinning mill, Scottco (Private) Limited (Scottco), which produces yarn mainly for the exportINVESTMENTS market. This constitutes the spinning operations of the Gr oup.AICO wholly owns Cottco, which, with nine ginneries acr ss Zimbabwe, oconstitutes the Cotton operations of the Group. Cottco is the single AICO also has a 49% stake in Olivine Holdings (Private) Limitedlargest ginner of cotton in Souther n Africa, and is involved in every (Olivine), a major player in the local fast moving consumer goodsfacet of cotton production and sales. This includes the provision of (FMCG) market. Its key products include edible oils and fats, cannedagronomic advisory services, pr oduction and mer chandising of vegetables, soaps, cotton and soya meal. In addition, AICO has aplanting seed, supply of chemicals and fertiliser, ginning, warehousing 100% interest in a frozen foods company, Exhort Enterprises (Private)as well as marketing of lint and cotton seed in global and local Limited (Exhort). Together, these two investments constitute themarkets. Group’s FMCG operations.GROUP STRUCTURE Incorporating 75% 100% 100% 50.50% 100% 49% 100% Cottco Zambrano Investments International (Private) Limited LimitedPRINCIPAL 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. Development, production and selling of broad acre crop Maize, soya beans, wheat, cotton, Seed Co 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 Olivine Africa soaps, candles as well as canned fruits and vegetables. beans, bath soaps, canned foods etc. Frozen carrots, beans, peas, cauliflower, Exhort Processing of frozen vegetables. Africa sweet corn, broccoli etc. Zambrano Investment vehicle for inflation hedged assets. Quoted shares and investment property. ZimbabweNote: Operations of Exhort Enterprises (Private) Limited have been closed down, pending disposal.6
  9. 9. Corporate InformationRegistered Office Company Secretary1st Floor SAZ BuildingNorthend CloseNorthridge ParkBox BW 537 Borrowdale P Manamike HARAREZIMBABWETel: 263-4-853054-6Fax: 263-4-850705Email: info@aicoafrica.comWebsite: www.aicoafrica.comAuditors Transfer Secretaries KPMG Chartered Accountants (Zimbabwe) First Transfer Secretaries Mutual Gardens No. 1 Armagh Avenue 100 The Chase (West) Off Enterprise Road, Eastlea Emerald Hill HARARE HARARE ZIMBABWEZIMBABWE Main BankersAfrican Banking Corporation Limited CBZ Bank Limited 1 Endeavor Crescent 60 Kwame Nkrumah Avenue Mount Pleasant Business Park HARARE HARARE ZIMBABWEZIMBABWE Standard Chartered Bank Zimbabwe Limited African Export-Import BankAfrica Unity Square World Trade Center BuildingSam Nujoma Street 1191 Comiche El NilHARARE CAIRO ZIMBABWE EGYPTStandard Chartered Bank PTA Bank22 Billiter Street 22nd and 23rd FloorsLONDON NSSF BuildingUNITED KINGDOM NAIROBI KENYA L awyers Gill Godlonton & Gerrans Kantor & Immerman Legal Practitioners 19 Selous Avenue Beverly Court HARARE 100 Nelson Mandela Avenue ZIMBABWE HARARE ZIMBABWE AICO Africa Limited 2011
  10. 10. Board of Directors AICO Africa Limited 2011 Bekithemba was appointed Chairman of AICO on 12 November 2010 having been appointed to the AICO Boar d on 15 August 2008. Prior to that, he had been on the Cottco Boar d since 1 December 2002. He is a prominent businessman and Managing Director of Lloyd Corporate Capital (Private) Limited. Bekithemba sits on the boar ds of CABS and African Sun Limited and is also a Director of Gaskets and Cuttings International (Private) Limited, Willsgrove Ware Pottery (Private) Limited and Rubber Pr oducts Manufacturers (Private) Limited. He holds a Bachelor of Technology degree in Accounting from the University of Zimbabwe and is a certified Business Excellence Assessor with The South African Excellence Foundation.Bekithemba Nkomo(Non-Executive Director) Patrick was appointed to the position of Gr oup Chief Executive for AICO Africa Limited with effect from 1 January 2010. Pat is the former Gr oup Chief Executive of Seed Co Limited, a subsidiary of AICO Africa Limited. Prior to that he w as Managing Director of Tobacco Sales Floor 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 MBA from the University of Cape Town.Patrick Devenish(Group Chief Executive) Innocent was appointed to the Board on 1 January 2011, and is a Partner with Atherstone & Cook Legal Practitioners. He holds a Bachelor of Laws (Honours ) degree from the University of Zimbabwe and has over 15 years of commer cial law experience. Innocent also sits on various company boards.Innocent Chagonda(Non-Executive Director) Catherine was appointed to the Board on 15 August 2008, and is a partner with Atherstone & Cook (Incorporating Wickwar & Chitiyo) Legal Practitioners. Prior to this appointment, she was a Cottco Board member since 1 December 2002. She holds a Bachelor of Laws (Honours) degree from the University of Zimbabwe and has several years of commer cial law experience. Catherine also sits on various company boards.Catherine Chitiyo(Non-Executive Director) Albert was appointed to the Board on 15 August 2008. Prior to this appointment, Albert was a Cottco Board member since June 2007. He has vast experience in business and is the Group Chief Executive of Mike Appel Organisation (Private) Limited. He sits on the boards of Nestle Zimbabwe (Private) Limited, RioZim Limited, Beta Holdings (Private) Limited, and is the Chairman of The Cotton Company of Zimbabwe Limited.Albert Nhau(Non-Executive Director)8
  11. 11. Board of DirectorsBernard was appointed to the post of Group Finance Director on 15 August 2008. Prior tothis he was the Finance Director for Cottco since 1 September 2005. He is a fellow of theChartered Institute of Management Accountants and holds an MBA from Nottingham TrentUniversity, United Kingdom. Prior to his appointment, he exer cised his skills in finance,business and strategy development as a consultant. Bernard is a former Finance Directorof Zimboard Products (Private) Limited and has worked for several blue chip companiesand groups of companies in Zimbabwe, including Carnaudmetalbox, Unilever (then LeverBrothers), Innscor Africa Limited and PG Industries Zimbabwe Limited. Ber nard also sitson the boards of Seed Co Limited, Olivine Industries (Private) Limited as well as Scottco(Private) Limited. Bernard Mudzimuirema (Group Finance Director)Pious was appointed the Gr oup Company Secretary on 15 August 2008. He joined theGroup in August 2005 after holding various positions in finance and administration for 15years. He holds a Bachelor of Accountancy (Honours) degr ee from the University ofZimbabwe, a Masters in Business Administration degr ee from Midlands State Universityand is a Chartered Secretary. Pious Manamike (Company Secretary)Lawrence has been involved in cotton merchandising for more than 57 years and is currentlythe president of Lawrence Preston Associates, a commodity brokerage and advisory group.Lawrence has considerable experience in international trading having served as presidentof the Liverpool Cotton Association in 1976 and the American Cotton Shippers Associationin 1991/2. He also served as Chairman of the Committee for Inter national Cooperationbetween Cotton Associations (C.I.C.C.A) fr om 1978 to 1980. He was appointed to theBoard on 15 August 2008. Prior to this appointment he was a Cottco Board member sinceOctober 2000. Lawrence Preston (Non-Executive Director)Farai is a Zimbabwean entrepreneur with significant investments in various sectors of theeconomy including financial services, hospitality, manufacturing, property developmentand mining. Farai is a charter ed accountant by pr ofession having served his articles ofclerkship with Er nst & Young. He is the founder member of Interfin Holdings Limitedincorporating Banking, Insurance and Stockbroking businesses. He is currently a shareholderand a Director of several listed and unlisted companies. Farai Rwodzi (Non-Executive Director)Patrick matriculated at Michaelhouse, Natal. He was articled and obtained CA (SA) and CA(Z) qualifications. Pat was a partner in a firm of Chartered Accountants before joining thecorporate world as Financial Director and later Chief Executive Officer of Delta CorporationLimited, where he spent a total of 34 years. A Dir ector of Barclays Bank of ZimbabweLimited for 7 years, Pat took a car eer change on leaving Delta Corporation Limited andnow runs an office that oversees five (5) operating companies. Patrick Rooney (Non-Executive Director) AICO Africa Limited 2011
  12. 12. Group Companies’ Board Composition AICO Africa Limited 2011 Subsidiaries Joint Operations The Cotton Company of Zimbabwe Limited Olivine Holdings (Private) Limited AF hau - Chairman N M Ndudzo - Chairman D Machingaidze - Managing Director* P St L Devenish - Deputy Chairman T Chaparamhosva (effective 1 April 2011)* J Mushangari - Managing Director* J Chindanya* CC Chitiyo (Ms) CC Chitiyo (Ms) O Dangwa (Mrs) P St L Devenish M Dzinoreva CB Mudzimuirema S Mavende* L Preston S Mazhandu F Kembo CB Mudzimuirema E Mugamu Scottco (Private) Limited AF Nhau P St L Devenish - Chairman A Kamali - Managing Director* S Bobat CB Mudzimuirema V Patel Seed Co Limited F Rwodzi - Chairman M Nzwere - Group Chief Executive* P St L Devenish DEB Long J Matorofa* CB Mudzimuirema JP Rooney CMB Utete (Dr) D Garwe (Dr) C Kabaghe MS Ndoro Exhort Enterprises (Private) Limited P St L Devenish - Chairman CB Mudzimuirema Zambrano Investments (Private) Limited P St L Devenish - Chairman CB Mudzimuirema * Executive Director10
  13. 13. Board Committees and Group ManagementBoard Committees Group ManagementAudit Committee AICO Africa LimitedCC Chitiyo (Ms) - Chairperson P St L Devenish - Group Chief ExecutiveCB Mudzimuirema CB Mudzimuirema - Group Finance DirectorAF Nhau P Manamike - Group Company SecretaryJP Rooney A Nyakonda - Group Audit ManagerRemuneration Committee The Cotton Company of Zimbabwe LimitedBL Nkomo - Chairman D Machingaidze - Managing DirectorCC Chitiyo (Ms) T Chaparamhosva - Finance Director (effective 1 April 2011)P St L Devenish J Chindanya - Director, Crop Procurement and InputsInvestment Committee Seed Co GroupAF Nhau - Chairman M Nzwere - Group Chief ExecutiveCC Chitiyo (Ms) J Matorofa - Group Finance DirectorP St L Devenish D Zaranyika - Managing Director, Seed Co ZimbabweCB Mudzimuirema G Bwanali - Managing Director, Seed Co ZambiaJP Rooney E Mhandu - Managing Director, Quton Seed Company D Phiri - Managing Director, Seed Co Malawi D Clements - Managing Director, Seed Co Tanzania 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 C Murove - Operations Director AICO Africa Limited 2011
  14. 14. Corporate Governance Statement AICO Africa Limited 2011 The Group is committed to the principles of ethics, transparency, The Boar d of AICO Africa Limited comprises seven non- responsibility, integrity and accountability in its dealings with executive Directors and two executive Directors. The Chairman its stakeholders. of the Boar d is a non-executive dir ector. All Dir ectors have access to outside pr ofessional advice through the Company The primary objective of corporate gover nance systems is to Secretary who is r esponsible to the Boar d for ensuring that ensure that Directors, Executives and Management carry out correct procedures are followed. their responsibilities effectively and ef ficiently. The Gr oups structures are, therefore, continuously reviewed and updated The Group Chief Executive is r esponsible for the day-to-day to ensur e compliance with applicable laws and generally management of the Company . Ther e is clear separation of accepted corporate governance practices. responsibility between the Boar d and Management. FINANCIAL STATEMENTS ATTENDANCE OF BOARD MEETINGS The Dir ectors r ecognise that they ar e r esponsible for the The Boar d met six times during the year under r eview. The preparation and integrity of the financial statements and related number of Dir ectors meetings and the number attended by information contained in the annual r eport in a manner that each Director during the period are: fairly presents the state of affairs and the results of the Groups operations. Held Attended I Chagonda** 3 1 The annual financial statements have been independently CC Chitiyo 6 6 examined by the Companys external Auditors. Their report is P St L Devenish 6 6 presented on page 24. F Montfort* 1 1 CB Mudzimuirema 6 6 INTERNAL CONTROL The Gr oup has developed and continues to maintain and AF Nhau 6 6 develop systems of internal control. These controls are designed BL Nkomo 6 6 to provide reasonable, but not absolute, assurance as to the LF Preston 6 3 reliability of the financial statements and to safeguar d, verify JP Rooney** 4 4 and maintain accountability of assets and to prevent and detect F Rwodzi** 3 3 misstatement and loss. The internal auditors have been tasked P Sithole* 2 2 to ensure compliance with policies, pr ocedures and inter nal * Resigned during the year controls and systems through continuous programmes that are ** Appointed during the year designed to cover all risks and pr ovide regular feedback to Board meetings are held at least once every quarter. executive management and the Audit Committee. The internal audit function has fr ee and unr estricted access to the Audit BOARD COMMITTEES Committee. The Board has established committees to assist in discharging its duties as follows: BOARD OF DIRECTORS All companies in the Group have unitary board structures. The • Audit Committee; boards meet regularly, retaining full and effective control over • Executive Committee; the r espective companies and monitor the performance of • Remuneration Committee; and executive management. • Investment Committee. To ensure unity of objectives and pr oper co-ordination, the Audit Committee Company elects management r epresentatives to sit on the The Audit Committee, which includes one executive Director, various boards. Each board is responsible for maintaining the consists of thr ee non-executive Dir ectors and is chair ed by direction and control of its company through: one of the non-executive Dir ectors. The Audit Committee is responsible for: • Setting and playing a prominent role in strategic development as well as determining the strategic direction of the Company • Internal and external audit policy; and/or the Group; • R e v i e w i n g t h e p e r f o r m a n c e o f e x t e r n a l a u d i t o r s ; • Determining performance targets and the remuneration of • Reviewing the scope, adequacy and ef fectiveness of the Executive Management; internal audit function; • Monitoring management performance against tar gets; • Reviewing and acting on matters r elating to financial and • Liaising with internal and external Auditors on the financial internal control, fraud, regulatory compliance, accounting and business affairs of the Company; policies, financial reporting and disclosure; • Reviewing, deciding and acting on material business • Reviewing financial statements prior to publication and transactions and/or matters; and adoption by the Board of Directors; • Promoting ethical conduct in business affairs of the Group. • Reviewing material financial transactions and projects prior to adoption by the Board of Directors; and The composition of each board ensures a well-balanced team • Reviewing business risks and the adequacy of the with a br oad range of business and industry expertise. Companys risk management systems and pr ocesses.12
  15. 15. Corporate Governance Statement (continued)Both the internal Audit function and the external Auditors have The Investment Committee meets, largely, on an ad hoc basis.unrestricted access to the Audit Committee and all of their It met three times during the year. significant findings ar e brought to the attention of the AuditCommittee and the Board. Held Attended CC Chitiyo 3 3 The Audit Committee meets at least once every quarter . P St L Devenish 3 3 CB Mudzimuirema 3 3 The Committee met six times during the year . Members AF Nhau 3 3 attendance of these meetings is shown below: : JP Rooney 3 2 Held Attended Executive Committee I Chagonda 2 2 The Executive Committee consists of the two executive CC Chitiyo 6 6 Directors and selected senior executives. CB Mudzimuirema 6 6 AF Nhau 6 5 The Committees functions are: BL Nkomo 4 4 JP Rooney 3 2 • Assisting the Gr oup Chief Executive Of ficer in managing the Group;Remuneration Committee • Providing a working link between the Boar d and seniorThe Remuneration Committee consists of two non-executive management;Directors, as well as the Group Chief Executive, and is chaired • Ensuring that strategic decisions are effectively implemented; by a non-executive Director. and • Ensure that management and operations performance are The Committees tasks ar e to r eview, assess and make adequately and r egularly monitor ed in-between Boar drecommendations to the main Board on the following matters: meetings.• The Group’s remuneration policies in general; The Committee meets at least once each month.• Remuneration packages for top management, especially Executive Directors; SHARE DEALINGS BY DIRECTORS, MANAGEMENT AND ST AFF• Incentive schemes including shar e incentive plans; The Groups policy concerning dealings in the shares of AICO• Measurement criteria for the performance of executive Africa Limited and its listed subsidiaries, by Dir ectors, Directors. Management, Staff and their immediate families, stipulates the periods when they can or cannot deal in its shar es.The Remuneration Committee met twice during the year .Members attendance of these meetings is shown below: DIRECTORS INTERESTS Held Attended The Dir ectors of the Company ar e r equired to disclose, in writing, any material inter est in any significant contract with CC Chitiyo 2 2 the Company that may result in a conflict or potential conflict P St L Devenish 2 2 of interest. No such conflicts wer e reported during the year. BL Nkomo 2 2 EMPLOYEE RELATIONSInvestment Committee The Group has formally constituted works councils in eachThe Investment Committee consists of thr ee non-executive operating company. These deal with issues that af fect theDirectors and two executive Directors. employees directly and provide platforms for:The Committee is responsible for: • Productivity improvements; • Information sharing and dissemination;• Providing advice to the Board in establishing policies related • Enhancing good employer/employee r elations; to investments and making recommendations thereon to • Consultation and dispute/conflict r esolution; and the Board for approval; • Collective bargaining.• Reviewing, approving and recommending to the Boar d investment transactions that management may consider within the investment guidelines;• M o n i t o r i n g t h e m a n a g e m e n t o f i n v e s t m e n t f u n d s ;• Evaluating investment performance, taking into account investment policies, guidelines and risk levels;• Monitoring, as required, staffs compliance with guidelines and pr ocesses of the investment policy; and• Reviewing annually the continued appropriateness of the Investment Policy and recommending to the Boar d any proposed modifications. AICO Africa Limited 2011
  16. 16. Chairman’s Statement AICO Africa Limited 2011 I am pleased to pr esent my r eport for Cotton and 30% profit growth in Seed. the year ended 31 Mar ch 2011. T h i s was, however , negated by the FMCG business and discontinued ECONOMIC OVERVIEW operations which r ecorded losses of The macro-economic environment was US$4.5 million and US$1.1 million, fairly stable for the year under r eview respectively. with modest economic growth recorded. Access to capital r emains highly Aggregate Group sales volumes fell by problematic and as a r esult economic 2% to 19 0,150 tonnes due to low recovery will be slow and arduous. Bank carryover stocks in Cotton and deposits rose steadily during the year stagnation in FMCG volumes. highlighting impr ovements in trading Nevertheless, Gr oup r evenue of conditions, volumes and business profits US$210.6 million gr ew by 29 % on though this will continue to be retarded account of firmer commodity and sales by shortage of capital. prices throughout. Liquidity, which seemed to ease in th e Gross margins improved throughout the early part of the year , tightened in Group, resulting in a composite gr oss t he second half of the year due to an margin of 41% (last year: 33%) while apparent slowdown of of fshore loans trading profit margin rose to 16% from and other FDI inflows. Consequently , 8% last year as a result. borrowing costs continue to be high and local loan tenures remain largely Group profit from operations of US$33.2 short term - to the detriment of business. million grew 160% over prior year. Profit before tax r ose by 311% to US$20.0 Bekithemba Nkomo Although there have been some notable improvements in the supply of coal, million, after charging interest costs of US$17.2 million. Group net profit from power shortages remain unresolved and continuing operations of US$18.6 million are a substantial constraint to the was 309 % higher than prior year . expansion and smooth running of business activities. Group attributable ear nings impr oved by US$13.2 million from a loss of US$4.3 Despite the above constraints the agro million - a gr owth of 309 % over prior Global agro sector has steadily recovered and crop year. production is on the incr ease. Global commodity prices a g ro c o m m o d i t y p r i c e s h a v e b e e n Net cash utilised in operations was firming against a background of adverse US$29.0 million and was mainly a result have been firming weather-induced supply constraints in of incr eased investment in input some parts of the world. schemes, as well as build up of stocks against a background and r eceivables. Capital expenditur e OPERATIONS REVIEW amounted to US$12.8 million for the of adverse weather- The Group’s operations continued on a year. sound footing, except for the FMCG induced supply business where operations continue to Going forward, anticipated injection of be negated by lack of working capital. capital into Olivine will turn this business constraints in some The Cotton and Seed businesses both around while buttressing overall growth recorded significant growth in volumes in performance of the Group. parts of the world. and pr ofits. The FMCG business is in the process of being r ecapitalised and TREASURY with this we expect this business to The Group indicated earlier in the year return to profitability. Going forward, the its intention to raise capital, including Group will continue to focus on its three equity. However, work and consultations (3) big businesses - Cotton, Seed and in the course of the year has revealed a FMCG. Exhort, the fr ozen vegetables lack of support for the equity option from business, has been closed down and is shareholders. The Gr oup Boar d has, being disposed of. Scottco - the spinning therefore, decided to pursue alternative arm, is still operational but has been put courses of action. Primary among these up for sale as it is no longer in line with is to harness internally generated cash the Group’s future plans. flows fr om anticipated str ong performance acr oss the Gr oup, GROUP FINANCIAL PERFORMANCE complemented by long term debt. Group financial performance impr oved significantly over prior year on the back of a US$13.5 million tur naround in14
  17. 17. Chairman’s Statement (continued) OUTLOOK Mr Patison Sithole, who had been the We expect much stronger performance Chairman for the Group for the past five across the Gr oup in the new financial years, stepped down from the Board on year. Performance will be driven by 10 November 2010, after serving the volume gr owth and ef ficiency Group Board for a total of ten years. Mr improvements. Recent initiatives to Bekithemba Lloyd Nkomo, who was the recapitalise Olivine should see the Audit Committee Chairman during this turnaround of this business and its return time, took over fr om Mr Sithole as to pr ofitability. In Seed and Cotton, Chairman of the Board. The Board and activities on the gr ound are promising staff at AICO Africa Limited wish to take and everything being equal, we should this opportunity to thank Mr Sithole for witness further gr owth in volumes, his leadership, counsel and guidance revenue and profits. during what was a most difficult period. We w i s h h i m w e l l i n h i s f u t u r e DIVIDEND endeavours. We expect Due to the prevailing liquidity challenges and concurrent funding requirements in ACKNOWLEDGEMENTS much stronger the Gr oup, the Dir ectors have not declared a dividend. Finally, I wish to extend my and the B o a rd s a p p r e c i a t i o n t o D i r e c t o r s , Management and Staff across the entire performance DIRECTORATE Group for their invaluable service and The Board wishes to advise that Messrs contribution in tur ning ar ound the across the Patrick Rooney , Filip Montfort, Farai Rwodzi and Innocent Chagonda wer e fortunes of the Gr oup. I also want to take this opportunity to thank my appointed Directors of the Company with colleagues on the Boar d for their wise Group in the new effect from 6 August 2010, 12 October counsel and continuing support. 2010, 1 December 2010 and 1 January To g e t h e r, w e w i l l a c h i e v e m o r e . financial year. 2011, r espectively. Mr Filip Montfort, however, subsequently r esigned fr om the Board with ef fect from 12 January 2011. The Boar d extends a warm welcome to these new members and BL Nkomo looks forwar d to their valuable CHAIRMAN contribution. 22 June 2011 15 AICO Africa Limited 2011
  18. 18. Directors’ Responsibilty Statement AICO Africa Limited 2011 ACCOUNTING RECORDS AND FINANCIAL ST ATEMENTS ACCOUNTING POLICIES The Dir ectors ar e r esponsible for the maintenance of adequate In preparing the Group financial statements set out on pages 26 to accounting records as well as the pr eparation and integrity of the 60 appropriate accounting policies have been applied, as have the financial statements and related information contained in the annual relevant International Financial Reporting Standards, unless otherwise report in a manner that fairly pr esents the state of af fairs and the stated, and ar e supported, wher e necessary, by r easonable and results of the Groups operations. prudent judgement and estimates. EXTERNAL AUDITORS ROLE APPROVAL OF FINANCIAL STATEMENTS The external auditors are responsible for carrying out an independent The financial statements for the year ended 31 March 2011 have been examination of the financial statements in accordance with International approved by the Board of Directors and are signed on its behalf by: Standards on Auditing and r eporting their findings ther eon. SYSTEMS OF INTERNAL CONTROL The Directors are also responsible for the Groups systems of internal financial control. These are designed to provide reasonable, but not BL Nkomo P St L Devenish absolute, assurance as to the r eliability of the financial statements CHAIRMAN GROUP CHIEF EXECUTIVE and to safeguard, verify and maintain accountability of assets and to prevent and detect misstatement and loss. Nothing has come to the 22 June 2011 attention of the Directors to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the year under review. GOING CONCERN After reviewing the Groups budgets and related financial projections, the Directors have no reason, in all material respects, to believe that the Group will not continue to operate in the for eseeable future. Accordingly, these financial statements have been pr epared on a going concern basis.16
  19. 19. Group Chief Executive’s Report AICO Africa Limited 2011 OVERVIEW forward. The total cost of this exer cise amounted to US$2.7 million. Statutory The year to Mar ch 2011 was a much Instrument 142 of 2009 (Cotton Sector improved year for the AICO Group. Seed Co Regulations) was amended during the year. continued on its growth path producing an This has resulted in a more stable marketing excellent set of r esults. Cottco showed a season. We continue to work with our peers reasonable profit which had looked doubtful in the industry and expect these changes to even at mid-year and Olivine continued to further consolidate industry viability and report losses as a result of lack of availability orderliness. of working capital. Cottco invested US$11.7 million in cr op The environment has on balance been kind inputs during the year and this should result to the Group. The Government of National in higher crop intake volumes as indications Unity (GNU) in Zimbabwe has pr ovided a on the ground suggest. World lint prices rose stable platform on which to operate, the significantly and pushed above 200USc/lb financial system is still under strain with in February 2011, though the company did liquidity constraints and the effective absence not benefit because lint stocks had been of a lender of last resort. The country enjoyed sold by this time. The above factors, in spite a moderate rainy season with a second half of the receding prices, are a good basis for drought having a fairly large impact on both a larger national crop, intake volumes and the cotton and maize crops. Conditions in improvement in profits in the new financial the region continued to be stable with a year. The business r ecorded a US$13.5 conducive environment for investment and million turnaround to post a profit before tax operations being the key factor. East Africa Patrick Devenish experienced a drought which, while bad for of US$3.4 million. Profit after tax amounted to US$6.8 million after a deferred tax credit Kenya and Tanzania, could well translate of US$3.6 million. into incr eased sales for Seed Co. Independence for Southern Sudan is exciting for all of Africa but especially for AICO as Seed Seed Co sales volumes increased across all The country both our Cotton and Seed businesses see the seed business units resulting in a growth big opportunities ther e. The situation in enjoyed a Malawi, which has experienced political and in overall volumes of 15%. In turn, revenue of US$98 million was 27% higher than last financial instability for most of the year , is moderate rainy cause for concer n. Commodity prices in year. Hybrid maize and cotton seed wer e general and soft commodities in particular the biggest contributors to this gr owth. season with a have enjoyed a great run and this has been Overall, seed production increased by 45% beneficial to all Gr oup companies. on the back of incr eases in hectar es and second half better yields. The pr oduction bottlenecks which were affecting Seed Cos capacity to OPERATIONS REVIEW drought having a adequately meet demand have been Cotton resolved and we expect steady and fairly large impact The national crop for the year improved to persistent growth in sales volumes in the 268,000 tonnes fr om 210,000 tonnes last years ahead. Seed pr oduction activity in on both the cotton year. Cottcos intake volumes also improved East Africa is intensifying and demand for to 111,075 tonnes compared to the previous Seed Cos varieties continues to gr ow. and maize crops. years 98,091 tonnes, representing a growth Inaugural seed pr oduction activities in of 13% for the period. This volume would Tanzania and Ethiopia point to a very have been significantly lar ger had buyers promising futur e in these markets. who did not contribute to cr op production not been licensed. The new factory and office block in Lusaka, Zambia, ar e now complete and this will Revenue for the year was 38% higher than contribute significantly to operating prior year due to an incr ease in both lint efficiencies and cost reductions. Seed Co volumes and prices. However, the peak lint Zimbabwe has replaced a large part of its prices enjoyed in the last quarter of the 2010 plant and this will lead to improvements in calendar year will only be realised in the new quality and efficiencies. Ground has been financial year, as stocks had alr eady been broken in Malawi and construction of the sold when this occurred. new factory and of fices will begin shortly. The company will not allow the temporary A voluntary r etrenchment package was instability in this important market to stand implemented and concluded during the year in the way of its expansion plans. Quton under review and we expect a much leaner won a tender to supply impr oved acid and more cost effective staff structure going18
  20. 20. Group Chief Executive’s Report (continued) delinted seed to the T anzanian cotton People industry last year and this pr oject is Any success that the Group has enjoyed is proceeding according to plan. The Seed directly attributable to the quality of the business posted a profit after tax of US$17.4 people who make it work. AICO as an million representing an increase of 30% over organisation is extremely proud of the quality the previous year. of the people who run it and tr easures the relationship with its people above all else. Fast Moving Consumer Goods (FMCG) - All Gr oup companies have detailed 49% AICO Share succession plans which focus on training Olivine continued to suffer from liquidity and and development as their main component. working capital constraints. This resulted in low production levels and stagnant sales Special mention needs to be made of our volumes. Revenue of US$18.3 million is 23% four key executives, David Machingaidze at above the prior year of US$14.9 million, due Cottco, Jonas Mushangari at Olivine, Morgan to higher relative prices. Low margins and Nzwere at Seed Co and Abbas Kamali at high operating costs resulted in a loss before Scottco, together with their respective teams. tax of US$4.5 million. All three have made immense contributions to the success of their or ganisations over Subject to timely injection of capital, this the year and have displayed unwavering business will r ecord a pr ofit in the new commitment to achieving Group goals. At AICO as an financial year. In this regard, the shareholders have agreed to put in the r equired capital, Cottco, David has streamlined the business and achieved profitability under very difficult organisation is starting with a total of US$10 million to be circumstances. Jonas at Olivine has done a injected befor e end of June 2011 and a sterling job of getting critical maintenance extremely proud further US$5 million by end of July 2011. done with limited r esources and has These amounts will be used for working maintained the morale of his team in of the quality of capital purposes (mostly raw materials) and preparation for the growth of this business to restructure some of the short term debt. in the new year . Morgan at Seed Co has the people who We ar e, ther efore, excited about the grown existing businesses and laid a platform prospects of this business going forwar d. to continue the Companys exciting growth run it and trajectory. Mention must be made of Group Spinning Finance Director, Bernard Mudzimuirema, treasures the Scottco yar n prices significantly lagged who has managed the finances under difficult relationship with behind lint prices for most of the year. This mismatch in prices made marketing of yarn circumstances and played a significant role in the Gr oups impr oved performance. its people above and maintaining pr ofitability ther eof challenging. As a result, volumes were low Corporate Governance all else. and the business was put into car e and The Group sees Corporate Governance as maintenance for most of the year in or der a key component of financial success and to avoid the losses and borr owings that as such a lot of effort goes in to building and would have arisen fr om (i) the above maintaining high standards. AICO has a very phenomenon and (ii) the need to incr ease strong internal audit function which on the working capital. one hand supervises the development and implementation of tight systems and On this basis, volumes were in line with prior processes and on the other acts as a strong year. Revenue of US$6.2 million was 6% support and complement to the exter nal higher than last year due to relatively firmer Auditors. prices. Profit before tax amounted to US$0.8 million. The business had no outstanding Outlook and Strategy loans at 31 March 2011. Once again management feels bullish about future prospects for the Group. The spike in Corporate Social Responsibility (CSR) cotton lint prices to US$2.20 a pound in The focus of CSR activities continues to March 2011 was somewhat beneficial to focus on the young, the disabled and the Cottco. Prices have, however, now dropped aged. As the business enjoys greater success to about US$1.00 and seed cotton prices the size of these programmes will increase. paid to gr owers need to be managed The need to focus on planting indigenous accordingly. The cotton buying season is trees has come to the attention of the Group drawing to a close and it seems the cr op and this will become a component of the may be a little smaller than originally programme in the future. anticipated. Cottcos market share is, at the time of writing, above last years position. AICO Africa Limited 2011
  21. 21. Independent Auditor’s Report Group Chief Executive’s Report (continued) AICO Africa Limited 2011 After a disappointing year last year, Olivine financial year. The Directors of a company is being recapitalised and management are are critical to its success and AICO makes confident that this will result in a turnaround a very str ong ef fort to engage the best in the near future. Demand for key products Directors in the market. On behalf of The Group has remains str ong and we look forwar d to management I would like to thank all enjoyed a much satisfying this. Directors for their continuing contributions to the Gr oup, which very often go above improved year and this Seed Co is continuing to expand into new and beyond the call of duty. markets and this will see pr ofits growing. is due primarily to the The company is incr easing its spend on work of all members of research and this will allow it to embrace P St L Devenish new technologies which will accelerate the staff. I would like to pace of product development. Relationships GROUP CHIEF EXECUTIVE with CGIAR (Consultative Gr oup in acknowledge the Agricultural Research) organisations such 22 June 2011 contribution of every as CIMMYT (Worldwide Centre for Maize and Wheat Impr ovement) and ICRISA T single member of the (International Crop Research Institute for the Semi Arid Tropics) are excellent and these AICO Group and look are gr eat sour ces of new germ plasm. forward to better Appreciation performance in the The Group has enjoyed a much impr oved year and this is due primarily to the work of new financial year. all members of staf f. I would like to acknowledge the contribution of every single staff member of the AICO Gr oup and look forward to improved performance in the new20
  22. 22. Directors’ Report AICO Africa Limited 2011 The Directors have pleasure in presenting their report together with OPERATING RESULTS the audited financial statements for the year ended 31 March 2011. The results for the year from continuing operations are summarised below and are set out in more detail in the accompanying financial PRINCIPAL ACTIVITIES statements. Commentary on these r esults is also pr ovided in the AICO Africa Limited (AICO) is a diversified agro-industrial conglomerate Chairmans and Group Chief Executives reports. with interests in cotton ginning and marketing, spinning, fast moving consumer goods and pr oduction and marketing of planting seed. The Company was incorporated in July 2008 and was subsequently reverse listed on the Zimbabwe Stock Exchange on 1 September 31 March 31 Mar ch 2008 in place of The Cotton Company of Zimbabwe Limited and thus 2011 2010 emerged as the new investment holding entity for the Gr oup. US$000 US$000 DIRECTORS RESPONSIBILITY STATEMENT Profit before taxation 20,018 4,875 The Directors believe that the financial information that has been Income tax expense (1,450) (339) presented fairly reflects the underlying performance of the Group and Profit after tax - continuing its entities for the years then ended and its financial position as of operations 18,568 4,536 those dates. Loss after tax from discontinued operations (1,089) (2,139) SHARE CAPITAL Profit for the year 17,479 2,397 The authorised share capital of the Company is 1,500,000,000 ordinary shares, of which 531,289 ,029 ar e issued and fully paid. Attributable to: Equity holders of the parent 8,946 (4,270) Following the Registrar of Companies February 2010 circular requiring Minority interest 8,533 6,667 that all companies re-denominate their share capital to United States 17,479 2,397 dollars, the Directors obtained the approval of the shareholders at the last Annual General Meeting to r edenominate the Companys Share capital 5,313 - share capital. The Companys authorised share capital was thus re- Capital reserves 33,049 52,536 denominated into 1,500,000,000 ordinary shares with a nominal value Retained earnings 42,233 29,919 of US$0.01 per share, and issued share capital of 531,289,029 ordinary Equity attributable to equity shares with a nominal value of US$0.01 per shar The re-denominated e. holders of the parent 80,595 82,455 share capital was funded out of the non-distributable reserves of the Company. US$5.3 million was transferr ed from capital reserves to Non-controlling interest 35,957 32,117 share capital for this purpose. Total equity 116,552 114,572 Movements in the issued share capital for the year were as follows: CAPITAL EXPENDITURE Capital expenditure for the year ended 31 March 2011 amounted to US$12.8 million and capital expenditur e for the following year is 31 March 31 March budgeted at US$11.9 million. 2011 2010 TREASURY Issued share capital The Group indicated earlier in the year its intention to raise capital, as at 1 April 2011 531,065,109 530,512,042 including equity. However, work and consultations in the course of Share options exercised 223,920 553,067 the year has r evealed a lack of support for the equity option fr om Issued share capital shareholders. The Group Board has, therefore, decided to pursue as at 31 March 2011 531,289,029 531,065,109 alternative courses of action. Primary among these is to har ness internally generated cash flows from anticipated strong performance RESERVES across the Gr oup, complemented by long term debt. The movements in the r eserves of the Gr oup are as shown in the statement of changes in equity. On the other hand, funding issues in Olivine are now being attended to. Both AICO Africa Limited and Industrial Development Corporation DIRECTORS SHAREHOLDING The details of Directors shareholding are shown in the shareholder of Zimbabwe Limited have now agreed to inject the required capital analysis r eport accompanying the financial statements. starting with a total of US$10 million to be injected befor e the end of June 2011 and a further US$5 million by end of July 2011. A further IMPAIRMENT US$5 million will be injected by 31 January 2012. Of these amounts, The income statement includes impairment losses of US$4.8 million US$12 million will be equity with the balance being made up of long for the Group, US$0.8 million of which was in the Cotton business, term debt. These amounts will be used for working capital purposes US$0.2 million in the Spinning business, US$3.2 million in the Seed (mostly raw materials) and to restructure some of the short term debt. business, whilst US$0.6 million was in the FMCG business. Impairment With this, the Directors expect this business to return to profitability losses were in respect of trade and other receivables, inventories as in the ensuing financial year. well as property, plant and equipment.22
  23. 23. Directors’ Report (continued)DIVIDENDSDue to the pr evailing liquidity challenges and concurr ent fundingrequirements in the Group, the Directors have not declared a dividend.DIRECTORSIn terms of Article 32.1 of the Companys Articles of Association,Messrs CB Mudzimuirema and AF Nhau and Ms CC Chitiyo r etireby rotation. Messrs F Rwodzi, I Chagonda and JP Rooney, who wereappointed during the year, will step down. Both r etiring Directors,and the new Directors, being eligible, offer themselves for re-election.AUDITORSMembers will be asked to approve the remuneration of the auditorsfor the year ended 31 March 2011 and to consider the reappointmentof KPMG as auditors to the Company for the ensuing year .For and on behalf of the BoardP ManamikeCOMPANY SECRETARY22 June 2011 23 AICO Africa Limited 2011
  24. 24. Independent Auditor’s Report AICO Africa Limited 2011 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 Report on the financial statements We have audited the accompanying financial statements of AICO Africa Limited (the Company) and its subsidiaries (the Group), set out on pages 26 to 60, which comprise the statement of financial position at 31 March 2011 and the 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 preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Companies Act (Chapter 24:03) of Zimbabwe, and for such inter nal control as the Directors determine is necessary to enable the pr eparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. W e 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 pr ocedures to obtain audit evidence about the amounts and disclosur es in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers inter nal control relevant to the entitys 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 entitys 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 suf ficient and appr opriate to pr ovide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company and Group at 31 March 2011, and the Company and Groups financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act (Chapter 24:03) of Zimbabwe. Emphasis of matter Without qualifying our opinion, we draw attention to note 30, which indicates that that Groups joint venture, Olivine Holdings (Private) Limited (Olivine) incurred a loss before tax of US$9 213 203 (2010: US$3 004 273 loss) for the year ended 31 Mar ch 2011 and has been facing working capital challenges. These conditions, along with other matters as set forth in note 30 to the financial statements, indicate the existence of a material uncertainty which may cast significant d oubt on Olivines ability to continue as a going concer n. This note also indicates the basis of preparation of Olivines financial statements. KPMG Chartered Accountants (Zimbabwe) Harare 9 August 2011 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.24
  25. 25. STATEMENTS OF FINANCIAL POSITIONAs at 31 March 2011 GROUP COMPANY 31 March 31 March 1 April 31 March 31 March 1 April 2011 2010 2009 2011 2010 2009 Notes US$000 US$000 US$000 US$000 US$000 US$000ASSETSNon-current assetsIntangible assets 9 - - - - -Property, plant and equipment 7 104,203 116,800 132,770 441 222 -Investment property 8 310 684 1,141 - - -Investments held in subsidiaries 9 - - - 174,814 120,074 113,537Investment held in joint venture 10 - - - 6,825 6,825 6,825Investment held in associate 11 39 65 65 - - -Total non-current assets 104,561 117,549 133,976 182,080 127,121 120,362Current assetsBiological assets 13 403 588 777 - - -Inventories 14 55,304 37,369 29,624 - - -Inputs scheme receivables 15 21,389 9,717 5,206 - - -Prepayments 13,975 12,004 6,205 3 10 -Trade and other receivables 16 42,994 29,885 30,788 3 64 -Other financial assets 17 2,956 2,131 583 - - -Assets classified as held for sale 26 2,402 3,277 51 - - -Bank and cash balances 18 7,751 12,161 5,700 759 39 -Balances owed by Group companies 21 - - - 6,944 5,803 5,678Total current assets 147,174 107,132 78,934 7,709 5,916 5,678Total assets 251,735 224,681 212,910 189,789 133,037 126,040EQUITY AND LIABILITIESCapital and reservesShare capital 22 5,313 - - 5,313 - -Capital reserves 22 33,049 52,536 52,143 164,128 118,145 111,946Retained earnings 42,233 29,919 33,512 (1,652) (1,419) (1,175)Equity attributable to equity holders of the parent 80,595 82,455 85,655 167,789 116,726 110,771Non-controlling interest 35,957 32,117 29,621 - - -Total equity 116,552 114,572 115,276 167,789 116,726 110,771Non-current liabilitiesBorrowings 23 14,480 10 189 - - -Deferred tax liabilities 12 18,793 25,974 39,589 3,202 250 -Finance lease liabilities - third party 25 194 258 - - - -Total non-current liabilities 33,467 26,242 39,778 3,202 250 -Current liabilitiesBorrowings 23 47,377 48,528 35,020 - - -Trade and other payables 24 19,539 20,626 15,646 120 40 -Finance lease liabilities - third party 25 424 518 - - - -Taxation 3,365 4,581 1,724 10 10 -Bank overdrafts 18 30,371 8,767 5,466 - - -Liabilities classified as held for sale 26 640 847 - - - -Balances owed to Group companies 21 - - - 18,668 16,011 15,269Total current liabilities 101,716 83,867 57,856 18,798 16,061 15,269Total equity and liabilities 251,735 224,681 212,910 189,789 133,037 126,040 B NKOMO - CHAIRMAN P DEVENISH - GROUP CHIEF EXECUTIVE 22 June 2011 22 June 201126 AICO Africa Limited

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