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Scope of this Report

We are pleased to present the annual report for Dairibord Holdings Limited, a company listed on Zimbabwe Stock Exchange (ZSE) which include Dairibord Zimbabwe (Private) Limited, Martindale (Trading Private) Limited t/a Lyons, Dairibord Malawi Limited, Kutal Investments (Private) Limited and NFB Logistics (Private) Limited for the year ended 31 December 2015.

This report is targeted at a broad range of our stakeholders with the aim of presenting a balanced review of material issues from our operations. The report includes our operations in Zimbabwe and Malawi.

This report is prepared using Global Reporting Initiatives (GRI – G4 Core) Guidelines in measuring our progress towards sustainability. This report is our fourth sustainability report. The previous report was prepared meeting GRI G3.1. Application Level-C reporting requirements.

Our sustainability reporting is integrated with our financial reports. Our financial statements are audited by Ernst & Young Chartered Accountants (Zimbabwe). An independent auditors’ report on the financial statements contained in this report appears on page 39 of this Annual Report.

Forward looking StatementsCertain statements in this report constitute ‘forward looking statements’. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performances, objectives or achievements of Dairibord Holdings to be materially different from future results, performance, objectives or achievements expressed or implied in forward looking statements.

The performance of Dairibord Holdings is subject to effects of changes in the operating environment and other factors. Dairibord Holdings undertake no obligation to update publicly or to release any revision of these forward looking statements to reflect the events or circumstances after the date of publication of these pages or to reflect the occurrence of unanticipated events.

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

Chairman Chief Executive Officer

Overview Corporate Profile 3

Vision, Mission & Values 4

Group Structure 5

Group Brands & Markets 6

Our Business Model 7

Group Financial Highlights 10

Governance, Ethics & EngagementsChairman’s Statement 11

Group Chief Executive’s Review of Operations 14

Corporate Governance & Ethics 19

Daribord Holding Limited Management 21

Sustainability Strategy & Governance 23

Risk Management. 25

Material Issues and Report Boundary 27

Stakeholder Engagement 28

PerformanceSustainability Performance 30

Statement of Directors’ Responsibility 37

Report of Directors 38

Independent Auditors’ Report 39

Annual Financial Statements 40

AnnexureGlossary of Terms 80

GRI Content Index 81

Shareholder Analysis 82

Notice to Shareholders 83

Shareholders’ Calendar 84

Form of Proxy

Loose

Corporate Information 87

Content

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Dairibord Holdings Limited 2015 Annual Report

Dairibord Holdings Limited is a manufacturer and marketer of quality milk, foods and beverages. The company is listed on the Zimbabwe Stock Exchange. Dairibord Holdings Limited has 100% ownership in Martindale Trading (Private) Limited t/a Lyons, Lavenson Investments (Private) Limited, NFB Logistics (Private) Limited, Kutal Investments (Private) Limited and 68.4% shareholding in Dairibord Malawi Limited. Kutal Investments is a property holding company which leases its properties to Group companies. Lavenson Investments (Private) Limited has a 100% ownership in Dairibord Zimbabwe (Private) Limited.

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

(yoghurt, ice creams, condiments and spreads) and beverages (cordials, ready-to-drink dairy and non-dairy, tea and mineral water) which are marketed in both the domestic and export markets.

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

Corporate Profile

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VISIONTo be the leading foods and beverages company in Africa, commanding a position of sustainable market leadership driven by strong

brands and superior human capital.

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

VALUESInnovation: We are committed to innovation and addressing changing customers’ needs and we will continuously develop our

processes to produce a wide variety of quality new products and services.

Commitment: Customer satisfaction is the yardstick against which our company’s performance in all spheres will be measured.

Exceeding our customer needs and expectations will be a commitment shared by every person in the company.

Professionalism: We will recruit and develop a well trained work force in which job competence, performance and succession

stability are the primary objectives.

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

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

with stakeholders.

Accountability: We take responsibility for our own actions.

Sensitivity: We will provide a safe and positive working environment for our employees. Openness, two way communication,

personal development, trust and recognition of achievement will be fostered to achieve our mission. Our goal is to be responsible

and accountable to our shareholders through value creation in which sustainable profitability is a key requisite. We have developed

and maintained a well-documented management system supported by an internationally recognized up-to-date enterprise wide

management system.

Fairness: We will be fair in all our dealings

Zero Tolerance to Corruption: Our strategies and operations are anchored on principles of sound corporate governance. We shall

not tolerate any form of corrupt dealings with our stakeholders. We will embrace ethical relationships with suppliers, employees,

government, customers, consumers and regulatory authorities. To this end, the Group operates a zero tolerance to corruption policy.

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

Vision, Mission and Values

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Group Structure

Dairibord Holdings Limited

Martindale Trading (Private) Limited

Lavenson Investments

(Private) Limited

Dairibord Zimbabwe (Private) Limited

Dairibord Malawi Limited

Repsol Estates

(Private) Limited

Soilmark Farming (Private) Limited

Rosenwald Estates

(Private) Limited

Goldblum Investments

(Private) Limited

Slimline Investments

(Private) Limited

Lyons Africa (Private) Limited

Lyons Zimbabwe (Private) Limited

Abrupt Enterprises

(Private) Limited

Chatmoss Enterprises

(Private) Limited

Qualinex (Private) Limited

Westside Foods

(Private) Limited

NFB Logistics (Private) Limited

Kutal Investments

(Private) Limited

100%

100%

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

100% 100% 100% 100% 100%

100% 68.4% 100% 100%

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

The table below summarises Dairibord Holdings Brands.

Product Category Product Type Brands

Dairibord Zimbabwe (Private) Limited Lyons Dairibord Malawi Limited

Liquid Milks Long Shelf Life

Cultured

Short Shelf LifeCream

Dairibord Steri MilkDairibord Chimombe

Dairibord Lacto

Dairibord Ching’ombe

Dairibord Chambiko

Dairibord Fresh MilkDairibord Fresh Cream

Foods Yoghurts

Ice cream Sticks

Ice cream Cones

Bulk Ice Creams

Cheese

Sauces & Condiments

Dairibord YummyDairibord Froot Scoop

Nutty SquirrelSkippy ChocBigga BearSuper SplitPlus 20Monsta MouseGreen GiantMello Ice

Divine

Dairibord Real dairy Dairibord Novelty

Lyons MaidSundae Cups

Napoli

Lyons Maid

Rabroy Tomato SauceRabroy Salad CreamRabroy MayonnaiseMagic WhipLyons Peanut Butter

Dairibord YoghurtDairibord YogieYuphoria

Dairibord Ice Lollies

Dairibord Bulk Ice Creams

Gouda and Cheddar

Beverages Ready To Drink

Crushes & Cordials

Bottled Water

Tea

Drinking Chocolate

NutriplusFun ‘n FreshNatural JoyPfuko/Udiwo

Dairibord Aqualite

Cascade

QuenchXtra value

Quick Brew TeaQuick Brew Rooibos

Lyons Drinking Chocolate

Family Choice JuicesJuice Up

Family Choice

Dairibord Aquamadzi

Logistics Refrigerated Insulated Tankers Flat Deck Passenger

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

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

Our stakeholder portfolio and their key interests

Stakeholders Issues of interest

Our Customers and consumers § Customer service § Product quality§ Prices§ Payment terms

Investors § Value creation§ Profitability§ Sustainability

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

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

Communities § Corporate social responsibility§ Clean Environment

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

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Our Business Model (continued)

OUR STRATEGY AT A GLANCE

Focus• Focused on

quality foods and beverages

Strategic priorities• Milk supply development• building superior brands

and human capital• cost reduction and

alignment• Investment in superior

technology

Opportunities• Milk demand exceeding

supply• Consumers increasing

nutrition literacy• Regional markets fuelled by

economic growth• Business realignment

for efficiencies and effectivenes

Core competences• A portfolio focused on

promoting and sustaining good health

• Competitive brands• diversified distribution

channels• Nationwide distribution

network

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Our Business Model (continued)OUR VALUE CHAIN

Stage of the value chain Comments

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

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

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

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

Processes

The Group undertakes value addition by converting the inputs into value added products. The Group operates 5 factories [4 in Zimbabwe and 1 in Malawi]. The logistics business provides transport services to both Group companies and third party customers.

Outputs and distribution channels

Product portfolioThe Group’s outputs are divided into the following portfolio;

i. Liquid Milksii. Foodsiii. Beveragesiv. Logistics

Distribution Channels�� Retail: This channel is composed of large retail outlets and wholesalers.�� Vending: This is a cash channel with independent vendors buying stocks for resale

on a daily basis. The Group’s fast moving lines are sold through this channel mainly Yoghurt, Cascade, Fun’n Fresh, Nutriplus and Ice creams.

�� Franchises: Most franchises operate from the Group’s premises formerly operated as distribution depots.

�� Sales shops: These enable the Group to sell as close to the market as possible. The Group has sales shops at factories, in cities and major towns.

�� Hospitality and institutions: The channel focuses on hotels, schools and similar institutions

�� Exports: trade is done mainly with customers in Zambia, Mozambique and Botswana.

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Group Financial Highlights 2015 2014 Increase/(Decrease) US$ US$ Revenue 103,441,209 99,015,525 4%Operating profit 3,970,058 1,356,521 193%Profit for the year 2,301,673 604,096 281%Net cashflows generated from operating activities 6,029,762 4,365,900 38%Net assets 48,102,112 46,084,681 4% Share information No. No. Number of ordinary shares in issue at the end of period 358,000,858 358,000,858 Weighted average number of shares 358,000,858 358,000,858 Share performance Earnings per share US cents US cents -Basic 0.65 0.20 226%-Diluted 0.65 0.20 226% Closing market price (US cents) 6.90 8.00 (23%)Net asset value per share (US cents) 13.37 12.77 5% US$ US$ Market capitalisation 24,702,059 28,640,069 (14%)

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INTRODUCTIONIt is my pleasure to report improved results for the year ended 31 December, 2015. The results reflect the impact of revenue enhancement measures and cost reduction initiatives implemented by the company at the beginning of the year.

OPERATING ENVIRONMENTZimbabweKey sectors of the economy were weak during the year, culminating in GDP growth of only 1.5%, compared to growth in Sub-Saharan Africa of 3.8%. The economy was negatively impacted by unfavourable weather conditions, job cuts, low consumer disposable incomes and softening commodity prices. According to the Confederation of Zimbabwe Industries (CZI), manufacturing sector survey report, capacity utilisation contracted from 36.5% in 2014, to 34.3% in 2015. Pricing pressure from imported products and weaker regional currencies, against the US Dollar, culminated in further reduction in consumer prices.

Year on Year inflation remained negative, having opened the year at –0.8%, and closing at -2.47%; with food and non-alcoholic beverages inflation at -3.71%. Increased power cuts and water rationing also contributed to the deterioration in the operating environment. This culminated in higher operating costs, as companies resorted to even more expensive alternative sources of supply.

MalawiThe operating environment in Malawi remained difficult due to floods, a weak domestic economy and foreign currency shortages. Year on year inflation was 25% driven by increases in both food and non-food inflation. The high rate of inflation had a negative impact on consumer purchasing power. Exchange rate deteriorated during the period, and resulted in an end of year

exchange rate of MK673: USD1, compared to MK490: USD1 at the beginning of the year.

Erratic supply and increasing cost of utilities, mainly water and electricity, also impacted negatively on operating costs.

GROUP PERFORMANCEMilk supply Group raw milk intake for the year was 26.509 million litres, a decrease of 2% from the previous year. The decline was due to a 24% fall in milk intake for Dairibord Malawi. In Zimbabwe, the Group recorded 3% growth in raw milk intake. This was in line with the growth in national milk production.

The cost of producing raw milk in Zimbabwe remains uncompetitive compared to regional economies.

Volume and Revenue PerformanceSales volumes increased 19% over the prior year, to 83.893 million litres, largely driven by the beverages portfolio, up 45% on 2014. Pfuko, Cascade and Aqualite were the major volume drivers. Liquid milks grew by 1%, while Foods declined 4%. The change in consumer spending patterns, from luxury products to basics, negatively impacted the performance of Foods which comprise mainly of ice creams, yoghurts and condiments.

Revenue grew by 4%, to $103.441 million. The mismatch between revenue growth and volume performance was due to a combination of factors, namely, change in product mix, and a reduction in consumer prices. Average selling prices declined 12%, to $1.22 from $1.39, in the previous year.

Investments in capacity and marketing support had a positive impact on overall top-line performance.

Chairman’s Statement 2015

Dr. L.L. TsumbaChairman

“Pfuko, Cascade and Aqualite were the major volume drivers.”

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ProfitabilityWhile volume and revenue grew by 19%, and 4% respectively, total operating costs increased by a mere 1.7% as the group benefited from the cost reduction and business re-alignment initiatives put in place earlier in the year. Consequently, operating profit for the period improved to $3.970 million, from $1.357 million in 2014. The operating profit margin for the period was 4% up from 1% in 2014.

Key cost containment initiatives implemented include the rationalisation of the Gweru factory, manpower reduction and cost effective procurement of key materials and services. These initiatives will continue to have a positive impact on profitability going forward.

DAIRIBORD MALAWIThe measures implemented to turn around Dairibord Malawi are also beginning to bear fruit. The company recorded an operating loss of $11 197, down from an operating loss of $383 036 in 2014. The board continues to review its position on the investment, taking into account the performance of the business as well as trends in the macro-economic environment.

CASH FLOWSCash generated from operations increased from $4.366 million in 2014 to $6.030 million during the year under review. The improvement was on account of improved business profitability. However, increased working capital requirements, to support growing sales volumes and new product lines, had a negative impact on cash-flows. The cash generated from operations was used to fund capital expenditure of $4.833 million, and to repay $1.274 million of borrowings. Borrowings thus fell by 12%, to $9.749 million.

SUSTAINABILITY REPORTINGThe Group remains committed to conducting its business in a sustainable way. Since 2012, the Group has been reporting on sustainability under the G3 guidelines of the Global Reporting Initiative (GRI). To improve the quality of the report, the company has embarked on a journey to upgrade its reporting to meet the G4 guidelines. This Annual Report has been prepared in line with the G4 reporting framework.

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

OUTLOOKThe macro economic situation is not expected to improve in 2016 largely owing to the El Nino induced drought. The cost of maize and stock feeds is expected to increase. This will put unwelcome pressure on margins.

In the medium to long term, Government efforts to re-engage International Financial Institutions are expected to have a positive impact on major sectors of the economy, including finance, agriculture, mining and manufacturing.

The main focus for 2016 will be to defend volumes whilst pursuing opportunities to optimise the Group’s cost base. The Group is undertaking a restructuring exercise. One of the objectives is to streamline the business by grouping together all related operations.

The new structure will consolidate the three operating companies in Zimbabwe; (Dairibord Zimbabwe (Private) Limited, Martindale Trading (Private) Limited T/A Lyons, and NFB Logistics (Private) Limited), into one operating entity. The new structure will allow the Group to re-model the business and reduce duplication of roles and activities along the value chain.

DIVIDEND As the Group is set to invest in critical performance improvement projects in 2016, the Board has resolved not to declare a dividend for the year ended 31 December 2015.

DIRECTORATEI advise that Mr Herbert Makuwa who was appointed director of the company on 1 March 2006 will be retiring at the next AGM and is not seeking re-election. Mr Makuwa was a member of the Finance and Audit Committee. On behalf of the board, I take this opportunity to thank Herbert for his invaluable contribution to the company over the years and wish him the very best in the future.

APPRECIATIONI take this opportunity to express my appreciation to our various stakeholders, employees, management and my fellow board members for their efforts in turning around the performance of the business.

DR. L. L. TsumbaChairman10 March 2016

Chairman’s Statement 2015 (Continued)

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Group Chief Executive’s Review of Operations

Anthony MandiwanzaGroup Chief Executive

OVERVIEWBusiness realignment to address emerging consumer needs and initiatives to reduce operating costs remained the key focus areas for the Group during the period under review. Despite the challenging operating environment, the Group recorded significant progress in building a sustainable business model. Key performance highlights are:• 193% improvement in operating profit over prior year. • New products contribution increasing to 12% of total revenue. • Gweru factory rationalisation following soon after the

commissioning of the Chipinge Steri Milk plant. The Group ended the year with four (4) factories in Zimbabwe from a total of five (5) in the previous year.

• Continuous head count reduction to realign with reduced number of factories. At the end of the year, the Group had a staff complement of 1451 employees from 1 478 the previous year.

• Recapitalisation to support new products, line extensions and increasing capacity for constrained lines. Capital expenditure of $4.622 million was deployed mainly towards the Steri Milk plant, Pfuko-Udiwo expansion and distribution facilities.

• Milk supply intervention through heifer procurement beginning to bear fruit. Contribution to DZPL raw milk intake was at 8% in 2015.

OPERATING ENVIRONMENT

OVERVIEWThe developments in the macro-economic environment had a direct impact on company level performance. Overally, the operating environment further deteriorated in 2015. Major global developments were as follows:• The slow down in the Chinese economy resulting in a

significant reduction in commodity prices mainly metals.

This trend had a negative impact on liquidity in the local economy through reduced mining receipts from exports. As a result, exports declined from $3.558 billion in prior year to $2.910 billion in 2015 culminating in a trade deficit of $2.839 billion.

• The decline in crude oil prices had a positive impact on cost of fuel as well as oil related products like plastic packaging

• The strength of the US dollar vesus regional currencies made imports cheaper particularly those from South Africa into Zimbabwe.

• The El-Nino induced drought impacted on prices and availability of agricultural commodities as well as utilities mainly water and electricity.

ZIMBABWE The government has made good progress re-engaging the International Financial Institutions which are critical stakeholders in the government’s strategy to raise funding for national projects. Furthermore, mega deals with the Chinese, Germans and other international investors reflect a significant medium to long term potential in the economy. Despite these deals, the economy remained depressed in the short term.

Year on year inflation was negative at -2.47% as at 31 December 2015 vs. -0.8% for 2014. The deflation is attributed to reduced disposable incomes induced by company closures, lay-offs, increased competition and cheaper imports from the region. The weakening of the ZAR worsened the competitiveness position of local manufacturers. The ZAR closed the year at USD1:ZAR15.2 from USD1:ZAR11.6 at the beginning of the year.

Power cuts and water supply challenges were exacerbated by the drought situation with negative impact on cost of utilities as businesses resort to alternative sources.

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

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Group Chief Executive’s Review of Operations (continued)MALAWI No improvement was recorded in the macroeconomic environment. The country remains donor dependent and reengagement efforts are taking longer to realise meaningful foreign currency inflows.

PERFORMANCE OVERVIEW

Revenue and volumes soldThe Group recorded a volume growth of 19% to 83.892 million litres while revenue increased by 4% to $103.441 million. The Beverages portfolio had the highest contribution to the growth. In volume terms, growth was 45% for Beverages, 1% for Liquid Milks and a decline of 4% for Foods.

The growth in beverages resulted in a change in product mix as shown below:

34% 40%

14%17%

52% 43%

2 0 1 5 2 0 1 4

PORTFOLIO CONTRIBUTION TO TOTAL VOLUMES

- Liquid Milk - Food - Beverages

35% 37%

27% 31%

37% 31%1% 1%

2 0 1 5 2 0 1 4

PORTFOLIO CONTRIBUTION TO TOTAL REVENUE

- Liquid Milk - Food - Beverages - Logistics

Change in product mix and price adjustments to improve brand competitiveness impacted price per litre which decreased by 12%. By portfolio, Liquid Milks, Foods and Beverages prices per litre were 3%, 5% and 12% below prior year respectively.

PORTFOLIO REVIEWThe graphs below show the performance trend between 2015 and 2014 by portfolio.

35,964

27,835

38,913

728

36,802

30,435 30,656

1,123

LIQUID MILK FOODS BEVERAGES LOGISTICS

Portfolio Performance - Revenue ($000)

2015 2014

27%

9%

2%

35%

28,122

11,485

44,286

27,905

11,928

30,579

- LIQUID MILK - FOOD - BEVERAGES

Volumes sold by portfolio (000 Litres)

2015 2014

1%

4%

45%

Liquid MilksGrowth for Liquid Milks was negatively impacted by supply disruptions during the commissioning of the Chipinge Steri plant. However, the impact was mitigated by growth in Chimombe and Lacto which benefited from line extensions, supply consistency and investment in marketing support. The category still presents significant volume growth potential given the supply demand gap currently obtaining in the country. The Group will therefore be investing in a carton processing and filling plant to increase supply which has not been able to meet demand.

FoodsDeclining consumer disposable incomes and increased competition had a negative impact on Foods which are now viewed as luxuries. Most affected lines were ice creams, yoghurts and salad cream. Growth was however recorded in Rabroy Tomato Sauce.

BeveragesThe Beverages portfolio benefited from the full year impact of Pfuko-Udiwo Maheu. The traditional beverage, launched mid-2014, has since won a leading position in the market. Investments will be made to support the brand through improved capacity, new flavors and marketing support. Other key volume drivers were Cascade and Aqualite water. The Cascade brand benefited from consistent market support and improved product quality while increased capacity benefited Aqualite volumes.

PROFITABILITYThe focus on reducing operating costs was maintained throughout the year. Various initiatives targeted at materials costs, efficiencies and other overhead costs resulted in improvement in profitability against a 12% decline in price per litre realised from the market. Consequently, operating profit improved from $1.357 million in 2014 to $3.970 million in 2015.

Whilst sales volumes went up 19%, cost of sales increased by 3%, selling and distribution costs declined 9% and administration costs remained flat. Going forward, the Group will continue to focus on reshaping the business model to reduce costs and improve efficiencies. Specific initiatives will include ongoing

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Group Chief Executive’s Review of Operations (continued)negotiations with suppliers of materials and services for price adjustments, input substitutions without compromising product quality and distribution efficiencies.

INVESTMENTSThe following investments were made in line with the Group’s recapitalization and expansion program:• The Chipinge Steri Plant commissioned in June 2015. The

investment enabled the Group to rationalize production operations at Gweru effectively reducing the number of factories. The investment will also reduce operating costs including maintenance costs, product losses, labour and utilities.

• Pfuko- Udiwo expansion at the Chitungwiza Factory. The investment was made to unlock capacity which was already constrained.

• Distribution capacity in the form of vehicles and market support facilities. This investment was largely aimed at supporting growing volumes and improve product presentation in the market.

A total of $4.622 million was spent on these investments.

CASH GENERATIONCash generated from operations improved by 38% to $6.030 million. Receipts from the disposal of properties and ME Charhons were $1.244 million.

Cash generation was impacted by increased working capital requirements. Customers are taking longer to pay while foreign suppliers demand significant pre-payments before delivery. During the year, inventories increased by 19% driven mainly by forward procurement of milk powders and finished goods to support increased volumes. Trade receivables went up 22% due to increased credit sales and delays in payments by customers. Going forward, the Group will focus on increasing sales through cash channels and aggressive collection of trade receivables to improve the working capital position.

MILK SUPPLY

57,50057,500

26,50926,50922,88922,889

3,6193,619

55,50055,500

26,92226,92222,13422,134

4,7884,788

NATIONAL GROUP ZIMBABWE MALAWI

Milk Intake Performance (000 Litres)

2015 2014

Milk intake for Zimbabwe operations grew by 3% vs. a national growth of 4%. DZPL milk intake was 40% of raw milk produced nationally.

A total of 330 heifers were procured by DZPL under the Heifer Procurement Programme bringing the cumulative total heifers procured to 760. These cows are now contributing 8% of total raw milk intake. A cautious approach on Heifer Procurement will be taken in 2016 in light of the prevailing El Nino induced drought.In Malawi, depressed demand for milk products and floods led to a 24% decline in milk intake. Going forward, milk intake is expected to improve in line with initiatives to increase sales of the related products.

HUMAN CAPITAL Human resources interventions have been modeled to facilitate productivity, capacity building and creating an environment conducive for innovation.

For the period under review, there were cordial employee relations when the country’s industrial relations climate was turbulent and unpredictable. Through various internal industrial relations and governance structures, staff contributed to strategic cost management initiatives that included mutually agreed wage freezes and managerial salary cuts.

The Group realizes the criticality of human capital in the attainment of its strategic goals. As such, training and development programs will continue focusing on leadership and technical skills as well as health and safety at the work place.

BRAND BUILDINGThe Group’s brands continue to occupy leading positions in various categories. During the year, selected brands won the following accolades:• Cascade- 2nd Runner Up in the FMCG Non – Alcoholic

Beverages Category under the Superbrands Awards for 2015• Chimombe- 2nd position in the FMCG Dairy Products

Category • Steri Milk- 1st runner up in the FMCG Dairy Products Category• Pfuko-Udiwo Maheu- 1st position in the Megafest Awards

To further strengthen our brands, the following initiatives are being undertaken:• Continuous research into the emerging consumer needs for

Group products• Improving processes and product architecture to ensure

that the product offering meets and exceeds consumer expectations

• Widening product offering through new SKUs, flavors and new products

• Investing in capacity along the entire value chain to consistently meet demand

STRATEGIC BUSINESS UNIT (SBU) PERFORMANCE

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Group Chief Executive’s Review of Operations (continued)The gragh below shows contribution to total revenue by SBU.

64%64% 61%61%

31%31% 33%33%

4%4% 5%5%1% 1%

2 0 1 5 2 0 1 4

SBU CONTRIBUTION TO TOTAL REVENUEDZPL Lyons DML NFB

Dairibord Zimbabwe (Private) Limited (DZPL)Turnover for the year was 13% higher than 2014. Volumes however grew at a faster rate of 32% mainly driven by Beverages and Liquid Milks which increased by 91% and 7% respectively. Foods remained flat on previous year. Significant contributors to volume growth were Pfuko-Udiwo Maheu, Aqualite, Chimombe and Lacto. The brands continue to maintain a leading position in the market and investments in brand building will be maintained in order to further increase market share and increase sales volumes.

Lyons Turnover was flat on prior year while sales volumes improved by 10%. The growth in volumes is attributed to the Cascade and Rabroy Tomato Sauce brands which recorded volume growth of 11% and 12% respectively. The Cascade brand was supported by a combination of increased flavor variants, larger SKUs and investments in trade support. Rabroy Tomato Sauce benefited from price adjustments and improved product availability. Going forward, the business will focus on revenue growth initiatives such as introducing more flavor variants for drive brands and aggressive market support to defend and grow market share.

NFB LogisticsTurnover for the business was $8.797 million, 11% above prior year. The growth was driven by an increase in group volumes and augmentation of capacity through broking. Third party turnover, at $0.652 million, was a 36% decline compared to the previous year, contributing 7% to the unit’s total revenue. This was as a result of moving capacity from third party customers to Group business to cater for increased volumes.

Dairibord Malawi LimitedThe business was turned around in 2015 with achieving a break-even performance from an operating loss of $383,036 in 2014. This was due to a reduction in operating costs and improvement in efficiencies. The company’s strategy has been realigned to ensure growth in sales volumes and improve profitability. Positive contribution to earnings is anticipated in 2016. Exports will continue to generate foreign currency to support raw material procurement for critical product lines.

GROUP RESTRUCTURINGThe Group is undertaking a corporate restructuring of its subsidiaries with the new structure taking effect from 1 January 2016. The restructuring is meant to streamline business operations, in order to reduce costs, increase efficiencies and simplify the Group structure.

The restructuring will result in having all operations in Zimbabwe under one distinct subsidiary, Dairibord Zimbabwe (Private) Limited (DZPL). The entire business undertakings for Martindale Trading (Private) Limited, (t/a Lyons) and NFB Logistics (Private) Limited will be transferred to DZPL. The operation in Malawi will remain a standalone legal entity. The property owning subsidiaries will be directly held and controlled by Dairibord Holdings Limited. This exercise will enable the business to optimize benefits of synergies and improve on its overhead cost structure.

OUTLOOKThe macro economic situation is not expected to improve in the coming year. Disposable incomes will remain low especially given lack of capacity to improve wages by the largest employers, namely Government and local authorities. In addition, the prevailing El Nino induced drought is expected to lead to an increase in cost of the staple food maize meal and stock feeds as the nation becomes a net importer of agricultural produce from outside the African boarders.

In the market place competition is expected to intensify from both existing and new entrants. Coupled with other deflationary pressures, consumer prices are expected to decline further impacting on revenue performance and profit margins.

The Group is however geared to respond effectively to these challenges. Key business drivers going forward are:• Investment in processing and filling equipment to support the

existing cartonised Chimombe. The brand has been already accepted in the market and the business is currently unable to meet demand.

• Upscaling capacity for Maheu to meet increasing demand and allow for the introduction of new flavors

• Line extensions and new flavors to increase share of the consumer’s pocket

• Optimization of product availability in the market through investment in trade support and strengthening our routes to the market

• Product reformulations to reduce costs of inputs whilst maintaining product quality and

• Focus on cost reduction along the entire value chain from materials procurement up to distribution operations

Management is confident that the strategies in place are sufficient

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to identify, prepare and respond to the risks and opportunities that emerge from the trends in the environment.

Anthony S MandiwanzaGroup Chief Executive

10 March 2016

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

Group Chief Executive’s Review of Operations (continued)

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Governance and Management ApproachThe Board of Directors is responsible for the direction and control of the Group, setting its strategic aims, providing leadership to put them into effect, supervising management and reporting to shareholders on their stewardship. To that end it has established appropriate policies and procedures to govern the conduct of the company’s business and deliberations of the board. The Board affirms its commitment to ensure the Group acts in a responsible and transparent manner from an economic, environmental and social perspective while creating sustainable value and benefits to all stakeholders.

The Group will endeavor to align existing corporate governance practices by adopting the National Code of Corporate Governance in Zimbabwe (ZIMCODE) launched during the year 2015. The group will continue to observe best practices in corporate governance by continuously benchmarking with international practices contained in The King III Report on Corporate Governance for South Africa, Organisation for Economic Cooperation and Development (OECD 1999) Principles of Corporate Governance, and Principles of Corporate Governance in the Commonwealth (CACG Guidelines 1999). The following is a broad review of the present structure and practices.

Business EthicsThe company adopted a Zero Tolerance Approach to corruption in all business dealings with all stakeholders. All cases involving corruption are carefully investigated. Depending on the case, the company may involve experts, external auditors and the police. The company adopted a policy of sustainable and responsible procurement when assessing and dealing with credible and certified suppliers and service providers. Where there are complaints arising from our business practices, due attention is placed. Under this policy, Group hopes to ensure that issues of Human Rights in Business as outlined by the United Nations are also considered in supply chain screening.

Communication with ShareholdersThe Company provides platforms for shareholders to communicate with the Board. Some of the platforms include annual general meetings, press announcements of performance (Interim and year end), company website, formal meetings with shareholders and investors, presentations and use of shareholders voting rights system.

Share DealingsDirectors and Management are required to declare any dealings in the shares of the company. They are required to declare any other interests that may materially affect the company.

Directors and all group employees are not permitted to deal directly or indirectly in the shares of the company during the

closed period as defined by the Zimbabwe Stock Exchange (ZSE)

Board Structure and ExpertiseThe present board comprises of seven non-executive directors (70%) (Including the chairman) and three executive directors (30%). A non executive director chairs the board. The board meets at least quarterly. Members of the board possess various expertise that include business, finance, manufacturing and human resources management.

Appointment and Retirement of Non-Executive DirectorsIn terms of the company’s Articles of Association, a third of non-executive directors retire from office by rotation at the annual general meeting and are eligible for re-election.

Professional AdviceIt is Board policy that provided the board agrees that there is a justifiable case directors shall be entitled to seek independent professional advice at company’s expense in the furtherance of their duties.

Corporate Governance & Ethics

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BOARD SUB-COMMITTEES:

Committee Members Main Function

Finance & Audit Mr. David Hasluck (Chairman)

Mrs. Rachael Pfungwa Kupara

Mr. Josphat Sachikonye

Mr. Herbert Makuwa

Mr. Nobert Chiromo

The Committee monitors the company’s overall control procedures, risk management, and financial reporting. It provides direct oversight and liaison on behalf of the Board with both internal and external auditors. The Committee reviews all significant Group risks, as well as risk mitigation initiatives and their effectiveness on a quarterly basis.

Remuneration Dr. Leonard L. Tsumba (Chairman)

Mr. David Hasluck

Mr. Anthony Mandiwanza

This committee is responsible for reviewing the company’s remuneration policies and approving remuneration packages for senior executives

Nominations Dr. Leonard L. Tsumba

Mrs. Sibusisiwe Chindove

Mr. Cleton Mahembe

Mr Antony S Mandiwanza

This committee searches and receives nominations, carries out background and reference checks and makes recommendations on candidates for board membership. It reviews the adequacy of the expertise, relevance and independence of the board. The Committee also co-ordinates the evaluation of the performance of the board.

ATTENDANCE TO MEETINGS DURING 2015

Year of appointment Committees

Main Board Finance & Audit Nominations Remunerations

Attended Attended Attended Attended

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

Mrs S Chindove 2008 2/4 1/1

Mr N. Chiromo 2015 2/2

Mr D Hasluck 2015 3/4 3/4

Mrs R P Kupara 2015 4/4 1/3

Mr T Mabika 1997 4/4

Mr C Mahembe 1997 4/4 1/1

Mr H Makuwa 2006 3/4 4/4

Mr A S Mandiwanza 1997 4/4 1/1

Mr F Mungoni* 2010 2/2 2/2

Ms M Ndoro 2009 4/4

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

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

Corporate Governance & Ethics

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CORPORATE MANAGEMENTAnthony S. Mandiwanza - Group Chief ExecutiveAnna Dhlamini - Group Information Systems ManagerBernard Chakeredza - Group Chief Internal AuditorCharity Magwenzi - Group Research and Development ManagerDaphne Bope - Group Human Resources ManagerDaniel Mhlanga - Group Procurement Executive (Acting)Gabriel Matanga - Group Chief EngineerGilbert Takabarasha - Group Human Resources and Administration DirectorImelda Shoko - Group Corporate Communications ManagerKudakwashe Bhaera - Group Finance ManagerMercy Ndoro - Group Finance DirectorObey Machechesa - Group Business AnalystThompson Mabika - Executive Director Strategy

OPERATIONS

Dairibord Zimbabwe (Private) LimitedTatenda Napata - Managing DirectorThemba Mutsvairo - Production ExecutiveMaurice Karimupfumbi - Financial ControllerTinashe Kandare - Human Resources ManagerStanley Mandizha - General Manager – Milk Supply Development UnitMpembe Baro - Engineering Manager Eunice Ganyawu - Sales and Marketing Executive

NFB Logistics (Private) LimitedLovemore Chokoza - Managing DirectorLeo Gandiya - Technical Operations ManagerPeter Kiropasi - Financial ControllerGeorge Mashayahanya - Transport and Logistics ManagerTerence Kasenya - Sales and Marketing Executive

Martindale Trading (Private) Limited t/a LyonsTracey Mutaviri - Managing DirectorGodfrey Nzuma - Financial ControllerKarman Machame - Production ManagerGilbert Mushunje - Sales and Marketing ExecutiveJacob Maneswa - Quality Assurance ManagerTrymore Mudzi - Human Resources Manager

Dairibord Malawi LimitedTheodora Marimo - Managing DirectorPedzisai Chiwota - Financial ControllerShadreck Munaka - Sales and Marketing Manager

Dairibord Holdings Limited Management

Commissioning in pictures

Dairibord Steri Milk Refurbished Plant Commissioning

Mr Misheck Nyamupingidza (second black General Manager of the then DMB), Honourable Mandy Chimene, Mr Anthony Mandiwanza (Dairibord Holdings, Group Chief Executive), Mr Kumbirayi Katsande (first black General Manager of the then DMB) and Mr Lance Jena ( Former Executive Director - Marketing Services and Exports)

Mr A. Mandiwanza (left) and Group Chief Engineer G. Matanga (in blue cap) touring the factory with Honourable M. Chimene

and other guests.

The towering Chipinge Dairibord Steri Milk Plant.

Mr. A. Mandiwanza, Dr L.L. Tsumba and Honourable M. Chimene handing over a donation of football and netball kits to the headmaster of Matione Primary School in Gaza, Chipinge, Mr Bepete.

Sandra Dodo and Tatenda Napata of DZPL reveal the rebranded Dairibord Steri Milk.

Guest of Honour, Honourable M. Chimene Minister of State for Provincial Affairs,

Manicaland Commissioning the refurbished Dairibord Steri Milk Plant in Chipinge.

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Sustainability Strategy & GovernanceManagement ApproachThe Group believes that operating in a socially and environmental friendly manner is key to the long term success and competitiveness of the business. The business is investing in systems to manage and address sustainability impacts arising from our operations. As such, the group adopted the Global Reporting Initiatives (GRI) Sustainability Reporting Guidelines as a tool for measuring performance in our sustainable business initiatives and practices.

GovernanceThe Group has a Sustainability Team at group level responsible for coordinating company level sustainability teams. At company level, Sustainability Teams assist management in identifying, evaluating and managing material issues pertaining to environmental and social impacts and opportunities. The teams monitor and evaluate data collected for reporting to Management and the Group Sustainability Team which reports to Senior Group Management and the Board of Directors.

Stakeholder EngagementThe Group’s stakeholder engagement strategy is part of our overall corporate affairs strategy and risk management. Key to our operations are our stakeholders who include investors, employees, communities, government, regulators, suppliers, customers and others. The group values these stakeholders. As such, stakeholder engagement for the purpose of capturing material concerns from our stakeholders which can help us balance our businesses approach with the long term success of the organization is an integral part of our strategy.

Inclusive BusinessInclusive business is the profitable integration of the less privileged and small & micro enterprises in the core value chain of larger companies. People and enterprises at the Base of the Pyramid (BoP) can be involved as suppliers, distributors, retailers, consumers, entrepreneurs & innovators and as additional employees.

The impact of the business as a commercial enterprise on the low to middle income sections of society is reflected in the business model which engages them in both upstream and downstream operations.

The diagram below shows the linkages between the business and the bottom of the pyramid stakeholders:

Farmers Vendors Franchises or distributors

• Guaranteed market for milk produced• Extension services• Credit facilities for herd development,

stock feeds, equipment and other farm requirements

• Lobbying to government for favour-able policies

• Provision of uniforms and equipment• Transportation to and from selling

points• Credit facilities to enable them to buy

and pay after sales

• Credit facilities• Premises for some at dairibord depots• Marketing support• Advisory support on how to manage

their businesses

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

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

• These are the financial resources that are used to fund our business activities and support our strategy. This includes the equity from shareholders, loans from financial institutions and trade partners.

• This refers to the employees as well as the processes used to engage and develop them. Critical components are the skills, capabilities, knowledge and experience relevant to the advancement of the strategy of the Group.

• This is the advantage we enjoy from relationships with key stakeholders including government, customers, employees, suppliers and financial institutions.

• This refers to the natural environment from which inputs are produced and outputs and waste disposed. As a manufacturing entity, we are committed to preserving this natural capital as well as working to optimize benefits e.g. through solar energy.

• This refers to the knowledge our employees possess as well as the intellectual capital that enables the business to remain ahead of competition and influence trends in our chosen domains.

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Risk Management PhilosophyRisk is embedded in the Group’s activities and is not separable from opportunity. The management of risk across the Group is not a standalone activity but rather an integral part of our operations. The risks in this report are the major uncertainties in terms of likelihood and impact. The board continues to monitor the business and the operating environment to identify and develop strategies to mitigate emerging risks.

Group Risk Management FrameworkThe Board is terminally responsible for risk governance across the Group. The Board has delegated the risk management function to the Group Finance and Audit Committee. The composition of the Finance and Audit Committee is made up of Non-Executive Directors only. The sub-committee is accountable to the main Board of Directors. The mandate of the Finance and Audit Committee regarding risk is to ensure that the Group has adequate systems to identify measure, predict, prepare for and respond to any risks that the organization may face.

Operational StructureManagement is accountable to the Board for designing, implementing and monitoring the Group’s risk management procedures and every manager is responsible for managing risk in their areas of responsibility.

To ensure the efficient monitoring and assessment of risk management systems, the Group Chief Internal Auditor is responsible for evaluating the adequacy and operational effectiveness of the procedures. The Group Chief Internal Auditor reports to the Finance and Audit Committee.

Main risks affecting the Group and mitigating measuresRisk category Specific exposures MitigantsSocio-political Excessive wage demands by labor unions

resulting in unsustainable wage levels� Proactive participation in wage negotiation� Promoting cordial industrial relations climate to minimize tension

Legal/Regulatory

Non-compliance with tax laws � Tax health checks done regularly Frequent engagement with authorities on tax laws and other related developments.

Non-compliance with indigenization and empowerment laws

� Annual certification for compliance is sought from the National Indigenization and Economic Empowerment Board.

Product and workplace safety below standard

� Operating standards are maintained above minimum requirements.

� Certification with regulators like National Social Security Authority, Environmental Management Agency, and Ministry of Agriculture are sought before commencing operations.

� ISO 9000: Quality Assurance procedures certified� ISO 22001: Food Safety Management Systems certification done

for DZPL and DML and being rolled out to Lyons. � Pursuing ISO 14001: Safety, Health and Environmental

certification

Risk Management

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Economic risk Declining consumer disposable incomes � Innovation to reduce costs and pass on savings to customers through lower prices

� Value offerings in the form of pack sizes and flavors

Increased competition from cheaper imports

� Price adjustments to retain competitiveness� Investments in brand building to enable our brands to have a

stronger value proposition� Cost containment measures to recover profit margins lost through

price adjustments

Decline in competitiveness due to the opening up of the Global economy and the attractiveness of the US dollar

� Investing in new technology to improve on efficiencies� Investing in research and development to keep pace with the

market

Deterioration of the operating environment in Malawi threatening viability

� Focusing on exports to preserve the value of the subsidiary in Malawi

� Adjusting business model to match consumer trends in the local market

Business risk Failure of the business model to create superior and sustainable performance

Remodeling Group structure through:� Consolidation of operating subsidiaries to eliminate duplication of

roles and reduce costs� Adjusting product offering in line with market trends

Work stoppages/operational failure due to materials non-availability, power outages and other unforeseen eventualities

� Holding safety stocks for all critical materials� Developed more suppliers for critical materials to avoid

concentration risk.� Signed supply contracts with most dairy farmers� The Group has invested in standby generators and boreholes to

ensure consistent supply of utilities

Inadequate raw milk intake volumes � Intervening through the Heifer program� Engaging government on policies that encourage investment in

the dairy sector.

Talent risk Loss of skilled employees � Rewarding top performers to improve retention� Training and development to ensure adequate skill pool

Inadequate succession planning exposing the future of the business

� 100% cover for all critical positions� Several management development programs are underway viz.

MBAs, Graduate Trainees and Food and Dairy Technology training

Commodity price risks Negative impact on profit margins � The procurement function undertakes global procurement of materials taking advantage of lower prices during down turns in global markets.

� Supply contracts are constantly negotiated to find better terms in light of developments in the market

Investor sentiment risk

Negative investor sentiment on the com-pany leading to share price decline on the Zimbabwe Stock Exchange.

� The Group actively participates in investor roadshows held by different securities traders to clarify on the prospects of the company

� One on one meetings are also held with interested investors or analysts at any time during the year

� Analysts’ presentations are held every year accompanying the publication of full year financial results.

Financial Risk Financial risk is comprehensively dealt with in the notes to the financial statements on page 76 to 77

Risk Management (Continued)Risk category Specific exposures Mitigants

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Materiality ProcessThe Group’s approach to identifying material aspects for disclosure is influenced by the stakeholder engagement process and internal evaluation. The Group applies its collective resources and the sustainable business philosophy in identifying sustainability aspects deemed high impact to both the Group and stakeholders. This process takes into account the business operating environment in Zimbabwe and Malawi. Key performance indicators are identified through an assessment of our business in relation to material concerns of our stakeholders on economic, environmental and social aspects. The approach to materiality by the Group is broadly guided by the GRI’s Sustainability Reporting Guidelines to ensure consistence in our approaches and basis for reporting.

IDENTIFICATIONThe Group engages all Heads of Business Units and Sustainability Teams Leaders;

PRIORITISATION The process of prioritisation is conducted through Workshops, Risk management meetings and Stakeholder Engagement

APPROVAL Review of material issues is conducted by Group Sustainability Team, Senior Management and Risk Management for approval

Report BoundaryReporting boundary for the Group is defined by where material impacts are identified within the Group’s operations. The Group assess environmental and social issues deemed to be of high impact to the Group, our stakeholders and where they are occurring. Boundary of the report content and performance indicators are approved at Group level following an evaluation process. This report covers sustainability performance from our operations in both Zimbabwe Malawi.

Material Issues and Reporting Boundary

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

Stakeholder Method of Engagement

Material Issues Discussed

Result/Action taken

Customers and consumers

�� Customer satisfaction surveys

�� Business review meetings

�� Social media platforms

�� Product quality

�� pricing

�� Due to increasing competition, pricing and product quality have become increasingly important in the customer’s mind.

�� The Group continuously review pricing to align with market taking into account the quality premium in our brands.

Government and regulatory Authorities

�� Representations (letters)

�� Formal meetings�� Policy briefings�� Compliance

inspections

Creation of a level playing field between imports and exports

�� Government implementing various measures to enable local companies to produce competitively

�� Import quotas and duties on finished goods in place to nurture local industry

�� Continuous government engagement to reinforce and improve on ease of doing business

Regulatory compliance

�� Compliance with regulations

Effluent treatment and refuse disposal

�� Effluent treatment plant construction in progress. Cost incurred at end of 2015 was $130,000 and commissioning will be done in the first half of 2016.

Water outages �� Water supply from City council impacted by both equipment quality and water levels at major sources.

�� Boreholes have been drilled at all strategic locations to ensure consistent supply of water

�� Health and safety

�� Factory license renewals

�� The Group is embarking on preparations for SHE certification. The construction of effluent treatment plants will enable compliance with the requirements for SHE certification.

�� Routine maintenance is done to ensure that all plant and equipment at least complies with minimum health, safety and environmental requirements.

Suppliers �� Formal meetings�� Supplier briefings�� Workshops

Raw milk supply initiatives and pricing

�� Heifer procurement scheme ongoing�� Partnered a local financial institution to fund bankable

dairy projects going forward. Looking for more institutions with appropriate funding models to increase the pool of funds

�� Farmers agreed to a price review to align with reduced milk powder prices globally. The move will be compensated by a corresponding reduction in stockfeed prices by feed manufacturers.

Prices, quality and supply consistence for key inputs

�� Price adjustments have been secured from most suppliers in line with the general deflation in the economy and weakening of major trading currencies.

�� Power cuts increasing due to low dam levels at Kariba impacting power generation.

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Stakeholder Engagement (Continued)

Employees RoadshowsWorks council meetings

Conditions of serviceRetrenchments

�� The Group’s policy is to pay above the negotiated wages in line with the performance of the business.

�� 13 employees were retrenched during the year. The retrenchments were not contested and the Group has paid benefits in line with best practice

Investors and Analysts

AGMs, Briefings Growth prospectsValue creationBusiness risk

� The Company’s turnaround strategies are continuously communicated to the investor community

� The investor relations team holds meetings during the year to apprise investors of the developments in the market and in the company

Financial Institutions

Formal meetings Funding requirementsTenure and interest rates

� The Group’s focus is to finance operations through low cost diversified funding.

Stakeholder Method of Engagement

Material Issues Discussed

Result/Action taken

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Sustainability PerformanceENVIRONMENTAL PERFORMANCE

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

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

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

Materials

Materials Used Units 2015 2014

PET Tons 588 454

HDPE Tons 2,251 1,546

Oils and Grease Tons 11 8

Plastic wrappers Tons 459 486

Detergents Tons 222 327

Paper packaging Tons 502 942

Polypropylene Tons 439 386

HDPE consumption increased by 45% due to significant growth in the production of Pfuko-Udiwo Maheu and Cascade. Increased fleet size to support the increased volume resulted in increased oil consumption. The closure of production operations at the Gweru factory after the commissioning of the Chipinge factory led to reduced detergents used for cleaning the production equipment and factories. Recycling InitiativesThe Group continues to sell used oils to dealers approved by the Environmental Management Agency (EMA). Recycling also include HDPE materials mainly used in the production of bottles for Steri Milk. The decline in HDPE recycling is attributable to improved production efficiencies achieved after the commissioning of a new Steri plant in Chipinge. The table below summarizes the performance in this regard.

Materials Recycled Unit 2015 2014

HDPE % 1 4

Used oil % 26 26

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

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Sustainability Performance (continued)• 590t of PET waste was collected from the environment, a recovery rate of 5%. • The waste was processed into 505t which was sold to China.

Projections for 2016 are as follows:• 1916t of PET waste to be collected from the environment, a recovery rate of 13%.• 1710t processed output to be sold as recycled material.

The company will continue efforts to recruit more contributors and expand waste collections to other cities.

ENERGYThe Group’s major sources of energy are electricity, diesel, petrol, coal and gases. The performance of these sources both in terms of availability and cost had an impact on the business. Key developments during the year are:

• Increased power cuts induced by low output from the national utilities both in Malawi and Zimbabwe. Electricity prices per KWH also increased.

• Global oil prices declined presenting an opportunity for price adjustments for all crude oil related fuels mainly diesel and petrol.

Due to increased sales volumes, coal, diesel and electricity consumption was greater than the previous year. The table below shows the energy consumption by source for the Group during the year:

Energy Consumption – Within the Organisation

Energy Type Unit 2015 2014

Electricity MWh 17,976 16,896

Heating (Coal) Tons 6,035 5,514

Gases Tons 8 6

Energy Consumption – Outside the Organisation

Energy Type Unit 2015 2014

Diesel ‘000’ Litres 2,284 1,538

Petrol ‘000’ Litres 199 166

WATERWater remains a key component of our production process. However, the prevailing El-Nino weather pattern has significant impact on water sources. The Local Authorities in Malawi and Zimbabwe are currently unable to provide adequate water supplies for factory operations. The existing water supply challenges are not expected to be resolved soon. The Group will continue to manage all sources of water available. The table below shows water consumption by primary source for the year under review:

Source Unit 2015 2014

Municipal Cubic Litres 382,002 114,881

Borehole Cubic Litres 181,315 257,209

Use of municipal water increased by 233% during the year due to reduction in the use of borehole which decreased by 30%. Overall water usage went up in line with volume growth.

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Sustainability Performance (continued)

EMMISSIONS, EFFLUENTS, AND WASTE

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

Human Capital Maintenance

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

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

Performance

Employee Engagement and Turnover

Total Employees at Year End

Employee Category Unit 2015 2014

Permanent Count 813 865

Contract Count 638 613

Total 1,451 1,478

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

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Employees Gender DistributionTotal number of female employees increased from 175 to 194 at the end of 2015. The table below shows manning levels by gender:

Employee Gender Category Unit 2015 2014

Female Count 195 175

Male Count 1,256 1,303

Total 1,451 1,478

Apprentices, Graduate trainees and Students on attachmentThe group continues to enhance the skills pool while the group invests in future human capital contribution through providing training and practical experience for apprentices, graduates and students. The table below provides a summary totals at the end of the year:

Category Unit 2015 2014

Apprentice Count 10 15

Graduate Trainees Count 17 11

Students on Attachment Count 10 18

Total 37 44

Health & Safety Health and safety is a priority for our employees, customers and other stakeholders. As such, the Group continues to improve its health and safety performance within its premises and where ever it conducts its business through the following: • Provision of health and safety training to achieve zero harm at the work place• Regular review of factory designs to implement measures that improve occupational safety• Factory clinics at operating factories• Medical aid support for all employees• Running awareness programs for HIV and AIDS

Work Related Accidents/InjuriesThe performance of the Group with respect to work place health and safety is shown below:

Indicators Unit 2015 2014

Hazards for which internal STOP Notes issued Incidence 1 -

Safety representative training (Frequency) Count 1 -

Number of lost time injuries Days 19 18

Total number of injuries Count 131 90

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Sustainability Performance (continued)Number of lost days Count 269 237

Health & Safety Training and Awareness Programmes

Programme Unit 2015 2014

Wellness Programme Employees 12 14

Anti-Retroviral therapy Employees 7 10

Medical aid Employees 612 675

Peer educators Count 20 30

HIV/AIDS awareness campaigns Activities 7 11

Clinics Counts 1 1

First Aid workers Count 50 30

PRODUCTS RESPONSIBILITYThe Group remains focused on delivering heathy and safe products to all customers. As such, the main priorities for product responsibility are:• Quality of raw materials tested before they are utilized in the production processes.• Supplier evaluation and engagement to ensure their systems produce consistent quality products that meet food safety

requirements.• Process certification to ensure that the Group’s operations have the necessary standards and procedures to produce quality

products. • A robust customer complaints handling procedure.

The following systems and certifications are in place to ensure the manufacture and distribution of quality products:• ISO certification. DZPL and DML are certified under ISO 22000:2005 Food Safety Management Systems. Lyons is ISO

9001:2000 certified and work is in progress to get ISO 2000:2005 certification in 2016. • Ministry of Health and SAZ certification of all products.• Collaborating with other industry players and regulatory agencies in clean up and awareness campaigns and environmental

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expos.

COMMUNITY INVESTMENTThe table below summarizes key community investment programs undertaken during the year:

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

2014 Amount ($)

Health and social welfare �� For the third year running, the Group sponsored the Cancer Awareness Survivors Trust (CAST) fund raising dinner. Proceeds raised from the dinner were channeled towards chemotherapy and meals for the less privileged patients from rural areas.

�� Chipinge Hospital received five(5) Television sets from Dairibord Holdings for the patients wards

�� The Society of the Destitute and Aged (SODA) in Highfield, Harare and Rekai Tangwena orphanage in Nyanga receive nutritious Group products every month.

25,000 12,000


Dairibord Holdings Limited presented five(5) television sets to Chipinge Hospital for the patients wards

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Sports �� The annual Dairibord Schools Rugby Festival sponsorship contract runs from 2014 -2018 and events are hosted at Prince Edward School in Harare.

�� Matione Primary School in Chipinge, Emmanuel and Mazarura High schools in Nyanga received a donation of Football and Netball kits.

184,920 180,420

Education �� Donation of $5,000.00 worth of tools for the agriculture, woodwork and building subjects at Ordinary Level for Mazarura High School.

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

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

31,500 26,653

Total Community Investments

241,420 219,073

ECONOMIC

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

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

2014 Amount ($)

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Statement of Directors’ ResponsibilityThe Directors are required by the Companies Act (Chapter 24:03) to prepare financial statements for each financial year giving a true and fair view of the state of affairs of the company and the Group as at the end of the financial period as well as the profit and cash flows for the same period.

The Directors are responsible for maintaining records, which disclose with reasonable accuracy the financial position of the company and the Group, and which enable them to ensure that the consolidated financial statements comply with the Companies Act (Chapter 24:03). The Directors are also responsible for safeguarding the assets of the Group and for preventing and detecting fraud and other irregularities.

The Directors consider that in the preparation of these financial statements, reasonable and prudent judgments and estimates have been made. International Financial Reporting Standards have also been followed where applicable with suitable accounting policies having been consistently applied.

The Directors recognize and acknowledge their responsibility for the Group’s systems of internal control. These systems are adequate to provide reasonable assurance that the assets of the Group are safeguarded and that accurate records, necessary for the preparation of the financial statements, are maintained.

The Directors have satisfied themselves that the Group is in a sound financial position, and has adequate resources to continue in operational existence for the foreseeable future. Accordingly, your Directors believe that the preparation of these financial statements, on a going concern basis is appropriate.

The financial statements for the year ended 31 December 2015 have been approved by the Board of Directors and are signed on its behalf by the Chairman of the Board, Dr L.L. Tsumba and by the Group Chief Executive Mr A.S. Mandiwanza.

Dr L.L.Tsumba A. S. MandiwanzaChairman Group Chief Executive10 March 2016

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

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

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

Distributable reserves at the beginning of the year 20 711 889Profit for the period 2 333 476 Transfer from capital reserves on sale of properties 119 210Distributable reserves at the end of the year 23 164 575 Movements in other reserves are shown in the Statement of Changes in Equity and in the notes to the financial statements.

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

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

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

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

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

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

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

M. NdoroCompany Secretary10 March 2016

Report of the Directors

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

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

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

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

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

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

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

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

Ernst & YoungChartered Accountants (Zimbabwe)Registered Public AuditorsHarare15 March 2016

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GROUP COMPANY 2015 2014 2015 2014 Notes US$ US$ US$ US$ Revenue 103,441,209 99,015,525 1,961,289 2,498,469

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

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

Other operating income 3 238,907 364,398 1,175,558 1,231,930 Selling and distribution expenses (9,921,234) (10,863,429) - - Administration expenses (10,854,985) (10,329,543) (3,356,540) (3,368,165)Other operating expenses 4 (206,533) (234,460) (700,000) - Operating profit/(loss) 5 3,970,058 1,356,521 (919,693) 362,234 Finance costs 6 (1,085,599) (792,305) (1,089,830) (794,510)

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

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

Income tax (expense)/credit 8 (709,917) (169,712) 67,986 (45,367) Profit/(loss) for the year 2,301,673 604,096 (869,683) 297,530 Other comprehensive income: Other comprehensive income to be reclassified to profit or loss in subsequent periods Exchange differences on translating foreign operations (284,242) (85,019) - - Other comprehensive income for the year, net of tax (284,242) (85,019) - - Total comprehensive income/(loss) for the year 2,017,431 519,077 (869,683) 297,530 Profit /(loss) attributable to: Equity holders of the parent 2,333,476 730,456 (869,683) 297,530 Non-controlling interests (31,803) (126,360) - -

2,301,673 604,096 (869,683) 297,530 Total comprehensive income /(loss) attributable to: Equity holders of the parent 2,139,054 672,303 (869,683) 297,530 Non-controlling interests (121,623) (153,226) - - 2,017,431 519,077 (869,683) 297,530

Earnings per share (cents) Basic earnings for the year attributable to ordinary equity holders of the parent 0.65 0.20 Diluted earnings for the year attributable to ordinary equity holders of the parent 0.65 0.20

Statements of comprehensive incomefor the year ended 31 December 2015

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GROUP COMPANY 2015 2014 2015 2014 Notes US$ US$ US$ US$ Assets Non-current assets Property, plant and equipment 10 41,705,060 42,326,441 201,051 401,905 Investment property 11 1,467,501 1,467,501 - - Intangible assets 12 658,011 688,262 138,578 77,473 Investment in subsidiaries 13 - - 16,998,183 17,698,183 Long-term loans receivable 14 - - 8,122,352 6,887,969 Prepayments-capital expenditure 220,904 - - - Other non-current financial assets 15 421,884 869,298 76,632 85,649 Deffered tax asset 24 31,436 - 31,436 - 44,504,796 45,351,502 25,568,232 25,151,179 Current assets Inventories 16 18,096,735 15,147,057 - - Amounts owed by group companies 17.1 - - 1,856,019 1,251,464 Prepayments 637,349 1,349,774 62,145 11,996 Trade and other receivables 18 11,823,454 11,613,141 38,171 339,794 Short-term loans receivable 14 - - 5,223,914 3,935,762 Cash and cash equivalents 19 2,809,915 1,414,341 58,672 36,637 33,367,453 29,524,313 7,238,921 5,575,653 Assets classified as held for sale 20 827,915 919,551 - - 34,195,368 30,443,864 7,238,921 5,575,653 Total assets 78,700,164 75,795,366 32,807,153 30,726,832 Equity and liabilities Equity Share capital 21.1 35,800 35,800 35,800 35,800 Share premium 21.2 1,379,664 1,379,664 1,379,664 1,379,664 Non - distributable reserves 22,912,784 23,121,201 17,016,597 17,016,597 Reserves of assets classified as held for sale 355,659 460,874 - - Retained earnings / (Accumulated losses) 23,164,575 20,711,889 (597,640) 272,043 Equity attributable to owners of the parent 47,848,482 45,709,428 17,834,421 18,704,104 Non - controlling interests 253,630 375,253 - - Total equity 48,102,112 46,084,681 17,834,421 18,704,104 Non-current liabilities Interest - bearing borrowings 22.1 4,561,863 6,511,313 4,498,168 6,420,860 Deferred tax liability 24 3,394,442 3,194,811 - 34,303 7,956,305 9,706,124 4,498,168 6,455,163 Current liabilities Trade and other payables 25 17,284,258 15,336,804 800,949 706,277 Interest - bearing borrowings 22.2 5,187,620 4,565,037 5,158,090 4,384,132 Amounts owed to group companies 17.2 - - 4,515,525 428,918 Income tax payable 169,869 102,720 - 48,238 22,641,747 20,004,561 10,474,564 5,567,565 Total liabilities 30,598,052 29,710,685 14,972,732 12,022,728 Total equity and liabilities 78,700,164 75,795,366 32,807,153 30,726,832

DR L. L .TSUMBA A. MANDIWANZA Chairman Group Chief Executive 10 March 2016

Statements of financial position as at 31 December 2015

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GROUP COMPANY 2015 2014 2015 2014 Notes US$ US$ US$ US$ Operating activities

Profit/(loss) before tax 3,011,590 773,808 (937,669) 342,897 Adjusted for: Depreciation of property, plant and equipment 10 4,609,952 3,914,217 207,878 205,673 De-recognition/ impairment of property, plant and equipment 10 - 207,735 - - Amortisation of intangible assets 12 91,356 91,357 - - Impairment of subsidiary - - 700,000 - Profit on disposal of property, plant and equipment and assets held for sale (74,026) (144,559) (1,660) (12,867) Finance income (127,131) (209,592) (1,071,854) (775,173) Inventory written off 16 773,840 824,805 - - Allowances for credit losses 18 153,912 187,256 - - Unrealised exchange loss - 6,038 - - Finance costs 1,085,599 792,305 1,089,830 794,510 Profit realised on recovery of amount on disposal of associate (73,898) - (73,898) -Working capital adjustments : Increase in inventories (3,885,802) (2,438,307) - - (Increase)/decrease in trade and other receivables and prepayments (446,869) (2,064,375) 260,490 (89,468) Increase in amounts owed by group companies - - (3,127,090) (4,024,122) Increase /(decrease) in amounts owed to group companies - - 4,038,699 (560,506) Increase in trade and other payables 2,226,707 3,584,795 94,672 70,103 7,345,230 5,525,483 1,179,398 (4,048,953)Interest paid (1,085,599) (792,305) (1,089,830) (794,510)Income tax paid (229,869) (367,278) (45,990) (165,796) Net cashflows generated from /(used in) operating activities 6,029,762 4,365,900 43,578 (5,009,259) Investing activities Purchase of plant and equipment 10 (4,621,930) (9,885,174) (9,563) (65,416)Purchase of intangible assets 12 (61,105) (77,473) (61,105) (77,473)Proceeds from sale of property, plant and equipment 346,280 142,321 4,200 14,667 Proceeds from sale of assets classified as held for sale 898,000 173,069 - - Amount recovered on sale of investment in associate 3 121,807 - 121,807 -Increase in long term prepayments (210,904) - - -Dividends received - - - 311,000 Finance income 127,131 209,592 1,071,854 775,173 Net cashflows (used in)/ generated from investing activities (3,400,721) (9,437,665) 1,127,193 957,951 Financing activities Proceeds from borrowings 4,403,397 9,437,114 4,382,516 9,351,804 Repayment of borrowings (5,677,585) (5,428,214) (5,531,252) (5,328,035) Net cashflows from financing activities (1,274,188) 4,008,900 (1,148,736) 4,023,769 Net increase /(decrease) in cash and cash equivalents 1,354,853 (1,062,865) 22,035 (27,539)Net foreign exchange difference 40,721 21,574 - - Cash and cash equivalents at beginning of the period 1,414,341 2,455,632 36,637 64,176 Cash and cash equivalents at the end of the period 19 2,809,915 1,414,341 58,672 36,637

Statements of cash flowsfor the year ended 31 December 2015

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Statements of Changes in Equityfor the year ended 31 December 2015

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COMPANY

Attributable to equity holders of the parent Non - Reserves of Non - Share Share distributable assets classified Retained controlling Total Capital Premium reserves as held for sale earnings Total interests equity US$ US$ US$ US$ US$ US$ US$ US$ (Note 21.3) As at 1 January 2014 35,800 1,379,664 23,483,902 491,274 19,646,485 45,037,125 528,479 45,565,604 Profit /(loss)for the period - - - - 730,456 730,456 (126,360) 604,096 - Other comprehensive income - - (58,153) - (58,153) (26,866) (85,019)Total comprehensive income - - (58,153) - 730,456 672,303 (153,226) 519,077 Transfer to retained earnings on sale of assets - - - (334,948) 334,948 - - Transfer to held for sale reserve (304,548) 304,548 - - - As at 31 December 2014 35,800 1,379,664 23,121,201 460,874 20,711,889 45,709,428 375,253 46,084,681 Profit/(loss) for the period - - - - 2,333,476 2,333,476 (31,803) 2,301,673 Other comprehensive income - - (194,422) - - (194,422) (89,820) (284,242)Total comprehensive income - - (194,422) - 2,333,476 2,139,054 (121,623) 2,017,431 Transfer to retained earnings on sale of assets - - (13,995) (105,215) 119,210 - - - As at 31 December 2015 35,800 1,379,664 22,912,784 355,659 23,164,575 47,848,482 253,630 48,102,112

Retained Non earnings/ Share Share distributable (Accumulated Capital Premium reserves losses) Total US$ US$ US$ US$ US$ As at 1 January 2014 35,800 1,379,664 17,016,597 (25,487) 18,406,574 Profit for the period - - - 297,530 297,530 Other comprehensive income - - - - - Total comprehensive income - - - 297,530 297,530 As at 31 December 2014 35,800 1,379,664 17,016,597 272,043 18,704,104 Loss for the period - - - (869,683) (869,683) Other comprehensive income - - - - - Total comprehensive income - - - (869,683) (869,683)

As at 31 December 2015 35,800 1,379,664 17,016,597 (597,640) 17,834,421

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Notes to the Financial Statements1. Corporate information The consolidated financial statements of Dairibord Holdings Limited and its subsidiaries (collectively, the Group) for the year

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

2.1 Basis of preparation The consolidated financial statements are based on the statutory records that are maintained under the historical cost convention,

except for land and buildings and investment property that have been measured at fair value. The consolidated financial statements are presented in United States Dollars (US$).

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

2.2 Basis of consolidation The consolidated financial statements comprise the financial statements of Dairibord Holdings Limited and its subsidiaries as at

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

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and

circumstances in assessing whether it has power over an investee, including: • The contractual arrangement with the other vote holders of the investee • Rights arising from other contractual arrangements • The Group’s voting rights and potential voting rights

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

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

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

retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities.

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2.3 Changes in accounting policies and disclosures The accounting policies adopted are consistent with those of the previous financial year. Amendments and improvements to

existing standards that became effective for the Group as from 1 January 2015 did not have a material impact on the Group.

2.4 Significant accounting judgements, estimates and assumptions The preparation of the consolidated financial statements requires management to make judgements, estimates and assumptions

that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Such estimates and assumptions are based on historical experience and various other factors that are believed to be reasonable in the circumstances and constitute management’s best judgement at the date of the financial statements.

Estimates and assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a

significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are described below: The Group based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about the future developments, however, may change due to market changes or circumstances arising beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

i. Useful lives and residual values of property, plant and equipment The Group assesses useful lives and residual values of property, plant and equipment each year taking into consideration past

experience, technology changes and the local operating environment. Residual values were reassessed during the year and were still in line with those determined last year. Refer Note 2.5 (i) for the useful lives of property, plant and equipment and Note 10 for the carrying amount of property, plant and equipment balances.

ii. Revaluation of land and buildings and investment property The Group measures freehold land and buildings and investment property at fair value with changes in fair value being recognised

in other comprehensive income for land and buildings and profit or loss for investment property. The Group engaged independent valuation specialists to determine fair value of freehold land and buildings as at 31 December 2012. Land and buildings were valued by reference to market-based evidence, using comparable prices adjusted for specific market factors such as nature, location and condition of the property. Refer note 10 for the carrying amount of land and buildings and estimates and assumptions used to determine the fair values. Management performed a fair value assessment for the fair value of the investment property was determined in 2012, using the assumptions and estimates disclosed under note 10, before the property was transferred from property, plant and equipment. The carrying amount of the investment property at year end was not materially different to the fair value and no fair value adjustment was recorded.

iii) Impairment of non-financial assets Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher

of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. Where assets are going to be recovered through use, impairment is calculated based on value in use which is the discounted value of the expected cash flows over a period of time.

Refer note 10 and note 11 for the carrying amounts of non-financial assets.

2.5 Summary of significant accounting policies

a) Business combinations and goodwill Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate

of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the

Notes to the Financial Statements (Continued)

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acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses.

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

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

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

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

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash generating unit retained.

b) Foreign currency translation The consolidated financial statements are presented in United States Dollars, which is also the parent company’s functional

currency. Each entity in the Group determines its own functional currency and items included in the consolidated financial statements of each entity are measured using that functional currency.

Transactions and balances Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency rates prevailing

at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rate of exchange ruling at the reporting date.

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

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

Notes to the Financial Statements (Continued)2.5 Summary of significant accounting policies (Continued)a) Business combinations and goodwill (Continued)

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in other comprehensive income or profit or loss, respectively). Group companies On consolidation the assets and liabilities of foreign operations are translated into United States Dollars at the rate of exchange

prevailing at the reporting date and their statements of comprehensive income are translated at exchange rates prevailing at the date of the transactions. The exchange differences arising from translation are recognised in other comprehensive income and presented in the foreign currency translation reserve in equity. However, if the operation is a non-wholly-owned subsidiary, then the relevant proportionate share of the translation difference is allocated to the non-controlling interests.

On disposal of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is reclassified to profit or loss as part of the gain or loss on disposal.

c) Revenue and other income recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can

be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, and value added tax. The Group assesses its revenue arrangements against specific criteria in order to determine if it is acting as principal or agent. The Group has concluded that it is acting as a principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements has pricing latitude and is also exposed to inventory and credit risks. The specific recognition criteria described below must also be met before revenue is recognised:

Sale of goods Revenue from the sale of goods is recognised when all the following conditions have been satisfied: i. the entity has transferred to the buyer the significant risks and rewards of ownership of the goods, usually on delivery of the

goods; ii. the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective

control over the goods sold; iii. the amount of revenue can be measured reliably; iv. it is probable that the economic benefits associated with the transaction will flow to the entity; and v. the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Interest income For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (EIR), which

is the rate that exactly discounts the estimated future cash payments through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income is included in finance income in the statement of comprehensive income.

Dividend income Revenue is recognised when the Group’s right to receive payment is established, which is generally when the shareholders

approve the dividend.

d) Taxes Current income tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be received from

or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where the Group operates and generates taxable income.

Current income tax relating to items recognised directly in equity or other comprehensive income is recognised in equity or other comprehensive income and not in profit or loss. Management periodically evaluates positions taken in the tax returns with respect

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to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of

assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences, except:

- Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither the accounting profit nor taxable profit or loss, and

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

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

- Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

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

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

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

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

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

Value added tax Revenues, expenses and assets are recognised net of the amount of value added tax except: - Where the value added tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in which

case the value added tax is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable - Receivables and payables that are stated with the amount of value added tax included. The net amount of Value Added Tax recoverable from, or payable to, the taxation authority is included as part of receivables or

payables in the statement of financial position.

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e) Pensions and other post-employment benefits and termination benefits

Pensions and other post-employment benefits Retirement benefits are provided for Group employees through independently administered defined contribution funds, including

the National Social Security Authority Scheme in Zimbabwe and National Social Security Fund in Malawi. Contributions to the defined contribution fund are recognised in profit or loss as they fall due. The cost of retirement benefits applicable to the National Social Security Authority Scheme and National Social Security Fund is determined by the systematic recognition of legislated contributions.

Termination benefits Termination benefits are employee benefits provided in exchange for the termination of an employee’s employment as a result of

either an entity’s decision to terminate an employee’s employment before the normal retirement date or an employee’s decision to accept an offer of benefits in exchange for the termination of employment. The Group recognises termination benefits as a liability and an expense at the earlier of when the offer of termination cannot be withdrawn or when the related restructuring costs are recognised under IAS 37 Provisions, Contingent Liabilities and Contingent Assets.

Termination benefits are measured according to the terms of the termination contract. Where termination benefits are due more than 12 months after the reporting period, the present value of the benefits shall be determined. The discount rate used to calculate the present value shall be determined by reference to market yields on high quality corporate bonds at the end of the reporting period.

f) Share-based payment Employees (including senior executives) of the Group receive remuneration in the form of share-based payment transactions,

whereby employees render services as consideration for equity instruments (‘equity-settled transactions’).

Equity-settled transactions The cost of equity – settled transactions with employees is measured by reference to the fair value at the date on which they are

granted. The fair value is determined by an external valuer. The cost of equity – settled transactions is recognised together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ( ‘ the vesting date’).

The cumulative expense recognised for equity – settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The charge or credit recognised in profit or loss for a period represents the movements in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of the earnings per share

(Note 9).

g) Financial assets Initial recognition Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables,

held-to-maturity investments, available-for-sale financial assets, as appropriate. The Group determines the classification of its financial assets at initial recognition. All financial assets are recognised initially at fair value plus, in the case of investments not at fair value through profit and loss, directly attributable transaction costs. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade dates i.e. the date that the Group commits to purchase or sell the asset.

The Group’s financial assets include cash and short term deposits, trade and other receivables and loans and receivables.

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Subsequent measurement The subsequent measurement of financial assets depends on their classification as follows:

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active

market. After initial measurement such financial assets are subsequently measured at amortised cost using the effective interest rate method (EIR), less impairment.

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

Impairment of financial assets The Group assesses at each reporting date whether there is any indication that a financial asset or group of financial assets is

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

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

Financial assets carried at amortised cost For financial assets carried at amortised cost, the Group first assesses whether objective evidence of impairment exists individually

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

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

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

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

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Derecognition of financial assets A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised

when: • The rights to receive cash flows from the asset have expired. • The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash

flows in full without material delay to a third party under a ‘pass through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset.

In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original

carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

h) Financial liabilities

Initial recognition and measurement Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss or loans and

borrowings, as appropriate. The Group determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables and loans and borrowings.

Subsequent measurement The measurement of financial liabilities depends on their classification as follows:

Interest bearing borrowings After initial recognition, interest bearing borrowings are subsequently measured at amortised cost using the effective interest rate

method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR.

The EIR amortisation is included in finance costs in the statement of comprehensive income

Trade and other payables Trade and other payables are subsequently measured at amortised cost using the effective interest rate method.

Derecognition of financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing

financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

Offsetting of financial instruments Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position

if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.

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i) Property, plant and equipment Property is measured at fair value less subsequent accumulated depreciation and subsequent impairment losses recognised after

the date of the revaluation. Valuations are performed frequently to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Plant, furniture, fittings, equipment and motor vehicles are stated at cost less accumulated depreciation and accumulated impairment losses, if any.

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

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

The Group’s policy is to depreciate property, plant and equipment evenly over the expected life of each asset, with the exception that no depreciation is charged on land and assets under construction and not yet in use. The expected useful lives of the property, plant and equipment are as follows:

Freehold land and buildings 40 years Plant and equipment 3 -10 years Furniture and fittings 2 – 10 years Motor vehicles - Light 5 years - Heavy vehicles and trailers 8 years

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

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

The assets’ residual values, useful lives and depreciation methods are reviewed and adjusted if appropriate, at each financial year end. Adjustments are made prospectively as a change in accounting estimate.

j) Impairment of non-financial assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists,

or when annual impairment testing for an asset is required, the Group estimates the recoverable amount of the asset. An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s (CGU) fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets.

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


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The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group’s cash generating units, to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of five years. For longer periods a long term growth rate is calculated and applied to projected future cash flows after the fifth year.

Impairment losses of continuing operations, including impairment on inventories, are recognised in profit or loss in those expense categories consistent with the functions of the impaired assets, except for a property previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognised in other comprehensive income, up to the amount of any previous revaluation.

For assets excluding goodwill, an assessment is made at each reporting date, as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash generating unit’s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years.

Such reversal is recognised in profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated

as a revaluation increase.

k) Investment properties Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment

properties are stated at fair value which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in profit or loss in the period in which they arise, including the corresponding tax effect. Fair values are determined based on an annual evaluation performed by an accredited external independent valuer applying a valuation model recommended by the International Valuation Standards Committee.

Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of de-recognition.

Transfers are made to (or from) investment property only when there is a change in use. For a transfer from investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use.

l) Leases The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception

date. The arrangement is assessed for whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

Group as a lessee Operating lease payments are recognised as an operating expense in profit or loss on a straight line basis over the lease term.

Group as a lessor Leases in which the Group does not transfer substantially all the risks and rewards of ownership of an asset are classified as

operating leases. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

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m) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial

period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

n) Inventories Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location

and conditions are accounted for as follows: • Materials and consumables are valued at the purchase cost on a weighted average basis. • Finished goods and work in progress are valued at the direct materials costs, labour and an appropriate portion of manufacturing

overheads based on normal operating capacity, but excluding borrowings costs.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

o) Cash and cash equivalents Cash and cash equivalents in the statement of financial position comprise cash at banks and on hand and short-term deposits

with a maturity of three months or less.

p) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of past events and it is

probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

The expense relating to any provision is presented in profit or loss net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

q) Non-current assets held for sale and discontinued operations Non-current assets and disposal groups classified as held for sale are measured at lower of their carrying amount and fair value

less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

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

Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.

r) Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business

combination is their fair values as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in profit or loss in the year in which the expenditure is incurred.


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The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortised over their useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. Currently the Group intangible assets consist of assets assessed as finite and are amortised over a period of 10 years.

The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful lives or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category that is consistent with the function of the intangible assets.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.

Research and development costs Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible

asset when the Group can demonstrate:• The technical feasibility of completing the intangible asset so that the asset will be available for use or sale • Its intention to complete and its ability to use or sell the asset• How the asset will generate future economic benefits• The availability of resources to complete the asset• The ability to measure reliably the expenditure during development

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation is recorded in cost of sales. During the period of development, the asset is tested for impairment annually.

s) Fair value measurement The Group measures non-financial assets such as land and buildings and investment property, at fair value at reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:• In the principal market for the asset or liability, or• In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the

asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair

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value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.• Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly

or indirectly observable• Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

t) Current versus non-current classification The Group presents assets and liabilities in statement of financial position based on current/non-current classification. An asset is classified as current when it is:

• Expected to be realised or intended to be sold or consumed in normal operating cycle• Held primarily for the purpose of trading• Expected to be realised within twelve months after the reporting period, or• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after

the reporting period. All other assets are classified as non-current. A liability is current when:

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

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

2.6 Standards and amendments issued but not yet effective The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s financial

statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.

IFRS 9 Financial Instruments In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments that replaces IAS 39 Financial Instruments: Recognition

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

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

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

Notes to the Financial Statements (Continued)2.5 Summary of significant accounting policies (Continued) s) Fair value measurement (Continued)

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requirements of IFRS 9.

Loans as well as trade receivables are held to collect contractual cash flows and are expected to give rise to cash flows representing solely payments of principal and interest. Thus, the Group expects that these will continue to be measured at amortised cost under IFRS 9. However, the Group will analyse the contractual cash flow characteristics of those instruments in more detail before concluding whether all those instruments meet the criteria for amortised cost measurement under IFRS 9.

(b) Impairment IFRS 9 requires the Group to record expected credit losses on all of its debt securities, loans and trade receivables, either on a

12-month or lifetime basis. The Group expects to apply the simplified approach and record lifetime expected losses on all trade receivables. The Group expects an impact on its equity, but it will need to perform a more detailed analysis which considers all reasonable and supportable information, including forward-looking elements to determine the extent of the impact.

IFRS 14 Regulatory Deferral Accounts IFRS 14 is an optional standard that allows an entity, whose activities are subject to rate-regulation, to continue applying most of

its existing accounting policies for regulatory deferral account balances upon its first-time adoption of IFRS. Entities that adopt IFRS 14 must present the regulatory deferral accounts as separate line items on the statement of financial position and present movements in these account balances as separate line items in the statement of profit or loss and OCI. The standard requires disclosure of the nature of, and risks associated with, the entity’s rate-regulation and the effects of that rate-regulation on its financial statements. IFRS 14 is effective for annual periods beginning on or after 1 January 2016. Since the Group is an existing IFRS preparer, this standard would not apply.

IFRS 15 Revenue from Contracts with Customers IFRS 15 was issued in May 2014 and establishes a five-step model to account for revenue arising from contracts customers.

Under IFRS 15, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

The new revenue standard will supersede all current revenue recognition requirements under existing IFRS. IFRS 15 establishes a five-step model that will apply to revenue earned from a contract with a customer (with limited exceptions),

regardless of the type of revenue transaction or the industry. The standard’s requirements will also apply to the recognition and measurement of gains and losses on the sale of some non-financial assets that are not an output of the entity’s ordinary activities (e.g., sales of property, plant and equipment or intangibles). Extensive disclosures will be required, including disaggregation of total revenue; information about performance obligations; changes in contract asset and liability account balances between periods and key judgments and estimates.

Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2018. Early adoption is permitted. The Group is still assessing the impact of the standard on its contracts with customers.

Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests The amendments to IFRS 11 require that a joint operator accounting for the acquisition of an interest in a joint operation, in which

the activity of the joint operation constitutes a business, must apply the relevant IFRS 3 principles for business combinations accounting. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint operation while joint control is retained. In addition, a scope exclusion has been added to IFRS 11 to specify that the amendments do not apply when the parties sharing joint control, including the reporting entity, are under common control of the same ultimate controlling party.

The amendments apply to both the acquisition of the initial interest in a joint operation and the acquisition of any additional interests in the same joint operation and are prospectively effective for annual periods beginning on or after 1 January 2016,

Notes to the Financial Statements (Continued)2.6 Standards and amendments issued but not yet effective (Continued) IFRS 9 Financial Instruments (Continued)

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with early adoption permitted. These amendments are not expected to have any impact on the Group.

Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation The amendments clarify the principle in IAS 16 and IAS 38 that revenue reflects a pattern of economic benefits that are generated

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

Amendments to IAS 27: Equity Method in Separate Financial Statements The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and

associates in their separate financial statements. Entities already applying IFRS and electing to change to the equity method in its separate financial statements will have to apply that change retrospectively.

For first-time adopters of IFRS electing to use the equity method in its separate financial statements, they will be required to apply this method from the date of transition to IFRS. The amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments will not have any impact on the Group’s consolidated financial statements.

Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants The amendments change the accounting requirements for biological assets that meet the definition of bearer plants. Under the

amendments, biological assets that meet the definition of bearer plants will no longer be within the scope of IAS 41. Instead, IAS 16 will apply. After initial recognition, bearer plants will be measured under IAS 16 at accumulated cost (before maturity) and using either the cost model or revaluation model (after maturity). The amendments also require that produce that grows on bearer plants will remain in the scope of IAS 41 measured at fair value less costs to sell. For government grants related to bearer plants, IAS 20 Accounting for Government Grants and Disclosure of Government Assistance will apply. The amendments are retrospectively effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact to the Group as the Group does not have any bearer plants.

Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture The amendments address the conflict between IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary that is

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

Amendments to IAS 1 Disclosure Initiative The amendments to IAS 1 Presentation of Financial Statements clarify, rather than significantly change, existing IAS 1 requirements.

The amendments clarify:• The materiality requirements in IAS 1• That specific line items in the statement(s) of profit or loss and OCI and the statement of financial position may be disaggregated• That entities have flexibility as to the order in which they present the notes to financial statements• That the share of OCI of associates and joint ventures accounted for using the equity method must be presented in aggregate

as a single line item, and classified between those items that will or will not be subsequently reclassified to profit or loss

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

2.6 Standards and amendments issued but not yet effective (Continued) Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests (Continued)


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Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception The amendments address issues that have arisen in applying the investment entities exception under IFRS 10. The amendments to

IFRS 10 clarify that the exemption from presenting consolidated financial statements applies to a parent entity that is a subsidiary of an investment entity, when the investment entity measures all of its subsidiaries at fair value.

Furthermore, the amendments to IFRS 10 clarify that only a subsidiary of an investment entity that is not an investment entity itself and that provides support services to the investment entity is consolidated. All other subsidiaries of an investment entity are measured at fair value. The amendments to IAS 28 allow the investor, when applying the equity method, to retain the fair value measurement applied by the investment entity associate or joint venture to its interests in subsidiaries.

These amendments must be applied retrospectively and are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments are not expected to have any impact on the Group.

IFRS 16 - Leases The International Accounting Standards board (IASB) issued IFRS 16 in January 2016 which requires lessees to recognize assets and

liabilities for most leases on their balance sheets. Under the new standard, a lease is a contract or part of a contract that conveys the right to use an asset for a period of time in exchange for consideration. To be a lease, a contract must convey the right to control the use of the identified asset, which could be a physically distinct portion of an asset.

The standard will be effective for annual periods beginning on or after 1 January 2019.The Group is still assessing the impact of the standard.

Annual Improvements 2012-2014 Cycle These improvements are effective for annual periods beginning on or after 1 January 2016. They include:

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations Assets (or disposal groups) are generally disposed of either through sale or distribution to owners. The amendment clarifies that

changing from one of these disposal methods to the other would not be considered a new plan of disposal, rather it is a continuation of the original plan. There is, therefore, no interruption of the application of the requirements in IFRS 5. This amendment must be applied prospectively.

IFRS 7 Financial Instruments: Disclosures

(i) Servicing contracts The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. An

entity must assess the nature of the fee and the arrangement against the guidance for continuing involvement in IFRS 7 in order to assess whether the disclosures are required. The assessment of which servicing contracts constitute continuing involvement must be done retrospectively. However, the required disclosures would not need to be provided for any period beginning before the annual period in which the entity first applies the amendments.

(ii) Applicability of the amendments to IFRS 7 to condensed interim financial statements The amendment clarifies that the offsetting disclosure requirements do not apply to condensed interim financial statements,

unless such disclosures provide a significant update to the information reported in the most recent annual report. This amendment must be applied retrospectively.

IAS 19 Employee Benefits The amendment clarifies that market depth of high quality corporate bonds is assessed based on the currency in which the

obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used. This amendment must be applied prospectively.

2.6 Standards and amendments issued but not yet effective (Continued)


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IAS 34 Interim Financial Reporting The amendment clarifies that the required interim disclosures must either be in the interim financial statements or incorporated by

cross-reference between the interim financial statements and wherever they are included within the interim financial report (e.g., in the management commentary or risk report). The other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time. This amendment must be applied retrospectively.

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

2.7 General disclosures The following exchange rates were used in the preparation of these financial statements: USD 1: Statement of Statement of financial position comprehensive income

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

2.6 Standards and amendments issued but not yet effective (Continued) (b) Impairment (Continued)


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Group Company 2015 2014 2015 2014 US$ US$ US$ US$ 3 Other operating income

Royalties - - 900,000 900,000 Dividends received - - 200,000 200,000 Profit on disposal of property, plant and equipment & assets classified as held for sale 74,026 144,519 1,660 12,867 Bad debts recovered * 73,898 - 73,898 - Profit on disposal of scrap 60,758 46,450 - - Sundry income 30,225 173,429 - 119,063 238,907 364,398 1,175,558 1,231,930

*During the year, the company received $121 807 from Cairns Holdings Limited (Cairns) for purchase of the shareholding in Charhons Private Limited done in 2012.The receivable from Cairns , except for an amount of $47 909, had been impaired in 2012 when Cairns was placed under judicial management and therefore a profit of $73 898 was realised.

4 Other operating expenses Exchange loss on foreign currency translation - 26,725 - -

Write off of plant components - 207,735 - - Retrenchment costs 134,504 - - - Impairment - Inventory 72,029 - - - - investment in subsidiary - - 700,000 - 206,533 234,460 700,000 - 5 Operating profit /(loss) is stated after charging the following:

Audit fees 181,753 197,385 45,000 39,000 Depreciation of property, plant and equipment 4,609,952 3,914,217 207,878 205,673 Amortisation of intangible assets 91,356 91,357 - - Directors emoluments for services as directors 210,386 191,585 100,990 88,460 Employee benefits expense

-Salaries and wages 15,390,253 16,659,421 1,992,400 1,958,712 -Pension costs 329,646 350,100 73,298 71,617 -National Social Security Authority 199,098 199,042 8,585 8,785 15,918,997 17,208,563 2,074,283 2,039,114 6 Finance costs

Interest on borrowings 1,085,599 792,305 1,089,830 794,510

7 Finance income

Interest received on loans and investments 127,131 209,592 1,071,854 775,173 8 Taxation

Current income tax:

- Current income tax charge 462,747 185,679 - 48,219 - Prior year (over)/ under provision (2,836) 24,796 (8,247) 24,796 Capital gains tax 20,969 65,709 6,000 5,100 Deferred tax -Deferred tax charge/( credit) 229,037 (106,472) (83,967) (32,748) -Prior year under provision - - 18,228 - 709,917 169,712 (67,986) 45,367

Tax rate reconciliation Standard rate 25.75% 25.75% 25.75% 25.75%

Prior year income tax charge under provision 0.33% 3.18% (1.06%) 7.17% Effect of higher tax rate in Malawi on assessed loss (0.05%) (0.23%) 0.00% 0.00% Disallowed expenses 1.06% 2.47% (1.48%) 1.25% Properties deferred tax charged at lower rate (3.26%) (7.78%) 0.00% 0.00% Profit on disposal of shares taxed at a lower rate (0.43%) (2.74%) 1.38% (6.17%) Non-taxable dividends - - 5.49% (15.02%) Depreciation on passenger motor vehicle excess cost ineligible for tax allowances 1.20% 1.32% (3.73%) 0.19% Impairment loss on subsidiary - - (19.22%) - Other non-taxable /non-deductible items (1.03%) (0.04%) 0.12% 0.06% Effective tax rate 23.57% 21.93% 7.25% 13.23%


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9 Earnings per share Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the

weighted average number of ordinary shares outstanding during the year.

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

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

2015 2014 US$ US$

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

2015 2014 No. No. Weighted average number of ordinary shares for basic earnings per share 358,000,858 358,000,858

Effect of dilution: Share options* - -

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

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

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


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10 Property, plant and equipment

GROUP COMPANY Freehold Plant and Capital Furniture Motor Furniture Motor land and equipment work in and vehicles Total and vehicles Total buildings progress Fittings Fittings US$ US$ US$ US$ US$ US$ US$ US$ Cost or valuation

At 1 January 2014 17,653,464 25,261,680 - 920,384 6,328,033 50,163,561 402,380 741,735 1,144,115 Additions 57,933 6,275,567 2,809,213 92,495 649,966 9,885,174 5,416 60,000 65,416 Disposals (442,225) (84,053) - (22,473) (145,163) (693,914) - (17,500) (17,500) Transfer to investment property (1,530,311) - - - - (1,530,311) - - - De-recognition of assets (Note 10.4) - (384,050) - - - (384,050) - - - Transfer to assets classified as held for sale (613,364) - - - - (613,364) - - - Exchange adjustments (89,876) (138,810) - 7,649 (30,985) (252,022) - - - At 31 December 2014 15,035,621 30,930,334 2,809,213 998,055 6,801,851 56,575,074 407,796 784,235 1,192,031 Additions - 6,320,829 (2,086,965) 52,017 336,049 4,621,930 9,563 - 9,563 Transfer to assets classified as held for sale - (198,998) - - - (198,998) - - - Disposals (43,071) (6,218) - - (197,173) (246,462) - (12,500) (12,500) Exchange adjustments (268,101) (440,834) - (25,883) (25,153) (759,971) - - - At 31 December 2015 14,724,449 36,605,113 722,248 1,024,189 6,915,574 59,991,573 417,359 771,735 1,189,094 Accumulated depreciation and impairment

At 1 January 2014 (25,401) (8,127,034) - (549,967) (2,168,185) (10,870,587) (198,343) (401,810) (600,153) Depreciation charge for the year (98,043) (2,879,572) - (179,986) (756,616) (3,914,217) (95,367) (110,306) (205,673) De-recognition of assets (Note 10.4) - 176,315 - - - 176,315 - - - Transfer to investment property (Note 11) 62,810 - - - - 62,810 - - - Disposals 18,460 73,381 - 22,422 100,925 215,188 - 15,700 15,700 Assets held for sale 5,720 - - - - 5,720 - - - Exchange adjustments 2,220 49,255 - (10,471) 35,134 76,138 - - - At 31 December 2014 (34,234) (10,707,655) - (718,002) (2,788,742) (14,248,633) (293,710) (496,416) (790,126) Depreciation charge for the year (97,599) (3,677,043) - (123,419) (711,891) (4,609,952) (56,830) (151,048) (207,878) Transfer to held for sale - 80,705 - - - 80,705 - - - Disposals 12,465 1,554 - 11,075 156,768 181,862 - 9,961 9,961 Exchange adjustments 15,074 235,226 - 20,276 38,929 309,505 - - - At 31 December 2015 (104,294) (14,067,213) - (810,070) (3,304,936) (18,286,513) (350,540) (637,503) (988,043) Net book value

At 31 December 2015 14,620,155 22,537,900 722,248 214,119 3,610,638 41,705,060 66,819 134,232 201,051 At 31 December 2014 15,001,387 20,222,679 2,809,213 280,053 4,013,109 42,326,441 114,086 287,819 401,905 10.1 Reconciliation of opening and closing carrying amounts 2015 2014 2015 2014 US$ US$ US$ US$ Net carrying amount at 1 January 42,326,441 39,292,974 401,905 543,962 Cost 56,575,074 50,163,561 1,192,031 1,144,115 Accumulated depreciation and impairment (14,248,633) (10,870,587) (790,126) (600,153) Movement for the year: Additions 4,621,930 9,885,174 9,563 65,416 Net carrying amount of disposals (64,600) (478,726) (2,539) (1,800) Depreciation charge for the year (4,609,952) (3,914,217) (207,878) (205,673) De-recognition - (207,735) Transfer to assets held for sale (note 20) (118,293) (607,644) - - Transfer to investment property - (1,467,501) - - Net exchange adjustment (450,466) (175,884) - - Net carrying amount at 31 December 41,705,060 42,326,441 201,051 401,905 Cost 59,991,573 56,575,074 1,189,094 1,192,031 Accumulated depreciation and impairment (18,286,513) (14,248,633) (988,043) (790,126)


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

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

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

Fair value of the properties was determined by using market comparable method. This means that valuations performed by the valuer are

based on active market prices, significantly adjusted for difference in the nature, location or condition of the specific property. As at date of revaluation 31 December 2012, the properties’ fair values were based on valuations performed by CB Richard Ellis,an accredited independent valuer.

Significant unobservable data Price per square metre US$400-US$1,250 (2014:US$400-US$1 250)

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

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

10.3 Property secured against borrowings

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

10.4 Assets written off During the prior year, some specific plant and machinery parts which had become obsolete in the production process were replaced in line

with technology changes. The replaced parts with a carrying amount of $207 735 were de-recognised.

10.5 Capitalised borrowings costs Borrowings costs of $123 000 (2014:$559 628 were capitalised during the year on the qualifying expenditure of $2.8 million. The interest

capitalised was computed using the specific interest rate on the borrowings . GROUP COMPANY 2015 2014 2015 2014 US$ US$ US$ US$ 11 Investment property Balance at 1 January 1,467,501 - - - Transfer from property, plant and equipment - 1,467,501 - - Cost (Note 10) - 1,530,311 - - Accumulated depreciation (Note 10) - (62,810) - - Fair value adjustment Balance at 31 December 2015 1,467,501 1,467,501 - -

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

The properties were revalued in December 2012 as part of land and buildings. Refer to Note 10 for the valuation technique and key

unobervable inputs used to value the property Management performed a fair value assessment at 31 December 2015 and the movement in fair value was not material.

Revenue and expenses relating to investment property

GROUP COMPANY 2015 2014 2015 2014 US$ US$ US$ US$ Rental income from leasing 75,803 97,635 - - Operating costs (20,870) (30,564) - - Net income 54,933 67,071 - - 12 Intangible assets

Cost At 1 January 1,003,211 925,738 77,473 - Additions 61,105 77,473 61,105 77,473 At 31 December 1,064,316 1,003,211 138,578 77,473 Amortisation At 1 January (314,949) (223,592) - - Charge for the year (91,356) (91,357) - - At 31 December (406,305) (314,949) - - Net book value 658,011 688,262 138,578 77,473


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12 Intangible assets (Continued)

Reconciliation of opening and closing carrying amounts

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

Net carrying amount at 1 January 688,262 702,146 77,473 - Cost 1,003,211 925,738 77,473 - Accumulated amortisation (314,949) (223,592) - - Movement for the year: Additions 61,105 77,473 61,105 77,473 Amortisation (91,356) (91,357) - - Net carrying amount at 31 December 658,011 688,262 138,578 77,473 Cost 1,064,316 1,003,211 138,578 77,473 Accumulated amortisation (406,305) (314,949) - - The intangible assets consist of computer software.

The additions to intangible assets under the company relates to the purchase of a business intelligence sofware which was not yet complete

as at 31 December and hence there was no ammortisation charge in the year.

13 Investments in subsidiaries Lavenson Investments (Private) Limited - - 6,259,870 6,259,870 Martindale Trading (Private) Limited - - 1 1 Dairibord Malawi Limited - - 507,807 1,207,807 Kutal Investments (Private) Limited - - 9,153,012 9,153,012 NFB Logistics (Private) Limited - - 1,077,493 1,077,493

- - 16,998,183 17,698,183 At 31 December 2015, the investment in Dairibord Malawi Limited (DML) was assesed for impairment as the subsidairy continues to post

losses. As a result of this analysis, the investment was impaired by $700 000 in the separate financial statements.

The recoverable amount of $ 507 807 was based on fair value less costs of disposal estimated using the net asset value per share. The company has a 68.4% interest in the subsidiary translating to 684 shares. The recoverable amount will be classified as a level 3 fair value measurement.

GROUP COMPANY 2 015 2 014 2 015 2 014 14 Loans receivable US$ US$ US$ US$ 14.1 Long-term loans receivable

Dairibord Zimbabwe (Private) Limited - - 10,728,821 8,467,968 NFB Logistics (Private) Limited - - 620,230 259,897 Martindale Trading (Private) Limited - - 507,215 1,071,314 - - 11,856,266 9,799,179 Less : Amounts falling due within one year - - (3,733,914) (2,911,210) - - 8 122 352 6 887 969

The long term loans receivable relate to loans that were issued to subsidiaries at an all-in cost of between 9.6% and 11% per annum and are

repayable by 2019. The holding company raises loans from banks for onlending to subsidiaries.

14.2 Short-term loans receivable Dairibord Zimbabwe (Private) Limited - - 1,490,000 1,024,552 Add : Amounts falling due within one year of long term loans receivable - - 3,733,914 2,911,210 - - 5,223,914 3,935,762


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

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

15 Other non-current financial assets

Loans receivable 421,884 869,298 76,632 85,649 The loans receivable represent the non-current portion of loans which were issued to staff under a motor vehicle loan scheme and loans

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

16 Inventories Packaging and raw materials (at cost) 12,269,199 10,740,497 - - Spares and general consumables (at cost) 3,024,708 2,704,557 - - Finished goods (at lower of cost and net realisable value) 2,802,828 1,702,003 - - Total inventories at the lower of cost and net realisable value 18,096,735 15,147,057 - - The amount of inventories recognised as an expense for the period was $ 57 517 088 (2014 :$55 320 994 ).

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

17 Group companies The following balances arise from normal trading activities:

17.1 Amounts owed by group companies

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

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

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


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

18 Trade and other receivables Trade receivables 10,031,500 8,242,338 - - Other receivables 1,791,954 3,370,803 38,171 339,794 11,823,454 11,613,141 38,171 339,794 As at 31 December 2015, receivables of $532 549 (2014 : $664 561) were provided for. The following is a movement in the impairment of

receivables balance: Opening balance 664,561 842,007 - - Charge for the year 153,912 187,256 - - Bad debts written off (285,924) (362,709) - - Reversal for the year - (1,993) - - At 31 December 532,549 664,561 - - The ageing analysis of trade receivables was as follows : Neither Past due past but not due nor impaired Total impaired 30-60 days 60 +days US$ US$ US$ US$

At 31 December 2015 10,031,500 7,633,834 1,108,640 1,289,026 At 31 December 2014 8,242,338 5,981,185 1,466,689 794,464 Trade credit is generally offered on 30 day credit terms and no interest is charged within the credit period.

See note 31.1 on credit risk of trade receivables to understand how the Group manages and measures credit quality of trade receivables that

are neither past due nor impaired. 19 Cash and cash equivalents Cash at banks and on hand 2,809,915 1,414,341 58,672 36,637

20 Assets classifed as held for sale

Assets classified as held for sale On 31 December 2013, certain residential properties were classified as held for sale following a Board resolution to sell some residential

properties and invest the cash in plant and machinery. Properties worth $878 230 have been sold to date and management is confident the remaining properties will be sold in the current year and hence remained classified as held for sale as at 31 December 2015.

At 31 December 2015, certain pieces of plant and machinery were classified as held for sale following a management decision that they should be sold.

The major classes of assets classified as held for sale as at 31 December 2015 are as follows:

Group 2015 2014 US$ US$ Freehold land and buildings 709,622 919,551 Plant and machinery 118,293 - 827,915 919,551 Reconciliation of assets held for sale

Opening balance 919,551 980,208 Disposals (209,929) (668,301) Transfer from property, plant and equipment (Note 10.1) 118,293 607,644 Closing balance 827,915 919,551 There were no liabilities directly associated with the assets held for sale.


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Group and Company 2015 2014 No. No.

21 Issued capital and reserves 21.1 Share capital Authorised shares Ordinary shares of US$0.0001 each 425,000,000 425,000,000 No. US$ Ordinary shares issued and fully paid At 31 December 2014 358,000,858 35,800 At 31 December 2015 358,000,858 35,800 Subject to the limitations imposed by the Companies Act (Chapter 24:03) in terms of a resolution passed by the company in general meeting,

the unissued shares have been placed at the disposal of the directors. Share option Scheme The directors are empowered to grant share options to certain employees of the company.The options granted are exercisable within 6 years

from date of grant and they all vested in 2011. Movements in the year No. No. Opening balance 465,286 465,286 Exercised during the year - - Exercisable at 31 December 465,286 465,286

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

-The exercise price of the option (US$) 0.085 -The market price of the option (US$) as at 31 December 2015 0.070 -The remaining contractual life (years) 1 Group and Company 2015 2014 US$ US$21.2 Share premium At 31 December 1,379,664 1,379,664


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21.3 Non-distributable reserves

Group Attributable to equity holders of the parent

Foreign Foreign Share currency currency Asset Other Option translation conversion revaluation capital Total

reserve reserve reserve reserve reserves reserves US$ US$ US$ US$ US$ US$

Balance at 1 January 2014 16,797 (4,127,129) 18,641,370 8,835,080 117,784 23,483,902 Other comprehensive income - (58,153) - - - (58,153) Gross - (58,153) - - - (58,153) Income tax effect - - - - - - Transfer to held for sale reserve - - (304,548) - (304,548) Balance at 31 December 2014 16,797 (4,185,282) 18,641,370 8,530,532 117,784 23,121,201 Other comprehensive income - (194,422) - - - (194,422) Gross - (194,422) - - - (194,422) Income tax effect - - - - - - Transfer to retained earnings on disposal of asset - - - (13,995) - (13,995) Balance at 31 December 2015 16,797 (4,379,704) 18,641,370 8,516,537 117,784 22,912,784 Nature and purpose of reserves Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of the

foreign subsidiary. Foreign currency conversion reserve The foreign currency conversion reserve arose as a result of change in functional currency from the Zimbabwe dollar to the United States

dollar.It represents the residual equity in existence as at the change over period and has been designated as non - distributable reserve.

Asset revaluation reserve The asset revaluation reserve is used to record increases in the fair value of land and buildings and decreases to the extent that such

decreases relate to an increase on the same asset previously recognised in equity.

Other capital reserves This relates to the profit made on the acquisition of additional interest in Dairibord Malawi Limited.

Share option reserve The share option reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key

management personnel, as part of their remuneration. Refer to Note 21.1 for further details of these plans.

Reserves of assets held for sale The reserve relates to the revaluation surplus on assets classified as held for sale.


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Borrowing cost % GROUP COMPANY United States Malawi 2015 2014 2015 2014 dollar Kwacha Maturity US$ US$ US$ US$ 22 Interest bearing borrowings 22.1 Long term borrowings a) Bank loan Malawi 37.5% Aug 2016 93,225 271,358 - b) PTA Bank-2011 Loan 11% Dec 2016 992,606 1,999,297 992,606 1,999,297 c) PTA Bank-2014 Loan 10.6% May 2019 4,756,086 5,012,672 4,756,086 5,012,672 d) Secured loan 10.6% Dec 2016 568,566 941,023 568,566 941,023 e) Bank loan Zimbabwe-secured 10% May 2016-Dec 2018 1,814,000 1,852,000 1,814,000 1,852,000 8,224,483 10,076,350 8,131,258 9,804,992 Less : Amounts falling due within one year (3,662,620) (3,565,037) (3,633,090) (3,384,132) 4,561,863 6,511,313 4,498,168 6,420,860 22.2 Short term borrowings f) Bank loan Zimbabwe - secured 10% Jan 2016 500,000 - 500,000 - g) Bank loan Zimbabwe - unsecured 11% Sep 2016 1,025,000 1,000,000 1,025,000 1,000,000 1,525,000 1,000,000 1,525,000 1,000,000 Add : Portion of long term loans falling due within one year 3,662,620 3,565,037 3,633,090 3,384,132 5,187,620 4,565,037 5,158,090 4,384,132 Total interest bearing borrowings 9,749,483 11,076,350 9,656,258 10,804,992 a) 37.5% secured loan This is made up of two loans totalling MK 140,532,913 (US$ 330,941) which were used in financing the acquisition of plant and equipment. The

loans are repayable by 30 August 2016 in monthly instalments of MK 2,988,018 (US$6,567 ). The loan is secured over assets purchased.

b) 11% PTA Secured-loan This loan was utilised to purchase plant and equipment.The total loan facity amounts to $4,023,000 and is secured by immovable property of

Kutal Investment (Private) Limited with a book value of $ 5,984,633 and assets purchased.

c) 10.6% PTA Secured loan The loan financed capital projects. This loan , together with the old loan above ,is secured over immovable property worth US$9 million and the

assets funded. The total facility available is $6 million. d) Secured loan This loan was used to fund part of the capital projects at Dairibord Zimbabwe (Private) Limited. The loan repayment is over 2.5 years and

started in November 2014. e) Bank Loan Zimbabwe This loan was used to acquire plant and equipment at Dairibord Zimbabwe (Private) Limited. Part of the loan , $784 000 is due by 10 May 2016

with the balance due by 10 December 2018. It is secured over property with a book value of $4,499,490.

f) Bank Loan Zimbabwe This was made up of various short term loans secured by immovable property of Kutal Investment (Private) Limited as indicated in note (e)

above. The current facility amounts to $500 000 and expires on 8 May 2016 and is subject to renewal.

g) Bank Loan Zimbabwe-unsecured This is a working capital loan. The facility expires on 30 September 2016 and is subject to renewal.


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23 Borrowings powers The directors may borrow any sum of money not exceeding the aggregate of twice the issued and paid up share capital of the company and

the aggregate of the amounts standing to the credit of all the reserve accounts and share premium account.

Banking facilities At 31 December 2015 , the banking facilities in place in Zimbabwe amounted to $15 182 000 (2014 : $16 500 000). The facilities expire

between 10 May 2016 and 10 May 2019. In Malawi the banking facilities amounted to MK 260,000,000 (US$ 530,612). The facilities expire by August 2016.

GROUP COMPANY 2015 2014 2015 2014 US$ US$ US$ US$ 24 Deferred taxation Deferred tax relates to the following: Property , investment property and property classified as held for sale 513,380 578,173 - - Plant and equipment 4,366,045 3,990,900 80,611 61,829 Intangible assets 133,755 157,278 - - Inventory (18,860) - - - Accounts receivable (103,011) (27,080) - - Unrealised loss on exchange (297,769) - - - Unutilised tax loss (1,225,007) (1,578,553) (53,369) - Prepayments 158,730 247,803 - - Provisions (164,257) (173,710) (58,678) (27,526) Net liability/(asset) 3,363,006 3,194,811 (31,436) 34,303 Disclosed as follows on the statement of financial position: Asset 31,436 - 31,436 - Liability 3,394,442 3,194,811 - 34,303 Reconciliation of deferred tax Opening balance as of 1 January 3,194,811 3,333,882 34,303 67,051 Tax expense/(credit) recognised in profit or loss 229,037 (106,472) (65,739) (32,748) Effect of exchange rate change (60,842) (32,599) - - Closing balance as at 31 December 3,363,006 3,194,811 (31,436) 34,303 The Group has tax losses which arose in two subsidiaries of US$5 779 026 (2014:US$6,027,066) that are available for offset against future

taxable profits. Deferred tax asset has been recognised for the whole amount of the tax losses. 25 Trade and other payables Trade payables 14,316,061 12,405,144 - - Other payables 2,968,197 2,931,660 800,949 706,277 17,284,258 15,336,804 800,949 706,277 Terms and conditions of trade and other payables: Trade and other payables are non - interest bearing and are on 14 - 30 day terms.


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GROUP 2015 2014 US$ US$ 26 Commitments and contigencies Capital commitments : Authorised and contracted for 5,762,728 1,528,753 Authorised and not contracted for 5,356,438 8,967,526 11,119,166 10,496,279 The Group’s capital expenditure will be financed from the Group’s own resources and borrowings. Litigation The Group is a respondent in various employee claims for unfair dismissal and vendor litigations. On the basis of legal advice the claims are not valid and there will be no outflow of resources. Operating lease commitments - Group as lessee The Group entered into a commercial lease on a commercial building.The lease is for a one year period with a renewal option included in the contract. There are no restrictions placed upon the Group in entering into the lease. Future minimum rentals receivable under the operating leases as at 31 December are as follows : Within one year 156,330 160,000 Operating lease commitments -Group as Lessor The Group entered into commercial leases with tenants on commercial buildings.The leases are for a one year period with a renewal option included in the contract. There are no restrictions placed upon the Group in entering into the lease. Future minimum rentals payable under the operating leases as at 31 December are as follows : Within one year 100,000 152,000 27 Related party disclosures 27.1 The consolidated financial statements include the financial statements of Dairibord Holdings Limited and the subsidiaries listed in

the following table: % equity Interest Country of Name Incorporation 2015 2014 Dairibord Malawi Limited Malawi 68.4 68.4 Martindale Trading (Private) Limited Zimbabwe 100 100 Lavenson Investments ( Private ) Limited Zimbabwe 100 100 NFB Logistics ( Private ) Limited Zimbabwe 100 100 Kutal Investments ( Private ) Limited Zimbabwe 100 100 27.2 Company US$ US$ Management fees received from subsidiaries 1,961,289 2,498,469 Royalties received from subsidiaries 900,000 900,000 Loans issued to subsidiaries 8,800,306 9,545,717 Loans repaid by subsidiaries 6,276,006 3,933,717 Interest income on loans to subsidiaries 1,058,062 755,862 Refer Note 14 and 17 for loans receivable from subsidiaries and related party balances respectively.


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GROUP 2015 2014 US$ US$ 27.3 Key management personnel transactions Compensation Group Short term employee benefits 3,178,304 3,294,752 Pension contributions 88,491 93,009 Total compensation paid 3,266,795 3,387,761 Company Short term employee benefits 1,517,722 1,561,193 Pension contributions 28,992 27,683 Total compensation paid 1,546,714 1,588,876 Motor vehicle loan balances Group 258,635 235,473 Company 68,748 108,776 The motor vehicle loans were issued at an interest rate of 9.5% , and on the same terms as to all other employees. Refer Note 15 for more detail. Share option scheme There are 465 286 outstanding share options currently excercisable which were issued to key management personnel in 2010. There were no excercises during the year 28 Pension and retirement plans 28.1 Defined contribution funds All employees of the Group are eligible to be members of defined contributions funds. 28.2 National Social Security Authority Scheme This is a scheme estabilished under the National Social Security Authority Act (1989). Contributions per employee is 3.5% per month up to a maximum pensionable salary of $700. This scheme is a defined contribution scheme from the Group’s perspective. 28.3 Pension costs charged to the income statement during the year Group National Social Security Authority Scheme - Zimbabwe 199,098 199,042 Defined contribution funds 329,646 350,100 528,744 549,142 Company National Social Security Authority Scheme - Zimbabwe 8,585 8,785 Defined contribution funds 73,298 71,617 81,883 80,402


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29 Material partly-owned subsidiary Financial information of subsidiary that has material non-controlling interests are provided below:

Portion of equity interest held by non-controlling interests:

Name Country of incorporation 2015 2014 and operation Daribord Malawi Limited Malawi 31.6% 31.6% US$ US$ 2015 2014 Accumulated balances of material non-controlling interest: 253,630 375,253 Loss allocated to non-controlling interest (31,803) (126,360) The summarised financial information of the subsidiary is provided below. This information is based on amounts before inter-company

eliminations. Dairibord Malawi Limited summarised statement of profit or loss for 2015

2015 2014 US$ US$

Revenue 4,210,573 4,980,585 Cost of sales (2,920,669) (3,779,227) Administrative expenses (1,301,101) (1,584,394) Finance costs (131,987) (157,946) Loss before tax (143,184) (540,982) Income tax credit 42,543 141,109 Loss for the year (100,641) (399,873) Total comprehensive income (100,641) (399,873) Attributable to non-controlling interests (31,803) (126,360) Dairibord Malawi Limited summarised statement of financial position as at 31 December 2015

2015 2014 US$ US$

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

Total equity 802,624 1,187,508 Attributable to equity holders of parent 548,995 812,255 Non-controlling interest 253,629 375,253 Summarised cash flow information for the year ending 31 December 2015

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


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30 Fair value measurement The following table provides the fair value measurement hierachy of the Group’s assets.

Quantitative disclosures fair value measurement hierarchy for assets: Group As at 31 December 2015 Fair value measurement using Total Quoted prices Significant Significant in active observable unobservable inputs markets (Level 1) inputs (Level 2) (Level 3) Assets measured at fair value Level 1 Level 2 Level 3 US$ US$ US$ US$ Revalued land and buildings (Note 10) 14,620,155 - - 14,620,155 Investment property (Note 11) 1,467,501 - - 1,467,501 There have been no transfers between Level 1 and Level 2. As at 31 December 2014

Fair value measurement using Total Quoted prices Significant Significant in active observable unobservable inputs markets (Level 1) inputs (Level 2) (Level 3) Assets measured at fair value Level 1 Level 2 Level 3

US$ US$ US$ US$ Revalued property (Note 10) 15,001,387 - - 15,001,387 Investment property (Note 11) 1,467,501 - - 1,467,501 There have been no transfers between Level 1 and Level 2.


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31 Financial Risk Management objectives and policies The Group’s principal financial liabilities comprise trade payables and interest-bearing borrowings. The main purpose of these financial instruments

is to raise finance for the Groups’s operations. The Group has various financial assets such as trade receivables and cash which arise directly from its operations.

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

are managed as follows : 31.1 Credit risk Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract leading to a financial

loss. The Group is exposed to credit risk from its operating activities (primarily for trade receivables and loan notes) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Trade receivables Customer credit risk is managed by each business unit subject to the Group’s establised policy , procedures and control relating to customer

credit risk management. Credit limits are established for all customers based on internal rating criteria. Credit quality of the customer is assessed through extensive credit verification procedures and individual credit limits are defined in accordance with this assessment. Customers with outstanding balances are regularly monitored.

The requirement for impairment is analysed at each reporting date on an individual basis for all customers. The maximum exposure to credit

risk at the reporting date is the carrying amount of each class of financial asset disclosed in note 18. The Group evaluates the concentration of credit risk as low since the balances are widely spread.

Cash balances The Group only deposits cash with financial institutions with high credit ratings. The maximum exposure to risk is equal to the carrying amount

of cash and bank balances as disclosed in note 19. 31.2 Liquidity risk The Group consistently monitors its risk to a shortage of funds.This requires that the Group considers the maturity of both its financial investments

and financial assets e.g accounts receivables, other financial assets and projected cash flows from operations.The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and debentures.

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

undiscounted payments : GROUP Year ended 31 December 2015 On 0 to 3 3 to 12 1 to 5 + 5 Total demand months months years years Liabilities US$ US$ US$ US$ US$ US$ Interest bearing borrowings - 1,926,765 3,875,696 5,192,657 - 10,995,118 Trade and other payables - 17,284,257 - - - 17,284,257 - 19,211,022 3,875,696 5,192,657 - 28,279,375 Year ended 31 December 2014 Liabilities Interest bearing borrowings - 1,292,640 3,994,683 7,357,433 - 12,644,756 Trade and other payables - 15,336,804 - - - 15,336,804 - 16,629,444 3,994,683 7,357,433 - 27,981,560 COMPANY Year ended 31 December 2015 Liabilities Interest bearing borrowings - 1,897,233 3,812,003 5,192,657 - 10,901,893 Trade and other payables - 800,949 - - - 800,949 Amounts owed to Group companies - 4,515,526 - - - 4,515,526 - 7,213,708 3,812,003 5,192,657 - 16,218,368

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


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31.3 Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign

exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenues or expenses are denominated in a different currency), and the groups net investment in subsidiaries . The Group limits exposure to exchange rate fluctuations by either pre-paying for purchases or retaining stock until the foreign currency to settle the related liability has been secured.

The following table demonstrates the sensitivity to a reasonable possible change in the Euro and Rand exchange rate ,

Effect Change in on profit rates before tax 2015 +10% 73,754 -10% (131,029) 2014 +10% 30,311 -10% (55,698)

Because of the investment in Malawi , the Group’s statement of financial position can be affected siginificantly by movements in the Malawi

Kwacha. The following table represents the effect on profit before tax to a reasonable change in the Malawi Kwacha to United States Dollar on the

consolidation of Malawi operations: Change in Effect rates on profit before tax

2015 +10% (13,255) -10% 6,088 2014 +10% (58,513) -10% 48,124

31.4 Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest

rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long term obligations with floating interest rates.

The Group manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. The Group’s policy is to

keep most of its borrowings at fixed rates of interests; with an option to re-negotiate interest rates for term loans every year. The only variable interest rate loan is one linked to 3 months LIBOR rate, but which will only impact on profit and loss if the LIBOR rises by at least 100%, a rise which is unlikely and hence interest rate sensitivity has not not been calculated.

31.5 Capital management The primary objective of the company’s capital management is to ensure that the company maintains a healthy capital ratio in order to support

the business and maximize shareholder value. The group manages its capital structure and makes adjustments to it in light of changes in the economic enviroment. To maintain or adjust the

capital structure the Group may adjust the dividend payment to shareholders, return capital to shareholders, or issue new shares. No changes were made to the objectives , policies or processes during the year ended 31 December 2015.

The Group monitors capital using a gearing ratio , which is net debt divided by total capital plus net debt. The Group’s policy is to keep the gearing ratio up to a maximum of 50%. The Group includes within net debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents, excluding discontinued operations.

2015 2014 US $ US $ Interest bearing borrowings (Note 22) 9,749,483 11,076,350 Trade and other payables (Note 25) 17,284,258 15,336,804 Less cash and short-term deposits (Note 19) (2,809,915) (1,414,341) Net Debt 24,223,826 24,998,813 Equity 48,102,112 46,084,681 Capital and debt 72,325,938 71,083,494 Gearing ratio 33.5% 35.2%


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32 Segment Information 32.1 For management purposes , the Group is currently primarily organised into business units based on business activity.The Group has four

operating segments as follows : Manufacturing - manufactures foods and beverages Logistics - logistical services and distribution of goods Properties - leasing of properties Corporate - resource allocation Three business units- 2 in Zimbabwe and the Malawi operation-have been agregated into the manufacturing segment.The following factors

have been considered in arriving at the decision: (a) the business units have similar product categories divided into milks, beverages and foods . These product lines have almost similar margins.

(b) they have same customers; and (c ) the 2 entities in Zimbabwe use same distribution to the market and in some cases share the same selling points in some areas.

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

performance assesment. Adjustments and Year ended 31 December 2015 Manufacturing Logistics Properties Corporate eliminations Group US$ US$ US$ US$ US$ US$ Revenue External customers 102,713,056 652,350 75,803 - - 103,441,209 Inter-segment 7,199,471 8,144,644 664,151 - (16,008,266) - Total revenue 109,912,527 8,796,994 739,954 - (16,008,266) 103,441,209 Results Depreciation, ammortisation and impairment 3,907,116 512,485 73,831 207,876 - 4,701,308 Operating profit/(loss) 2,962,457 887,812 539,481 (919,693) 500,000 3,970,057 Segment assets 60,250,701 7,035,325 21,300,942 32,775,718 (42,662,522) 78,700,164 Segment liabilities 37,404,490 3,547,045 357,589 14,941,296 (25,652,368) 30,598,052 Capital expenditure 4,430,091 182,277 - 70,668 - 4,683,036 Adjustments and Year ended 31 December 2014 Manufacturing Logistics Properties Corporate eliminations Group US$ US$ US$ US$ US$ US$ Revenue External customers 97,893,279 1,024,611 97,635 - - 99,015,525 Inter-segment 5,032,010 6,934,229 627,821 - (12,594,060) - Total revenue 102,925,289 7,958,840 725,456 - (12,594,060) 99,015,525 Results Depreciation 3,176,965 456,271 75,309 205,672 - 3,914,217 Operating (loss)/profit (342,643) 756,928 792,336 362,243 (212,343) 1,356,521 Segment assets 54,866,576 5,879,432 21,061,287 30,726,832 (36,738,761) 75,795,366 Segment liabilities 33,258,157 2,816,080 642,315 12,022,727 (19,028,594) 29,710,685 Capital expenditure 9,631,248 334,500 22,711 142,889 (168,701) 9,962,647 The adjustments and eliliminations columns relate to inter-segments transactions and balances which are eliminated on consolidation.

32.2 Geographic Information Revenue from external customers Group 2015 2014 US$ US$ Zimbabwe 99,721,998 94,034,940 Malawi 3,719,211 4,980,585 103,441,209 99,015,525 The revenue information above is based on the location of the operations

Non-current assets Zimbabwe 42,599,229 43,542,493 Malawi 1,231,343 1,809,011 43,830,572 45,351,504 Non current assets consist of land and buildings, investment property , plant and equipment, intangible assets and investments.


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33 Events after the reporting date Effective 1 January 2016, the Board resolved to restructure the Group and streamline the business to achieve operational efficiencies by

grouping together all related operations and businesses. The Group structure has therefore changed from the one on page 5 of this report. The new group structure is summarised below:

• Martindale Trading (Private) Limited and NFB Logistics are now operating divisions of Dairibord Zimbabwe (Private) Limited (DZPL). DZPL

itself is now owned directly by Dairibord Holdings Limited. • The property holding companies-Goldblum, Slimline, Chatmoss and Qualinex-are now directly owned by Dairibord Holdings Limited

• Lavenson Investments Private Limited, Kutal Investments (Private) Limited and Martindale Trading Private Limited will no longer hold assets

and will be de-registered. In addition, Soilmark Farming (Private) Limited, Repsol Estates (Private) Limited, Rosenwald Estates (Private) Limited, Repsol Estates, Abrupt Enterprises (Private) Limited, and Westside Foods (Private) Limited will also be de-registered.


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DML - DAIRIBORD MALAWI LIMITED

DZL - DAIRIBORD ZIMBABWE LIMITED

DZPL - DAIRIBORD ZIMBABWE (PRIVATE) LIMITED

HDPE - HIGH DENSITY POLYETHYLENE

GDP - GROSS DOMESTIC PRODUCT

IFRS - INTERNATIONAL FINANCIAL REPORTING STANDARDS

ISO - INTERNATIONAL STANDARDS ORGANISATION

MBA - MASTERS OF BUSINESS ADMINISTRATION

NSSA - NATIONAL SOCIAL SECURITY AUTHORITY

PET - POLYETHYLENE TERAPHTHALATE

PBT MARGIN - PROFIT BEFORE TAX MARGIN

SADC - SOUTHERN AFRICA DEVELOPMENT COMMUNITY

SAZ - STANDARDS ASSOCIATION OF ZIMBABWE

SBU - STRATEGIC BUSINESS UNIT

SKU - STOCK KEEPING UNIT

ZSE - ZIMBABWE STOCK EXCHANGE

ZIMRA - ZIMBABWE REVENUE AUTHORITY

Glossary of Terms

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GRI Content IndexGRI Indicator Page No. External

Assurance

STRATEGY AND ANALYSIS

G4.1 11 Not Assured

ORGANISATIONAL PROFILE

G4-3 Front Cover Not Assured

G4-4 5 Not Assured

G4-5 Back Cover Not Assured

G4-6 Scope;5 Not Assured

G4-7 44, 82 Not Assured

G4-8 3 Not Assured

G4-9 5-10 Not Assured


G4-11 N/A Not Assured

G4-12 9 Not Assured



G4-15 Scope,34 Not Assured

G4-16 N/A Not Assured

IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES

G4-17 72 Not Assured





G4-22 Scope Not Assured


STAKEHOLDER ENGAGEMENT

G4-24 23.29-29 Not Assured




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REPORT PROFILE





G4-32 This Page Not Assured


GOVERNANCE


ETHICS AND INTEGRITY


SPECIFIC STANDARD DISCLOSURES

Material Aspects: DMA and Indicators

Page (s) Omission External Assurance

ECONOMIC

Economic Performance

G4-EC1 Direct economic value generated and distributed (see Finan-cial Statements)

35-36; 38;40-79

n/a Assured

G4-EC3 Coverage of the Organisation’s defined contribution plan N/A n/a Not Assured

G4-EC4 Significant financial assistance received from government. 36 n/a Not Assured

ENVIRONMENTAL

Materials

G4-EN1 Material used by weight or volume 30 n/a Not Assured

G4-EN2 Percentage materials used that are recycles materials 30 n/a Not Assured

Energy

G4-EN3 Energy consumption – Inside the organisation 31 n/a Not Assured

G4-EN4 Energy Consumption – Outside the organisation 31 n/a Not Assured

Water

G4-EN8 Total water withdrawn by source 31 n/a Not Assured

Emissions, Effluents, and Waste

G4-EN23 Effluent and waste discharge 32 n/a Not Assured

SOCIAL PERFORMANCE INDICATORS

Employment

G4-LA1 Employment 31-33 n/a Not Assured

G4-LA6 Occupational incidences 33 n/a Not Assured

G4-LA8 Health and safety training and awareness 31 n/a Not Assured

GRI Content Index

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Shareholders Analysis 31 December 2015 Number of Issued Shareholders % Shares % Size of Shareholding 1 5 000 5,120 90.88% 3,837,729 1.07%5 001 10 000 114 2.02% 822,337 0.23%10 001 25 000 105 1.86% 1,775,830 0.50%25 001 50 000 73 1.30% 2,747,027 0.77%50 001 100 000 75 1.33% 5,335,725 1.49%100 001 200 000 46 0.82% 6,880,422 1.92%200 001 500 000 43 0.76% 13,548,132 3.78%500 001 1 000 000 21 0.37% 15,293,141 4.27%1 000 001 above 37 0.66% 307,760,515 85.97% 5 634 100.00% 358,000,858 100.00% Trade Classification Investment and Trust 33 0.59% 4,636,693 1.30%Local companies 329 5.84% 185,809,772 51.90%Insurance Companies 15 0.27% 49,222,294 13.75%Nominees Local 42 0.75% 1,292,518 0.36%Pension Funds 175 3.11% 82,879,204 23.15%Local individual residents 4 869 86.42% 16,206,173 4.53%Employee share trust 1 0.02% 10,000,000 2.79%New non - residents 26 0.46% 5,738,212 1.60%Nominees foreign 2 0.04% 35,377 0.01%Fund managers 15 0.27% 1,270,805 0.35%Banks 2 0.04% 70,262 0.02%Other 125 2.22% 839,548 0.23% 5 634 100.00% 358,000,858 100.00% Top Ten Shareholders Stanbic Nominees (Pvt) Ltd. 113,382,361 31.7%Old Mutual Life Assurance Company Zimbabwe Limited 46,902,421 13.1%Serrapin Investments (Pvt) Ltd 44,542,780 12.4%SCB Nominees 033663900002 25,238,557 7.0%Mining Industry Pension Fund 17,667,266 4.9%Scrimpton Investments (Pvt) Ltd 10,513,330 2.9%National Social Security Authority 10,282,425 2.9%DZL Holdings Employee Share Trust 10,000,000 2.8%Old Mutual Zimbabwe Limited 6,368,443 1.8%Lalibela Limited 5,739,057 1.6%Other 67,364,218 18.8% 358,000,858 100.0% Directors' Shareholding Dr L. L. Tsumba - S. Chindove 2,637,879 T. Mabika 1,893,832 C. Mahembe 138,575 H. Makuwa 100 A. S. Mandiwanza 9,491,528 J. H. K. Sachikonye 266 M. R. Ndoro 3,167,513 D. Hasluck - R. P. Kupara -

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

Ordinary Business1. To receive and adopt the Financial Statements for the year ended 31 December 2015, together with reports of the Directors and

Auditors thereon.

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

offers himself for re-election.

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

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

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

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

Special Business

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

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

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

AGM.d) The company will have adequate working capital for a period of twelve months after the date of the notice of the AGM.

Notes

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

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

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

By order of the boardM. NdoroCompany Secretary10 March 2016

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Corporate Information

Dairibord Holdings LimitedCompany Registration No. 2168/94www.dairibord.com

Registered OfficeZB Life Towers9th Floor77 Jason Moyo AvenueHarare

Postal AddressP O Box 587, Harare, ZimbabweTelephone Numbers: 263 4 790801-7, +263 4 731071-8Fax Number: +263 4 795220

Company SecretaryMercy R NdoroE-mail: [email protected]

AuditorsErnst & Young Chartered Accountants (Zimbabwe)Angwa CityJulius Nyerere Way/Kwame Nkrumah AveP.O Box 62 or 702Harare

Principal BankersStandard Chartered Bank of Zimbabwe LimitedBarclays Bank of Zimbabwe Limited

Transfer SecretariesCorpserve (Private) Limited4th Floor, ZB CentreCnr 1st Street and Kwame Nkrumah AvenueHarareZimbabwe

Sustainability Reporting Advisors Institute of Sustainability Africa (Insaf)52 Northampton Crescent EastleaHarareZimbabwe

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Notes

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Content · Dairibord Real dairy Dairibord Novelty Lyons Maid ... Family Choice Juices ... The Group’s principal business is the manufacturing and distribution of foods and ...

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